RE:Updated Presentation at Sprott Conf July 25-28, 2017 The biggest problem with KDX must be the comparison to KL' s performance. KDX could improve its % increase in EPS over KL by a combination of the following:-
- Increase in POG - Since KDX's cash costs are high v KL, then increases in POG will benefit KDX shareholders pro rata, more than KL.
- Silver to Gold ratio drops to below 50. With KDX's important silver output, this would advantage KDX over KL.
However, at the rate of growth being exhibited by KL, the POG and silver will have to increase significantly in order to justify a closing of the rating of KDX v KL.
I initially bought in to KDX in March 2017, primarily because I considered the TN purchase at $32m (with no NSR liabilities) to have very good long term prospects. I have always been happy with the cost / benefit of this purchase and the recent drill results bode well for the future. It always intrigues me that TN's predecessor San Gold was capitalised at over $1bn in about 2011 ..... these times could return, particularly since TN is focussed on mining lower volumes of high grade ore.
Having made a benenficial exchange of KDX to KL in the summer of 2016, I recently switched my 75% KL / 25% KDX, to about 40% KL / 60% KDX. This was done when KL was 2.75 x KL ..... perhaps I should have waited for my previously announced swap target of 3x .....