KNTNF Projected Valuation Mid- 2024 The following is posted not so much to for the benefit of the board but to reinforce my own reasons for continuing to hold this position:
As of 10/30/23 kntnf= 3.90 w ttm earnings as follows (0.04+0.0.02+0.06+0.01=0.13),
so p/e= 3.90/0.13= 30 or so depending on the day.
Some will remember that this p/e> 60 a few years back before Covid, equipment shutdown and mining accidents slowed earnings growth and gold price variations.
The key is not earnings but earnings growth.
I repost the last few years eps (ttm) as baseline data to make an aguement for mid-2024 price.
2023: 3rd est= 0.02 (0.14); 2nd= 0.04 (0.13); 1st= 0.02 (0.11)
2022: 4th=0.06 (0.15); 3rd= 0.01 (0.16); 2nd = 0.02 (0.17); 1st= 0.06 (0.17)
2021; 4th= 0.07... did not go back to figure ttm but you can see no consistent ttm earnings growth
This is reason p/e dropped to 30 from 60 area.
So let's focus on best and worst quarters of 2022 and 2023:
Best: Q1/2022 where earnings= 0.06
Conditions: net income/revs= 26.9%; AISC= $788; head gr= 8.3; gold eq oz= 28188; eq price=$1769
Worst: Q1/2023 where earnings= 0.02
Conditions: net income/revs= 12.4%; AISC= $1506; hd gr= 5.2; gold eq oz= 21488; eq price=$1807
So it looks like primary factors are AISC, head grade and gold eq oz produced
The 4th q 2023 results unfortunately won't be released until March 2024 but the production results
will be released the 2nd week of January 2024 THIS THE KEY DATE in the near term.
If any of you have read thru the updated presentations here's what you'll find:
The 3rdQ 2023 average daily tons mined was 1370 but October so far average is 1902tpd (+13%).
In addition, they have stated that concentration is on higher head grades now and more efficient
processing from the twin incline completion.
Therefore, I project a record gold eq oz quarter that exceed prior 35k oz.
Even though 4th Q AISC guidance is $1180-$1300, the gold price rising back toward $2000.
The above lays the groundwork for a 4th q eps at $0.06 or greater. If knt can give guidance in January
for and AISC back to or below $1000/oz then a 1st q eps at $0.08 seems reasonable.
In short, if p/e holds at 30 and a gold price at current, then a mid-May 2024 price (1st q eps) of
$6 is reasonable (ie p/e=30; ttm eps= $0.20). I expect knt will release guidance for 2024 in excess of 150k eq oz mined as opposed to 120-140k oz that was revised to 111-116k due to accident.
These may be overly conservative... if gold price settles at $2000 and if knt demonstrates earnings growth then the p/e could trend toward 40. In which case a mid-2024 price at 10 is not unrealistic.
I also remind myself that end 1st q 2025 is when stage 3 is scheduled for completion (ie start of 290k oz per annum). So 7 quarters from now (mid-2025), I'm going to throw out a p/e at 40 and a ttm eps
at 0.30 for a mid-2025 price=$12.
Obviously all of the above are speculative assumptions for developing a future price.