KWR - Kingwest Resources

[finicky]

Yikes, KWR @ 10 cents per share, guess I should have listened to the skeptics.

Company thinks the scoping study for a 31 month contract mining and toll milling campaign is "robust". My guess is, it is, but market sentiment and s.p actually becomes a 'fundamental' factor when you're intending to raise $20M via mostly equity for upfront working capital.

All up costs are thought to be 1,700/oz and they're counting on a received $2,300/oz gold price. Mid range EBITDA for the whole campaign predicted to be $79M. Not bad for a currently $16.5M market cap minnow, if they can pull it off, but at what dilutionary cost will it be to shareholders?

For 5 months they'll just be chewing through that working capital, thought to max out at $13.5M at the 5 months level, then production pay starts to overhaul costs for a breakeven point at about 10 months along the 31 months pathway.

 

[finicky]

In the pit of gloom, placed a stink bid for 30,000 more @ .085 last night but KWR roaring back today with 2M volume and up .005 to .105 ?

 

[Sean K]

In the pit of gloom, placed a stink bid for 30,000 more @ .085 last night but KWR roaring back today with 2M volume and up .005 to .105 ?

This is an interesting play finicky. Dig up stuff under old mines and cart it to someone else's mill for processing.

Is this actually a good plan?

Maybe they should hire some Uber drivers to move the ore. UberGold.

Mineral Processing

Kingwest Resources has had preliminary discussions with multiple parties regarding the potential future treatment of the mined material in order to estimate toll treatment milling options and costs. A review of recent toll treatment terms was also conducted by independent consultants GDL Pty Ltd on behalf of KWR for the Eastern Goldfields locality, that includes Menzies, to estimate reasonable toll treatment options and costs for the Menzies resources. A unit treatment cost of $44/t has accordingly been applied in this study. Additional to this the state gold royalty (2.5% of gross revenue) and a gold refining cost of $15/oz has been applied to generate the Net Revenue figure.

Material Cartage

The mined material from the eight open pits will be hauled to four ROM pads located along strike within 7km north/south. Mine geologists will designate the material classification during mining and material dumped separately into HG, MG and LG stockpiles. The ROM storage pads will all be located within 500m from the Goldfields Highway with access provided by well-maintained dirt roads. The study plans for a separate cartage contractor to be engaged providing machines and manning to achieve the outlined delivery schedule. The most likely employed haulage machines will be road trains with four side tipper trailers capable of a payload of 125t per trip and an average speed of 80km/hr.

The study has assumed an average cartage distance of 100km with an estimated unit cartage rate of $11/Wmt plus fuel ($12.75/Wmt including fuel). It is assumed the material cartage will be carried out on a continuous 24 hours basis with drivers on a two weeks on one week off roster. Each employed road train will be capable of four trips per 12 hr shift and 30kt per month. A maximum monthly cartage rate of 210kt/mth has also been applied assuming no more than seven road trains are being employed for any single period.

 

[finicky]

Yeah so the scoped mining plan is to open a few new pits and cut back a couple of old pits to get some money into the company for the deeper diamond drilling under historic high grade shaft mines that average less than 200 metres of depth.

Schematic of the 1990's pits and historic shaft mines showing u/g grades and ozs in blue

Open pit mining ceased in 1999 and inveterate goldbugs know about the untempting price of gold back then and the understandable deep lack of interest in mining it. The Menzies gold field was one of W.A's best and it wasn't abandoned because of lack of gold. The pits themselves have had no deep drilling done (that I know of), all the Menzies drilling so far has been to extend or infill shallow open pittable resources on a path to contract mining and toll milling. The ore in the scoping study sounds excellent, they expect open pit mined material to be 1.7g/t but will be selecting out higher grade stuff for the toll mill at 2g/t. Gold recovered at mill from ore is expected to be 95% for 147,000 ozs.

The deep drilling underneath the historic shaft mines will be for the big prize(s). As said, these old shaft mines were only < 200 mtrs deep on average; the deepest was 600 mtrs and they pulled an average 22g/t Au out of them. They were abandoned in 1943 , WW11, water ingress, gold prices, under capitalisation and I would guess manpower were issues. Most of these assets will have deep drilling for the first time and will have the benefit of modern drilling and targeting technology. They will also be looking for analogues, along strike and parallel, probably under cover.

But first the money - from the pits.

 

[finicky]

Moved my bid up to 0.10 and that is definitely not construable as advice
I just found myself very convincing, lol

 

[finicky]

Gee, KWR spent almost all its money during the March Quarter on drilling and payment for the independent scoping study for the Menzies Gold Project (MGP) open pits. They have less than a quarter of cash left!

However in the comments they now say they are considering a sale of the MGP resources as well as the long mentioned option of contract mining and toll milling. The scoping study estimates a free cashflow range of $95m - $64m for the higher grade material in the scoping plan. So if they succeeded in selling that resource to a second party surely KWR could get +$20m out of the deal? KWR is market capped at only $18m. A sale would pump the company for drilling its tantalising Goongarrie project and hopefully KWR would still keep ownership of most of the MGP including the u/g propects. Living on hopium these days.

"Corporate discussions regarding ore treatment and/or sale of KWR’s Menzies gold Resources have been initiated with numerous parties"

 

[Dona Ferentes]

The best place to look for Gold is under the head frame of a shaft mine in an abandoned 100 year old gold field.?

or do a Trump and drain the swamp (not ASX listed, unfortunately)

Suggestions from locals that the owners of the Beaconsfield Gold Mine in northern Tasmania search a nearby contaminated wetland could lead to a $30 million windfall.

$30m gold find in swamp after tip from locals

When the new owners of a Tasmanian gold mine heard a tip from town locals they would do well to check out the nearby swamplands, they took a look — and are very happy they did.

www.abc.net.au

 

[finicky]

Volume almost totally dried up. You'd think KWR was in a trading halt if not looking closer.
I have just put in a bid for 30,000 more shares @ 0.105 which is the the highest level of bidding atm.

This is trading day 3 after the company revealed in the Qtrly resport that cash is down to $800k and it is in talks to do an equity raise or an asset sale. Wouldn't this normally induce selling? Why isn't the market for KWR nervous? Everyone's just sitting around. Maybe there is a belief prevailing that a deal to sell the open pit resources at Menzies is the more likely scenario. I mean, you wouldn't be selling your shares in an $18M market capitalised company if you believed a $20M sale* of an asset might be imminent.
* this is purely my tentative figure and speculation

I emailed the CEO who proved accessible for a past query. Merely asked what exactly was meant by a "sale of the Menzies gold resources", if he was able to answer that. It can't mean sale of the whole MGP tenement(s). What I would have loved to ask is which financing option is the more probable - sale of resources or an equity raising?

 

[finicky]

Bid in for another 30,000 @ 0.10
Becoming an uncomfortably big punt now - $40k paid so far and down 38%
Oh, and the CEO Mr Ed Turner answered my email in a typically prompt and affable manner. Confirmed that KWR is canvassing a sale only of some of the currently designed pit shell resource, not the whole shebang of underground prospects, undefined pit prospects and Menzies tenements. Of course that desired course might not happen and the other financing option is an equity placement.

 

[finicky]

Well this is going just great. Hanging out for news about what the capital raising will be - a sale of the resource defined so far, or an equity issue around historical lows. Has the s.p been deliberately worked down by those who will load up in a raise at a depressed price? In for a penny in for a pound, I added 10,000 more @ 10c, then 30,000 more @ 8.9c yesterday. If an equity raise is the way they go, I just hope it includes a rights issue.

Daily

 

[Sean K]

Well this is going just great. Hanging out for news about what the capital raising will be - a sale of the resource defined so far, or an equity issue around historical lows. Has the s.p been deliberately worked down by those who will load up in a raise at a depressed price? In for a penny in for a pound, I added 10,000 more @ 10c, then 30,000 more @ 8.9c yesterday. If an equity raise is the way they go, I just hope it includes a rights issue.

Should see finicky in the Top 20 holders soon. eeeeek. Good luck. Surely there must be an uptick soon.

 

[finicky]

At last, trading halt due to capital raising.

From presentation a couple of days ago:

 

[finicky]

Well the totallly accurate grapevine news was out over the weekend on another forum preempting today's asx announcement of a $3m capital raising for Peleton Capital's clients @ .08 a share with a free attached half option (ex 0.15). No SPP or R.I. My remaining hope to benefit from this situation is that the March Qtrly cashflow remark (highlighted in yellow) remains meaningful, and conceivably they might still be negotiating to sell some of our assets (the modelled pit shells in the scoping study) to obviate too much dilution. To develop all these pits themselves by contract mining and toll treatment would require more than $21m upfront.

 

[barney]

Well the totallly accurate grapevine news was out over the weekend on another forum preempting today's asx announcement of a $3m capital raising for Peleton Capital's clients @ .08 a share with a free attached half option (ex 0.15).

Been a tough old road for you this one @finicky

I think the Cap Raise has set the LOW and just under 9 cents might show some fight.

I hope so for your peace of mind

 

[finicky]

I suspect that was leaked placement info capitulation type selling that took it down to 8c @barney
The CEO has hinted by email reply to me that shareholders should expect strong news flow now that the company has drilling funds. However that will compete with any fickle placement clients of Peleton Capital, so I have a bid in at .081. I agree that .08 should bear the strain

 

[finicky]

Still going just great. Got long awaited sitting bids for another 70,000 @ 0.081 filled yesterday, now price is 0.079. The way the equity raising was handled without a look in for shareholders has shaken my faith in management. When I emailed the ceo after the placement announcement he didn't even echo disappointment. The placement @ 0.08 + half a free option went to the ipo broker of KWR who has a brother on 'our' board - things that make you go hmmm..

All Data Daily

 

[barney]

Still going just great. Got long awaited sitting bids for another 70,000 @ 0.081 filled yesterday,

This looks so over sold given their Projects/Market Cap it makes you wonder what is going on.

I have not had time to dig around the rat traps @finicky . Do you have any info on the HZN (Major S/H) KWR connection

ie. Directors past relationships ... any possible subterfuge that is not obvious at face value?

There are always reasons why the SP trades against gravity at this end of the market

This could end in tears, or it may be the best buying opportunity for a minnow Goldie for the next 2-3 years

I suspect the current SP will look like a bargain in a years time if the POG stays stable, but I need more time to dig in the dirt

 

[finicky]

Sorry for the delayed response @barney

Horizon Minerals (HRZ) is the major shareholder of Kingwest Resources (KWR) and held more than 19% before the placement dilution. The placement diluted the shares by 20% not counting the attached options. HRZ picked up a chunky 6.25m shares plus options in the placement but that would not have fully sustained their percentage holding.

Jon Price is the M.D of HRZ and is on the board of KWR. How this came about is that HRZ, either in its current form or as the former Intermin Resources, divested the Menzies ground and other tenements to the newly listed KWR and took a sizeable amount of the transaction in KWR shares.

The safest way to invest in KWR would be buy into HRZ imo, I currently strongly prefer the management and HRZ has cash and investments, a growing resource next to Kalgoorlie and has already done profitable trial mining and toll milling.

KWR could come up with dramatic results from its drilling, I really like the prospects at Menzies and Goongarrie. But I am no expert obviously and frankly have more often been wrong than right with these pure specs I am very disillusioned by the way the company behaved over the equity raising and looking back, even the email responses could be perceived as a bit vapid and tone deaf if reread in cynical frame of mind. They have shown themselves ready to violently dilute shareholders and deny their natural right to participate and all this with no hint of regret or apology.

 

[barney]

Sorry for the delayed response @barney

Thanks M8. Appreciate your insights. Will keep watching with interest

 

[finicky]

Buying power surging into KWR today, ^up 9%

Daily