Kingsgate Consolidated Limited (KCN) –Building Chatree up to >200,000ozpa

• Kingsgate’s Chatree gold mine in Northern Thailand has now received all its required approvals to mine Chatree North and commenced blasting its “A” prospect in mid-January 2009. At a throughput rate of 2.4mtpa, the expected average grade of ~2g/t results in production of ~140,000ozpa gold and some silver credits (~0.6Mozpa silver or an additional ~10,000ozpa gold equivalent).
• However, initial grades at “A” appear capable of being >2g/t and when combined with mining higher grades (possibly >6g/t) in C-North, production could increase to 75,000oz to 85,000oz for the first half of 2009, resulting in Kingsgate achieving its ~100,000oz (+/- 3,000oz) forecast for the year ended June 2009.
• With credit markets in turmoil and debt available at double-digit rates, we have assumed that KCN achieves its increased production through gradually extending its plant (to 5mtpa and >200,000ozpa) at a slower rate, by using its own cashflow.
• As Chatree North still lies within the Phichit and Phetchabun provinces, the original BOI (Board of Investment approval) tax incentives for Chatree should apply (8 years’ tax-free from 27 Nov 2001, then 5 years at 15% tax), although further concessions are being sought with the increased expenditure.
• However, the new Chokdee discovery covering a wider footprint than Chatree lies ~20km NW of Chatree in the Phitsanulok province. Hence it would require its own separate new BOI, aside from the likelihood of being a standalone operation.
• Initial indications are showing that Chokdee has the potential to become a significant discovery, extending over 700m on strike and open in all directions. Interestingly its pyrite has the same lead isotope as Chatree, inferring that it was part of the same magmatic event as Chatree (although its gold mineralisation has some similarities & a separate visible gold-in-quartz veinset amongst the 3 lodes).