KGL RESOURCES LIMITED — Call Transcript 2011

Apr 5, 2011

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Kentor Gold Ltd

Highlights of interview....

• Company Strategy Including Jinka Acquisition

• Attraction of Jinka Assets

• Progress at Andash

Date of lodgement:

6 A p ril 2011

Title:

“M D Explains J i nka Minera l Tak e over”

• Funding & Value Creation

Record of interview:

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Kentor G old Limite d (ASX cod e : KGL) ha s announced an off-mar k et take-ove r offer for t h e Australi a n gold and base metal s company J inka Mine r als Limited . At the sa m e time, y o u noted in your anno u ncement t h at the dev e lopment o f the Andas h gold-cop p er project i n Kyrgyzs t an remains Kentor Gold’s priority. Can you e laborate on your comp a ny’s strate g y here?

Managing Director, Simon Milroy Our stra t egy is to a cquire adv a nced proje c ts and pro g ress them through ex p loration a n d develop m ent to pro d uction. That’s what w e are doing with Anda s h. We acquired it as a n advance d project an d it has our f irst priority as we prep a re to go to t h e full-scal e developme n t stage of w hat we ex p ect will be o ne of the world’s lowe s t cost gold p roducers.

Whilst A ndash is t h e first proj e ct ready fo r developm e nt, we don’t plan to be a one mi n e compan y . Rather, w e see real b e nefits for s h areholders by buildin g and operat i ng numero u s mining p rojects co m mensurate with our s k ills base. T he Jinka a c quisition g i ves Kentor a strong n e w growth o ption and being in Aus t ralia divers i fies the ge o graphical l o cation of o u r operatio n s. We believe we will b e able to le v erage off t h e cash we h ave paid and through o u r propose d resource d r illing and d e finition create real val u e for share h olders. We believe Jin k a will be a source of q u ality futur e cash flows which will contribute t o the long t e rm growth o f the Com p any.

Jinka’s a ssets include advanc e d gold an d copper p r ojects wit h the poten t ial for ear l y develop m ent.

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The Jin k a assets in c lude two f ormer gol d mines. J u st how ad v anced are they towar d s renewed production ? What are y our immed i ate plans?

Simon Milroy

We are a iming for early gold p r oduction at Burnakura a nd Gabani n tha. They are within 2 0 km of e a ch other a n d about 50 km south o f Meekath a ra in West e rn Australi a . Burnaku r a produce d 216,250 o z gold from open cut op e rations at a head grade of 3.8 g/t, a nd 50,637 o z gold fro m undergro u nd at an average grade of 5.95 g/t. Gabanint h a produced over 180,0 0 0 oz gold f rom an ope n pit at 3.23 g/t.

Our first task is to e s tablish JO R C Resources and then p repare feas i bility studi e s for open p it mining. Burnakura h as a proce s sing plant w hich is un d er care an d maintenan c e and can b e re-com m issioned an d expanded to process B urnakura a nd Gabani n tha ore. T h ere is also a refurbis h ed camp, w o rkshops, o f fices and al l of the nor m al mine sit e infrastruct u re.

We also propose to do some dr i lling at Jer v ois, Jinka’ s base meta l s project in the Northe r Territor y , with the a i m of calcul a ting a Reso u rce and pr e paring a fe a sibility study.

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Last mo n th you advised that yo u were waiti n g for the o u tcome of a G overnmen t Commissi o n of Inqui r y into And a sh. You h a ve emphasised that An d ash is the p riority project. Can y o u provide a n update?

Simon Milroy

We are w aiting for t he Commi s sion’s dete r mination. I n the interi m , they have asked us t o resume o ur dealings with the lo c al people. W e have a l o t of local u nderstandin g and supp o rt for the benefits that the operati o n will brin g , but these v ery benefit s – hundreds of new jo b s locally and higher l e vels of wa g es – can c a use concer n in the mi n ds of some people abo u t change. Members of our B o ard and t h e manage m ent team h ave deep and valuable experien c e in minin g projects i n foreign co u ntries. We are aware o f the local i ssues and a r e working with the co m munities t o address an y concerns.

I am confident that w e will reac h agreement with the local community and once we are on t h ground, t he construc t ion of And a sh will tak e 12 months t o complete .

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The offe r for Jinka i s all cash, a n d Kentor G old has to f u nd the dev e lopment c o st of Andas h . Can you do this fro m existing re s ources?

Simon Milroy

Yes. W e have some $71 millio n in cash fro m which to f inance the $ 12.8 millio n total cost o f the Jink a acquisitio n . The cas h reserve, t o gether wit h the US$5 0 million de b t facility w e accepted last month f rom Macq u arie Bank, is more than enough to fu nd the dev e lopment cost of Anda s h which is e stimated at U S$96 mill i on.

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Andash i s being set up for an i n itial annua l production of 70,000 o z gold and 7,400 tonn e s copper p er year for six years, w ith a gold cash cost of US$29/oz after copp e r credits a n d royalty. Presumably the rising price of gold and cop p er are imp r oving the e conomics o f Andash e ven further ?

Simon Milroy

Yes, the calculation above assu m es a copp e r price of $ 2 .75/lb for c opper. At c urrent copp e r prices, w e will have n egative ca s h costs for g old produc t ion.

companyinsight.com.au What ar e the conditi o ns attache d to the Jink a Minerals t a keover and what needs to be done t o finalise t h e transacti o n?

Simon Milroy

The offe r is conditi o nal, among s t other mat t ers, on 90 % minimum acceptance by each cla s s of Jinka Minerals s ecurity holders, altho u gh the co n ditions ca n be waive d at Kentor’s discretio n .

We hav e a pre bid a cceptance f or 19.9% o f the share s in Jinka. O ffer docu m ents are no w being se n t out to Ji n ka shareho l ders and th e y will hav e one mont h to accept t he bid. Jin k a shares a r e not listed, hence we e x pect the sh a reholders t o rapidly ac c ept the bid as it provid e s liquidity to their sha r es.

companyinsight.net.au Thank y o u Simon.

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