Kaminak Gold Corporation (“Kam”) – 2016-01-14
Kaminak’s Eira Thomas released a positive Feasibility Study (FS) on the company’s Coffee Gold project situated in the Yukon. Not positive enough however to make the share price budge. Lots of shares churned since the announcement but the price just belly flopped. By this we mean price went down moderately, and just spread itself all over the present price range. Surely Ms. Thomas was expecting better but…. what can we say. Other than blaming it on the markets we think there may have been a few other contributing factors. Lots of folks are of the opinion that using 5% discount rates to calculate NPVs is unacceptable. Increasing that discount rate to a more appealing and conservative 8% or 10% would have wiped millions of dollars the dollar figures reported. Ms. Thomas says in the release that the study is based on using an exchange rate of $1 to $0.78 USD. If Ms. Thomas is truly aware of a place that will provide dollars at those exchange rates we want to talk! Also in the release Ms. Thomas says the study is based on a gold price of $1150 /oz. Well gold was off today in its biggest one day drop since mid-December and is well short of $1150/oz. BMO is calling for an average gold price of $1050/oz throughout 2016.
These tri-issues could change Ms. Thomas’ numbers quite a bit if factored in. The $100 gold price difference knows close to 20% off the profit figures, add in the added discount factor and the exchange rate and poof goes tens to hundreds of millions of dollars.
The project is achievable but perhaps not as profitable as the study expects.