Virtual AGM – Online Guide
Virtual AGM Online Guide
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Thailand Update – 23 September 2021
Thailand Update
Kingsgate Consolidated Limited (“Kingsgate” or the “Company”) is pleased to announce that negotiations between the Company and the Royal Thai Government are now entering the final stages. Kingsgate has also been advised that the arbitral tribunal is now ready to issue the award after a lengthy period of deliberations.
In this regard, Kingsgate and the Thai Government have jointly requested that the arbitral tribunal hold the award until 31 October 2021, to allow the parties a short extension to conclude their settlement negotiations.
As referenced in the ASX release dated 18 February 2021 titled “TAFTA Update”, Kingsgate has been negotiating with the Thai Government with a view to a settlement in which certain steps will be taken, including (but not limited to):
- The grant of all operating licences and permit applications required to re-start and operate the Chatree Gold Mine;
- The renewal/approval of key exploration licence applications to enable access to previously unavailable but highly prospective areas;
- The establishment of improved processes around expediting approvals of mining leases and mine plans;
- The issuance of Board of Investment incentives in relation to royalty and tax relief for the re-start and continuance of operations;
- The ability to access development funding (if required) for plant refurbishment/expansion;
- The examination by Kingsgate of the feasibility of developing a local Thai gold refinery with international accreditation;
- Support from the Thai Government for the potential listing of Akara Resources on the Thai Stock Exchange, which if implemented would give Thai investors the opportunity to participate in the re-invigorated gold industry;
- The successful resolution of all outstanding local legal issues;
- The examination by Kingsgate of options for the construction of a renewable energy plant at the Chatree Gold Mine;
- The establishment of a local COVID-19 vaccination hub by Kingsgate to ensure the health of Chatree employees and local communities; and
- The re-instatement of previous commitments by Kingsgate to continue supporting local communities through various education, health, and infrastructure programs.
Kingsgate can further advise that the Metallurgical Processing Licence (“MPL”) is now available for the Company to activate subject to payment of the relevant processing fees.
As reported in the Kingsgate Reserve and Resource Statement dated 2 September 2020 (See ASX release titled “Kingsgate Mineral Resources and Ore Reserves 2020”) the re-instatement of the MPL would equate to the ability to exploit Chatree’s Mineral Resources which were estimated at 3.4 million ounces of gold and 29 million ounces of silver, and the re-instatement of Chatree’s Mineral Reserves of approximately 900,000 ounces of gold, and 8 million ounces of silver which were based on a US$1,200 per ounce gold price.
In addition, Kingsgate commissioned an independent Life of Mine Plan (“LOM”) based on Chatree’s Mineral Resources. This LOM at a gold price of US$1,700 an ounce indicated the potential for a mining inventory (not yet to JORC standards) of more than double the current reserves, and involves a major expansion of the existing pits.
As previously advised in the June Quarterly Activities Report dated 29 July 2021, Kingsgate has also undertaken independent CAPEX studies to ascertain the refurbishment of the plant and re-start costs of Chatree. These studies indicate that, in the current market conditions, it would be feasible to re-start the mine, subject to the Thai Government completing the actions outlined above.
With the future operating certainty and exploration upside that could flow from a settlement on these terms, a successful re-start of the Chatree Gold Mine combined with the sustained rise in both the gold and silver prices could give Kingsgate significant optionality with the asset, and a path forward which may include continuing operations, selling the asset or listing Akara Resources on the Thai Stock Exchange.
While there can be no guarantee that a negotiated settlement will be reached, Kingsgate is comforted by its recent engagement with the Thai Government, and Kingsgate maintains it has excellent prospects of a successful arbitral outcome if these negotiations do not successfully conclude.
Kingsgate also appreciates that the period since the Chatree Gold Mine was closed and up until now has been frustrating at times for shareholders, and the Company would like to sincerely thank shareholders for their ongoing patience and support as we approach the final stages of the international dispute resolution process.
The Company would also like to state that at every turn, setback, and difficulty experienced over the last 5 years it has found a way forward without resorting to capital raisings or increasing debt, again in the interests of shareholders.
As a result of the Company’s exercise of its legal rights under the Australia-Thailand Free Trade Agreement, there is now the prospect of a negotiated outcome and a real opportunity to re-start the Chatree Gold Mine in the near term which will provide significant economic benefits to both the local and national Thai economies.
(Please note that Kingsgate and Akara Resources are subject to all applicable Thai Government mining laws and regulations as part of the negotiated settlement).
Nueva Esperanza – Chile
Kingsgate would also like to advise that work continues negotiating a Binding Agreement with TDG Gold Corp (TXSV:TDG) for the sale of Nueva Esperanza an advanced gold-silver exploration and development project, located in the Maricunga Belt of the Atacama Region of Northern Chile. The process is taking longer than anticipated in part due to the impact of COVID-19 and the cross jurisdictional nature of the transaction between Australia, Chile and Canada.
Ross Smyth-Kirk OAM
Executive Chairman
Kingsgate Consolidated Limited
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LOI signed for A$69 million sale of Nueva Esperanza
Letter of Intent signed for A$69 million sale of Nueva Esperanza
Kingsgate Consolidated Limited (“Kingsgate” or the “Company”) is pleased to announce that it has signed a non-binding Letter of Intent (“LOI”) with TSXV listed TDG Gold Corp (“TDG”) outlining terms for the acquisition of the Company’s Nueva Esperanza advanced gold-silver exploration and development project, located in the Maricunga Belt of the Atacama Region of Northern Chile.
The transaction is subject to the parties entering into a legally binding agreement, as well as certain conditions being met. These conditions include board approval, due diligence, and completion by TDG of a financing of at least C$35 million. TDG is in the process of completing this financing, however, there can be no guarantee that the transaction will proceed.
The total value of the deal is approximately A$69.1 million1 and is a combination of cash and equity, that will both strengthen Kingsgate’s balance sheet, and importantly retain ongoing exposure to the gold and silver markets. The key details of the deal are as follows:
- C$25 million2 cash payable to Kingsgate upon completion of the transaction;
- Kingsgate will be issued 14.0% of TDG’s outstanding common shares calculated on a post-closing basis (inclusive of any shares issued in a concurrent financing and with an option to increase the holding up to 19.9%);
- C$6.25 million is payable to Kingsgate within 3 months of completion of a Definitive Feasibility Study;
- A payment of C$5 million or 10 million TDG shares at their discretion to be issued at the point of a construction decision;
- A payment of $C5 million or 10 million in TDG shares at their discretion at the one-year production anniversary;
- A payment of C$8.75 million at the 2-year production anniversary; and
- Kingsgate will have a representative on the TDG board.
The Executive Chairman of Kingsgate, Mr Ross Smyth-Kirk said “We are delighted with this opportunity to go into partnership with TDG, an exciting new Canadian gold and silver company.
We’ve worked very diligently over a long period of time to get the best deal on Nueva Esperanza, and we think this will represent excellent value for our shareholders”, he said.
About TDG
TDG is a major holder of mineral claims and mining leases in the historical Toodoggone Production Corridor of north-central British Columbia, Canada, with over 23,000 hectares of brownfield and greenfield exploration opportunities under direct ownership or earn-in agreement.
TDG’s flagship projects are the former producing, high-grade gold-silver Shasta, Baker and Mets mines which are all road accessible, produced intermittently between 1981-2012, and have over 65,000 metres of historical drilling.
In 2021, TDG proposes to advance the projects through compilation of historical data, new geological mapping, geochemical and geophysical surveys, and drill testing of the known mineralisation occurrences and their extensions. TDG currently has 64,423,459 common shares issued and outstanding. For more information see: TSXV:TDG or https://tdggold.com.
Transaction details
The value of the deal is approximately A$69.1 million and is a combination of cash and equity. Under the terms of the proposed transaction TDG will acquire all of the shares in Kingsgate’s Chilean subsidiary Laguna Resources Chile Limitada. Completion of the proposed acquisition would be subject to a number of conditions precedent, including completion of satisfactory due diligence, the negotiation and settlement of a binding definitive agreement, and receipt of regulatory approvals.
The LOI will be terminable by either party if the parties have not entered into a binding definitive agreement by 16 July 2021, or such other date as determined by the parties.
The LOI contemplates a date for completion of 31 August 2021, which date may be extended by the agreement of the parties.
Corporate Strategy
The completion of a successful transaction on Nueva Esperanza would ensure the financial security of Kingsgate going forward while still giving excellent exposure to the gold and silver markets through its holdings in TDG.
This is turn would provide excellent optionality around the ongoing negotiations with Thailand to achieve a negotiated settlement under TAFTA. This may include the use of proceeds from Nueva Esperanza to refurbish and restart the Chatree Gold Mine if a negotiated settlement can be achieved and all licences and permits granted.
If all the licences and permits are granted the Chatree Gold Mine would have an estimated JORC compliant resource of 3.4 million ounces of gold (4Mt at 0.65g/t Au and 5.59g/t Ag) and an ore reserve of 0.09 million ounces of gold (2.5Mt at 1.1g/t Au and 17.6g/t Ag) respectively. Please see ASX:KCN release titled “Kingsgate Mineral Resources and Ore Reserves 2020”, dated 2 September 2020. Kingsgate is currently in the process of costing the refurbishment and restart of the operation.
Kingsgate cannot guarantee reaching a negotiated settlement with the Thai Government. However, the TAFTA framework and claim to date remains in place in the event that a settlement cannot be reached.
Investment Forums
Kingsgate from time to time becomes aware of various comments made about the company on investment forums, social media or in the Thai media. As previously stated, Kingsgate would urge shareholders with concerns to contact the company directly for information and to refer to trusted sources such as the ASX platform or company website for updates.
Ross Smyth-Kirk
Executive Chairman
Kingsgate Consolidated Limited
Notes
- Calculated on an AUD-CAD exchange rate of A$1:00 is equal to C$0.93 as at 29 June 2021.
- Subject to balance sheet adjustments, which is a normal process under a transaction of this type.
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Update on the Gold Sludge held at the Chatree Gold Mine
Update on the Gold Sludge held at the Chatree Gold Mine
Kingsgate Consolidated Limited (ASX:KCN) (“Kingsgate” or the “Company”) is delighted to announce that its subsidiary, Akara Resources, has been granted permission by the Thai Government to sell the high value gold and silver “sludge,” which is secured at the Chatree Gold Mine, to a Thai refinery to be processed into fine gold and silver.
The sludge refers to material cleaned from the tanks and processing plant following the closure of the Chatree Gold Mine on 31 December 2016, and has always been, and acknowledged to be, the property of Akara Resources.
The sludge contains approximately 4,750 ounces of gold and 34,800 ounces of silver, and is valued at around A$14 million at a gold price of A$2,678 an ounce (as at 9 September 2020) before royalties, transportation and refining costs.
Akara Resources has agreed terms with a Thai refinery to process the sludge pursuant to new legislation requiring gold mined in Thailand to be refined in Thailand. Shipment of the sludge to the refinery has commenced.
Whilst this move is long overdue, Kingsgate sees it as a small but positive step, and seemingly as an act of good faith, indicating a new willingness by the Thai Government to pursue a negotiated settlement between the two parties, a process KCN has advocated for some considerable time.
Ross Smyth-Kirk
Executive Chairman
Kingsgate Consolidated Limited
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Kingsgate Receives Settlement Monies from Insurers
Kingsgate receives settlement monies from Insurers
Kingsgate Consolidated Limited (“Kingsgate” or the “Company”) is delighted to announce that it has now received in full US$55 million from its Political Risk Insurers after settling proceedings against them last month.1
Executive Chairman of Kingsgate, Mr Ross Smyth-Kirk, today said “it marks a real turning point for the Company.
“It enables us to clear all our corporate debt, carefully consider our strategy around our Nueva Esperanza Project in Chile, and work together with the Insurers to fully prosecute the TAFTA2 Claim.”
Ross Smyth-Kirk
Executive Chairman
Kingsgate Consolidated Limited
Notes
- Kingsgate had a Political Risk Insurance Policy in place at the time it is alleged that the Government of Thailand illegally expropriated its Chatree Gold Mine in May 2016; and
- The Australia – Thailand Free Trade Agreement (“TAFTA”).
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Kingsgate settles PRI Claim for more than A$82 million
Kingsgate settles Political Risk Insurance proceedings for more than A$82 million
Kingsgate Consolidated Limited (“Kingsgate” or the “Company”) is delighted to announce that it has settled proceedings against its Political Risk Insurers (“Insurers”) by entering into a legally binding Heads of Agreement (“HOA”).
Kingsgate Consolidated Limited (“Kingsgate” or the “Company”) is delighted to announce that it has settled proceedings against its Political Risk Insurers (“Insurers”) by entering into a legally binding Heads of Agreement (“HOA”).
Kingsgate had a Political Risk Insurance Policy in place at the time it is alleged that the Government of Thailand illegally expropriated its Chatree Gold Mine in May 2016. (“TAFTA Claim”)1
The HOA provides for a settlement to Kingsgate worth more than A$82 million2 comprising:
- A cash payment of US$55 million to be made to Kingsgate by mid-April 2019;
- A requirement for the Insurers to contribute up to US$3.5 million of future costs towards the TAFTA Arbitration. The Insurers funding contribution will be paid on a pro-rata basis with Kingsgate; and
- A sharing arrangement between Kingsgate and the Insurers for future distributions of TAFTA Claim proceeds.3
Executive Chairman of Kingsgate, Mr Ross Smyth-Kirk, today said “I realise that it has been a long recovery process for our loyal shareholders, but this settlement transaction provides material upside for our Company, namely:
- Sufficient funds to pay out in full the Corporate Debt Facility;
- Liquidity to give the Company time to maximise the value of the Nueva Esperanza project through further development or sale, and remain aspirational for other development opportunities;
- Kingsgate no longer requires litigation funding to pursue its PRI Claim nor its TAFTA Claim; and most importantly,
- The Insurers’ pro-rata funding commitment under the HOA means that Kingsgate and the Insurers will be working together to fully prosecute the TAFTA Claim.”
“I would also like to thank our dedicated legal team at Clifford Chance that helped deliver this excellent outcome, and especially Investec Australia Limited, whose rock solid support has enabled us to pursue both the PRI and TAFTA claims,” Mr Smyth-Kirk said.
Ross Smyth-Kirk
Executive Chairman
Kingsgate Consolidated Limited
Notes
- The Australia – Thailand Free Trade Agreement (“TAFTA”);
- A$82,000,000 is based on an AUD-USD exchange rate of 0.71, and includes an estimate of the insurer’s share of the TAFTA legal fees of US$3.5million; and
- The Insurers are only entitled to the amount of their original financial contribution incl. interest – Kingsgate keeps any TAFTA Claim proceeds in excess of that contribution.
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