KGL - KGL Resources

[banska bystrica]

Re: KGL - Kentor Gold

For those worried about political risk.

http://pennystockdd.com/stock-news/stans-energy-chair-meets-kyrgyz-president-otunbayeva/

The Kyrgyz Opportunities Forum, held September 23 in New York City, provided the perfect opportunity for President of the Kyrgyz Republic H.E. Roza Otunbayeva to meet with investors and business people working within the Republic.
President Otunbayeva was in New York to discuss opportunities for cooperation, investment and trade with both US and Canadian companies. She attended the Forum, organized by the Kyrgyz-North America Trade Council and Chadbourne & Park LLP.
The conference brought together a wide variety of delegates who came to New York to network and hear presentations by speakers such as Ambassador Robert O. Blake, Assistant Secretary of State, South and Central Asian Affairs, at the U.S. Department of State; Rodney Irwin, Chairman of the Board of Stans Energy Corp, Frank Herbert from Centerra Gold; Hugh Mckinnon from Kentor Gold; and speakers and representatives from a number of Kyrgyz government agencies.
Rodney Irwin, who is not only Chairman of Stans Energy, but also Canada?s Former Ambassador to Russia and the current Honorary Consul of the Kyrgyz Republic for Canada also presented.
In her keynote speech to delegates, President Otunbayeva highlighted her government's recent initiatives to enhance business opportunities in the central Asian country. Business-friendly legislation is being adopted that promotes international cooperation in trade and enhances protections for foreign companies and investors. One innovative piece of legislation includes the creation of one central agency for foreign investors to deal with: The Ministry of Economic Regulation.
The Kyrgyz Republic has also proposed the creation of Free Economic Zones (FEZ) within the country. These FEZs will provide foreign businesses with tax exemptions, reduced fees and complete exemptions from customs duties on export and import of merchandise into and from the economic zones, and simplified customs procedures.
Of major interest to investors is the government's pledge that foreign investments in a FEZ cannot be nationalized. The Kyrgyz government is also bringing forward laws that ensure that property rights of investors will remain paramount and legislation will be enacted to ensure all business transactions are protected legally. The Kyrgyz government has engaged with US law making specialists to help design these laws.
Taking on and reducing corruption of elected officials has also become a chief plank in the platform of the interim government.
While the Kyrgyz Republic has been hard hit by the international financial crisis, the government has taken concrete steps to improve the country's economic outlook.
Government projections are that by 2011, the Kyrgyz Republic will experience a growth rate of 20 percent. One chief area of optimism is mining and mineral development in the country. Centerra Gold?s Kumtor mine has provided significant economic benefits to the country and President Otunbayeva has indicated that further mining development is key to the country?s future economic prosperity.
Following the forum, President Roza Otunbayeva was met with U.S. President Barack Obama and attended the UN General Assembly meeting at the United Nations.

 

[benwex]

Re: KGL - Kentor Gold

$96M capital cost for the processing plant will probably consist of $50M bank debt and $46M equity. I'd like to see circa $25M in a convertible note and a rights issue for circa $21M.

If we assume an extra 250M shares on issue post capital raisings, KGL will have 826M shares on issue.
With a NPV of AUD$250M, that would give a current NPV of 30c per share fully diluted.
Looks a compelling case for a strong buy IMO at current prices, trading at a 53% discount to the fully diluted NPV.

Hello BB,

I have just recently began looking at KGL and enjoyed your comments on ASF. The news of Maq bank's initial commitment subject to due diligence is great news for the Aktash project. 50% project finance seems like as good as it could get considering the sovereign risk that Kyrgyz Republic poses. I look forward to the detail as it become public...

Now the short fall in Capex will be delivered through equity raising no doubt. In your calculations for the 250m new shares issued, what price have you assumed to achieve the fully diluted 30c evaluation? Have you had any correspondence with KGL that have indicated how they will include (or compensate) existing share holders?

Also they seem to be very light on drilling results and information relating to further exploration in the immediate area to increase the resource. A 6 year mine life is extremely short and I am looking for more confidence that this will easily be pushed out to 10+ years..

And curiously what is with Banska bystrica mate? Are you based in Slovakia??

regards,

Benwex

 

[banska bystrica]

Re: KGL - Kentor Gold

Benwex,

The valuation model changes daily with the gold/copper price. Using today’s prices of $1,347/oz and $3.79/lb for gold and copper respectively, the current NPV for Andash Zone 1 (Not Aktash which you mentioned) is US $270M.

Aktash (a separate deposit 8km to the N/E of Andash just purchased by Kentor for $19/oz gold and US4.8c/lb copper....bargain!) will add an additional 3-5M tonnes of ore and two years additional mine life to Andash (the ore from Aktash will be incorporated into the Andash ore).

This adds 56% to the NPV calculation.

Andash Zones 2 and 3 will be also added to the reserves once JORC certification is received. This is estimated at 30% of the Zone 1 resource.

In summary, if we calculate the NPV for Andash (Zones 1,2 and 3) and Aktash, we come up with a total NPV of US$270 X 1.3 x 1.56 = US$547M.

This equates to an undiluted valuation of 96c per KGL share.

Remember this does NOT include any value for:
Savoyardy: (located along strike from the 1.5M oz Sawayaerdun project across the border in China),

Tokhtonysay: (57m @1.5g/t gold and 1.4% copper) or

Nakhodka: (9.9m @ 7.9g/t gold and 8m @6.0g/t gold).

The estimated strip ratio is a ridiculously low 0.7:1. Waste and ore will be dry blasted and excavated in three metre high flitches. Andash Zone 1 waste rock is non acid generating and will be placed south of the pit making use of the natural slope. The waste will also be used for the ongoing construction of the tailings dam wall. Ore will be stockpiled at a site near the crusher. Tailings will be stored in an impermeable basin. A reclaim facility will recover water from the tailings dam for use in the process plant. Tailings storage conforms to regulations designed to prevent seepage into the Karakol River.

Average concentrate grades of 60g/t gold and 22% copper are expected.

PS. I live in Qld but spend regular time in Eastern Europe.

 

[banska bystrica]

Re: KGL - Kentor Gold

The unknown at the moment is how much dilution to raise the additional $50M?

RBS have indicated the capital raising will probably include quasi equity/hybrids. I read that as something along the lines of convertible notes combined with a rights issue for shareholders. The beauty of CNotes is that they are normally issued at a premium (130%-150%) to the prevailing share price and have a conversion date perhaps three to four years out?

Importantly, at current prices, KGL will have paid back the $50M debt to Macquarie in circa 8 months after production commences.

Effectively, KGL could be producing 100,000 oz gold per annum at a cash cost of zero after copper credits and be debt free by 2013. People can work out what that would value KGL at.

 

[banska bystrica]

Re: KGL - Kentor Gold

2012/13 EBITDA of circa $120M per annum on a conservative 8X EBITDA multiple implies a 2012/13 market cap of $1Bn. That's where I see the upside potential. Best do do your own research.

 

[banska bystrica]

Re: KGL - Kentor Gold

Elections today:

http://www.google.com/hostednews/af...docId=CNG.abcf68e546390d16450e621e39e18711.11

"Polls open in landmark Kyrgyzstan elections

(AFP) – 59 minutes ago

BISHKEK ”” Polling stations in Kyrgyzstan opened Sunday for elections aimed at creating Central Asia's first parliamentary democracy despite fears of a resurgence of violence in the troubled ex-Soviet state.

Polling stations are to close at 8:00 pm (1400 GMT) and first results are expected on Monday.

The Kyrgyz parliament was given new powers in a June referendum that followed a bloody revolution and deadly inter-ethnic violence, it contrasts strongly with the strongman presidential rule typical in the region."

 

[Boggo]

Re: KGL - Kentor Gold

As requested, nice break out of a period of going sideways, always the best break outs, closed at 16c, stop at 14c. Last two bars are yellow indicating a potential overbought, usually ignored in a strong bull (gold) market.
(Note that this is just my method for S&P ASX300 stocks, may not work for everyone)

(click to expand)

 

[banska bystrica]

Re: KGL - Kentor Gold

Thanks for that Boggo.

Elections today will play a major role in how the country is perceived re: civil unrest.

http://english.aljazeera.net/news/asia/2010/10/2010101023315864490.html

"Polls open in Kyrgyzstan elections
Vote in the troubled ex-Soviet state is held amid fears of ethnic violence that killed hundreds of people this year.

Polling stations in Kyrgyzstan have opened for elections aimed at creating Central Asia's first parliamentary democracy.

Sunday's vote is held amid fears that the polls could reignite ethnic violence that killed hundreds this year in the troubled ex-Soviet state.

Polling stations are scheduled to close at 8pm (14:00 GMT) and first results are expected on Monday.

Roza Otunbayeva, the country's acting president, has vowed that the elections would be held in a spirit of fairness and transparency.

"These elections are of fateful importance for our people and state," she said in an address to the nation on Saturday.

"We are not just electing a parliament but starting a new system and opening a new page in our history," Otunbayeva said.

But coming after months of political turbulence and violence, tensions have been high in the run-up to the vote to choose a newly empowered legislature.

Strengthened parliament

The Kyrgyz parliament was given new powers in a referendum following a violent uprising in April that toppled Kurmanbek Bakiyev, the then president, and brought Otunbayeva to power.

Otunbayeva and her allies hope the installation of parliamentary rule will restore stability to a country shattered by unrest since the uprising.

In June, violent clashes - particularly in the country's south - between ethnic Kyrgyz and minority Uzbeks left more than 400 people dead, most of them Uzbeks, and displaced around 400,000 people.

Many Uzbeks say they are still being victimised by security forces and targeted in the investigation into the clashes.

But according to James Bays, Al Jazeera's correspondent reporting from the capital, Bishkek, a strong showing in the polls by supporters of Bakiyev could complicate matters.

If ex-president Bakiyev's supporters return to power, the political order could once again become destabilised, he said.

There are 120 seats available in the Zhogorku Kenesh, the parliament. Some 2.8 million of the country's five million population are eligible to choose between the total of 29 parties.

Election officials say the vote will be overseen by a record number of international observers - 850 monitors from 32 organisations.

Around half a dozen parties are expected to gain seats, but no party is likely to win much more than 15 per cent of the vote, meaning a coalition government is inevitable.

Under the new arrangement, parliament will pick a prime minister and play a key role in forming the government.

Rivalry

But the elections have highlighted a rivalry between parties backing the recently amended constitution which boosted the power of the legislature, and parties that aim to restore the authority of the presidency.

Surveys show the camps running a close race, although the final makeup of the coalition could be subject to protracted negotiations.

A pair of pro-Otunbayeva centre-left parties - Ata-Meken and the Social Democratic Party of Kyrgyzstan (SDPK) - are expected to figure prominently but not win a majority, according to recent opinion polls.

A possible upset could come from the Ar-Namys party led by ex-prime minister Felix Kulov, a favourite of the Kremlin who has campaigned under law-and-order slogans and vowed to reinstate the presidential system favoured by Moscow.

The virulently nationalist Ata-Zhurt, targeted this week in a raid on its offices that saw piles of its campaign literature burned in the street, has also made a strong showing, especially amongst ethnic Kyrgyz in the south.

Kyrgyzstan, which hosts a strategically vital US air base near Afghanistan, is set to embrace a parliamentary system of governance, marking a sharp departure from the "strongman model" exercised under Bakiyev.

Political developments in Kyrgyzstan have pleased the US but annoyed Russia, which warned that the first parliamentary democracy in Central Asia could be a catastrophe for Kyrgyzstan.

Geo-strategically vital Kyrgyzstan - the only country in the world to host both Russian and US military bases - has long been considered the region's most politically volatile state."

 

[banska bystrica]

Re: KGL - Kentor Gold

Up to 19c today. The penny slowly starting to drop as to how dirt cheap this gold/copper stock is. Nice 100%+ gain over the past month. Much more upside ahead.

 

[banska bystrica]

Re: KGL - Kentor Gold

Boggo,
Any chance of an updated chart and technical commentary? The fundamentals tell me this is heading to 50c+ in 2011 and $1.20+ once in production in 2012, possibly much higher depending on exploration results/acquisitions etc.
What do the charts say?

 

[Sean K]

Re: KGL - Kentor Gold

IMO technicals say overbought, and next major resistance at 25c. Support at 15c. Looks to have run a little hard the past month.

 

[Boggo]

Re: KGL - Kentor Gold

Boggo,
Any chance of an updated chart and technical commentary? The fundamentals tell me this is heading to 50c+ in 2011 and $1.20+ once in production in 2012, possibly much higher depending on exploration results/acquisitions etc.
What do the charts say?

banksa, the chart is similiar except for a new bar and a gap.
The market doesn't like gaps and has a tendency to close them but having said that these cheaper stocks are a bit erratic and less predictable.

I am not sure of the fundamentals or what is driving it (I stick to the ASX 300 nowadays as they seem to be more stable).

Your only decision that I see is how much of your current (potential) profit you are willing to give back before you bail out if it turns down, other than that ride it for all its worth.

(click to expand)

 

[banska bystrica]

Re: KGL - Kentor Gold

Thanks Boggo. I'm riding it all the way to production. Just way too cheap on fundamentals.

 

[jonojpsg]

Re: KGL - Kentor Gold

Thought I'd point out the possibility of this going on another run shortly - announcement today confirming go-ahead for Andash and the two big sell lines at 19.5 and 20c are being taken out (still some at 20c) - after that there's much less supply so will be interesting to see how it goes

Disc: Am holding

 

[Boggo]

Re: KGL - Kentor Gold

As mentioned in my previous post above, the market doesn't like gaps.
The gap on this is now closed and its in a nice position so far today.

(click to expand)

 

[Boggo]

Re: KGL - Kentor Gold

Interesting bid ask volume in the market, buyers and sellers not showing their hands are usually what drives it though.

There is one ambitious seller at the end of the ask queue.

My punt at it is highlighted in the last 20 trades.

.

 

[rony18]

Re: KGL - Kentor Gold

Hi Boggo,

I am new to this forum. What do you see KGL going to on your charts
after todays strong performance.

Rony

 

[Boggo]

Re: KGL - Kentor Gold

Impossible to tell really, it has found support where it had resistance, effectively a breakout with some significant interest as indicated by the volume.

There are obviously some fundamentals or rumours at work behind the scenes as indicated on the chart by the steady climb over the last couple of months.
When the dust settles the charts always show equilibrium imo.

I have determined how much I am prepared to have at risk on my trade if it turns down otherwise I will just let it run, get the stop to breakeven and open a coldie.

If tech/a stumbles across your post he may provide a pattern/VSA view of where it is now but unlikely that he will be making any predictions of targets.

 

[Sean K]

Re: KGL - Kentor Gold

Boggo,
Any chance of an updated chart and technical commentary? The fundamentals tell me this is heading to 50c+ in 2011 and $1.20+ once in production in 2012, possibly much higher depending on exploration results/acquisitions etc.

BB, the analysts seem to disagree with you a little.

RBS have 21c on it.

http://www.kentorgold.com/PDF/2010Oct-RBSMorganBrokerReport.pdf

Maybe it's a very very short term target?

Seems pretty amazing they're going into production so quickly with such a minor resource and low grade.

Any issues with the grade?

 

[Ping]

Re: KGL - Kentor Gold

Hi Kennas,

KGL have decent copper grade. It is not just gold, copper is also significant. When copper credits taken into account, cash cost to mine is $ 26 per ounce gold. Low strip ratio, near surface deposit. Don't worry to much about that gold grade on its own, it is the overall cash cost to mine that is important. They have one of the cheapest in the world. They plan 70,000 ounces of gold annually intially. Considering the average cash cost for mining gold in open pits is about $ 600 an ounce, you can see they great margin they stand to gain on todays/future gold prices. This stock has huge potential in my opinion. They have a number of tenemants in close proximity to each other giving good results to this point. I can see this stock hitting a buck next year, my opinion of course.