Doesn't this show clearly how the market psychology is negative towards PM producers? The report is vague, but the implication is for a profitable large scale mining operation, which could turn KGC into a monster cash cow by paying all company expenses, making everything else pure cash profit, plus there is reserve growth potential. I guess it means the analysis is that Tasiast might be just a little too big for KGC to handle. This really seems illogical to me, since KCG is potentially a great customer for the bankers, why do they pummel the stock? We assume the vauge report means hiding bad news, but with this stock price, good news could be worse for the current management as it invites a takeover. Is there anything worse than having more gold than you can handle (I know it is a rediculous question)?
As I said before, here is the worst case scenario. KGC pumps $625M into the project for 2013. 2014 Q1 gold plummits and they scrap the project. Analysts wonder why not wait before buildout. Mgmt believes as the project moves forward month-by-month the numbers will get better and better. My hope is that KGC will provide constant open dialogue on the project as it moves forward.
Here is the upside. By the time 2014 Q1 when the final feasabiltiy comes out, much of the capital would have already been spent, and hopefully new reserves will be added to 2P. The marginal cost benefit then will look great on a IRR basis. Hopefully gold can stay above $1,500.....
The most useful information from this study is the questions from the conference call. I would suggest everyone listen to the Q/A on the call. Analysts are really putting mgmt's feet to the fire. After 3 years from purchasing Tasiast, shareholders deserve more in-depth details. Mgmt is still withholding much useful information.