When Kenadyr Mining (TSXV: KEN) listed at the end of March 2017, it gave investors a double opportunity. First, to own a quality venture that has the potential to confirm massive historical resources noted by previous drilling. Second, the Kyrgyz Republic is home to some of the world's largest gold mines, including the tongue twisting Taldy-Bulak Levoberejny ("TBL") mine, owned by China's largest mining company, Zijin.
The story gets very interesting quite quickly. Here's the graphic for context. And the best part is that Kenadyr has begun drilling, ahead of schedule on those areas potentially connected to the massive TBL mine. (Uncovered red as opposed to red under grey)
Zijin's TBL orebody connects to Kenadyr's high grade "South Zone" its highest priority target. The soviet estimate within a portion of the south zone (based on 24 drill holes in the area directly adjacent to the TBL orebody) shows an initial unclassified historic estimate of 900,000 oz. Au at a grade of 8.3 G Au/T. This historic estimate is open in all directions and to depth.
Two key facts:
- TBL: Newly built and producing with a cap cost of $296 million, it contains 3.2 M oz. Au in reserves and resources at a grade of 7.2g Au/T. The mine is designed to produce 125,000 oz. Au/annum.
- KEN: The Soviet estimate within a portion of the South Zone (based on 24 drill holes in the area directly adjacent to the TBL orebody) shows an initial unclassified historic estimate of 900,000 oz. Au at a grade of 8.3 G Au/T. This historic resource is open in all directions and to depth.
Kenadyr President Bryan Slusarchuk states: "Drilling this type of high grade gold target anywhere on the planet should be compelling to investors. Drilling it right next door to a super-major's operating mine makes it more compelling yet." He continues; "Poor core recovery during Soviet drilling (averaging 60%) and the use of predominately ICP analysis (versus fire assay) may have understated the resources and grades at the south and other zones – comparison of previous soviet drilling results at the TBL to recent drilling results show a significant increase in average gold grades. "
The Company makes no conclusions as to deposit or reserves, actual or inferred. The goal is to prove or exceed the metrics of previous Soviet drilling, which consisted of the gold zones identified by Soviet drilling (81,800m in 139 holes) that are adjacent to Zijin's TBL deposit (using a 1g au/T cut off). The historic Global Estimate is 6m oz. Au grading 2.3– 4.7g au/T.
There are more legs to the Kenadyr story. CEO Dr. Alexander Becker's mining provenance in Asia is impressive. Experienced in the Kyrgyz Republic over more than two decades, he has many successes including the acquisition of acquiring the gold potential of the Chaarat deposit in the Kyrgyz Republic (gold resource of 6.5 million ounces). He is primarily in-country and runs the operation on the ground. His local, industry and government contacts are peerless.
Dr. Becker, Kenadyr's CEO states "The commencement of drilling represents the start of an exceptional period for Kenadyr and our shareholders. The current drilling is to test and confirm previously reported high grade historical results. This drilling is in the South Zone, not the only area of gold mineralization on the property, but an extremely important zone as it is a large and high grade target and of course is immediately adjacent to Zijin's TBL Mine."
The other bit of investor intrigue is the potential that Zijin could either partner or acquire Kenadyr or claims/land under its control. Zijin purchased the TBL Mine in 2011 and in 2015:
- 50% of Barrick's Porgera Mine for USD $298M
- 12,836,826 shares of Pretium at CAD $6.30/share for a purchase price of CAD $81M
- Zijin purchases 49.5% stake in Ivanhoe's Kamoa copper project for USD $412M
Drills Turning Now
A full month ahead of schedule, Kenadyr with contractor Quest Exploration Drilling (QED) has begun drilling on the South Zone to an anticipated depth of 850 meters.
In addition to initial drilling in the high priority South Zone it will proceed with bull dozer trenching and sampling cuts on the SS Zone and SS Trend. As well as drilling, the Company intends to take approximately 1,250 channel samples and 2,200 soil geochemistry samples in this area.
Given that KEN has no debt and $7 million in cash, the Company is in a strong financial position to take advantage of drilling opportunities and offsets should that be necessary. Drilling updates are planned over the summer with assay results available in late Q3, early Q4, 2017.
While still speculative, Kenadyr is intriguing in that it could well end up greater than the sum of its already interesting parts.
Aa a KEN investor/shareholder the potentialities are intriguing, albeit yet to be crystalized. First, KEN is in an area that until now investment exposure was not available. The actions of Zijin in the area could well have ramifications for KEN, particularly as the Company proves up reserve numbers.
The main benefit is for Kenadyr to prove up or exceed the previous numbers associated with significant Soviet and Malaysian drilling in the area.
Having historic drill and geological records, couple with current technology certainly ups the potential to proving up a significant resource.
Equally important is the presence of those drilling records to direct and significantly reduce/mitigate the exploration risk. Couple that with peerless in-country expertise and a look for spec to spec/conservative investors seems worth some time.
While you might be reluctant to look Kenadyr over when words like 'Asia' 'Chinese Mining' or the seeming isolation of the property, these are not material factors.
Infrastructure includes good power, paved roads 100 km to town, mining friendly jurisdiction and an experienced and willing workforce.
All in all, most if not all the junior mining investment boxes are checked; including the important three M's, Money, Moxey, Management.
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