Ann: March 2016 Quarterly Activities & Cashflow Report-KRM.AX, page-14

Given that the shaft and water ingress issues will not be fixed until 1QFY17/3QCY16 the question is: Does one buy now and risk:

1) Over the next 8 weeks smooth progress is made and news of this reaches mkt.
2) Current exploration is successful and at least one more exceptionally rich (60-120gram) reef is discovered.
3) Staring in mid June ore productions ramps up rapidly and gold prod reaches targets i.e. 4-5x current Au production by Christmas.
4) June qtr report (in late September) describes how all in cost has dropped below USD600 and on trk to go under USD450 in 2QFY17. (bear in mind when Medusa had the 'Great Hamish reef of 2.5m x 40g its all in costs were under USD300/oz and SP rose to over $6.oo.). Some KRM reefs are even higher grade although widths more in 1.0 -1.3m range!

Clearly all the above will raise the SP with 3 & 4 the most powerful drivers.

However buying now risks:
a) POG falling dragging down all gold stk prices.
b) Water ingress remains unmanageable and prevents/delays increased ore prod by another 6 months.
c) no new reefs are discovered.

Risk a) will have little effect on KRM profits. If you produce at USD500 then a fall from USD1,250 - 1,150/oz is not substantial.

Risk b) is very serious. It will knock confidence that KRM's problems will ever be solved and SP will take a dip back to 15c in my estimation.

Risk c) The ore body within KRM's tenements is riddled with epithermal reefs. Several are wide and very high grade. I'm confident more very viable gold reefs will be discovered. Just read Doug Kirwin's comments in recent company update. Very positive indeed from a true expert.

Generally i avoid risk wherever possible but every stk carries some risk. Its the degree that varies. With small caps like KRM i use the risk: reward ratio as a guide and I've bought as i feel the probability of exceptional reward warrants the risks outlined above.

Timing: Now the question is.... do i buy now or in say 4-8 weeks time when we'll have a better picture re progress at the mine?

Leverage: each 1 cent movement on a 20c SP is 5%. Not to be taken lightly.

dyor before deciding anything.