@Menta KRR is a blessed stock. First FDV, then HGO deal + POG almost doubled and now Spargos.
What's next super news ? FDV 2.0 ? A cheap mill acquisition ? Spargos drill results ? a take out offer ? Lake Cowan ? Nickel (btw prices are quite high atm) ? Ore sorters ? Aquarius and hidden secret ? POG to 2200$ ? higher than expected average grade at BH and HGO ? Time will tell :)
UPDATE of my initial post of the 08.30.2020. I will try to list what we can expect as news flow for KRR.
KRR is up more than 15% now, while POG is down from 2000 to 1950 USD/Oz
The Best is still to come in my opinion #UnleashTheBeast
- MMX deal close (done)
- Big Coarse discovery in a one shot at BH (30k+, i.e about 75m CAD in cash) [expected impact on KRR share price : +50%/80%]
- Several smaller but regular coarse find (6 or 7 times 10k) [+50/80%]
- Grade improve at BH [+30 to 50% if grade above 3.0 g/t]
- Grade improve at HGO (expected with Spargos, but not only)
To illustrate, Q2 production was at 2.25g/t average for about 95koz/y. With 3 g/t, production could be 127k/oz per year.
Drilling results et ressources improvment
- Very positive drill results at HV (Aquarius, north Baloo, Hidden secret and so) [+30%]
- Very positive drilling results at Spargos.[+10 or 20%]
- Drilling results in BH that could double or triple the Au resserves. That would make KRR a 1M+ Au resserce company. (done but keeps on going, we can now expect 1 or 2 more positive new drilling results now that the drilling budget has been extented).
- A new mill acquisition, that would be in the low run very profitable to steadily mine all that low grade that is (or might be) in the 1800 km² HV land [+50%]
- A mill extension (scheduled but might takes more than 2 years) [+20%]
- A Sluicing explotation of the PaleoChannel, which looks very promissing. [+30%]
- A average sorter use in HV and BH that could rule out about 10 or 15% or the waste rocks and increase average grade of about 15%. That would increase production of about 15 to 20% without wasting much resserve [+'30%]. A +15% increase with sorters with a natural grade increase could propel production above 150k/oz per year without mill modification.
- Use of sorters to make large very low grade deposite economical and profitable (0.2 to 0.5 g/ open pit deposites, that could become profitable with sorters). We can imagine that they are at least 1 or 2moz , to 5 or 10 moz of low gold density deposit on the surface in aurific veins of quartz at HGO. With sorters they could become very profitable.
- Increase in nickel production, that could be according to the market spot price sometime very profitable. i.e. If nickel demand peakes, KRR could quickly increase its production. Moreover the nickel development cost will lower gold's one in BH- Hugh Nickel deposite find
- Large economical Nickel Find
- Addition to my previous post : Finding of relativly small but highly profitable high grade nickel spots (done)
- Debt repaiment (it will just comes anyways)
- An accretive acquisition of any company/land (Westgold or Spargos like)
- A +50% hostile takeover proposition
- POG going high, [i expect +10% of KRR price for each +§100 increase]
- Reduction in AISC and G&A
What can slow KRR growth :
- Covid and gold company service delay. Many gold company are now trying to accerate their production. In this environment Trucks, bulldozers and engines would be harder to purchase. Drilling analysis lab might be satured. Workforce price might increase.
What could be negative on KRR :
-POG going lower. Above 1500 KRR will do fine. POG was already higher than 1500 pre COVID.
- Management (but so far the team has proved to be among the best on the market)
- Fraud, industrial mining accident, politic or fiscal issues. ETC.
My running EBITDA estimate : 1950 (POG) -1000 (AISC) = 950. Production : my guess is 26oz/T atm. 950x104 = 99m Usd or 130m CAD per Year.
Actual net cash : I will need time more to refresh it. let's guess 40m C$.
EV : About 535m. So actual EBITDA ratio is 4.1x (without warrants and option)
Beta hunt seems to have 20 years of ressources, so my opinion is KRR should be at 6x EBITDA at least and reach more as the expected newsflows is realised.
My target : 5.85 C$ / sh
Disclosaure : I m very long KRR