knl has potential

KNL has the potential to be a great investment.

The announcement on Friday afternoon was due and unfortunately may result in some dilution (hopeful very minimal). It would have been better if Kibaran found decent Nickel intercepts at Kagera (forcing earlier release of securities from escrow). I suspect the focus has shifted to graphite with Nickel exploration being done in the background.

I really hope the graphite assays, latest metallurgy and further drilling results are great (better than SYR’s). Management must release some well overdue positive news to arrest the highs of $0.655 achieved on 4 September 2012. Investors who bought around the highs are down 37% when KNL is better positioned:

• Now there are 2 intercepts of graphite greater than 200m (6 intercepts over 140m with 3 ending in mineralisation) with the discovery growing with every drill hole.
• Metallurgy of 94.8% achieved to date with potential for improvement.
• KNL vs SYR (flake size) – advantage KNL:

KNL: 88% of graphite carbon over 250 microns or 70% of graphite carbon over 500 microns (that is exceptionally large flake graphite). Some samples are over 2,000 microns.

SYR: Based on the presentation (7/06/2012), SYR has graphite flakes up to 568 microns with an average size of 159 microns (medium to coarse graphite). However, recent holes have discovered graphite carbon over 1,000 microns (page 5 of announcement dated 20/09/2012).

• Rock chip samples average 15% in Ndololo (peak grades of 29.9% TGC). Assay results pending. I would be hoping for average >12% TGC for the first hole, with increases thereafter (noting the Vanadium SYR also possesses).
• John Park now on the Board
• Additional $3.1m cash to fund future drilling
• Multiple graphite prospects, however greater land area and possibly better infrastructure

Due to the capital raising at $0.35 holding back this share, stunning drilling finds haven’t been recognised by the market. SYR in contrast has continued to release positive news and their share price has benefited.

Let’s hope management put a rocket under this share in the very near future.

GLTA