KBL Investment, page-5

So as far as I can see, this is a low risk "strategist investment" by KDR by taking over the $12.6 million debt of KBL.  In fact it will be in a good position to decide which assets to sell off to recuperate the loan amount while picking up some excellent assets in its goal to become a producer.

If KBL starts to return to profitability in the near future, then KDR has a 9.7% stake in a company as its second largest share holder - which so happens is right next door to its Crowl Creek projects.  That is obviously a major plus.  Further on this later.

He’s my  breakdown of the announcement as follows:

* KBL Mining debt due for repayment by March 15th 2015.

Having trouble actually finding out how profitable KBL are each quarter. Their quarterlies are not all that clear and I can’t find a simply 4c cash flow document either. I think that explain a lot in itself.

They said they were profitable last quarter.  I suppose the question is if they can repay the loan by March next year.  Production at the mine has been dropping off from what I have read so far.  I believe KDR will receive the interest of the loan repayments until it’s paid off.

As part of the loan acquisition, Kidman has inherited from Capri a 9.7 per cent equity stake in KBL and will consider selling this shareholding at the appropriate time. Furthermore, the company has no intention of participating in KBL’s recently announced SPP.

KBL quarterly positive cash flow is obviously not enough to repay the debt thus why KBL is raising money through a share purchase plan. KDR is not going to participate and may sell out before then.  Thus KDR has positioned itself to be able to acquire assets at bargain prices.

KBL’s Mineral Hill Project covers an area of 49km2 and includes a operating mine and mill which currently produces KBL has announced plans to expand the mine’s capabilities to also produce gold and silver dore (bullion) and lead-zinc concentrates

And this is the main prize that Kidman would be after.  Acquire these assets for future production of KDR resources including I’d imagine for Browns Reef as well.  Why build something from scratch when you can buy someone else’s for next to nothing.   

The purchase price for these shares is the deferred issue to Capri of 22,249,824 shares in Kidman. The deferred settlement date for the issue of the Kidman shares is 31st March 2015, and is subject to any required shareholder approvals being obtained;

No payment to Capri until March next year and payment will be made in KDR equity.   Thus if KBL defaults on the loan, KDR can acquire their assets and make payment to Capri quite easily.  Kidman would have a new major shareholder, approximately 145 million shares on offer and lots of new assets including an operating mine and mill.


KBL main mine asset has a resource of 5.4Mt – if you add to the tenements KDR has next door (mostly unexplored), then this can easily be expanded.   KDR can easily make the leap from explorer to producer quite easily from here.
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If KBL can rise funds to pay back the loan, then KDR can simply pass that payment on to Capri without paying in equity. Thus nothing it's not losing anything besides missing an opportunity to pick up assets quite cheaply.

Kidman Resources has made a very bold move here with this deal and from what I can see, the risks to it are quite low. However, the rewards can be quite substantial. Will need to do some further research on the total value of KBL assets and find out more on who Capri are.   

As far as I can see, if KBL defaults, then Capri will still be invested in a Cobar Basin mining company through KDR.

No movement on the KDR share price today. Perhaps the market doesn't see it the same way as I do.


Haplo