via asx online for public release (26 pages including cover)
TRANSCRIPT
Suite 801, Level 8 Tel: (61 2) 8256 4800 Email: [email protected] 14 Martin Place Fax: (61 2) 8256 4810 Website: www.kingsgate.com.au Sydney NSW 2000 Australia
ABN 42 000 837 472
21 September 2010 Via ASX online FOR PUBLIC RELEASE (26 pages including cover) The Manager Company Announcements Office Australian Securities Exchange Dear Sir/Madam,
2010 Post Financials Presentation Please find attached Kingsgate presentation update which was provided to investors at the Excellence in Mining Conference held in Sydney, as well as the Denver Gold Conference held in Denver today. Yours faithfully, KINGSGATE CONSOLIDATED LIMITED PETER WARREN Company Secretary
Kingsgate Consolidated Limited
Kingsgate Consolidated Limited
High Margin Gold Production ASX 2nd
largest gold company
High Margin Gold Production ASX 2nd
largest gold company
September 2010September 2010
1st
Millionth Ounce Bar1st
Millionth Ounce Bar
These materials include forward looking statements. Forward looking statements inherently involve subjective judgment & analysis & are subject to significant uncertainties, risks & contingencies, many of which are outside of the control of, & may be unknown to, the company.
Actual results and developments may vary materially from that expressed in these materials. The types of uncertainties which are relevant to the company may include, but are not limited to,
commodity prices, political uncertainty, changes to the regulatory framework which applies to the business of the company & general economic conditions. Given these uncertainties, readers are cautioned not to place undue reliance on such forward looking statements.
Forward looking statements in these materials speak only at the date of issue. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, the
company undertakes any obligation to publicly update or revise any of the forward looking statements, changes in events, conditions or circumstances on which any such statement is based.
These materials include forward looking statements. Forward looking statements inherently involve subjective judgment & analysis & are subject to significant uncertainties, risks & contingencies, many of which are outside of the control of, & may be unknown to, the company.Actual results and developments may vary materially from that expressed in these materials. The types of uncertainties which are relevant to the company may include, but are not limited to,
commodity prices, political uncertainty, changes to the regulatory framework which applies to the business of the company & general economic conditions. Given these uncertainties, readers are cautioned not to place undue reliance on such forward looking statements.Forward looking statements in these materials speak only at the date of issue. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, the
company undertakes any obligation to publicly update or revise any of the forward looking statements, changes in events, conditions or circumstances on which any such statement is based.
Forward Looking Statements:Forward Looking Statements:
Information in this presentation that relates to Exploration Results, Mineral Resource and Ore Reserve estimates, geology, drilling and mineralisation, is based on information compiled by
Ron James, who is an employee of the Kingsgate Group and is a member of The Australasian Institute of Mining and Metallurgy.
Ron James is a Competent Person under the meaning of the JORC Code with respect to Exploration Results, Mineral Resource and Ore Reserve estimates, geology, drilling and mineralisation being presented. He has given his consent to the Public Reporting of these statements concerning Exploration Results, Mineral Resource and Ore Reserve estimates, geology, drilling and mineralisation, and is in agreement with the contents and format of this presentation.
Information in this presentation that relates to Exploration Results, Mineral Resource and Ore Reserve estimates, geology, drilling and mineralisation, is based on information compiled by
Ron James, who is an employee of the Kingsgate Group and is a member of The Australasian Institute of Mining and Metallurgy.
Ron James is a Competent Person under the meaning of the JORC Code with respect to Exploration Results, Mineral Resource and Ore Reserve estimates, geology, drilling and mineralisation being presented. He has given his consent to the Public Reporting of these statements concerning Exploration Results, Mineral Resource and Ore Reserve estimates, geology, drilling and mineralisation, and is in agreement with the contents and format of this presentation.
Any statement or information relating to the potential quantity and grade of an exploration target, specifically the Chokdee Prospect, is based on recent public announcements and is conceptual in nature. There has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.
Any statement or information relating to the potential quantity and grade of an exploration target, specifically the Chokdee Prospect, is based on recent public announcements and is conceptual in nature. There has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.
Competent Persons Statement:Competent Persons Statement:
Reporting on Exploration Targets:Reporting on Exploration Targets:
DisclaimerDisclaimer
ASX: Rising Mid-Tier MinerASX: Rising Mid-Tier Miner
Low Cost Gold ProductionLow Cost Gold Production
Increasing Reserves/ShareIncreasing Reserves/Share
Increasing Earnings/ShareIncreasing Earnings/Share
Proven Value CreatorProven Value Creator
Expanding ProductionExpanding Production
Kingsgate – Asian Gold Kingsgate – Asian Gold
ChatreeChatree
2nd
Largest ASX Gold Stock (by Mkt Cap)
Key asset -
Chatree Mine, Thailand
Producing: ~9 years, >1Moz poured
Mine life: 12+ years with expansion
Mkt Cap: ~A$1 Billion
Shares: 100.7 Million, 1.8M options
3rd
best performing ASX200 stock
over last decade
Highest dividend paying gold stock
Stock widely held by:
Insto’s: 20% Aust, 20% USA, 15% Europe/UK, 5% Asia
Retail: 25%Directors: 8%
2nd
Largest ASX Gold Stock (by Mkt Cap)
Key asset -
Chatree Mine, Thailand
Producing: ~9 years, >1Moz poured
Mine life: 12+ years with expansion
Mkt Cap: ~A$1 Billion
Shares: 100.7 Million, 1.8M options
3rd
best performing ASX200 stock
over last decade
Highest dividend paying gold stock
Stock widely held by:
Insto’s: 20% Aust, 20% USA, 15% Europe/UK, 5% Asia
Retail: 25%Directors: 8%
ThaiGold Belt
Global Cumulative Gold Production (%)Global Cumulative Gold Production (%)50%50% 100%100%25%25% 75%75%0%0%
Average Gold Only Producers(US$600/oz)
Average Gold Only Producers(US$600/oz)
US$850-900/ozCash
margin
US$850-900/ozCash
margin
Low Cost Gold ProducerLow Cost Gold Producer
Kingsgate 8 Year AverageUS$232/oz @ 2.5g/t Au (1 Moz)
Kingsgate FY2010
US$335/oz @ 1.7g/t Au
Kingsgate FY2010
US$335/oz @ 1.7g/t Au
US$/
ozUS
$/oz
-200-200
800800
600600
400400
200200
00
10001000 Global Cash CostCurve 2009
Global Cash CostCurve 2009
Low Cash CostsUS$335/oz costsLow Cash CostsUS$335/oz costs
Lowest 20% ofIndustry CostsLowest 20% ofIndustry Costs
Source: GFMS.Source: GFMS.
US$850-900/oz Cash Margin
US$850-900/oz Cash Margin
Gold
Pric
e Go
ld P
rice
Good Position on Cost CurveGood Position on Cost Curve
Low Cost ProductionLow Cost Production
Asian Competitive Advantage
Asian Competitive Advantage
Costs: US$15.50/t, Up15% in 9 yearsGrid power & labour keep costs lowCosts: US$15.50/t, Up15% in 9 yearsGrid power & labour keep costs low
Low Cost Gold Maintained
US$335/oz costs
Low Cost Gold Maintained
US$335/oz costs
132,628oz Gold Production FY10US$335/oz Cash Costs FY10US$257/oz + US$78/oz Thai Royalty
132,628oz Gold Production FY10US$335/oz Cash Costs FY10US$257/oz + US$78/oz Thai Royalty
Cash CostsRoyalty
Mining
Costs
ProcessingSupport
20
10
5
15
0
15.20US$/t
17.10US$/t
14.40US$/t
17.50US$/t
14.80US$/t
15.10US$/t
Mar 09 Jun 10Mar 10Dec 09Sep 09Jun 09
US$/
tonn
e Or
e Pr
oces
sed Quarterly Cash Costs per TonneQuarterly Cash Costs per Tonne
1.61.61.71.72.32.3
1.51.52.02.0
1.51.5 g/tAug/tAu
Quarterly Cash Costs per OunceQuarterly Cash Costs per Ounce
0
100
200
300
400US$
Average:US$322/oz
364
309
Mar 09
32,992oz
228
169
Jun 09
43,036oz
Sep 09
359
288
29,302oz
332
247
Mar 10
32,646oz
345
261
Jun 10
30,456oz
312
239
Dec 09
40,224oz
Operating Cash Costs
Royalty
Expansion: Double CapacityExpansion: Double Capacity
Plant Expansion+ 2.7 Mtpa
Plant Expansion+ 2.7 Mtpa
Current Plant2.3 Mtpa
Current Plant2.3 Mtpa
Expanded Total+5 Mtpa
Expanded Total+5 Mtpa
Plant processing capacity increase from 2.3 to >5 MtpaMid-2011 Commissioning; Ausenco EPCM Increase production up to 200,000 ounces per year
Plant processing capacity increase from 2.3 to >5 MtpaMid-2011 Commissioning; Ausenco EPCM Increase production up to 200,000 ounces per year
Expansion Plant Areabeside current plantExpansion Plant Areabeside current plant
Construction UnderwayConstruction Underway
CIL Tanks & Grinding Circuit under constructionCapex
Remaining ~US$100m; Spent Further US$25m
Mandated Investec & Thai banks : Seek US$100m debt Tax incentives granted for production from new plant
CIL Tanks & Grinding Circuit under constructionCapex
Remaining ~US$100m; Spent Further US$25m
Mandated Investec & Thai banks : Seek US$100m debt Tax incentives granted for production from new plant
Grinding CircuitSAG & Ball Mill AreaGrinding CircuitGrinding CircuitSAG & Ball Mill AreaSAG & Ball Mill Area
CIL TanksCIL TanksCIL TanksTailings ThickenerTailings ThickenerTailings Thickener
Construction UnderwayConstruction Underway
Key items in place –
concrete footings/slab and steelworkKey items in place –
concrete footings/slab and steelwork
CIL TanksCIL TanksCIL Tanks
Primary CrusherPrimary CrusherPrimary CrusherStockpile ReclaimStockpile ReclaimStockpile Reclaim
1 km1 km
World Class DepositWorld Class Deposit
World Class Deposits are >5 Moz
World Class Deposits are >5 Moz
Chatree ~6Moz to date & growing
including mined to date
Chatree ~6Moz to date & growingincluding mined to date
1.9 Moz Reserve4.3 Moz Resource1.9 Moz Reserve
4.3 Moz Resource
Section5km5km
1 km1 km
WesternAustralia’sKalgoorlie Super Pit
(same scale)
WesternAustralia’sKalgoorlie Super Pit
(same scale)
Expanding Current PitsExpanding Current Pits
Current ‘A’
Pit design
is at limit of drill data
Drilling restricted due to blasting in mine
Current ‘A’
Pit design
is at limit of drill data
Drilling restricted due to blasting in mine
30m @ 16g/t gold30m @ 16g/t gold12m @ 30g/t gold12m @ 30g/t gold
Upside in Prior PitsUpside in Prior Pits
Prior pits to re-open at current gold price
Drilling to locate high-grade targets
Prior pits to re-open at current gold price
Drilling to locate high-grade targets
2.5 km2.5 km2.5 km
17m@ 4.7g/t1m@41g/t
26m@ 2.1g/t3m@17g/t
Conceptual PitsConceptual Pits
* Whittle Four-X modelling only at different pit optimisation scenarios
* Whittle Four-X modelling only at different pit optimisation scenarios
Q Pit(sth)
Large Low Grade PotentialLarge Low Grade Potential
‘A’
Pit -
Chatree NorthLarger Pit potential
at current gold prices
‘A’
Pit -
Chatree NorthLarger Pit potential
at current gold prices
Chatree TotalReserves: 1.9 MozResources: 4.3 Moz
Chatree TotalReserves: 1.9 MozResources: 4.3 Moz
A PitChatree Grade/Tonnage Variance Versus Gold Price*
Gold Price(US$)
Gold Grade(g/t)
Tonnes(Millions)
Contained Gold(Moz)
1050 0.98 71 2.21150 0.96 78 2.41250 0.85 100 2.7
Best Ever Profit; Up 125%Best Ever Profit; Up 125%
EPS: 75.2 cents/share Solid profit from full productionMaintain low cash costs: US$335/oz
EPS: 75.2 cents/share Solid profit from full productionMaintain low cash costs: US$335/oz
FY10 Profit: A$73.1MUp 125%
FY10 Profit: A$73.1MUp 125%
‘Underlying Profit’ A$75.6M
‘Underlying Profit’ A$75.6M
Add back unrealised FX loss (A$3m)1st
year of Thai Tax (7mths at 15%)Pre-Tax Profit A$82.3M -
up 150%
Add back unrealised FX loss (A$3m)1st
year of Thai Tax (7mths at 15%)Pre-Tax Profit A$82.3M -
up 150%
Revenue: A$175MEBITDA: A$96M
Revenue: A$175MEBITDA: A$96M
Revenue up 54% from prior yearIncreased production:132,628 ozs
gold; 2.7Mt processed
Revenue up 54% from prior yearIncreased production:132,628 ozs
gold; 2.7Mt processed
Highest Gold Dividend YieldHighest Gold Dividend Yield
FY10 Dividend: 35c/shYield: 3.5%
FY10 Dividend: 35c/shYield: 3.5%
Strong Cash PositionStrong Cashflow
Strong Cash PositionStrong Cashflow
Differentiate KCN from ETF’sTotal: A$1.29/sh since 2002Highest yield of any gold miner
Differentiate KCN from ETF’sTotal: A$1.29/sh since 2002Highest yield of any gold miner
Cash: A$49M at end June No debt; Unused US$30m facilityStrong cashflow
to support
exploration, development. US$100m debt being arranged
for expansion –
Investec, Thai
Cash: A$49M at end June No debt; Unused US$30m facilityStrong cashflow
to support
exploration, development.US$100m debt being arranged
for expansion –
Investec, Thai
Gold ProvinceGold Province
T h a i l a n dT h a i l a n dT h a i l a n dT h a i l a n dT h a i l a n d
Not a single mine -
a Gold Province
Satellite Pit Potential
Suwan Area –
trucking
distance to Chatree plant
Potential for more mines
Chokdee discovery
1300km2
tenement
First Mover advantage
Patient, persistent growth
Not a single mine -
a Gold Province
Satellite Pit Potential
Suwan Area –
trucking
distance to Chatree plant
Potential for more mines
Chokdee discovery
1300km2
tenement
First Mover advantage
Patient, persistent growthPending
70
km
70
km
Granted
NakhonsawanProvince
PhitsanulokProvince
PhichitProvince
PhetchabunProvince
NakhonsawanProvince
PhichitProvince
PhetchabunProvince
PhitsanulokProvince
ChatreeChatree
Thai Gold BeltThai Gold Belt
ChatreeChatree
BangkokBangkok
Target: Fill The VoidTarget: Fill The Void
No major ASX gold companies except Newcrest
Mid tier Producers: 100-300,000 oz/year
No major ASX gold companies except Newcrest
Mid tier Producers: 100-300,000 oz/year
Lihir
& Andean gone from ASX Lihir
& Andean
gone from ASX
Opportunity exists to Fill the Void
Opportunity exists to Fill the Void
KCN –
2nd
largest gold producer on ASX by market capitalisation
KCN –
2nd
largest gold producer on ASX by market capitalisation
Market Demand:Mid Tier ProducerMarket Demand:Mid Tier Producer
Market seeking liquid mid-tier gold producer with >300,000 ozs/year
Market seeking liquid mid-tier gold producer with >300,000 ozs/year
Growing a Mid Tier MinerGrowing a Mid Tier Miner
Forecast production
~130,000 ounces at low costs
Expansion: to 200,000 ounces per year
Forecast production
~130,000 ounces at low costs
Expansion: to 200,000 ounces per year
Open pit upside; Underground potential
New discoveries
High grade structures to augment ore feed
Open pit upside; Underground potential
New discoveries
High grade structures to augment ore feed
Solid cashflow: exploration & development
Strong profits; prudent fiscal management
Solid dividend yield
Solid cashflow: exploration & development
Strong profits; prudent fiscal management
Solid dividend yield
www.kingsgate.com.au
IncreasingProduction/share
IncreasingProduction/share
IncreasingReserves/share
IncreasingReserves/share
Increasing Earnings/share
Increasing Earnings/share
AppendixAppendix
www.kingsgate.com.au
Income Statement -
Solid BaseIncome Statement -
Solid BaseA$ Million
:A$ Million
:
Revenue Gold/SilverInterest / OtherMining CostsInventory (Stockpiles)Employee CostsAdmin, Biz Devel, ConsultD & AFinance CostsExploration / DevelopmentUnrealised FX LossPre Tax ProfitTax (7mths Thai tax)
Profit
Revenue Gold/SilverInterest / OtherMining CostsInventory (Stockpiles)Employee CostsAdmin, Biz Devel, ConsultD & AFinance CostsExploration / DevelopmentUnrealised FX LossPre Tax ProfitTax (7mths Thai tax)
Profit
2008-092008-09
113 4
(70)20
(11)(9)
(12)(2)
--
33-
A$33
113 4
(70)20
(11)(9)
(12)(2)
--
33-
A$33
175 1
(82)28
(12)(9)
(14)(2)
-(3)82 (9)
A$73
175 1
(82)28
(12)(9)
(14)(2)
-(3)82 (9)
A$73
2009-102009-10
55%
8%
--
17%---
148% -
121%
55%
8%
--
17%---
148% -
121%
Asian Competitive Advantage
Established Infrastructure
Grid Power
Sealed roads
Lower cost support
Skilled manufacturing
“Buy Thai”
sourced supplies
Labour –
Skilled & available
Robust Deposit
Simple mining & metallurgy
Safe Mine = Efficient Mine
Safest gold mine globally
Asian Competitive Advantage
Established Infrastructure
Grid Power
Sealed roads
Lower cost support
Skilled manufacturing
“Buy Thai”
sourced supplies
Labour –
Skilled & available
Robust Deposit
Simple mining & metallurgy
Safe Mine = Efficient Mine
Safest gold mine globally
Low Cost DriversLow Cost Drivers
Cost Comparisons – Thailand vs Australia
Open Pit Mining (US$):
Waste:
$1.70/t
vs $2.50/t Ore:
$3.40/t vs $4.00/t
Power:
8c/Kwh vs 20c/Kwh
Assays:
$3/sample vs $20/smp
Cost Comparisons – Thailand vs Australia
Open Pit Mining (US$): Waste:
$1.70/t
vs $2.50/t
Ore:
$3.40/t vs $4.00/t
Power:
8c/Kwh vs 20c/Kwh
Assays:
$3/sample vs $20/smp
Current OperationsCurrent Operations
A East PitA East PitA HillA Hill
A Pit looking WestA Pit looking WestA Pit looking West
K WestK West
K West Pit looking SouthK West Pit looking SouthK West Pit looking South
1st
Millionth oz -
Feb 20101st
Millionth oz -
Feb 2010
Chatree Mine History1993-95 Discovery2000-01 Construct 1Mtpa Plant2001 First gold pour (Nov ’01)2006 Expansion 2Mtpa Plant2008 New Mining Leases2010 1st
millionth ounce
Chatree Mine History1993-95 Discovery2000-01 Construct 1Mtpa Plant2001 First gold pour (Nov ’01)2006 Expansion 2Mtpa Plant2008 New Mining Leases2010 1st
millionth ounce
9 years operatingAv Cash Costs:
US$245/oz
9 years operatingAv Cash Costs:
US$245/oz
World’s Safest Gold Mine*
Zero Environmental Incidents
ISO standards on all activities
Only mining company granted Social Accountability SA8000
Amnesty’s CSR ‘Benchmark’
Training focus -
99% Thai
80% workforce –
local villagers
31% women in management
21 Masters grads -
supported
Created new local industries
World’s Safest Gold Mine*
Zero Environmental Incidents
ISO standards on all activities
Only mining company granted Social Accountability SA8000
Amnesty’s CSR ‘Benchmark’
Training focus -
99% Thai
80% workforce –
local villagers
31% women in management
21 Masters grads -
supported
Created new local industries
Sustainability FocusSustainability Focus
Proven AbilityProven Ability
Opportunity exists to stand-out amongst ASX mid-cap gold producers
Focus on growth in Asia/Australia
‘Critical Mass’
in S.E. Asia
Favourable track record: social/local development & environmental record
Track record of investing in major value creating assets/companies (>3x returns)
Opportunity exists to stand-out amongst ASX mid-cap gold producers
Focus on growth in Asia/Australia
‘Critical Mass’
in S.E. Asia
Favourable track record: social/local development & environmental record
Track record of investing in major value creating assets/companies (>3x returns)