As I think the accumulated costs over the past 5 years are higher than we can even sell it for. So even if we sell it, it still acted as an anchor overall (like a liability, but if it can be sold for any amount eg. $1m, the liability stops and it was an expensive asset with a small value). Eg. if it cost $20m over 5 years, then sells for $20m, we're well behind due to corporate interest costs, dilution and underperforming inflation.
We were not notified of the expected sales price, or offers made, but I'm imagining it being somewhat small like $20m or maybe less.
If wanting to value it extremely simply, based on in ground value, then we can use a comparison company.
NVA:ASX - 10moz gold, mainly low grade, almost at PFS stage, a bit of a tough development path. $47b in ground value, $90m market cap (trades at 0.2% of IGV). KCN's NE - 1.9moz gold equivalent, decent grade, almost PFS stage or maybe outdated PFS stage, a bit of a tough development path. Quite similar overall. $9b IGV, better grade deserving 0.3% instead of 0.2%, so $27m valuation. So a forced seller might be lucky to get $20m, and KCN's market cap suggests that it isn't say $100m.
Alternatively, 2016:
The project has a NPV @ 5% real of US$168M before tax and an IRR of 25% with payback in year 3 of the 11.6 year life.
It may be able to sell for 20% of NPV, for outdated-PFS stage. So $51m AUD instead. Hopefully the NPV has risen since 2016, and developing it further is the way to prove that. In which case, maybe $100m sale price is a possibility, which would be enough to boost KCN's SP, and somewhat justify the holding costs. Or if floated on a stock exchange, maybe $100m valuation + IPO cash contributions would put it on a higher market cap like $150m.
KCN Price at posting:
$1.37 Sentiment: Buy Disclosure: Held
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