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Big boost to gold manufacturing, profit as Kaiser mine hits its straps

Kaiser Reef has executed a remarkably profitable turnaround strategy at its Victorian A1 gold mine with a 45 per cent March quarter hike crowning three quarters of increasing gold production. In its best ever quarterly result, Kaiser delivered a net cashflow result from the mine of $3,443,000 for the March quarter – a significant hike on the December quarter that showed $615,000. Completing its transformation of the mine from administration to profitability, Kaiser finished the March quarter with $6.9 million in the bank.

Kaiser only purchased the loss-making Maldon mine and gold processing plant in January 2021 and it is already reaping the benefits of its well-executed turnaround strategy.

Since plucking the mine out of Administration after previous operators faltered, Kaiser has been busy with the drill bit increase resources, opening a new mechanised production area at the Queens Lode and upgrading its mining equipment.

Developing mining access to deeper lodes has also delivered strong results and provided confidence in the long-term future of the A1 mine according to Kaiser.

High-grade unmined areas at depth are now being increasingly accessed and the company said this material contributed to the high quarterly mined head grade of 14.0 grams per tonne gold.

Production at the A1 mine is also being ramped up as the decline provides access to the Queens Lode and the mine transitions from handheld to mechanical-mining dominated production.

Even after operating two drilling rigs, purchasing equipment, developing the mine and corporate overheads, Kasier still finished the March quarter with a free cash flow figure of over $1.8m.

March quarter production was 2814 ounces at a grade of 14 g/t gold and metallurgical recoveries were solid at of 96 per cent. Operating cash costs for the underground mine per ounce of gold were $1149 against a received gold price of $2658 per ounce for the quarter – a margin that would be the envy of many open pit miners.

The A1 mine has produced more than 500,000 ounces of gold at a ridiculously high average grade of 26 g/t with a long history of production dating back to 1861.

Ore from the A1 mine is processed at Maldon where the company has a modern, 150,000 tonne per annum carbon-in-pulp gold processing plant. Both the Maldon and A1 projects are 100 per cent owned, giving Kaiser a stranglehold on almost the entire Maldon goldfield that has recorded production of 1.74 million ounces at a head grade of 28 g/t gold.

The processing plant is well located in Central Victoria between Bendigo and Ballarat and toll treatment is being considered to fully utilise the plant until production at Maldon can start to supplement the A1 mine.

Kaiser reported some seriously high-grade gold results from drilling at Maldon during the quarter. At Union Hill drill results included 1.8 metres at 29.6 g/t gold and at Nuggety Reef 2.2m returned 10.3 g/t gold.

The company said its resource modelling work is well advanced at Union Hill, aided by the completion of recent drone surveys. Drilling at Nuggety Reef was restricted by the very narrow mining licence and Kaiser is planning further drilling in enhanced locations once the surrounding exploration licence is granted.

Kaiser has flagged further good news at the A1 mine, with expectations of ongoing improvement in operating efficiencies, gold production and output in 2022. The bulk of the rich Queens Lode ore body is anticipated to be processed in the second half of 2022.

Gold production showed a textbook ramp up execution and was a fantastic outcome during a time of significant pandemic related staffing and supply issues. Looking to the future, our processing plant remains well under capacity and Kaiser will focus on the continued expansion and development at the A1 mine and eventually hope to bring Maldon, one of the great Victoria goldfields, back into production.

Kaiser is moving to define itself as a profitable miner and self-funded explorer and the latest quarterly result has underlined its original strategy to buy the A1 mine out of admin.

It is often said that numbers speak for themselves. If that is true then the last four quarterly operational bottom line results from Kaiser’s A1 mine tell a good story.

The mine lost $888,000 in the June quarter before losing another $1.1m in the September quarter which no doubt caused a few wobbly knees amongst the company’s larger backers.

However, by the December quarter, management’s turnaround strategy had started to take hold with an operational bottom line of $615k before turning out the stellar bottom line net cash flow figure of $3.4m for the March quarter.

And with a fully paid for mine and a smorgasbord of uber-high grade targets to go after in addition to a profitable operation, Kaiser now has some serious colour in its cheeks as it heads into the June quarter.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au

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