Kaiser Reef marks turning point as jump in gold output delivers positive cash flow
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Kaiser’s efforts to unlock the potential of its high-grade A1 mine have borne fruit with a 45% increase in quarterly gold production resulting in positive cash flow.
Operational improvements carried out during the March quarter allowed the Victorian mine to produce 2,814oz of gold at an average head grade of 14 grams per tonne to generate revenues of $7m.
Continued strength in gold prices and a favourable exchange rate resulted in Kaiser Reef (ASX:KAU) receiving a healthy gold price of $2,658/oz while its low cash cost of $1,149/oz translated into the company recording a positive cash flow of $1.8m.
This also resulted in a 36% increase in its cash balance to $6.9m as of 31 March 2022.
Managing director Jonathan Downes said the “robust” quarterly profit was “an extremely pleasing turning point” and that the A1 mine’s performance was a “textbook example of ramp-up execution and a fantastic outcome” in the face of significant pandemic-related staffing and supply issues.
“More remarkable is that a lot of work was conducted on the near-term development of the Queens Lode, with benefits yet to be realised and while running exploration with two diamond drilling rigs,” he added.
“Kaiser is moving to define itself as a self-funding explorer. With two outstanding – and more importantly – historically-proven 100% owned exploration projects at the Maldon goldfield (historic production 1.74Moz @ 28 g/t gold) and the A1 Mine, in operation, the future looks bright.
“As we get deeper at A1, we are discovering, as expected, an increasing amount of this extraordinary, previously unmined material that was just too hard in the late 1800’s to exploit. Some of this material contributed to our quarterly mined head grade of 14.0 g/t gold.”
Downes noted that the company’s processing plant was still operating well under capacity and that it aimed to fill that capacity through continued expansion and development at A1 and bringing the Maldon gold field back into production.
While mining and production from Queens lode started in the later half of February this year, Kaiser expects the bulk of the orebody to be mined during the second half of this year.
During the March quarter, Kaiser’s exploration efforts returned some encouraging results including a top hit of 2.2m grading 10.3g/t gold at the Nuggety Reef mine within the Maldon project.
Further drilling at Nuggety Reef will be carried out once the larger surrounding exploration licence is granted
The company has also advanced resource modelling work at the Union Hill underground area – where drilling late last year returned up to 1.8m at 29.6g/t gold – after completing drone surveys recently.
Maldon has historical production of 1.74Moz grading 28g/t gold and features extensive existing infrastructure.
Along with its close proximity to the processing plant at A1, Kaiser expects that rapid and low-cost development can be implemented using its existing mining fleet and experienced mining team for minimal capital cost.
This article was developed in collaboration with Kaiser Reef, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.