Kingsgate (KCN)

Discussion in 'Stocks & Derivatives' started by SilverSanchez, Nov 1, 2011.

  1. SilverSanchez

    SilverSanchez Active Member

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    Kingsgate just made a takeover bid for Laguna Resources (100% premium to opening share price today)

    If successfull Kingsgate will have a prodicing Gold Mine in Thailand, A Silver project in Australia, and now another silver project in Chile

    They are really trying to shure up mines and ounces... as a dividend paying stock these guys are really working hard to build a massive resource list - and most of the new aquisistion have been silver... me thinks this company is one to watch long term....

    What do others think about this stock ATM?

    135.27M issued

    6.66 - 11.66 - 52 wk low/high

    paying 5c dividend per share

    Production has been down lately (i dont really like their project in Thailand, to be honest i hope they sell it). But these other mines look very substantial.
     
  2. SilverSanchez

    SilverSanchez Active Member

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    Im making a buy target of $6 - and i think ill get it - anyone wanna bet?
     
  3. finicky

    finicky Well-Known Member Silver Stacker

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    Nope, reasonable chance it'll get there - my sense of the chart, that's all. I got a reply from a company rep to an email I sent querying the robustness of the Bowdens resource. The reply was slightly encouraging, but I'm still basically unconvinced. I'm a silver bug, so I'm hoping a $100 silver price in a year or so will rescue us, but there's no way I would be relying on that to buy a weak sounding resource like Bowdens.

    Hello,

    I am wondering if the case for the Bowdens project can be further explained in your presentations to potential investors.

    I don't understand how such a low grade silver resource is attractive to mine. Less than 2 ozs/tonne of Ag.
    From the notes I can't judge whether that is before or after adjustment for 81% metallurgical recovery. I ignore the paltry presence of lead and zinc in the ore.


    I really don't get it, I've been buying into spec miners for a few years, mostly unsuccessfully, and this Bowdens resource seems close to the most pathetic thing I've seen in a prospect. And the costs will be Australian not Thai.

    I have only 2,000 shares in Kingsgate but was recently looking at it for a family buy when the price dropped. The Bowdens purchase is what put me off.

    Rgds

    finicky


    Dear finicky,

    Thank you for your enquiry.

    For your information, please note that a 2oz/t Ag (~60g/t Ag) orebody is, for reference, equivalent to a ~1.3g/t Au orebody using the AuEq45 ratio we use.

    For an ore body that outcrops and has a 1:1 strip ratio I think you might find that the economics look very attractive at current silver prices and quite robust on any reasonable forecasts. Please note that the Pb and Zn by-products would lift the grade closer to 78g/t Ag, equivalent to ~ 1.7g/t Au using the AuEq45.

    If you would like to discuss further please feel free to contact me.

    Kind regards,

    Joel Forwood
    General Manager Corporate & Markets
     
  4. SilverSanchez

    SilverSanchez Active Member

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    Thatx for that Fin - I still like em though...

    You have to do something with fiat and aquiring silver isnt a bad way to use it. If you are really expecting silver to hit $100, then the leverage on this sucker is great...

    Hypothetical

    A mine cash cost per ounce of Silver is $30
    Spot price of Silver is $40 - average profit per ounce $10

    Spot price goes up to $50 - cash costs stay steady
    That is a 100% increase in profits

    The leverage in the share price is an upside potentially - depends how you look at it.
    It just depends on what you are looking for.
     
  5. SilverSanchez

    SilverSanchez Active Member

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    I picked these guys up for $5.91 (got in to early as usual as i watched it go down to about 5.60)
    I am very pleased with my purchase as there was a nice return to a more fair valuation (although i still believe its undervalued compared to total resource value)

    If you look at the chart there is a break as it burst through $7... so it may come back and fill - ill prob buy more mid $6 range....
     
  6. SilverSanchez

    SilverSanchez Active Member

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    Yeah I really like their managment. Thire aquisition of Bowdens and Luguna's silver projects means they fit my profile for a mid producer.

    More than one mine
    in more than one contry
    good at deals
    managment proven record w/ a similar take on the PM market as me

    They have been around for a while, i like the CEO. Keeps saying at the AGM "this is what your company has done" "this is what your company spent" "this is how we have managed your company" - i like the shareholder respect.

    I prefur to use lower values to do my maths because of future volitility - i think we just came through or coming through a bear trap in the Metals and PM Stocks. So i loaded up on mids producers and small cap developers. KCN's leverage potential is fantastic - really looking forward to seeing how these guys use their money to bring these projects online.
     
  7. Silverthorn

    Silverthorn Well-Known Member

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    Trading halt for cap raising?
     
  8. SilverSanchez

    SilverSanchez Active Member

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    Funding for mine development?
     
  9. Silverthorn

    Silverthorn Well-Known Member

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    Couple more announcements released.

     
  10. SilverSanchez

    SilverSanchez Active Member

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    Just watched their financial review - nice results

    The reason why im so bullish on this company is because it is essentially a brand new company, the amount of aquisitions they have made over the last 12 months means they no longer the Kingsgate of 14 months ago. They are a multi mine company with far larger potential than a single mine company. This has mid cap - large cap growth all over it, once they deal with their debt.
     
  11. Silverthorn

    Silverthorn Well-Known Member

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    big drop today. buyers of the placement selling down some of their holdings?
     
  12. SilverSanchez

    SilverSanchez Active Member

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    Yeah - $7.10 price of placement (probably wasnt that much of a discount when the sale went through - but KCN surged through $7... market needed a reason to backfill.

    I bought at 7.17, will buy more under $7. Short term pain long term gain. I trust the managment. May turn out to be my downfall - I know its popular to loath managment of your companies when the SP is going down. But I dont.

    Avg buy in price for me now is $6.55
     
  13. SilverSanchez

    SilverSanchez Active Member

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    Getting punished by the market (as well/or a normal market correction) at the moment....
     
  14. SilverSanchez

    SilverSanchez Active Member

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    I still insist my market timing is the worst in australia :)
     
  15. Silverthorn

    Silverthorn Well-Known Member

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    At least the dividend will be coming in a couple of weeks.
     
  16. finicky

    finicky Well-Known Member Silver Stacker

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    Gapped down last two days - determined selling. Holders can hope for a test of 5.60 area of prior low, or even a low chance pull-up before that, but another way of looking at it is that the price has been in a downtrend channel and is looking for yet another lower low. I figure the $7 level should have held after the breakthrough, if the stock was healthy, because it was resistance become support, then the support failed and became resistance again. Now the whole 2 year thing above $7 is looking a bit like a horrible freaking top. Bowdens, I blame Bowdens and the capital raising, and increase in debt. Just the way I'm feeling about the chart, nothing sure about it.
     
  17. SilverSanchez

    SilverSanchez Active Member

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    Im mid and long term bullish on KCN because of their silver properties in peru and australia. They made shrewd aquisitions as well - they didnt over pay they got their properties cheap.
    They are serious about their dividend policy as well.
    I purchased some more today at 6.07
     
  18. finicky

    finicky Well-Known Member Silver Stacker

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    I'm waiting for a good sign of a bottom before I add - if I add. I still think Bowdens sucks - an acquisition shouldn't rely on a mega rally of the underlying metal for it to be robust.
     
  19. SilverSanchez

    SilverSanchez Active Member

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    Well if you wait for it to be robust in current prices, you cant get it cheap and you have competition - thats why i like the aquisition :) They did it early - just like my buying

    Managment and I share a similar investing philosophy - but they are a lot smarter than me.
     
  20. SilverSanchez

    SilverSanchez Active Member

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    Looks like i pretty much bought the bottom today - we'll see if $6 support holds
    Beware of a bounce - moving to retest $6 in the short term.

    But im expecting this stock to be a long term hold
     

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