I know this is a little bit late in coming out seeing as we are already five days into the new year, but as they say better late than never. The first yearly review I did was on OBJ Limited and in that instance I went through each announcement and summarised what had been happening. In Kentor’s case it is much easier to discuss each of their projects in a general sense as all the material items can be condensed into a couple of paragraphs without repeating information and boring you all to death. I have however spent today re-reading Kentor’s announcements just to re-familiarise myself with the year that was 2011.
Some of the most important news arguably came in the first half of the year when Kentor’s Andash project started to face delays. It is important to keep in mind that this project was bought as “development ready” and management certainly hoped to get it off the ground within the year. Unfortunately for Kentor political interference, a court case surrounding the 20% of the project not held by Kentor and local opposition to the project resulted in delays. However, what is one man’s problem is another man’s gain as this provided an environment that saw the share price trade at 10 cents and under and resulted in me seriously considering the stock for my portfolio (and later on making a number of purchases).
Kentor Gold also announced plans to acquire Jinka Minerals in April 2011. At the time there was speculation that this was to take the focus off Andash and the delays that were occurring in the Kyrgyz Republic. This however was dismissed by management who stated that the aim of Kentor was (and continues to be) to acquire and develop late stage projects. If Kentor wasn’t a good investment on Andash alone then the takeover of Jinka Minerals certainly boosted its prospects. The acquisition bought the Burnakura Gold Project, Gabanintha Gold-Copper Project and the Jervois Base metals project, all of which are on granted mining leases and have been mined at various times throughout their history.
As a result Kentor Gold is now in a very strong position in my opinion. Firstly they have announced their plans to re-commence production at Burnakura, with works currently underway, by mid 2012. This will provide Kentor will strong cash flow that can then be utilised to fund further exploration and development. Next online could be the Andash project of the expansion of the Burnakura project to treat the Gold-Copper ore from Gabanintha, followed by Jervois in 2014ish (IMO) if all goes to plan. As you can see it is an ambitious plan but management have stated that their aim is to develop three mines in three years and I am backing their strategy.
Throughout 2011 we also had the results of drilling plans, surveys and initial resource statement which are obviously important, but have been previously discussed and won’t be mentioned in detail in this post.
The other projects I do want to comment on are the Bashkol exploration Licence in the Kyrgyz Republic and the Geo-Thermal Project. Firstly, the Bashkol exploration licence looks very promising with additional exploration scheduled to take place in 2012. I am a firm believer that additional opportunities will be presented to Kentor Gold within the country once they are able to get Andash off the ground and run it profitably. Obviously there is a long way to go with Bashkol but the initial results look promising and I eagerly await any additional exploration date that will be forthcoming throughout the year. My understanding of the site is that it is at a high elevation and on sloped terrain as a result most of this exploration work would have to be carried out in the warmer months.
Secondly, the Geo-thermal project was mentioned in a quarterly report a couple of months back. This is often over looked by the market but is a fairly simple project to get off the ground. My understanding (having spoken to management) is that it takes one drill hole to take the resource from inferred to indicated status and that they are currently waiting on a licence application. This could provide some additional cream for all holders in 2012 and is something that I am following closely.
In general 2011 has been a year of acquisitions and delays, 2012 is all able moving these projects forward and starting to generate some cash flow. I remain confident in management’s ability to execute their strategy and look forward to announcements on Andash and Jervois which are expected in January 2012.
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