Chairman’s Review
Kingsgate has undergone a major transformation in 2011 as it diversifi es
from being a company with one mine in one country to having two
mines and two advanced development projects in three countries. When
coupled with the major expansion at Chatree, this operational and
geographic diversifi cation has put Kingsgate on the path to becoming
the premier mid-tier precious metals producer on ASX for the benefi t
of all shareholders. Despite a diffi cult year operationally, Kingsgate
continued to deliver returns to shareholders in the form of dividends.
The world class Chatree gold mine in the rural heartland of Thailand
remains the cornerstone operation for Kingsgate where a strong commitment
to near mine exploration and a resource base of nearly 4 million
ounces is supporting a major expansion of the operations, more than
doubling the throughput to 5 million tonnes per annum. The expansion is
expected to produce fi rst gold in the December quarter 2011.
Production from Chatree in 2011 was impacted by an extended delay
in the granting of approvals to access and mine a high grade area that
required a highway to be re-aligned in order to access the ore. While the
highway was moved well before the end of 2010, the approval to access
and mine the area was only granted in June 2011, a delay of over six
months severely impacting production and earnings for the year. Access
to the high grade ore is expected in the December quarter following the
removal of overburden material.
From early February 2011 Kingsgate added the 100,000 ounce per
annum Challenger gold mine in South Australia to its operating base
following the successful acquisition of Dominion Mining Limited via
a Scheme of Arrangement. Operations at Challenger were impacted
for several months by severe wet weather following cyclone Yasi in
February. Major access roads were damaged thereby cutting supply
routes to the remote site.
Challenger is providing a solid production base with potential resource
growth, and it also adds key underground mining skills into Kingsgate.
A renewed focus on the exploration potential close to the surface is
delivering results.
Also in February 2011, Kingsgate secured 70% ownership of Laguna
Resources NL through an off market takeover offer. Laguna’s principal
asset at the time was the Arqueros silver and gold advanced project in
the highly prospective Maricunga gold and silver belt in central Chile.
Subsequently Laguna acquired the Esperanza and Chimberos leases to
complement and enhance the overall project. The combined project
has been re-named Nueva Esperanza, or “new hope”, and is currently
undergoing a feasibility study with a decision to mine expected in the
March quarter 2012. |
In August 2011, following the end of the fi nancial year, Kingsgate added
to its project pipeline with the purchase of the Bowdens silver project
near Mudgee 240 kilometres north-west of Sydney, NSW. Bowdens is
also undergoing a feasibility study, including an Environmental Impact
Study (EIS), which is expected to be completed towards the end of
calendar 2012.
The financial results for the 2011 financial year were impacted by
abnormal operating conditions at both Chatree and Challenger during
this transition year. The signifi cant change in the make-up and structure
of Kingsgate now positions your company for signifi cant growth in
production and earnings over the next three years and into the future.
Stronger gold and silver prices will enhance the overall earnings and
drive increased returns to shareholders.
I would like to thank Gavin Thomas, the entire Kingsgate, Challenger,
Laguna and Thai teams and management, as well as our contractors, for
their part in delivering the operational and fi nancial performance during
what was a diffi cult year operationally for your company.
Kingsgate’s shareholders can look forward to improved performance
from Chatree and Challenger and the advancement of the two major
development projects over the coming year.
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