KAU to increase production from its gold mine in Tasmania?

Our gold producing Investment Kaiser Reef (ASX: KAU) just increased processing throughput at its Henty mine in Tasmania.

KAU tested throughput for the project at up to 400,000 tonnes per annum of material - which is a ~33% improvement on the initial capacity of ~300,000 tonnes per annum.

KAU also said the higher throughput was achieved “without major infrastructure changes” with potential to increase it even more.

At a very high level, throughput is the amount of material KAU’s project can process.

The more material processed, the more gold is able to be processed.

Last quarter KAU produced a total of 8,115 ounces of gold with grades of ~4.12% and recovery rates of 89.1%.

IF KAU can replicate those recovery rates/grades at the 400,000tpa processing capacity it could increase production to north of 45k ounces per annum…

(Remembering that when KAU first acquired the asset it was forecast to produce ~25k ounces per annum, so potentially more than doubling IF things continue to go well).

Obviously this is very back of the envelope numbers, a lot will have to go right for these numbers to be hit.

KAU also committed to equipment and infrastructure upgrades including twin boom jumbos, larger trucks/loaders and an upgrade to the size of its decline so that all of this equipment can go in and out of the mine more easily.

Overall - KAU putting in place improvements it said it would when it first acquired the asset to try and increase production.

Here is a slide from KAU’s most recent presentation showing the works that would be done to increase production at Henty:

(Source)

KAU is now drilling with TWO rigs on site

We also noticed KAU start drilling with a second diamond rig operational on site.

KAU said it would be “targeting resource extension and addition” with drilling ongoing at the initial target Cradle Zone, sitting above a large portion of the mine.

Drilling would likely then move onto ‘Zone 96’ that it has also said in the presentation could also provide the opportunity to extend the mine life.

So KAU is drilling here (Fingers crossed the drilling can deliver a big resource/mine life upgrade now):

(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.

Today 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 🔄

Now with KAU’s drilling at Maldon complete, we want to see the results from drilling.

The reason we think exploration success at Maldon could be material for KAU is because of how close it is to KAU’s operating processing plant AND because Maldon was previously home to Australia’s highest grade gold mine - Nuggety Reef - which produced ~301k ounces of gold at ~187g/t gold grades.

Although not guaranteed, a major discovery at Maldon (even 1/10th of the grades Nuggety produced at) could be a game changer for KAU primarily because of the proximity to a mill which is currently operating at 20% of its capacity:

Read our prior article on the drilling commencement: KAU: Gold exploration drilling has begun. Gold’s next leg up also begun…