Hello Mike, The market is obviously nervious about KRM given that the sp has not tracked the POG. Perhaps the company ought to have come out with a progress report at the end of Feb to allay fears rather than rely on a third party press release with allusions to Sherlock Holmes. . The Dec Qtr reports were obviously ambigious and required qualification. For example, the claim that KRM's cost of production is $150/oz is somewhat blurred by the qtr report that from a revenue of $8.057 mil, only $2.321 mil was the net operating cash flow . If we take the actual production cost of $3.515, this represents a cost of 43.6% and at a gold price of say $1300/oz this would be a cost of $567/oz. and far from $150/oz
And it is not clear where the $14 mil Credit Suisse forward silver sale fits in and how much of it, if any, is armatised over the last qtr?
While the Cash flow statement indicates $14.977 mil cash at the end of the qtr, the operations statement indicates $20.096 mil cash and bullion which presumably means that KRM had $5.119 mil bullion unsold at the end of the qtr.
The Feb press report, while confirming that the makeshift production plant was producing gold on target, it did, nevertheless, remind us that the main plant is not yet functioning.
This is why an update by management is required to confirm that production is on target, costs reflect the $150/oz cost assertion and that the monsoon season has not impacted on the mine or its operations.A resource update would be great.
It is quite ironic that the sp was over $1.50 in mid Jan before the Qtr reports and the press release and has tracked downwards since despite gold's historic high price.
To quote Cool Hand Luke, I think we have a case here of " a failure to communicate".
I hold a significant holding in KRM so I'm not trying to downramp the share; I'm just being frank and honest and if the management reads this blog, then I hope they will take note.My fundamental calculations which make assumptions about cost of production, pog, production and the life of the mine indicate that the share should be well over $2 by end of year.
But as usual, DYOR.
Moorookamick
KRM Price at posting:
$1.32 Sentiment: Hold Disclosure: Held
