KGL - KGL Resources

[banska bystrica]

Re: KGL - Kentor Gold

Based on gold at $1,500/oz and copper at $4.30/lb, the cash cost for producing gold is negative $300 per ounce. NPV is $330M (see table in company's ASX announcement).

I posted months ago that a fair valuation for a company operating with one mine in a foreign jurisdiction would be circa 8X EBITDA. I have just looked at Pan Aust's (PNA) financials where Simon Milroy was employed and was pivotal in the program that saw PNA make the transition from explorer to producer. Market cap went from $30M to currently $2.4 billion. Share price went from 5c to 80c or 16 bagger.
PNA reported $300M EBITDA and current market is $2.4Bn. Therefore, market is pricing PNA on exactly 8X EBITDA.

Fast forward 12-18 months for KGL. Hurdles to overcome but assuming production of 70,000 ounces of gold and 7,500 tonnes of copper gives us EBITDA of circa $125M based on gold at $1,500/oz and copper at $4.30/lb.
EBITDA $125M X8 = $1 billion market cap or 94c per share.
No exploration upside included.

 

[investorpaul]

Re: KGL - Kentor Gold

Not sure if anyone else on ASF is still following KGL but I have picked up a couple of parcels (one for my speccy portfolio and another in a joint account).

Although Andash is on the backburner at the moment the Jinka Minerals acquisition has provided KGL with an excellent opportunity to be producing gold from mid next year.

The Jinka acquisition provided KGL with three projects:

1. Burnakura
2. Gabanintha
3. Jervois

Burnakura ceased operations a couple of years ago and has been in care and maintenance mode ever since. KGL plan on bringing it back into production mid next year with the free cash flow generated going towards the funding of other projects.

Early projections could also see Jervois become bigger than Andash (kyrgyz Republic).

I also expect Andash to go ahead eventually, however I have assumed it does not when arriving at a potential value for KGL.

As always DYOR

 

[kingkev]

Re: KGL - Kentor Gold

The latest results were exactly what the market has been looking for but................

They are working some great tenements and their resource standings are good. Andash unfortuanatly is on the backburner as all efforts are put into Jervois.

I have topped up again on these lows and still feel that this one is a good hold

 

[investorpaul]

Re: KGL - Kentor Gold

Hi KingKev,

I have been reading up on the political situation in Kyrgyzstan and the importance of mining to the region.

I do believe Andash will get the go ahead in time and this will certainly boost the SP as most of the market has already written this project off.

The reasons why I believe Andash will go ahead is because investment into the country is just too important to ignore. The Kumtor mine for example contributes a huge percentage of the countries GDP and if Andash proceeds it will create 450 jobs and generate of $600m towards GDP in the first 6 years alone.

Also if we examine the previous Governments and political turmoil alot of the time they were ousted due to corruption and a failure to live up to their promisses. Put simply if the new government (elections are due in October) want to stay in power they need to be clear and transparent and put forward a program that will improve wages, health, education and living standards. The development of a strong mining industry would go someway towards this IMO.

I do however agree with you about Jervois. I believe it offers great long term potential and with Burnakura coming online next year we have a great avenue available to fund future development and exploration.

 

[investorpaul]

Re: KGL - Kentor Gold

Great ann out today by KGL in regard to their Jervois Project.

Confirmation of mineralisation below 200m at the Reward Prospect

True width of 16m @ 3.27% copper, 51.33 g/t Silver and 1.16 g/t Gold.

Hit a high of 12.5c, will prob close around 11c-11.5c IMO (based on the previous run in anticipation of drill results)

 

[explod]

Re: KGL - Kentor Gold

Andash looks like being a goer soon.

I like the prospects.

 

[investorpaul]

Re: KGL - Kentor Gold

Andash looks like being a goer soon.

I like the prospects.

I went to the Gold Symposium in Sydney on Monday and Tuesday. I spoke with Simon Milroy (MD & CEO) and must say that I am very happy to hold shares.

There strategy of 3 mines in 3 years has the potential to provide for a significant increase in the SP.

I expect an announcement on Andash prior to x-mas, with construction expected to start in January.

 

[explod]

Re: KGL - Kentor Gold

Thanks for the info investorpaul.

Good action today on the chart with increased volume. A close above 12cents would look like a good breakout. Maybe a bit of up on gold could do that now.

 

[investorpaul]

Re: KGL - Kentor Gold

Thanks for the info investorpaul.

Good action today on the chart with increased volume. A close above 12cents would look like a good breakout. Maybe a bit of up on gold could do that now.

Hi Explod

Im not sure if you are on HC but these are the notes I posted on KGL and the Gold Syposium:

Hi Guys,

Still at the Gold Symposium, but I have fired up my laptop to provide you with an update.

My notes are summarised under each individual project:

Andash

- The government has assumed their 20% share of the project.

- Once the gov had their 20% they asked KGL why the project was taking so long. KGL explained the situation and the gov now wants it to progress ASAP.

- If we get approval it should be prior to x-mas with construction to start in the new year. (seem all but certain IMO).

- t $2.75/pound copper the cash costs at $29/oz of Gold. At current prices (for copper) the cash costs are likely to be negative. (i.e. all the gold is "free").

- The local town (which has a pop of 4,000 people and is 4km from the Andash Project) now want it to go ahead. The sentioment has changed.

- Only 5 wealthy land owners ever opposed the project. Their opposite appears futile now that the gov is on side.

- All engineering planning has been completed, only need to construct

Atkash

- KGL did not want to exercise their option on Atkash as it would have cost them $8 million without nothing whether Andash was going ahead. Without Andash, Atkash is uneconomical.

- Once approval is gained on Andash, they will re-examine Atkash and are confident of getting it.

- A Russian co recently offered the land owners $14 odd m for it, but reneged on the deal. KGL is now the only "buyer" IMO.

Jinka Minerals General

- Jinka was never purchased to take the focus off Andash. KGL's strategy has always been to acquire -> develop -> operate.

- Jinka minerals was about to go to an IPO but KGL was there at the right time and jumped in before hand.

Burnakura

- Feaso is delayed cause they are looking at the underground operations which will be more profitable.

- Still scheduled to start producing in June 2012.

- An RC campaign of 20,000 m will start shortly to infill the current resource.

- Start one will be 250k tpa.

- Stage two will be heap leach to treat the oxide ore.

Gabanthia

-Strategy remains to truck high grade ore to Burnakura

- Prevoius co stopped mining as soon as they hit any copper.

Jervois

- Not much was said expect the grades continue to get higher the deeper the drilling goes.

Geothermal project

*For some of you who remembered my post a few weeks back are the quarterly I was interested in finding out about this more.

- After "ditching" geothermal projects in Central Asia the company undertook a review of other opportunities throughout the South Pacific.

- They could recieve confirmation of the licence any day now. All the company had to do to secure the licence was to such a land holders claim which they have done.

- Once the project is granted one hole needs to be drilled to take the project from inferred to indicated resource status. It is then good to go (so to speak).

- Kentor will then spin the company out into a new co. they are not sure if KGL will retain shares in the company themselves or provide the shares to current holders.

- Strategy will this is to max shareholder returns (all extra cream IMO).

General comments on Gold

- David Evans stated the case for gold to:

2011 = $1,750
2015 = $3,800
2020 = $10,000 (however this will only be worth $4,600 in todays money due to massive inflation)

- David Evans said "the combined value of all the worlds gold miners is less than a global corporate such as Exon"

- Govs are conning public with global warming and expect them to run the same campaign on the devaluing of currencies.

- Eric Sportt

- Gold supply has hardly increased over the last 10 yrs

- Currently the world only adds 1.4% to the above ground supply of gold each year.

- On six simple measures there has been an increase in demand for of gold by 2,000 t pa from 2000 to 2010. This increase in demand is not being met by an increase in gold supply (as per stat above) therefore some central banks MUST be leasing/selling it (without informing the public).

- China/East Asia cannot get enough of the stuff.

- Gold exports to China (via Hong Kong) were 57 tonnes in Sep 2011 allow. A 6 fold increase on last year.

- the sale of physical gold and silver to people/public and investors is increasing at an enormous rate. in 2000 the US mint sold 8,405,000 oz of silver. In 2010 they sold 34,662,500 oz of silver.

- When Sprott launched their silver trust they made a bulk purchase of silver and it took three months for it to be delivered. Some of the dlivered bars where printed after their date of purchase (i.e. they had to produce more silver to meet previous demand).

- With $1bn you could buy all the silver listed on the commex.

- Eric spott values James Sincalirs opinion and he has stated gold to hit $12,000/oz. He correctly predicted that it would hit $1,650.

- Gold Assets only represent 1.5% of the worlds total assets. As funds/asset managers/clients demand exposure to gold this demand cannot be met by an increase in supply but must come from existing above ground stock.

- Louis Boulanger

- Since 1961 the US national debt has never gone fown.

- If we had sound money today gold would be at 10,000 an oz.

Thats just a couple of notes I have heaps more information to share. It has been a great event

 

[mr. jeff]

Re: KGL - Kentor Gold

Thanks for taking the time to put that up, much appreciated.
I went to an investor type "show" in 2009 and witnessed a bullion presentation with claims of gold doubling in value, Bernanke is evil, etc. and many of the crowd were practically ridiculing the presenter. Then gold doubled. I am by no means convinced which way it will go, but these professional views are nonetheless worth hearing.

Will take a look into KGL.

Cheers.

 

[explod]

Re: KGL - Kentor Gold

Very big thanks here too investorpaul. That is a great effort and your enthusiasm to pass it on here speaks volumes about your take.

And agree mr. jeff, that many of the sceptics are coming around to the realisation that gold is an alternative to holding the ever diminishing value of fiat.

It will be stocks such as this which will skyrocket as the penny really starts to drop in my view and very pleased to be holding.

 

[investorpaul]

Re: KGL - Kentor Gold

Stron buying in KGL over the last 20 odd mins.

The sellers at 12c and 12.5 c were completely taken out. I wonder what is brewing? or if people are just waking up to the fundamentals of this co?

 

[TMC93]

Re: KGL - Kentor Gold

I had an order in at 0.10 and had a look before and it had jumped 8%, hard to tell whats brewing.

 

[investorpaul]

Re: KGL - Kentor Gold

I had an order in at 0.10 and had a look before and it had jumped 8%, hard to tell whats brewing.

Based on what management has been talking about recently we have the following potential catalysts in the short term:

1. Andash approval (hopefully prior to 1 Jan 2012)
2. Burnakura feaso which wil now include the higher grader underground resource
3. Pre-feaso on Jervios

Also "Melua" on another forum mentioned that Simon Milroy held a meeting with a Fund Manager this morning and has another meeting planned tomorrow. The recent buying could be attributed to them.

If we hold 12.5c-13c today then we may be a second wave of technical buyers tomorrow IMO.

I look forward to seeing how the rest of the day progresses.

 

[TMC93]

Re: KGL - Kentor Gold

Based on what management has been talking about recently we have the following potential catalysts in the short term:

1. Andash approval (hopefully prior to 1 Jan 2012)
2. Burnakura feaso which wil now include the higher grader underground resource
3. Pre-feaso on Jervios

Also "Melua" on another forum mentioned that Simon Milroy held a meeting with a Fund Manager this morning and has another meeting planned tomorrow. The recent buying could be attributed to them.

If we hold 12.5c-13c today then we may be a second wave of technical buyers tomorrow IMO.

I look forward to seeing how the rest of the day progresses.

I agree, i have not been following Kentor as closely as you (great blog btw) so i cannot comment on the above but have been watching this daily, been hovering around the 11.5 cent mark and to see it jump to 12.5/13.0 in 20 minutes tickles my interests. Prospects look good for the long run so IMO but DYOR.

 

[investorpaul]

Re: KGL - Kentor Gold

I agree, i have not been following Kentor as closely as you (great blog btw) so i cannot comment on the above but have been watching this daily, been hovering around the 11.5 cent mark and to see it jump to 12.5/13.0 in 20 minutes tickles my interests. Prospects look good for the long run so IMO but DYOR.

Thanks TMC, I'm glad people are viewing my blog, it helps keep me motivated to keep going with it.

KGL has held up very well IMO after the market decided to tank again last week.

I will be looking for a close of 12.5 - 13c on volume of +10m as strong confirmation that this run has more legs.

But based on the comments about a Fund Manager doing the buying, I would not be surprised to see the price capped to try and force a close below 12.5c.

Either way I am happy to hold and eagerly await the news on Andash (when the real increase will come IMO)

 

[TMC93]

Re: KGL - Kentor Gold

Your welcome, I only have a small stake in this company but have been looking at increasing it, bought a small parcel in hopes of good news with the Andash project over the new year. Will have to watch this one closely over the close and open.

 

[investorpaul]

Re: KGL - Kentor Gold

Closed at 13 cents and 9.4m vol (close enough to my hopefuly predicition of 10m).

Now all we need is the US & Euro to stay alive for another night and we should get some technical buyers joining the fray tomorrow IMO.

If you pull up a chart KGL has now closed above previous resistance around 12-12.5c IMO.

 

[TMC93]

Re: KGL - Kentor Gold

Closed at 13 cents and 9.4m vol (close enough to my hopefuly predicition of 10m).

Now all we need is the US & Euro to stay alive for another night and we should get some technical buyers joining the fray tomorrow IMO.

If you pull up a chart KGL has now closed above previous resistance around 12-12.5c IMO.

Im thinking we will see some selling tomorrow morning and then another rise based on the strong finish today (im no expert). But who knows, maybe there will be an announcement or maybe it was just a inrease in demand, eitherway i have long plan hopes for this company (now im all out of FMS )

 

[TMC93]

Re: KGL - Kentor Gold

Announcement released a few minutes ago, brief overview

- explains great metallurgical test work at Jervois
- Jervois ore body continuing at depth; grade increasing
- Jervois potentially Kentor's largest project
- Updates Burnakura feasinility study
- Confidence about to start up for Andash project
- Exploration and the 2012 outlook

Should hopefully see a rise in SP after this.