Yes, exactly. But Geoff has plenty of options. I would think maybe 5 more mill in cost cutting max is realistic, -3 off development and -2 off ops. They have to keep drilling and exploring to sure up resources.
The value of inventory could easily improve another 5 in Q3.
They could reduce creditor payments for a quarter by 5 but I'm not keen on that. I think Geoff has signalled that he aims to return cash to pay off debt ASAP. Thus the -10m payment to creditors.
You could easily see a 5 mill improvement in cash costs. E.g. the nickel number is low, as are some of the other prices there but I am hesitant to be higher on those as I assumed perfect production.
So improvements in inventory, cash costs, & op cost cutting could put them in the black, but for the business to hum and be in a position to execute the 5 year plan, they really need 3 quarters of Q1 type numbers.
2013 will be a good year for them if zinc prices average 1.10 plus. I am buying now and or have bought since mid-late last year because I am confident of LL closing and a substantial resource upgrade. If you wanted to manage risk though, the Chinese like to restock from Apr-Oct but that theory didn't really work for me last year with Europe and all. However, this is a 2-3 year investment, not a day trade. KZL should bounce back to 60c-$1 in 2013 barring Armageddon.
One thing I really like about KZL and zinc and is the transparency. You can figure out just about everything going on and I hate being exposed to bubbles.
In the 3 year China stocks chart you can see this kind of trend with restocking. Blackmarket zinc though is always a concern. Once over $1.10.
KZL Price at posting:
30.0¢ Sentiment: ST Buy Disclosure: Held
