The Elephant in the Room… what’s the real story?We've all seen the KNT NR including the following excerpt with little comment here.
On March 13, 2024, the Mineral Resources Authority (“ MRA ”) ordered a temporarily suspension of underground operations through issuance of a “Form 29”, pending the completion of action orders in relation to an independent safety audit and the installation of a collision avoidance system. Work on these action orders is underway and were in process by the Company prior to the issuance of the action orders.
Suspension of underground mining since March 13 means that the 1st q will be negatively
impacted at a time when the average realized gold price from 4th q to 1st q will be > $200.
Since there has been no follow up, we must assume underground operations remain down.
So the 1st q earnings to be reported in mid-May will be negatively impacted at a time when
gold continues to rise. Obviously, there seems no logical reason for MRA to close
underground mining for a non-industrial death.
The mention of the collision avoidance system clearly relates back to the 2 deaths from last
summer. So was there some timeline given to KNT as a safety countermeasure to these
deaths that wasn't taken as seriously as MRA intended?? I look back on the time since that
accident and thought there was never any detailed follow up report from KNT to us
To me, it seems highly unlikely that the MRA would be this petty and punitive unless there
is a bigger story.never provided to us... the full story.
So, I've resigned myself to 1st q earnings being poor (we'll get 4th q eps on Monday).
My hope is that KNT can establish with MRA, the same excellent relationship they've had
with other government PNG personnel.
This memo is written as much for the professional analysts that will be involved in the
April 2 conference call Q&A in the event they follow this message board... time to ask the
penetrating questions. Keep in mind that Lewins has collected in salary, incentives and
optiions that total nearly $2 million every year since 2017... I have no problem with that
but he needs to also be accountable to the shareholder.
The 2nd quarter begins next week (April, May, June). If Lewins can resolve the closure
issue in early April, I will breathe a little easier even if 1st q earnings are now
highly suspect.