Kagara is being sold and has been sold like it's going broke tomorrow. It reminds me of August-October last year when everyone was convinced the US was going into recession and Greece was going bankrupt. Both didn't happen. KZL are still being punished for what happened in October last year.
In the absence of good news, sellers will continue selling and try to force holders to throw in the towel.
However, so much bad news is now priced that in that if the company doesn't announce it's broke or offers a glimmer of good news in the next activity report (3 weeks), the argument will be seen as fundamentally flawed. Shorts are being set up for a big squeeze. Shorts are now 0.26%. The highest I have seen.
I have never seen a company go broke where it's metals prices continue up, and it costs such as the AUD & Brent Oil go down ($1.04 now from $1.09). KZL also has low debt compared to 2009 and 80 mill cash at bank and will be able to add 6 mill to cash flow as cost saving iniatives are fully realized..
The Aussie market is also a lagger full of pessimists that don't believe in the market rally and expect armageddon round the corner.
What they and Aussie funds fail to appreciate is that central banks around the world are engaged in activities to re-inflate the global economy and this isn't going to end any time soon, not whilst its needed to offset austerity in Europe etc.
Sure you could point at America's deficit of 15 trillion and tout concern, but you could equally point to the resources supporting it that they are beginning to strongly exploit.
Fact 1. The US has Three Times the Proven Reserves of Saudi Arabia in Shale Oil
Fact 2. 48 U.S. states have a total 750 trillion cubic feet of technically recoverable shale gas.
This rally we are experiencing now is not going to end any time soon. One way or another KZL, it's metal prices and share price are going up eventually.
KZL Price at posting:
16.5¢ Sentiment: Buy Disclosure: Held
