An extensive drill program to increase resources in the proposed Q-Pit area is ongoing. The focus is
on drilling gaps in the Q-Pit Central design area and drilling out the proposed waste dump area.
The deep drilling on S-Pit and A-Pit East has continued to advance potential underground targets.
Both zones have reasonable grades, considerable strike lengths and are open in all directions. The
A-Pit mineralisation has great potential to depth and down-dip to the north within the preferred
sedimentary host unit. More drilling is planned to test these targets as suitable for underground
Regional Exploration is focusing on further testing the known prospects of Chokdee, Suwan and
several other targets close to the Chatree Gold Mine. A review of the Suwan District was completed
and a plan is now in place to fully assess the potential of this district. Exploration is on hold in the
Chokdee District, awaiting further permitting. Several drillable targets have been generated including
re-logged EOH Air-Core chips, alteration analysis and re-processing geophysical data.
Kingsgate has revised its production forecast for the 30 June 2011 financial year to 110,000 –
120,000 ounces (from 120,000 – 130,000 ounces) as a result of delayed access to higher grade ore
at the Chatree mine. In addition to this, it is expected that Dominion will contribute approximately
40,000 ounces for the 5 months from acquisition on 2 February 2011 to 30 June 2011.
Construction of the Chatree North plant expansion was approximately 60% complete at the end of
December 2010 and remains on schedule and budget. The new plant is anticipated to be
commissioned in the September quarter 2011. This will result in a combined total ore processing
capacity over 5.0 million tonnes per annum with a potential gold production rate of over 200,000
ounces per annum. Funding for the expansion is expected to be completed mid-March 2011. Nonbinding
expressions of interest were received in mid-January 2011 from six Thai and international
banks for in-excess of US$250 million.
It is Kingsgate’s intention to progress the initial public offering of Akara on the Stock Exchange of
Thailand (IPO), but the timing of the IPO will be dependent on the outcome of the settlement of the
dispute with Sinphum, the preference shareholder in Akara, and market conditions.
Sinphum has still not met its obligation under the shareholders agreement with the Group. Ongoing
negotiations to settle this matter out of court have not been successful and, consequently, Kingsgate
is now seeking to have the matter settled by arbitration in Singapore in accordance with the dispute
clauses in the shareholders’ agreement.
Kingsgate remains very confident that arbitration proceedings will be favourable.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the
Corporations Act 2001 is set out on page 6.
Rounding of amounts to nearest thousand dollars
Kingsgate is of a kind referred to in Class Order 98/100, issued by the Australian Securities and
Investment Commission, relating to the “rounding off” of amounts in the Directors’ Report and
financial report. Amounts in the Directors’ Report and financial report have been rounded off in
accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest
This report is made in accordance with a resolution of the Directors.