Here's a copy (to anyone interested)of what the Tom Kinakin's
Stockline had to say about KRT:
Tom Kinakin's Stock Line
Email: invest@stockline.com
Web: stockline.com
SPECIAL SITUATION
Kensington Resources Ltd.
Diamond Exploration
Symbol: KRT
Stock Market: VSE (Senior Board)
Last 12 Months: $0.63 - $2.00
Current Price: $1.91 (April 22-am)
Shares Outstanding: 13.8 million
Fully Diluted: 22.5 million
Diamonds in North America
Four years ago no one, except for a handful of geologists, would believe that commercially viable diamond deposits exist in North America. That was before DiaMet Minerals announced its discovery in the Northwest Territories. Since then there have been several other deposits uncovered after the expenditures of millions of dollars.
Although not a single mine is in production yet, DiaMet plans to start production within three years. That's one of the reasons its
share price rocketed from under $1.00 to $60.00 in 14 months ending Dec. 9, 1992. Two other companies, Aber Resources and Mountain Province Mining, have deposits that have the potential to become producing mines.
Joint Venture With Majors
Perhaps the most profitable mine for shareholders might not be in the Northwest Territories. I've uncovered a relatively unknown company that might be today's best bet for profits from diamond exploration. Kensington Resources is an equal joint-venture partner with three major companies in 71 kimberlite pipes at Fort a la Corne, Saskatchewan. The three partners are Uranerz Explorations and Mining Inc., Cameco Corporation and Monopros Ltd., a subsidiary of DeBeers Consolidated Mines Ltd. of South Africa.
"What's a small company like Kensington doing in the big
leagues?" I asked myself. Then I asked Kensington. The answers have me excited about the company and I'm sure you'll share my enthusiasm.
World Class Property
The three majors started diamond exploration in Saskatchewan in 1988 and quickly discovered North America's largest known diamondiferous kimberlite field in the Fort a la Corne area in Central Saskatchewan about 40 miles east of Prince Albert.
Some $15 million was spent to discover 71 kimberlite pipes of which 44 pipes have been drill tested. Of the pipes tested, 24 are
confirmed as diamond bearing (with diamonds greater than 1mm). This is one of the largest clusters in the world and most pipes have an average mass twice that of pipes in the rest of the world. Only 132 of the 2,000 kimberlite pipes known worldwide are macro-diamond bearing and Kensington has a 25% interest in 24 of these pipes.
The region is uniquely characterized by containing completely
preserved kimberlite volcanoes. It is this preservation that results in individual pipes being very much larger than in other worldwide clusters. The biggest pipe contains almost one billion tonnes and several others are estimated at over 500 million tonnes. By comparison, DiaMet's pipes average 20 million tonnes.
Kensington finalized a farm-in on the 280 square kilometre
project of the joint venture in March of 1995 by agreeing to spend $3.4 million over the next three years.
Results To Date
Last September Kensington announced excellent results from two 17 kg (37 lb.) samples from pipe No. 147. The micro-diamond counts per 10 kg (22 lb.) of each sample were 19.4 and 14.7 stones. While the samples are small, these are encouraging results and comparable to Aber's average of 13.8 stones per 10 kg. Kensington has announced that it has received the majority of the results from the 162 tonne mini-bulk sample taken during the 1995 exploration program and the announcement was made on January 15th. The grades and stone counts were very good and Kensington is planning an expanded winter drilling program.
We do know that a high proportion of the diamonds found to date
are of gem quality. This would indicate a higher value per carat for the stones once production begins. Coupled with grades of better than one carat per tonne, speculators can start to believe that Kensington and its partners could have an economically viable mine within a few years.
So far, over 3,500 diamonds discovered at Fort a la Corne have
been examined, the largest of which is 0.987 carats with many others between 0.25 and 0.66 carats.
Another step toward that goal is the commissioning of Fluor
Daniel Wright Ltd., a highly-respected engineering and consulting firm, to carry out a large scale mining/milling operation on a typical kimberlite pipe in the area. This scoping study will determine the approximate capital and operating costs as well as the grade and value parameters required for economic viability.
Potential Profits
While there is still much work to be done before a decision can be made, the potential for profits is huge. The profits from a potential mine could exceed $300 million annually. My assumptions were an average grade of 0.7 carats per ton, diamonds worth an average of only $100 per carat, a cost of $15 per ton, and finally, an annual tonnage of 6 million tons.
In my opinion, these results compare favorably with those of
Aber and Mountain Province. Yet those two companies are capitalized (share price times shares outstanding) at $650 million and $132 million respectively while Kensington's total capitalization is only about $24 million. If the numbers in the consultant's report are any where near my assumptions, and once other analysts become aware of the facts, Kensington share price should do some serious catching up in order to put the company's capitalization more in line with other similar companies.
Conclusion
Yes, there are diamonds in North America. Kensington and its partners aren't the only group to discover these precious stones. But Kensington's properties are less than one hour from established infrastructure including roads, electrical power, transportation facilities and an experienced labor force.
As well, the plains of Saskatchewan aren't as environmentally sensitive as the fragile conditions in the tundra of the Northwest Territories. The Province of Saskatchewan is highly supportive of mining as are its people and its unlikely that radical groups will launch frivolous protests.
A new drilling program is underway to test the rest of the
kimberlite pipes and it has already been announced that all four holes have intersected kimberlite. This will be followed by a large diameter drilling program on the pipes considered to have the greatest potential to become mines.
Recommendation
Stock Line recommends purchase of shares of Kensington Resources for aggressive speculators. The shares might well be valued between $4.50 and $5.00 in the near future so short-term gains to the $4.00 level don't seem unrealistic. I am targeting $3.00 by April 26th and $4.00 a week or two later. I hope you are able to buy KRT for under $2.00 but purchases to $2.50 will still be extremely profitable
We understand that the company is ready to tell their story to the world and a number of newsletters are looking into KRT.
For More Information
Kensington Resources Ltd.
408 - 1200 West Pender St.
Vancouver, BC V6E 2S9
1-800-333-8098 or (604) 681-0377
and another one sent out today to me:
Tom Kinakin's Stock Line
Email: invest@stockline.com
Web: stockline.com
April 25, 1996
Kensington Resources Ltd.
Symbol: KRT
Exchange: VSE
Current price: $2.30
stockgroup.com
Phone: 1-800-333-8098
Late Wednesday afternoon I had a two hour meeting regarding Kensington. It was extremely
informative about the development of Kensington to date, current activity on two projects and
the near-term plans for the company. Our timing on this stock will prove to be uncanny and very
fortunate. I can't recall ever being as excited about the future prospects for one of my
recommendations.
Here are some statistics that must not be overlooked. There are some 2,000 kimberlite pipes in
the world. Only 132 of these are known to contain diamonds greater that 1 mm and are called
diamondiferous. Of the 132 diamondiferous bodies Kensington has a 25% interest in 24 of them.
That doesn't make a mine but it sure improves the likelihood that one (or more) of these bodies
will be economically viable.
We know the company has discovered diamonds. These results have already been announced. The
grades and quality of the recovered stones were better than good but I don't assume that these
small samples are conclusive. Larger samples are planned during the next six months.
In the meantime, the winter drilling program punched another eight holes into seven previously
untested targets and another hole into the most promising body where hole #145 was drilled.
This could go a long way towards confirming that Kensington's shares are grossly undervalued.
The samples are in the lab for assay and the results are expected by May 20th.
Now for the good news, the Clearwater Nickel Project. I originally understood Clearwater was a
minor prospect. Not so. Hidden away deep inside Kensington's information package was one
reference to nickel. It merely said that the Clearwater Nickel Project has identified geological
characteristics which suggest that a Voiset Bay-type nickel/cobalt mineralization is directly
applicable to the company's property. It's obvious to me that KRT wasn't to anxious to publish
too many details about this property.
What is a Voisey Bay-type deposit worth? Inco just bought out Diamond Fields for a reported $172
dollars a share (pre split value) or about Cdn$4.5 billion. This is one of the largest
nickel/cobalt deposits in the world. Are there more? Can similar caricatures be located
elsewhere in Canada?
KRT reported in a April 17, 1996 news release that an Electromagnetic (EM) survey had been
completed on the Clearwater Project. That sparked some speculation about another potential
Voisey Bay but let's not get caught up in the hysteria. It could take a few days or more for
analysis of the survey but rumor has it that they have exciting results.
I did some digging around and discovered that a geologist from Diamond Fields was contracted by
Kensington to identify a possible target area that could host a Voisey Bay-type deposit. The
property is a joint venture with Uranerz, a private international mining company.
The most interesting thing about all this is a the flurry of activity around the area early this
week. More than one or two helicopters have been spotted in the vicinity hopping from spot to
spot. Was it just ground crews doing surface exploration? If so, why the big rush all of a
sudden? Could that be linked to the EM results and possibly additional claim staking? It's not
hunting season right now so they weren't flying deer hunters into the woods. If I can confirm
these tips and rumors I'll let you know immediately.
Never before have I relayed rumors to my subscribers but these are too interesting to completely
ignore.
Apparently this area has real merit as is evidenced by the results of previous geological
testing. You bought the shares because of diamonds and you may have a big bonus of
nickel/cobalt. How likely? I don't know. Perhaps the results of the EM, expected in a day or
two, will shed more light on this potential elephant.
In my original recommendation I suggested you buy to the $2.50 level. Throw that out the window
and make sure you get some shares before all the news is released. Now I expect purchases at
$3.00 and even $4.00 will reap big profits in the short term. I expect the share price to
triple before the end of May and still have ample upside potential over the next six months.
Don't be a seller for a small profit. Kensington could reap a windfall for its shareholders.
Just remember who told you about the Clearwater Project first.
Disclaimer: Stock Line is published by Legacy Communications Inc. Neither
the information nor any opinions expressed constitutes a solicitation by us of the purchase or sale of any securities. There are no guarantee that any recommendation will be profitable or will equal past results, particularly in the case of low-priced shares known as penny stocks. Officers, directors and employees of the publisher may or may not have positions in the securities mentioned or recommended. Investors should be aware that the purchase of securities issued by foreign companies involves certain risks which may not pertain to securities of United States issuers. Not all broker-dealers are able to handle purchase and sale transactions involving foreign securities. Information concerning foreign securities that is generally available to the public will often be less comprehensive and less reliable. The value of foreign securities is affected by fluctuation in foreign currency exchange rates. The articles and information published is believed to be from reliable sources but cannot be guaranteed. The information contained in these reports may not be complete. Investors should always consult with their securities advisor before making any investment decision. |
