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.
- Strong Group operating performance with a 7% increase in quarterly gold production to 54,539 ounces, and a 12% reduction in total cash costs to US$918/ounce, when compared to the September quarter.
- Challenger’s performance highlights the benefits of the restructuring plan. Gold production of 20,318 ounces was at the highest level for seven quarters, and total operating costs were 17% lower than the September quarter.
- Continued optimisation at Chatree delivered a strong quarter with 34,221 ounces of gold produced and operating costs 8% lower than the previous quarter.
- Group debt repayments of approximately A$17 million were made during the quarter and corporate borrowing facilities were restructured.
- The definitive feasibility study (DFS) for Nueva Esperanza is nearing completion.
CommSec CBA Resources Series: Kingsgate (KCN)
12th June 2013
CommSec’s Tom Piotrowski talks with Gavin Thomas, Managing Director (MD) & Chief Executive Officer (CEO)
Kingsgate Managing Dirctor and CEO Gavin Thomas interviewed by Reuters’ Lucy Marcus for the program “In the Boardroom”, Thursday 6th June 2013.