KAU adds $13.7M cash to its balance sheet from gold (and silver) production

Our gold producing Investment Kaiser Reef (ASX: KAU) just brought out its December quarterly production numbers.

Straight off the bat the first thing that jumped out to us was the change in cash balance.

KAU’s cash increased from $29.4M to $43.1M.

(source)

So KAU is now sitting on $43.1M in cash and is only capped at $193M (at 32.5c per share).

In terms of production, Henty surprised us again to the upside - 6,946 oz gold and 6,526 oz silver (yes, KAU was the first in our Portfolio to produce silver).

When KAU first acquired Henty it was looking to produce ~25-30k ounces of gold per annum across both its assets.

This quarter's numbers, annualised, would come in at ~28,499 ounces combined, and now there are some silver credits to sprinkle over the top of this.

So far it seems like the deal to acquire Henty is paying off for KAU.

KAU acquired the asset when gold was US$3,000/oz for total consideration of ~$31.6M (cash and KAU shares).

Now gold is at US$4,450 and just in this one quarter, KAU has added ~$13.7M in cash to its balance sheet.

(source)

We also noticed KAU’s CEO mentioned the two remaining call options (2,000 ounces at A$5,300) would be closed out this quarter meaning KAU will be producing without any hedging/call exposures.

Basically - as of March KAU will receive the spot price for all gold it produces…

At today’s spot prices, 30,000 ounces of production would be worth A$200M revenue…

(source)

What’s next for KAU?

Cost optimisation and exploration at Tasmanian project (Henty) 🔄

The main thing we want to see at Henty is for KAU to increase production rates and optimise costs.

Recently the company confirmed that upgrades to the plant are mostly in place with trials to begin shortly on increasing throughput.

(Source)

Here KAU’s new managing director Brad Valiukas talking about the optimisation work KAU is doing on site:

Watch it here: Kaiser Reef: Henty Growth, Maldon Potential & A1 Update (KAU.ASX)

Exploration program at Maldon 🔄

With KAU’s drilling at Maldon complete and results released, we want to see follow up drilling on the results announced here recently.

With KAU expecting to begin works to re-access and rehabilitate the underground decline in January we are looking forward to seeing KAU drill new areas of Maldon from underground. So we should get an update on this shortly. (source)

Update on potential for waste dump processing 🔄

Late last year KAU drilled into waste dumps and began trial processing at its 350ktpa 100% owned Maldon processing mill in Victoria, which is currently operating well below full capacity.

These are old waste dumps left by old miners and KAU knows there is some gold in them, so is going about looking into seeing if they are worth processing.

During November ~3,567t of waste material was processed at average gold grades of 1.6g/t and recovery rates of 90%.

(our back-of-the-napkin calcs tell us that it could be ~165 ounces of gold - worth ~US$700k at today’s prices - not bad for waste dump material).

We will be watching for any updates on these in the quarterly next month.