Any thoughts on Kalahari Resources? I have bought in twice - once well above 30 cents and once at 3 cents - but also, my confidence wanes even in the midst of their current upward trend to the 7-8 cent range. I am thinking of bailing out and cutting my losses - more like a scuff than a cut, though.
Richard
Hi Richard,
If you were at a buyer at $0.30, you have been invested in Kalahari Resources Inc. for a long time and should consider tax loss selling on those shares. When I look at the case for KAL, the comments from the Management Discussion and Analysis filed with SEDAR on October 30,2009 gives rise to sober second thought about the opportunity.
When I read the following in any report, it gets me a bit antsy: "The company does not have sufficient working capital to meet its obligations for the next 12 months."
Understanding the nature of junior exploration companies and their never ending quest for new money to advance their projects is one thing but to be sitting on only $16,887 in cash is quite another.
KLA is developing their Lamaque gold property in Val d'Or property in Quebec but in their last filing they were only able to spend $17,792 on exploration. Plus with gold trading over $1100 an ounce, you have to ask how high a price do they need to get investors interested in their play?
The three year chart shows the advance that started in November of this year as KLA consolidated their control of Lamaque and announced a 6,000 meter drill program.
The three month chart provides a good view of the recent action and the resistance the stock is meeting at $0.08. Volume has been a pattern of spikes then thin trading which suggests that there isn't a ton of players at the tables for this tournament.
What KLA needs is capital, and if you look at the last two rounds of financing, they have been at low prices and haven't provided the company with sufficient capital to fund themselves for the next 12 months.
The company plans to increase their gold resources to 1M ounces in 2010 and to improve their visibility in the market and to build a better website. But to accomplish these goals they will have to raise new money. Same old story.
I would suggest that you sell the $0.30 shares for a tax loss and let the $0.03 shares ride into the new year to see if what appears to be an experienced management team can find an oasis in what has been a long thirsty trek through the desert.
Happy Capitalism!
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Lou Schizas