Kilo Goldmines
Potential 2.5Moz gold resource in renowned greenstone belts in the DRC now valued at a fraction of true underlying asset value.
Kilo Goldmines has been in the DRC since 2009. Its licences cover 2,417km², including greenstone belts where gold mines have recently begun operating. The lacklustre stock performance results from drilling at the flagship Somituri Project which didn’t quite match expectations. Further drilling, new joint venture deals and the acquisition of additional projects could re-energise the company.
Multi-pit gold mine potential at the partially-explored Imbo licence
A 1.675Moz resource has been delineated at the Adumbi Prospect in the Imbo licence area. Infill drilling of known extensions at depth could boost the resource significantly. There is vast potential here as the Imbo licence area contains at least 4 more prospects. Imbo is just one out of 6 licence areas at Somituri. Possible JV deals are under consideration to explore the additional potential.
Exploration on Isiro Project by JV partner Randgold set to recommence
Gold major Randgold can recommence exploration on the Isiro JV after KGL successfully defeated a licence challenge which halted work here. Randgold’s exploration at Isiro has uncovered important characteristics in greenstone belts, similar to those seen at its own major discoveries.
Resolute Mining has a 27% stake & is fast expanding its DRC footprint
To us it looks like corporate action could be on the cards. In April 2018, Resolute took a similar stake in Loncor, whose licences surround Somituri.
Highly conservative peer group analysis suggests an upside of 492%
Our conservative valuation shows the upside. We initiate coverage of Kilo Goldmines with an initial target price of CAD14.81 cents and a Conviction buy stance.
RISK WARNING & DISCLAIMER
Kilo Goldmines (KGL) is a research client of Align Research. Align Research holds an interest in the shares of KGL. For full disclaimer information please refer to the last page of the full document. This investment may not be suitable for your personal circumstances. If you are in any doubt as to its suitability you should seek professional advice. This note does not constitute advice and your capital is at risk. This is a marketing communication and cannot be considered independent research.
| Year to Sept | 2016A | 2017A | 2018E | 2019E |
|---|---|---|---|---|
| Revenue (C$'000) | - | - | - | - |
| Pre-tax (C$'000) | (2,968) | (7,338) | (2,300) | (5,600) |
| EPS (C$) | (0.04) | (0.04) | (0.01) | (0.03) |