Kin Mining (KIN)
The electrifying impact of gold’s price spurt was not restricted to the local gold producers. There was a trickledown effect on the gold developers, with gains of about 8 per cent common on the basis that life has just got a lot easier for them.
Leonora gold developer Kin Mining (it is actually mining a small starter pit) was an example on Friday with its 1.5c or 8.5 per cent price rise to 19c a share.
When Kin picked up the Leonora gold project with its 720,000 ounce resource base in November 2014 from the administrator of Navigator Resources for the knock down price of $2.7 million, no once much cared.
Now that gold is fully $400 an ounce higher than at the time of the purchase, Kin’s counter-cyclical acquisition is doing exactly what the company had hoped — giving it a real shot at becoming a gold producer of size.
A low-level scoping study released earlier this year in to a $55m development with an initial mine life of 6 years arrived at a net present value of $56.3m when $1500 gold was assumed, rising to an NPV of $105m at a $1700 gold price, with a capital payback of 30 months at that price.
There is a bigger ambition to grow the resource/reserve base and achieve a shorter payback, with a drilling program now under way that will deliver a news flow at this time of heightened interest in gold exploration results.
Despite a long gold mining history, exploration drilling in the region has pretty much pulled up at depths of 150m. Initially, 100m-150m will be the target to get the confidence to move in to production, with financing all that much easier to achieve than it was before Brexit.
But eventually the deeper potential will be tested and with a bit of luck, it could deliver the sort of results to make Kin’s ambition to become a long-term producer of 50,000-100,000 ounces of gold annually a reality.
KIN Price at posting:
22.0¢ Sentiment: Buy Disclosure: Held
