text: Kingsgate management and staff continue to 
  work towards realising the operational poten- 
  tial of the Company’s two gold mines and to 
  complete the feasibility studies currently 
  underway at Nueva Esperanza and Bowdens. 
  
  Challenger 
  The Challenger Mine had a difficult year and 
  produced 66,216 ounces of gold at a total cash 
  cost of US$1,135/oz. The grade of the processed 
  ore was 3.91 grams per tonne, which 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 produc- 
  tion from the lower levels. A shortfall in under- 
  ground development also limited access to ore 
  sources. 
  
  Operations 
  
  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 production performance was 
  achieved despite some operational hurdles with 
  slower than anticipated Government approvals 
  to allow full utilisation of the expanded plant. 
  
  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. 