I figured it prudent to assess the damage caused by Italy and Greece. Zinc has yet to have a run and make no mistake KZLs future success is very much tied to zinc. See: Why Invest in Kagara - Growing zinc and copper production in North Queensland to a targeted level of 120ktpa zinc and 30ktpa copper by 2016.
Key themes:
We can see the breakdown of two trading channels on Sep 19 (Greece) & Oct 31 (Italy). Based on the impact of these two events, a new and more conservative trading channel has formed. Long-term support at 35-36c held as did short-term support at 38c, which have formed the basis for a bullish trading channel going forward.
With the strong US rally on Friday and with Greece & Italy moving out of the limelight, the focus for investors and institutions will be on how to position themselves for 2012.
We could see a quick jump in KZLs share price to 49c (short-term resistance and lower line of former trading channel) given it's mid-November and as the outlook for zinc continues to improve. Short interest is low at .03% compared to .24% on Oct 04 - or 87% less. Zinc demand has softened slightly heading into year end with 3000t of backorders cancelled in the past week. However, headline stocks are still targeted to fall under 700,000t.
All things considered, I'd expect to see KZL bounce to 45c (yellow line) by year end with upside to 50c. This would match Macquarie's present valuation target and remains fairly conservative with the exception of exacerbated developments in Europe and positive signs such as earlier progress with Lounge Lizard negotiations.
Looking into 2012 - on January 11, we have the quarterly activities report for Q4, 11.
Good luck to all holders...
KZL Price at posting:
38.0¢ Sentiment: Buy Disclosure: Held
