KINGSGATE CONSOLIDATED LIMITED.
KCN - Excellence in Mining and Exploration Presentation - Mr Gavin Thomas, MD
Wednesday, 17 September 2008 3:00pm
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KINGSGATE CONSOLIDATED LIMITED. (KCN)
ASX code: KCN
Website: http://www.kingsgate.com.au/
Industry: Materials
Principal Activities:
Gold mining and exploration.
Address:
14 Martin Place, Level 8, Suite 801,
SYDNEY
NSW
Phone: 02 8256 4800
Fax: 02 8256 4810
Executives & Directors
Mr Ross D Symth-Kirk , Non Exec. Chairman, Independent Director
Mr Gavin Thomas , Managing Director, CEO
Mr Craig Carracher , Independent Director
Mr Peter McAleer , Independent Director
Mr Peter Warren , CFO
Mr Peter Warren , Company Secretary
Company Podcasts
Company ASX Announcements
Company ASX announcements can be viewed on the ASX website.
Announcements from the preceding six months are shown below.
Please refer to the relevant stock exchange if any of the above information is incorrect
KINGSGATE CONSOLIDATED LIMITED. (KCN) Events
| Company (Stock Code) | Date/Time | Event | Timezone: Australia/Sydney |
|---|---|---|---|
 |
Tue, 16 Mar 2010 11:30am |
Kingsgate Consolidated: Gavin Thomas. ASX Small to Mid Caps Conference New York March 04, 2010 |     |
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Wed, 24 Feb 2010 10:00am |
Kingsgate Half Year Results Presentation |  |
 |
Tue, 16 Feb 2010 4:00pm |
KCN to present at the ASX 2010 Small to Mid Caps Conference - Gavin Thomas, CEO |  |
| |
Tue, 10 Nov 2009 2:00pm |
A Golden Year: Kingsgate Consolidated 2009 AGM Presentation - Gavin Thomas, Chief Executive Officer | |
 |
Tue, 10 Nov 2009 11:15am |
Chairman's Address to Kingsgate 2009 AGM, Mr Ross Smyth-Kirk (Non Exec. Chairman) | |
| |
Tue, 29 Sep 2009 3:45pm |
Low Cost Gold Production - Gavin Thomas, CEO | |
| |
Tue, 29 Sep 2009 8:00am |
Kingsgate Increases Gold Reserves - Mr Gavin Thomas, CEO | |
| |
Thu, 27 Aug 2009 3:00pm |
Kingsgate Full Year Results Interview - Mr Gavin Thomas, CEO | |
| |
Thu, 27 Aug 2009 11:00am |
Kingsgate Full Year Results Presentation - Mr Gavin Thomas, CEO | |
 |
Mon, 20 Apr 2009 2:30pm |
KCN - Quarterly Update Presentation - Mr Gavin Thomas, CEO | |
| |
Wed, 26 Nov 2008 11:45am |
Kingsgate Mine Permitting Completed - Mr Gavin Thomas, CEO | |
| |
Fri, 14 Nov 2008 11:30am |
KCN - 2008 Annual General Meeting - Mr Gavin Thomas, CEO | |
| |
Wed, 17 Sep 2008 3:00pm |
KCN - Excellence in Mining and Exploration Presentation - Mr Gavin Thomas, MD | |
| |
Fri, 22 Aug 2008 11:00am |
KCN - 2008 Full Year Results - Mr Gavin Thomas, CEO | |
| |
Thu, 24 Jul 2008 1:00pm |
KCN - 2008 June Quarterly Report - Mr Gavin Thomas, CEO | |
| |
Tue, 22 Jul 2008 1:30pm |
KCN - Grant of New Mining Leases Approved - Mr Gavin Thomas, CEO | |
| |
Thu, 1 May 2008 12:30pm |
KCN - March 2008 Quarterly Report - Mr Gavin Thomas, CEO | |
| |
Fri, 15 Feb 2008 11:30am |
KCN - Half Yearly Results FY2007 - Mr Gavin Thomas, CEO | |
| |
Fri, 18 Jan 2008 12:00pm |
KCN - December 2007 Quarterly Report - Mr Gavin Thomas, CEO | |
| |
Mon, 10 Dec 2007 11:00am |
KCN - Kingsgate Mine Leases Unaffected - Mr Gavin Thomas, CEO | |
| Fri, 19 Feb 2010 | Interim Results | ||
| Mon, 9 Nov 2009 2:00pm |
Annual General Meeting Museum of Sydney, Corner of Bridge and Phillips St, Sydney, 2000
|
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| Wed, 28 Oct 2009 11:00pm |
Quarterly Production Date | ||
| Wed, 23 Sep 2009 | Date Payable | ||
| Wed, 9 Sep 2009 | Record Date | ||
| Thu, 3 Sep 2009 | Ex Div Date | ||
| Thu, 27 Aug 2009 | Full Year Results | ||
| Fri, 24 Jul 2009 | Quarterly Production Date | ||
| Fri, 24 Apr 2009 | Quarterly Production Date | ||
| Thu, 19 Feb 2009 11:00pm |
Interim Results | ||
| Wed, 28 Jan 2009 11:00pm |
Quarterly Production Date | ||
| Thu, 13 Nov 2008 1:00pm |
Annual General Meeting Museum of Sydney, 37 Phillip St, Sydney, NSW
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| Thu, 21 Aug 2008 | Full Year Results | ||
| Thu, 14 Feb 2008 11:00pm |
Interim Results | ||
| Thu, 15 Nov 2007 1:00pm |
Annual General Meeting Museum of Sydney, Corner Phillip and Bridge Streets Sydney NSW 2000
|
||
| Tue, 28 Aug 2007 | Full Year Results | ||
| Mon, 19 Feb 2007 11:00pm |
Interim Results | ||
| Wed, 15 Nov 2006 11:00am |
Annual General Meeting Level 28, Deutsche Bank Place, Cnr of Hunter and Philip Streets Sydney NSW 2000
|
||
| Tue, 3 Oct 2006 | Date Payable | ||
| Thu, 21 Sep 2006 | Record Date | ||
  Displaying 1-20 of 60 events
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KINGSGATE CONSOLIDATED LIMITED. (KCN)
| Ceasing to be a substantial holder | Mon, 15 Mar 2010 |
| Revision to `DRP Share Price` Announcement | Fri, 12 Mar 2010 |
| Becoming a substantial holder | Fri, 12 Mar 2010 |
| Dividend Reinvestment Plan Share price | Thu, 11 Mar 2010 |
| Revised Appendix 3Y - Change of Director`s Interest Notice | Fri, 5 Mar 2010 |
| Appendix 3Y Change of Director`s Interest Notice | Fri, 5 Mar 2010 |
| Appendix 3B | Thu, 4 Mar 2010 |
| Appendix 3Y Change of Director`s Interest Notice | Thu, 4 Mar 2010 |
| Dividend from Conduit Foreign Income | Tue, 2 Mar 2010 |
| Ceasing to be a substantial holder | Tue, 2 Mar 2010 |
Please note: This company appears on this website as a result of its listing on the Australian Securities Exchange. Boardroom Radio does not claim any association with any company listed on this site.
INTERVIEW WITH MR. GAVIN THOMAS, CEO OF KINGSGATE CONSOLIDATED LIMITED (KCN)
“Excellence in Mining and Exploration”
http://www.brr.com.au/event/51584
WEDNESDAY, SEPTEMBER 17, 2008, 3:00 PM.
KCN Thanks, Corbis. It’s always a pleasure to be here at Excellence in Mining and Exploration. I think it’s certainly a great conference. It’s fast becoming equal
10 to anything else here in Australia and as far as I’m concerned, it’s great that we don’t have to flop down in some dust house in (inaudible) and that we don’t struggle for accommodation. It is a momentous time for a lot of people out there in the markets today, and just note or just look here and uh-oh, (inaudible) in a sea of red, there are three on my watch list, Kingsgate up in
15 green, Newcrest in (inaudible).
So with that I think that’s indicative of -- in difficult times, people fly to quality. And that’s certainly what I want to talk about today with Kingsgate. Certainly lots happened over the last 12 months with Kingsgate. It’s a fair comment to
20 say that we remained Asia’s showcase mine, gold mine. We have many enviable operating parameters at our mine. We are clearly the world’s, on published base data, we are the world’s safest gold mine. And we have a degree of operating skills that are not often seen in a small group like ours. Certainly just getting back to the quality, I want to focus on that today. And
25 then -- but certainly there’s an underlying message, we also will show you that Kingsgate understands Asia, knows how to operate in the region and can deliver the results, certainly it’s been a frustrating time for us over the last two or three years of been waiting for our licenses, but certainly it has been a milestone reached with our leases just being granted. And I think that the
30 issue that really gives the company is that it allows us to embark on a growth strategy, I want to talk about that and focus on it today.
First of all, let’s dispense with the normal forward-looking statements. Let’s get into the real story. There are -- you can see from the map here on
35 certainly with Corbis here, you can see that we are imminently placed in China to be a partner, a key partner with China. And with that we are in the powerhouse region of the world, and I think that we are well placed to take advantage of that relationship.
40 Certainly, the five keys to Kingsgate at this stage are, we have a -- firstly a very large asset. It’s a really, really good quality asset. It’s large. It’s growing in both reserves and resources. So far we’ve identified -- the system has about 5 million ounces of gold. We’re just about to reinvigorate our exploration program there. And over the next three to five years, we’d be
45 disappointed if we don’t basically double that mineral endowment in terms of resources.
Secondly we are producing gold profitably and have been doing so for seven years. We’ve just gone through two years of very low-grade 1 gram gold. We are just about to -- with the new leases being granted, we’re going to have high-grade gold, about 2 grams. We were very comfortable at making gold -- profit I should say, at 1 gram gold. We -- our average case close is $457, which was the world average. And that’s a very credible result given the low
5 grade head growth of 1 gram.
The third aspect of key I should say to Kingsgate is that we are just about to embark on doubling production. We were advanced with our detailed engineering study to increase production from about 2.4 to 2.5 million tonnes
10 per annum to 5 million tonnes per annum.
Fourthly, we have a strong balance sheet and cash flow. Know that as of June 30, $400 million in cash that’s about 30 million as we made payments on capital equipment for the expansion.
15
And lastly we have a gold province in Thailand that is, quite frankly, unknown and underestimated by most people around the world. To my point of view, it is one of the absolute gems for us as a company. It’s a world-class province, and we have essentially, through first-mover risk status, been able to get the
20 core of what we want. Just focusing on the gold province, you can see it here. There’s this gold built here in central Thailand. This has been on about five years ago, we decided to have a proper scientific look at this region. We centred in this part of Thailand and what we have been able to do is establish that this is an absolute little (inaudible). It’s got I would suggest many tens of
25 millions of ounces to be discovered over the next couple of generations as we get stuck into it.
Just a couple of points about Kingsgate, we are a Thai-focused company with our Chatree gold mine. It’s in a rural region with extraordinary good
30 infrastructure, Beachmont roads everywhere, grid power, hydropower, so it’s very low cost, very consistent gold. We are in the ASX 200 and I think for a mid-cap company like ours, with about 400 million, we are quite remarkable with only 100 million bits of paper out there.
35 Let’s move into the actual new leases that we’ve just been granted. You can see here in yellow, this is the area that we’ve just been granted. It’s Chatree North. What that’s allowed us to do is have access to a much larger area to mine. As I’ve said, the grades will double basically from 1 to 2 grams next year and has given us a basis for cash flow and mining for at least 7 if not 10
40 plus years. We’ll be carrying out an aggressive exploration program. There’s a funny quirk in Thailand where you cannot drill on mining lease applications. So we’ve been startled for the last 2-1/2 years of growing this asset base. We are going to refocus our resource development. We have just committed to 160,000-metre program, within that yellow box area and that will be in – focus
45 on increasing resources.
If we go and have a look at this large asset just to give you an idea, it’s 5 kilometres long and if you look at the large gold deposits around the world, the average size is 4 million ounces. We are certainly above the average in the total system. And certainly we think that the drilling will get back to our historical average discovery rate and that’s about a million ounces of gold per annum. And if you look at the size of what we think we have, we believe that we will have about 5 kilometres of continuous, semi-continuous pits in
5 Chatree North. When we combine that with what we have already in Chatree, it will be about 8 kilometres of virtually continuous open pit mining. When we compare this to the (inaudible) super-pit, you can see it’s a very, very large deposit. Field aids are around and if we do get exploration success as we expect over the next three years, this will get up into the top desk tile of large
10 gold deposits around the world.
Just let me focus a little bit on this resource growth. There is resistivity in and around the mine. You can see the Chatree mine here and Chatree North in black, it’s not very clear, but the essence here is the red is showing you
15 courts or court alteration and that has been a very good indicator of gold in this region. These are (inaudible) rocks and these are (inaudible) stones have been very, very good at identifying gold, very high success rate. And if you look at it, we have now got a continuous zone of alteration over 23 kilometres, so we have open pits for about 8 kilometres. We believe that we’ve got highly
20 prospective zones for at least 23 kilometres. Very large upside in near mine discovery potential. Sorry, pardon me.
If we just look at what we are doing in this mine itself, we’re going to focus on these two areas or just circle there, the western part of the A-Hill and -- of the
25 A-pit I should say and the Q-pit areas. We have -- it’s here as 100 to 240, the actual budgeted approval is for 160,000 metres of drilling. That’s pretty aggressive. That’s about 25% of what Rio is doing in the Hammers lease today, just to try and put it into perspective. We believe that we will get back to our historical discovery of about 1 million ounces into resources every year
30 and a substantial increase in reserves in financial year, in the next financial year. It’s very simple stuff. It’s just extending our own ore bodies. We have not been -- had access to this area here nor here for the last 2-1/2 years. And all we’re doing is extending non-mineralization. That’s why we are very comfortable that we will be able to increase this quite dramatically in terms of
35 reserves and because they are just adding to -- extending pits here or joining up 9 pits today, this is a job-compliant resource with a pit around it, and that you would see here there’s just no drilling, and that’s why we believe we’ll have a very -- well a higher than average conversion factor of resources to reserves. And to date we’ve had a very low discovery cost. In terms of
40 resources, they are -- we believe that we’ll be adding resources at less than $10 an ounce and reserves at less than $20 an ounce.
Just looking at this the other way, just to refocus in on some of those issues upfront, and so here’s the Chatree mining operation here. This is what we’re
45 going to move into. You can see here that we have areas that are undrilled and untested, major resistivity anomaly. Undrilled areas, this is the -- these blocks up here the highest growth blocks that we have in the entire property, but essentially you’re going to be looking at -- that’s semi -- that their only reason for the gap there is the highway, which we’ll need to mine through and relocate, but we believe that we will have a continuous pit for 5 kilometres, when you join our (inaudible) Chatree, that will be essentially 8 kilometres of continuous open pit.
5 Let’s focus in on the major area of the A-pit, this is the 3D view of it, wire frame of the mineralization, and of our 1.6 million ounces that we have at the moment, 1.2 is contained within this open pit. The purple there underground and a potential and none of that is in our reserve category at this stage. We have had difficulty in getting access into this region and with the granting of
10 these mining leases, that’s now available to us, and we intend to go in there and aggressively drill out that area. In addition, we will also be chasing our underground and upgrading this potential in time.
Just to give you an idea, 30 metres of half an ounce, 12 metres of 1 ounce
15 and 10 ounce of silver, indicates that these fee designs are truly high-grade systems that we’ll be able to access in the next 5 to 10 years, and we believe that this will get the mining operation going well beyond the 10-year time frame.
20 Just hitting some stats, we have been profitable. Last year 36 million earnings per share, 32 cents per share, the operations were 8 million, well -- sorry, the cash flow from operations of -- the profit I should say from operations was 8 million. We averaged $457 per ounce, which is virtually the average for the world, but we have an extraordinarily low grade of 1.1 grams, and we were
25 able to maintain our unit cost per tonne.
What we are going to move into is higher production and higher grade. Over the next 12 months, we expect an average grade of 2 grams, and obviously we are going to -- we are in a ramp-up phase right now, our September
30 quarter will be full. Now our December quarter will be better, our March quarter will be even better, and we will stabilize operations probably by June next year as we get the -- it’s almost like starting up a new mine at this stage.
I believe that the significant issue that we have within Kingsgate is that we
35 have massive competitive advantage being based in Asia. There is incredible infrastructure, grid power that allows us to maintain our cost. We have a Thai team that is very well trained. Each one of our managers could happily get a job down here, and we have very low turnover. We have a new mining fleet, which will give us certainly very good availability to move forward into the
40 future.
This gives you an idea of where we’ve come from. You can see that our grade is dependent virtually upon our head grade and that while we move into 2 grams depending on how quickly we can get into this ramp-up phase; we’re
45 projecting 100 to 240,000 next year. By the time we will not be able to get a full year of our expansion in calendar year ’09-’10, but it should be there in ‘10-’11, and by that time we’ll be trading 5 million tonnes per annum, and you can do the math yourself, at 2 grams that’s 5 -- that’s about 300,000 ounces. We’ll be projecting in the range of 250,000 to 320,000 ounces when we’re doing 5 million tonnes per annum.
Let’s just look at this expansion. It’s pretty simple. We have an existing plant
5 right here. You can see it, where it’s trading 2.4 million tonnes per annum. The Sanco completing the detailed engineering of our -- expanding our plant, and all we’re going to do is add another stream right beside the existing plant, very simple, we know what the capital costs are, the operating costs, and it’s just a matter of detailing the final design and we should -- by the time we
10 have financial close on this, we think that we will have this all wrapped up ready to start early next year. In terms of the operations, I don’t intend to read this out. It’s just that we have an excellent track record.
As I said, we know what to do and how to do it in Asia. We have gone there.
15 We have brought in international world’s best practice. I think it’s an outstanding achievement. We are the only mining company in the world with SA 8000. A lot of people don’t quite understand this, but that is Amnesty International’s benchmark on corporate social responsibility. It’s essentially -- it’s the basis of ethical behaviour, and we’re proud of the fact that we are the
20 only mining company. BHP, Rio, do not have SA 8000 in any of their operations. And I think that just gives you an idea of the quality of the people that we have in Thailand. I want to now go and talk about the region, the second part of our growth. We’ve been talking about the production side of it and the growth that we’re having there. In terms of -- we believe that we have
25 near mine increase here. We have -- you’ve seen this slide before.
Let me just show you what it’s like in our regional areas. That’s the same area in our 1300 square kilometre zone of regional prospects. As I’ve said we like this part of the gold bill, where this bend is in the volcanic trend. We’ve picked
30 that. We’ve got 40 projects that have been identified, 5 to 8 of these are drill-ready right now. Certainly we believe that this first mover advantage has been strong positive for us. And one of these targets is the Chatree size mine.
Just to remind you how -- when their systems get big, they are really, really
35 big. Chatree has a surface exploration of -- sorry, geochemical surface exploration with a constant geophysical anomaly of about 23 square kilometres. This new one is 35 square kilometres and growing. We intend to commit 20,000 metres to this regional project. And there is an understanding that should the discovery be made, that the project will be -- that the project
40 will be increased.
Summarizing Kingsgate, why we have good investment, the fact that we are one of the few islands of green out there in the sea of red that’s going to be dominating today, is the fact that we have growth, growth in production,
45 growth in resource base. And that the ramp up will take time to come through. There’ll be good news coming over the next 3 to 6 months. And by the time we stabilize everything, it will take maybe as long as 6 to 9 months. And we will be expanding our -- basically our cash flow through production. Our reserve and resource growth, I think, are going to be the real gems to Kingsgate. We’re going to extend our ore bodies, we are going to keep on drilling 160,000 metres of drilling, that’s a lot of drilling, and just to give you an idea of the competitive advantage of Asia, (inaudible) our preferred drillers, and the budget for that -- the budget we will, sorry, the amount of money that
5 we will pay (inaudible) is only $3.5 million dollars for that 160,000 metres of drilling, that’s just outstanding, that we -- at least three if not four times higher here in Australia. We have the regional targets. We’re going to start drilling them over the next week or so, and we would expect some very good news flow from that over the next quarter. Also we have a very strong balance
10 sheet. And then in this sea of uncertainty out there, I think that we have the ability to -- from our cash flow the fact that we have no debt, we do have an ability to go and meet our growth objectives, and there are not going to be very many companies that can get up there and say that in the future. Kingsgate is a company that understands Asia, knows what to do and how to
15 do it and has the ability to achieve significant growth. And with that, I’d like to finish and I’ll be open to questions.
INTERVIEW CONCLUDED
Contact brr@brr.com.au for more information
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