I know this might be somewhat annoying as there have been so many threads started recently but they all seem to be based around one idea.
I’m creating this to act as a chat room for people to bounce ideas and find gaps in their thesis, ask questions (instead of starting whole threads, please Dutchboy
), hear some peoples back of the envelope calculations and generally try give us punters a place to be constructive around the company.
It’ll be great if we can not have any downrampers but let’s not label anyone who has a differing point of view a downramper- this is a highly risky business where the most likely outcome is not success- a bit of balance in our thesis is a good thing. (And will also stop the trollers trolling)
Here’s my morning thoughts on the company when I was introducing a friend to the company; Would love some feed back and contributions by holders and interested parties alike.
I think KAU is THE MOST under valued
producing gold stock (not including the people getting toll milling companies such as HRZ, BTR, CEL- though our Mcap is smaller than all of them…)
I’m some what thinking of them as an explorer that is self funded with their production from the mine they’ve recently bought.
Top management, ex Northern star who’s role was at the beginning of their journey, taking over a big mine and stream-lining operations, something he very quickly has proven he is capable of doing. One of the strong characteristics or strengths through his career has been mine startups, restarts and stream lining productivity. With a mining engineering degree and obviously a rich history in the industry he has some of the highest pedigree you can ask for in a director.
Not heaps of value put on their new 30,000 ounces of production. They have a processing plant at their exploration site in Maldon too so once they find some more substantial resources there (they already 180koz) they will turn that into another 20 - 30koz hub bringing their total to 50k-70koz Pa with really really small capex/cost (cost will be dependent on where they find the gold/whether they can mine it off the existing decline/infrastructure) by putting good dirt into a running mill which is pretty unheard of and their Mcap is only 160m (exploration plays that have 100kau oz are valued at 50m and they have no existing infrastructure in terms of plant or declines)
Most goldies (more so the big ones at this point of the cycle) get valued around $12000 per produced ounce- for now that equation is 30x12=360m Mcap then you factor in that success at their other project = quick production because they already have a mill, this could climb pretty rapidly to 500m Mcap and still not be fully valued. Obvs that’s the bull case- there’s always inherent risk when relying on exploration but the Maldon region has some of the highest grade gold deposits and was minded ages ago when they didn’t have exploration drilling like we do now so potential is real for there to be more big deposits there.
I’m sure I’ve missed some things that big money is aware of, hence the lower share price; They might be in the details of some of the following
- Henty historically hasn’t been the easiest mine
- Tazzy has a super profit tax
- there’s dept in their structure (on paper is says 7m but perhaps there complexity to this I don’t understand?)
- catalyst (CYL) has an agreement with them for their mill in Maldon (I think it was for half of its capacity?)
I personally think the market hasn’t looked down the chain yet for smaller players but once we start getting exciting hits from Maldon this becomes viewed as an incredible brownfields exploration play that is self-funded by tight operations in Tazzy with a manager who has proven he can run a project better than CYL and other major mining companies who have run the mine before. If we aren’t successful finding 200-300k new ounces in Maldon, the market will eventually value the company for 90-100m free cash flow from Henty operations.
also very bullish on the near term potential for getting more funding and knowledge of the processing plant through trucking waste material- if it doesn’t
create money, it’ll create intellectual knowledge within the business which is exactly what we want to see in the building of a company.
keen for add ons and other potential reasons the company isn’t being fully valued?
cheers, Geewee
