29 August 2014
Financial Results for the Year Ended 30 June 2014
- Underlying EBITDA* of $66.4 million
- Underlying loss before tax $5.2 million
- Gross cashflow from operations for the year of $72.9 million
- Statutory loss after tax $96.3 million
- Full year results significantly impacted by A$84.6 million non-cash impairment to Bowdens Silver Project
- Higher gold sold (+11%) offset by lower gold price received
- Repayment of A$52 million of group debt facilities
- Cash of $64.1 million (including restricted cash of A$10.5M)
29 August 2014
Company Announcements Office
Australian Securities Exchange
Preliminary Final Results and Appendix 4E for the Year Ended 30 June 2014
Kingsgate has recorded the following financial performance for the year ended 30 June 2014:
- Gold sold up 11% to 216,887 ounces
- Revenue of $328.3 million.
- EBITDA* (before significant items) of $66.4 million.
- Loss before tax and significant items of $5.2 million.
- Loss after tax and significant items of $96.3 million.
- Non-cash asset impairment of $84.6 million relating to the Bowdens Silver Project.
Gold sold for the year was up 11% to 216,887 ounces (2013: 195,948 ounces) including 140,868 ounces from Chatree and 76,022 ounces from Challenger. This was offset by a lower realised gold price of US$1,291 per ounce (2013: US$1,588 per ounce).
Chatree continued to perform strongly delivering EBITDA of $87.2 million and a net profit before tax of $34.3 million. At Challenger the major restructure and new mine plan and new contract miner improved the underlying financial performance with the operation close to breakeven for the year before one-off restructuring costs.
The major contributor to the after tax loss of $96.3 million is the non?cash impairment to the carrying value of the Bowdens Silver Project (“Bowdens”). The Board of Kingsgate believes that Bowdens remains an important asset in the Kingsgate development portfolio, however in accordance with the current accounting standards the Company is required to assess the carrying value of the operating and development projects within a set valuation framework. The outcome of the assessment is a non?cash impairment of $84.6 million against the carrying value of Bowdens.
The development projects continued to advance during the year. At Nueva Esperanza, the Definitive Feasibility Study (“DFS”) was completed on the project based on a heap leach process and on-site power generation. The results of the study support the technical viability and financial robustness of the project. At Bowdens, the feasibility work continued on mine planning, infrastructure and metallurgy and has confirmed the optimum process route. Work will now focus on completion and lodgement of the Environmental Impact Statement (“EIS”) by the end of calendar year 2014.
The outlook for the Group in fiscal year 2015 is for gold production to be in the range of 195,000 to 215,000 ounces. The Chatree Mine in Thailand is expected to continue its strong performance and remain the major producing asset for Kingsgate with an improved production performance of between 130,000 to 140,000 ounces. At the Challenger Mine in South Australia, the focus will remain on cost and productivity improvements with drilling to continue to assess the potential to convert further resources to reserves and extend the mine life. Gold production for the year from Challenger is expected to be in the range of 65,000 ounces to 75,000 ounces of gold.
Kingsgate continues to adapt to the volatile operating environment for gold producers and pursue strategies to lower costs and improve operating efficiencies in order to maximise shareholder returns. This includes considering partners for development projects and potential rationalisation of the asset base.
Kingsgate Consolidated Limited
- Strong Group operating performance with quarterly gold production of 55,450 ounces at total cash cost of US$857/ounce.
- Record Group annual gold production of 209,500 ounces, at the top end of the guidance range of 190,000 to 210,000 ounces.
- Chatree produced 36,475 ounces of gold at US$631/ounce and Challenger produced 18,975 ounces of gold at US$1,291/ounce for the quarter.
- The retail component of the capital raising was completed in mid-April with gross funds received of A$30.9 million.
- Mine plan optimisation and additional metallurgical testwork is underway to support the positive Nueva Esperanza DFS.
- Encouraging gold exploration results at Sayabouly in Lao PDR with 5.0m @ 6.7g/t gold and 4.0m @ 6.7g/t in trenching.
- Geoff Day was appointed CEO and will join Kingsgate during the September quarter.
- Peter Warren appointed as a Non-Executive Director of Kingsgate.
Kingsgate Consolidated Limited (ASX: KCN) wishes to advise of the appointment of Geoff Day as Chief Executive Officer (CEO). Mr Day was previously EGM Sustainability and External Affairs for Newcrest Mining Ltd. His role covered operational governance and corporate functions including external communications, government relations, health, safety, environment, risk, security, Corporate Social Responsibility and executive accountability for Newcrest’s joint venture businesses in Fiji and Papua New Guinea.
Mr Day will commence duties following completion of his contractual obligations at Newcrest during the current quarter.
Mr Day has a Masters degree in Applied Science (Chemistry) from Monash University and has spent the past 29 years involved in the mining industry working with various mining companies including Ok Tedi Mining Limited, Lihir Management Company, Rio Tinto, Kagara and Newcrest in a number of technical, managerial, operational leadership and executive positions.
Kingsgate Chairman, Ross Smyth-Kirk welcomed the appointment and said, “we are very pleased that Geoff is joining Kingsgate and bringing the requisite skills and background to assist Kingsgate to deliver the high performance outcomes we expect from our existing operations and progress the strong development opportunities in our asset portfolio.”
Mr Day said, “I am delighted to be joining the business and I look forward to working with the Kingsgate team to realise the full potential of the company’s asset base.”
A summary of the material terms of Geoff Day’s employment contract are included in Appendix 1.
Kingsgate Consolidated Limited
A summary of the material terms of Geoff Day’s Employment Contract:
|[To be confirmed]|
|Total Fixed Remuneration (TFR)||$675,000 per annum|
|Short Term Incentive (See Note 1)||Maximum of 50% of TFR|
|Long Term Incentive (Performance Rights) (See Note 2)||50% of TFR|
|Notice by Company – period (See Note 3)||12 months|
|Notice by Executive – period (See Note 3)||3 months|
|Maximum Termination payment (See Note 4)||12 months of average annual base salary|
|Not specified. On-going appointment.|
- Normally paid in cash following the achievement of performance targets set by the Board each year.
- The granting of Performance Rights is subject to shareholder approval. The vesting of Performance Rights is subject to achieving performance targets set out in the notice of general meeting approving the Performance Rights.
- The Company may pay the Executive in lieu of notice.
- Any payments or benefits to be provided to the Executive under the termination clauses or any other clause of the Employment Contract will be reduced to a level which does not require shareholder approval under Part 2D.2, Division 2 of the Corporations Act 2001 (Cth) and which does not infringe the ASX Listing Rules.
CEO and Executive Management Update
Kingsgate Consolidated Limited (ASX: KCN) wishes to advise of a number of executive management changes and that a new CEO is expected to be announced next week after release from existing contractual arrangements. Until the new CEO commences, Kingsgate Chief Operating Officer (COO), Tim Benfield, has been appointed Acting CEO.
Kingsgate Chairman, Ross Smyth-Kirk said, “while we are close to finalising the commencement of our new CEO it is important to maintain corporate and operational leadership in the period prior to the new appointee commencing duties.”
Tim joined Kingsgate in February 2012 as Chief Operating Officer. He is a mining engineer with over 21 years’ experience in the mining industry in both operational and corporate roles.
Kingsgate also wishes to advise that its Chief Financial Officer (CFO), Duane Woodbury, will be leaving the Company effective early July 2014. Duane has been involved with Kingsgate over the past seven years, with the last three as CFO. He has been an integral part of the management team which has transitioned Kingsgate into a diversified precious metal company operating in several jurisdictions around the world.
Ross Coyle, Kingsgate’s General Manager Finance and Administration and formerly the Finance Director for Dominion Mining Ltd, will assume the CFO responsibilities on an interim basis following Duane’s departure.
Kingsgate Chairman, Ross Smyth-Kirk, said “Duane has been an important part of Kingsgate’s senior management team over a number of years and he leaves the Company with the Board’s best wishes for his future endeavours.”
The Board of Kingsgate is pleased to advise that Peter Warren is to be appointed as a director of the Company.
Peter is a CPA of over 40 years standing, with an extensive involvement in the resources industry. He retired from Kingsgate in 2011 after five years as Chief Financial Officer (CFO) and Company Secretary. Peter has over 15 years operating in a senior financial capacity as CFO and Company Secretary for a number of public and private companies.
Kingsgate Chairman, Ross Smyth-Kirk said, “We look forward to Peter joining the Board as he brings with him a strong financial and corporate skill set and is very familiar with the operations and jurisdictions in which Kingsgate currently operates.”
Kingsgate Consolidated Limited
KCN will transfer responsibility for the maintenance of the KCN Share Register to Link Market Services Limited (Link), effective start of business Monday, 30 June 2014.
The new share registry contact details are provided below:
Link Market Services Limited
680 George Street
SYDNEY NSW 2000
Locked Bag A14
SYDNEY SOUTH NSW 1235
International Telephone: 61 1300 554 474
Facsimile: 02 9287 0303
Lodgement of documentation by member organisations, security holders, and other interested parties must be made at the new address from Monday, 30 June 2014.
Should you have any questions regarding the change of address, please direct them to Alison McGuire, National Business Development Manager, at Link on 02 8280 7662.
Kingsgate Consolidated Ltd