shorting big time, page-5

Hi dan69,

Nothing much has happened with KRM since it hit over $1.90
in April except the ann. that there was a plant stoppage
due to Ball Mill problems and the May-June market drop.

This plant problem is now being overcome permanently by the fitment of a SAG MIll between the crushers & the Ball Mills. Not alone will this cure the problem but it will provision for higher throughput later on if required.The SAG mill permits one Ball Mill to idle permitting alternative Ball Mill R&M without disrupting plant throughput.

From what I can gather the plant is producing at the
lower rate of approx 180 tons/day with ore grade between
10 & 18gr/ton as it has been since commissioning.
(last report indicated the higher grade)

The plant stoppage in April has been less than anticapated & the sheduled stop at the end of June enables the fitment of the SAG mill. Once fitted the SAG mill should increase throughput to the forecast 350 tons/day with a capacity of more if required.

Mr Market through a lack of understanding sees this bedding-in of the plant as a problem rather than normal or good news.

As I previously posted, if you do the simple sums:-

350 tons/day with say an average of 14 gr/ton
= 158 ozs/day X 365 days =56,940 ozs per year.
(Grade ranges between 18 & 10 gr/ton)

Even if one is a pessimist & says that the grade will drop to the lower 10 gr/ton the sum would look:-

350 x 10 divided by 31 = 113 ozs/day = 41,245 ozs P/A

The company has forecast 45,000 ozs p/a

At 45,000 ozs with $1350 AUD /oz profit( silver factored-in) the annual profit would be $61 mil approx.(costs could drop under zero if silver grade only slightly improves)

Even if we deduct another $11 mil for extra drilling etc we still get 19.4 cents EPS.(257 mil shares)#

Multiply this by a forward multiple (P/E) of say 10 to 12
and we get a share price ranging from $i.94 to $2.33.

My belief is that come Dec the SP will be middle of this range or better.

KRM has $20 mil cash in the till with likely another
$12 to $13 mil more come end of June, so there is a very low chance of dilution.

Many goldbugs investing in emerging gold miners do so on sentiment rather than on fundamentals and are likely to be
panicked into selling once the market drops.

If one believes that the POG will stay put or improve
over the next year and once one does the sums on KRM, then
short term blips should not be a worry.

World events that moved the POG upwards show little signs of abating; at least not over the next year or so.

Cheers
Moorookamick

# 257 mil shares for an emerging gold miner is excellent (some get to over a billion) and indicates that, unlike other goldies, GXY has not overly diluted during it's exploration stage.MM.

nb: Please do your own research before making any decisions to buy,hold or sell & if fundamental data is not available then the stock is purely speculative.