Over the weekend, I had a re-read of Pieter Bruinstroop's Intersuisse report and 77c per share valuation (48c risked). It looks like Intersuisse are being quite realistic and whilst it factors in quite a bit that is still to happen, it is certainly not a "best case" scenario for the stock. It doesn't include any exploration upside and I believe this is where a major re-rate potential exists. They haven't even scratched the surface at Jervois (there are 12km of mineralisation) and I'm particularly bullish on Gabanintha from an exploration point of view. Burnakura looks a shoe-in to produce 5,000 ounces of gold per quarter so there's circa $20M per annum free cash flow kicking in from June next year. No ramp up required as the infrastructure is already there and been operational previously. Intersuisse are valuing Burnakura at $100M and on my figures I agree. That equates to 5X FCF which is fairly conservative and include zero exploration upside. Burnakura will pay all the corporate expenses and all drilling activities so the need for future cap raisings would appear to be zero.
KGL Price at posting:
$1.05 Sentiment: Buy Disclosure: Held
