KAU - Kaiser Reef

[finicky]

Re Maldon:

 

[finicky]

The processing plant is at Maldon. The A1 gold mine is near Woods Point and is 300kms east by road of the plant
That's a very long haul.

"Location
The A1 Gold Mine is located in Eastern Victoria, 23km south-southeast of Jamieson and 300km east of Maldon (by road). The project is located on the extensive and prospective Lachlan Fold Belt which extends from New South Wales to Victoria."

 

[Als2own]

The processing plant is at Maldon. The A1 gold mine is near Woods Point and is 300kms east by road of the plant
That's a very long haul.

"Location
The A1 Gold Mine is located in Eastern Victoria, 23km south-southeast of Jamieson and 300km east of Maldon (by road). The project is located on the extensive and prospective Lachlan Fold Belt which extends from New South Wales to Victoria."

Yes I understand that but the union hill decline is only 3 kms from the mine . That’s where they need to start mining. Less haulage and so much spare capacity at the mill. Win win

 

[finicky]

@Als2own said " .. but the union hill decline is only 3 kms from the mine"

Right, but the A1 mine Nova project is what they're talking about and where a mining plan is currently advanced. They're not anywhere near mining at Maldon yet are they? So trucking ore 300kms is the only near or even medium term source of cash?

 

[finicky]

Not to say it's not doable. It obviously is, using current high grade selective ore from air-leg mining. Because from July 2024 presentation:
• "Production modelled at <A$2,400/oz Au AISC once ramp up complete .."
This at A1 and AISC would obviously account for haulage to Maldon.
Mechanized mining, which I've since read is their intention with fresh primary ore below level 23, should mean lower grade, but against this better efficiencies.

 

[finicky]

Back in May the M.D Jonathan Downes addressed the haulage cost to Maldon question. It's in the video post #72 previous page. His comment is at time:12.20. But anyway he said that it was costing 0.6g/t to haul ore that is 11.5g/t head grade. And that would be less than 0.6g/t now with a higher AUD gold price.

 

[Als2own]

In the notes for the agm this Friday, one tranche of the directors performance bonus’s is commencement of mining in Maldon within 2years, hence my view that news may come this year. Also 500k oz jorc wthin 4 years and also 1m oz jorc within 4 years. Page 14 in the notes. There is also a 20000 oz production in a 12 month period and 30000 oz in a 12 month period. I hope they get them all

 

[finicky]

'Next Investors' tip sheet is pumping KAU upon high grade (but thin) diamond drill intercepts announced today. Little added to our wealth of knowledge here.

Excerpt:

Good news for Aussie gold producers… With operations in Australia. (and costs paid in Aussie dollars) Like our Investment Kaiser Reef (ASX: KAU). $42.7M capped KAU are mining and selling gold in Australia right now… KAU owns a gold processing plant AND the historical A1 gold mine in Victoria, Australia. Discovered in 1861, the A1 gold mine has produced over 600,000 ounces of gold. That’s ~$2.6 Billion worth of gold at today’s gold price… The average historical grade out of the A1 mine was 25g/t gold. This is extremely high grade. But the old time miners couldn’t reach the deepest levels with the technology of the time… KAU has put in years of work to reach the deepest and never before mined levels of the A1 mine. And today KAU released the first two new drill results from these never before mined levels:

(Source) The announcement also stated that “Kaiser geologists have identified that other mineralised intercepts have been encountered in later holes, with assays expected shortly” So we expect to see more assays in the very near term from KAU…. and more new drill holes. It looks like KAU could be close to discovering and mining some new ultra high grade reefs at the A1 gold mine. While gold against the Aussie dollar is at an all time high. (to date KAU has been mining and processing the “left over ore” from old time miners… and still getting lots of gold out of it) So what happens if KAU confirms the discovery of a new high grade gold reef at the “never before mined levels at A1? They can quickly mine and sell it while gold prices are at record levels. KAU owns a currently operating gold processing plant in trucking distance from the mine. KAU has already been mining, processing and selling remnant ore from the A1 mine. And flirting with breakeven. They are all set up with the team and equipment to start mining, processing and selling the newly discovered gold straight away. So the blue sky upside we are looking for is that KAU finds new, large, ultra high grade gold reefs with continued drilling into the never before mined levels. (Like the gold reefs the old time miners found and mined 600,000 ounces from at A1 over the last century.) …and then KAU rapidly mines and sells the gold while gold is at record prices. If KAU can continue to get high grade hits in the never before mined depths of the A1 and starting pulling out high grade ore, it will be transformational for KAU Today’s results are from the untouched parts of the mine where grades are (hopefully) even stronger and more gold is uncovered. So the first two new exploratory drill holes indicate that there are more high-grade, high-potential areas to mine. IF KAU can produce at average grades anywhere near the old drill intercepts of ~25g/t then it could mean material revenue for the company… Gold is at all time highs now in AUD terms, so every incremental ounce of gold adds a lot of cash to the top line numbers of producers. Just 10,000 ounces of gold (which 3 years ago may not have been much) is now worth A$43M. KAU is the first company to hold these assets, ready to mine fresh UNTOUCHED ground at a time where the gold price is at all time highs….

 

[finicky]

...

KAU also owns 100% of a processing plant that is able to process ore mined out of the A1 mine.

Which means KAU can capitalise on today’s all time high gold prices and turn its A1 ore into cash quickly…

Exploration a big part of the KAU story​

Having a processing facility becomes far more important when it is combined with exploration success.

A good example of this is Spartan Resources.

Anyone who has been investing in the gold sector in Australia for more than 2 years would know the Spartan Resources story (formerly Gascoyne Resources).

Gascoyne owned the Dalgaranga project which was a relatively low grade operation, producing gold for years in an old gold mill in WA.

After multiple false starts, and attempted restructures the project was most recently recapitalised in 2022.

After a ‘hail mary’ exploration drill program outside of the existing resource (and existing mine), a huge gold discovery was made.

The kind of gold discovery that most small caps dream of.

In 2022 Spartan Resources drilled ~50m away from its existing JORC resource (which had been producing gold for years) and it found high-grade gold intercepts extending the area of mineralisation.

Previous drilling had missed a giant discovery, literally a stone's throw away from its old open pit… Spartan made a new high grade discovery and the company’s share price went from 10c to $1.59 and is now capped at ~$1.7BN.

Past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance. The big upside for Spartan Resources is that all of the existing processing facilities are in place, so any value from a gold discovery could be immediately realised. We think KAU (with some exploration luck) has the potential to deliver something similar to this too… KAU has a processing mill ready to go. If it can make a further gold discovery it can follow a similar success pathway as Spartan Resources… All it takes is one monster hit… Which is the best thing about exploring in never before drilled areas… you just don’t know what you might hit. KAU also owns the Maldon gold project​ In addition to the A1 gold mine KAU owns the Maldon project. This project has historically produced 2.1Moz of gold since 1854 and has been placed on care and maintenance over the last 7 years. (2.1Moz of gold is worth over $9 Billion at today’s prices) If KAU is able to unlock the exploration potential and make a further discovery it could be a ‘Spartan-like’ story.

 

[finicky]

...

KAU also owns 100% of a processing plant that is able to process ore mined out of the A1 mine.

Which means KAU can capitalise on today’s all time high gold prices and turn its A1 ore into cash quickly…

Exploration a big part of the KAU story​

Having a processing facility becomes far more important when it is combined with exploration success.

A good example of this is Spartan Resources.

Anyone who has been investing in the gold sector in Australia for more than 2 years would know the Spartan Resources story (formerly Gascoyne Resources).

Gascoyne owned the Dalgaranga project which was a relatively low grade operation, producing gold for years in an old gold mill in WA.

After multiple false starts, and attempted restructures the project was most recently recapitalised in 2022.

After a ‘hail mary’ exploration drill program outside of the existing resource (and existing mine), a huge gold discovery was made.

The kind of gold discovery that most small caps dream of.

In 2022 Spartan Resources drilled ~50m away from its existing JORC resource (which had been producing gold for years) and it found high-grade gold intercepts extending the area of mineralisation.

 

[finicky]

...
We think that M&A activity will be attracted by companies with existing mills with resources.

This is because toll milling agreements become more likely and the cost and time to build a new mill means it is increasing.

So there is a premium for those companies with “everything ready to go”.

KAU is in a unique position in Victoria where it is notoriously hard to permit and develop processing plants.

It is already operating, processing and selling gold.

Any exploration upside can be ‘stapled on’, and any company looking for a processing facility could see KAU as a potential acquisition target.

We think that KAU is entering this macro environment of consolidation for gold projects from a position of strength.

A big part of our KAU Big Bet, is getting its own projects to fill the mill and generate cash, our Big Bet is as follows:

Our KAU Big Bet:​

“KAU re-rates to a market cap greater than $300M by increasing gold production at its A1 Mine and/or making new discoveries at either of its two gold projects (A1 or Maldon)”

NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is a lot of work to be done, many risks involved - just some of which we list in our KAU Investment Memo. Success will require a significant amount of luck. There is no guarantee that our Big Bet will ever come true

Kaiser Reef​

ASX: KAU​

Our KAU site visit:​

We have been to all three of KAU’s projects during our Due Diligence process on the company.

Check out our notes from our site visits here: Our New Investment is Kaiser Reef (ASX: KAU)

We saw both the A1 gold mine and the processing plant when we visited the site back in March and again in October.

 

[finicky]

...

KAU: drill hits up to 65g/t gold. Gold in Aussie dollars at record levels. KAU can quickly mine and sell the gold. Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 4,665,000 KAU shares and the Company’s staff own 35,000 KAU shares at the time of publishing this article. The Company has been engaged by KAU to share our commentary on the progress of our Investment in KAU over time. Aussie dollar falling against global currencies? When measured against the in Australian dollar, gold is hitting new all time highs every week: Good news for Aussie gold producers… With operations in Australia. (and costs paid in Aussie dollars) Like our Investment Kaiser Reef (ASX: KAU). $42.7M capped KAU are mining and selling gold in Australia right now… KAU owns a gold processing plant AND the historical A1 gold mine in Victoria, Australia. Discovered in 1861, the A1 gold mine has produced over 600,000 ounces of gold. That’s ~$2.6 Billion worth of gold at today’s gold price… The average historical grade out of the A1 mine was 25g/t gold. This is extremely high grade. But the old time miners couldn’t reach the deepest levels with the technology of the time… KAU has put in years of work to reach the deepest and never before mined levels of the A1 mine. And today KAU released the first two new drill results from these never before mined levels: (Source) The announcement also stated that “Kaiser geologists have identified that other mineralised intercepts have been encountered in later holes, with assays expected shortly” So we expect to see more assays in the very near term from KAU…. and more new drill holes. It looks like KAU could be close to discovering and mining some new ultra high grade reefs at the A1 gold mine. While gold against the Aussie dollar is at an all time high. (to date KAU has been mining and processing the “left over ore” from old time miners… and still getting lots of gold out of it) So what happens if KAU confirms the discovery of a new high grade gold reef at the “never before mined levels at A1? They can quickly mine and sell it while gold prices are at record levels. KAU owns a currently operating gold processing plant in trucking distance from the mine. KAU has already been mining, processing and selling remnant ore from the A1 mine. And flirting with breakeven. They are all set up with the team and equipment to start mining, processing and selling the newly discovered gold straight away. So the blue sky upside we are looking for is that KAU finds new, large, ultra high grade gold reefs with continued drilling into the never before mined levels. (Like the gold reefs the old time miners found and mined 600,000 ounces from at A1 over the last century.) …and then KAU rapidly mines and sells the gold while gold is at record prices. If KAU can continue to get high grade hits in the never before mined depths of the A1 and starting pulling out high grade ore, it will be transformational for KAU Today’s results are from the untouched parts of the mine where grades are (hopefully) even stronger and more gold is uncovered. So the first two new exploratory drill holes indicate that there are more high-grade, high-potential areas to mine. IF KAU can produce at average grades anywhere near the old drill intercepts of ~25g/t then it could mean material revenue for the company… Gold is at all time highs now in AUD terms, so every incremental ounce of gold adds a lot of cash to the top line numbers of producers. Just 10,000 ounces of gold (which 3 years ago may not have been much) is now worth A$43M. KAU is the first company to hold these assets, ready to mine fresh UNTOUCHED ground at a time where the gold price is at all time highs…. KAU also owns 100% of a processing plant that is able to process ore mined out of the A1 mine. Which means KAU can capitalise on today’s all time high gold prices and turn its A1 ore into cash quickly… Exploration a big part of the KAU story​ Having a processing facility becomes far more important when it is combined with exploration success. A good example of this is Spartan Resources. Anyone who has been investing in the gold sector in Australia for more than 2 years would know the Spartan Resources story (formerly Gascoyne Resources). Gascoyne owned the Dalgaranga project which was a relatively low grade operation, producing gold for years in an old gold mill in WA. After multiple false starts, and attempted restructures the project was most recently recapitalised in 2022. After a ‘hail mary’ exploration drill program outside of the existing resource (and existing mine), a huge gold discovery was made. The kind of gold discovery that most small caps dream of. In 2022 Spartan Resources drilled ~50m away from its existing JORC resource (which had been producing gold for years) and it found high-grade gold intercepts extending the area of mineralisation. Previous drilling had missed a giant discovery, literally a stone's throw away from its old open pit… Spartan made a new high grade discovery and the company’s share price went from 10c to $1.59 and is now capped at ~$1.7BN. Past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance. The big upside for Spartan Resources is that all of the existing processing facilities are in place, so any value from a gold discovery could be immediately realised. We think KAU (with some exploration luck) has the potential to deliver something similar to this too… KAU has a processing mill ready to go. If it can make a further gold discovery it can follow a similar success pathway as Spartan Resources… All it takes is one monster hit… Which is the best thing about exploring in never before drilled areas… you just don’t know what you might hit. KAU also owns the Maldon gold project​ In addition to the A1 gold mine KAU owns the Maldon project. This project has historically produced 2.1Moz of gold since 1854 and has been placed on care and maintenance over the last 7 years. (2.1Moz of gold is worth over $9 Billion at today’s prices) If KAU is able to unlock the exploration potential and make a further discovery it could be a ‘Spartan-like’ story. KAU has a big land position in the area, so any meaningful discoveries that get the project up to that 1Moz threshold would be a game changer for the company. It could also make KAU far more attractive to any larger gold companies, at a time of accelerating M&A in the gold industry. Gold M&A strong this early in 2025…​ Two weeks ago, in the New Year’s Eve period, Astral resources acquired ~20% of Maximus Resources at a 56% premium. This early gold M&A deal shows the potential for consolidation across the gold mining industry in 2025. (source) We think that M&A activity will be attracted by companies with existing mills with resources. This is because toll milling agreements become more likely and the cost and time to build a new mill means it is increasing. So there is a premium for those companies with “everything ready to go”. KAU is in a unique position in Victoria where it is notoriously hard to permit and develop processing plants. It is already operating, processing and selling gold. Any exploration upside can be ‘stapled on’, and any company looking for a processing facility could see KAU as a potential acquisition target. We think that KAU is entering this macro environment of consolidation for gold projects from a position of strength. A big part of our KAU Big Bet, is getting its own projects to fill the mill and generate cash, our Big Bet is as follows: Our KAU Big Bet:​ “KAU re-rates to a market cap greater than $300M by increasing gold production at its A1 Mine and/or making new discoveries at either of its two gold projects (A1 or Maldon)” NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is a lot of work to be done, many risks involved - just some of which we list in our KAU Investment Memo. Success will require a significant amount of luck. There is no guarantee that our Big Bet will ever come true Kaiser Reef​ ASX: KAU​ Our KAU site visit:​ We have been to all three of KAU’s projects during our Due Diligence process on the company. Check out our notes from our site visits here: Our New Investment is Kaiser Reef (ASX: KAU) We saw both the A1 gold mine and the processing plant when we visited the site back in March and again in October. Here are a few pictures from the A1 gold mine: Here are some from the gold processing plant in Maldon: And here are some pictures from the company’s Maldon Gold project: What’s next for KAU?​ Over the next 3-6 months we are most interested in seeing KAU drill out and develop its A1 mine. Here are the two objectives we will be tracking in the short term: Exploration drilling at A1 Mine: We want to see KAU drill out the never tested sections of the A1 mine and make high new grade discoveries. Milestones: Drilling commences Drilling results Increase production from the A1 Mine: We want to see KAU mine out the never before touched sections of the A1 gold mine. Milestones: Decline construction progress Mining of virgin ground commence Increased average gold grade processed What are the risks in the short term?​ The two key risks for KAU in the short/medium term is “exploration risk” and “development/delay risk”. Exploration risk because the company is now drilling at its A1 mine. If the drilling fails to deliver high grade gold hits then it could impact KAU’s development strategy. The market may also start to discount the potential of the development strategy which we think could impact the share price in the short term. Exploration risk There is no guarantee that KAU’s upcoming drill programs are successful and KAU may fail to find economic silver-gold deposits. Source: What could go wrong? - KAU Investment Memo 21 October 2024 Development delays are also a risk for KAU. KAU is constantly spending cash on operating its processing facility AND on decline development work. IF decline development is delayed or takes a lot longer than expected it could mean KAU goes longer periods without production revenues. We think the market could perceive this as a negative and start to price in future capital raises. Development/delay risk Should any or all of the above risks materialise, KAU could wind up stuck in “development purgatory” where newsflow dries up and the project remains stagnant for a prolonged period of time, hurting the share price. Additionally, if delays occur in terms of material newsflow, the market could turn on KAU. Source: What could go wrong? - KAU Investment Memo 21 October 2024 We list more risks to our KAU Investment Thesis in our Investment Memo