Kentor Gold Strikes High Grade Gold at The Murchison Gold Project

Kentor have released an announcement on some really strong drill intercepts which form part of the Burnakura Gold Project. The highlights of the announcement include:

·         5m @ 102.2 g/t gold from 43m (incl. 1m @ 474.5 g/t gold)

·         17m @ 9.6 g/t gold from 43m (incl. 1m @ 103 g/t gold)

·         Potential to increase production and lower costs for the initial 2012 operation.

Those results on their own are strong for any mine in Australia, but are even more significant when you on consider than the estimated mine ore grade is currently 1.65 g/t. (i.e. significantly lower than these hits).

Also given the Burnakura is a high cost project anything that lowers costs or increases ounces mined is very important.

I posted this on Hot Copper which accurately describes to potential of increasing the average grade per tonne mined. The 3 g/t Au grade mentioned below is the average grade for Stage 1 which will source ore from four open pits including Lewis.

“the 24,000 oz (stage 1) is based on an average grade of 3 g/t Au. Now I am not sure how much we may be able to increase the average grade (if yesterday’s results continue) But some rough maths shows that if the grade increases to 4 g/t Au (even if it was just for year 1 or 2) that would equate to production of approx 32k oz in those years.

This is an extra 8,000 oz which at $1,600 AUD POG generates an additional $12,800,000 for essentially the same processing costs.”

As it is the grade that it is increasing, not the amount of material we process, any extra gold recovered is essentially bonus money that was not initially calculated as part of the stage one feasibility.

The announcement also says that the top 30 meters of the two drill holes have not been assayed so it will be interesting to see how they turn out.

Weekly Update: Week Ending 24 February 2012

To calculate the weekly performance on my portfolio I take the close from last Friday to work out the percentage increase/decrease in each stock. This is compared to the ASX 200 (Code: XJO) and the Small Ords (XSO). The Small Ords is comprised of companies included in the ASX 300 index, but not in the ASX 100 index. I include the Small Ords in my comparison as it helps highlight the markets appetite for risk.

Market:	Close (Friday 17/02/12):	Close (Friday 17/02/12):	Percentage Change:
XJO	4195	4283	2.10%
XSO	2412	2503	3.77%

It was a good strong week on the markets with the ASX 200 gaining 2.10% and the Small Ords powering ahead by 3.77%. Over the last couple of weeks I have been paying less attention to the general market as all of my stocks seem to be increasing/decreasing in value based on company specific events. That won’t necessarily be the case each week but it is just something I have noticed recently.

Code:	Weighting:	Share Price Friday (17/02/2012)	Share Price Friday (24/02/2012)	Percentage Change:	Weighted Change:
OBJ	21.64%	0.020	0.019	-5.00%	-1.08%
MHM	17.04%	0.775	0.900	16.13%	2.75%
KGL	26.55%	1.070	1.220	14.02%	3.72%
Trading	12.86%	1.070	1.220	14.02%	1.80%
Cash	21.90%			0%	0.00%
TOTAL	100.00%			13.055%	7.19%

In regard to my portfolio what can I say other than they say a week is a long time in politics but the same also holds true for the stock market. Last week I was getting more and more disillusioned at the performance of MHM and KGL in particular. The value was always there but they both just lacked a catalyst to reverse their recent sell off.

Kentor Gold got the boost it needed with a Company Insight Report on Monday. It had hit an intra-day low of $1.01 before rallying 20% over the Monday and Tuesday. It then took break during the middle of the week before a strong finish on Friday where it closed at $1.22. This equates to a gain of 14.02% compared to the close last week of $1.07.

My trading parcel of Kentor Gold is also back in profit which is pleasing to see.

Kentors performance in itself would have made my week but on Thursday we received a company update from MHM metals that saw the share price reverse strongly from its lows in the mid-high 70 cent region. The buying continued on Friday with a company presentation that was not market sensitive, but clearly laid out where the company has come from, where it is now and the potential it has to offer in the future. As a result of these two announcements MHM closed the week 16.13% higher at 90 cents.

OBJ was the poor performer dropping 5% to 0.019 cents. It appears we are in a period of no news and as a result the stock has been dropped by traders and short term investors for the time being.

Overall the portfolio gained 7.19%, significantly outperforming both the ASX200 and the Small Ords.

Code:	Weighting:	Share Price Friday (17/02/2012)	Share Price Friday (24/02/2012)	Percentage Change:	Weighted Change:
OBJ	27.71%	0.020	0.019	-5.00%	-1.39%
MHM	21.82%	0.775	0.900	16.13%	3.52%
KGL	34.00%	1.070	1.220	14.02%	4.77%
Trading	16.47%	1.070	1.220	14.02%	2.31%
TOTAL	100.00%				9.21%

Without cash the portfolio managed a gain of 9.21%

Code:	Weighting:	Purchase Price	Current Price:	Percentage Change:	Weighted Change:
OBJ	22.93%	0.023	0.019	-17.39%	-3.99%
MHM	22.28%	1.100	0.900	-18.18%	-4.05%
KGL	22.41%	0.980	1.220	24.49%	5.49%
TOTAL	67.63%				-2.55%

The long term holdings of the portfolio (excluding KGL trading stock) remain 2.55% under water. I hate to speculate on future price performance, but if we get another strong week or two I am confident of closing the gap to break even shortly.