major announcement, page-6

Yes fair enough, but tell me, why should the market be excited about KCN? It has a small patch of land that it mines, that’s fine, but earnings are going to remain the same for a long period of time. My point here is that KCN started small, discovered and is now producing, it has no major new sites that it is looking at etc. Because of this, its earnings will be flat.

Now if earnings where to be increasing that would warrant a good PE ratio for KCN, but the problem is that its earnings are decreasing. So all investors have to look forward to are stable dividens, thus a low PE Ratio.

This is shown in the market, it has a dividend of 6.6% VS its sector which is 3.5%, but yet KCN's PE ratio this year is 7.43 (forecasted 9 in 2005 at current levels) VS its sector of 15.61.

So on that lets have a look at is competitors earnings (from present to 2005), LHG's is forcasted to grow by 1825%, NCM 300% and OXR 488% all these companies earnings are growing at a rapid rate whereas KCN's is forecasted to grow at a rate of -34%. Do you see why it has a low PE Ratio now?

I believe at the current price that KCN is valued a little more than its fair value as it certainly does not have the fundamentals of its competition.

Now the problem you have hear is that if the gold price goes through the roof, KCN will go up, but the margin will remain the same in regards to the other gold stocks, so once again KCN is not attractive. But on the more probable side that the price of gold will fall, will mean that the other companies growth will decrease, but KCN's negative growth will accelerate, this is why I believe KCN is overvalued and a little more risky.

Cheers

Tejay