Kincora Copper (TSX-V: KCC) – Copper Hunter Drops the Ball, but Ready to Go Again

Interview with Sam Spring, President & CEO of Kincora Copper (TSX-V:KCC)

Kincora Copper is TSX-V-listed copper-gold exploration company with assets in Mongolia and Australia. I want to know if Kincora has what it takes this time round having spent $20M on their Mongolidan project and then parked it. Or is it more of the same?

Kincora Copper was founded in 1983. It began focussing on Mongolian copper assets, such as Bronze Fox, at the turn of the decade. The company still holds Bronze Fox and is going through the mine permitting process. I was interested to ask Spring exactly what the company has accomplished since then.

Matthew Gordon Talks To Sam Spring Of Kincora Copper – May 30th, 2020

Kincora Resources has been acquiring district-scale land packages and “working it,” rather than “baking it.” Spring was pleasingly pragmatic, acknowledging that most exploration plays don’t come off. Kincora Resources drilled 3 different copper projects in Mongolia last year, and the results were somewhat “disappointing.” This exemplifies the high-risk nature of exploration investment, and investors need to always keep this in mind. The company holds 1,800km² of land in Mongolia.

As a consequence of this unfruitful drilling programme, and an increasingly difficult legislative environment in Mongolia, Kincora Copper segued to Australia, focussing on one particularly compelling property, the Macquarie Arc Belt, within the Lachlan Fold Belt, a ‘world-class porphyry belt’ hosting an endowment of over 100Moz gold and over 24Mt copper.

Midway through 2020, the company concluded a “significant” financing to the tune of C$6.25M creating a “reasonable budget for project generation.” The company has 1,700km² of land in Australia, and plans to “replicate the same strategy” it employed in Mongolia: work the land hard and get drilling on targets. There is an election in Mongolia next month, and while the country has dealt with COVID-19 well, investor sentiment has been obliterated.

In Australia, Kincora’s Copper’s assets are “in the headspace” of major existing mines. This might be true on a geological and technical level, but I want to hear more about why I can trust the company to deliver a de-risked land package to the market. As Spring stated, there is no point in them being just another copper junior without a competitive advantage. Kincora Copper needs to stand out, for the right reasons this time.

Kincora Resources claims to have assembled an industry leading technical team who have made multiple Tier 1 copper discoveries. The team has been in place since 2016 and also worked on Kincora’s Mongolian projects. John Holliday, the company’s technical director, was a principal discoverer and site manager of the Tier 1 Cadia gold-copper porphyry and Marsden copper-gold porphyry in the Macquarie Arc of the Lachlan Fold Belt, and was a principal geological advisor on the acquisition of many significant projects, including Namosi and Wafi-Golpu, for Newcrest. He is just one member of a highly-experienced team.

The remuneration strategy for the management and board is based on an unknown salary (Spring didn’t tell us). However, he claims a “significant portion of the salary is in equity.” The management and board owns 9% of the company, and claims the vast majority of the team, including himself, invested in the last round of financing.

At what point will Kincora Copper need to go back to the market to fund the development of its 8 projects along the belt? It appears the company won’t be doing anything until it understands the potential of its assets. The company should be putting out some copper-gold numbers in the next 5-6 weeks to provide some certainty to the market at a cost of c. c$500,000. The company will have around C$1.5M in the bank after this next round of drilling finished in a “couple of months.” The burn-rate when Kincora Resources isn’t doing anything is C$900,000 per annum. Can Kincora Resources shed its legacy reputation of being a failed Mongolia-based story? It remains to be seen.

Kincora Resources agreed an MOU in January with RareX for 6 projects and executed it at the end of March. RareX obtained 9% of Kincora Resources. Kincora is the operator and sole funder, owning 65% of the projects until a positive PEA is produced. It looks a typical JV. RareX has seen its share price rocket in the wake of the agreement.

Spring is complimentary of the liquidity on the ASX exchange compared to other markets, particularly the TSX. Will Kincora list on the ASX? The current priority is obtaining positive assay results, which are a universally applicable catalyst.

What did you make of Sam Spring and Kincora Copper? Comment below and we will get back to you.

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