Kalamazoo (KZR) is a promising gold junior prospect on several fronts:
1) It owns the Ashburton concession that was acquired from Northern Star
2) Its tenements sits in the Pilbara Craton as well as in proximity to Victoria's Fosterville
3) Substantial shareholders are Sprott and Novo Resources
4) Right management team
5) Relatively undervalued to its peers
KZR is an add at 72c.
Per Barry Fitzgerald
KALAMAZOO:
The wonderfully named Kalamazoo (ASX:KZR) has made a late pitch to be included as a nominee for deal of the year by a junior for the 2020FY.
Last month it picked up the Ashburton gold project near Paraburdoo in the Pilbara from Northern Star in a deferred $17.5m cash deal with Northern Star.
Deferred is the important bit because cash and sliding royalty payments only flow to Northern Star on Kalamazoo making a success of Ashburton i.e. it becomes the 100,000-150,000pa gold producer it has the credentials to become.
Those credentials are underpinned by a 1.65Moz resource (20.8Mt at a handy 2.5g/t) worked up by Northern Star before it put the project on ice in 2013 because the gold price fell from US$A1,600 to US$1,300/oz in a hurry.
That sharp fall gave rise to Northern Star’s subsequent Pacman acquisition of producing assets shed by retreating US gold majors.
Those acquisitions have underpinned its growth from a one-mine producer at the currently mothballed Paulsens gold mine, a couple of hundred kilometres west of the Ashburton project, into the gold powerhouse it is today.
So the Ashburton gold project – thought about in Northern Star’s time as a 100,000ozpa producer from oxide ores ahead of a shift to refractory sulphide ore – became non-core and was left on the backburner.
The Reinehr brothers who control 32% of Kalamazoo were private explorers around Paulsens in its early days and got to know the Northern Star team well. The benefit of staying close is reflected in the deal struck on the Ashburton.
Kalamazoo has put together a quality team for the Ashburton push and is full of ideas on how to grow the existing resource base, with the first exploration holes under its ownership expected in the next two to three months.
Kalamazoo shares have risen in response to the deal. It last traded at 67.5c for a market cap of $68m.
That looks to be on the mean side of things when compared with the fancy market caps of the Pilbara gold explorers/developers up towards Port Hedland thanks to the excitement around De Grey’s Hemi discovery.
De Grey and the other Pilbara gold players are trading at multiples of Kalamazoo on a per resource ounce basis for no apparent reason, remembering of course that Kalamazoo is also one of the leading lights in the new Victorian gold rush.
Two of the biggest gold bulls in the world – Sprott and Novo Resources Corp - love the Victorian search for the next Fosterville as much as they do the addition of a Pilbara gold leg to the Kalamazoo story. They each hold 7% of the company.
