What the Analysts Say

WHAT THE ANALYSTS SAY: This week our team of experts run the ruler over Kin Mining  (ASX: KIN) and Orinoco Gold (ASX: OGX).

Website: www.breakawayresearch.com

Kin Mining (ASX: KIN)

Kin Mining listed on the ASX on 2 October 2013 with six projects in the Leonora district of the north-eastern Goldfields of Western Australia.

The focus is on gold, nickel‐copper‐platinum group metals (PGMs) and base metals exploration.

In late 2014, the company acquired the Leonora gold project from the Administrator of Navigator Resources.

This provided Kin with an immediate gold resource base as well as significant exploration upside.

The company plans to target near‐term cash flow through the exploitation of two shallow open pits as part of a longer term objective of establishing a more substantial gold operation at Leonora.

Significant Achievements In A Short Time Frame

The company has been listed on the ASX for less than two years and has achieved significant milestones in that brief period of time:

Successful exploration on the IPO assets has defined numerous targets for follow up work 
The acquisition of the Leonora Gold Project (LGP), which is a potential game changer for Kin, at a cost of only $2.7 million;

The LGP provides an immediate million ounce gold inventory, a pathway to near‐term production, the potential to expand production and to develop a moderate‐sized gold project, as well as significant exploration upside;

Secured finance for the LGP and early production program under difficult market conditions; and

Asset enhancement and acquisition has largely been achieved with minimal dilution of shareholders’ equity.

Following on from above, the company has identified an opportunity for securing early cash flow through the mining and treatment (vat leaching) of shallow material from two ‘starter pits’ at Lewis, within the larger 120,000 ounce Bruno‐Lewis resource at Cardinia.

The estimated upfront capital of $1 million is low. Historic metallurgical test work indicates gold recoveries of +70% on coarse material.

Free dig, shallow supergene ore should account for an inexpensive operating cost of around $750 per ounce.

If the company can meet its production and operating cost targets, even the first phase should generate excess cash.

More importantly, the infrastructure would be in place for a phased expansion of more easily accessible material.

Funding is in place and pit optimisation and metallurgical test work are well advanced.

Website: www. breakawayresearch.com

Company: Orinoco Gold (ASX: OGX)

Development of Orinoco’s 70 per cent-held Cascavel gold project in Brazil is now well advanced, with activities running on schedule for plant commissioning in January 2016.

The modular plant is being constructed by the Australian based Gekko Systems.

Metallurgical testwork by Gekko has returned excellent results, indicating around 90 per cent recoveries to a high grade concentrate through a simple gravity circuit and a coarse 600 micron grind.

Recent months have seen key developments, including siting the processing plant at Cascavel rather than Sertão as initially planned, a move that has significant logistical and financial benefits.

The company has also increased its strategic holding in the highly prospective Faina Greenstone Belt to approximately 300 square kilometres, a step towards realising the strategy of finding more resources, and using Cascavel as a regional processing hub.

Current drilling at Sertão also aims to define additional resources.

Corporately, the company has made key management and board appointments, and successfully raised $3.2 million through a rights issue and placement, in addition to finalising the gold streaming funding.

Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice, successful or otherwise.

The views, opinions or recommendations of this article do not in any way reflect the views, opinions, recommendations, of The Resources Roadhouse.

The Roadhouse makes no representation or warranty with respect to the accuracy, completeness or currency of the content. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian financial services licensee before making investment decisions.