Kenadyr Pitchbook V1

Issue #1
2018
Kenadyr
Investment
Review
PitchBook
In Partnership with: InProved Energy and Resources

Featuring:
Mark Hood
CO-CEO & Head of Operation
Max Delamain
CO-CEO & Head of Business Development
Catherine Lindsay
Chief Financial Officer
In partnership with:
Hemera, Inproved Energy and Resources &
Afar Insights
Table of Contents for Hemera
Pitch-Book
1.0. Introduction 3
2.0. Trend 1
2.1. Gold Value vs the USD 4
2.2. Kyrgyzstan’s Economy level 4
3.0. Trend 2
3.1. Zijin Company 6
3.2. Zijin Gold Production in 2016 6
4.0. Trend 3
4.1. Taldy Bulak Levoberezhny
Mine 7
4.2. Bourbai Project 7
5.0. Trend 4
5.1. Kenadyr Company and
Financial Record 8
5.2. Kenadyr Stock Perfomance
and comparison with GDXJ 9
6.0. Methodology 10
Afar insights
JOHNSON KOH Founder, CEO
HUGO PASCAL Head of Structured Financing
Content:
JOHNSON KOH Senior Analyst
YOHANES ALVIN Data Analyst
HUGO PASCAL Data Analyst
TEO GUDELJ Senior Graphic Designer
Special thanks to:
Contact us:
inquiry@inproved.com
21 Bukit Batok Crescent
WCEGA Tower 25-70
Singapore 658065
1

AfarInsights
PitchBook
1.0. Introduction
Population in UK has been increasing lately, thus the increase in population lead to increase in UK’s
Urban Population. Furthermore, the government has an issue in providing their people a safe, comfortable
and nice-looking house. When brexit takes place, UK has been suffering with Skill shortage
and technology shortage in innovating new technologies, due to this UK housing minister Gavin Barwell
has said that the government sees a huge opportunity in manufacturing houses off site.
One of the solution to solve the problem is Modular Construction. ‘Modular construction’ is a term
used to describe the use of factory-produced pre-engineered building units that are delivered to site
and assembled as large volumetric components or as substantial elements of a building. The modular
units may form complete rooms, parts of rooms, or separate highly serviced units such as toilets or
lifts. The collection of discrete modular units usually forms a self-supporting structure in its own right
or, for tall buildings, may rely on an independent structural framework. The main sector of application
of modular construction are, private housing, social housing, apartment and mixed use building, educational
sector and student residence and many more. In UK, the Modular Construction has been
applied and government has seen this as a huge investment. Therefore, Hemera has come out with
a new investment which involved with Modular Construction and they name the project as Shape
Living.
2

AfarInsights
PitchBook
2.0. Trend 1
2.1. Gold value vs the USD
Gold has always been the go-to haven
for investors during times of economic
turmoil and uncertainty. One fact that
supports this is the negative correlation
between U.S. Dollars and gold price that
is consistent throughout the past,
because as the economy slumps and
the currency depreciates, the demand
for gold rises.
As the U.S. trade deficit perpetually
increases, U.S. President Donald
Trump’s administration began a tariff war
with China in April 2018 that escalates
trade tension between the two countries,
and economists see the tension could
draw on for two more years. Trump also
mentioned that a trade fight with Japan
might be next on his agenda.
Along with other factors that plague the
global scene, it is safe to assume that
investors would flock to gold in these
times of uncertainty and push the gold
value up. This is good news for the gold
mining industry as their profitability is
strongly dependent on the price of gold.
2.2. Kyrgyzstan’s Economy
level
Gold makes up the biggest portion of
Kyrgyzstan’s exports. However, local
demand for gold has been increasing
lately, with the Kyrgyz central bank stocking
up on gold. Kyrgyzstan plans to up its
gold reserves from 16% of its international
reserves of 2 billion USD to 50%. The
gold acts as contingency plan for the
uncertain economic future of China and
Russia, whose imports are crucial for
Kyrgyzstan’s economy. Kyrgyzstan also
relies on Russia for the mass of migrant
Kyrgyzstani workers who search for
work at Moscow.
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AfarInsights
PitchBook
While China is engaged in trade war with
the US, recent US sanctions against
Russia has been similarly increasing the
trade tension between US and Russia.
Although China-Russia relationship has
been growing, the outcome of this
conflict between the world’s greatest
economies remains unclear. Kyrgyzstan
has learned from Russia’s currency crisis
in 2014-2015 when the value of
Kyrgyzstani som plummeted along with
the Russian ruble. Gold is favorable as it
is exempt from the currency risk of holding
these vulnerable currencies, and also
because of its flexibility to be used in
buying other currencies as needed.
Kyrgyzstan gold reserves reached an
all-time high during the first quarter of
2018 at 7.95 tonnes, up from 6.95 during
the fourth quarter of 2017. It is forecasted
to reach 10.8 tonnes by 2019, and 13.2
tonnes for 2020. To quote Kyrgyz central
bank governor Tolkunbek Abdygulov,
“Taking into consideration that we mine a
lot of gold in our country, it’s God-given
that we should keep
a large part of our reserves in gold.”
These high forecasts of gold demand will
push the gold price up, which is good
news for the gold mining industry in
Kyrgyzstan.
After a steady uptrend throughout 2017
and Q1 of 2018, the gold price per ounce
for Kyrgyzstani som took a plunge after a
high point of 93,160 KGS/oz on April
13th. By Q3, the gold price found a
support level at around 81,000 KGS/oz
and is looking to begin another uptrend.
The future of gold price for the
Kyrgyzstani som is promising, as the
local demand for gold is high with the
Kyrgyz central bank buying and stockpiling
gold for its reserves, as well as the
general economic uncertainty as a result
of the US trade wars with Kyrgyzstan’s
economic allies.
The GDP of Kyrgyzstan has steadily
grown over the past 2 years, from 6.7
billion USD in 2015 to 7.5 billion USD in
2016. It is forecasted to continue
increasing to 7.8 billion USD by 2018.
With Kyrgyzstan’s improving economy,
investing in Kyrgyzstani companies is
looking to be a relatively safe investment.
Comments on the graph 4
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AfarInsights
PitchBook
3.0. Trend
3.1. Zijin Company
Zijin is a Shanghai (code: 601899) and
Hong Kong (code: 2899) listed company
and one of the largest gold exploration
and mining company in China. Their
operations span across 24 provinces in
China and 9 other foreign countries. Zijin
is a highly profitable company. In 2016,
they managed to produce 1347.41 tons
of gold, 30.06 million tons of copper, 9.5
million tons of lead/zinc, of molybdenum
and of tungsten under complete equity
method globally, due to their efficient
production. They are nominated to be
the largest listed gold company, the
second largest mined-copper producer,
and the second largest mined-zinc
producer in China. In the same year, their
net profit for the parent of the company
were RMB 78.85 billion, the total assets
and equity attributable to owners of the
parent were around RMB89.22 and last
but not least, the dividends of the company
were RMB17.8 billion. (first)
3.2. Zijin Gold Production in
2016
The graph below is some of the Zijin
Gold Project Mining which they have
been investing in. One of Zijin’s gold
explorations is Zijinshan Gold & Copper
Mine which is located in Shanghang
County. The mine has produced
236,950 ounces of gold (approximate 7.4
tonnes) and gold reserves were 10.2
million ounces (around 318 Tonnes) in
2016. Zijin had also invested 2.5 billion
yuen in Zijinshan’s soil and water conservation
and ecological restoration by the
end of 2016. Longnan Zijin mining was
established in 2007 and is located in Li
County. By the end in 2016 they have 7
mining rights over an area of 68.7km2,
including the mine called Liba Gold Mine.
In 2016, the mine has produced 94,105
ounces of gold and the gold reserves
were 2.78 million ounces. There are
numerous more gold mines that Zijin has
invested in, which all performed favourably
with significant gold production.
Zijin’s track record is promising.
In Kyrgyzstan, Zijin has invested in the
Taldy Bulak Levoberezhny (TBL) mine
which has been forecasted to produce
significant amount of gold. Currently,
Kenadyr mining has 100% hold interest
in 164km2 Borubai exploration license
which encircles Zijin’s TBL mine.
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duis dolore te feugait facilisi.
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AfarInsights
PitchBook
4.0. Trend 3
4.1. Taldy Bulak
Levoberezhny Mine
Altynken LLC is the first company who
hold the exploration and mining license
for the TBL mine, valid until 5/01/2026.
Furthermore, Summer Gold LLP holds
60% interest and Kyrgyzstan holds the
remaining of the 40% the interest of
Altynken. In 2011. Zijin Mining Group Co
took over the 60% interest and till now
the TBL mine is still under them. In 2015,
according to Kyrgyz geologists, the mine
holds 65 tonnes of gold and continued
exploration is expected to add up to 20
tonnes to reserves. The mine is in Taldy
Bulak gorge in the Tien Shan mountain
around 120 km (75 km) east of the
capital. In 2017, TBL mine has produced
2017 kg of gold as well. The mine will
continue to be profitable as long as the
price of gold does not fall below $1,080
per ounce and currently, the gold price is
$1198.29. The gold mine project is the
second major gold project in the country
after the collapse of the Soviet Union in
1991. Zijin and Kenadyr are keen to
invest in the mine due to the promising
forecasts.
Kenadyr has proudly announced a
private placement with Zijin, due to the
high potential of gold production from
the Borubai project. This will help maintain
Kenadyr’s sustainability by financing
the exploration and mining of the TBL
mine and other areas. The private placement
offers 8,360,000 units at $0.20 per
unit for total gross proceeds of
$1,672,000. Each unit will consist of one
common share and one common share
purchase warrant. Each warrant will
allow the holder to purchase one
common share of Kenadyr at a price of
$0.35 for a period of 24 months from the
date of issuance or before May 30 2020,
thus with this agreement Kenadyr is in a
good hand of achieving their predicted
result in future. Considering the future
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profitability of the Borubai project and
this support from one of China’s largest
gold mining company, other Chinese
investors might be keen on investing in
Kenadyr.
4.2. Bourbai Project
Borubai project is located in the Kyrgyz
Republic in Centre Asia. The project
grants Kenadyr the license to explore the
TBL mine, which is expected to contain
3.2 million ounces in reserves. It is the
third largest gold mine in Kyrgyzstan with
a mine life of 19 years. According to the
news release published by Zijin, the TBL
field contains (C1 plus C2) 8909100
tonnes of gold ore (the average grade is
7.23 grams per tonne). The project holds
exploration license for 164km2 of the
mining area and the entire area has been
tested with airborne magnetic, radiometric
and gravity surveys, ground-based
resistivity and induces polarization
surveys by the Soviet Government. The
area can be seen from the location map
below.
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AfarInsights
PitchBook
5.0. Trend 4
5.1. Kenadyr Company and
Financial Record
Kenadyr is a start-up public listed gold
mining company in Kyrgyzstan. Its daily
stock price has been decreasing since 2
year-time, from $0.54 in 2017 to currently
$0.11. The bid size is currently 43500
and the ask size is currently 12000. Even
though the stock performance has been
dropping, the result from short-term
solvency ratio has proven that the company
has the ability to meet the
long-term obligation, net working capital
ratio, current ratio, quick ratio (acid test)
liquidity ratio (cash) and working
capital/equity that are under short-term
solvency ratio. With Kenadyr’s Borubai
project and and their agreement with
Zijin, the stock performance will definitely
rise due to the robust expected gold
production which is under TBL mine.
They also currently have 9.28m market
capitalisation and also has given out
92.81M outstanding shares. Based on
the financial report and future prediction,
Kenadyr is worth investing. Kenadyr
Stock Price will also be affected due to
the gold price performance in
Kyrgyzstan.
Comments on the graph 4
molestie consequat, vel illum dolore eu
feugiat nulla facilisis at vero eros et
accumsan et iusto odio dignissim qui
blandit praesent luptatum zzril delenit
augue duis dolore te feugait nulla
facilisi.
Comments on the graph 5
in vulputate velit esse molestie
consequat, vel illum dolore eu feugiat
nulla facilisis at vero eros et accumsan
et iusto odio dignissim qui blandit
praesent luptatum zzril delenit augue
duis dolore te feugait facilisi.
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AfarInsights
PitchBook
5.2. Kenadyr Stock
Perfomance and comparison
with GDXJ
Zijin has been investing in Kenadyr due
to its daily stock performance which has
been fluctuating in the past 2 years and
Borubai project (which has been
expected to produce gold). The highest
return Kenadyr has experienced is in
2018 (26/6/2018) which is 32.14%. and
currently their daily return is -4.76%.
GDXJ used for benchmarking to make
stock price’s performance with junior
mining company. It can be seen that
GDXJ stock price performance also
shown similar graph with Kenadyr, it has
been fluctuating for the past 2 years
also, based on the Standard Deviation
average return and beta calculation to
test the stock volatility, Kenadyr currently
has 5.61% for their beta, -0.34% for the
average return and their beta is
0.68002. Despite trend to fluctuate,
Kenadyr has given higher returns than in
GDXJ the past 2 years-time.
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AfarInsights
PitchBook
6.0. Methodology
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AfarInsights
PitchBook
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AfarInsights
PitchBook
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