Kinbauri Making Progress

On April 2nd, Kinbauri Gold Corp. (KNB.v) announced that it had completed the purchase of the El Valle and Carles Mines, the El Valle mill and auxiliary facilities, and two new properties in Spain. As a result, the company is much closer to becoming a gold producer, with operations possibly starting in as little as 18 months. In order to pay for these assets, a major financing is underway with the company planning to raise a total of $13,500,000. To date, a total of $12,719,000 has been raised through the issuance of 25,438,000 receipts at a price of $0.50 per receipt (each receipt is comprised of one common share and one-half warrant exercisable at $0.70). Once the entire financing is complete, a total of 27,000,000 receipts will have been issued, meaning the company will have in the neighbourhood of 52,000,000 common shares fully diluted.

With regards to this financing, Buffalo Gold Ltd. (BUF.u, http://www.buffalogold.ca) announced on April 5th that it was expanding its gold assets through a strategic CAD$5,500,000 investment in Kinbauri, meaning they have subscribed to 11,000,000 of the receipts. Buffalo will hold approximately 28% of the company upon approval of the financing.

There is little doubt that a financing of this magnitude was necessary for the company to execute its plan of action, and the funds are most definitely being put to good use. Also, even with this major financing, the stock has not been unreasonably diluted, and the added liquidity will make the stock much easier to trade.

On the exploration front, a 13,000m drill program is scheduled to begin in April and is going to focus on Area 107 and Black Skarn North at El Valle. Inferred resources of 304,116 ounces of gold (835,834t, average grade 10.73 g/t) and 81,422 ounces of gold (506,668t, average grade 5 g/t) respectively have been previously reported at those sites.

At Corcoesto, a trenching and drilling program that was initiated to increase shallow open-pittable resources by 25% to 35% (less than 100,000 ounces of gold) and raise the cutoff grade to 1.75 g Au/t is supposed to be completed in early 2007. The company notes that so far "results from drilling on the Picotos vein systems show continuity and gold grades indicative of a significant increase in open-pittable resources."

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The stock has been responding rather favourably to the progress being made, and volume has been well above average this past week. On April 5th, a new 52-week high was hit as the stock briefly touched $0.90 before closing at $0.85.

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Someone trading out of house 046 (Blackmont Capital Inc.) has been doing the bulk of the buying, so I would expect the price to remain at this level until this person has finished establishing their position. Looking forward, solid results from drilling at Corcoesto and El Valle could drive the price up another level (to the $1.15 range) in the short to mid-term, but ultimately I would expect the stock to be suppressed once the newly issued shares become free trading in 4 months time. However, I would be very surprised if we saw the share price below $0.50 again. My sell target will be adjusted once results start coming out.

For a complete update on the company's projects, here is a link to a recent interview with CEO Dr. Vern Rampton:
http://easylink.playstream.com/stockhouse/kinbauri_022807.wax (open this URL in Windows Media Player).

Please do your own due diligence, these are not recommendations.