Syndicated loan facility

A US$100 million Baht denominated syndicated loan facility between Akara Mining Limited (Akara) and a bank syndicate comprising CIMB Thai Bank Public Company Limited, the Bangkok branch of Sumitomo Mitsui Banking Corporation and Investec Bank (Australia) Limited was executed in May 2011. The syndicated loan facility is a four year amortising loan with equal half-yearly repayments commencing on 31 March 2012. Akara has fully drawn down the facility at the time of this report.

Financial Position

Shareholders’ equity at 30 June 2011 was $599.8 million, an increase of $283.8 million over the previous year. This was positively impacted by 2011’s profi t, the acquisition of Dominion and Laguna and offset by the dividend payments and exchange differences arising from the translation of foreign controlled entities.

Income Tax

The mine operation in Thailand has approvals for tax benefi ts from the Royal Thai Board of Investment (BOI). During the year, the current processing plant was taxed at half tax holiday (15% tax rate) as the previous eight year full tax holiday (nil tax rate) expired in November 2009.

The BOI promotion for the new Chatree North gold processing plant will be in place once the construction is completed and the plant is commissioned for use. Profi t derived from the new plant will be tax exempt for eight years up to the value of the capital cost of the new plant including a 25% investment allowance.

Dividends

An interim dividend declared for the year ended 30 June 2011 of 10 cents per fully paid share was paid on 16 March 2011.

A fi nal dividend declared for the year ended 30 June 2011 of 5 cents per fully paid share was paid on 30 September 2011.

Planned IPO in Thailand

Kingsgate announced on 29 August 2011 that a settlement had been reached with Sinphum Co. Ltd (Sinphum), a Thai company which held preference shares in Kingsgate’s Thai operating subsidiary, Akara Mining Limited (Akara).

As a result both parties have agreed to cease all legal and arbitration actions and the preference shares in Akara have been transferred to a new Thai investor.

Kingsgate has met all outstanding fi nancial obligations to Sinphum under the original shareholder agreement, including outstanding preference share dividends, up to the settlement date of 26 August 2011.

As part of the settlement, the Company has granted 1.5 million Kingsgate 3 year options that vest in 12 months at a strike price of $10.36 and 500,000 deferred share rights that vest, subject to the Chatree Mine meeting specifi ed production targets, over the next 14 months.

This settlement will allow Kingsgate to recommence preparations for an IPO of Akara on the Thai stock exchange.

Plant Expansion

Construction of the Chatree North Expansion Project (Project) is on schedule and the Project is coming in approximately 5% under the original US$100 million budget. Once the Project is complete, the total ore processing capacity is expected to be around 5 million tonnes per annum.

The Project was funded through a US$100 million Baht denominated syndicated loan facility between Akara and a bank syndicate comprising CIMB Thai Bank Public Company Limited, the Bangkok branch of Sumitomo Mitsui Banking Corporation and Investec Bank (Australia) Limited.

Business Development

Kingsgate continues to pursue opportunities in the gold sector from early to advanced stage projects which could deliver substantial value to Kingsgate shareholders. During the year, Kingsgate successfully acquired 100% of Dominion and 70% of Laguna.

Dominion acquisition

On 2 February 2011, Kingsgate acquired all of the shares in Dominion via a Scheme of Arrangement (Scheme). The major asset of Dominion is the Challenger Gold Mine in South Australia. Under the Scheme, Kingsgate issued 32,416,572 fully paid ordinary shares at the quoted price of $9.33 per share, for a total consideration of $302.4 million. On acquisition, Dominion became a member of the Kingsgate tax-consolidation group.

Laguna acquisition

During the year, Kingsgate also undertook an off-market takeover bid for Laguna and received acceptances for 70% of Laguna’s issued capital when the bid closed in February 2011. The major asset of Laguna is the Nueva Esperanza silver / gold project located in central Chile. In consideration Kingsgate issued 1,434,386 fully paid ordinary shares and paid $2.4 million in cash.

Bowdens Silver Project acquisition

On 22 September 2011, Kingsgate completed the acquisition of the Bowdens Silver Project in New South Wales, Australia. Consideration for the acquisition was $75 million comprising:

• $35 million cash, payable upon closing;
• two payments, each of $5 million cash, payable on 31 December 2011 and 30 June 2012; and
• $30 million in Kingsgate shares.