KGL Resources (ASX:KGL) share price slumps 9%. Here’s why

The KGL Resources (ASX: KGL) share price has plummeted nearly 9% today on the back of the company’s quarterly report. Let’s take a look.

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KGL Resources Ltd (ASX: KGL) shares were plummeting today on the back of the company’s quarterly report. By the market’s close, the KGL share price was trading 8.88% lower at 77 cents.

Let’s take a closer look at the quarter that’s been for KGL Resources.

Balance sheet boost

While KGL’s results for the quarter ending 31 March 2021 weren’t the strongest, it wasn’t all doom and gloom.

The company reported very little in the way of income from its operating activities – just $64,000. After employee and operating expenses, KGL reported a loss of $368,000 over the course of the quarter.

In late February, the company conducted an institutional placement, earning itself around $23.7 million (before costs) in the process. This has left the company with a little more than $24 million in the bank at the end of the quarter.

KGL holds no debt and has an estimated $17.5 million in cash ready to use on future operating activities – a large increase from the $7 million it had at the end of the previous quarter.

Project update

During the quarter, KGL continued developing its Jervois Copper Mine Project in the Northern Territory. It is now working towards attaining its feasibility study.

The project’s pre-feasibility study found it could support a mining operation at the rate of 30,000 tonnes of copper concentrate, as well as gold and silver, per year for an initial 7.5 years.

The company states it is working to improve the quality and size of the resource, extend its mine life and improve its economics.

This quarter was the first in which the company could begin drilling at the site once more after the project was shut down for 12-months following the COVID-19 pandemic. Drilling recommenced in February.

Part of the capital raise completed by KGL this quarter went towards funding a second drill rig for the Jervois Project. According to the company, 11 holes were drilled at the project over the last quarter, with assay results expected in the June quarter.

KGL Resources share price snapshot

While today’s news hasn’t been kind to the KGL Resources share price, its performance on the ASX of late has given it some wiggle room.

Currently, the company’s shares are up by around 185% year to date. They are also up by around 380% over the last 12 months.

KGL Resources has a market capitalisation of around $327 million, with approximately 387 million shares outstanding.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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