Directors’ Report
43
Directors’ Report
During the year Kingsgate sold its exploration 
assets in Western Australia and Queensland 
through the sale of shares in its subsidiary 
company, Quadrio Resources Limited, to Caravel 
Minerals Limited (“Caravel”), an Australian 
company listed on the ASX. (Kingsgate received 
a 35.54% interest in Caravel and 20,000,000 
unlisted options to acquire Caravel shares 
exercisable at 10 cents on or before three years 
from the date of issue. Kingsgate’s holding was 
reduced to 27.04% following a rights issue by 
Caravel post year-end).
Chatree
Chatree continued as Kingsgate’s primary 
production asset throughout the year, 
producing 133,681 ounces of gold and 
1,000,569 ounces of silver. The strong produc-
tion performance was achieved despite some 
operational hurdles with slower than anticipated 
Government approvals, to allow full utilisation of 
the expanded plant.
The delay of 63 days in approval of the Plant #2 
Metallurgical License and lower than expected 
availability of some of the mining contractor’s 
major mining equipment negatively impacted 
the production targets. However, near surface 
higher grades in Q Prospect mitigated these 
difficulties resulting in a strong final quarter for 
the year.
Total mill throughput for the year was 5.7 million 
tonnes, 11.4% higher than 2012, despite the 
impact of the 63 day delay during which Plant #2 
was not operating. The overall plant availability 
of 98.1% was slightly lower than the previous 
year’s 98.4%. The expanded plant is operating 
around 24% above the annual “nameplate” 
throughput rate at 6.2 million tonnes per annum 
and this is expected to continue.
Total cash costs for the year were US$767 per 
ounce (US$620 per ounce exclusive of Thai 
royalties). The average royalty paid to the Thai 
Government was $US147 per ounce of gold. 
Total production costs after depreciation and 
amortisation were US$952 per ounce of gold 
produced. 
At year end, 9.7 million tonnes of ore was stock-
piled with an average contained gold grade of 
0.57 g/t representing 178,086 ounces of gold.
Challenger
The Challenger Mine produced 66,216 ounces of 
gold for the year with an average milled grade of 
3.91 g/t and a total cash cost of US$1,135/oz. 
The grade was lower than expected due to a 
shortfall in ore supply from the mine that was 
supplemented by low grade ore from stockpiles. 
Higher dilution in stopes at the base of the mine 
(Challenger Deeps) and depletion on those levels 
due to the additional displacement of the ore 
horizons following the identification of the “215 
Shear”, contributed to the lower than expected 
production from the lower levels. A shortfall in 
underground development also limited access to 
ore sources.
Development and mining commenced at the 
higher grade Challenger West orebody during 
the year but was insufficient to offset the short-
fall from Challenger Deeps.
With the completion of the current mining 
contract scheduled for the end of July 2013,  
a tender was completed and a new upgraded 
contract was awarded to Byrnecut which 
commenced on 1 August 2013.
Following the fall in the gold price a strategic 
review of the Challenger Mine was completed. 
This resulted in the decision to implement a new 
mine plan to focus primarily on the higher grade 
Challenger West orebody. This plan will be 
implemented over the first quarter of the 2014 
financial year. 
Nueva Esperanza Silver / Gold Project
The Nueva Esperanza Silver / Gold Project 
advanced during the year with an initial scoping 
study for a decision to mine the Arqueros and 
Teterita portions of Nueva Esperanza completed 
in late 2012. The study demonstrated that open 
pit mining at two million tonnes per year and 
processing by milling and agitation leaching in 
cyanide was technically feasible although high 
capital and power costs negatively impacted 
project economic returns. 
As a consequence, feasibility work has transi-