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Kingsrose Mining Limited (ASX: KRM) is a metals and mining sector company engaged in the exploration and production of gold. The company holds an 85% interest in the Way Linggo Project, located on the mineral rich Trans-Sumatran Fault, part of the Pacific Rim of Fire, Indonesia, through its Indonesian subsidiary PT Natarang Mining (85%-owned), which owns and operates the project.
The company has a 4th generation Contract of Work (CoW) with the Government of Indonesia for ~ 100 km2 of the Way Linggo Project, which encompasses two mines - Talang Santo Mine and Way Linggo Mine, plus a 140 Ktpa Merrill Crowe gold circuit. The Way Linggo Mine has a track record of producing high-grade low-cost gold from open cut activities while Kingsrose Mining is currently exploring the possibility of re-engineering underground operations and commencing open cut activities at Talang Santo.
Recently on 5 August 2019, Kingsrose Mining informed that the processing plant at its Way Linggo Gold Project, that had stopped on 2 July 2019 due to a pit wall failure disrupting the ore supply, resumed operations on 4 August 2019 (8 am), in line with the timeline provided earlier.
While the mill was not operational, the processing team completed the maintenance and comprehensive cleaning of the plant and chutes. Moreover, the crushing of available stockpiles began in mid-July 2019, implying that the mill would have full fine-ore stockpile in place prior to recommencing operations. Subsequently on 3 August 2019, the team began filling the tanks which would allow the plant to immediately ramp up to optimum capacity.
June 2019 Quarter Highlights
Kingsrose Mining reported another successful quarter (three months ended 30 June 2019), that witnessed increased production, lower unit costs and a significant increase in cash on hand.
Operations Overview â The productivity during the drier months of May and June increased considerably to a total of 669k bcm ore and waste moved (March 2019 Quarter (Q3): 526k bcm). The total gold in ore mined stood at 7,871 ounces (Q3: 5,631 ounces) while Kingsrose Mining produced 7,469 gold (Au) ounces and 46,699 silver (Ag) ounces (Q3: 5,471 Au oz and 45,640 Ag oz).
The Way Linggo open pit mined 16,747 ore tonnes at 6.5g/t Au and 78g/t Ag (Q3: 13,839 t at 8.1g/t Au and 102g/t Ag) while the total waste removed from the pit was 310,151 bcm (Q3: 335,810 bcm) during the three monthsâ period. Meanwhile, the Talang Santo pit produced 12,833 ore tonnes at 10.6g/t Au and 33g/t Ag (Q3: 8,020 t at 7.8g/t Au and 22g/t Ag) with total waste moved from the pit at 346,566 bcm (Q3: 180,855 bcm).
Source: June 2019 Quarter Report
In addition, the companyâs overall strip ratio remained consistent with Q3 and with two pits in production, the processing plant has been operating close to capacity for the quarter. Kingsrose Mining also informed that its consolidated unit costs were reducing as the mill was operating at capacity causing increased efficiencies.
Source: June 2019 Quarter Report
Exploration Update â During the quarter, the company primarily focussed on the near pit drilling activities at Talang Santo and a geologist was employed to complete a comprehensive geochemistry and geophysics validation, compilation and reporting of the significant work undertaken on the regional exploration. This work is ongoing with the output, including prioritisation and assessment of targets, expected in the second quarter of this financial year.
A resource definition and resource extension surface diamond drilling program also commenced in the vicinity of the existing Talang Santo pit, with assays and review of results expected in August 2019 followed by pit re-design to be completed by September 2019.
The next phase of drilling involving deep drilling under the existing underground workings of both Talang Santo and Way Linggo mines was scheduled to begin in July 2019. The program would begin below Talang Santo and go on for around three months, followed by completion of holes at Way Linggo. The drill program results are expected to be disclosed by December 2019.
Processing- The plant throughput for the June quarter was 29,123 dry tonnes (Q3: 22,702 t) at a head grade of 8.4g/t Au and 58g/t Ag (Q3: 7.9g/t Au and 73g/t Ag) while gold recovery was consistent with expectations at 94.9% (Q3: 95.3%). The plant operated at 92.5% of its capacity, reflecting an improvement of 22.5% on the March quarter and above the expectation of 90%.
Corporate and Finance â Around 5,626 ounces of gold (Q3: 5,401 ounces) was sold during the quarter at an average gold price of AUD 1,839, USD 1,299 (Q3: AUD 1,821, USD 1,305) per ounce and realised AUD 10.3 million (Q3: AUD 9.8 million) in revenue. The cash costs (C1) of production reduced to USD 919 per ounce from USD 1,036 in the prior quarter, and all-in sustaining costs of production for the period were USD 1,033 per ounce (Q3: USD 1,190). Overall, there was an improvement in the unit costs resulting from increased ore production and associated efficiencies.
As at 30 June 2019, the company had a total of AUD 12.4 million, comprising AUD 4.3 million in cash and AUD 8.1 million in bullion (including unrefined (filter cake, Dore) and refined gold (at AUD 2,009/ounce) and silver (at AUD 22/ounce).
Health and Safety - Kingsrose Miningâs 12-month moving average Lost Time Injury Frequency Rate stood at 1.18 for Q4 FY19 (Q3: 0.62) while the company recorded one Lost Time Injury. Overall, the number of incidents reduced compared to the previous quarters and the site safety programs continued emphasising on the importance of safety assessments prior to starting a job and encourage quality hazard reporting and inspections.
Also, the Community Relations and Empowerment team undertook a number of initiatives for the local community. The areas of work being education, health, employment, economic independence, social and cultural, environmental, creation of Community Groups to support Community Development as well as Infrastructure Support.
Management Restructure- During May 2019, Kingsrose Mining executed a management restructure whereby-
- Mr Karen OâNeill, Kingsroseâs highly experienced resources & finance executive and CFO, was appointed as Chief Executive Officer.
- Mr Chloe Lam, Kingsroseâs Financial Controller, was appointed as Chief Financial Officer.
- Mr John Nguyen, a veteran mining engineer was appointed as Site GM.
- Mr Stuart Bodey finished his tenure as provisional CEO and would continue a consultant as required.
Stock Performance
On 8 August 2019, Kingsrose Mining closed the dayâs trade at AUD 0.051, up 4%, with ~ 1,936,654 shares traded. The company has a market capitalisation of around AUD 35.77 million. Besides, KRM has generated a positive return of 28.95% in the last three.
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