** why are you selling gold, page-5

resource up 3moz reserves up 1.5moz Kingsgate has delivered some very exciting and some disappointing news today.

All of which was known in advance but, some investors refuse to do any research or to place the information in context.

First, the financial data is all about looking in the rear view mirror to see what has already happened in the previous 12 months. I tells us little about what is going to happen.

So what did it tell us of the past 12 months to June 2005...

1. grade was down (2.4g/t vs 3.1g/t) which impacted gold production which impacted revenues and profit. Profit was $8.6m versus $37.6m

Where it does tells us something of the future, the news is very good...

1. Cash on hand remains significant at $32m

2. Operating costs remain very low at ~$220oz

3. Hedge book has been substantially reduced

4. A 5c dividend is available in addition to capital growth

5. Operating cashflows were a very healthy $22m

6. Improvements to projections are being targetted through a focus on cost and production initiatives

6. A strategic position has been taken in GoldStar (GDR.ASX) and exploration work has lead to the company to apply for tenements in Peru

Additionally, the company announced today that....

1. Reserves increased 39% to 1.5moz

2. Resources increased 66% to 3.0moz

3. Plant is being expanded as we speak from 1.8mtpa to 2.3mtpa with commissioning in Q4 2005

4. Gold production will rise from 126,000oz to 150,000oz in the current financial year

5. Significant exploration budget $11m will convert many more resources to reserves and continue the very exciting exploration programme at Chatree North which has a strike of 4km by 1.5km!!!

So....the sellers today are reacting to old, stale information. They are not looking forward at the next 10-12 months and thinking about the progress that will redefine this company.

I hope it is the company doing much of the buying today via the share buyback because it will mean that these shares are not available to be bought back at anytime in the future unless, the buyer pays considerably more for them.

I respectfully suggest that you think once, think twice about your reasons for not investing in KCN.