If you are not prepared to own a company for 5 years, why buy it for 5 minutes...Warren Buffet
If KZL had used cash to make poor investments, I would have sold or stopped buying but they haven't.
This year we have seen them make progress on acquiring Einasleigh (being paid for now), completing exploration that is delivering excellent grades of 20-40% of zinc at King Vol, 10-20% copper zones at Baal Cammon, and similar results at Red-Cap. Mux has also made progress with their BFS 1 now complete.
However, I am a bit surprised that they needed to raise cash now too given that they reported they had 25 mill in cash, a new 40 mill ANZ refinancing fund setup, and 30-40 mill in stock to invoice.
Take our 16 mill for Einasleigh, 20% off receivables due to lower metal prices and the fact that they clearly decided not to tap into the ANZ funds and it's cleat that there wasn't any other choice but to issue a small share parcel at a 10% discount. It's better than raising debt and then paying interest.
Given net asset value less liabs is about 500 mill and market cap about 244 mill, I am happy for them to do this cap raising to pay for further exploration. It also takes the pressure off Lounge Lizard negotiations and allows them more time to complete this transaction in their favour.
Adding 25 mill to market cap will also be offset to a degree by a significant resource upgrade at King Vol in the next week or two.
KZL Price at posting:
34.0¢ Sentiment: Buy Disclosure: Held
