Q&A with Daryl Midgley, Chief Financial Officer at KBL Mining
Following several key changes within its ranks and tweaks to current operations, KBL Mining is keen to make progress in a commodity market niche that has suddenly reawakened after several years of downbeat prices. KBL has shifted its focus from underground base metals production to open-cut gold and silver production at possibly just the right time. Finfeed spoke to KBL’s CFO Daryl Midgely, to give our readers the scoop behind this junior explorer that’s already in production.
Remember that KBL is a small mining company subject to market fluctuations and all the risks that come with that. Seek professional financial advice if considering KBL for your portfolio.
Mr. Midgley joined KBL in 2012 as Financial Controller and is now the Company’s Chief Financial Officer. He brings 19 years of accounting and audit experience with the last 10 years being focussed in mining. Mr. Midgley played a key role in the refinancing of the company which concluded with the Quintana deal in March 2015. This enabled the company to restructure the balance sheet, build the CIL gold plant and develop the Pearse open-cut deposit.
Finfeed: Welcome to Finfeed Daryl and thank you for joining us today.
Daryl Midgley (DM): Thanks for having me.
Finfeed: Let’s get straight to the nitty-gritty — investors as well as analysts are keen to know just how prospective Pearse really is, what’s your take?
DM: We’ve published a series of market updates recently regarding the latest news at Pearse. In summary, what I can say is that we are delighted to see the Mineral Hill process plant return to pre-interruption levels. This now puts us [KBL] in a great position to significantly raise our cash-flow thereby reducing our financial commitments with respect to Quintana. We have turned the company around over the past 12 months and we’re very optimistic about the coming year.
Finfeed: KBL announced a maiden ore reserve at Pearse North, and you are currently conducting an exploration programme at Pearse South — which prospect would you say is a priority?
DM: As you’ve just said, we have two prime areas of focus, but there is also a background asset in the form of Sorby Hills in WA. We expect to finalise a capital raising to the tune of $6 million, and the majority of these funds are to be deployed proving up more resources across Mineral Hill and Pearse. We have identified good gold/silver mineralisation in the south and have just published a JORC compliant 179,000t @ 2.5g/t in the north.
Finfeed: What are your immediate milestones?
DM: Our intention is to move more resources into the Inferred category via exploration drilling, but also, we are quietly confident that we can successfully explore the region between Pearse North and Pearse South deposits, given the As-Sb-Au geochemistry anomaly stretching very synchronistically from north to south. We will of course update the market as soon as we know more.
Finfeed: Are there any other titbits of information that KBL shareholders can get excited about?
DM: As I was saying, the turnaround that we have now completed at KBL, makes this a very exciting time for us. We have effectively moved from base metals to precious metals as our core focus, so hopefully, the historically high gold prices in Australian dollars will continue to provide a strong operational background for us. Moreover, we have also taken the reigns at our new gold processing plant at Mineral Hill which was completed only in January. This additional infrastructure could potentially put us in a strong regional position by allowing us to process ore from other miners.
Finfeed: What about the financial state of KBL? What’s the story with funding?
DM: This aspect is key for all mining companies and we are no different. We are extremely confident that our upcoming $6 million capital raise will go through without any hitches and we’re also moving in the right direction in terms of reducing our debt financing exposure with Quintana. Bottom line, the Pearse deposits and the return to full-scale production, are two factors that clean up our balance sheet and puts us on track to raise our valuation in this new financial year.
Finfeed: Gold and precious metals in general have been grabbing headlines and analysts’ attention in recent weeks, do you think the broad improvement in gold/silver pricing will translate into a higher valuation for KBL?
DM: That’s a bit of a loaded question, but I will do my best to answer it (chuckles). Of course it’s always great to see your chosen commodity go up in price, but we are not overly concerned with spot gold prices.
The KBL Board has put together a strategy whereby we have changed tact to focus upon gold and silver, but we also have other assets in the background that we could potentially turn to at a later date, if needed. I see KBL as a nimble and flexible junior mining company that can adapt to change, and that is what we’re currently doing.
Spot gold prices can do many things, but it will be our exploration and our results that do the talking in terms of how we are valued.
Finfeed: Thank you for your time Daryl, and for answering our questions.
DM: It has been a pleasure, thank you.