Chaarat has entered into a binding term sheet to set up a joint venture with Çiftay İnsaat Tahhüt ve Ticaret for the Tulkubash and Kyzyltash projects in the Kyrgyz Republic.

Under the terms of the agreement, Çiftay will become the construction and long-term mining contractor for the Tulkubash project.

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The Turkish mining and mine construction contractor moved the equipment to the Tulkubash site in the Chatkal Valley last year.

Under the terms of the agreement, Çiftay will progressively invest $31.5m to acquire a 12.5% equity stake in the Tulkubash and Kyzyltash projects, based on the $252m valuation reached by the two parties for the mining projects.

Chaarat executive chairman Martin Andersson said: “I am delighted with this agreement and would like to express my sincere gratitude to the Çiftay team for their clear expression of confidence in Chaarat and the Tulkubash project.

“Çiftay’s investment represents a significant milestone for the funding of Tulkubash and clearly demonstrates the company’s inherent value. Further, this agreement illustrates our focus on shareholder value and ability to creatively fund the business on accretive terms.”

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The investment made by Çiftay is expected to provide a significant amount of the equity needed for the Tulkubash project.

“Çiftay’s investment represents a significant milestone for the funding of Tulkubash and clearly demonstrates the company’s inherent value.”

The total capital expenditure for the Tulkubash project is estimated to be in the range of $120m to $130m. Following the equity investment from Çiftay, a significant part of the remaining capital expenditure is expected to be debt funded.

Currently, Chaarat is in the process of securing the remaining financing required for the project, which is expected to be completed in the third quarter of this year.

The company said that the first gold production at the Tulkubash project remains on schedule for 2021.

Chaarat and Çiftay are expected to enter into definitive agreements for the joint venture in the second quarter of this year.