Initial results from both RC and Diamond drilling have been highly encouraging. The diamond drill holes designed for metallurgical test work have confirmed previously interpreted mineralisation. Several of the RC holes intended for resource definition have returned significant intersections outside of the current resource model, indicating the potential to increase the current resource estimate.

Information from the program will be included both in a preliminary EIS document and the bankable feasibility study which should be completed in the September quarter 2012.

Total feasibility and assessment expenditure for the quarter at Bowdens was A$2.7 million.

CHILE

NUEVA ESPERANZA PROJECT

Field operations at the Nueva Esperanza project during the March quarter focused on the completion of resource and geotechnical drilling at Teterita and completion of sterilisation drilling over proposed sites for mine infrastructure (plant, waste dump and tailings storage area). Metallurgical sample testing was completed for the Arqueros mineralisation.

Following the completion Teterita resource modelling, a resource upgrade has resulted in an increase of 30% in the contained silver at Teterita. As of 31 March 2012, the total Mineral Resource at Teterita is over 17 million ounces of silver, hosted in 6 million tonnes of ore at an average grade of 89 g/t silver (cut-off 22.5 g/t silver). At a gold/silver price ratio of 45, this is equivalent to about 380,000 ounces of gold (cut-off 0.5 g/t gold).

The Teterita drilling results and the soon to be despatched metallurgical samples will now be incorporated into the technical feasibility study which is now expected to be completed in the September quarter 2012.

Total feasibility and assessment expenditure for the quarter at Nueva Esperanza was A$3.4 million.

CORPORATE

During the quarter Kingsgate raised A$70 million via an ordinary share placement to existing and new institutional shareholders.

At the end of March Kingsgate had total cash and bullion/doré of A$87.2 million, comprising cash of A$68.4 million and bullion/doré of A$18.8 million.

The balance of the Thai debt facility is approximately US$85 million, following the first loan repayment of US$15 million on 31 March 2012. The Kingsgate A$60 million corporate credit facility was drawn to A$40 million. Under the terms of these loan facilities, the Group is required to maintain a minimum cash balance of A$5 million in respect of its Australian operations and US$15 million in respect of Akara. After excluding these amounts, the Group cash and bullion/doré is A$67.8 million.

In addition, Kingsgate has a five year A$35 million convertible loan facility that provided funding for the Bowdens acquisition.

Kingsgate declared and paid an interim dividend of 10 cents per share, unfranked, during the quarter (total cash payment of A$13.2 million).

Kingsgate successfully completed the compulsory acquisition of the balance of Laguna Resources NL that it did not own following the close of the offer on 13 January 2012.

OUTLOOK

Following another good quarter in March 2012, Kingsgate is forecasting a strong June quarter with Chatree benefitting from the higher grade ore from C North.

Full year total gold production guidance is in the range of 205,000 to 225,000 ounces. This includes 115,000 to 125,000 ounces from Chatree and between 90,000 to 100,000 ounces from Challenger.