Fundamentally KRM is still in the same position it was in Aug 2012 with the exception of the drop in production from about 10K Au gold equivalent to 4250 for the Sept Qtr & the prospect of a similar result for the Dec Qtr.
The Qtr report said that production would back to normal by Mar 2013 and since the market always looks forward, this should, IMO, see the SP recover.
In the interim, the ongoing accidents inquiries should result in much safer mines. Mining is a dangerous occupation and even a miner as big and sophisticated as BHP has had fatalities in WA a few years ago but once the the inquiry was complete, production got back to normal with improved safety proceedures in place.
KRM's strength is its grade and its low cost of production and if the old addage is right ( grade is everything) the market will soon see value in KRM once the current accident problems are sorted.
The drop in share price from $1.25 to 89c is an over-reaction, IMO. Realistically, this setback will result in about 12K ozs gold equivalent loss ( say $12 mil net) which is about 4c/share- which is equivalent to the cost of the recent dividend.
IMO, for long term holders, the SP should kick back once the mines resume full production come next March.
With Talang Santo on board, KRM has the potential to lift production to 60K ozs p/a gold equivalent at a time when QE3 is driving up the POG and the silver hedge will be retired next year.
With kind regards to all Moorookamick
PS: Please remember that accidents are just that and it is simply futile to assign blame to management without knowing all the facts. The government inquiry will provide us with the facts later. MM.
KRM Price at posting:
89.0¢ Sentiment: LT Buy Disclosure: Held
