Nathan, I appreciate your desire to crunch numbers, but I think it may be a little early for this yet. The company is still bulk sampling two of their projects and my past experience of this process is that it will take months for this to be done properly. I have spoken to the company and they tell me they are continuing work on both the Good Hope and the Postma Pipe.
I think there is another perspective on this whole play. If you look at the relative age of the company, what it has accomplished to date, the way it structures its deals, and the comparative market capitalization, I believe the stock merits the attention of the serious small cap investor.
First, CK's accomplishments to date. The company is seven months old as a public company. It has secured options on not one, but two different deposits which have both had diamond recoveries in the past and on which CK is conducting bulk samples to determine whether either will be economic to mine. This in itself eliminates some of the risk of "the one shot wonder plays". If either of the plays work out to be economic, the stock will have the ability to trade on earnings or at worst revenues.
Secondly, the way the management has structured each deal is worthy of examination. On the Good Hope, the vendors can not sell their shares until the company has one dollar of positive cash flow for each share issued in this deal. The suggests the company is not willing to dilute for second class projects.
Finally, the comparative market capitalization of the company is really quite startling. Hymex diamonds which is mining alluvials in the Republic of Guinea has a $29 million market cap. Please check its news releases to judge for yourself some of the apparent problems they seem to be having with financing. Rex diamonds did $4.9 million in revenues in their last six month results published and they have a market cap of $60 million. To the best of my knowledge, the same individual who sold Rex several of their projects also is the owner of the Postma Pipe which CK has optioned. CK has a market cap of about $4 million dollars.
These facts make me feel that at the current levels this stock probably represents a good risk versus reward gamble. I enjoy reading your entries to this site. I trust that this type of input is of interest as I notice that much of what gets posted is speculation and hype. Please respond Nathan. |
