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Single focus Kaiser to sell Stuart Town gold project

Kaiser Reef has cleared its decks and will focus on its turnaround, high-grade Victorian gold assets after announcing it would be divesting its NSW Stuart Town gold project into a new ASX-listing.

However Kaiser will still have some skin in the game holding a free carried 10 per cent stake in IP aspirant Checkmate Minerals upon listing.

Whilst Kaiser says it considers the tenements highly prospective for gold mineralisation, the company says it has made the decision to focus on near mine and near production opportunities in its wholly-owned Victorian production and exploration assets.

Kaiser Reef has executed a remarkably profitable turnaround strategy at its Victorian operations, comprising the A1 and Maldon gold mines, with a 45 per cent March quarter hike crowning three quarters of increasing gold production.

In its best quarterly result, Kaiser delivered a net cashflow result from the mines 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 under previous operators to current profitability, Kaiser finished the March quarter with $6.9 million in the bank.

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

The gold producer has increased the resource through successful drilling, opening a new mechanised production area at the Queens Lode and upgraded its mining equipment.

Under the deal Checkmate will pay a non-refundable deposit of $25,000; 5,000,000 Checkmate shares and 2,500,000 performance shares that will vest when Checkmate delineates a 2012 JORC compliant inferred, or higher, mineral resource on Stuart Town. Kaiser has the option to take the performance shares or $500,000 cash.

Prior to the finalisation of any agreement Checkmate needs to satisfy a number of conditions including finalising due diligence on the Stuart Town project, completing a seed capital raising, firm commitments for a Checkmate IPO or capital raising greater than 20c per share and any necessary regulatory or government approvals required for an ASX listing.

The deal has occurred at an exciting time for gold. Prices have surged almost 18 per cent this calendar year and investment banking heavyweight Goldman Sachs is tipping A$2950 – and beyond – is likely in the next few months against the backdrop of the Russian invasion of Ukraine.

At the beginning of that crisis, the banker suggested the resulting rally in commodities could further deteriorate the developed market growth inflation mix.

“The last time that we saw all major demand drivers accelerate simultaneously was in 2010-2011 when gold rallied by almost 70 per cent. Given the material upward revision in investment and demand assumptions, we now upgrade our three, six and 12-month gold targets,” the bank said.

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

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