The stars may indeed be lining up for KZL at the moment:
1. Buoyant copper prices - C1 cash costs are relatively irrelevant at the moment with copper over $4.30 >> US$1.50 - US$1.70 C1 cost range - who cares if we're at the upper limit?
2. Zinc (and lead prices) better - KZL has previously been realising zinc prices of around $0.90 to $0.93 - if zinc can hold at around $1.10 then margin will be 2 - 3 times higher.
3. Nickel production should be ramping up? - haven't heard anything but up to latest quarterly were saying still expected 2011 production of 50,000 tonnes (2,000 tonnes contained). Will be interesting to see exact Western Areas production cost but should be a healthy margin at current prices. Can add incremental $20m to NPAT?
4. Mungana - everything seems to be on track for reserve upgrades? 63% in a company producing 100 - 150 koz of gold at cash cost of US$300 - 400/oz (net metal credits) in 2 - 4 years time can't be a negative.
5. High grade copper intercepts at Mungana (up to 7.5%) capable of being brought into production in 2 years a possibility?
6. Time frame set for getting an Admiral JV partner - if a partner could be found by April willing to invest $100m+ that would be a huge plus for KZL.
7. CSE bid - not a big deal for KZL in the scope of things. I believe what gself and yatchy say - game over for CSE shareholders if KZL walk away - capital raising at 5 cents. For experts to claim 35 cents a share fair value while CSE trading at 12 cents with 20K of turnover a day and directors with little or no interest in the company, the Independent Expert report is respectfully wrong. I don't hold shares in CSE for the above reasons
8. A lot of analysts call KZL a speculative metals play. IMO KZL is no more speculative than most other copper plays on the ASX. For a start, KZL is actually in production, which is less risky than most of the other metal/copper companies listed on the ASX. Second, KZL has a diversified metals production base which is less risky than most listed metals companies. Third, KZL has no debt. Fourth, all analysts now forecast that copper is unlikely to go below $3 in the foreseeable future so the realistic range in production costs is somewhat irrelvant bar another Global Financial Crisis which destroyed the share prices of almost all listed metal companies, even the biggest boys. Sixth, KZL has an excellent portfolio of potential upside/projects, such as Mungana and Admiral Bay that can make a significant difference and have realistic chances of success. Seventh, KZL has a major Chinese partner that has backed them with real money. Eighth, management have a real and substantial interest in the company, which is more than can be said for most metal companies listed on the ASX. So when analysts call KZL 'speculative', this is only an accurate statement if they classify nearly all other metal companies as 'speculative' too in my humble opinion.
DYOR and yes I do hold shares in KZL for the above reasons.
uncleasty
KZL Price at posting:
85.0¢ Sentiment: Buy Disclosure: Held
