KWR - Kingwest Resources

[finicky]

Settled at 0.135 after asx closed, so nothing at all in the share price for today's news. One possible explanation is selling whatever's left out of the 38m shares or so from the cap raising @ 0.08. With the range that the s.p has been in the last few days those placement holders have been able to sell at a bagger and even reserve the proceeds to exercise the 19m free options they got for ex 0.15

If KWR receives the profit before tax that I suggested as a ballpark figure then at $28m market capitalisation it trades at about the Net Present Value of $30m for the Yunndaga jv alone. And Yunndaga is just a sideshow, a vital one for funding but its current mineral resource estimate is only part of its prospectivity let alone the whole Menzies Gold Project (MGP) where there are already other pits defined. If this jv is to be successful there is nothing in the current s.p for the undrilled remainder of the Yunndaga deposit, the rest of the MGP and nothing for the possible blow-the-doors-off Goongarrie Gold Project.

My attempt at a NPV for KWR's share of the Yunndaga u/g mining jv - to be taken sceptically, I haven't done it before, and I have ignored tax as it's intended as a rough guide anyway and a lot of the cash flow will be used for exploration, i.e expensed . Also KWR will have tax losses to apply.

 

[finicky]

My above estimate of NPV can dismissed untiI get a better basis for my assumptions, e.g the premiss of a $500 margin - because if Peleton Capital's report (provided by a poster elsewhere) is close to true then I have been wildly optimistic - although I thought I was being conservative. Also, while I have found it nowhere in KWR's announcement, Peleton is saying that our joint venturer, FMR, gets to recover its capital costs before profit sharing starts. That seems reasonable on the face of it, but from my reading of the announcement part of the deal is that FMR shoulders all capital costs - I haven't found anything about recovery of these costs. I'll go with Pelton's interpretation until I am better informed. Peleton is close to the company as its clients were the ones who got the 8c/share plus free half oppie placement deal.

Quote from Peleton Capital report:

"Whilst it is early days and with little data to work from currently, we can still nevertheless speculatively envisage free cash flow emanating from this JV being somewhere in the region of $0.5m to $1m per month post FMR’s capital (CAPEX) recovery."

Also, frankly I missed the part of the announcement where KWR says legally binding sign-off for the jv will be up to 6 months away. Peleton Capital suggests mining won't start until late H1 CY2022. So another capital raising by KWR is not out of the question imo.

 

[finicky]

Closed @ 0.13 today
I added 20,000 @ 0.135 today
In for 410,000 now - average ~ 0.14
Be there or be square.

 

[finicky]

Cynicism's back again, will be much confirmed if Peleton Capital's clients are back for a second bite after having the opportunity to sell their 8c placement shares for double the price (and keep the free attaching half option). Some detective poster elsewhere said at the prior raising that a KWR director is the brother of Peleton's director?

 

[finicky]

Kingwest holding the line at 14c after trading halt lifted

Has raised $4m at 0.12 per share which adds 34m shares to the total and as suspected Peloton Capital again got its mitts on the placement, this time sharing with Euroz Hartleys as joint managers. A further 8m options ex 17c went to the joint managers. Kingwest now has $5.5m cash for drilling mega prospect Goongarrie as well as extending and defining the Menzies project.

$0.5m will be paid by FMR Investments when they sign off on the jv mining agreement for Yunndaga u/g at Menzies (6 months away) then $0.5m upon first blast for the decline. Eventually payments will stream monthly to KWR at 40% profit share from the Yunndaga mine after FMR has recovered its capital outlay.

The company is strongly alluding to further monetisation deals to come at the Menzies Gold Project.

Counting up the shares, options and share rights now:
243m shares
51m options + share rights
= 294m shares fully diluted*
* exercise of all options would bring approx $10m into the company

 

[finicky]

 

[finicky]

So those 34m new shares will settle Oct 21, so in a week the brokers' clients will be able to flip. Chances are high on a pullback of the s.p so anyone wanting a piece of the action might be able to get shares soon @ 12c. Be there or be square if that happens.

Also, correction, the 8m options issued to the brokers for managing this placement are exercisable @ 20c, not 17c as I earlier said.
17c I believe is the ex price for 17m options issued in Sept to management.

 

[finicky]

Dropped a cent to 0.13 today. The placement was at 0.12 and those shares should be in the insider accounts tomorrow. A descent to 0.12 is almost certain and with time, maybe lower. Don't miss out if you like a big spec bet - my average 0.14 and I'm inclined to add.

New Aircore drill already kicked off, 1,000 mtrs diamond across 4 holes in 3 weeks, big 10,000 mtrs RC campaign very early next year.

Someone emailed Ed Turner about flooding issues at a salt lake mine and brought up flooding at 'Lady Goongarrie' mine. He replied that the flooding was due to cyclonic rainfall and being for a small operation the miner had taken a chance and saved capital by not building a retaining wall with pumps and a channel on the outside. Elsewhere, salt lake mines have been successful in the region, St Ives was one he mentioned. The resource would have to be 1+ million ozs and higher grade to be economical. Something of which they obviously hopeful, ("it could be massive" he said elsewhere)

 

[finicky]

I picked KWR for the November tipping comp as I drew no better idea from the stocks of which I am familiar. Price boosting announcements are more likely to come after November.

However I pin some hope on another monetisation deal over current Jorc resources at the Menzies Gold project. Or maybe something visual (pre lab assays) emerging from the four exciting diamond drill holes planned in November to test the bedrock below the previously announced Lake Goongarrie aircore discovery - see the highlighted items from the recent update. I guess the ongoing aircore drilling could also throw up something fresh.

Other than that, the chart is not an impossible chance of consolidating here before another impulse move although I do not favour that scenario yet. There might be enough anticipation left for speculators to decide to get themselves set before results. Undecided. Any enthusiasm in buying will have to overcome profit taking from the recent placement to insiders @ 0.12.

Daily

 

[finicky]

As anticipated, shares have changed hands @ 0.12 today which is the price that clients of Peloton Capital and Euroz Hartleys got their 34m placement shares at. There's a build-up of buyers @ 0.12 but they will likely to be chewed up soon and a bid at that price should land some shares at the same price as the insiders.
I have placed a more ambitious bid for 40,000 down @ 0.105 where there is a gap. I just think it's not impossible that the new heavy supply will chew up any demand and then stop losses could kick in. I remember the last placement @ 0.08 eventually had this effect and shares could be bought on market at less than 0.07.

Diamond drilling into the Goongarrie Lake basement rock beneath the 'deep lead' gold bearing gravel is scheduled this month, November, and they're not drilling for peanuts, they're on the hunt for a +million oz Kanowna Belle analogue.

From the recently published Qtrly:

"Initial interpretation of the gold system at Sir Laurence suggests that there is a large bedrock gold deposit present, which has acted as the gold source for an overlying and adjacent ‘Deep Lead’ alluvial gold deposit.
These Tertiary deep leads commonly accompany the Yilgarn Archaean reef gold deposits, and were formed where locally derived, high-grade, vein quartz gravels were eroded from outcropping quartz reefs and then dumped into the adjacent alluvial channels. Nearby examples include the previously mined rich deep lead gold deposits at Paddington and Kanowna."

 

[finicky]

 

[finicky]

This is holding up remarkably well given the recent placement of shares @ 0.12.
Being cynical, maybe the insiders in the placement got the good oil not to dump their shares too quickly.

Aircore drilling has been ongoing on Lake Goongarrie.

FMR, the partner for the proposed Yunndaga underground mine at Menzies was diamond drilling at the end of Oct and the CEO said in his interview that they would be drilling "for another few weeks". That was to be 6 diamond holes, mostly for investigating the u/g conditions to eventually position their decline, but who knows what they'll find. Kingwest has identified multiple shoots beneath the Yunndage pit but only one was mined, Princess May, 85 years ago and the operators back then pulled out 270kozs @ 16g/t

Four diamond holes is to be drilled into Lake Googarrie this month too.

Perhaps there will be more monetising jv deals done on the remaining Menzies defined open pit deposits, the CEO has been hinting that they're trying to get more deals done like the one on Yunndaga.

Alternatively though, maybe a trap-door will open beneath the complacent soon and the placement holders will dump when there is enough build up of offers. That is what happened after the prior 8c placement, the share price held on for quite a while but then the selling was relentless and sent the s.p below 7c. Much more potential for news now than back then.

 

[finicky]

Extended the strike to 600 metres south of the original discovery and reconfirmed that the gold assays in the alluvial gravel (deep lead) comes from high grade gold bearing quartz reefs which were once outropping before being covered by lake sediment (screenshot 2).

Huge Potential at Lake Goongarrie Gold Discovery

 

[finicky]

Gap up, strong volume for lunch-time
Could loosely interpret recent consolidation as a messy flag - low volume stock and 12c placement interfering with shape.
20c not unreasonable target b4 week is out imo. Not that I care too much ST as this has possibility of a lotto hit?

2 Yr Daily

 

[finicky]

Up 22% b4 close
I tried to help you ?️
Huge Potential at Lake Goongarrie Gold Discovery

 

[debtfree]

Up 22% b4 close
I tried to help you ?️
Huge Potential at Lake Goongarrie Gold Discovery

Do you think it will fill in this Tuesday's gap by next Tuesday @finicky?

 

[finicky]

I favour a breakaway gap like last time (i.e a non fill)

 

[finicky]

Our understated CEO looks and sounds relaxed.
Good chance of more Goongarrie aircore drill line assays being released before November is out.
Diamond drill rig has just moved to the site today so not expecting any news this month from that. Maybe some anticipatory fomo buying though? Buyers still swimming against the tide of 12c placement profit takers though, I assume - also the earlier 8c placers?
Mý only remaining cards for the Nov comp are something visual (pre-lab) from the diamond drilling by FMR jv partner beneath the the Yunndaga pit at Menzies (should be well advanced by now) and a long odds announcement re another monetisation deal at the Menzies project.

Of course, comp wise, I pray to my personal God for that penny deadful Lepidico (LPD) to fall flat on its face from some mishap but that LPD chart is not looking good (for me). Break up from a pullback?

 

[barney]

Well well well ..... Haven't been on ASF a lot in recent times but just had a squiz at Kingswest

I love it when patience pays off .... It can be tough at this end of the market

Well done @finicky ...... Just remember which mates were backing you when the chips were down,

Particularly when delegating where the complimentary bottles of Jim Beam are to be distributed, lol

ps I don't mind the cheap "Nelson bourbon" as well ... I am a simple man

Well done M8 .... Glad to see this turn around for you. Generally pays to trust your research at this end of the market!

 

[finicky]

There goes my Dec comp entry.
Bad and good news for the legions of KWR followers - sounds like that's all for the year.

The diamond drill rig on Lake Goongarrie got constantly bogged and they weren't able to do a single hole. Now we have to wait for Q1 2022 for deeper info on the bedrock mineralisation and they will use a better suited rig on tracks that has been acquired.

Further aircore results are in: significant mineralisation has now been found in all 14 drill 'fence lines' along the Sir Laurence strike which has now doubled to 2 kilometres of length. SL is seen as open in all directions.

Outside the Sir Laurence footprint, 1.5kms west they got a hit of 8m at 5g/t from 12m depth - possibly a new discovery.

Overall score - disappointing because of the aborted DD campaign and also no news from our potential jv partner (FMR Ltd) as to their DD progress beneath the Yunndaga pit and whether they will commit to the funding deal which is essential to KWR capping its dilutionary share issuance.