Far East Capital commentary....

Far East Capital commentary.

http://www.fareastcapital.com.au/imagesDB/newsletter/WeeklyComm18June2022a.pdf

Encouragement is not enough in this market Kingwest Resources (KWR) brought out a release yesterday that immediately saw the shares fall 30% on the market opening. We would have expected the price to fall rather than rise, given the drop in the Dow the night before, but it was worse because of the disappointing news flow.
About a year ago KWR came out with very positive news referring to a new gold discovery named Sir Laurence, beneath Lake Goongarrie, in WA. It was described as a “discovery” at the time based on aircore assays over an extensive 2 km x 1 km area.
However, the aircore drilling gave areas of anomalism without penetrating more than a metre or two into the bedrock that sat beneath the lake sediments. So, while it looked very promising at the time, and it pointed to a discovery, there wasn’t yet any really depth expression.
That is why the current diamond drill program is so important. The first two diamond drill holes reported yesterday failed to intersect economic gold grades.
The geology looks good, so there is encouragement, but no economic grades. Some geologists might call this a technical success, but that is not what the punters like to hear.
This was always going to be a discovery that took time to test and evaluate. Invariably, there are twists and turns along the way.
The shares could roar back into favour if the diamond drilling hits economic grade and structure, but how far away is this news? How patient do we have to be?
These levels could offer a brilliant buying opportunity, but there are no guarantees.