it is in Karora Resources (WKN: A2QAN6) Moving forward in the Seven Leagues is nothing new. But this pace, which is now being shown, will surprise even the strongest of Karora’s bulls.
While the company is making excellent progress developing its second mining tunnel at Beta Hunt, even ahead of schedule and behind cost estimates, it is also in the process of acquiring another mine. Evidence points to very strong growth in Karora Resources.
Because the second mining tunnel alone on the “Beta Hunt” is an integral part of the growth plan to double production to 2 million tons per year. Since the work is going well, and even at lower costs than originally planned, it is likely that the start of production will be brought forward by at least three months, that is, to the first quarter of 2023. This leads us to assume that by 2024, gold production It would already be about 205,000 ounces a year.
Such significant news throws Paul-Andre Hoyt, Chairman and CEO of Karora Resources “out of his socks”:
“I am pleased that our teams here have made significant progress in developing the second work at the Beta Hunt mine. Executing our development plan quickly while staying on budget is a tremendous achievement given the current inflationary environment, which negatively impacts many operations and development projects in our sector “.
The newly discovered cutting area makes you sit back and watch the drilling results!
As other news, Karora has not only posted the discovery of another sternum region, but a sternum region that seems to have it really all! Because exploratory drilling immediately delivered contents higher than 198.5 grams/ton of gold above 4.5 meters and 18.6 grams/ton of gold above 15 meters and 18.3 grams/ton of gold above 4.0 meters!
Huet was also very satisfied with the results of the new drills from ‘Western Flanks’, ‘A Zone North’, ‘Fletcher’ and ‘Sorrenson’ reinterpreted mowing area, where not only the grades and distances are excellent, but also the immensity will confirm the growth potential of the ‘Beta Hunt’ .
These discoveries will only be due to strong exploration programs that will continue to identify new shear areas that will then be converted into new successes. The latest property of “Larkin”, for example, is clear evidence of this. The continued expansion of this discovery with new shear zones is one reason why one should look to extend the life of the ‘Beta Hunt’ mine.
The planned takeover of another gold mine is positively causing a stir!
Another exciting issue was the agreement to buy the Lakewood processing facility, which was announced during the suspension of trading in Karura shares. The fully permitted Lakewood facility is located just 60 km from the Beta Hunt mine and has an annual production capacity of 1 million tons. The purchase price is A$70 million in cash and A$10 million in Karora stock.
Another highlight of this news is that the Lakewood processing plant does not buy a pig in a poke, but does have a deep knowledge of Karora’s recovery rates. Because already in the first quarter of this year, the Lakewood processing plant has successfully processed about 60 thousand tons of beta-hunt with a gold recovery rate of 94%!
Huet rightly describes the acquisition as a transformative step and explains:
“Completing the acquisition of Lakewood Mill would be a transformative step forward for Karora, similar to what happened with the acquisition of Higginsville in June 2019. The Lakewood facility is closer to Beta Hunt than it is to Higginsville, which has other immediate strategic and operational benefits as well.” .
In the current hyper-inflated capital environment, which has a negative impact on many development projects, Karora Resources is opting for acquisitions in order to avoid potential increased costs suffered by competitors. In addition, the dependence on a single plant is reduced, which makes the company’s future growth significantly less risky.
Additionally, following the addition of the second mine, the company expects to increase nominal processing capacity by more than 60% to approximately 2.6 million tons per year. But that’s not all, production can be increased dramatically again when the second ball mill located at the Lakewood site becomes fully operational.
“Toll Milling” – another source of income?
In order to take full advantage of the second mine operation as well, Karora has another interesting source of income, which is the so-called “fee milling”, i.e. processing foreign ore. Paul Hoyt also found clear words on the matter and said:
“The addition of a second operating mill brings significant potential for billable mill capacity. Therefore, we intend to fill short-term spare capacity through fee-based mill agreements at one or both of our Higginsville and Lakewood mills pending completion of the Beta Hunt expansion. At the Lakewood facility, we will begin evaluating mill improvement opportunities to maximize efficiency at both mills as one substantially low-risk entity.”
This is how the acquisition is financed and the incredible growth!
To fund this explosive growth, Karora has announced a A$60 million “buy deal” financing. Buyers of this guaranteed capital increase are Haywood and Cormark. Approximately 12,500,000 shares will be issued at a price of C$4.80. The show is expected to close on or around June 15.
Karora Resources (WKN: A2QAN6) She did it again and she made her shareholders happy! The company reported the discovery of a new challenging shear area, along with excellent high-quality drilling results. In addition, the development of the second drilling tunnel is proceeding better and more cost-effective than expected. But in our opinion, the company shot the real bird with the purchase of the second mill, which allows for an instant 60% increase in processing power, which is not affected by the inflationary environment.
And that’s where we see the biggest advantage, because this acquisition of a stretch of mill in “Higgingsville” means you can escape almost entirely financially and time-wise during these times of strong inflation. Because the costs of installing a new processing plant will literally explode in the current inflationary environment. In this regard, purchasing the Lakewood plant is a very smart and risky move Karora Resources (WKN: A2QAN6) Suddenly it decreased significantly again. Moreover, there is the possibility of processing orders, at least until the expansion of the “Beta Hunt” fills the capacity of the facilities, from which more money can be made during this time.
A great achievement for the Karura team once again. With these managers, the company’s growth is not only a top priority, it is clearly demonstrable! At the latest after the ‘Baught Deal’ is done we expect the stock price to go up again!
Graphics and Image Sources: Karora Resources
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