Recognition of Kimber Value
posted on
Nov 17, 2009 03:00AM
Creating value through Exploration and Development in the Sierra Madre of Mexico
I am also a Kimber investor since early 2008 and have been reading the forum since the inception. I think the reason why Kimber has not been participating in the current bull market is that the value of the company cannot really be calculated due to the lack of production and revenue. This pretty much translates into a negative revenue stream due to the ongoing exploration activities. Given there is no end date to this negative revenue stream at this point, it is hard for average investors to jump into Kimber wagon since they are not able to clearly anticipate the end of this negative revenue stream or prognosticate a date of acquisition.The professional traders (naked shorts) have no hesitation or fear smacking it down given there is no persistent positive event (growth in profit and revenue on quarter to quarter basis) that will uphold the stock price.One can of course argue Netscape was attracting capital like honeys attracting flies or there are proven reserves at Kimber that are going up in value as gold is going up in price. However, we also have to be aware of that there are many, many options at the current gold bull market that are attracting capital inflow into the gold sector, ranging form actual gold bullion, GLD (ETFs), Senior Miners, Mid Cap Miners and Baby Juniors (MFN, NXG, RBY). To have said all the above, I am actually quiet bullish on Kimber.Kimber really is a diamond in the rough among of exploratory companies given its resources and location.SB has done a great job in illustrating all that.Kimber is very similar to a long-term option call that has no expiration date. Option contract is what will give you multiple returns.The value of KBX will be unlocked partially or fully when one of these scenarios occurs
a. Kimber changes its current model and has pre-conceived plans to go into production.Kimber does not have to produce but by just having plans to going into production will start generating interest and I believe market will give a different value to KBX given that there is more certainty involved.
b. Kimber is taken out by other mining companies at a high premium.Obviously, this is all we are hoping for but the date is somewhere in the future.
c. Kimber decides to become a junior miner.This will enable the value of Kimber to be easily calculated.This, however, is a long and arduous road, building a mine is not an easy job.It took Mark Bailey of MFN more than 15 years from beginning till now. On Jim Sinclair's latest interview, he did however, recommend the juniors to start mining gold the old fashion way instead of trying to obtain the capital from the banks.
d. When the other investment alternatives in gold become expensively prohibitive, meaning every other investment alternative in gold becomes overvalue, the capital will then flow into exploratory companies.It probably will occur but at the end of the gold bull market.
e. Recognition is wide spread. Honestly, I have not seen Kimber’s name being mentioned on Motley’s Fool, Minyanville or other financial web sites.I however, have seen NXG, RGY and other exploratory companies being discussed there before.The KBX trading volume is anemic. It means it is not well known.I agree with SB, we need to promote Kimber.
TM