Kin Mining pulls back on WA gold project; shares tumble 40pc
Link copied to
Kin Mining has dialled back the construction works at its Leonora gold project in Western Australia while it tries to rein in a potential cost blowout.
The company’s (ASX:KIN) share price took a hit following the news on Wednesday, sinking over 40 per cent to 15.5c by the closing bell.
Kin told investors the decision was due to an expected increase in the existing preproduction capital cost estimate for the Leonora project.
Following the recent board reshuffle, the company undertook a review that made clear it would need to spend more cash than the $35.4 million outlined in the October 2017 definitive feasibility study.
According to Kin, this would have meant it would need to raise more cash to cover the increased costs.
Kin has spent $5.9 million on the Leonora project so far and had budgeted a further $3.1 million to cover certain committed items.
Trevor Dixon, who was previously chairman and is now acting managing director, said in February the company was “going through some growing pains”.
Don Harper quit his role as managing director in February after Kin received a demand from two former directors for the removal of David Sproule as an executive director.
Kin is now undertaking a “comprehensive review” into the cost and timing of the project, which has a resource of over 1 million ounces.
But the company says it is “remains confident that the LGP holds significant value”.
Kin is continuing exploration at the project and its search for a new managing director.
The company is also undertaking an $11 million capital raising, which is expected to enable it to fund its current liabilities, curtailed construction works, review costs, exploration and corporate overheads for the next six months.
Kin is yet to decide how it will raise the cash.