researching kgl, page-2

I will have to keep this brief for now, but happy to expand on any point’s later (need to help out with kids this morning-first day back to school here).

1. You can’t hope for a better MD- proven ability at starting up new mines and as honest as they come. As for delivery of projects, again proven past experience but we certainly have experienced delays with Andash. This has probably nothing to do with management and almost everything to do with Kyrgyzstan. First an overthrow of the previous highly corrupt government, then local opposition by a few corrupt locals looking after self interests and some locals and in particular 2 corrupt politicians to stir up trouble. We are looking much closer to progressing now but its still Kyrgyzstan so some minor delays still being experienced but this time it seems to be poor organization of getting this Kurulti organized for the formal go ahead. If it drags on too much, it is not a pre-condition so we shouldn’t expect to wait too much longer.
On the other hand, back home the last I heard Burnakura is running ahead of schedule. I see no issues with management not delivering where it’s in their control.

2. They definitely don’t need more at Andash, but have plenty more likely there with zones 2 and 3 as well as Atkash. Zones 2 and 3 are likely to add around 40% value to the already around $3-$4 valuation based on reserves alone and Atkash will be more valuable. They also have ample at Burnakura for now as its only a small plant (18 years at the initial plant size and 9 years if they double capacity. There is likely exploration upside-especially at depth, but very strong upside at nearby Gab for higher grade material.
Jervois can use more and has excellent exploration potential.


3. I haven’t time to check but pretty sure Helmsec was referring to u/g ore bodies. Simon is an experienced mining engineer; let’s see how he handles the project. Higher gold prices will help and there are no issues with open pits. Also we are targeting bulk u/g rather than narrow vein mining.

4. The larger the resource the less of an issue distance becomes. We will have a scoping study to answer these questions in a few months. Prior to that Jervois is not given any value at the current price (neither is Andash) so both offer very strong upside as they progress. On my numbers the current market cap is easily justified by Burn/Gab and there is likely upside just from those two.

5. We have $50mill mandated from Macquarie and 30-40mill cash. Just enough to get home with any potential shortfall at Andash in the last 6 months of construction being likely covered by Burnakura cash flow.

6. No hedging required because of below zero cash costs net of copper credits at Andash and Burn paid for with cash-no hedging again.

7. 10 bagger easy if everything falls into place. 10 bagger likely even without Jervois, just with gold reaching $2000 and staying above (a near certainty IMO).

Let me know if you want more detail on any point.