Chatree Gold Mine set to Re-Open

Kingsgate Consolidated Limited (“Kingsgate” or the “Company”) is delighted to announce that by December 2021, the Company expects to be in a position to commence mobilization for the refurbishment of the Chatree Gold Mine with activation of the Metallurgical Processing Licence (“MPL”), and renewal of mining leases required for operations, including Mining Lease 25528/14714 (the “Quartz Lease”). The Quartz Lease is needed to fully optimize the A Pit and has been pending approval since 2011.

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.

Kingsgate is currently working to optimize the re-start process by assessing a number of options, one of which includes an initial refurbishment of Chatree North (Plant #2) to access the current low grade stockpiled ore for processing which has around 6.6 million tonnes of ore, and contains in the order of 73,000 ounces of gold and 780,000 ounces of silver.

It is anticipated that this could generate sufficient cash flow to fund various other works including the development of the Quartz Lease, the cut back of the A Pit, refurbishment of Plant #1, and implementation of an expanded exploration program focusing on resource to reserve delineation as well as regional grassroots exploration programs.

In addition to permitting, Kingsgate is pleased to update progress referenced in the ASX:KCN release dated 23 September 2021 pertaining to certain other steps taken as part of a negotiated settlement with the Thai Government which include but are not limited to:

• • Exploration licence applications to enable access to highly prospective areas.
    Update: Exploration which includes rock chipping, soil sampling and RAB drilling has commenced on 22 of the 44 exploration areas granted in the Phetchabun region in November 2020. Kingsgate is currently reviewing the more strategic exploration areas with the Thai Government for suitability with Kingsgate’s timeframe and resource availability.
  • Improved processes around approvals of mining leases and mine plans.
    Update: All processes will be undertaken in accordance with Thai laws and regulations in cooperation with the Thai Government so applications are processed in a timely manner so as not to impede mining operations.
  • Board of Investment incentives for the re-start and continuance of operations.
    Update: Discussions are underway with the Board of Investment to work through various investment incentives to finalise ahead of the re-start of operations.
  • Development funding (if required) for plant refurbishment.
    Update: Discussions are underway with banks in Thailand to ascertain lending terms as a basis for a decision to select the optimal funding solution for re-opening Chatree Gold Mine (Again only if required).
  • Developing a local Thai gold refinery with international accreditation.
    Update: A local Thai refinery, subsequent to assessment and testing, has demonstrated that the required criteria including volume and purity are on par with previous refining partners for doré from the Chatree Gold Mine can be met. Kingsgate is considering negotiating a refining agreement with the local Thai refinery on commercial terms that may be slightly more favourable due to transportation cost savings.
  • Listing Akara Resources on the Thai Stock Exchange.
    Update: Relevant Thai authorities responsible for the Thai Stock Exchange have affirmed that there is no additional legal limitation beyond normal listing criteria imposed by the Thai Government for Akara Resources.
  • The resolution of all outstanding local legal issues.
    Update: Progress has been made in accordance with Thai judicial process towards resolving legal issues. Kingsgate reaffirms its continuing commitment to not only adhere to Thai laws and regulations but institute the highest standards of operations regarding safety, health, environment and respect for the Thai community and culture.
  • The examination by Kingsgate of options for the construction of a renewable energy plant at Chatree.
    Update: Kingsgate will progress this issue once the re-start configuration is finalised.
  • A local COVID-19 vaccination hub to ensure the health of Chatree employees and local communities.
    Update: All current Chatree Gold Mine employees as well as persons residing in the same households have been fully vaccinated for COVID-19 under a program supported by Kingsgate. Discussions are underway with local health authorities on cooperation to effectively implement a vaccination program for the wider community.
  • Kingsgate’s commitment to support local communities.
    Update: Kingsgate stands by its commitment to Thailand to continue with the previous policies undertaken with regard to local employment and to improve local education, health and infrastructure programs.

In order to give effect to the steps listed above, both Kingsgate and the Thai Government have jointly requested the arbitral tribunal further hold the award until 31 January 2022, to allow the parties sufficient time to judiciously draft these items in and ratify formal settlement documentation.

This effectively means that the TAFTA framework remains in place until such time as settlement documentation is completed. While there can be no guarantee that the settlement described above will be fully implemented, both Kingsgate and the Thai Government continue to work cooperatively together to achieve a negotiated outcome that provides the highest benefits for all stakeholders.

Ross Smyth-Kirk OAM

Executive Chairman
Kingsgate Consolidated Limited

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

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