Kenadyr Mining (KEN.V) only confirmed last week it has started a drill program on its Borubai gold project in the Kyrgyz Republic but has already provided the assay results of a large part of the first hole of this campaign. A few holes were drilled before the company came public, but the current drill program will be much more important due to its size.
A first prioritized area is a part of the South Zone which is directly adjacent to the TBL mine, owned and operated by Zijin Mining, and this area has already been drill-tested by the Soviets in the Seventies and Eighties. Even though their drill results were already very encouraging, there’s a lot of hidden potential left as the Soviet drillers had to deal with really poor core recovery rates and ICP analysis to determine the average grade.
The first assay results are very encouraging, as Kenadyr intercepted a very wide interval of 40 meters containing 6.17 g/t gold and a little bit deeper, an additional 5 meters at 5.8 g/t gold was intercepted. This is a very encouraging start, but the market didn’t seem to be impressed as even though almost one million shares changed hands, Kenadyr closed the day just one cent higher, at 53 cents.
There are several explanations for this mute reaction. First of all, Kenadyr was drilling in an area which was known to contain gold, so it looks like the market was pretty much expecting Kenadyr to do well. On top of that, the first partial results are pretty basic. Yes, Kenadyr intersected 40 meters at 6.17 g/t gold, but it would be surprising if those 40 meters didn’t contain some higher grade and lower grade areas, so the reaction will probably be less muted upon the publication of the more detailed assay results.
And finally, when Kenadyr became public, the investors in the C$0.35 private round were subject to a two month lock-up period, which expires next week. It’s not unlikely some of these shareholders have hit the sell or short button. That could explain why the share price opened higher, but was pushed down in the first 90 minutes of the trading day.
As a summary: the first hole was a deep one and is designed to reach a depth of 850 meters and this will tell Kenadyr a lot about what’s going on under the surface. Keep in mind the South Zone remained open in no less than three directions so we do expect a lot from Kenadyr’s very first drill program as a public company, and this initial 40 meters at in excess of 6 g/t definitely is an encouraging start!
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The author has a long position in Kenadyr Mining. Please read the disclaimer
