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Sunday, November 27, 2022

A Close Look at LKA Gold Inc (OTCMKTS:LKAI)

LKA Gold Inc (OTCMKTS:LKAI) is hoving just under a penny where the stock has formed a strong base in recent months. LKAI has a history of big moves running up from $0.30 to highs over $1 in earlier this year.

LKAI is a Delaware shell that has been around for years. They used to trade as LKA International, Inc. but changed their name to LKA Gold Inc in March of last year when they affected a 1 for 2 reverse stock split.

LKA Gold Inc (OTCMKTS:LKAI) acquires and develops properties in politically stable jurisdictions capable of yielding high profit margins even during volatile economic conditions. The Company looks for projects in advanced stages of exploration that can cash flow in a relatively short period of time. This usually requires taking on projects the majors won’t touch.

LKA’s exploration program at its Golden Wonder MineVein material is extracted as crews follow the volcanic vent system along the wall of the Uncompahgre Caldera. This method of exploratory mining and underground drilling proved successful in locating the first commercial ore body which yielded more than 133,000 ounces of gold from a single ore chute measuring less than 10,000 cubic feet. From 1998, through the second quarter of 2006, the average grade of Golden Wonder ore was 16.01 ozs. (454 grams) gold per ton.

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LKA said that additional chutes may exist on its mining claims. Upon resuming exploratory operations in the first quarter of 2009, LKA has extracted and/or shipped (sold) twenty-nine bulk samples of crushed vein material containing nearly 4,400 ounces of gold with a net value, after processing, of over $5 million. The Company continues to seek and evaluate financing options to expand/accelerate this program. Investors are cautioned that the Company continues to generate substantial losses and additional funding and exploration work is required. A commercially viable ore reserve has yet to be established and there can be no guarantee that the Company will be successful in this regard.

On November 25 LKAI annoaunced it recently engaged San Juan Drilling of Montrose, CO, to commence drilling from the 6th level of the Golden Wonder to test potential, close-in, high-grade targets adjacent to the current exploration areas. Drilling will also probe for extensions of the Golden Wonder vein structure(s) several hundred feet beyond the current working area. Following the high-resolution mapping of the mine’s exploration and historic production zones, it is anticipated that this new underground drilling program will provide a much clearer understanding of this unique gold deposit.

LKA also reported that Q-3 exploratory mining and gold shipments were suspended due to mapping, drilling preparations, and infrastructure improvements. Recently completed construction of new surface facilities will accommodate a larger crew for operations.

With a production history of 140,000 ounces of gold at an astonishing average ore grade of 13.17 ounces gold per ton and an average production cost of less than $150 per ounce, LKA has proven that, with the right properties and management team, enormous capital investment and muti-decades of development are not necessarily required to achieve profitable gold production. LKA believes its mine exploration/development strategy is highly effective in maximizing earnings while minimizing investor risk.

According to LKA President, Kye Abraham, “While not our primary objective at this stage, ore sales are a welcome by-product of the exploration program and continue to cover the cost of our operations….which is highly unusual in this business. If we can nail down a financing package we can increase revenues and the pace of our search for the next big ore shoot….which would make these ore shipments and grades look insignificant by comparison.”

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Currently trading at a $7 million market valuation LKAI is making a strong move up off its base at $0.20 to recent highs of $0.70 before some consolidation over $0.40. LKAI has a history of big moves running up from $0.30 to highs over $1 in 2014 and investors are hoping it can do it again.

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Disclosure: we hold no position in LKAI either long or short and we have not been compensated for this article.

Ali Raza
A journalist, with experience in web journalism and marketing. Ali holds a master degree in finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of cryptocurrency publications.

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