Didn't stop WSA from falling -4.22% today. I don't know that WSA got a bargain. 60 or less would have been a bargain. Given Kagara paid 25 for it 6 years ago and invested a further 35, its sounds like both parties got what they probably should have got in hindsight.
I was expecting a bit more with nickel prices up the past few months and the supposed bid tension they reported in the quarterly in Jan that failed to materialize but thems the breaks.
There is probably a little hidden message in it from WSA too, which is that nickel assets are not as valuable as we may have thought. Nickel is down more than 50% from when KZL bought this mine and after checking the Economist forecasts yesterday, I noted that Nickel is set to fall next year back to $7.80 or so. It would seem the recovery in nickel prices the past few months had little impact overall on the final price. These facts alone would have made it pretty difficult for KZL to argue a much higher price that 13% on top of what they invested in it. As for WSA, I think it could be a buy but I'm going to wait 6-9 months to see how their stock price and nickel prices fair.
At then end of the day, KZL made money on it and will net circa 70 million in cash after stockpiled nickel is factored in. Maybe slightly more. After buying Einasleigh for 16 mill in October last year, they have really traded one asset for another and banked net 54 mill. Not a bad result but clearly under maybe what we here and others were expecting.
I guess the big question for analysts will be... 'Is/was this enough to fund their ambitions for the next few years?'. We know they had 10 mill cash at bank at the end of Q2. 80 mill in cash should buy them enough time until zinc prices bounce.
I am calculating their forward exploration and dev budgets now less LL to see if they will have enough cash.
KZL Price at posting:
31.0¢ Sentiment: Buy Disclosure: Held
