Kingsgate has recorded the following financial performance for the half year to 31 December 2013:
Revenue of $165.1 million.
EBITDA* (before significant items) of $27.9 million.
Statutory loss after tax of $4.9 million.
Gross cashflow from operations for the half‐year of $41.5 million.
Higher gold sales (+19%) offset by lower gold price received.
Investment and capital expenditure reduced by 62%.
Corporate debt facilities restructured and a total of ~$17 million repaid
Gold sales for the half‐year were up 19% to 108,610 ounces (1HFY13: 91,480 ounces) with higher production from both Chatree and Challenger. This was more than offset by the lower realised gold price of US$1,297 per ounce (1HFY13: US$1,663 per ounce). Gross operating cashflow for the half‐year was $41.5 million despite the lower gold price. Investment and capital expenditure was reduced by 62% following the implementation of cost reduction initiatives following the volatility in the gold price.
During the half‐year the Kingsgate Group repaid approximately A$17 million of its outstanding debt. At year end, Kingsgate had A$44 million outstanding under its current corporate facilities, down from A$55 million at the end of the September quarter. Kingsgate has completed the documentation for a restructure of its corporate debt facilities and following the satisfaction of Conditions Precedent, expected during the current quarter, Kingsgate’s corporate debt will reduce to A$40 million under one new corporate debt facility. In addition, approximately US$119 million is outstanding under the Kingsgate’s Thai operating subsidiary Akara Resources PCL (“Akara”) loan facility following the initial repayment of US$5.6 million in November.
The two development projects continued to advance during the year. For the Nueva Esperanza silver/gold project in Chile, the Definitive Feasibility Study (DFS) was well advanced during the half‐year with completion of the DFS expected by the end of March 2014.
At the Bowdens silver project in New South Wales, the feasibility work will continue in 2014 in parallel with the preparation of the Environmental Impact Statement (EIS).
Kingsgate is on track to meet gold production guidance for the 2014 financial year following the strong first half. Group production guidance for the year remains at 190,000 to 210,000 ounces including 120,000 to 130,000 ounces from the Chatree gold mine in Thailand and 70,000 to 80,000 ounces from the Challenger gold mine in South Australia.
Kingsgate continues to pursue strategies to adapt to the volatile operating environment for gold producers with the focus to remain on operating efficiencies and cost saving initiatives in order to maximise shareholder returns. This may also include consideration of partners for development projects and potential rationalisation of the asset base.
Kingsgate Consolidated Limited (ASX: KCN) is pleased to announce that it has signed documentation with Investec Bank (Australia) Ltd to refinance Kingsgate’s existing corporate debt facilities as previously detailed in the 2013 financial year accounts. The new facility will be available to the Company following satisfaction of conditions precedent, standard for a corporate facility of this nature. This is expected in the first quarter of 2014.
As part of the restructure, Kingsgate has reduced its corporate debt by A$11 million to A$44 million and following completion of the refinancing (expected in the first quarter 2014) Kingsgate’s corporate borrowings will reduce further to A$40 million under one new corporate debt facility.
In conjunction with the current refinancing, the company has recently drawn down A$15 million under its Convertible Revolving Credit Facility, which subsequently has been repaid through the issue of 11,774,572 ordinary shares at a price of approximately $1.27 per share. Funds raised are available for general corporate purposes.
Appendix A summarises the Kingsgate Group’s debt facilities following completion of this refinancing.
Kingsgate Managing Director and CEO Mr Gavin Thomas said, “This refinancing strengthens our capital structure and is another important step in transitioning the company to operate in a weaker and more volatile gold price environment.” “We remain focused on reducing the Group’s debt position, with more than A$17 million of borrowings now repaid over the last two months.
“When combined with the considerable operating and cost improvements at the Challenger mine and the continued strong performance at Chatree, Kingsgate is maximising its flexibility in adapting to changing market conditions,” he said.