Kingsgate snubs ‘opportunistic’ takeover

PERTH (miningweekly.com) – Takeover target Kingsgate Consolidated has advised shareholders to reject the “opportunistic and inadequate” offer from Singapore-based Northern Gulf Petroleum International.

Northern Gulf last month offered to buy 50.1% of Kingsgate for 4.2c a share in cash, with the company’s director, Chatchai Yenbamroong, claiming that he could potentially save Kingsgate from losing its Chatree gold mine, in Thailand.

Kingsgate, which on Monday resumed trading on the ASX after a five-month suspension, stated that an independent expert had deemed the offer as neither fair, nor reasonable, supporting the views of the Kingsgate board.

The independent expert valued Kingsgate at between 27.9c and 42c a share, which is significantly more than the Northern Gulf offer.

The board stated that the offer also failed to recognise Kingsgate’s improved prospects and financial position, as well as its flagship asset, the Nueva Esparanza gold/silver project in Chile.

“We are optimistic about the company’s future, particularly our exiting Nueva Esperanza project, and strongly recommend shareholders reject this offer,” Kingsgate chairperson Ross Smyth-Kirk said.

Kingsgate produced 39 026 oz of gold during the three months to September from its Chatree operation, with 39 742 oz of gold poured.

Thailand’s only gold mine, the Chatree operation, is expected to cease operations at the end of December, by order of the government. While not giving any reason for the forced closure, the government has said that the decision to suspend operations at the mine is in no way a reflection on the way that Kingsgate operates the mine.

Kingsgate on Monday said that despite the looming deadline, the operation was benefiting from previous investment to access high grades and reduced strip ratios. With the Thai government’s decision to halt operations, operational margins at the project have also improved as all meaningful capital investment at Chatree has now come to a halt.

Gold sales for the quarter reached 29 905 oz, at an all-in sustaining cost of $596/oz, with the average gold price reaching $1 335/oz.

Meanwhile, with the Chatree closure deadline looming, shares in Kingsgate nosedived as share trading resumed on the ASX. The miner lost 32% of its value, with stock closing at A$0.28 a share, giving Kingsgate a market capitalisation of A$62.60-million.