Kingston Resources (ASX:KSN) - rising gold developer in the Asia-Pacific region, October 2021


by Melissa Darmawan

Kingston Resources Limited (ASX:KSN) Managing Director Andrew Corbett provides an update on the Misima Island Gold Project as the project's definitive feasibility study nears completion.

Melissa Darmawan: Hello. Melissa Darmawan for the Finance News Network. Today I'm talking to Managing Director Andrew Corbett from Kingston Resources (ASX:KSN). Andrew, welcome back and nice to meet you.

Andrew Corbett: Hi, Melissa, and thanks for having me back here and great to be talking to you about Kingston today.

Melissa Darmawan: It's great to have you. For those tuning in for the first time, can you give us an overview of the company?

Andrew Corbett: Yeah, Kingston Resources is a very focused gold developer, aiming to be a mid-tier miner. So, we've got our cornerstone asset, being Misima, which we see as an opportunity to build a business around. It's a 20-year mine life. It's a big project. And it's a fantastic stepping stone to become a developer from.

Melissa Darmawan: Thanks, Andrew. So, let's touch on that. Tell us more about the size of the resource and the project economics.

Andrew Corbett: Yeah, Misima, we've recently upgraded the resource in September to 3.8 million ounces. And, most importantly, 2.5 million ounces of gold, this is. And there is a big silver credit as well, which we can talk to. But 2.5 million ounces of the gold is in the indicated category, which is 700,000 ounces more than we had in our previous resource update. So, we expect the resource to keep growing. We expect the reserve to keep growing. And the project's still open at depth. It's open to the east, it's open to the north. So, there's a massive opportunity for this to continue to grow and be a larger resource base.

Melissa Darmawan: Could you comment on the Umuna resource and what the next steps are and what it's all about?

Andrew Corbett: Yeah. So, Umuna is 95 to 96 per cent of our contained resources. So, basically we've got one small starter pit of the project called Ewatinona, and then Umuna is basically going to run for 17+ years. And it provides basically the feed of the... It's a large plant. We're looking at a 5.5 million tonne plant. 17-year mine life currently on the pre-feasibility. Average 130,000 ounces a year at an all-in sustaining cost of 1159. So, Umuna basically is the backbone of that, with its… Like I said earlier, it's got plenty of potential to keep growing, Umuna. In fact, right now our aim is to get cashflow and we'll continue to grow the resource after we get cashflow. So, that's our current strategy.

Melissa Darmawan: Andrew you've mentioned another precious metal, silver. Can you tell us how it's going to contribute to the project?

Andrew Corbett: The silver gives a really nice benefit to our all-in sustaining costs. So, what we have today is about 24 million ounces of silver in resource, about 6.5 million ounces in reserves. Now shareholders should look for that to grow, that reserve number particularly. So, what it does today, it provides a hundred dollars per ounce credit to our all-in sustaining. So, that 1159, 1160 all in sustaining number already includes that silver credit. So, any movement in the silver price provides fantastic leverage and lowers our all-in sustaining costs. So, it just expands the margins. So, if we can produce, recover more silver, and the silver price continues to grind up, then that's a great result.

Melissa Darmawan: And how about the Livingstone Gold Project? Could you provide us a summary?

Andrew Corbett: Yeah. So, with Livingston, it was a smaller greenfields project in Western Australia. We've recently just sold that. We've always said it was a funding source for Misima. Misima's the main game. It's the asset that's going to run for 20 years. Whereas Livingston, you know, it's a smaller toll treating opportunity in Western Australia. So, that transaction actually went through on Monday. It's due to complete in December. So, we sold that for up to $10 million. So, effectively $5 million upfront, with cash and shares, and then some milestones of another $5 million.

Melissa Darmawan: Okay. So, let's take a deeper look at the financials. Could you also talk us through that and also the strategy?

Andrew Corbett: Yes. So, in terms of when we did the PFS, we used a US$1600 gold price, which delivered an MPV of 835 million, pre-tax that is, and an IRR of 33 per cent. So, economics at 1600 gold were outstanding. Obviously, gold today is flirting with 1800 US. So, the economics just get better. And, in fact, when we published the PFS, we did provide scenarios up to 1900 US. And you'll see the project, it delivers 5 billion in revenue. This is big, this is a big project at over 130,000 ounces. And a lot of investors say to us, "Well, why only 130,000 ounces? Why don't you grow that?" And we probably will. But it's where we're starting at. So, right now the DFS is underway. That's due to be completed in March next year, at which point we will also publish the new reserve. And that new reserve is going to grow. As I said earlier, we've increased our indicated ounces by 700,000 ounces. So, we're hoping a majority of those ounces convert to reserves in this next update.

Melissa Darmawan: Before I let you go, we've seen fellow gold miners take the spotlight. How do you see the company placed among your peers?

Andrew Corbett: Very well. So, Kingston already has one of the largest undeveloped reserves on the ASX in the gold space. We get this update out, I suspect we're going to be the largest undeveloped gold reserve on the ASX, listed on the ASX. We have a project with a 20 year mine life. Like I said, 130,000 ounce base rate. And, most importantly, what's important for investors today is value, valuations. If you look at our peers and our comparisons, which is all on our presentation for people to look at, we're one of the cheaper gold stocks on the ASX. So, that's a fantastic opportunity. How do we unlock that value? We get the DFS completed next March. We get the approvals in the following 12 months after that. That's where the money's going to come for the shareholders.

Melissa Darmawan: Andrew Corbett, thanks for the update. It was great talking to you.

Andrew Corbett: Thanks, Melissa. And really enjoyed it. Appreciate your time.


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