Nice to see the SP on the rise again. QE without a doubt is on the way, the question is when? Here's some commentary on KGN. SMF069

KGN has M&I Resource of 3.64 M oz (1.1 g/t) Au and Inferred Resource of 1.55 M oz (1.1 g/t) Au, and is well funded ($197 M cash as of April 2011). At KGN’s recent market price of $3.13/sh, its enterprise value is $39 M, or $7.50/oz Au of total Resource.

Last fall, KGN released a pre-feasibility study which disappointed in that the combination of capital and operating costs were not as good as the market had expected. One concern was that KGN would have to raise a lot of equity to put the mine into production, diluting the Company’s equity.

KGN’s pre-feasibility study was based on an initial capital expendi-ture of $506 M to produce $258,000 oz of Au for 10 years — from oxide and sulfide gold ores. We note that about 20% of KGN’s gold resource is oxide gold and requires less capital per oz Au produced.

We believe that KGN can become a producer of ~100,000 oz Au annually by spending cash on hand and not raising any further equity. Once in production, the operation could be expanded to also mine and process the sulfide gold ore.

We believe KGN has excellent potential to expand the gold Re-source through further exploration.