Kingsgate gets a Thai boxing

Kingsgate is desperately seeking clarity after reports of a Thai law that may let its Chatree gold mine keep operating.

Kingsgate Consolidated ( KCN ) 29.5c

The silly season is in full flight, judging from the share price surge enjoyed by the Thai miner today after it announced the closure (on a care and maintenance basis) of its mainstay Chatree operating mine.

This followed weekend reports that the Thai parliament last week had passed a mining law that might enable Chatree – slated for closure from January 1 – to keep operating.

But Kingsgate’s stunned management today said the first it knew of the new policy was via the media, with no communication from the government.

The company’s local arm, Akara, has sacked its staff and contractors and “taken other measures which will result in Chatree being placed on care and maintenance from the end of this month.’’

In May, the Thai government ordered the closure of all gold operations on environmental grounds, effective from December 31 this year.

But over the weekend, there were media reports that the relevant department was developing a new minerals policy that may result in a licence extension for the mine, 280km north of Bangkok.

However Kingsgate CEO Greg Foulis today said a supposedly supportive new mining bill passed by parliament last Thursday would not really help its cause, given it won’t become effective for up to 210 days.

Ominously, he says, restarting the mine “would require significant time and capital expenditure as well as the granting of additional licences and approvals.’’

With 1000 local jobs at risk, Kingsgate is seeking urgent clarification. But with industry minister Atchaka Sibunruang unavailable for a chat before next year, this one will unwind in Thai time.

Frustratingly, the closure looms after a period of solid output for the mine, which produced 18,697 ounces in November and 29,905 oz in the September quarter (compared with 24,435oz previously).

This has enabled management to reduce debt to $13 million from $72m as of September 30.

Without Chatree, Kingsgate – market cap of $54m -- is worth only the value of its Nueva Esperanza gold and silver exploration project in Chile.

Despite the 2015-16 financials copping a “material uncertainty” warning from auditor PricewaterhouseCoopers, investors took the long view and overwhelmingly rejected Gulf Petroleum’s 4.2c a share offer lobbed in September.

Kingsgate shares today surged by as much as 9.5c (40 per cent) and at noon were 6c (25 per cent) higher.

Hope for the hapless investors in Bellamy’s, which is in an ominous trading halt ahead of a trading update?

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