Kaiser pulls $10M cash flow from Tassie gold venture for Q4

West Australian

3 days ago

Kaiser Reef Ltd has pulled more than $10.1m in free cashflow after accounting for all its expenses during the quarter, comprising production, staff and administration costs across its two gold operations, bolstering its bank balance to a stellar $24.7m at the end of June.
The company has significantly boosted revenue since assuming control of its recently purchased Henty gold mine in Tasmania, raking in an impressive $25.177 million for the June quarter.
Kaiser placed its hands firmly on the wheel at Henty on May 15, steering the operation to produce solid results for the balance of the quarter, after nabbing the profitable underground gold mine in western Tasmania from ASX-listed goldie Catalyst Metals.
Management locked-in the transformational acquisition by agreeing to pay Catalyst $15M in cash and $16.6M in shares, handing Catalyst a maximum 19.99 per cent stake in Kaiser.
Kaiser will further pay Catalyst 50 ounces of gold per month capped at 3000 ounces and a 0.5 per cent royalty on gold produced from the Darwin Target Zone, after being in control of the operation for six months.
The company produced 4069 ounces of gold at Henty from May 15 – June 30, generating revenue of $21.205m from the Tassie mine, against operating costs of just $10.147m, indicating the potential for future profitable operations at the site. All-in sustaining costs totalled $2951 per ounce of Tassie gold.
Its Maldon plant produced 756 gold ounces from mining at its existing A1 gold mine 120km east-northeast of Melbourne.
Kaiser plans to pump out more than 30,000 ounces of gold a year from Henty, 30 kilometres north of Queenstown, as it aims to reach its stated goal of a total 50,000 ounces a year from its Tasmanian and Victorian operations.
Management has plans to strip the underground floor at Henty to allow access for larger trucks in a bid to boost haul loads, carting more ore out of the portal and boosting the size of work areas. A second twin-boom jumbo rig has returned to site to increase its push forward with the underground development of the mine.
In a move in line with the current life-of-mine plan, management decided to increase the potential for a further 12,800 ounces of gold with its decision to re-locate its underground explosives magazine, with the move now well advanced.
The company appears to have nabbed an enviable asset in Henty in the reciprocal deal with 19.99 per cent stakeholder Catalyst, providing both companies with an opportunity to lift production ounces due to the two firms forging of an agreement for a 50/50 joint venture (JV) at Kaiser's Maldon processing plant.
The JV allows for Catalyst to co-develop the plant, which is strategically placed between Victoria's gold-rich regions around Bendigo and Ballarat.
Increasing the capacity of the Maldon plant could fire up both firms' processing plans, allowing Kaiser to feed gold-bearing ore from its existing A1 gold mine.
Meanwhile, Catalyst could push material into the plant from its Four Eagles project north of Bendigo, which has 70,000 ounces gold at a stunning 26g/t in its Boyd's Dam project.
Kaiser now has a five-year mine plan for Henty, based on a current mineral resource of 4.1m tonnes at 3.4 grams per tonne (g/t) gold for 449,000 ounces. This is supported by current ore reserves of 1.2mt going 4g/t for 154,000 ounces gold.
The mine has proven to be a viable gold operation with historical production of 1.4M ounces at a rock-solid 8.9g/t gold. Kaiser will benefit greatly from Catalyst recently investing in drill platforms, tailings facilities and underground fleet equipment before the sale took place.
Kaiser believes Henty also has tremendous scope for near-mine exploration and development success too, aided by some significant infrastructure, including underground and surface workshops, an administration complex and a coveted 300,000-tonne-per-annum carbon-in-leach processing plant. The plant is fully permitted to 2030.
The mine comes with the twin benefits of hydro-generated grid power and renewed tailings storage capacity.
Kaiser bankrolled the deal to pick up Henty with a successful $30M share placement, in addition to a $10M funding package from Auramet International, which has $2m remaining in undrawn funds. Combined with its stash of cash in the bank, it is well-placed for working capital.
Kaiser's decision to move with speed on the Henty project offers a compelling opportunity to continue generating significant cash flow. The company will no doubt be looking to continue pumping out the as much of the precious yellow metal as it can at today's sky-high price of A$5087 per golden ounce.
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