I was first pointed to K92 by someone I talk with on a regular basis when it was $7, I thought the thesis to be very compelling. Very low AISC, huge organic growth to come with around a 4x in production in the years ahead, and having exploration success upon exploration success. Sadly I didnt buy at the time as I felt TNZ was undervalued still and wanted to see them announce another DNS deal. It hasnt worked out terribly as TNZ is up a similar amount in that time period and I obviously didnt lock in CGT through realising profits. So its not a blunder per-say, and I follow the story closely. I will most likely buy as KNT is still cheap given the current gold price and the price of gold seems to have lots of tailwinds given the lack of geopolitical confidence in the world right now.
K92 started off more or less as a pump and dump operation from the way I see it, put together by two unsavoury people in the industry. Barrick bought the project during durress during the last gold cycle, off-loaded it to K92 during the pits of the bear cycle for around $5mm, and the new owners hit the jackpot with exploration success further west of the old resource. Its one of those stories that makes junior miners interesting as a whole. The power to buy something for $5mm and create a $3.7bn company out of it. Alot of the infrastucure had been built, the tunnel had been dug, and all the new management team had to do was dig a bit further into the hill and voila, the jackpot was there. Low capital intensity mixed with a huge high grade resource. I'm pretty sure the unsavoury charachters dumped there stock soon after and in came the current CEO, John Lewins as COO initially and then CEO a year so after. He has a decent amount of shares in the company but has also sold shares in the past, most notably during the gold highs in covid. He has since accumulated the shares through exercising stock options. I guess you could argue he is a good allocator within his personal account in that respect, selling at highs and buying the shares back at much lower prices. It has been an impressive story, minimal diltuion and will be a >400k ozeq producer in the next few years. If you compare the grade, size, production, and reserves to LUG, its very similar. The big difference being the 5.5x difference in market cap. I wouldnt expect a similar NAV multiple on K92 as you see with LUG (Lundin magic touch), but you would assume an expansion in share price as they execute the growth from here. AISC will be bottom quartile with a tier 1 mine and lots of exploration thereafter.
They're also finding lots of copper in there exploration. Lower grade but high tonnage. You'd assume K92 is primed for a takeout down the line. All that gold and copper and right on China's doorstep. To be honest, its amazing it hasnt been taken out yet. Something that did concern me was in a recent call where management said they was looking at M&A. Unless you are decent at M&A, then I'm not a fan and I'd rather a company like this just work on operational excellence with what they have. They can create more than enough value for shareholders just by keeping there heads down and going through the motions, I see no reason to complicate things unless the deal of a lifetime comes up, which is unlikely in this gold market I think.