QUARTERLY REPORT for the PERIOD ENDED 30 SEPTEMBER 2002

Transcription

1 ABN October 2002 The Manager Announcements Company Announcements Office Australian Stock Exchange Limited By ASXOnline (Page 1 of 12) FOR PUBLIC RELEASE Dear Sir QUARTERLY REPORT for the PERIOD ENDED 30 SEPTEMBER 2002 Please find attached a Quarterly Report for the period ended 30 September 2002 for Kingsgate Consolidated Ltd including Appendix 5B Mining Exploration Entity Quarterly Report for the same period. Yours faithfully Kingsgate Consolidated Ltd Mike Diemar Managing Director Level 17, 33 Bligh Street Tel (61 2) info@kingsgate.com.au Sydney NSW 2000 Fax (61 2) Website Australia

2 Quarterly Report on Activities for Three Months to 30 September 2002 ABN Kingsgate added to S&P/ASX 200 index Profit of AUD33 million declared AUD0.15 per share dividend declared Prospect A resource adds 700,000 oz gold Chatree production for ¼ = 39,777 oz gold SUMMARY The name of the Company was changed to Kingsgate Consolidated Ltd to better reflect the international nature of its operations. On 25 October 2002, Standard & Poor s announced the inclusion of Kingsgate in the S&P/ASX 200 index, effective 01 November PRODUCTION Chatree Mine Thailand Gold production: 39,777 ozs. Silver production: 136,102 ozs. Total Cash Cost per ounce: USD80 per oz. Average gold price received: USD314 per oz. FINANCE 2002/2003 year forecast Approximately as follows; Gold production 160,000 oz Cash cost USD80 per oz Profit USD25million Audited profit to 30 June 2002 was AUD33 million. Dividend of AUD0.15 per share was declared, to be paid on 28 October Revenue for the quarter was USD13.5 million. Cash on hand at the 30 September was USD18.0 million The Company s gold hedge book, comprised largely of flat forwards was restructured to, increase exposure to a rise in the gold price, to give greater revenue protection in the event of a gold price decline, to potentially reduce committed ounces by the use of down and out barriers and to hedge revenue streams of US and Australian dollars. There are no committed ounces for the next 18 months. EXPLORATION The first resource estimate at Prospect A, 1 kilometre north of Chatree Mine was announced on 01 August 2001 as follows. Indicated plus Inferred resources at 0.7 g/t Au cutoff. 14,120, g/t Au and 20 g/t Ag for 706,000 oz gold and 8,989,000 oz silver. Drilling was completed adjacent to the Tawan and the future Chantra Pits at Chatree to aid in final pit design and mine scheduling. Results are due in early November For further information, please contact: Mike Diemar, Managing Director. Telephone Fax info@kingsgate.com.au Website: Kingsgate Consolidated Ltd September Quarter Report

3 SAFETY Chatree Mine s outstanding safety record continued, with no lost time injuries during the quarter, bringing the number of manhours without lost time injury to 1.8 million. PRODUCTION Chatree Mine Thailand Production in the September quarter was: Operation Units Sept 2002 Quarter Waste mined Ore mined Waste:ore ratio Ore grade Closing stockpile Stockpile grade Ore treated Head grade Gold poured Silver poured Gold recovery Tonnes Tonnes BCM Au g/t Ag g/t Tonnes Au g/t Ag g/t Tonnes Au g/t Ag g/t Ounce Ounce % 615, , : , , , , June 2002 Quarter 639, , : , , , , All ore mined was sourced from the Tawan Pit. Operations were very satisfactory, considering that the quarter coincided with the main part of the wet season, when softer oxide ores were often too wet for efficient mining and material handling in the crushing and reclaim systems. Mined and processed volumes were below forecast, processed grade was above forecast, gold production was above forecast and cash costs were below forecast. Average plant feed gold grade is scheduled to be marginally lower for most of the December quarter until higher grade oxide zone Chantra Pit ores are mined late in the period. The Chantra ore will be an important component of the feed throughout the March 2003 quarter. The CIL processing plant performed well with gold recovery on forecast at 89.7%. A process plant upgrade consisting mainly of the addition of 3 CIL tanks to further increase recovery is in progress and on track for commissioning in mid December An optimisation study is underway to define the parameters of a further plant upgrade in PRODUCTION COSTS Chatree Mine Thailand (Unaudited) Gold Institute Revised Standard for Reporting Production Costs: Cost Category Direct mining expense Refining and transport By product credit Cash Operating Cost Royalty Total Cash Cost Depreciation/Amortisation Total Production Cost Sept ¼ USD/oz Au Produced 83 3 (16) June /4 USD/oz Au Produced 71 2 (15) Silver is accounted for as a byproduct at Chatree Mine whereby revenues from silver are deducted from operating costs in the calculation of cash costs per ounce. If the Company had accounted for silver production as a co product, whereby costs were allocated separately to gold and silver based on their proportion of revenues, the following costs per ounce would be reported: Total cash Costs gold USD91 silver USD1.5 Noncash costs gold USD49 silver USD0.8 Gold USD139 silver USD2.3 The Total Cash Cost of future production at Chatree will fluctuate due to changing grade, throughput and recovery outcomes. FINANCE Kingsgate Group An audited consolidated net profit of AUD33 million was achieved for the year to 30 June A maiden dividend of AUD0.15 per share was declared on 02 August 2002 to be paid on 28 October In the 6 months to 30 September 2002, debt was reduced to USD20 million. Cash on hand at 30 September, including USD5.9 million to be paid in dividend, was USD18.0 million. (The utilisation of cash is subject to the terms of the syndicated Chatree funding facility) Exploration expenditure in the September quarter was USD186,000 at Prospect A and USD407,000 on mine development drilling in the Chatree leases. Kingsgate Consolidated Ltd September Quarter Report

4 Chatree Mine Category Unit Sept 2002 Quarter June 2002 Quarter Average spot gold for quarter, London close Average gold price received Gold sold Silver sold Revenue from metal sales USD/oz USD/oz Ounce Ounce USD , ,449 13,440, , ,384 14,152,135 PROJECT BACKGROUND Chatree Gold Mine is 280 km by bitumen highway north of Bangkok. Total Measured, Indicated and Inferred Resources at 31 July were 27.9 million tonnes at 2.0 g/t Au and 15 g/t Ag. ( g/t Au cutoff). Open cut Proven and Probable Reserves at 30 June were 7.7 million tonnes at 3.0 g/t Au and 13 g/t Ag (0.8 g/t Au cutoff at US$260/oz). The mine currently operates the Tawan Pit. Gold and silver extraction is by Carbon in Leach processing at about 1.2 million tonnes per year, with destruction of cyanide to low levels prior to delivery to the tailings storage facility. The Royal Thai Board of Investment approved a long tax holiday and other benefits to Akara Mining Ltd the owner of the Chatree Mine. EXPLORATION Prospect A.. 1 km north of Chatree Mine. The first independent estimate of gold and silver resources in Prospect A, was announced to ASX on 01 August The mineralisation consists of low sulphidation epithermal quartz carbonate stockworks, veins and fault breccia fill similar to that being mined at Chatree. The resource estimates are considered to closely approximate grades that will be recovered during mining and include dilution expected during mining. Preliminary cyanide bottle roll tests indicate recoveries of approximately 95%. Chatree Mine Drilling Drilling programs have now been completed within and adjacent to the current Tawan Pit and the future Chantra Pit. The data was required to allow final pit designs and new mining schedules to be completed as part of the process plant optimisation study for the 2003 plant upgrade. Updated resource and reserve estimates are underway as part of the study and results should be available in early November Parameters of the 2003 process plant upgrade should be known in quarter 1, HEDGE RESTRUCTURE and HEDGE POSITION at 30 September 2002 The Kingsgate Group had no foreign exchange currency hedging in place at the date of this report. During the quarter a major hedge book restructuring was completed in order to : Gain more exposure to a rise in the gold price; Build in greater overall revenue protection in the event of a gold price decline; Provide a mechanism to accelerate the potential reduction of committed gold ounces through the use of down and out barriers, on 79 % of granted gold call options; Hedge expected revenue streams of US and Australian dollars. Following the restructure, Kingsgate s hedge portfolio can be summarised as a series of escalating Resources in the Indicated and Inferred categories gold collars, which is bolstered through near and far were: dated (noncommitted) gold put revenue protection. 8.9M 2.0 g/t Au 24 g/t Ag (1g/t Au cut) There are two separate but similar structures, with 5.3M 0.8 g/t Au 13 g/t Ag (0.71g/t cut) 35% of the committed ounces being in Australian Total resources at 0.7 g/t Au cut: dollars and 65% being in US dollars. This will 14.1M 1.6 g/t Au 20 g/t Ag containing, ensure revenue streams to the Kingsgate Group in the 706,000 ounces of gold and 8,989,000 ounces of two most required currencies. The structures can be silver. described as follows: A twostaged drilling program will commence at Prospect A at the end of October, The program USD (and AUD) structure will consist of both infill and step out holes with the This consists of sold gold call options, maturing aim of elevating the resources to a status for quarterly from March 2004 to December 2007, at an conversion to reserves in March/April, average strike of USD316.21/oz (and Kingsgate Consolidated Ltd September Quarter Report

5 AUD621.07/oz). For all calls maturing from 2005 onwards a single touch down and out barrier at an average strike of USD /oz (and AUD554.31/oz) is in place. In addition, enhanced revenue protection is secured through bought gold put options maturing quarterly from December 2002 to December 2008 at an average strike of USD300.91/oz (and AUD591.03/oz). Kingsgate has taken advantage of the current low cost of borrowing gold by fixing funding out to late 2003 and thereafter has floating gold lease fees prepaid at 1.1% on the amortised face value of the put options. When active the barrier on a call option is triggered by a single trade at/ or below the respective barrier level, with all associated ounce commitments knocking out instantly. Note that if gold trades below all relevant barriers after 15 March 2005, all of the remaining call options with barriers will be cancelled and the committed ounces will reduce to zero. An important feature of this structure is that there is no committed ounces in the next 18 months and therefore the Chatree Mine production, can be sold at spot and will fully participate in any rise in gold price that may occur. In the event that the gold price falls in this period, the put options will ensure a minimum price of USD300 and/or AUD580 per ounce for that portion of production covered by put options. The gold hedge position at the 30 September 2002 is detailed in the following table and is shown graphically in the attachment. Kingsgate s policy is to cover a majority of the group corporate costs, debt repayments and mine operating costs with gold hedging. Kingsgate Consolidate Ltd Gold Hedge Disclosure Forward Sales USD denominated (2) ENRP (1) oz USD/oz June 2003 June 2004 June 2005 June 2006 After June 2006 Total Spot Deferred USD denominated ENRP minimum oz USD/oz Put Options Purchased USD denominated oz 39,000 46,800 59,800 71, , ,600 ENRP (average) (1) USD/oz AUD denominated oz 21,000 25,200 32,200 38,500 59, ,400 ENRP (average) (1) AUD/oz Call Options Sold (no barriers) USD denominated oz 20,800 20,800 50,000 91,600 Strike price (average) USD/oz AUD denominated oz 11,200 11,200 22,400 Strike price (average) AUD/oz Call Options Sold (with barriers) USD denominated oz 39,000 71,500 84, ,000 Strike price (average) USD/oz Barriers (average) (2) USD/oz AUD denominated oz 21,000 38,500 45, ,000 Strike price (average) AUD/oz Barriers (average) (2) AUD/oz Kingsgate Consolidated Ltd September Quarter Report

6 Total Hedged (as bought puts) 000 oz 554 Total Committed ( no barriers) 000 oz 114 Total Committed (with barriers (2) ) 000 oz 300 Grand Total Committed 000 oz 414 (1) ENRP (Estimate Net Realised Price) is after making allowance for gold lease fees. Gold lease fees for 504,000 oz are fixed funded out to late 2003 and thereafter floating gold lease fees are prepaid at 1.1% on the amortised face value of the put options. 50,000 oz at floating gold lease fees are prepaid at 1.5%. (2) When active the barrier on the call option is triggered by a single trade at/ or below the respective barrier level, with all associated ounce commitments knocked out. If gold trades below all relevant barriers after 15 March 2005, all of the remaining call options with barriers will be cancelled and the committed ounces will reduce to zero. (3) Mark to market of negative USD10.1 million based on the spot price USD on30 September (4) Put options are not committed ounces and do not form part of Total Committed number. Information in this report which relates to resources, reserves and mineralisation has all been previously reported to ASX with permission of the nominated Competent Person. For further information contact the undersigned or visit our website at Yours faithfully Kingsgate Consolidated Ltd Mike Diemar Managing Director Attachments Kingsgate Consolidated Ltd September Quarter Report

7 Kingsgate Consolidated Ltd. Total Hedge Book at 30 September, Kingsgate Consolidated Ltd. USD Portion of Hedge Book, Sep, 2002 Dec, 2008 USD Hedge Structure Strike Barrier Ounces USD USD Au Bought Put contracts * 13,000 Sold Call Contracts * 10,400 Bought Put contracts * 10,400 Sold Call Contracts * 19,500 Down/out Barrier Window 300 Bought Put contracts * 19,500 Sold Call Contracts * 19,500 Down/out Barrier Window 300 Bought Put contracts * 19,500 Sold Call Contracts * 16,250 Down/out Barrier Window 301 Bought Put contracts * 16,250 Sold Call Contracts * 13,000 Down/out Barrier Window 303 Bought Put contracts * 13,000 Sold Call Contracts # * 12,500 Bought Put contracts # * 12,500 Bought Put contracts * 6,500 Diemar 25Oct02 Kingsgate Consolidated Ltd. AUD Portion of Hedge Book, Sep, 2002 Dec, 2008 AUD Hedge Structure Strike Barrier Ounces AUD AUD Au Bought Put contracts * 7,000 Sold Call Contracts * 5,600 Bought Put contracts * 5,600 Sold Call Contracts * 10,500 Down/out Barrier Window 550 Bought Put contracts * 10,500 Sold Call Contracts * 10,500 Down/out Barrier Window 550 Bought Put contracts *10,500 Sold Call Contracts * 8,750 Down/out Barrier Window 555 Bought Put contracts * 8,750 Sold Call Contracts * 7,000 Down/out Barrier Window 560 Bought Put contracts * 7,000 Bought Put contracts * 3,500 Diemar 25Oct02 Notes to tables. Gold borrowing fees fixed to Sept, Thereafter gold funding on face value of puts prepaid at 1.1% except for # which is prepaid at 1.5%. Kingsgate Group has no foreign currency hedges.

8 Appendix 5B Mining exploration entity quarterly report Appendix 5B Rule 5.3 Mining exploration entity quarterly report Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001. Name of entity KINGSGATE CONSOLIDATED LTD ABN Quarter ended ( current quarter ) September 2002 Consolidated statement of cash flows Cash flows related to operating activities Current quarter Year to date ( months) 1.1 Receipts from product sales and related debtors 26,436 26, Payments for (a) exploration and evaluation (b) development (c) production (d) administration (343) (1,051) (7,640) (629) (343) (1,051) (7,640) (629) 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid (666) (666) 1.6 Income taxes paid 1.7 Other (provide details if material) 16,251 16,251 Net Operating Cash Flows Cash flows related to investing activities 1.8 Payment for purchases of: (a)prospects (b)equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a)prospects (b)equity investments (c)other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities Other (provide details if material) (26) (26) Net investing cash flows Total operating and investing cash flows 16,379 16,379 (carried forward) (23) (23) + See chapter 19 for defined terms. 30/9/2001 Appendix 5B Page 1

9 Appendix 5B Mining exploration entity quarterly report 1.13 Total operating and investing cash flows (brought forward) 16,379 16,379 Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings (9,380) (9,380) 1.18 Dividends paid 1.19 Other (provide details if material) Net financing cash flows (8,412) (8,412) 7,967 7,967 Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 25,251 25, Exchange rate adjustments to item Cash at end of quarter 33,218 33,218 Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities Current quarter $A' Aggregate amount of payments to the parties included in item Aggregate amount of loans to the parties included in item Explanation necessary for an understanding of the transactions NONE Noncash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows NONE 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest NONE + See chapter 19 for defined terms. Appendix 5B Page 2 30/9/2001

10 Appendix 5B Mining exploration entity quarterly report Financing facilities available Add notes as necessary for an understanding of the position. Amount available Amount used 3.1 Loan facilities Construction loan USD20m 36,799 36, Credit standby arrangements Estimated cash outflows for next quarter 4.1 Exploration and evaluation 1, Development 1,500 Total 2,530 Reconciliation of cash Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows. Current quarter Previous quarter 5.1 Cash on hand and at bank Deposits at call 5.3 Bank overdraft 5.4 Other (provide details) Total: cash at end of quarter (item 1.22) Changes in interests in mining tenements 32,720 25,144 33,218 25, Interests in mining tenements relinquished, reduced or lapsed Tenement reference N/A Nature of interest (note (2)) Interest at beginning of quarter Interest at end of quarter 6.2 Interests in mining tenements acquired or increased N/A + See chapter 19 for defined terms. 30/9/2001 Appendix 5B Page 3

11 Appendix 5B Mining exploration entity quarterly report Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates. Total number Number quoted Issue price per security (see note 3) (cents) Amount paid up per security (see note 3) (cents) 7.1 Preference + securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buybacks, redemptions Ordinary securities 72,140,854 72,140, Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buybacks Convertible debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted 7.7 Options 1 for 1 Employees options 492, ,000 55, ,000 Exercise price Expiry date 11 July May 2005 Directors options 450, Nov Issued during quarter Employees options 7.9 Exercised during quarter Employees options 43, ,000 55, July Dec May Expired during quarter 7.11 Debentures (totals only) 7.12 Unsecured notes (totals only) + See chapter 19 for defined terms. Appendix 5B Page 4 30/9/2001

12 Appendix 5B Mining exploration entity quarterly report Compliance statement 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4). 2 This statement does /does not* (delete one) give a true and fair view of the matters disclosed. Sign here:... Date: 30 October 2002 (Director/Company secretary) MIKE DIEMAR Print name:... Notes 1 The quarterly report provides a basis for informing the market how the entity s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report. 2 The Nature of interest (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities. 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report. 5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with. == == == == == + See chapter 19 for defined terms. 30/9/2001 Appendix 5B Page 5