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Kaiser Reef Limited: September 2020 Review [ASX: KAU]

kaiser reef limited gold mining company review

Recently listed gold explorer Kaiser Reef (‘Kaiser’ or the ‘Company’), has pegged its future success on its wholly owned Stuart Town Project (the ‘Project’).

Located in the Lachlan Fold Belt, NSW, between Newcrest Mining Limited’s Cadia mining operation and Alkane’s new gold discovery – the Boda Project, the view that the project is prospective for gold is supported by the extensive number of historic gold mines located in the region. The Newcrest Mining owned Cadia project is Australia’s largest gold mine with resources of 42 million ounces of contained gold.

Although the Project covers a significant historic gold field, with more than 80 recorded historic mines, it has had very limited exploration.  It is believed mining first began at Stuart Town in the 1850 and continued through to 1875.

Despite no records on the actual production from the project between 1851 and 1875, Kaiser believes it was “significant”. However, records between 1875 and the early part of the 20th Century indicate gold production of about 170,000 ounces. The records also reveal extremely high historic head grades of between 25-30g/t gold.

A Rio Tinto entity has previously explored the area, which returned “encouraging” results from soil sampling. Most of the exploration focused on Cadia-style deposits.  Additionally, Mount Isa Mines subsidiary Carpentaria Exploration undertook a review of magnetic and radiometric data and noted a possible anomaly that could be a source of gold. However, this anomaly is yet to be drilled.

In an independent geologist’s report on the project, Snowden Mining Industry Consultants noted limited drilling had been undertaken at the project. Its observations of the drilling also suggest it was “hastily conceived” and focused on meeting tenement expenditure requirements rather than a geological strategy.

Under Snowden’s recommendation, Kaiser has allocated $2.5 million towards exploration activities at Stuart Town over the next two years.

Exploration for the first year will comprise detailed mapping, geophysical surveys and reverse circulation drilling, with a budget for the period of $1.08 million.

In the second year, Kaiser will undertake more detailed mapping along with RC and diamond drilling. This has an estimated cost of $1.42 million. 

As part of Kaiser’s growth strategy, it has indicated it would look at acquisition opportunities – primarily gold and base metals within Australia. In April 2020 Kaiser announced that it has secured further exploration tenure over the northern extent of the highly endowed and prospective Macquarie Arc.

The Macquarie Arc is located within the Lachlan Fold Belt, the “Macquarie North” project. The licences cover 80 kilometres of interpreted1 strike of the Macquarie Arc, identified as being prospective for copper-gold porphyry mineralisation. The project lies to the north of licences held by FMG Resources Pty Ltd and Kincora Copper Australia Pty Ltd.

The prospective target rocks are intrusive igneous rocks associated with copper and gold mineralisation in the belt and are overlain by sediments of variable depth with negligible historic exploration.

Directors consider it is extraordinary that a mineral terrain of this potential within Australia, one of the premier mining districts in the world, remains so untested. While the Company’s focus remains at the gold endowed district of Stuart Town, Kaiser is excited to have secured this greenfield project and will work towards exploration as soon as practical. Whilst the Company is not aware of any reason why the exploration licences will not be granted in due course (anticipated within three months), investors are cautioned that there is a risk the exploration licences will not be granted.      

Kaiser Reef raised $4,500,000 via the issue of 22,500,000 Shares at an issue price of $0.20 per Share in February this year.  

Kaiser has a lean capital structure and low overheads, ensuring high leverage for investors to any exploration success. The Board have significant expertise and experience in the mining and resources industry and will aim to ensure that funds raised through the Offer will be utilised in a cost-effective manner to advance the Company’s business. The Board considers that one of the best indicators for a large-scale gold deposit is below a significant historic gold field that remains largely unexplained.

Leading Kaiser’s growth strategy and exploration at Stuart Town is a board comprising Adrian Byass as non-executive chairman, Jonathan Downes as executive director and David Palumbo who is both a non-executive director and company secretary. Mr Byass is currently on the board of several other gold companies and Mr Downes has more than 25 years’ experience in the mining sector and has worked with nickel, gold and base metals. Mr Palumbo has more than 14 years’ experience across company secretarial, corporate advisory, and financial management and reporting of ASX-listed entities.

Shareholders of Kaiser Reef, with its major tenements located in the gold-rich Lachlan Fold Belt, no doubt are hopeful that the old adage, “The best place to look for gold is where you’ve already found it,” rings true.

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