Diary Of A Private Investor In The Diggers & Dealers Aftermath: Catalpa And Kingsgate Play Host, And Both Are Looking Good.
By Susie Boeckmann / www.minesite.com
Following the Diggers & Dealers jamboree, certain of the minesite team were flown in two nine seater Cessnas to the Catalpa Mine, a flight which lasted for about an hour. Catalpa, previously Westonia, is named after a ship that allowed some Irishmen to escape from the hands of Australian justice in such a daring way that the name apparently lives on, more than a hundred years later. Catalpa’s well-respected management team, managing director Bruce McFadzean, Stuart Pether, general manager operations, Erik Palmbachs, chief financial officer, and Nick Winnall, geologist exploration manager, all think that Catalpa is a name that encapsulated the boldness of their aim to build a mid tier gold mining company, mining in excess of 100,000 ounces per year from the Edna May mine from mid 2010.
The company plans its first gold pour in April next year. There are large stockpiles of tailings to treat so ramping up to production should be relatively simple. As we visited, the plant was in full construction and so was the miner’s camp, abutting the village of Westonia. This is truly a model town with a population of around 60 people. The mine will have a workforce of around 130 on completion. The town has many facilities: a movie theatre, a pub which is said to have the oldest wooden structure in Australia, various attractive shop fronts, as well as a variety of modern sporting facilities. Altogether it looked a very neat setup.
After a tour of the plant, camp and village, we were provided with an excellent “morning tea” (for which read “large spread of food!”) in the sports hall, before we flew on a further 330 kilometres or so to Perth. Working backwards, that makes the Catalpa mine within fairly easy reach for management or investors. We landed at Janacot Airstrip in South Perth, about 45 minutes away from Perth main airport.
Then, for this member of the Minesite team, that trip was followed by a flight to Sydney and the following day by a stimulating lunch with Kingsgate Consolidated and some corporate colleagues. The Kingsgate board is disappointed that it does not have more recognition in the Australian market. The company operates in Thailand very successfully with low cost gold production of between 125,000 ounces and 150,000 ounces per year.
In the June quarter gold production hit just over 43,000 ounces of gold, up from just under 33,000 ounces produced in the March quarter, and nearly three times as much as was produced during the same period last year. This time round, the quarter-on-quarter increase was due to an improvement in the grade of the mill ore feed to 2.3 grammes per tonne.
The company’s cash cost per ounce is US$350, and it’s expected that that number will drop even lower as plans to expand into the Chatree deposit come to fruition. The company currently has A$30 million cash in the bank, and no debt. What’s more, that cash position can only improve as the cash continues to flow in from operations at Chatree.
The major perceived risk is political. But Kingsgate is 300 kilometres away from anywhere of high political significance, and remains quite reassured that any ongoing political difficulties in Thailand will not reach its rural area of operation. The company also claims to have the safest mine in the world, and puts a heavy emphasis on training within the area. The company’s Thai partners have taken up their options to the tune of around US$25 million which demonstrates their confidence in the ongoing progress of this project. Kingsgate is actively looking to expand, increase its gold resources and to explore other projects in Thailand, including the Chokdee deposit, which is currently being drilled. Watch this space !
CAH Price at posting:
$1.21 Sentiment: None Disclosure: Not Held
