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Aug 2012 - Kingsgate Cons

Kingsgate Consolidated Limited (KCN) – Establishing a Gold Production Base of ~250,000ozpa Ahead of Bringing its Silver Mine Projects on-Stream

  • Kingsgate has two established potentially >10 year life operating gold mines being the Chatree ~150,000ozpa gold and ~1mozpa silver (~20,000ozAuEquiv) mine in Thailand, and the Challenger ~90,000ozpa to 110,000ozpa gold mine in South Australia. Gold production could be ~20,000ozpa to 30,000ozpa gold or so higher than FY 2012's ~209,000oz.
  • KCN has commissioned its additional rated 2.7mtpa plant at Chatree at a record capital cost of <$100m, resulting in a 5mtpa combined capacity. However, debottlenecking has already raised the throughput to ~6.2mtpa to 6.5mtpa ahead of a possible minor modification to ~7.2mtpa (and probably >150,000ozpa gold) in FY14.
  • Chatree's grades are currently expected to be lower at possibly ~0.8g/t to 0.9g/t in FY13 as the AAe pit mines through a lower grade area. However, studies are underway for different stage possibilities to access some of the higher grades ~30m below the pit floor earlier in FY13, in addition to reviewing underground mining capabilities.
  • Kingsgate's Challenger gold mine appears to be limited to ~90,000ozpa to 110,000ozpa due to the annual vertical mining capability of its individual lodes. The discovery and mining of Challenger West has been extremely encouraging for improved production in FY13 offsetting the re-establishment of the stopes on the M lodes beneath the major "79" fault displacement.
  • Of KCNs two silver mine projects, Nueva Esperanza in Chile may be the most advanced in the approval process. Described as high sulphidation epithermal mineralisation, Nueva Esperanza may be near the top of the system as it does not have significant sulphides, and conventional high leach recoveries can be achieved without flotation. A preliminary target is ~100,000ozpa AuEquiv (4.4mozpaAg & 10kozpaAu), possibly for >10 years.
  • KCN's second silver mine project appears to resemble a low sulphidation epithermal stockwork at Bowdens in NSW, with base metal credits. High grade (>1000g/tAg) intersections have been made beneath the last reported resource, resulting in a re-evaluation (despite already having a sufficient required size). The preliminary production size appears to be ~140,000ozpa AuEq (~7.0mozAgpa) based on a ~4.0mtpa plant.
  • Written by: Keith Goode
  • Wednesday, 01 August 2012