#KGLD an investment opportunity?

Several investors have invested in Kolar Gold Limited (KGLD) an Indian company with great potential.

These are some of the reasons as to why this is a potential investment opportunity:

  1. Shortage of stock.  Any small buying pressure and the share price rises significantly. 
  2. Indian government is taxing gold imports making the importation of gold more and more expensive. The obvious option is to mine resource in India.
  3. Indians poor and rich hoard gold. Like the British have an obsession with owning their own home  the Indians have the same obsession for gold.
  4. Indian government are actively progressing mine licences to get as many mines in operation as quickly as possible. Indian Ministry of Mines is  auctioning mining licences after change in legislation in 2015.
  5. The Kolar Gold Mine was once owned by a British family called Taylor  and was very successful. After independence the mine was state run and gradually declined and closed due to lack of investment and poor management. A cooperative was set up and  many of the shares in the mine are owned by relatives of many of those from the original cooperative.  Kolar have a strategic partnership with Bharat Gold Mines Limited (BGML) the local workforce and  Geomysore Services India (GMSI).
  6. Mine owners, miners and Indian Government are all  working together to put mine back into operation.
  7. Old management team have been removed and experienced management team now in place.
  8. Current assets are valued at 3.5p compared with current share price of 1.30p. Share price at this level has a significant safety net.   If after the strategic review it is decided to close the company and return value to shareholders each share has a value of 3.5p.
  9. CEO  Harvinder has personally invested £500k.
  10. Strategic review being carried out.
  11. Several investors have significant investment in business. What do they know that private investors don’t?
  12. Fintech mentioned in several RNS’s.
  13. Cameron Parry has become CEO of KGLD.
  14. Cameron was involved with  Coinsilium a blockchain technology company. Is this a clear indication that KGLD looking at Fintech?
  15. Metal Tiger have taken up a significant position with one of their largest investments.
  16. Significant share purchase today 18th August. TR1 tomorrow will indicate who purchased.

 

Risks

a)  Potential problem with mining licences being put out to tender. KGLD might not get licence.

b) KGLD are working with a co-operative of miners. Nothing wrong with that but if up against a company that is focused on shareholder value and not looking after the workers will they get the licences if go to tender?

This link takes you to further research.

Based on the above this share has significant potential and the worst case scenario seems to be the business is wound up, the assets sold and 3.5p per share returned to shareholders.

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