bloomberg interview with chairman, page-3

I feel dumb only watching this now. Such clear info is always nice to have.

I note Mr Freedman says the base resource will add 500k this year and 500k 'at least' the next year. I am sure he knows what he is talking about.

So, we will have a company with about 2.5 mill resources in two years. And it makes me happy that MY base case was always 2 mill resource and 1 mill reserves and simply produce 50k gold year for 20 years at a very fixed cost - so it becomes a 'bet' on the price of gold.

I think at 1600 oz the mines are nicely profitable. I think the overall costs may even push 1200 oz. But you are looking, then at $400 oz x 50k (after this year, this is the startup year, so will be half that 25k, I think)... or a simple 20 mill free cash a year.

And I think they can operate on 10 mill a year. So you are looking at a base line of $10 mill profit on a market cap of 55 mil. So that is outstanding

Now, note Mr Freedman hinted they are very postive toward the 'at least' 500k a year additions. And, I agree re the price of gold, it is likely to be higher over the next couple of years.

To my eye, the base case shows the company is really good value now. As long as gold sits 1600+ and they find their next 1 mill ozs.

If you want to predict a rosey future, let us just say a $2000 gold price AND they find more then then another 1 mill AND they eventually manage to double production to 100k - say in three years.

Now you would have something like $80 mill a year free cash, minus 10 mill to operate - or 70 mill a year profit. Of course that super rosey future would have the shares around 5 times their current price.

Now it is odd for me to type the above. It can happen. But it would happen incredibly slowly. KGM would just find a little extra each month. Instead of adding 40k resources a month, maybe they would add 60k. And the price of gold need not sky rocket. It only need grind up over three years from 1600 to 2000. That is nothing, actually.

And as Mr Freedman said, after this year, they will have multiple mines producing at the same time. So, if they really do simply find more, they can dig more, and send more to the mill.

As I have always said. This is a boring company. It is well run. As Laurence said 'they can operate on the smell of an oily rag'. And the base case is solid. It seems to me to only have upside from here.