In order to get some good discussions started, I thought I’d give my top reasons to invest in KXL as well as reasons to be cautious.  It would be great to debate each one of these points in the near future.  Please tell me why I’m wrong or back me up if you agree. 

Top reasons to invest in KXL

#10:       Newcos  - There are a couple of good points in this one but generally speaking if management can find enough value for each Newco to trade on their own merit, you usually find that the sum of the Newcos will eventually out value the sum of the original.

#9:          Geopolitical environment - Canada is probably the friendliest, most politically stable, unthreatening place in the world.   Is there a better country in which shareholders would want their company to develop a natural resource?  I don’t think so, & in my mind, boosts the intrinsic value considerably.

#8:          Caribou – This story is long from over.  There is ample data suggesting there is a huge deposit.  Remember how big this area is?  It may be taking longer than some short term thinkers can handle, but base metals is still 1/3 of KXL’s focus.  A good hole down the road will turn heads quickly once again.  Hopefully the RIM results gives good insight.

#7:          Airborne Uranium Survey  -  How much luck could one company have?  Then again, this company seems to have done their homework and found great places to stake.  We will soon find out if the Otish basin has the potential.  Uranium is going to be extremely valuable in the near future considering it is the only real source of energy to replace oil & gas.

#6:          Working Capital – With three divisions working hard to eventually become Newcos, you know this will take time and capital.  So far we have seen an excellent fund management strategy.  Other companies simply would not have the working capital to take on these kinds of projects, or at least be faced with greater limitations.

#5:          Expedited results coming - After looking at the pictures of the samples with visible gold, one can believe with high probability that these results will come back with good numbers.  If these numbers are great then it helps support the original news release and hype.   The share price will continue upwards.

#4:          Insider Trading – When insiders are buying, or in other words, continuing to pump more of their own dollars into the company this means they continue to believe on the inside what they are saying on the outside.  They have had plenty of time to pump and dump this stock, yet all they have done is buy and hold. 

#3:          Management – Once again the only real asset an exploration company has is its management.  This management team has great credentials, but more importantly, has been doing an excellent job.  Sure, some would say they have made a few errors in judgment like the Caribou hype, but the long term strategy has been outstanding.  For example, keeping a lid on the Golden Mile discovery until they were able to stake all the land around it was brilliant.  

#2:          Resent Gold Discovery – Unlike Caribou that shows signs of being a huge discovery, this already IS a huge discovery.  Now is the fun part of finding out just how large it is.  On top of this are many bonuses such as roadway access, a mining friendly environment, not to mention shallow gold which must mean lowering the cost to extract it (if in fact this gets to that point), plus a rising price of gold.

#1:          Three lottery tickets for the price of one – KXL gives one a play in base metals, gold, & uranium.  If any one of these resources is found especially given today’s world economics, you will be happy to have shares.  (I’ll definitely write more on this point!)

Top reasons to exercise caution

#4           General Market Correction – We are not out of the clear if there is a major market correction.  The good news is that the FED has showed they want to raise market confidence as they lowered interest rates last time by a ½.  It would also be crazy during an upcoming election to squeeze the economy by raising rates… however we all know that inflation is higher than they care to admit.  This will not be good news for many sectors but is a great argument for gold to hit new highs.  Unfortunately this is better for gold producers, not so much for gold explorers (although it doesn’t hurt either).

#3           Share Dilutions – I too can live with the current share dilution, however, I would not like to see any further warrants issued for the time being.  For an exploration company we are starting to reach higher levels of outstanding shares.  Then again, the plan is to break KXL into three.  The more shares issued, the harder it becomes for the stock price to raise – especially when you are not producing anything, but when things turn ugly more shares means more sellers.

#2           Poor results at Caribou – Results so far at Caribou have created skepticism.  In my opinion, if this were a different company which announced results from the Golden Mile, they would be trading in the $2-$3 range by now.  People are once bit twice shy.  However, IMHO, results are the best medicine for this problem.  Bring on the next results please!!!

#1           Depth of Golden Mile? – So far we only know that other discoveries have gone 1.5 km deep in this area.  Basing calculation on ‘others’ is not the most scientific methodology.  If they don’t confirm depth, this stock comes back down.