Why has the Kingsgate (ASX:KCN) share price plunged 10% today?

The Kingsgate share price is plunging despite the company announcing plans to refurbish its Chatree Gold Mine.

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The Kingsgate Consolidated Limited (ASX: KCN) share price is tumbling today despite the company announcing the next step towards reopening its Chatree Gold Mine.

The company is planning to begin refurbishing the embattled mine, located in Thailand, starting in December.

While the news seems exciting, the market is sending Kingsgate’s stock into the red.

At the time of writing, the Kingsgate share price is $1.76, 10.86% lower than its previous close. Today’s movement follows yesterday’s unexplained 22% surge.

Let’s take a closer look at today’s news from the gold mining company.

Kingsgate share price lower on plans to refurbish Chatree

The Kingsgate share price is plunging lower despite the company announcing plans to start refurbishing its Chatree Gold Mine. Work will commence after its Metallurgical Processing Licence is activated and required mining leases are renewed.

The company is currently looking into starting the refurbishment at its Chatree North Plant.

That would allow the company access to approximately 6.6 million tonne of low-grade ore stockpiled at the mine. The ore contains around 73,000 ounces of gold and 780,000 ounces of silver.

Kingsgate expects the contained minerals could generate enough cash flow to fund other works at the site.

It’s also hoping to finally receive the Quartz mining lease. The company needs the Quartz lease before it can fully optimise the mine’s A Pit. The lease has been pending approval since 2011.

Update on negotiations

Another possible reason for the Kingsgate share price being dragged lower is on the back of an update to its settlement negotiations with the Royal Thai Government.

Last month, the company updated the market on its negotiations with the government to grant the company operating licences and permits.

Today, the company stated both it and the Thai Government have requested the arbitral tribunal continue to hold the award until 31 January 2022. The delay will provide both parties with the time to judiciously draft items and ratify settlement documentations.

The company has already begun working towards some negotiated settlement actions.

Exploration needed for the company to be granted access to prospective areas is underway. Drilling has begun at 22 of the 44 exploration areas granted to the company in the Phetchabun region. Kingsgate is also reviewing more strategic exploration areas with the Thai Government.

It’s in talks with Thai banks to establish lending terms that could help fund the reopening of the Chatree Gold Mine. However, the company isn’t certain it needs additional funding at this point.

Kingsgate is also looking at making a refining agreement with a Thai refinery. It believes the refinery could process doré from the Chatree Gold Mine.

The company is also looking at potentially constructing a renewable energy plant at Chatree and establishing a vaccination program for the community surrounding the mine.

Finally, the company is still moving to list Akara Resources on the Thai Stock Exchange.

The company noted:

While there can be no guarantee that the settlement… will be fully implemented, both Kingsgate and the Thai Government continue to work cooperatively together to achieve a negotiated outcome that provides the highest benefits for all stakeholders

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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