THE new managing director of copper and nickel producer Kagara is planning to reinvigorate the company’s exploration program and restore fading shareholder confidence.
THE new managing director of copper and nickel producer Kagara is planning to reinvigorate the company’s exploration program and restore fading shareholder confidence.
Melbourne-born Geoff Day has more than two decades of experience in the mining industry, working in leadership roles at Rio Tinto and as chief operating officer for gold producer Newcrest Mining.
He joined a board of seven, which includes current executive chairman and Kagara founder Kim Robinson, and executive director Joseph Treacy.
Since the global financial crisis, the company has seen the value of its shares plummet from $5.50 at the beginning of 2007 to about 60 cents currently.
Despite the significant depreciation, Kagara has secured nickel assets at Lounge Lizard south-west of Kalgoorlie, copper assets in North Queensland and lead-zinc-silver tenements at Admiral Bay, south of Broome.
Mr Day said he saw the managing director position as a golden opportunity to grow the company by utilising its existing strengths.
“This is an exciting company, it’s undervalued and it has underperformed, but it has great tenements in Queensland and WA and I’m pretty sure I know what needs to be done here, which largely revolves around tying together really good assets and really good people,” he said.
In 2010 Kagara entered into a strategic alliance with its current major shareholder, China’s Guangdong Foreign Trade Group (GFTG), to provide Kagara with the potential to access development capital from offshore.
With the backing of GFTG, a portfolio of under-explored tenements and a strong balance sheet, Mr Day said the company had all of the ingredients for success.
“I don’t really see it as a risk. I have great assets and no debt to play with. I have a reputation to change but that is solvable. It’s an organisation that just needs a bit of moulding to put it on the path to growth and development,” he said.
After speaking with shareholders, Mr Day discovered that the majority of shareholders were ambivalent about the company’s performance.
“I’m under no illusions that the journey to restore confidence in the company will take three to four quarters of consistent achievement of promises and demonstration of growth,” Mr Day said.
With exploration traditionally limited to open pit and shallow depths, Mr Day said the under-utilised North Queensland copper assets would only give the company a short-term outlook.
“We haven’t been able to handle capital investment very well, we need to spend a couple of years doing a detailed exploration program to realise the full potential of the assets that we have,” he said.
Since 2006, the sale of copper concentrates has become the company’s primary revenue driver, with forecast copper metal production of approximately 23,000 tonnes for the 2011 financial year.
Mr Day said he intended to spend upwards of $20 million at its North Queensland operations to establish a minimum 10-year mine life for both zinc and copper production.
“I want to paint a 10-year picture for production and once that goal is satisfied we can concentrate on next level of growth such as technology, which will give us more efficiency. The third level of growth will perhaps involve offshore expansion into Papua New Guinea or Thailand,” he said.
Kagara’s greatest challenge was one that was out of its control, that was, fluctuating commodity prices, he said.
“I don’t see huge technology or exploration concerns, but the thing I can’t change is commodity prices, so catastrophic events impacting the market can really upset a small company like us,” he said.
But in the short term, Mr Day’s target is to restore the trust and confidence in Kagara’s shareholder base.
“My short-term goal is to get the share price up to $1 within 12 months and north of a $1.50 within 24 months and I believe the company has the assets and intelligence to get to $2.50 in 3 to 5 years time,” he said.
