Kingsgate turns Chatree’s recovery into a record $277.9 million profit

Chatree delivers Kingsgate’s record financial year

Kingsgate Consolidated Limited (ASX:KCN) has reached the more comfortable side of its turnaround: Chatree produced a full year from mining, rather than relying mainly on stockpile feed, and the group generated a record A$277.9 million net profit after tax. Revenue rose 77% to A$596.4 million, EBITDA increased 264% to A$343.5 million and operating cash inflows reached A$225.7 million.

The result was powered by both volume and price. Chatree produced 86,078 ounces of gold and 766,009 ounces of silver, meeting full-year guidance, while gold sold for an average US$4,176 an ounce and silver for US$61.28 an ounce. Gold production stayed above 20,000 ounces for six consecutive quarters by year-end, a useful sign of operating consistency after the mine’s restart.

The numbers extend the company’s record FY2026 profit, previously reported at A$278 million, although the annual report adds the fuller balance-sheet, cash-flow and reserve detail behind that headline.

Debt falls as shareholder returns resume

Kingsgate ended June with A$179.2 million in cash, bullion and doré, including A$85.6 million of unrestricted cash and A$26 million of restricted cash. Borrowings fell 60% to A$25.7 million from A$63.7 million, with approximately A$38 million repaid during the year. The company also paid a 10-cent interim dividend, returning about A$27 million to shareholders.

Directors have recommended another unfranked 10-cent final dividend, worth A$26.6 million, for payment from retained earnings. That recommendation is not yet a year-end liability, so the renewed dividend stream remains subject to the relevant approval process. The improved liquidity is material, but it was achieved during an unusually strong precious-metals price environment rather than through a demonstrated downturn cycle.

Chatree enters a more demanding mining phase

Operationally, Chatree processed 5.47 million tonnes of ore at an average gold head grade of 0.60 grams per tonne, with gold recovery improving to 83%. Total material moved rose 49% to 22.1 million tonnes, including 16 million tonnes of waste. The next mine plan calls for more movement as the A East cutback continues and pre-stripping begins at the new Q Pit, which is expected to provide an additional higher-grade ore source.

The report also flags the less tidy parts of the year ahead: unexpected rock falls, a seven-week partial closure of Plant 1 and increased waste requirements. Plant availability fell to 93.7% from 95.7%, despite throughput remaining above nameplate capacity. Kingsgate reported AISC before royalties of US$1,178 an ounce in the managing director’s report, while the operations and directors’ sections report US$2,123 an ounce; the differing royalty treatment will need to be reconciled before either figure is used as a clean comparison.

The company has also secured additional land for waste and tailings storage, while water remains a central operating constraint. Chatree continues to operate on a nil-release basis, with additional evaporation capacity expected in the first half of FY2027 and a two-phase treatment and reuse strategy still dependent on technical work and approvals.

Nueva Esperanza gains value, but remains pre-feasibility

Kingsgate’s Chilean Nueva Esperanza project received a substantial accounting boost, with a A$68.6 million impairment reversal recorded after the acquisition of royalty and water rights and the rise in gold and silver prices. The project’s Ore Reserves increased 37% to 0.26 million ounces of gold and 31% to 51.9 million ounces of silver, following the September update that linked the gains mainly to higher price assumptions and lower royalties rather than new drilling.

The next test is metallurgical rather than merely financial. Kingsgate has mobilised a drill rig and camp to collect 1,100 metres of fresh core from the Arqueros, Chimberos and Teterita orebodies for comminution and leach testing. Drilling has begun, but a storm interrupted one hole, and the project remains at the pre-feasibility stage. The company is also assessing a lower-capital heap-leach route and has said it is advancing options that could include a separate ASX listing.

Production growth meets the reserve depletion test

Across the group, Mineral Resources declined 4% to 3.5 million ounces of gold, with the reduction at Chatree attributed entirely to mining depletion. Total Ore Reserves fell 3% in contained gold to 1.4 million ounces but rose 22% in contained silver to 61.4 million ounces, reflecting the Nueva Esperanza revision. Chatree’s own Ore Reserves declined 9% for gold and 12% for silver, also due to depletion.

The long-running TAFTA arbitration with Thailand was formally terminated in December 2025 without an award or settlement agreement. However, the annual report records a A$12.8 million legal provision linked to an insurer dispute following the arbitration’s termination. That provision is a reminder that the political dispute may be closed while its financial tail is not entirely gone.

For FY2027, the key question is whether Chatree can sustain its production platform while absorbing heavier waste movement, managing Plant 1 reliability and expanding Q Pit access. At Nueva Esperanza, the decisive milestones are the metallurgical results and feasibility work, not the impairment reversal that helped make this year’s profit look exceptional.