Ann: Drilling Confirms High-Grade Gold Mineralisation at Depth, page-18

The potential of Kingsrose Mining is huge.

If we go by the Talang Santo Resource Update (17/09/2020), we find that there is an estimated 150,000 ounces of gold which is Indicated and Inferred. If we assume a sensible margin of 800 dollars per ounce of gold (Kingsrose has a history of being a low-cost gold miner), that is 120 million dollars in total. I understand that it is an estimated Resource, however there is more gold in the 100 square kilometres of land that they are licenced to explore. So even if the estimates were wrong, we still have at least more than 100 million dollars of value which is not on the balance sheet, and we are buying that +100 million of value for nothing - the mines are all for free because we are buying Kingsrose below net cash minus all liabilities.

Ten years ago Kingsrose Mining's market capitalization was above 300 million, and I understand how mine life is limited and all - but 30 million dollars is wayyy below what Kingsrose should be valued. A more sensible valuation should be at least 100 million dollars given the quality of their resource.

Kingsrose had many setbacks after 2013/2014, but we need to understand that this is a turnaround situation - and it is fortunate that while the turnaround has already happened and the company is doing well, the market still underprices it - it means we can buy more of it. The Indonesian Government divestment requirements have been overreacted to - if half of PT Natarang would be purchased at fair market price then we are talking about some serious money, at least 100 to 200 million dollars in cash right there. And we paid 30 million for the company, so that is a potential 5 times your investment in liquid assets alone. So even the divestment which people are in fear of happening is actually still a good outcome for our company.

So that's our margin of safety there - we have some serious high quality mines for free, and we have an ultra conservative valuation of at least a hundred million dollars which is 3 times the price we paid for it. You also have a great cashflow yield and a hedge against inflation considering what is happening in our monetary environment. It's looking like we have to continue quantitative easing forever, and keep the ball rolling, so gold is a decent protection against any adversity in our global monetary system.

And it is fine if you disagree with me - I encourage in-depth, open-minded discussion of this, I'm trying to find out what is wrong with this particular gold miner, but I can't. The only thing 'wrong' I can pinpoint is the limited mine life, but the gold resource is there - with high grades, and we have strong liquidity to expand our resource.

Thank you for reading my analysis, and I do encourage a healthy discussion on this seriously undervalued gold producer.