KZL - Kagara Limited

[Aargh!]

Re: KZL - Kagara Zinc

Can anyone tell me if the announcement today re Waterloo was expected???
The timing just struck me as odd for some reason (4:05pm) and made me think that this was to perhaps keep the SP over $6... Seemed like they have used one of the cards up their sleeves.

 

[Dukey]

Re: KZL - Kagara Zinc

Seems to have been a good response to yesterdays announcement re Admiral Bay.

> KZL looks to be on the rise again!! up 42 cents today so far...

 

[legs]

Re: KZL - Kagara Zinc

Up 3.73% today, is it on rumours of a Oxiana Takeover?? I haven't heard a thing for a few days. Anyone got any idea?

 

[Aargh!]

Re: KZL - Kagara Zinc

KZL has been hammered in recent weeks after a 12% drop in before tax profit and seasonal rains. Interesting to see Kim Robinson snap up 400,000 shares at $3.70 equaling a cool $1.48m!

 

[treefrog]

Re: KZL - Kagara Zinc

KZL has been hammered in recent weeks after a 12% drop in before tax profit and seasonal rains. Interesting to see Kim Robinson snap up 400,000 shares at $3.70 equaling a cool $1.48m!

with zinc falling and further to go this year may see $3:00 before a real turn - earnings growth forecasts not impressive and CBA continues to bail out

 

[rederob]

Re: KZL - Kagara Zinc

with zinc falling and further to go this year may see $3:00 before a real turn - earnings growth forecasts not impressive and CBA continues to bail out

Don't count those chickens yet.
Kagara is leveraged to copper, and zinc is more of a by-play.
However, with zinc refining capacity in China constrained by power outages there will be a good rebound in prices within the month. Moreover, the continually touted zinc oversupply has not shown itself to any degree, and inventories remain near cyclical lows.
I suspect "flooding" would be of more concern to Kagara than the metals' fundamentals.
(I do not hold KZL, but am a keen follower.)

 

[MRC & Co]

Re: KZL - Kagara Zinc

Any thoughts on this one lately? Got a very high ROE (good for those fundies) and on a nice uptrend (good for those techies). Not to mention some decent growth potential!

 

[roland]

Re: KZL - Kagara Zinc

whilst having a look at Zinifex, I have put a couple of graphs together to include KZL (used to have, now I just have ZFX). Obviously KZL is heavily influenced by the LME Zinc price, but have better swings than Zinifex - maybe because of the influences of their copper etc.

 

[michael_selway]

Re: KZL - Kagara Zinc

Any thoughts on this one lately? Got a very high ROE (good for those fundies) and on a nice uptrend (good for those techies). Not to mention some decent growth potential!

KZL is actually not too bad if you can buy it low, I have a fellign ZInc Price could make a come back, like Lead and copper have not certain though

Thx

MS

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS 40.7 40.8 49.7 66.2
DPS 22.0 14.0 15.0 19.5

Diversified resources group Kagara Ltd (ASX: KZL) has reinforced its position as a low-cost, high-margin
base metals producer, today announcing a A$35.9 million net profit after tax (2006: A$38.9 million) for the
6 months to 31 December 2007 despite the significant pull-back in metal prices seen during the latter part of
2007.
Kagara said today (Wednesday) that the solid financial result was underpinned by strong operating margins at
its flagship North Queensland base metal operations, where a combination of higher production volumes,
particularly in copper, high grades and significant by-product credits contributed to low cash operating costs.
Sales revenue increased by 22% to $150.8 million (2006: $123.9 million) and earnings before interest, tax,
depreciation and amortisation (EBITDA) were $65.3 million (2006: $82.2 million), reflecting lower metal
prices. The net profit translated to earnings per share of 16.7 cents (2006: 19.6 cents).
Kagara’s North Queensland base metal operations generated net cash flow of $85 million for the first half,
providing a strong foundation for the Company’s aggressive organic growth and exploration programs.
Copper production increased by 76% to 11,409 tonnes of contained copper (2006: 6,472 tonnes), while zinc
production increased by 9.5% to 22,848 tonnes of contained zinc (2006: 20,869 tonnes) and lead production
fell by 6% to 6,150 tonnes of contained lead (2006: 6,530 tonnes).
Kagara achieved a copper cash production cost of US$1.45/lb (2006: US$1.49/lb), against a realised copper
price for the first half of US$3.29/lb (2006: US$3.31/lb) of payable copper; the zinc cash production cost was
US$0.53/lb (2006: US$0.47/lb) against a realised zinc price of US$1.20/lb (2006: US$1.70/lb). This enabled
the Company to deliver a cash operating margin for copper – currently the principal contributor to its earnings
– of US$1.84/lb of payable copper and a cash operating margin for zinc of US$0.68/lb of payable zinc.
“Although we saw a 30% reduction in the realised zinc price during the half, the continued diversification of
our production – with copper currently the main driver of our earnings growth – provided a solid buffer
against adverse commodity price movements,” commented Kagara’s Executive Chairman, Kim Robinson.
“We are very pleased overall with the result, which really highlights the robust nature of our operations and
their ability to generate strong cash flow and profits at all phases of the commodity cycle,” he added. “The
operational improvements we implemented last year, including the change to owner-operator mining and
increased operational flexibility arising from the re-commencement of mining at Mt Garnet, has also given us
greater capacity to withstand seasonal rainfall events and other operational challenges.”
Mr Robinson said Kagara’s strongly growing production profile was set to continue, with production of
copper and zinc respectively on target to exceed levels of 30,000 tonnes and 40,000 tonnes of copper metal
and zinc metal for the 2007/08 financial year.
“We are also continuing to deliver on our growth strategy, with construction of the new $80 million Mungana
base metal production centre on track to commence in April,” Mr Robinson. “This project, which is being
developed as an underground operation, will drive our production and earnings growth through the rest of the
decade, enabling us to double our zinc production to 100,000 tonnes of metal by 2010.”
Mr Robinson said other recent highlights included the high-grade base metal discoveries at Waterloo, near the
Thalanga copper plant, and Victoria, in the Chillagoe region, as well as the highly successful $20 million
drilling program at the Admiral Bay Zinc Project in Western Australia. “The completion of this program and
an initial resource scheduled for the second quarter, combined with ongoing exploration programs at Red
Dome in Queensland and Lounge Lizard in Western Australia will continue to expand our pipeline of exciting
development prjects for the future,” he said.

 

[MRC & Co]

Re: KZL - Kagara Zinc

Interesting charts Roland, agree on the comparison and the reason for the differences in the charts.

Michael, how do you define "low"? Based on your signature and a quick calculation, I would say this is a fairly low price!

Good to see some future gold exposure too with this one at Mungana.

 

[GREENS]

Re: KZL - Kagara Zinc

SYDNEY (Dow Jones)--Australian copper and zinc producer Kagara Ltd. (KZL.AU) is considering the sale of its Lounge Lizard nickel project and use the proceeds to develop its A$1.2 billion Admiral Bay zinc-lead project, Chief Executive Kim Robinson said Tuesday.

Not what I had in mind for Kagara’s nickel tenants in WA. Initial results from Lounge Lizard have been very encouraging. With the demand for nickel closely aligned with that for iron ore, you would think the fundamentals for the metal are very strong at present and into the foreseeable future. A lot of the big miners such as RIO and BHP are trying to lift their nickel exposure, as well as the mid tier ranks such as ZinOx. These companies wouldn’t be investing so much in the metal if they didn’t see a future.

Kagara and nickel I thought would be an excellent exposure rounding off the company’s balanced exposure to base and precious metals. I think I’d much prefer to see the company sell some of its interest in the large Admiral Bay project (i.e. reduce the operational and cost risks) whilst maintaining full or even slightly reduced ownership in their WA nickel operations. If they offload their nickel assets to fund the Admiral Bay project and retain 100% ownership, their share price will become a near perfect positive correlation to the zinc price. Not so sure I want that kind of exposure to just the one metal. I know they will have some significant copper and gold projects in production by the time AB gets up and running, but I still think the company will be viewed purely as a zinc exposure for investors, leaving many wanting exposure to other base metals particularly copper to flee.

Also Very interesting to note that some big players have shown strong interest as a JV partner in the AB project.

Article below.

"We would probably put Lounge Lizard on the market, but at the right price. To do that, we need to identify the potential before considering a disposal of the asset. But it would be an opportunity to put the money towards Admiral Bay and it certainly would make a lot of sense for us," Robinson told reporters.

Kagara hopes to come up with a reserve for Lounge Lizard by the end of the year.

Admiral Bay has been touted as the next century zinc mine, and could be in production at a rate of about 380,000 metric tons of zinc, 180,000 tons of lead and 5.5 million troy ounces of silver from about 2012, making it one of the world's biggest zinc mines.

Rio Tinto previously owned the project in Western Australia but never developed it, selling it to Kagara for A$2.5 million in 2004.
While Kagara would like to keep 100% of the project, it may have to look for a joint venture partner to help shoulder some of the development process, Robinson said.

BHP Billiton Ltd., Vedanta Resources Ltd., Xstrata Plc, Sumitomo Corp. and Kagara's largest stakeholder Korea Zinc Co Ltd. have all expressed interest in forming a partnership, he said.

Korea Zinc holds a 14.2% stake in the company.

"Korea Zinc would be the natural partner for the project," said Robinson, adding that the same would be true for nickel miner Western Areas N.L. (WSA.AU) in terms of a potential acquisition of the Lounge Lizard project, also in Western Australia.

But miners such as Zinifex Ltd. may also be interested after stating a long-term nickel production target of 100,000 tons a year, he said.

Kagara bought the nickel prospect for A$25 million from LionOre in 2006. The tenements are directly adjacent to Western Areas' Flying Fox nickel mine, and already share some of the mining infrastructure.

Robinson said analysts were "unjustifiably negative" about the zinc market.
"There is an assumption that everyone will stay in production. There are companies struggling to turn a profit following the fall in zinc prices, and certainly some producers are going to stop output," he said.

"The fall in zinc prices will also stop some deposits going into production, and talk of certain projects has notably stopped," Robinson said, without specifying.

London Metal Exchange zinc prices have fallen from lofty heights of $4,580/ton at the end of 2006 to around $2,400/ton.

Kagara was budgeting a zinc price of $2,500/ton for 2008, Robinson said.

 

[MRC & Co]

Re: KZL - Kagara Zinc

Well KZL broke out of a box a few days ago which I was lucky enough to catch. Resistance sitting just up above of its current price, but RSI shows a positive divergence. Looks strong at the moment, could see a consolidation around the overhead resistance level and then a further run.......

 

[MRC & Co]

Re: KZL - Kagara Zinc

Well KZL broke out of a box a few days ago which I was lucky enough to catch. Resistance sitting just up above of its current price, but RSI shows a positive divergence. Looks strong at the moment, could see a consolidation around the overhead resistance level and then a further run.......

Well as expected, made it to resistance and I sold to make a 60c profit on this trade per share.

Not looking promising for a break though, with the effort (volume, range), and outcome (close) both poor.

Great trading stock, so I will be looking for another consolidation and then a push through this level (where I will buy) to next resistance of around 6.30.

Cheers

 

[mino]

Re: KZL - Kagara Zinc

Hi, I am new with stock, but does anyone have any idea why the price of KZL tends to dive down, even last friday when most of the mining stocks prices went up, kzl looks steady (0.00% change).

What's been happening with them? I saw a buy recommendation from one of the national finance magazine about this company, but have been following it from past 2 months, it doesn't look promising.

Comments anyone?

 

[skunkmonkey]

Re: KZL - Kagara Zinc

What a mess. A bad day on the market and KZL closed at $2.85 today. It crawls up but it always drops so fast ...

 

[AjD]

Re: KZL - Kagara Zinc

Anyone know what is brewing down at Kagara?? Trading halt until Mon 25th...

But why the difference between "bid" and "offer" last time i checked there was about $1 diff between the two??!!

 

[YELNATS]

Re: KZL - Kagara Zinc

Anyone know what is brewing down at Kagara?? Trading halt until Mon 25th...

According to Kagara an announcement is pending concerning their Admiral Bay Zinc Project.

Due to the fall in POZ maybe they are thinking of offloading or jv-ing it, to OZL perhaps?

From the Kagara website:
Quote
Admiral Bay Zinc Project

--------------------------------------------------------------------------------

Major undeveloped zinc deposit with significant discovery upside
Discovered in 1981 and explored by CRA Exploration
Acquired by Kagara in 2004
Landmark A$15 million drilling program underway in 2007
Targeting inferred resource of 50-75 million tonnes of zinc
The undeveloped Admiral Bay Zinc Project is potentially a world class lead-zinc-silver deposit located 140km south of Broome in the Kimberley region of Western Australia.
Unquote

 

[YELNATS]

Re: KZL - Kagara Zinc

Announcement came out at 12.24 pm today:

Quote
Kagara is pleased to announce an initial resource estimate for the Admiral Bay deposit containing an Inferred resource of 72 million tonnes at a grade of 3.1% zinc, 2.9% lead, 18 grams per tonne silver and 11% barium reported at a nominal 2% zinc equivalent cutoff.
Unquote

Market seems to like it, up 7.6% at the moment.

 

[GREENS]

Re: KZL - Kagara Zinc

According to Kagara an announcement is pending concerning their Admiral Bay Zinc Project.

Due to the fall in POZ maybe they are thinking of offloading or jv-ing it, to OZL perhaps?

Market seems to like it, up 7.6% at the moment.

Yep and why wouldn’t it.

They definitely will not be offloading this project, this looks like it will probably surpass the likes of Century. This could play out to be a very sound purchase by Kagara.

It’s not only that this deposit is one of the largest undeveloped zinc mines in the world, but the fact that it will also be one of the lowest cost mines. Given that the cost of production is expected to be in the lowest quartile of cash costs worldwide, this will ensure very healthy margins even at current or lower zinc prices.

Also it is important to realise the fact that this is just an initial resource of a measly 72Mt’s @ 3.1% Zn, 2.9% Ld, 18g/t Ag & 11% Barium after drilling only 2.1km of an 18km known strike length of mineralisation. While massive already, this deposit has the potential to be a monster and sustain a mine life of half a century, which is a key reason why the likes of BHP, Xstrata, Tech Cominco and even more majors are wanting a piece of the action as a JV partner in this project.

With mine development costs expected to exceed well over $1B, it would seem logical that they would have to take on a JV partner (as you say suggest yelants) or sell their nickel ground - if it turns out to have the goods, to have any chance of bringing this mine into production.

 

[basilio]

Re: KZL - Kagara Zinc

Any thoughts about KZL at the moment ? Being butchered on the market and currently at 40c. But it is still producing copper and zinc at a reasonable profit and theoretically yielding 30% ! On all its statements this company should be worth far more and recover strongly. Have I missed something?