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Is Kidman the next Maverick?

Kidman Resources Limited (ASX: KDR)(KDRO) could be one that tops 2013’s list of gainers. Investors are always on the lookout for the next big thing, just like Maverick Drilling and Exploration Limited’s (ASX: MAD) 500% mad share price surge in 2012.

Focused on the exploration and development of metals such as gold, copper and rare earth elements, Kidman’s prospects have been paying off. With a market capital of $44 million this company has flown under many investors’ radars, but those lucky few who seen the potential of the company have been laughing to the bank ever since. With healthy balance sheets and very small amounts of debt, Kidman seems well placed to take on big projects.

The stock came on to my radar when I was looking for small caps that were financially sound and showed stability in terms of stock prices and balance sheets. The company successfully raised $3.3 million from the placement of 11,000,000 fully paid shares in the December quarter last year. The raising was needed to accelerate the exploration of the Home of Bullion (HOB) and Prospect D projects in the Northern Territory. Both prospects were tested and massive sulphide deposits were intercepted including copper at HOB and copper and nickel at Prospect D.

Since March the company’s share price has been volatile and in one day it increased over 100%. In just over one month the share price has gone from below $0.20 to open today at $0.475, but is expected to go higher when the company begins to develop its two sites.

Executive Director Shane Mele said in an ASX release yesterday “it is very pleasing to see that the our first pass RC drilling at prospect D has encountered high grade massive sulphides containing predominantly copper and nickel 2km from previously identified mineralisation”. Kidman’s tenements are 100% owned and strategically located less than 30kms west of the Stuart highway and the 10kms east of the Adelaide-Darwin railway line.

Foolish takeaway

After purchasing shares in Kidman, I knew what I stood to lose or gain and accepted the possibility of potentially losing money. Speculative investments pay a higher return but they come with significant risk. As such, Foolish investors know to never invest without doing their research first. Drilling down and finding results are a sure way to minimise your chances of losing out. No matter what complicated analysis can be done, the future can change in an instant, therefore it’s important to do your own investigation and find out how much you’re willing to risk.

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More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Owen Raszkiewicz does not own shares in any of the mentioned companies.

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