July 2011 - Kingsrose Mining

KINGSROSE
Miners and analysts near the
end of the long descent down to
the mine adit. On the opposite
side of the stream the orebody is
exposed.
Kingsrose’s Sumatra gold-silver
quest has moved up a big cog
By Ross Louthean who visited Way Linggo
The late June announcement of spectacular drilling results at the Talang Santo prospect, near the spine
of the structure that contains the Way Linggo mine, has been an enormous boost to this Australian run
project in Sumatra.
The results give a clear indication
Kingrose Mining Ltd (ASX: KRM) is
not only on the trail of a second mining
target on its Contract of Work (COW) but
that it is in a virginal region for more
discoveries – perhaps a chain of high
grade epithermal gold-silver pods similar
to Pajingo and Vera-Nancy in north
Queensland.
This COW is on the Trans Sumatran
Fault Zone which runs along the length
Director Bill Phillips (blue overalls) listens to
exploration boss Gerry Baguio at a geology
briefing.
of Sumatra and on which other major
epithermal deposits have been discovered,
including Martabe (5.9 M gold oz) and
Pongkor (3.6 M oz).
As the crow flies, Talang Santo is 7
kilometres from the Way Linggo mine –
now entering its second year of operation,
and veteran miner and director Bill
Phillips who led the move to build a solid
road through the undulating high country
said its winding course covers a distance
of 24 km.
Phillips was a trouble shooter and
underground mine operator who opened
up mines Kalgoorlie and at Meekatharra
as the gold boom developed. As a driving
force behind recent mine developments
in the Philippines and now Sumatra, he
knows the importance of creating local
relationships, generating jobs and training
and minimising the costly exercise of
manning up with expatriates.
That road, he told this writer on a
helicopter run out to Talang Santo where
drilling rigs were identified by blue
canvass cover in the dense vegetation,
would allow exploration to move forward
on Talang and other targets. Now there
was a top quality road to allow locals into
coffee plantations and other activities to
expand and thrive.
Director Peter (Cookie) Cook, said that
when Way Linggo began development
The Trans Sumatra Fault stretches from one
end of Sumatra to the other.
22 July 2011 GMG

Peter Cook (left) and John Morris
underground.
At lunch time miners hang their boots on
stakes to dry out.
A loco driver hauling ore trucks out to the adit entrance.
there was a choice for Kingsrose – it could
either bring in largely mechanised mining
to exploit the mine quickly, or train locals
and bring in Indonesian expertise to not
only win hearts and minds but also allow
for systematic regional exploration.
You generate work for the locals,
live within their communities and provide
prosperity and you are well down the
political and bureaucratic track.
Cook, who has stepped back from
running Australian exploration and
mining companies to holding nonexecutive
roles on companies he helped
nuture, said Way Linggo employs 600 who
are mainly locals.
Rural life in Sumatra, as it is in
most of Indonesia, is a spartan existence
but the Way Linggo locals are doing well
and the bottom line is that Way Linggo
has cash operating costs the envy of most
other operating precious metal mines.
Cash costs have been below $US200/
ounce, and at times much lower than
that if taking in the huge silver credits.
At times cash costs, with silver credits,
have been around $US20/oz after treating
really high grade ore.
What is more encouraging is that
grades recovered have been well above the
resource grades of 8.44 grams/tonne gold
and 129 g/t silver to be achieving grades
in ingots of 15 g/t Au and 184 g/t Ag, with
results from the A orebody zone being
above 20 g/t Au and 300 g/t Ag, while in
the B orebody zone grades over significant
widths have been around 33 g/t Au and
414 g/t Ag.
Assuming a grade of 12 g/t Au and 144
g/t Ag, Kingsrose is targeting output this
year of 45,000 oz of gold and 600,000 oz
silver. The gold content in the dore has
been about 10%.
The operating company PT Natarang
Mining which has a 15% partner Bpk
Herryansyah, owned by an Indonesian
businessman.
Bill Phillips took up the Way Linggo
area with Mike Andrews who had been
involved in its discovery post-Busang
when Australian and Canadian explorers
rushed into Indonesia chasing epithermal
targets by following river systems.
The company that made the
original discovery in a high stream
was Musswelbrook Energy & Mining
Ltd, a company controlled by the Kerry
Packer empire, but its ardour for ongoing
work was pricked – as it was for many
other Indonesian explorers – by the
exposure that Bre-X’s Busang project in
Kalimantan was a total scam.
Coincidentally Musswellbrook
also started the Coho gold-silver mine in
the Philippines, but it was hit by a gold
plant robbery that saw staffers killed
and, at the time the gold price was going
pear-shaped.
Coho was later taken up by Medusa
Minerals and the man who drove the
underground mine development and the
winning of local hearts and minds was Bill
Phillips – though he left the still operating
project a year ago to place his focus on
Way Linggo.
To get the company going corporate
expertise and capital was brought in,
including current directors John Morris
and Peter Cook and well known mining
industry investor Wally Unger.
Way Linggo is a thriving operation
tapping into two vein systems which
company geoscientists believe will
cohere at depth and provide more
bonanza zones.
Everyone at the camp looks fit
– as the walk from the change rooms
and operational centre to the adit is down
a long winding track of steps that told this
writer he has been too long away from
his bike.
GMG July 2011 23

KINGSROSE
New chief executive is an
old hand on Indonesian mining
An important changing of the
management guard at Kingsrose Mining
has been a decision that both satisfied the
outgoing and incoming executive.
Chris Start – who joined the company
earlier this year as general manager
became managing director at the
beginning of this month.
At the same time executive chairman
John Morris will step back from this role
held since the evolution of the company in
2007 to become non executive chairman.
Start graduated from the Royal
Melbourne Institute of Technology as
a metallurgical engineer with honours
in 1988 and, for the past 23 years,
has worked as a metallurgist and
management positions with companies
including Dominion Mining and Newmont
Mining Corporation.
Workers near the ball mills at the process
plant.
New MD Chris Start next to the SAG mill shell at the milling complex.
He has worked at the Kidston gold
mine in Queensland, Murrin Murrin
nickel-cobalt laterite project, and Granny
Smith and Boddington gold mines in
Western Australia.
His international experience has
included being process manager at
the Mount Muro gold-silver mine in
Kalimantan and was general manager at
the Musselwhite gold mine in Canada
He gained a Master of Science
Degree in Mineral Economics which
was put to good use in corporate roles at
both Dominion Mining and Australian
Goldfields.
“Way Linggo is an amazing project. It
is a small, high grade producing gold mine
generating a healthy cash flow,” he said.
“With de-bottlenecking of the
processing plant and the imminent
installation of the SAG mill, our
immediate focus will be on developing
additional mining sources to increase
production.
Helping end the bottleneck is the new
SAG mill standing on site at the mine
processing centre which is awaiting
assembly.
Talang Santo shaping up as a clone of Way Linggo
It took about forty drill holes to hit paydirt
on Talang Santo which is a fair indication
of how difficult the needle-in-the-haystack
is in finding a significant epithermal body.
Kingsrose now has three drill rigs on
site and this is just the beginning of the
quest to make this a potential second mine
for the company.
Drilling and surface reconnaissance has
outlined a swam of epithermal veins and
the last two holes reported to the end of
June were:
DDH199: 1.1 metres grading 46.9 g/t
gold and 87.9 g/t silver from 176m depth,
including 0.5m at 98.9 g/t Au and 164.9 g/t
Ag; followed by 4.35m at 10 g/t Au and 25.2
g/t Ag.
DDH194: 2.4m at 7.5 g/t Au and 35.5 g/t
Ag from 109m, including 1m at 14.95 g/t Au
and 74.2 g/t Ag; followed by 3.9m at 9.18 g/t
Au and 21.2 g/t Ag, including 0.5m at 19.38
g/t Au and 22 g/t Ag.
The discovery is at the northern end of
the Way Linggo COW, and Kingsrose has
already applied for the open area to the
north and is confident it may be granted by
the Indonesian Government before the end
of the year.
Chairman John Morris said the
company has only drilled a handful of holes
in the discovery area on the Talang area.
“The system remains open in most
directions and the strike length, so far, is
approaching that seen at the Way Linggo
mine,” he said.
“This is only one of many veins in the
Talang region and we are excited by the
overall potential.”
Blue covers mark the position of two drill
rigs at Talang Santo with the exploration
camp on the far right.
There are now three drill rigs on
site and more may be brought in. The
exploration expenditure may be upward of
$US1 M a month.
24 July 2011 GMG