2009 Media Releases

June 26, 2009

Deutsche Bank initiates coverage of Kingsgate Consolidated Ltd

Deutsche Bank has initiated coverage of gold exploration and production company Kingsgate Consolidated Ltd (ASX: KCN) with a Hold recommendation.

Research analyst Brendan Fitzpatrick initiated coverage with an A$6.70 twelve month price target.

Mr Fitzpatrick said “The Thai mining assets are robust and Kingsgate’s foundation asset, the Chatree Mine, has been in production since 2002 and is currently producing at an annualised rate of approximately 150,000 ounces per annum (kozpa) with total cash costs of approximately USD350/oz. A proposed expansion could see this rise to approximately 250kozpa from 2011.”

During a recent site inspection, Mr Fitzpatrick noted the exploration upside around existing pits. “Kingsgate has further exploration potential in the region with the Chokdee asset being the most advanced target. The mining and processing appear to be low risk, as the open pits are near the surface and metallurgy is simple.”

Deutsche Bank expects extensions to the current reserves in the Chatree North Mining Lease as well as further regional exploration. The question according to the Deutsche Bank research is if or when Kingsgate will IPO the Chatree asset on the Thai stock exchange, what value will be realised and how it will re-invest the funds of approximately AUD300 million. “The mining asset IPO remains the strategic question mark”, said Mr Fitzpatrick.

Trading at 1.2 times net present value and 7x 12 month PER Deutsche Bank sees Kingsgate as fairly priced on a valuation and multiples base given the proposed expansion is yet to be completed.

Kingsgate Consolidated owns and operates the low cost Chatree mine in central Thailand through its Thai subsidiary Akara Mining Limited. Its strategic advantage is the company’s specialist knowledge of the geological, political and economic climate of mainland South East Asia developed since 1988.

For further information, please contact:

Michelle Chaperon (02) 8258 1311


Footer Navigation:
Last Update: January 31, 2018
Copyright © 2020 Deutsche Bank AG