Katanga Mining Ltd Ord KATFF

KAT - What to expect?

[Sogosohubidu201]

What to expect?

 

KAT will report Q2 production number before the end of this month and Q2 financial report in August. Without the one time charge of $150 millions USD resulting from the settlement with Gecamines, KAT should make 10 cents per share in Q2. But investors and traders should be able to see through this one time charge event.

 

New mining code is being gradually implemented in DRC. Royalty rate for copper and cobalt has been raised from 2% to 3.5%. Cobalt has not yet been listed into strategic minerals, which will result in 10% royalty rate. It will be difficult to implement the Super Profit tax in the short term with strong resistence from miners. So short term, the impact on KAT earning is the royalty raise from 2% to 3.5% for copper and cobalt.

 

Cobalt inventory in asia including China was reduced by 50% in recent months. Q3 and Q4 are strong seasonaly quarters for the sale of electric cars, The mile range for main stream of electric cars is increased to 300-500 km with one full charge in China and willl be increased to 400-1000 km worldwide in 2020. China has also expanded to 20 cities in terms of limitation of gasoline cars on road. For new car buyers in these cities, electric cars are very much their only choice. All of these should result in the fast penetration rate of electric cars going forward, and therefore the increase use of cobalt. I expect that cobalt price will recover and move higher into Q3 and Q4 this year.

 

The US subpoena investigation in Glencore will take many years to completed. Historically, Glencore had been accused for many wrong doings, but never has anyone convicted, It is in Glencore DNA to sale in stormy sea to maximize its profit. Before this investogation is completed, which is many years away, most in this board may have already been out of KAT with decent profit. Why worry?

 

Longer term. if you want to maximize your return in KAT, you got to wait for next year when copper revenue double and cobalt revenue triple while cost of production will only increase slightly about 10%, resulting in explosive growth in net earning. I will expand this in another post. KAT will likely start to pay dividend late 2020. Share price of KAT should start rising dramatically going into next year.

[QianPathFinder]

Good points, I am all in.

[topdop]

@Sogosohubidu201, no, it likely won't be US$150 Million as you state, more like US$383 Million... See point 21 of my Executive Summary following the Glencore settlement with Gecamines: httpwww.stockhouse.com/companies/bullboard?symbol=t.kat&postid=28205204#z309MtbggDdxwg0U.99 21. The Company has reported thst the AGGREGATE FINANCIAL IMPACT on the Company by settlement is expected to be

[Sogosohubidu201]

Yes, Topdog, there are other no cash one time expenses that I did not include in my original post. Nevertheless, they are one time expenses only from the settlement deal, which will not affect future earning after writeoff.