KCN 8.33% 91.0¢ kingsgate consolidated limited.

quarterly update

  1. 77 Posts.
    Looking for comments on the quarterly

    My take is
    - cash from the andean sale, missed some upside, but on an ounce per market cap basis it seemed to make sense
    - cash should last until the lease
    - all valuation is based on the mining lease, which has a strong chance of being awarded this year, virtual certainty of being awarded based on the community focus of kingsgate
    - meanwhile drilling continues, large exploration upside in the region (expecting 10moz which is huge vs the market cap and potentially more to come)

    Once lease is granted
    - should see cash costs low, maybe $300 per ounce
    - all infrastructure will be in place
    - gold price could continue to $1000 at this time
    - if production gets to over 300,000 ounces this is cash flow of $210mil (roughly half current market cap)
    - potentially leading to 4/5 times upside (just looking at the gold and the near term)

    Other major take out is that this company is unhedged to gold and therefore without hedging the cost base is geared to the gold price (not many companies are)

    With a confidence of 10moz (and potentially a lot more), why is the market not buying it? I know the leases are a factor, but say there is 90% chance of getting the leases then the valuation should be reduced by this factor and that still isn't reflected?
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