Kincora Copper – Ready To Finish The Year Strong After Recent Progress

Palisade Research September 17, 2018
Category: Research

Make sure to read our original write-up here...

Preparations are underway to drill two large-scale copper porphyry targets – success would confirm the first new significant copper discovery globally since 2014.

Kincora Copper (TSX-V: KCC) will be undertaking the first modern systematic exploration across its dominant and district scale position in a highly mineralized but vastly under-explored copper-gold belt.

We see significant strategic corporate appeal in Kincora and its projects, especially in the increasing activity in the copper sector. We recently saw BHP increase their stake in SolGold to 6.1%, and the cash acquisition of Nevsun Resources for $1.8 billion.

Current Price: C$0.12

Shares Outstanding: 69.3 million

Market Capitalization: C$11.7 million

Cash: C$2.2 million

Total Liabilities: C$0.5 million

 

The last couple of months for Kincora have been somewhat unsettled.

Kincora successfully completed the first of a funded two-phase exploration program, yet the company’s share price was driven down due to corporate matters, a steep public overhang (selling) from its largest shareholder and red flags from three-of-a-five-man board being turned over as a ‘flow on’ effect.

But the major catalyst for the share price decline from 33 cents to 13 cents was the result of the company’s largest investor having a change of strategy – a London listed private equity group that’s being liquidated.

Fortunately, the CEO and President – Sam Spring – secured a buyer for the block of shares in the LIM Asia Special Situations Master Fund Ltd. (LASSMF).

In fact, LASSMF not only bought the 22% block, but also bought a second block from another former director – The fund now owns a 28.7% interest and is a strong cornerstone investor for Kincora.

LASSMF has been investing in Mongolia for over 15 years – so there’s little doubt that their support and expertise will help Kincora shareholders.

LASSMF participated in the Discover Mongolia conference last week in Ulaanbaatar. They also undertook site visits of Oyu Tolgoi (the largest expansion project for any commodity in the world) and Kincora’s dominant position of the rest of the belt – meeting senior community leaders and inspecting current field activities.

This further illustrates the diligence undertaken by LASSMF and why they’re one of the oldest operating alternative fund managers in Asia.

LASSMF’s Founder, Chairman and Chief Investment Officer (CIO) – George Long – echoes our excitement over Kincora’s potential. . .

He highlights Kincora’s significant landholdings and outlined targets. The company’s proven team that already has multiple copper discoveries under their belt. And a proven track record working in Mongolia.

So, after briefly floundering – Kincora’s stock is now back on the radar with their stronger shareholders, board, industry leading technical team and copper porphyry drill targets.

With Kincora’s board restructured and industry-veteran, Cameron McRae, appointed as Chairman – who oversaw Oyu Tolgoi’s construction and commissioning – exploration activities have advanced this year. And with cash in the company treasury, Kincora’s now once again ready to prove to the World that their projects are indeed Tier-1 assets and looking to make the first globally significant copper discovery since 2014 .

Southern Gobi: An important new source for global copper discoveries. . . 

 

Location: Dominant position a proven belt. . .

 

 

Now, let’s talk about Bronze Fox. . .

Bronze Fox is an advanced exploration target and the flagship asset of Kincora – this asset alone previously underpinned a $40-50 million-dollar market capitalisation versus the current $15 million.

Bronze Fox is made up of Western and Eastern Licence – the former impacted by a dispute which impacted exploration of the project up until this field season. An independently defined exploration target of over 400 million tonnes underpins 1.3-1.5 million tonnes of copper equivalent metal.

Most of the drilling has been focused on the Eastern License area – which is made up of a large granodiorite body in a mag high/low boundary and weak chargeability high-feature (i.e, weak/moderate sulphides and copper).

The focus is now on the Western side of this package – West Kasulu and the Western Trend. West Kasulu is along the section from Hole F62 (864 meters of 0.38% CuEq, including 13 metres of 1.4% CuEq).

Kincora’s then following up on the Western Trend – which have much higher chargeable IP anomalies than that of the previously drilled area – outside of the current block model area – and coincides with a large and deep seated magnetic low.

Such a scenario suggests that the bulk of exploration has been on the periphery of a very extensive mineralized system with three-of-the-only-four holes having intersected higher grade mineralisation (including F62).

Preparations are underway to also shortly resume drilling at a second large-scale copper porphyry target – East Tsagaan Suvarga (East TS).

While phase-one of drilling was hindered due to corporate issues, Kincora was still able to drill 14 holes for 3,452 meters at the brownfield East TS target.

Half of the 14 holes from the maiden drilling program at East TS intersected the target – the Tsagaan Suvarga intrusive complex (TSIC).

Exploration to date indicates that the East TS target has all the right geological, geophysical and structural ingredients to at least emulate the Serven Sukhait open pit project (307 million tonnes at 0.54% copper resource) – a billion dollar plus development project with US$377 million spent to date.

Surface mapping, drilling and geophysics supports the potential for a preserved high-grade orebody, or series of orebodies – like the Oyu Tolgoi mineralized trend – with four Tier-1 scale targets the focus of ongoing field activities.

IP and MT surveys are ongoing to refine these large-scale targets that are expected to support a second drilling campaign by the fall or early winter.

 

Canadian listed Cu-Au porphyry exploration projects in emerging jurisdictions – key parameters. . .

When we first initiated coverage of Kincora, the stock was at 34 cents. And to say the stock is cheap today is an understatement with the increased quality of the board, new strategic shareholders, and targets that all well advanced since the earlier period.

Putting their flagship asset’s potential into perspective, a valuation comparison for success at Bronze Fox would be Xanadu Mines (see chart above).

Success at East TS would likely put Kincora in the leagues of the original Ivanhoe Mines with their discovery of Oyu Tolgoi, as well as the Tier-1 porphyry discovery of SolGold with their Cascabel project in Ecuador.

With the overhang of selling gone and with drilling on the horizon – we believe Kincora is poised to finish the year very strongly . . .

 

Palisade Global Investments Limited holds shares of Kincora Copper. We receive either monetary or securities compensation for our services. We stand to benefit from any volume this write-up may generate. The information contained in such write-ups is not intended as individual investment advice and is not designed to meet your personal financial situation. Information contained in this report’s from sources we believe to be reliable, but its accuracy cannot be guaranteed. The opinions expressed in this report are those of Palisade Global Investments and are subject to change without notice. The information in this report may become outdated and there is no obligation to update any such information. Do your own due diligence.

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