Onepath, Answer for you – comparisons between NWI and CCH
Onepath,
Thank you for your reply to my first post in SiliconInvestor, where I discussed the unique opportunity in Campbell Resources. You are correct in pointing out that Nuinsco resources (NWI.TO) is investing in Campbell and providing Operating Management.
You asked for my thoughts on comparing NWI and CCH. I think both companies are great stock to own. But I believe that in the next year, we will see a greater percentage gain in CCH.
Here are my reasons:
Reason #1) Campbell is at a dramatic turning point right now. They have operated under CCAA restructuring protection for about 15 months. Their restructuring has been approved by the Quebec Superior Court. We all expect Campbell to exit CCAA in the near term.
IMO, the exiting from CCAA will be a dramatic turning point. I believe (but I have no proof) that there are many Institutions and Funds that would have been interested in buying CCH, but were prohibited from buying because of the CCAA status. I think it’s quite reasonable that a typical gold mutual fund would not be permitted to buy companies that are in the middle of a restructuring.
So the exiting from CCAA, will in my opinion, open the door to a flood of new investment. I don’t see a comparable major event with NWI.
Read my post on the SI board for Campbell Resources, where I compare Campbell in 2006 to Campbell in 2002-2004. A whole bunch of Blue Chip firms were paying 80 cents a share back then with no problem. The dilution alone does not explain this difference (conclusion: CCH is tremendously undervalued).
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Reason #2) Campbell is currently producing from two mines. There is an ongoing effort to return to normal production costs. What this means is that the 4th quarter of 2006 should show a nice operating profit.
For someone studying Campbell, the thing to compare is the production, production cost, and cash flow seen in the 3rd and 4th quarter 2005. In 2006, the quarters have been negatively impacted by Campbell’s cash crisis.
It does not appear that NWI has an operating profit right now. The first profit we may see from NWI may be from the Corner Bay bulk sample (that’s an original Campbell property).
So if you want near term production, with operating earnings, Campbell is the company to own. Nuinsco agrees – they are buying a percentage of Campbell.
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Reason #3) The Corner Bay deposit is the hottest thing on earth, if you read the Nuinsco website. But I am 90% sure that Nuinsco’s 50% ownership will only go down to 250 meters. But I think the overall Corner Bay deposit will end up being much deeper than 250 meters.
The Campbell Prospectus (released Sept.13, available in Sedar) makes very strong points that every single one of Campbell’s properties will be aggressively drilled. The total copper ore tonnage at Corner Bay is listed on the Nuinsco website. My calculations come up with about 250 million lbs of high grade copper, if you count all three resource categories.
But several of the Corner Bay holes already drilled went deeper than 250 meters. And Campbell will be doing more drilling. So my point is that yes, Corner Bay is a Behemoth of property. But if you want the most exposure, you need to own CCH, not NWI.
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Reason #4) Nuinsco has some very promising development going on. Are NWI shareholders clear as to how each of these projects will be financed? I have some questions there, and would love to hear the answer. Is Minago and Cameron Lake development already financed?
With Campbell, it looks like the current deals will finance all exploration and development through the end of 2007. That’s a total of 5 operating mines, totally paid for, or almost completely paid for. Remember that there will be about 100 million warrants on the street, each with an exercise price of $0.15. If these warrants are exercised, Campbell will have another $15 million to finish the projects I just referred to.
Summary
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- A significant corporate event will occur, that will probably open the door to Institutional Investment
- Near term production and cash flow
- Projects will be financed
- Better exposure to Corner Bay with Campbell.
Yes, it is true that NWI owns CCH shares. But why not just buy CCH at these prices?
I am inviting you to immediately correct me if anything I have written about Nuinsco is incorrect. I have not spent that much time studying NWI. |
