KAT Exploration Inc (KATX)

[scottmba]

Let's take a look at valuation. I always like to start here when I buy a stock, so I know what the floor is. That way I don't have to worry when the fraudulent market makers try to shake me out. I can then add with the bad guys.

So, via the disclosure statement on December 23rd (Which is a great thing, you all should read it. It also generally precludes a move up to a higher exchange.) the outstanding shares are approximately 300 million. Now the key number is the float, which stands at 68 million. The remainder of the shares are restricted, or held by the owners. These 230 million are not freely trading. Great news.

So at the current price of .047, we get a market cap of 300 x .047 = $14.1 million. Now the company has $5 million in cash. So the value of all of their stakes is a mere $9.1 million. So for each share you buy, you get .016 cents in cash and .03 is the price paid for Ken and all his claims. Sounds like a bargain to me.

My plan is fairly simple. I have added today and yesterday on the dip. If it gets to .04, I will add more. I will hold until at least the drilling results come in, but any pop that makes the valuation go out of whack, I will sell some. For example, a ride to $.50 right now would put the market cap at 150 mil, which is too expensive. (If they have a JV deal, then the rules obviously change.)

ScottM