rhenium an analysis

Rhenium an analysis
One of the metals which KMN does have in the ground is rhenium.

Here is a chart of the price of rhenium:


The current price is: about $12,000 per kilo (http://www.taxfreegold.co.uk/rheniumpricesusdollars.html)

Notice that the price of rhenium has not retreated like other base metals. That is probably because of the fact that there is no paper market in rhenium. Hence there is no speculation on rhenium unlike base metals and precious metals.
The increase in price seemed to be all due to supply and demand issue.

The high price of rhenium appears to be driven mainly by demand and it’s demand is energy related. The two uses of rhenium are as a catalyst and in superalloys. Superalloys account for more that 60 percent of consumption. The major use in superalloys is in jet turbines where high temperature resistant and high fatigue strength is required.
Bear in mind that both of this uses are rather recent and both are driven by energy. Rhenium began to be used in turbines in around 1998 and only recently are there huge interests in ctl (coal to liquid) where rhenium and platinum are used as catalyst. The best thing for rhenium is that at this point in time it is virtually impossible to substitute

From Tom Vulcan: (article by Rhenium Son of Moly in www.minormetals.com)
And demand does look as if it is set to increase. Not only are high aviation fuel prices and increasing environmental concerns forcing airlines to be more fuel efficient, but, in addition, the new rhenium super-alloy turbine blades that can help them achieve this efficiency now require a rhenium content of up to 6%, when, previously, it was only 3-5%. Of the civil aircraft manufacturers, Boeing alone "expects to supply 475-480 commercial planes this year and 500-505 in 2009, up from 441 planes in 2007." Its European rival, Airbus, is set to deliver some 470 this year and up to 453 in 2007.
The other part of demand is in the new breed of fighter aircraft which use twice the amount of rhenium compare to the older F16.
Production of rhenium is about 50 metric tons a year.and total world is only about 10,000 metric tons.
Kalman has about 2.3 mil ozs of rhenium resource.
This would work out to be about 65 tonnes of rhenium. That would work out to be about 0.65 percent of world reserve or about more than one whole year of world production. Question is would there be other miners who will be interested in this mine since rhenium is so rare.
Or in monetary terms that is about 780 mil of rhenium in the ground at 12000 dollars per kilo.

The point we need to ask is the price of rhenium and for that matter gold silver and moly will increase or decrease or stay the same over the long term say 5 years.
Taking into consideration a huge recession in the states my believe is in the short term the price of rhenium and for that matter gold, silver moly and copper may not go up much and may head down but over the longer term say a couple of years I am quite confident that all of these metals will go up in price especially for moly and rhenium which are mainly energy metals

Now we will have a look at the share price of KMN. At a price of say 10 cents and using an approximate figure of 500 million shares we have a market cap of just 50 million. That is a steal considering that rhenium alone in the ground is about 800 million dollars. Of course if we take into consideration the other metals like copper and moly in Kalman and gold silver and copper in San Anton; KMN is even more of a steal. We are talking about a company with about 8 billion worth of metals in the ground trading at less than 50 millions dollars!!!

Of course there is the risk and right now the biggest risk is that KMN may run out of money and hence become insolvent. But I seriously doubt management will allow that to happen. They may just stop drilling and conserve money until a suitable time arise before they proceed again. Remember: that have been pretty good in raising money over the past few years.

But that again this is the risk some of us may be willing to take for the risk to reward ratio or margineof error is extremely good at this price. In other words you can put in one thousand dollars now and you can have returns of 5000 or 10000 or 20000 dollars in a couple of years and yet the shares may not be overvalue if things go according to plan. And if the company do go bankrupt you will lose just 1000 dollars. That is the risk reward situation.

I am sure that all of us who buys shares understand that we take risk whenever we buy any shares but then most of us do not know that we are also taking risk when we are not buying shares. For then where do we keep our savings? It is only been perhaps a few months ago that Americans and British and Icelanders and Hungarians and Spanish and Germans and the list go on; who thinks that they are not taking any risk when they put their money in the banks hence blindly trusting their governments and bankers. But now most of them have awaken to the fact that there are risk involve in being passive with their money. The trouble is they are mostly jumping from the fire to the frying pan by moving their money into US treasury. No doubt there is little chance that they will lose their capital but they will lose their capital to a sinister thing called inflation which is when the creation of money is greater than the expansion of the economy.