Kingston Resources Abandons Open Pit Mining at New South Wales Project; Launches AU$12 Million Capital Raise; Shares Hit 52-Week Low
Kingston Resources (ASX:KSN) said it suspended mining at the Pearse South open pit at its Mineral Hill mine in New South Wales following a second geotechical incident involving a wall failure, according to a Thursday filing with the Australian bourse.Tension cracks were visible in the pit's sole access ramp on June 1 and continued to open over subsequent days, resulting in a vertical slumping that made it unsafe for use, per the filing."Potential remediation options would take several weeks and a ramp redesign would sterilize a material amount of the remaining ore," the company said, adding that the risks and costs of regaining access outweigh the benefits of continued mining.As such, Kingston will not resume mining at the Pearse South open pit.The company has also paused underground development and delayed the start of underground production at Mineral Hill in favor of an intensive resource and near mine exploration drilling program. The decision will impact staffing levels, with Kingston retaining about 24 site personnel for an interim period with about 120 redundancies and the loss of 18 contractors, it said.The cost of the open pit closure, redundancies, and fleet demobilizations is estimated at AU$5 million over the coming months. The open pit closure will also result in an estimated gross revenue reduction of about AU$39 million in the June to September period, the company said.Additionally, Kingston is looking to raise about AU$11.6 million in capital, including a firm commitment for a roughly AU$2.6 million placement to investors via the issuance of about 36.4 million new shares at a price of AU$0.07 each. The company is also launching a fully underwritten entitlement offer to raise about AU$9.1 million before costs through the issue of about 129.5 million new shares at the same price.The company's shares fell past 48% in recent Thursday trade and earlier hit a 52-week low.
