Kaiser Reef shares up about 10% as investments turn to gold

Rallying gold prices and increased production are boosting Kaiser Reefs’ plans to become a profitable gold miner and investors are taking notice.

Winners are grinners, which is certainly the case for shareholders of high-grade gold producer Kaiser Reef (ASX:KAU) today with the stock up about 10% to 22c after a positive profit and production announcement.

The company has made some significant progress with its A1 gold mine in regional Victoria during the December quarter after investing in capital and focus by its workforce, delivering a 36% increase in gold production over the previous quarter.

More importantly, the combination of increased production and high gold prices have allowed the company to yield an operational profit on revenues of $5.1m and mine/mill operating cash costs of $3.9m.

Little wonder than that shares in the company surged up to 18% in the morning before settling to a roughly 10 increase.

Kaiser’s December quarter monthly gold sales Pic: Supplied

Centennial Gold Assets

The company says the increased production shows its purchase of a series of assets in the Victoria’s highly sought-after gold district from administrators of Centennial Mining in 2021 was a good move.

During 2021, Kaiser worked on operational improvements, boosting its monthly operational results.

Production ramp up kicked off with a decline extension in mid-2021, which is ongoing. The company said during the December quarter, development to allow access and mining of the historical Queens Lode, along with exploration drilling at Maldon has also progressed.

Further improvements to improve operating efficiency, gold production and outputs are targets in 2022 as Kaiser pushes ahead with its ambitious vision to become a multi-mine high-grade gold producer with an exploration focus.

Kaiser also remains confident in the potential of Queens Lode, which has not been exploited by previous historical mining.

When accessed and in full production, Queens Lode is forecast to fill Kaiser’s gold pot further with substantial increase in production and revenue.

Next-level exploration

Kaiser said its next-level exploration target remains the Union Hill and the prized Nuggety Reef gold projects within the Maldon goldfields, where exploration continues with two operating drilling rigs.

Maldon is located between Bendigo and Ballarat in the Victorian Goldfields. The Maldon goldfield has produced 1.74 million oz of gold at an average grade of 28 grams per tonne (g/t) with the Nuggetty Mine been one of Victoria’s highest-grade gold mines.

Remains underexplored

Despite having a history dating back to the 1800s Kaiser considers the Maldon goldfield to be “underexplored and extremely prospective”.

With its existing infrastructure and Kaiser’s gold processing plant a mere 3km away, the company is prioritising exploration at the goldfield.

Drilling started early during the December quarter, targeting prospective potential ore shoot extensions.

After the large underground drilling rig finished up at the A1 mine it has moved on to exploring Maldon locations with a focus on projected extensions to historical high-grade mineralisation at the Eaglehawk Reef, considered one of Maldon’s largest high-grade and historical mines.

The Kaiser owned Maldon goldfield produced 1.74 million ounces of gold at an average grade of 28g/t on a granted mining lease.

Maldon is considered to have some distinct exploration and development advantages. It has an established and serviced decline, which enables easy underground access for drilling high-grade shoots and is facilitating the underground drilling and future potential mining.

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.