The other day Kentor Gold released their quarterly report along with MHM and OBJ. I have been so busy writing other posts and analysing the reports that I have not had a chance to post on Kentor Gold, until now.
The first paragraph really says it all in regard to the future potential of this company:
“Kentor Gold Limited advanced towards its goal of bringing three mines into production over the next three years”.
It is certainly an ambitious project but Kentor Gold has the cash ($40m), plus the debt facility ($50m) and can use the cash flow generated from Burnakura to help fund the second (Andash) and third (Jervois) mine.
I will breakdown my analysis and thoughts on the report under individual project headings.
Burnakura
During the quarter the program to restart production was commenced. This included recommissioning existing processing plant, the installation of additional plant, the completion of a feasibility study detailing mine planning and additional exploration drilling. Everything appears to be progressing nicely on this front and the power plant was also successfully restarted without any significant problems.
We can also expect assay results from a 60-hole air core drilling program that tested structural targets adjacent to the magnetic anomaly approximately 2 km north of the existing NOA open pits will be available early in the December Quarter (i.e. any week now). An 8,000 metre RC drilling program will also commence this month to infill and increase the confidence in the areas where production is planned to commence.
Jervois
Recent drilling campaigns have continued to produce high grade copper-silver results. And more importantly “high grade mineralisation is being extended to depths hundreds of metres below the current Resources”. We can expect an updated JORC resource sometime in the near future.
Andash
“Negotiations at community level continued during the quarter, aimed at achieving local approval for site access so that construction of the project can commence.
As soon as this occurs, geotechnical investigations will be completed and the 12-month construction program will proceed.”
The above statements continue to be very positive on the project. My confidence in Andash proceeding continues to increases and was aided by the positive election results which I posted on earlier today.
Bashkol Exploration Licence (Kentor Gold 80%)
This was a project that we had not heard much about lately. The report states that the exploration program for 2011 has been completed and results will be released to the market next quarter (i.e. any time now) as soon as the fire assay results have been received.
It will be interesting to see what happens with this exploration area. I doesn’t appear to be a key priority for management so it would not be unusual for this one to go on the backburner for a while, unless the results are truly great.
Geothermal Energy
The second forgotten project is the Kentor’s involvement in geothermal projects. Originally the company was looking at geothermal projects in Kyrgyzstan with the idea being to sell cheap/clean energy to China. This was then expanded to include other former soviet bloc countries.
Around the same time all this was happening, back in 2007, Simon Milroy joined the team and refocused the company. Prior to this it appears as though Kentor Gold had no clear strategy and was looking at anything and everything including Gold in Kyrgyzstan, Uranium in Australia and the above mentioned geothermal projects.
You can therefore understand my surprise when this popped up in the report, as I thought it had long been cut adrift. The report states that a review which stated two years ago found that Savo Islands in the Solomon Islands was the best project available and an application was lodged for a Geothermal Energy Licence. “It now appears that this licence is likely to be granted”.
The report then goes on to state that the application was made using a 100% owned subsidiary Kentor Energy.
I have reviewed the original announcements and my notes and at the time we were teeing something up with Panax. Whether this is still on the cards remains to be seen, however this project could deliver a little bit of extra cream for KGL shareholders.
The original announcements on the geothermal projects can be viewed here:
You can also read up on Panax here:
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