Kingsgate Consolidated (ASX:KCN) remains focused on getting its Chatree Gold Mine into full production but is “always aspirational” regarding seeking potential acquisitions.
Speaking to Mining.com.au on the sidelines of the Diggers & Dealers Mining Forum in Kalgoorlie, CEO Jamie Gibson says as an ASX-listed gold mining company with a producing asset in Thailand and a development project in Chile, the company is well positioned for growth.
The $349.25 million market capitalised company will assess prospective targets internally, but also welcomes approaches from advisory firms pitching potential targets.
“I think you have to be open in this market with gold at around US$2,400. It’s an incredible bull market for gold. Obviously, there’s been a few wobbles in recent times. If we are made the right offer, we’ll take it. If we find the right opportunity, we’ll take it,” the CEO tells this news service.
“At the moment, we’re single-minded just about getting our Chatree Gold Mine back into full production. I guess the proceeds is split up between the operational side of it. We’re also running a really aggressive exploration program. We found a significant, what we think, extension to the Chatree system within 2-3 kilometres of the existing plant. So, all of our work is going on that.
“Like your question about M&A, Kingsgate is always aspirational. We are looking, if we find the right asset or someone makes us the right offer, then we’re absolutely up for it.”
On 17 July 2024, Kingsgate also reported the conditions precedent to drawdown the US$35 million term facility with Nebari Gold Fund 1 and Nebari Natural Resources Credit Fund II have been satisfied.
Gibson says it’s currently a tough market to raise capital, and the US$35 million facility means Kingsgate is fully funded have Chatree at full production. The company now has a “transformational quarter” ahead with plans to upgrade both the gold grade and production in terms of ounces at Chatree.
“We’re exploring, we’re adding ounces, and we’ve actually just funded into a whole lot of new Caterpillar equipment – 41 new pieces,” the CEO adds.
In terms of potential deals, Gibson notes existing producers typically like to add ounces, and it’s easier if they have a brownfields, or an operating project as you they “just blend it straight in”.
“What you find with the greenfield projects is obviously a lot of capital. Sometimes it doesn’t always pan out the way it can. Of course, the first priority is you look for something that’s already producing. If you can’t get that, you look at something that’s near mine, close to production, and go that way.”
The aforementioned funds received will go towards: repayment of the preference shareholder loans; delivery of the remainder of new mining equipment; expanding the aggressive near-mine and regional exploration programs; and ongoing work on upgrading the existing resource base at Chatree.
Nebari is a US-based investment manager, specialising in privately-offered pooled investment vehicles including Nebari Natural Resources Credit Fund II and Nebari Gold Fund 1, which are funding the aforementioned transaction.
Last month, Kingsgate appointed Dan O’Connell to the management team as CFO. O’Connell has experience across financial and commercial disciplines within Australian listed multinational mining companies.
At the beginning of Q2 2024, the gold price reached a new all-time high of $3,511 on 3 April. The World Gold Council says April was a time to shine for gold, which posted a 4% gain and ended the month at US$2,307 per ounce, driven by Chinese buying and central banks.
On 20 May, it was sitting at $3,650 per ounce, representing a 2% increase compared to April. The start of July the price of gold is $3,487.18 per ounce. The spot price is currently $3,647.17.
The World Gold Council says total gold supply in 2023 increased 3% year-on-year as mine supply and recycling both posted growth – to total 4,898.8 tonnes.
Australian gold production decreased by 4% year-on-year in the March quarter 2024, due to lower grades and disruptions from heavy rainfall, according to the Department of Industry, Science and Resources’ (DISR) latest issue of its Resources and Energy Quarterly: June 2024.
Production is forecast to grow over the outlook period as major new projects and expansions come online. Gold export earnings are expected to reach a record $33 billion in 2023–24, easing to around $31 billion in 2025–26 as prices gradually decline from record levels in Australian dollar terms.
World gold demand decreased by 5.3% year-on-year to 1,100 tonnes in the March quarter 2024. This fall was largely driven by a 28% decline in investment demand, with central bank demand continuing to be elevated.
Write to Adam Orlando at Mining.com.au
Images: Kingsgate
