As mentioned before last night I had a catchup with Kentor MD. Their investor relations was also present. Also present were a couple of other significant individual investors and a supportive broker via teleconference though they had to leave pretty much when i got there so didnt really get a chance to talk to them.
Simon initially ran me through some of their ground on his laptop that will be the focus of their exploration programme in May, and I was impressed with how extensive that programme will be...but then again they have the cash already so I guess I shouldn't be surprised.
Anyway here is the main points of the conversation in my view:
1. Kyrgyz coup
Obviously the main talking point. Not an issue in Simon's opinion and in fact a significant improvement fro the previous regime. The only disappointing thing about it was that it did not happen after financing was complete (so I guess that will make it a bit tougher, but ill cover this off later).
In particular the new regime will get rid of corruption and in particular is very pro-mining. In fact the new governer of the Talas region is a person formerly associated with the Andash Mining Company (!!!) so obviously will be very supportive.
There is no risk of the government taking back project...the onyl thing they are taking back is any state strategic assets that were sold of too 'friends' of the former leader...for example the telecoms sector which was sold off to a friend of the former president's son. Hence the end of corruption. Here is a good article I spotted this morning:
Very useful information here as to why the CAPEX number increased so much though i've covered the main point before, ie using new equipment):
- new equipment to be used because they expect minelife will be much longer due to other deposits they expect to find, and also increasing the zone 1 resource is likely
- upgrades to certain equipment to increase copper recovery...for example they have identified some equipment that will signficantly incrase the native copper recover rate, and the cost of that is far outweighted by the increased value from greater copper production
- pre-payment of some stage 2 equipment was assumed, however since feas was released was decided certain items won't actually need to be purchased immediately
3. Financing
They hope for no delay in finanlising finance and in fact believe the recent instability will actually be a positive when things become more stable and the financiers recognise the new regime as being much better than previous. Several financing options are being considered (including one I alluded to in previous post, ie selling forward concentrate to smelters for an immediate up front payment).
The new appointment recently announced is a very well respected person and should aid substantially in organising an appropriate finance package.
Simon appeared to be in preference of minimising as much as possible the impact on share capital strcuture (which I am glad about)
4. Offtake agreement
They are still going full ball with this and the Chinese smelters (and even other countries) are falling over each other to secure future feed.
They also believe they have identified an improvement in their concentrate quality not considered in the feasibility which could improve the offtake terms.
This is a KEY item im my view and will provide an extraordinary help with getting finance so hopefully they can get this agreement in a timely fashion.
5. Exploration programme at Talas
Exploration will not be delayed by the recent events and it will be a major programme. The geo is still going over the area to define the highest priority targets, however it is probably going to include a mix of:
- zone 1 infill drilling to increase grade of current resource - extensional drilling at zone 1 to increase current resource - exploration drilling at Nakhodka - exploration drilling at Tokhtonysay (this is the one I'm personally looking forward to the most due to previous drill result)
Also interesting was that the assay lab is pretty much on route to the project, so results from drill holes will be known very quickly.
6. Exploration programme at Savoyardy
Unfortuantely no exploration here as yet due to ground conditions (snow etc). However they believe this project is significantly underrecognised by the market primarily due to not showing how big the system is, so they hope to do the next exploration significantly far enough away (perhaps up to 1km) from the current resource to show the size potential of the project.
7. Market's reaction to feasibility
They were disappointed with market reaction believing too much focus on the NPV and not enough on the cashflow. Hence why I believe they should have issues a co-media releaed which focussed on the cashflow itself.
8. Other opportunities
Despite effectively being in development, there are significant potential opportunities in the region outside their existing projects and they are continually looking out for these.
9. Am I a buyer on Monday
Not sure...had I sold any shares on Friday I probably would have bought them back on Monday. But I didnt so I still have a signifcant holding and therefore probably no real reason personally to buy more. However the story is still very good in my opinion so if the shareprice were to weaken, I would probably top up.
Cdchi1
KGL Price at posting:
9.4¢ Sentiment: LT Buy Disclosure: Held
(20min delay)