Kingsgate Seeking $50 Million Loan for Thai Gold Mine

By Jesse Riseborough

Nov. 10 (Bloomberg) -- Kingsgate Consolidated Ltd., owner of Thailand’s biggest gold mine, is seeking a loan of about $50 million to finance half the cost of a plant expansion at its Chatree project that is forecast to double production by 2011.

“We are going to be financing $100 million, we want to do some from internal cash flow and some will come from the debt markets,” Gavin Thomas, chief executive officer of the Sydney- based company, said today by phone. Kingsgate is in talks with Investec Plc for a $25 million loan and for a similar amount from a group of Thai banks, he said.

Gold futures climbed to a record for the second straight session yesterday as the slumping dollar spurred demand for the precious metal as an alternative investment. A $100 million expansion will double capacity at the plant to as much as 240,000 ounces a year, according to the company.

“At this stage, I would expect that as long as everything stays pretty stable and we can get some support from the Thai government, I think the project will probably go ahead,” Thomas said, adding that the plan will likely go to the board for approval within the next two months. “There’s been meetings and trips to site, they are progressing along well.”

Kingsgate advanced 3.8 percent to a record A$9.34 at the 4:10 p.m. Sydney time on the Australian stock exchange. That’s the highest since the company began trading its shares in 1988. The stock has more than doubled this year and has a market value of A$902 million ($836 million).

Production will be at the “upper end” of the company’s forecast for between 120,000 and 140,000 ounces of gold in the 2010 fiscal year, Thomas said.

The price of gold for immediate delivery was dropped 0.3 percent to $1,100.27 an ounce at 4:21 p.m. Sydney time.

To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net