Katoro Gold Share Discussion Threads

[grahamwales] 15/12/2020 16:54

QS99

Which is why I intend taking advantage of the current market value and build up a very nice holding.

Just hope it stays down here for the next couple of months but wont hold my breath and will buy at every opportunity.

As you say there are explorers out there with M cap's way above this and will never produce an ounce of gold.

When this deal go through that's when we will see how quick this moves.

[qs99] 15/12/2020 16:30

Fair point Graham, but this is valued at £7m, yet has potential as you say in next few years with resource being firmed up to be super profitable (if run well).....vs other miners / explorers who are at multiples of this price. Let's see, as you say, more information on funding will help out

[grahamwales] 15/12/2020 16:28

Ed

Think the first couple of years will be to get the plant up to speed, although my figures were just as an example.

A company making £2-£3 million per annum must be worth at least £50 million m cap.

Personally think they will get better recovery rates over and above the 60% they have estimated.

Until we see the funding costs i.e. interest payments, royalties etc. etc. lets not get ahead of ourselves.


Taken from KAT twitter.

➧First 8 years production from TSF7
➧Measured resource of 390koz Au @ 0.32g/t
➧All in sustaining cost (AISC) US $727/Oz

[uknighted] 15/12/2020 15:33

Just got in from a 6 mile walk with just one glove and there has been a surge in posting numbers. No surge in the share price yet but perhaps that will follow. GLALTH.

[edgein] 15/12/2020 15:23

Graham,

I think you're being highly conservative on the level of profit from Blyvoor after 3 years. There will be more meat on these new reserve numbers once the SAMREC CPR and the SAMVAL are released. If you believe the BBC we'll be in the post-Brexit, Post-Covid apocalypse for years so gold prices should remain strong. I reckon Blyvoor profit on 36k gross oz or 18k net will be much higher (see AAU for similar numbers from an actual mine rather than a low cost tailings operation). Agreed though that like JLP this may not be the only tailings operation acquired, but can you imagine what the free cash flow from Blyvoor could do to exploration on the huge Haneti licence? That's more what I'd like to see.

Regards,
Ed.

[grahamwales] 15/12/2020 14:52

Ed

The way I see it the price reflects possibly couple of hundred thousand turnover and no profit. If they get this project up and running then could be looking at £2 to £3 million profit in 3 years time. Sounds a long way away and for traders it’s a lifetime however for investors it’s not that long and price won’t go up overnight but 20p or so in 3 years time will be very lucrative for potential investors.

Prove up Haneti and farm it out then look for more tailing projects. DRDgold seem to do quite well out of it.

[edgein] 15/12/2020 14:35

Qs99,

Well we've all been there. I've been investing almost 30 years now and you'll learn not to chase hype and spikes and only buy value. Its best to take at least 2-3 year outlook on any stock (exception might be the likes of NCYT, I don't see many covid tests being sold this time next year).

Graham,

Well they've just transformed the reserves today, as LC said this will contribute significantly towards the funding. There's many a small miner valued at 3-4 times this cap with little or no M&I reserves. Should be good news flow towards the reserve report, financial close and construction, plus maiden drilling at Haneti too of course. We'll see in due course where the share price goes after all that.

Regards,
Ed.

[grahamwales] 15/12/2020 14:27

Keeping it down with UT again.

This is the bit that pleased me.

“once the Blyvoor Project goes into production”

Probably the biggest clue yet that it’s going to happen

Just need to see if there is any other precious material now that may be in with the tailings hence waiting on the metallurgical results.

[qs99] 15/12/2020 14:22

Thanks Ed, agree with your view, shame I didn't get into EUA! Also I need to stop taking too much off the table too early, did so with GGP and NCYT this year. Ho hum....

will maintain patience on this one as the metrics are now known and share price hasn't moved, may also add some when I free up £s elsewhere...

thanks again Ed and have a good rest of your day

Cheers
QS99

[edgein] 15/12/2020 14:06

QS99,

Yes their free cash flow would be in excess of $1000/oz at the current estimated AISC. Quite substantial. I'd also expect a phase 2 development to come in especially on the back of current gold prices. This is a cash cow asset. 876k - 1.4m oz could sustain a project considerably larger than 36k oz pa. On a projected cash flow or reserve basis the current £7m cap is beyond ridiculous. Should easily be multiples of this using any metric. Add to the fact that there's imo nothing in their cap for the main asset (Haneti) which you would expect to attract at least some speculative value this close to drilling. Its all about patience chap, its not about what you're missing, its about what the rest of the market is missing right below their nose. They're off chasing hype and hope and come late to the party. No doubt the herd will be buying here when the rest of us are grabbing our coat. Take EUA as a prime example, at 0.4p there was a handful of us buying, most of the market not interested. Now that its recently been as high as 40p volume of money on a daily basis many multiples (and no they didn't increase their reserves 216% in the mean time). They still have the same level of reserves as they had at 0.4p, they just got a lot more recognition once they said they were gonna sell those assets.

Blyvoor has just gotten a lot more valuable today with this upgrade whether the mm's or punters recognise it or not. I'm quite happy to hold these for the foreseeable future through the Blyvoor development and Haneti drilling. It'll likely take patience as its not a hot stock yet.

Regards,
Ed.

[qs99] 15/12/2020 13:46

Thanks Edgein

numbers look boggling when you think about it Gold Price has been firmly above $1,750 for 6 months now, heading North again today, so assuming a c.$1,000 profit on each ounce mined is not therefore unreasonable IMO (do you agree Edgein?).

On that basis and if KAT own 50% the NPV on such large numbers is just way out of kilter with a £7m market cap

what am I missing please?

Cheers
QS99

[tonytony4] 15/12/2020 13:39

Here we go!! Flat to blue imo..

[tonytony4] 15/12/2020 13:39

Here we go!!

[edgein] 15/12/2020 13:34

Qs99,

Agreed no mining at all required now. All KAT are going to do is reprocessing these old tailings. I agree the AISC looks very realistic for a tailings project.

Graham yeah the almost 900k oz of M&I is more than enough for the startup. Absolutely no need to put all of the 1.4m oz into M&I. That current level of M&I would support 36k oz per year for a substantial time (31.5 years).

Regards,
Ed.

[qs99] 15/12/2020 13:30

Yes nice spot Graham

Just looks an odd price

let's hope they can get funding in debt, or equity at a decent premium to this share price or an earn-in.....either way with these numbers and potential to be churning out massive revenues, it's share would dwarf today's price no? DYOR

[tonytony4] 15/12/2020 13:28

Come on let this rise now MM's.. I wonder why they are holding this back!

[tonytony4] 15/12/2020 13:23

Good point there Graham why leave it out unless all was satisfied and done..

[grahamwales] 15/12/2020 13:17

Pretty bold statement and sounding like deal is done imo.

“Additional resource upgrade work for the remaining TSF's is not necessary at this stage and will be conducted once the Blyvoor Project goes into production as part of ongoing production planning.”

[qs99] 15/12/2020 13:14

Thanks Edgein and would agree. These are not deep mine requirements so absolutely every reason the AISC can be kept low, making this on an NPV basis I am sure many many multiples of today's share price ...DYOR

[grahamwales] 15/12/2020 13:11

COVID has slowed down all companies working in South Africa so not surprised. Does strengthen the negotiation hand of Graham Briggs with these figures though.

With gold prices predicted to rise over next couple of years everyone should be a winner on this project.

[tonytony4] 15/12/2020 13:04

These are numbers that the market wanted now they are there for all to see. Financing will be more favourable for kat now.

[edgein] 15/12/2020 13:03

QS99,

If they can keep their AISC to beween 600-700oz, then considerable. I make the total resource to about 1.4m oz or about 700k oz net to KAT. M&I making up 62% of that as quoted in today's RNS, a very significant increase in M&I. Met testwork and compliant reserve to follow pending the covid backlog that's everywhere at the moment. But today's news significantly strengthens the company hand in negotiations.

Regards,
Ed,

[grahamwales] 15/12/2020 13:02

Roughly 100k ounce increase in resource as well 100,000 x $1800 = $180 million more in revenue. Happy days.