Keras Resources (LON: KRS) are to all intents and purposes a rare gem. A mining company listed on the London Alternative Investment Market in so far as they are actually now producing gold. They are debt free and have a mining team that has between the 3 of them over 80yrs of get your ‘hands dirty’ experience. The first small shipment of ore, from the Grants Patch tribute mining play, after processing, will generate approx. 12 Kilos of gold. This, as Reeves confirmed, should substantially increase over the next 12 months, the approximation of gold produced could be between 750-1000 kilos of gold. A tonne of gold would propel their share-price to what Reeves believes would be multiples of where it is today. The next parcel sent to the Paddington Mill is expected to be bigger. *Tribute mining is a deal where you operate the asset on behalf of the owner. This has favourable advantages in terms of no exploration costs, existing leases, while the toll treating requires no development capital, only working capital.
All too often retail punters are lead down the proverbial RNS garden path, by companies that just keep promising jam tomorrow. AIM is littered with so called gold, copper, Iron, coal and rare earth mineral miners that have for years promised much but never delivered one single gram of production. The only thing these ‘Lifestyle’ companies mine is city of London brokerages. Not so Keras Resources. They are delivering and producing gold.
My interview with the head honcho, David Reeves, was a relaxed affair with a man who knows he and his team have quite literally struck gold. What I liked is that he and his team have a lot of skin in the game. *(Pre placing) They held between them 26% of the company (Reeves had 11%) all directors fly economy class and are aware that keeping costs down at the corporate level, as well as the production level, is a statement of intent. Far better to rough it for a few years flying “Back of the bus” and use cost savings to increase company production and value. The Long Range Business plan (LRBP) is to build a 20, 30-40koz producer in Australia and bring on their African manganese and iron ore projects to full production.
Their manganese and iron ore projects in , Africa could, subject to permits, be up and running in a matter of 6-9 months. Funding from gold revenues should ease the financial pain. Manganese is a key ingredient in steel production. Revenues from successful projects could generate literally millions of double digit annual revenues of $18,000,000+ per year. All however is subject to finance being available. They have in my opinion kept these projects on the back burner so that they can focus on generating near term cash flow from their Western Australian gold assets. This strategy is a case of ‘real politick’. Driving shareholder value by acquiring access to permitted projects with low capex and opex, with the potential for near-term cash flow is key to the strategy. Hence why they’re concentrating on their tribute mining deals.
As ever I did ask the burning question on the next placing and as ever I was given the ‘stock’ answer. However I do have my own unique way of getting information from other sources. I tell it like it is, regardless of who it effects. My loyalty is to my readership and followers. I don’t take what CEO’s say to me as the gospel according to the company, even if as in the case of Dave Reeves, he is a genuine, decent businessman with the best of intentions. The Placing, and there will be one, is the only negative I can find in a sea of positives.
My sources, who I contacted post interview, told me that a placing is (was) being put together. Shard/Beaufort are whispered to be seeking £1M. (Now confirmed at £1.25m) I could be wrong (But was right!) but looking at the way the SP has performed post Shard warrant exercise, it is a pointer of jiggery pokery. I own shares in this company so I take a keen interest in them. The exercise of warrants by Shard Capital last week was indicative of city brokerages ‘cashing’ in on the recent rises in value. I see this as nothing more than business on their part, but a warning to shareholders that a placing is on the way. (Caveat Emptor) Cash is low. Now we all know that AIM is an incubator for companies who will place at the drop of a hat. (Just look at God awful Red Rock Resources (LON: RRR)) the placing here is to grow the company and not to line the pockets of corporates. It’s a bump on the road.
‘Jam today’ after the placing should be the launch pad for a minimum 3p target this year.
N.B Technical Glitch yesterday on a draft that some how ended up live . Placing now confirmed.