trading halt, page-36

re: ** bring it on 50c , is that all? 1 million ou Andean adventure for ambitious Kingsgate


Thursday, February 23, 2006

A BUSY transcontinental fortnight looms for Ross Smyth-Kirk, with MiningNews.net catching up with the Kingsgate Consolidated chairman and 4.5% shareholder last night as he boarded a Qantas flight in Sydney en route to conferences in Europe and the Americas. He'll undoubtedly spend plenty of time on the trip selling the merits of Kingsgate's bid this week for Andean Resources. Report by Michael Quinn



Smyth-Kirk is catching up with major shareholders in Zurich ahead of conferences in Tampa, Toronto and New York.

With Kingsgate chief executive Gavin Thomas in tow, Smyth-Kirk will showcase an emerging miner that has clearly hit its operational straps over the past year or so, and which is now sharpening its corporate teeth as it seeks to fill the yawning gap that is the Australian mid-tier gold sector.

On the operational front, the company's Chatree operation in Thailand is having a strong year after a relatively tough 2004-05, with production on track to meet forecasts of nearly 150,000 ounces at cash costs of $US220/oz.

With the company also achieving outstanding exploration success over the past 12-18 months – both reserves and resources being doubled at low cost – the aim is to now double processing and production to around 300,000oz.

The expansion will more or less begin once a mining lease is approved. While the approval has been awaited for some time, Smyth-Kirk is unfazed, claiming it is part of doing business in Asia.

"We understand [doing business in Asia], we do it, others find it too difficult, but we live with it and work through the system," Smyth-Kirk said.

The company is also awaiting approval for a three-year extension to its 100% ownership of the project, with the original agreement calling for 51% "Thai ownership" by November 2006. The subsequent Thai-Australian Free Trade Agreement allows for 60% Australian ownership.

In any case, Kingsgate says potential sell-downs will represent a "commercial transaction" with "fair value expected".

Uncertainties aside, the market has been clearly impressed with Kingsgate's efforts over the past 12 months or so.

From around $2 per share last May, the stock has fairly flown, hitting a peak of $6.07 per share earlier this month.

Under the takeover bid for Andean now underway, Kingsgate is offering one of its shares for every 15 Andean shares – valuing Andean shares at 39c when the bid was made.

"We don't think [Kingsgate] is overpriced. If you look at recent analyst reports, they put a much higher value on us once we get our new mining leases," Smyth-Kirk said.

"And that's not a matter of if we get them, it's a matter of when."

Smyth-Kirk said the interest in Andean and its project in Argentina is obvious, given the junior's Cerro Negro deposit.

"It's very much like our Chatree deposit, a low sulphidation epithermal deposit. We have real expertise in developing these things in foreign countries … we also have an exploration presence in South America, in Peru, Chile and Argentina, and we have a number of people at board level, senior management that have a lot of experience at developing these things."

In terms of Cerro Negro, Sydney-based Southern Cross Equities produced a bullish report on the deposit and other prospects held by Andean last August.

Southern Cross said Cerro Negro looked commercial, estimating an initial resource of "probably over 500,000oz, say 4 to 5 million tonnes grading around 3.5gpt".

It claimed this would support a 75,000oz per annum operation producing gold at less than $US200/oz, and that such a resource could be attractive to other players in the district, including Canadian-Peruvian company Minera Andes – which has been developing a nearby silver-gold project.

However, Southern Cross also said "the real opportunity" is that the Cerro Negro deposit could move towards the 1 million oz size with further drilling – and that 2-3 additional vein targets could potentially have another 1Moz "or more" – underpinning a 120-150,000ozpa operation.

Shares in Andean jumped 5c (15.6%) morning to 37c, while Kingsgate was off 33c (5.6%) at $5.54.

Courtesy mining news..

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