This is a good hint of the future strategy for the company. For...

This is a good hint of the future strategy for the company.

For those who aren't longer term holders, I'd like to point out something to put this announcement in context.

KNL management are conservative beasts. They don't market/spruik for the sake of doing so (sometimes I wish they would), and would not put out an announcement as a mere fluff piece.

When KNL first released their scoping study for Epanko, it was for 20 ktpa. Why? Because they had the buyer in mind, and subsequently announced an MOU and then a binding off-take with an EGT, for 10 ktpa on "take or pay", plus a marketing agreement for an additional amount. It was small, but it was achievable, and the company did it in small steps.

Last year, they announced a scoping study and a plan to have 40 ktpa production (an increase from the 20 ktpa). Why? Because they had another buyer in mind, and subsequently they released an LOI with ThyssenKrupp for 10 years, for an additional 20 ktpa, and hopefully soon that will be binding. Again, small steps, building bit by bit.

In both the above cases, the company was talking with the respective buyer for 6-12 months before the initial MOU/LOI announcement came out.

So now, we have the company release a mutli-stage plan for a ramp up in production from 40 ktpa to 100 ktpa. While I have no inside information, recent history would strongly indicate that KNL management are working to a plan, possibly in conjunction with a buyer (or at least with a buyer in mind). Whether that's an existing buyer that wants to increase, or a new buyer, I don't know. But I do know that KNL management only release information in smaller, achievable steps, and then set out to complete them.

By the way, at conservative margin of $800 per tonne, a 100ktpa production profile (likely across two mines) is gross margin (after cost of production) of $80m per year. That's a lot of cashflow. The future dividends on a current 17c share price will seem enormous. (for those who want a bit more math, imagine some dilution taking us to approx 200m shares by time of construction funding. $80m pa is approx $0.40 per share. Take off I, T, D, A, i.e. the bits after E in EBITDA, take off some reinvestment and reallocation of capital, and you are still going to have a very, very good income stream relative to the current share price.

Of course, in a couple of years, you aren't going to be able to pay the current share price to secure the income stream. It will likely be 10 times as high by then, or more, as mentioned on another thread.

The trick is, who has the patience to make a worthwhile, considered investment...