Chairman’s Address 2017

The year in review has been one that has seen great highs and lows for your Company, highlighted by the incredible job your Board and Management did in turning an $80m debt into a $38m cash balance over the final 7 months of operation of the Chatree Mine.

This has allowed us to stabilise the Company and develop a clear strategy:

• With respect to our corporate costs by continuing to make savings on expenses.
• Our approach to the risk versus the reward on our Political Risk Insurance claim and our claim under the Australia Thailand Free Trade Agreement.
• Our appointment of leading international law firm, Clifford Chance and Dr Andrew Bell S.C. to prosecute the Company’s interests under its PRI Policy and under TAFTA.
• Our continuation with our feasibility and exploration activities in Chile.

I’m proud of the relevant and diverse skills your Board possesses to successfully advance the critical issues which are now before it. Your Board has been working tirelessly to address a myriad of complex issues as they arise, and has been meeting on short notice at all hours of the day and night

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Update on Chatree Legal Proceedings
10 November 2017

Introduction

On 13 October 2017, Kingsgate Consolidated Limited (ASX:KCN) (“Kingsgate” or the “Company”) announced that it would be commencing proceedings in the Supreme Court of New South Wales against Zurich Australia Insurance Limited and other named insurers under a US$200 million Political Risk Insurance Policy (the “PRI Claim”).

On 2 November 2017, the Company announced that it would commence international arbitration proceedings against the Kingdom of Thailand (“Thailand” or the “State”) under the Australia Thailand Free Trade Agreement (“TAFTA”) to recover substantial losses resulting from the unlawful expropriation of the Chatree Gold Mine in 2016, and other unlawful measures taken against the Company’s covered investments in Thailand (the “TAFTA Claim”).

Both sets of proceedings have now been commenced.

Kingsgate has established a highly experienced and effective legal team to prosecute both sets of proceedings, and will be closely managing the team to ensure the optimum outcome for shareholders.

The purpose of this release is to introduce you to the team, and to briefly describe the two claims and the processes to be followed in prosecuting each claim.

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Quarterly Report for the period ending 30 September 2017

Significant Matters

CORPORATE

• Kingsgate has commenced proceedings in the New South Wales Supreme Court against Zurich Insurance Australia Ltd, and other named insurers, under a Political Risk Insurance Policy held by the Company when the Thai Government expropriated the Chatree Gold Mine in May 2016.
• The Political Risk Insurance Policy has a maximum liability of US$200 million.
• Kingsgate made a claim under the Policy which was denied, and while the outcome of the proceedings cannot be guaranteed, the Board considers that the terms of the Policy respond to the actions taken by the Thai Government against the Company in 2016.
• Kingsgate has appointed the leading international law firm Clifford Chance to represent it, and Dr. Andrew Bell S.C. as Senior Counsel on the matter.
• Kingsgate announced a Share Buy-Back Scheme of up to 10% of the Company’s shares, given the Board’s concern that the share price does not accurately reflect the value of the Company’s assets.
• The Share Buy-Back Scheme should increase the net asset backing per share, therefore providing a benefit to shareholders. Bell Potter Securities has been appointed to conduct the buy-back.

CHILE

• Kingsgate continues to progress its 100%-owned Nueva Esperanza Gold-Silver Project in Chile, with work commencing on a seasonal exploration program as well as permitting and feasibility related activities.
• Following a number of encouraging drill intercepts earlier in calendar 2017, the principal focus of the spring exploration program will be to further unlock the excellent potential of the Cerro Blanco West exploration target. (See ASX:KCN “New Silver Discovery at Nueva Esperanza, Chile” dated 17 July 2017).
• The Environmental Impact Statement (“DIA”) for Nueva Esperanza was submitted to Chilean regulatory agencies in July 2017 and, at their request, this has now been upgraded to a more comprehensive Environmental Impact Assessment (“EIA”) to better outline measures to ameliorate the impact of noise and dust on flora and fauna in the project footprint.
• As the majority of the work for the EIA has already been completed, it is expected to be submitted in early 2018.

THAILAND

• After notifying the Thai Government, in April 2017, that Kingsgate would be seeking a range of remedies including compensation for the measures taken against the Chatree Gold Mine in violation of The Australia – Thailand Free Trade Agreement (“TAFTA”), the Company has had meetings with the Thai Government on 27 June and 16 August 2017. (Noting however, that the consultations period which is the first step required under a TAFTA claim expired on 27 July 2017).
• While the dialogue continues in good faith, if at any point in the future Kingsgate considers that a mutual outcome is not able to be reached, Kingsgate has reserved its rights under TAFTA and is free to commence international arbitral proceedings.

FINANCIAL

• Cash at 30 September 2017 totaled A$15.8 million.
• CCorporate debt at 30 September 2017 remains at zero.

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