Exploration

The rising gold price has meant that lower grade material has become economically viable to be processed and therefore it is critical to redetermine the limits of economic mineralisation and be able to plan the future shape of the open pits with respect to the location of infrastructure and waste dumps. Drilling has therefore focused on expanding the open pits at Chatree North and determining the potential size of the Chatree pits when re-opened in the future.

Further gold mineralisation has been discovered in and around the A and Q Pits at Chatree North and the current pit designs are at the limits of the current drilling data. New, higher-grade targets have been identified for potential underground operations, although the current focus has been on near-surface deposits. Extensions to the gold mineralisation around the old pits at Chatree show the opportunity to re-open these pits once further drilling has been completed and potential underground targets remain to be tested.

Ore Reserves were increased by 41%, after mine depletion, to
1.9 million ounces with Mineral Resources increasing to 4.3 million ounces of gold. This provided the certainty to increase the processing capacity with more than 10 years of mine life once the new plant is completed.

A study was completed to demonstrate the effect of rising gold prices on Chatree’s reserves. While indicative only, the methodology is a good guide should gold price assumptions for gold reserves increase. At current gold prices, the geological block model yields a reserve of 2.7 million ounces, a 40% increase.

Regional exploration for feeder pits near Chatree resulted in a new gold discovery at Suwan. Gold mineralisation and alteration of a similar style to Chatree was identified over an area of 20 square kilometres. If proved to be economic, this material would be within trucking distance of the Chatree processing plant. Other drill-ready stand-alone regional targets will also be explored next year.

Sustainability

Safe, responsible mining activities and positive social and community interaction continue to be the key focus at Chatree. Chatree has nearly 14 million hours worked (7 years) without a Lost Time Incident and continues to be the safest gold mine in the world (based on publicly
available data). All international standards have been maintained and the Company is accredited with: Social Accountability SA 8000, Health & Safety ISO 18001, Environment ISO 14001, Quality ISO 9001, Laboratory Standard ISO 17025 and Thai Labour Standard TLS 8001. Local communities, workers and suppliers continue to support and benefit from the mine’s sustainable operations.

Kingsgate received acknowledgement of its performance with two awards for Producer of the Year 2009 (Resource Stocks) and Excellence in Production and Mine Management 2010 (Excellence in Mining). In Thailand the Thai subsidiary, Akara Mining Limited, received the Zero Accident Gold Award for 2010. Further, the Company’s positive focus on health and safety has improved standards of our contractors with the Thai mining contractor, Lotus Hall, receiving a Zero Accident Gold Award as well.

Past and Future

Kingsgate has shown its ability to deliver high quality shareholder returns by a strong focus on mine performance, sustainable practices, diligent exploration and the efficient management of a world-class gold resource at Chatree. Beyond the new financial year, will come the benefits of an expanded plant and other growth opportunities as
Kingsgate remains focused on increasing production per share, reserves per share and earnings per share as the Company continues to be the rising mid-tier gold company on the Australian Securities Exchange.