Kingston Resources (ASX:KSN) Presentation, FNN Online Investor Event, July 2020

Company Presentations

Kingston Resources Limited (ASX:KSN) Managing Director Andrew Corbett presents on the company's transition from exploration to development at its Misima Gold Project, and on the company's Livingstone Gold Project, at FNN's Investor Event.

I'll just spend a little bit of the time here talking about that view of Misima Island. That picture's quite important because that's previously the location of the processing plant you can see in the foreground there this morning. So Misima's a large scale project that produced gold for 15 years and I'll talk to you about where we're at with it today and the strategy with Kingston.

So next slide please. And one more thanks.

Cheers. So thank you. So investment snapshot. So as Clive mentioned, we're ASX listed. We have the two projects, one in PNG and one in WA. So the WA project's near. I'll talk about that today as well. So Misima, we recently reached 100% equity ownership of that project. It's currently got a 3.2 million ounce resource and 18.2 million ounces of silver. So it's a large scale project. It's got an extensive mining history and it's significantly de-risked for development.

Our pre-feasibility study started this quarter and we'll talk to you more about that as we progress. So our strategy is basically to build a gold mining company and we want to achieve that by using Misima as the cornerstone project as the next low cost large scale producer in Asia Pacific. In addition to that, we have the Livingstone Gold Project. It's a lot smaller but it's actually very exciting, quite high grade and we're actually drilling that project as we speak. In terms of funding, we're very well funded. We've completed capital raising, which I'll talk to you about shortly. The PFS is underway. All reserve targeted by Christmas.

Next slide please.

So just a big capital structure board and management. So our share price at 23 cents or thereabouts today. Quite tight register at 231 million shares. Market cap's just over $50 million. As I said earlier, we completed a capital raising last quarter at 16 cents. So that was a placement of $6.4 million plus subsequent a quarter and we've completed to two million dollar SBP or so at 16 cents.

So our board, a lot of extensive mining history with our board and we think that's one of our key differentiators as we develop Misima. Tony Wehby, he's a chairman. He's been for the last four years. He was the chairman of Euralia and took that from a expiration company to a producing asset as it is today. Nick Wilkes, he joined a couple of years ago. He was the former managing director of Oceana Gold. Nick's built four gold mines, so he has extensive experience. He also has lived and worked in PNG for 10 years. Stuart Rechner, a geologist based in Melbourne. Myself, mining engineer 25 years experience. I've worked and operated and managed gold mines over the last 25 years but I haven't built one, so that's one of the key reasons we have Tony and Mick involved with that experience from the board. Chris Drew is our Chief Financial Officer. Other important guy here on this list is Stuart Hayward who joined about 12 months ago. He's the chief geologist. He's ex Newcrest, drilled out Cadia, Wafi-Golpu in PNG, Lihir, and has also been involved in Olympic Dam in his career, so quite extensive experience. Charles Yobone is our PNG project manager based on Misima as we speak today.

Top 20 shareholders speak for about 60% of the register and three substantial shareholders there, Winchester Investments, is a family office, high net worth individual. Delphi, similar high net worth family office, and Farjoy also a high net worth family office. Winchester's London based. Delphi is German based.

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Misima gold projects quickly in summary. So it is based in PNG, it's about 600 K east of port Mosby. We have one exploration license on that. We are the only company. It's a carbonate base metal system. Low-sulphidation epithermal. It is moderate grade resource but it has extensive high grate late events, which we'll talk about as we go. Our strategy is to build a large scale open pit similar to what Plaser did. Following their footprint, notified new in time processing plant.

It'll be mainly residential project with some FIFO out of Australia and PNG. Population of Misima's really interesting. There's over 20,000 people there and it's a very relaxed Malaysian cultured and quite interestingly it's matriarchal in its community and society, which makes it actually a very pleasant place and enjoyable place to be. It's very well good infrastructure from the previous mine with high schools, hospital, roads all built by the previous operating mine. It is wet, good 3,500mm per year. The resource, a bit hard to see there in that table but it's basically a hundred million tons at about one gram for the 3.2 million ounces of gold.

Just next slide please.

So the history of Misima's very interesting. You can see 1999, the mine closed sub $300 gold price. We picked the project up in 2017 at about a $1200 gold price and we are here today at about a $1900 gold price. So it is a great development story and a obviously rising gold price environment. Large scale resource. There is 1.5 million ounces are in the indicated resource category, so they can report to a reserve which we hope to actually achieve by Christmas.

Ewatinona is a starter-pit which we'll talk through when mining studies will focus basically on advancing the project. Getting them out by Christmas, the economics out, getting a reserve statement out, getting the EIS project and the baseline work underway and lodging the EIR to start the approvals process. You can see a picture there of the processing plant and you can see the sea in the background. The processing plant was basically 500 meters from the coast.

Next slide please.

So just the history with Plaser. You can see they operated for 15 years and processed 90 million tons. So we have a very strong blueprint to follow as we develop the Misima gold project. As I said earlier, we've got one and a half million ounces in the indicated category. The Placer mill was a standard CIL processing plant, operated very effectively in very low cost. We've got the leverage of all the infrastructure that remains including ports, airports, roads, haul road, air strip. And geo technically, geologically, and metallurgical it's a very well understood project. That table there helps you understand the potential gold process and the different pit shelves and the scale of the project. You can see from that cross section there that the ore body is in places up to 100, 200 meters wide.

Next slide please.

So just the last one on the history here, so Misima's been producing gold for 130 years. It still is today for the artisanal miners. The Placer mine operated for 15 years. When the gold price environment sub 300, average production was 230,000 ounces a year. Peak production was 370,000 ounces a year. So that's a material project for any producer today.

LOM among cash cost were very low at US$218 an ounce. You can see where it sat on the cost curve. That 1995 cost curve is the oldest cost curve we could find. So it was the bottom quartile of the bottom 25. So the other key takeaway from this slide is line six and seven there with the grade reconcile and the production reconcile. So basically, positive grade and positive tons. So they found more, at higher grade and it produced more gold over the 15 years.

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Exploration wise, like I said earlier, we are the only exploration company on the island. We've got basically an EL, which covers 80% of the island. It's about 180 square kilometres. Our focus is on the southern section, the areas that produced gold previously. So, Umuna, you can see the pit there. That’s about three kilometres long, and that contains 90% of our ounces today. And the other area of interest is Ewatinona, the start of the pit area which we're going to start at Quartz Mountain.

Next slide please.

So Quartz Mountain, I will move through these quite quickly because there's a lot of drill hole results here. But they're all very exciting but I won't read them all out because there's too many to point to. So Ewatinona, this is the last lot drilling over the last six months. You can see broad based intersections, everything above one gram is increasing to our gold grade about overall global resource. Plenty of silver content as well as we progress the project.

Interestingly, next to Ewatinona we have made a new discovery called Abi which was at 23 meters at 2.9 grams per ton. We will go back to that area and be drilling that as soon as we can get started again in the next quarter.

Next slide please.

Other targets, Umuna East, this is 200 meters to the eastern side of the main pit. Low oxide dirt ready to the basic mine. Good access from the haul road. It's modest grade but very low cost economics to mine this dirt. As I said earlier, it's oxide and ready. So that's a very exciting target which we'll follow up when we commence drilling.

Next slide.

And Umuna, the main old body. So this is three million ounce resource here, 52% of that is an indicated category. You can see the extent and the potential of this project. It's 3.5 kilometres long. Only 119 meters depth is the average drill hole depth for the whole project. There are obviously some deeper holes, but on average 119 metres. Plenty of upside for extensions at depth to the north, to the south, and to the east.

Next slide please.

And as I said earlier, it's a multi stage event all body. So it is a broad one gram all body but there are high grade structures in a lot of interesting intersections you get in within the Umuna. So you can see those intersections there ranging from two grams to sometimes 16, 17 grams and broad. So high grade big structures at depth, which is obviously the price. That's what we want to get the project going for and focus on as we produce from the open pit.

Next slide please.

The community supports Misima and it's actually no different to anywhere else in the world. Whether it be Western Australia, Queensland, or PNG. Without the local community support, the project won't go ahead, so we do a lot of focus on this. It's quite simple in terms of our strategy. We keep them well informed. We keep them up to date with what we're doing. And we offer employment where we can. So it's a very simple strategy. Our project manager, Charles Yobone, runs that community work program that we do and our focus is really on local employment. So as you can see there, we're about 78, 80% local employment plus the PNG nationals. We only have the one expat involved in the project. Very similar pathway that Placer followed also. So as I said, community support is keen and we've got 1200 or 1300 shareholders and 2,000 stakeholders at Misima that are all going to benefit from this project once we get it rebuilt.

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Timeline for activities. Regional fieldwork and exploration drilling had to unfortunately stop at the end of March with Covid-19. We are hoping to recommence drilling in October this year. We're currently in the process of getting approvals and putting procedures in place to recommence drilling. Environmental baseline work is continuing. Our mining studies are underway and project approvals will commence in the last quarter of this year. Like I said earlier, the PFS is a material event for Kingston and shareholders. That target is Christmas and that'll be when the main reserve statement comes out as well.

Next slide please.

Changing track here, I'm going to Western Australia. We're currently drilling our WA gold project as we speak. It's Livingstone. It's already got a 50,000 ounce resource at Homestead on it. It's a surface oxide resource. You can see that is 18m at 7g, 5m at 20g, or 7m at 12g. We made a discovery in 2018 called Kingsley. It's about 10km west from Homestead. The tenement itself is about 35 km long, so there's a lot of prospective targets that we're following up and we're currently drilling Kingsley as we speak. Last year in 2019, we got 10m at 1g, 5m at 3, 2m at 13. All shallow oxide drilling results.

Next slide please.

Just a last one on Livingstone. You can see these are what the sections are. It's just shallow resource. A fantastic open pit oxide project potential in WA. Like I said, we'll be bringing results to the market there in August as we currently are drilling.

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So the valuation proposition, why invest in Kingston. As you can see, we are trading on a very low EV/Oz of resource multiple, even with the recent move in the share price, and we are one of the largest resources in our peer group. So there's plenty potential there in terms of share price and valuation as we advance this project. We see the PFS as one of the key factors of unlocking this discount in our EV per ounce of resource.

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Another comparison, just to let you do some of your own research on Kingston and where we sit. There's the top 25 resource gold projects in Australia and PNG. Kingston is the only small capital non producing company on that list at number 23 of the list. So it's a big project and we're one of the smallest companies.

Next slide please.

So just in summary, key takeaways from what I've been talking about today, we've got the Misima gold project. We're now 100% of that project. It's a very exciting large scale project. It's significantly de-risked. We're going to follow the Placer footprint, using their designs, their history, all the data we have to basically de-risk the project and get it ready to rebuild. Existing 3.2 million ounce resource, which is plenty big enough to basically be the backbone of a long life project and basically enough to get going on. Mining studies are underway. Misima ticks all the boxes in terms of geological settings, production history, and the quality of the asset. We're drilling in Livingstone, so that's going to be some exciting news for there hopefully. Experience board and management in place.

Next slide please.

So if there's any questions, please do not hesitate to contact. My details are there, phone number and email address. Thank you.


Ends

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