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Kaiser Watch August 11, 2022: NPK hits revenue and output targets for H1

Posted: Aug 11, 2022JK: Kaiser Watch August 11, 2022 with Jim Goddard and John Kaiser
Published: Aug 11, 2022KRO: Kaiser Watch August 11, 2022: NPK hits revenue and output targets for H1
Kaiser Watch is a weekly 15-30 minute audio show produced by KaiserResearch.com with Jim Goddard and John Kaiser discussing the junior resource sector. The show has three parts: the first is a general topic, the second discusses developments involving the KRO Favorites which as of January 1, 2022 are no longer exclusive to KRO members, and the third is a peek inside the members only KRO Bottom-Fish Workshop. KRO is transitioning into a Do-It-Yourself research platform that covers all Canadian and Australian resource listings and which also features a Bottom-Fish Workshop where John Kaiser highlights juniors with solvable "missing pieces". Companies that graduate from the Workshop may become part of the Annual Favorites collection whose profiles and related commentary are unrestricted for non-members. Visit the KRO Favorites Dashboard for quick access to all the unrestricted Favorites related content. KRO is not sponsored or compensated directly or indirectly by public companies. The business model is based solely on membership fees in the form of a USD $450 Annual Individual Membership that at some point will increase substantially to reflect KRO's shift to a research platform. However, when the change happens active members will be grandfathered to renew indefinitely at the current rate provided they maintain a continuous paid membership. Kaiser Watch is available at Kaiser Research YouTube and as a Podcast downloadable from KaiserResearch.com. Each episode will be made available through the publication of a Kaiser Media Watch blog report which will provide links to specific questions and include supplementary graphics. All episodes will be archived at Kaiser Watch.

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Kaiser Watch August 11, 2022: NPK hits revenue and output targets for H1
Jim (0:00:00): Nevada Exploration provided an update for its South Grass Valley project in Nevada. Is there still no gold for Wade?
Nevada Exploration Inc may have reached the end of the line with regard to its 100% funded effort to discover a brand new Carlin-type gold district in Nevada. The Jan 31, 2022 financials suggest there is no money left for another hole between #14A and #13A, nor to finish the suspended #13A to target depth. Hopes now turn to the Kelly Creek project optioned 75% to Austin Gold which is threatening to drill Lone Tree style Upper Plate hosted targets generated by the Scorpion rig before NGE pivotted to SGV in 2018. Somebody told Dennis Higgs that the best target sits in a "wetlands" area but he may be afraid of getting his feet wet and may drill an area outside of of designated wetland which would be suitable for a milling facility. This is called condemnation drilling, and with Wade's luck, the Gold Nazi may deliver gold to Austin's drill bit where there isn't supposed to be any, which can either make the groundwater targets really compelling, or pound a stake into the gold in groundwater method. When Intl Enexco tried a decade ago I visited the project and it was bone dry. The Humboldt River meanders through Kelly Creek Basin but is dry most of the year. Enexco did not have the target resolution NGE has today. Wetlands are an issue when you want to dig an open pit in them, which is unlikely at the KCB project because it is under gravel cover. Unless NGE can secure a strong farmout deal with a major for SGV, or KCB delivers a discovery, the best hope will be for Austin Gold to absorb NGE and revive the regional groundwater sampling strategy as a project generator. It is fabulous to find a hidden Lower Plate window altered by a major Carlin-type hydrothermal cell, but drilling through thick gravel cover in search of the sponge horizon that would have soaked up gold requires a $20-$30 million 3-4 year commitment, well beyond the means of a junior.
Nevada Exploration Inc (NGE-V)

Bottom-Fish Spec Value
South Grass Valley United States - Nevada 2-Target Drilling Au
Austin Gold Corp (AUST-NY)

Unrated Spec Value
Kelly Creek United States - Nevada 2-Target Drilling Au

Location of South Grass Valley relative to Major Cortez District Deposits

Section of South Grass Valley Target and proposed hole we wish was drilled in 2018

Topographical View of Deposits in Kelly Creek Basin Area

Where should Austin drill to find gold to mine and no gold to site a mill?
Jim (0:18:51): Endurance Gold reported a new round of drill results for Reliance. Did they support your analysis of the company's drilling strategy?
In KW July 28, 2022 I introduced the idea of studying a junior's drilling strategy for clues about what they are learning from the core well before assays are in hand. This only works if the junior is like Endurance Gold which provides detailed graphics and drill plans that allow one to see what they are trying to demonstrate. In that KW episode I noted that in light of reults for holes #23-24 other holes like #27 made sense as part of an effort to understand the implications of holes #23-24, without telling us what they learned, but the nature of hole #30 made no practical sense unless they say something very encouraging in hole #27. On Aug 8 EDG published results for an additional 4 holes that included #27 whose implications I discussed in Tracker Aug 8, 2022 (members only). Earlier this year I created a cartoon for a conceptual model explaining what EDG thinks it is chasing at Reliance. The latest results prompted me to create a revised conceptual model to illustrate how the latest results, which include structural descriptions, have expanded the scale of the Reliance play. I still haven't switched EDG from Bottom-Fish Status to a Good Spec Value Favorite because we do not yet have that no brainer drill hole that makes the size potential obvious to everybody. But with the latest news the risk that at the end of the day Reliance boils down to nothing more than a gold fart has dropped sharply.
Endurance Gold Corp (EDG-V)

Bottom-Fish Spec Value
Reliance Canada - British Columbia 3-Discovery Delineation Au

Old Conceptual Model for Reliance Gold System

Drill Strategy Analysis Graphic from KW July 18, 2022

Drill Results as of August 8, 2022

New Conceptual Model for Reliance Gold System
Jim (0:25:32): Verde Agritech reported results for the first half of 2022. Did they meet their guidance?
Verde Agritech pretty much hit its guided targets for H1 of 2022, but the stock has not taken off because NPK has not yet told the market that Plant 2 is operational. The output during H1 reflected maximum existing capacity, but for NPK to achieve its H2 guidance Plant 2 needs to be operational. NPK indicates this should happen in August for Phase 1, and also indicates Phase 2 which brings capacity to 2.4 million tpa beyond the existing 600,000 tpa will be operational in early Q4. The key shipping window is July through October so it is critical that Plant 2 become operational. The second question is whether or not NPK will have the orders if Plant 2 becomes operational in time to produce the K Forte output projected by the May guidance. KCl cif prices have declined to $800/t from the $1,040-$1,270/t range during H1, but NPK's guidance is still based on CAD $109/t which translates into about USD $510/t KCl, So there is a buffer to meet the revenue and EBITDA guided targets. However, what NPK accomplished in H1 is impressive compared to 2021 and earlier years. The redomiciling from UK to Singapore has been done, though there is still a delay with US brokerage firms being able to trade the stock in the OTC market. The company can't officially talk about its application for NASDAQ listing, but CV seems to think that this may occur in September, by which time hopefully we have heasrd Plant 2 phase 1 is grinding out K Forte. The US listing will be very important because it will expose the stock to the younger generation that trades through platforms like Robin Hood where you can own as little as a single share that is not bought at odd lot prices because of the way the order flow is managed. US institutions interested in an agriculture growth story with an ESG spin and a tech dimension will also come knocking. On Aug 11 NPK was presenting at a Canaccord Growth Conference in Boston where it was the only company with mining component to its growth story. The other thing that could kick in when the US listing is secured is a surge of online Amazon purchases of Super GreenSand. Buying a $10 bag for $38 is not quite the same as buying a Tesla, but it is within financial of reach of Robinhooders. Sales of Super GreenSand are never going to be more than a drop in the bucket for NPK's growth story, but it allows investors to have a tangible connection to the product underpinning their dreams of NPK becoming a $50-$100 stock as it gradually ends up supplying more than 50% of Brazil's potash needs in a soil friendly manner.
Verde Agritech Ltd (NPK-T)

Good Spec Value
Cerrado Verde Brazil - Other 9-Production K

NPK Guided and Actual results for 2022 presented in quarters

NPK Guided and Actual results for 2022 presented has halves

Don't just buy NPK stock, buy a bag of Super GreenSand from Amazon!
Disclosure: JK owns Endurance Gold, Nevada Expl, Verde Agritech; Verde Agritech is a Good Spec Value rated Favorite; Endurance and Nevada Expl are Bottom-Fish Spec Value rated

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