http://www.theaustralian.com.au/business/opinion/in-a-seemingly-p...

http://www.theaustralian.com.au/business/opinion/in-a-seemingly-parallel-universe-we-have-the-metals-markets/story-e6frg9ex-1226129258018

Slow to move

SOMETIMES the market is very slow off the mark. Such was the case on Wednesday with Kalgoorlie Mining (KMC) making an announcement that, initially, was clearly misunderstood, then treated as ho-hum. Some investors twigged by Thursday, but it was not until Friday that the full import was realised.

According to KMC, it delivered 10,507 tonnes of ore under the sale agreement with Toronto's Barrick Gold.

The junior is selling ore to Barrick, which owns the Kanowna Belle treatment plant near Kalgoorlie, until it builds its own.

The first ore shipment contained 1241 ounces of gold, and KMC would trouser $2.1m before haulage and processing charges.

That is just one month's income for a company that, on Wednesday, had a market cap of $25m.

The company plans to deliver ore to Barrick each month (up to 20,000 tonnes) so cashflow will be strong. So what did the market do after the news? Of course, it marked the shares down to 9.7c. Let's pause right there. Here's a company that will be getting millions of dollars over coming months and the market reckons it is worth less than 10c a share? But on Friday, investors moved in and got the stock to 12.5c.

It illustrates a point your correspondent will be labouring on Wednesday in a report to be published in the Wealth section of The Australian: that most investors have not realised how the present (and projected) gold price is going to deliver rivers of cash into local producers.

On Wednesday, we name names and show what bottom lines might look like.