G'day
Accumul8 - you asked for "
(my)insights into the results and current position for KFM" so here goes...
1. Underlying business value is growing and already exceeds market cap. I thought Kingfisher's underlying business value was much greater than its MC before the latest MW2 results. IMO that remains true after the announcement. Here's why.
The announcement demonstrated an important extension of the mineralised veins and dykes that were hoped for along the 54km Chalba shear zone. We now know that there is high grade mineralisation under the exceptionally high grade rock chips spot – in addition to the high grade REEs that we found in our original discovery hole on 12 January 2022,
which discovery BTW had no surface expression. Bear in mind that we've found REEs in clays too, so it's an emerging very fertile area with multiple concepts capable of producing the goods. That's clearly good for value.
Naturally, I would have liked to have seen some really chunky intersections in these MW2 results, or perhaps an intersection of spectacular grade, realising we couldn't expect to get anything like the grades obtained from the surface samples taken from the rocks above that because those samples were presumably enriched by weathering etc.
Also as to intersections and grades, I find it helpful to look at what's being developed nearby at Yangibana (which pleasingly has attracted support from the Federal Gov't and also from Andrew Forrest). We can't know at this early stage precisely what our acreage will eventually throw up, but initial indications are very promising re the nature of the intersections and the grades, given what else has been found – and is being developed - in the region.
2. Levers for growthI see levers for potentially tremendous uplift in our underlying business value, e.g:
(a) MW2 has more to offer – let's drill some more, then reassessThe high grades reported just now at MW2 warrant further drilling (which Kingfisher has already committed to doing soon). With better results appearing at depth, there might be an opening up of some of the veins. We'll have a better view about the potential here, after the next round, in the next few months.
While we don't yet know what MW2 ultimately may deliver, it's assuring that we're seeing rock of mineable grade. We just need to find enough of it in our acreage (MW2 is not the only pebble on the beach), which I think we have a good chance of doing. If so, our MC will be way higher than now.
The usual review by the team of these particular results may well (but perhaps might not) suggest better locations here to test – as so often happens. I'm more than happy to keep backing a team that's achieved so much already, as I said in Post #:
65961659(b) Many other prospects and target already – from only 5km of 54kmin Chalba Shear ZoneWe also have many other high potential prospects already known (e.g. MW7 with its high grade outcrop, KF 3 and so on) and we haven't even got boots on ground for the largest part of this shear zone. We've only had a decent look at ~ 5km of the 54km zone, so we'll surely find other worthwhile targets and potential highlights along the remaining 90% of the zone, given what the airborne EM has already thrown up.
An example comes from our 11 April 2022 announcement. We sampled a historical diamond hole (GAD-003) drilled by Cameco
25km along strike from MW2, and the hole had 3.4m at 0.14% TREO from surface. Other samples of 0.32% TREO, 0.20% TREO and 0.16% TREO were obtained from the modest 15cm maximum sample lengths permitted to be assayed from the DMIRS library. That's not high grade but bear in mind that
this limited material was assayed for REEs for the first time when we did so. Being 25kmfrom MW2 is a further indication of how extensively fertile our acreage could be. By the time we get to explore that part of the shear zone we may have a pretty good understanding of the controls to high grade zones.
I've bought a lot of shares because I'm confident enough that we'll uncover several significant discoveries in our acreage. I'll assess all new results but I won't get spooked by a possible market expectation gap with early drilling results in MW2 - especially since they're high grade anyway.
(c) 30km of Lockier Shear Zone acreage looks really promising tooI won't hide my excitement with the potential here, too. The Lockier Shear Zone, like that at Chalba, is another crustal boundary; recognized sources of carbonatites. There are some very interesting looking targets already apparent on the Lockier, with broadly circular features that look like they may be carbonatite plugs, appearing in a mineralised setting, with a magnetic feature in the middle and a thorium response as well. That's a nice start. I've posted before about the following example before. At this early stage it looks very exciting.
3. Compelling value for money Having convinced myself that Kingfisher has strong REEs potential, our underlying business value -v- our market cap. looks compelling. This one set of results from MW2, high grade as they were anyway and attractive as they are (without being stunning) – hasn't made a material difference to my high level KFM value assessment for now, and since the share price and thus our MC has fallen ~25% since the announcement, the stock looks even more compelling at these lower prices.
4. 'Market' reactionI'm a bit surprised by the extent of the 'market' reaction to the announcement but I've learned over many decades as an investor that wild swings in tightly capitalised stocks are quite common and that even good stocks get belted (or rocket) from time to time as some people panic to get out ('because it's going lower') or jump over each other (because it's going higher').
I'm reminded of Warren Buffett's comments about the market acting like a manic depressive and suddenly offering shares 'on sale' at discount prices that are largely disconnected from real value – typically triggered by something that does not affect underlying business value by anything like the amount of the movement in MC.
How such a disproportionate thing can happen makes sense to me because 'the market' is just a minority of people of different personalities and in different circumstances and who are competing with each other. It doesn't take a lot to trigger some to clamber over each other, thus produce MC swings that tend to feed on themselves, leading to some people wanting to get at the front of the queue, so altering prices accordingly, often disconnected from the underlying business value because of semi-panic. That's how this looks to me right now.
5. ConclusionUltimately,I ask myself if we still have:
* good people …
* running a tightly capitalised company …
* with plenty of cash in the bank …
* actively exploring a high potential block …
* in a great region of significantly emerging scale …
* in a great sector underpinned by multiple uses …
* operating in one of the world's best mining jurisdictions?
* And is the current market cap now under $20M – repeat, $20M?
Since my answer to each question is "Yes", I work hard on research – to gain assurance – and I chose not to panic because I know it's likely to cause losses.My confidence with Kingfisher at current prices is driven by clear fundamentals. However, I'll close with this chart, for those looking for a possible bottom for the recent sell down. If we haven't already seen it, it surely is just cents away.
(20min delay)