For those of you who keep a close eye on my blog and in particular the weekly reports you would know that since consolidation Kentor Gold has been a poor performer. It has come down off its highs of approximately $1.30 and on Monday almost hit $1.
Then came a Company Insight Announcement. I have mentioned in the past that these are a great communication tool that provides little snippets of information that we would otherwise miss out on. Anyway the market responded and the share price climbed 20% over the next two days. It settled down during the middle of the week and is now back up to around $1.20 where it will hopefully close for the week.
The report talks about each of our projects and really emphasises the fact that Burnakura is a multi-stage project and that we should not just focus on stage one. In Simon Milroy’s words “the second phase, heap leaching, oxide ore is what really makes the project perform as this will increase the gold output and reduce the operating costs”. It is also important that this second phase does not need a huge additional amount of capital expenditure as we will already have most of the equipment required.
The phase one will also only included mining from four of the twenty open pits at the project so there is plenty of upside in future mine life. To help assist with this goal Kentor is currently undertaking a 20,000m exploration program at the Murchison project. The program is designed to infill drilling around the initial mining areas to increase confidence and extend the resource. It will then move to Gabanintha.
There wasn’t a whole heap of information provided on Andash, but if one thing stood out it was “If we meet those target numbers we will produce free cash flow each year that is equal to our current market capitalisation”. If that doesn’t highlight the potential of this project and the rewards on offer for Kentor Gold shareholders then I don’t know what would.
On to Jervois and it is pretty clear by now that management are extremely positive on the potential of the project. In the announcement Simon Milroy stated “Jervois is shaping up as a pretty major multi-metal mine, and it could well emerge as the largest of the three current projects”. Kentor plans to complete a scoping study next month and then proceed straight into a full feasibility study. The scoping study is currently examining the economics of a 1.5 mtpa floatation concentrator producing a copper concrete with significant precious metal credits. Kentor is also investigating the production of a magnetite concentrate from the floatation tailings, which is pretty significant in my opinion.
Overall it was a well written and fairly well detailed report. The market obviously approved as we saw the share price respond strongly.
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