Kingsrose reports strong gold production at Way Linggo project as turnaround continues

By Romel S. Gurky

ASX-listed Kingsrose Mining said on Wednesday that the turnaround at its 85 percent-owned Way Linggo gold project in Indonesia?s South Sumatra Province continues to gain pace, with production increasing and strong progress made on several potential growth options.

Kingsrose said in a statement that total production for the September 2017 quarter was 8,791 ounces of gold, representing a 74 percent increase on the June 2017 quarter.

The increase in production continues to be driven by the Way Linggo open pit mine, which is now consistently producing high-grade, low-cost gold and silver, the company explained.

In addition, the company said, the final pit cutback at Way Linggo was approved by the Indonesian Ministry of Energy and Mineral Resources. The application for the so-called Pinjam Pakai (borrow and use forestry permit) is expected to be approved in February 2018 in line with Kingrose?s development timetable.

Open pit activities at the Way Linggo Mine have involved a series of staged cutbacks aimed at safely recovering pillars and remnant ore located above the 1 Level of the original Way Linggo underground mine. As a result, Way Linggo is generating strong cash flow for the company, as highlighted by its performance during the September 2017 quarter, when it produced 24,224 tons at 9.1 g/t Au at a cash cost of just US$311. ?The approval of the pit cutback means Kingsrose will continue to generate solid production and cashflow from this mine,? the company said.

To ensure Kingsrose capitalizes on this outstanding opportunity, the company said it is undertaking a study to explore the possibility of further expanding the existing open pit beyond the currently planned cutback to recover the ore body down to the 3 Level.

Elsewhere, Kingsrose said at the Talang Santo gold and silver mine, also in South Sumatra, production has continued to be adversely impacted by the inflow of groundwater into the mine and poor ground conditions. There has also been a reduction in mineable areas as a result of delays in developing the mine to access the lower levels. ?This combination of factors has rendered the mine uneconomic in its current guise and as a result, the company will progressively suspend underground operations from the middle of this month.?

Kingsrose said it is firmly of the view that significant potential remains at Talang Santo and therefore it has commenced a scoping study to consider options to re-engineer the current underground mine. This would involve modern mechanized underground mining methods which would result in far greater rates of production and lower costs. ?The initial results of the study are encouraging and the study is expected to be completed by the end of October 2017.?

In addition, the company said it has commenced a study into the suitability of an ore sorter for the Talang Santo Mine. Test work is underway to establish if the Talang Santo ore body is amenable to this technology. The ore sorter has the potential to significantly increase the already-high grades from Talang Santo and reduce dilution from any future mining operations.

In parallel with the underground scoping study, Kingsrose is in the process of completing a feasibility study on an open pit operation at Talang Santo, where, similar to the Way Linggo Mine, there is a significant high-grade portion of the Resource remaining in the upper levels of the Mine. This was unable to be extracted via the current underground mining method.

Kingsrose said it is working to accelerate the open pit studies for Talang Santo and intends to seek the required regulatory approvals from the Indonesian Ministry of Energy and Mineral Resources. At this stage, it is anticipated that the relevant open pit approvals will be received during the September 2018 quarter.

Accessing the remnant Resource at Talang Santo via an open cut presents an excellent cash generation opportunity and will allow the company to direct funds towards expanding the currently known resource at Talang Santo via additional exploration and drilling and also progress exploration on the wider project area.

Kingsrose Chief Executive officer Paul Jago said in the statemen tthe company was undergoing a substantial transformation aimed at maximizing free cashflow and securing a sustainable, long-term future.

?With the reconstruction now completed, we have an immense opportunity to capitalize on these high-grade orebodies,? Jago said.

?Our focus is on maximizing free cashflow by adopting modern mining methods which will improve safety and working conditions, lower costs and enable us to mine as much of the high-grade ore as possible.

?We ultimately aim to establish two production sources using the appropriate combination of open cut and underground methods while pursuing the highly promising exploration potential of the broader Way Linggo Project.?

Editing by Reiner Simanjuntak