yo gold bug bob. we seem to be in many of the same stocks. I like your postings. I may have some news for you not only on this stock but on another of the stocks your watching. Mate Can you reach out to me privately on whatsap +66819790164. or email
[email protected] dont think you'll be disappointed.
Bobby K- I see your into KIS and posting well again as usual. doff my cap in your direction too - having been lucky enough to have got some of the PP in KIS its good to see were fighting on the same side again.
And Rollercoaster this ones for you. its bout your doubts over KIS Capex funding. these are my thoughts.
all companies need funding to develop into mines.
In KIS case I think funding for AUD 65 mill is not too big an issue. They have announced they are in discussion for critical metal grant, and state govt grants. You may not be aware but the govt already subsidizes king island for something like 30 mill a year I believe. It would not be a leap of logic to see that if they helped the mine (the main economic driver on the island restart after china dumped the tungsten market in the 1090's, then they could save on the unproductive /uncreative subsidies they have to pay the island right now as far as I can see all they have is kelp and cheese and a few tourists and surfers.(I've never been there) . So it makes sense the govt should help them. Also with senator Mcains 2018 bill that US military cant buy critical metals from community countries and the china/ us trade war the west is now in need of tungsten. It's now a critical metal (for industry and military ) in US and EU . Right now china has 85% of all the worlds tungsten, (which is why they dumped the market before to put most western mines out of business- then jacked the price up 800%. Russia has 9% and Vietnam 3%. The west now has almost none. KIS's Dolphin mine has by far the purest tungsten in the world - that why it was mined since first world war in 1917. Now that China is stopping/seriously,limiting tungsten exports its critical for the west (due to trade war and the fact its mines ar also running a bit low) The west has to open up new supplies. the best in the world western or easten is Dolphin's -by far.
therefore is see it as quite probable and logical that state or fed govt (or maybe US govt???) will assist them with a grant or royalty loan. Let's guess for 10-15 million.- it's not worth the bother to much less- and could be more.
So the 40-50 mill aud the balance should equity & debt. Lets say 50/50 or 25 mill on each to be conservative. with fs done and offtake agreement sin place with good buyers , I believe KIS could raise 25 mill at say at half its NPV (thats now 148 mill so say 75 mill cap) but drilling continues so I'm expect the resource to get bigger as they have more outlying land around. which should also be rich in tungsten. And If the resource gets bigger -then logically so will the NPV. So they should be able to easily raise at half its NPV which could be between 75-100 mill cap.- with 300 mill shares out that 25-30 cents. I'd even say they could raise at 40 cents. Especially if post covid tungsten goes back up to where it was 280 not 210$
or to look at it another way I personally have estimated that at current covid-low tungsten prices - based on their announcements and FS - KIS could make around 20 -25 mill post-tax PA. Put that on a 5 x pe and its at around 100 mill. (or again 30 cents.) On a 10x pe higher. So I believe they will be able to raise new equity from investors without too much difficulty at between 30-40 cents. That's 70 mill more shares. Not too heavy dilution.
Then comes the loan part for 25 million. If a bank won't loan against their rich resource with offtake agreements for the highest quality of tungsten in the world from some serious buyers, in a project with govt granted support - then what will they ever lend against? So IMO this won't be too hard. Moreover there are 3 big shareholders in this co -plus seemingly with their rich mates in it - and those 3 who alone are worth 1.5 billion AUD. You think if push comes to shove they cant/won't pony up 25 mill between them to buy a bond from the co to ensure the project gets going? Its better than getting crap bank interest rates on their cash.
So I forecast something like this: KIS stock is going up to 30-35 cents IMO sooner than we may think. At that level I also forecast funding for the capex will be raised. Then who knows where it can go? But if tungsten price recovers and the resource gets an upgrade, as one should reasonably expect from their recent drilling, thisstock could go rise to be to a 300 -400 mill cap stock in the fullness of time.
That's a potential Disallowed! even from here - and I like those.
For full disclosure yes I'm long. yes I'm talking my book. and yes I'm bullish. And Before anyone complains please first lay out a logical argument why I may be over-estimating and why this share price is not massively undervalued here? Then we can argue.
DYOR!
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