major announcement, page-9

re: major announcement--broker review Resources
Kingsgate Consolidated (KCN)
Another Significant Gold Mineralisation Discovery
Buy for Growth and Yield $3.77
Event
KCN has continued to successfully explore for
additional gold deposits in the vicinity of its impressive
Chatree gold mine in Thailand that could significantly
boost the current reserve base of one million ounces of
gold. We recently reported on the discovery of a very
high gold grade ore zone discovered during grade
control drilling in the Tawan Pit at the mine. However,
the company's latest find, called Prospect Q, is a new
discovery and located approximately 3km to the north
of the existing mining operations at Chatree.
Prospect Q has yielded intersections over a strike
length in excess of 1.2km with results from depths of
12m to 120m. The style of mineralisation is classic
Chatree epithermal veining and better RC results
include 13m @ 9.33g/t from 121m, 10m @ 5.78g/t
from 53m and 8m @ 3.82g/t from 80m.
Impact
Prospect Q has extended the strike length of the known
mineralized system at Chatree to at least 6km, which
in itself has implications for the discovery of further
gold in the future. It is likely that further information
will be given in the March 2004 quarterly report due to
be released on the 27th of this month.
KCN holds a large ground position around its Chatree
mine, where until recently it was focussing its
exploration efforts on near term production targets tosupport the expansion of ore processing that has
involved an almost doubling of ore treatment capacity
to combat planned grade declines. With this expansion
now running smoothly, the company is increasingly
turning its attention to the highly prospective area
around the mine, where it is now using its structural
knowledge from mining at Chatree to hone in on a
large number of anomalous areas identified from
previous geochemical sampling.
We anticipate KCN will make further significant
discoveries as it progressively evaluates these
prospective targets and accordingly we recommend
KCN as a BUY for its profitable operations that place
the stock on a low P/E of around 7x and support a high
(but unfranked) yield of around 7% with upside from
ongoing exploration success.
Source: Aspect Huntley and Intersuisse analyst estimates
FYE Jun 2002A 2003A 2004E 2005E
Reported NPAT $m 33.0 47.3 44.5 46.1
EPS c 45.9 65.3 52.1 54.1
P/E x 3.3 5.0 7.2 7.0
EPS Growth % -- 42.3 -20.2 3.8
DPS c 15.0 25.0 25.0 25.0
Yield % 7.6 7.6 6.6 6.6