SYDNEY -- Kingsgate Consolidated Ltd, the Australian producer that shuttered Thailand’s biggest gold mine following a licensing dispute, advanced the most in almost 20 years after the nation’s government said a suspension had been lifted.
The miner, which in December closed the Chatree operation about 280 kilometres north of Bangkok, jumped as much as 55%, the most since October 1997, and was 36% higher at 30 Australian cents at 12:57pm in Sydney trading. Kingsgate’s market valuation has tumbled to about A$68 million (1.8 billion baht) from A$1.1 billion (28.9 billion baht) at the end of 2010.
Sydney-based Kingsgate estimates a potential restart of the operation would cost more than $50 million, Executive Chairman Ross Smyth-Kirk said in a phone interview. “It’s a very expensive situation to re-open, and quite frankly we haven’t got the funds to do that at the moment,” he said. Kingsgate had cash of A$22 million as of June 30, according to a July filing.
Kingsgate has been informed by Thailand’s government that it has lifted a temporary suspension on the Chatree mine, while authorities also advised the producer’s local unit that an application for a renewal of its metallurgical processing license could now go ahead, the company said Friday in a statement.
Thailand’s junta leader Prime Minister Prayut Chan-Ocha suspended gold mining from Jan 1, citing complaints about environmental and health risks at Chatree. Kingsgate rejected the allegations and argued that a government-commissioned report offered a “scientific rebuttal” of the allegations, according to an April filing.
While Thailand’s government said it will not offer compensation for losses related to Chatree’s closure or assist with costs of a restart, Kingsgate has been informed authorities “may be willing to provide other meaningful benefits in consideration of the shut-down,” the company said in its statement. Kingsgate’s board “has determined that it is in the interests of the company to further explore this matter,” according to the statement.
Chatree was Kingsgate’s only producing mine after the company in 2016 sold an operation in Australia and with studies still continuing on potential gold and silver projects in Chile.
Any restart of the Thailand mine would take at least three to five months, Mr Smyth-Kirk said in the interview. The site would probably require new equipment and it remains unclear how many of the about 1,000 people who left jobs connected to the operation would be available to return, he said.