Kaiser Reef Sets Up For Future Growth

Junior high grade underground gold miner Kaiser Reef will issue its annual report for fiscal 2021-22 ahead of a deadline of Aug. 31.

the report will show a company turning around a previously moribund operation.

Gold production is trending higher with a gross profit margin of more than 50% an ounce, ie cash flow positive.

All the excess funds are being turned back into exploration, mine and processing plant refurbishment, new equipment and planning to open a second mining front at Maldon while increasing output from the existing A1 mine.

in short, KAU has used 2021-22 to set itself up to be a highly profitable junior producer. This process will continue this year and bear some fruit but these likely will be dwarfed by a far more juicy 2023-24.

here's a (very) rough back of the envelope guide to some key metrics for last fiscal year.

KAU produced about 9;000 ounces of gold last FY, which generated sales of $23 million achieved at a production cost of $14.3 million.

cash at June 30 was $6.6 million compared with $4.8 million previously. The company has no debt.

i won't be forecasting any earnings figures but its safe to say these will show a substantial turnaround from 2020-21.

underpinning the expected rosy future seen for the company are some highly commercial brownfields exploration results at the A1 mine. These include an intercept of 4.6 meters grading 135,7 gpt from 36 meters down and just below current mine workings; 3.7 meters at 68.6 gpt, 12.1m at 24.3 gpt and 19.1m at 11.9 gpt.

in July, KAU issued an inaugural JORC inferred mineral resource estimate for some areas at Maldon of 286k ounces at 4.4 gpt with an exploration target set that could see this double.

the company is now working up a plan to mine these ounces. This plan will almost certainly be put into motion this fiscal year, likely sharply boosting company output.

the company is setting itself up to be one of Australia's most profitable junior producers.

while shareholders will start to see the benefit of this in fiscal 2022-23 patience will be required beyond this year to reap the full bounty.