Ann: A1 Mine Production Update, page-52

James Dunn recommended KAU as a buy on the Switzer special on Gold stocks on Monday 15/4.

Kaiser Reef (KAU, 15.5 cents)Market capitalisation: $27 million12-month total return: –13.9%3-year total return: –19.9% a yearFY25 estimated yield: no dividend expectedFY25 estimated price/earnings (P/E) ratio: n/aAnalysts’ consensus target price: n/aKaiser Reef Limited was floated in 2020 to acquire the Stuart Town project, which covers a significant historical gold mining district in New South Wales, with more than 80 recorded historic gold workings. The Stuart Town project is located between Newmont’s Cadia mine — Australia’s largest gold mine, producing 597,000 ounces of gold in FY23 – and the Boda copper/gold discovery made by Alkane Resources.But things changed in January 2021, when Kaiser Reef took over Centennial Mining, which brought with it a group of assets in Victoria, including the A1 gold mine, Maldon goldfield (currently on care and maintenance) and the Maldon processing plant which treats A1 ore.Kaiser Reef immediately became a producer, at A1. The A1 gold mine has produced 620,000 ounces of gold since 1861, at about 25 g/t of gold, and even recently, it produced at about 11 grams per tonne in the 18 months before Kaiser Reef picked it up. To put that in context, anything above 5g/t gold is considered high-grade by modern standards (even the ‘waste’ tailings at A1 averaged close to 3 g/t gold.)Kaiser Reef fully owns the Maldon Goldfield, which has produced more than 1.7 million ounces over its life at an average grade of 28 g/t gold, from a number of historic high-grade mines, including Nuggety Reef, a project which historically produced about 300,000 ounces of gold at the truly staggering grade of 187g/t, but hasn’t been operated since the mid-1800s – like many of Australia’s historically worked mines, it was plagued by engineering issues, most notably rising water levels: it certainly wasn’t that the diggers ran out of gold. Working from the modern established decline below the goldfield, Kaiser Reef is drilling on Nuggety Reef at the moment. Being located less than five kilometres from Kaiser’s operating Maldon gold processing plant, Nuggety Reef could become a second mining centre for the company.In the year to 30 June 2023, the A1 Mine produced 11,350 ounces of gold, up 30%, at an average realised price of $2,705 an ounce. In the most recent quarterly report, for the quarter ended in December 2023, the company produced 1,746 ounces, processing 7,363 tonnes of ore at an estimated average grade of 6.2 g/t of gold and realising a gold price of $3,055 an ounce.Kaiser Reef has mainly been mining among the historical levels in the A1 Mine, but in 2024 the company has started to move into higher-grade unmined targets below the historic workings. This year, it has entered the Dukes Reef, a substantial and high-grade historical production reef, and has also made new reef discoveries below historical levels.Kaiser Reef hasn’t forgotten the New South Wales areas that it was established to explore; in December, it was awarded a suite of exploration licences over the northern extent of the highly endowed and prospective Macquarie Arc near Walgett in western NSW. But Victoria is what should be front of mind for investors contemplating Kaiser Reef.