lol
btw, Lance Lewis' comments on it last night gave me the idea:
dailymarketsummary.com
NSU was the only loser and fell 12 percent (which was a loss of a nickel). This stock has been destroyed just like the rest of the gold sector for no other reason than hedge funds have been forced to raise cash anywhere they could. Remember, with $60 mln in cash, NSU doesn’t need access to the credit markets in order to fund the initial construction stages of Bisha. If one believes that gold prices are going higher, NSU is a steal, and yes I own it.
With a current market cap of $44 mln (below its cash on hand) and the Bisha project having an NPV (using a 10 percent discount rate) of $267 mln (assuming Au $700/oz, Cu $1.80/lb, Zn $0.60/lb, Ag $10/oz), NSU is trading at an 84 percent discount to its NPV using extremely conservative assumptions, let alone a gold price of over $1000. In other words, NSU’s stock needs to rise about 6-fold to $2.16 a share in order to be what I consider to be merely “fairly” priced at today’s metals prices. My biggest fear is that some other miner will buy the company for less than what I think it’s worth, which is closer to $6 when based on higher gold and silver prices (above $850 gold and $15 silver).
NSU’s plight is not unusual. “Steals” like these can be found in many places; it’s precisely what happens when the XAU/Gold ratio collapses to all-time lows. To repeat, unless gold absolutely implodes to around $500, these gold stocks will literally crash to the upside and rapidly close the valuation gap that has developed over the past few months once the market comes to believe that gold prices are not going to collapse and that the financial system will remain intact. And every day that LIBOR comes down is another encouraging sign that the financial system is not going to implode. |
