I just received an email bulletin from Stockhouse about KRT! Looks good....I hope they continue.
subject: Insider Report Special Update -- Kensington Resources [KRT.V Date: Wed, 10 Jun 1998 19:17:35 -0700
From: insider@stockhouse.com (Insider Report)
To: iandm@planet.eon.net
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Insider Report Special Update--June 10/98
Home Page: www.stockhouse.com/insider
E-mail: insider@stockhouse.com
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Company: Kensington Resources Ltd.
Symbol: KRT
Exchange: VSE
Current Stock Price: $0.31 CDN
Shares Outstanding: 23.9 million
52 week trading range: $0.26 - $0.58
Website: www.kensington-resources.com
E-mail: info@kensington-resources.com
Telephone: (604) 681-0377
INTRODUCTION
Originally featured in March, 1996, at $1.45, Kensington Resources went on to be a star performer, hitting nearly $5 within a month. However, since hitting that peak, it has been a never-ending slide all the way down to $0.31. The question we asked ourselves recently, though, is that even given current market conditions, is KRT worth only 10-20% of what it was worth in 1996? As well, with the interest in Alberta diamonds over the last year, is Kensington fairly valued versus other Alberta diamond juniors given their progress?
This update is mostly meant as a retrospective look at Kensington and what they have now. The reason for the update is that the INSIDER REPORT was shocked when it took a look back at Kensington and their results in comparison to current Alberta juniors. As a matter of fact, of all the juniors in Alberta, Kensington could only realistically be compared to Ashton, and Ashton may not even compare to the stage that Kensington is at.
OVERVIEW
To begin, here is a quick overview for those who are unfamiliar with Kensington Resources:
Kensington Resources' major property is the Fort a la Corne property in Saskatchewan, Canada. It is a joint venture between Kensington (30%), Uranerz Exploration and Mining Limited (10%), Cameco Corporation (30%), and Monopros Limited (30%), a wholly-owned subsidiary of DeBeers.
The Province of Saskatchewan has a unique geological environment for the occurrence of diamondiferous kimberlites. Protected by thick sedimentary layers left by an inland sea, Saskatchewan kimberlite bodies have escaped erosion. Unlike most kimberlites in South Africa and the Northwest Territories, the kimberlite bodies at Fort a la Corne are almost intact with the full kimberlite volcano still remaining. Among the 71 kimberlites in this project, bodies up to 1.6 kilometers in diameter have been identified, the largest diamondiferous kimberlite containing an estimated one billion tonnes.
HIGHLIGHTS
1. Ashton [ACA.T] is Alberta's most celebrated diamond junior. Their joint venture has resulted in the finding of 23 kimberlites to date. Compare this to Fort a la Corne's 71!
2. 70 pipes have been drilled and tested with 34 pipes containing macro diamonds larger than 1 millimeter.
3. Many of these pipes have in excess of 100 million tons of diamond bearing material. One has almost 1 billion tons ( 1,000 million tons)
4. One cluster (5 pipes touching each other) has 2 billion tons.
5. As a comparison, Diamet's [DMM.B] average pipe size in the NWT find is 15-20 million tons.
IF THEY BUILT A MINE
The following calculations are assuming that the results continue to be good and the joint venture puts a mine into production at Fort a la Corne:
Kensington's maximum cost to process kimberlite material is $15 Canadian dollars per ton. The diamond value recovery price, according to Luc Rombouts, a well known expert diamond appraiser (adjusted for micro diamond grades) is between $50 AND $ 100 US Per carat. Using $75 on average per carat, the mine will produce on average about 25 carats per every 100 tons or ¬ carat per ton. This equals $18 US per ton or $25 Canadian per ton. Revenue of $25 per ton less the processing cost of $15 per ton gives us a net profit of $10 per ton. They could process 60,000 tons per day for a profit of $600,000.00 per day. That's $18 million per month, and $216 million per year. 30% of this is or $ 64.8 million would be Kensingtons share.
The life of the mine would be very long. With 60,000 tons per day being processed (diamond grades are 70% gem quality and 30% industrial quality) it would take 91 years to process the 5 pipe cluster which contains 2 billion tons.
STRONG PARTNERS
Kensington's partners are De Beers (actually Monoprose which is De Beers Exploration unit) and Cameco who is closely associated with the Saskatchewan Provincial government. Cameco has recently offered to buy Uranerz for $483 million. Uranerz is the operator of the project and is also a partner.
De Beers has been in the diamond business in South Africa and around the world for over a hundred years. They control the world market and are very wealthy. They have been involved in this project and have invested in it for 9 years.
CONCLUSION
One thing is for sure: compared with Alberta diamond juniors, Kensington is FAR advanced yet is trading near or below most Alberta diamond juniors. Why is Kensington so lowly valued? The main reason, in our view, is that Kensington is joint-ventured with some of the biggest diamond companies on earth. Companies like DeBeers have no need to announce every new kimberlite or every new exciting piece of data. In actuality, as Chuck Fipke did with Dia Met, they will want to keep things as quiet as possible until they can get a mine in production and ensure that they have all the best property tied up.
Therefore, we may NEVER see really exciting news from the Fort a la Corne JV until it becomes a billion dollar diamond mine. A junior like Kensington needs news to keep its shareholders as junior investors usually will not sit on a stock for years without hearing a progress report.
Therefore, the INSIDER REPORT will be keeping a close eye on the area and will be using its sources to find out the necessary info as it may come available.
Insider Group
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