You raise a very valid point. Nobody can dispute the lack of love for KZL since 2008.
I sold all of my holdings in 2006-7.
I started buying again at the start of this year (March) in 2011.
If you sit down and look at the books from a 2-3 year perspective, and based on what Kagara aims to spend on exploration, there is a funding shortfall of about 100 million.
To reconfigure this business and extend the limited mine life, you must explore the most prospective, cost efficient ground that is closest to local milling, management and transport infrastructure.
Admiral Bay, the sale of Lounge Lizard, and or a sale of KZLs stake in Mungana are highly speculative and impossible to forecast accurately.
Thus mainstream analysts will model a scenario based on actuals rather than probabilities.
By my calcs Kagara could easily raise 180 million by disposing of two assets. These disposals would be at almost fire sale prices.
Cash costs for zinc are down from 80c to 72c and available zinc stocks have fallen below the critical 700,000t.
So I guess you can lead a horse to water but you can't make it invest.
In time though (6 months or less), KZL will return to being a favourite amongst day traders. Short positions have fallen from 0.24% of total shares to 0.03%. This indicates a fear amongst shortsellers to continue to short with such disposal of assets in play and the possibility of a big move north in the next few weeks. Charts certainly support his view.
KZL Price at posting:
43.0¢ Sentiment: Buy Disclosure: Held
