Excelsior Gold Limited (ASX:EXG) Managing Director, David Hamlyn Presents at the ASX CEO Sessions in Sydney


Excelsior Gold Limited (ASX:EXG) is a new gold producer in the Kalgoorlie region. It has a project north of Kalgoorlie, called the Kalgoorlie North project. We’ve been exploring that for about the last five years, we’ve built a resource base up to about 1.4 million ounces of gold. And last year we took the project into production with an ore reserve of about 283,000 ounces. We’ve done it through a milling agreement with a nearby mill, with a very low capital cost to the project.

The Kalgoorlie project was brought into production with very little capital requirements. And we have a production profile of about 42,000 ounces, for the first three years of the operation based on open pit mining. And the production increases to 50,000-55,000 ounces, as the underground operations come into the mine plan in 2019. The cost structure of the operations, since we actually only mine and we treat at the Paddington operations, the all-in sustaining cost for the project life of mine, is around about $AUD1,220 per ounce. And that gives us a very good profit margin in a current high gold price environment.

Excelsior Gold has just completed, or is in the process of completing a funding arrangement, with a couple of cornerstone investors coming into the company. That will provide financial security for the operations going forward. As I say, we had a very low capital requirement to get it up and running. And the provision of funds by the cornerstone investors will allow us to accelerate our mining operations, but more importantly, accelerate our exploration on the project as well. The funds raised will total in the vicinity of $5 million to $11 million, depending on the outcome of a rights issue, as part of that funding. And the cornerstone investors coming in, we’re very happy to welcome GWR Group Limited (ASX:GWR) to our register, as a major shareholder in the company as well.

The funding package that we’ve implemented is a combination of investments by cornerstone investors, and a rights issue open to eligible shareholders. The cash position will vary depending on the outcome of the rights issue. The rights issue is substantially underwritten by the cornerstone investors, and has the potential to raise $5.1 million. The cornerstone investment themselves has potential to raise a further $6 million. So we see a very strong cash position going forward, from both the cornerstone investment and the rights issue.

The gold price fluctuates but has been very strong in Australian dollar terms, because of the exchange rate and obviously increases in the American gold price, as well. We take advantage that through increased production, through the Paddington operations, we’ve seen a steady increase in the desire by Norton Goldfields Limited (ASX:NGF) to treat our ore. We started mining with a minimum treatment capacity of 500,000 tonnes of that operation; it’s now increased to 750,000 tonnes. And that gives us a lot more exposure to the spot gold price, as we go forward. So we see strong cash flow coming out of the operations, as we progress in 2016 and very strong cash flow coming through in 2019 when we have the underground operations.

We see the project as a long-term supplier of higher-grade underground ore, for operations in the Kalgoorlie area. This time next year, we will be completing the main pit that we’re mining at the moment, the Zoroastrian central pit. We have just announced some very good positive reconciliation data, from this pit. We do expect that pit to increase in size and that will have big ramifications, for both the economics for the underground operations and the pit, going forward. So this time next year, I think we will in a position where we will be potentially still mining the Zoroastrian central pit. It’ll be a larger pit and we will be designing up the underground operations. And we look forward to a very strong cash flow coming from those underground operations for a very long time.


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