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Aim-quoted miner Chaarat Gold on Wednesday announced an agreement to sell its only operating mine, Kapan, to an Armenian mining operator for $55.4-million.

Kapan is a polymetallic orebody that produces copper and zinc concentrates, with gold and silver as byproducts

Chaarat bought Kapan in 2019, but believes the proposed sale is a beneficial exit opportunity at a time when the asset sees increasing costs, potential losses and further funding requirements following several years of profitable operation.

The proposed sale would allow the company to focus its growth pipeline in the gold sector, said CEO Mike Fraser in a statement.

“[The proposed sale] accelerates our strategic objective of developing the Tulkubash project and evaluating opportunities for inorganic growth options,” he stated.

Upon completion of the sale, Chaarat will own two Kyrgyzstan-based gold development assets – Tulkubash and Kyzyltash – that have the potential to produce more than 350 000 oz/y of gold.

The transaction will significantly improve Chaarat’s balance sheet by reducing its short and long-term liabilities by $39-million and receive a cash injection of $5-million. These funds will be used to provide working capital that will assist the company to among other items, continue working towards completing the potential Xiwang investment which upon ompletion will assist in developing the Tulkubash project.

In terms of a binding conditional sale and purchase agreement, Chaarat will sell the asset to Armenian mining operator Gold Mining Company.

Gold Mining Company operates the Lichkvaz mine, which has supplied third-party ore to the Kapan plant for processing for a number of years. The buyer’s shareholder is also the MD and co-owner of S&A Mining, which has been the long-term mining contractor partner at the Kapan mine.