Kingston Resources accelerated life of mine plans boosted by $6.5m capital raising

Kingston Resources’ (ASX: KSN) targeted growth strategy aimed at the company becoming a leading diversified gold-copper producer in the Asia-Pacific region has been boosted by confirmation of a planned $6.5 million capital raising.

The company is aiming to build a bank roll of $18 million, made up of $11.5 million of cash at hand and $5.5 million and $1 million from the new institutional placement and a share purchase plan (SPP) respectively.

The funds will play a key role in Kingston’s plans to accelerate development of the historic Mineral Hill mine in the Cobar region of New South Wales, which it acquired in January 2022.

Development plans for Mineral Hill mine

The growth strategy has also been boosted by the release of new life of mine (LOM) studies.

Kingston is targeting the re-establishment of underground mining at the Southern Ore Zone (SOZ) underground section at Mineral Hill, which will leverage the existing decline development and infrastructure for a low-cost restart.

Processing plant refurbishment and underground redevelopment works have already been identified for use by the funds from the $5.5m placement.

Stepping up production

Kingston, which is currently producing gold from a high margin tailings project at Mineral Hill, is aiming to commence open pit and underground mining by the end of FY2027.

The company’s new studies have estimated total life-of-mine production of 123koz gold equivalent payable.

It is also investigating significant upside with the current life of mine only utilising 22% of the current 8.9Mt of mineral resources.

At the same time, the company is preparing to commence copper production by the end of 2024.

Transition to diverse mineral production

LOM planning has a timetable which will see a transition from current gold and silver dore production, to the addition of gold concentrate production within CY24, before adding separate copper, lead and zinc concentrates by the end of CY24.

Managing director, Andrew Corbett, said the unveiling of the LOM plan is the opening of a new phase of growth for Mineral Hill.

“The Kingston team has been working hard to deliver the updated LOM plan, which includes metallurgical studies, geological modelling, engineering optimisation and design, as well as thorough cost estimation and minimisation. This comprehensive technical work will ensure a successful transition back to conventional mining and establish the foundation for long-term growth.”

“We view the current Tailings project results as evidence of our ability to evolve from an explorer/developer to a profitable gold producer. This represents Phase 1 of our Mineral Hill story.”

Expansion and exploration

Mr Corbett said Kingston has now entered phase two of its long-term plans at Mineral Hill.

“Our team has finalised the initial mineral resource and ore reserve inventory, and we know there is huge extension potential within the mining lease alone.

“Additionally, we have identified priority exploration targets across our two adjoining exploration leases, and we have a pipeline of resource development targets that could feed our processing plant well beyond the LOM inventory.

“We are confident that we can further demonstrate our expertise in open pit and underground mining and explore opportunities to expand our mining inventory through organic means or acquisitions in the region.”

Best known for its Papua New Guinea roots and its work at the high-grade Misima gold mine in PNG, Kingston identified the opportunity for rapid development at Mineral Hill in 2022, when it acquired a mine which was fully approved and supported by abundant infrastructure.

“The significant plant and equipment located within the processing plant enables us to rapidly increase cashflow from operations and maximise utilisation across our assets. Our comprehensive permits and approvals provide us with a regulatory advantage, enabling us to transition immediately from the tailings project to hard rock mining.

“We are hugely excited to be taking this next step in scaling our operations. With the launch of the placement and SPP, alongside existing cash and debt facilities, we will now have the funds to progress Kingston’s growth plans in earnest,” Mr Corbett said.

Gold production success

The company recently reported it had sold 1,775 ounces of gold during May at a realised gold price of A$2,999/oz and an all-in sustaining costs (AISC) of A$1,312/oz via its Mineral Hill tailings processing project.

The processing plant produced 1,827 ounces of gold with a recovery rate of 61.0%.

The capital injection from the tailings project will prove to be a major boost for the company’s proposed open pit and underground mining opportunities at Mineral Hill.