A $9 million profit was recorded on the sale of the Company’s interest in Goldstar Resources, a return of around 300% on the investment. Past exploration costs in South America of $3.5 million were expensed this year, because the projects were deemed to be at an early stage of exploration and further expenditure has been deferred until the Company returns to profitability.

Cash flow
The operational cash flow for the year totalled a negative $19.9 million impacted by the delivery of most gold production into out-of-the-money hedges. Net investing cash flows for property, plant, equipment and exploration were $13.6 million and included $3.8 million deposit on new SAG and Ball mills for the expansion and $4.9 million spent on exploration activities. Dividends paid during the year amounted to $3.7 million, which corresponded to the full financial year 2005/06 dividend announcement.

Thai investors participated in a strategic placement early in 2007, which contributed $11 million. Other Thai investors contributed to a placement of preference shares in the Company’s Thai subsidiary, Akara Mining Limited (Akara).

As at year end, the Company had US$20 million in credit facilities, drawn to A$20 million (US$18 million). In July 2007, credit facilities were increased to US$28 million, repayable either in January 2008 or 12 months from the grant of the Chatree North Mining Leases.

Financial position
Shareholders’ equity at 30 June 2007 was $184 million and represents an increase of 44% on the previous year.

Income tax
The Company’s operation is located in Thailand and operates under approvals received from

Summary
Kingsgate’s financial performance was negatively impacted by a difficult year in operations, due mainly to low gold grades and delivering the production into out-of-themoney gold hedge positions. This significantly reduced cashflow and net profits in comparison with the previous financial year. The financial performance is anticipated to improve markedly during the 2007/08 year as the mill feed gold grades will increase significantly once the new Chatree North Mining Leases are granted and all gold sales are now unhedged.

Earnings
The net loss after tax for the year was $12.6 million, equivalent to US$10.9 million, a significant decrease on the previous year’s profit of $16.7 million. Total revenue was $52.6 million, significantly below the previous

year of $74.1 million. Profits and revenue were reduced primarily because:

1. Gold grades of mill feed halved in comparison with the previous year, at slightly higher costs per tonne, reducing production to 85,994 ounces gold.
2. Production was delivered into out-of-themoney gold hedge positions. The average gold price received during the year was US$417 per ounce in comparison with a spot gold price that ranged from US$560 to US$691 per ounce.

The continued focus on cost management has maintained cash costs on a per tonne basis (mined and processed), with only a 14% increase over the last three years. Cash costs of production on a per ounce basis increased markedly due to the low gold grades, rising to US$440 per ounce.