KZL has 718,307,956 shares on issue or a market cap of about 200 mill at current prices.
Shareholders equity, the difference between assets and liabilities stood at 497 mill as at June 30 and after a revaluation and writedown of existing assets. We know now that these assets are conservatively valued, if not undervalued. This excludes of course 23,000,000 options on issue. I would have to look for the details but KZl is trading at about 50-60% under value.
Debt is currently 31 mill, which as a % of total equity fell -5% in Oct.
Operating EBIDTA is forecast to grow from 17% to 38% by 2014. Achievable if zinc prices jump to $1.40 by 2014.
Granted cash flow looks week but how to you explore tenements by spending 150 mill on exploration to unlock the value of these assets and maintain a strong cashflow? With such low debt, why is that a problem anyway?
Failed 5 year strategy after 2 months? Interesting view...but I beg to differ...and at the end of the day companies with balance sheets that are not saddled with debt are among my favourite kind to invest in.
I would be more than happy to see KZL take on some debt to fund exploration targets and with almost 300m of net asset equity sitting around why not take on more debt or sell an asset to achieve those targets.
We'll see who is right or wrong about KZL and Zinc in 6-12 months time...I hope you don't miss out.
KZL Price at posting:
32.0¢ Sentiment: Buy Disclosure: Held
