Post by
stick2 on Jan 31, 2023 7:24pm
How do you price an explorer
I'm near retirement, so mostly just invest in boring old dividend payers like cdn banks. But, I'm genuinely interested in how to value this company, and if anyone who I dont have on ignore (Im way too old to let trolls mess with my chi) has any good sense opinion on that.
I started following NFG when it was north of 10 bucks a share, and the potential story from the drill bit for NFG seems really good. I'm a geo, so I can do my own dd on the data they are reporting, I'm obv pleased or I woudnt be here.
My issue with buying shares is more: what is a share worth when theres no cash flow for maybe 5+ years, other than some big dog coming in for a piece like Teck did on voiseys bay, but I'm feeling that that potential might be minimized because of the existing share structure. So, if its just discovery and eventual cash flow from mining, what is the pathway to value.
I'm thinking: they could put out a robust MRE in a prefeas that details the production economics from one or two zones to get the ball rolling on ounces in the ground and a real valuation on more than just spec. When will that happen? Maybe 2024, or does management even care about driving the stock price. I should think they do care, as they can dilute a lot less when they raise at north of 10 a share than at below 5.
I really dont know how to value where they are at today. My feeling is that below 5 is cheap, so I bought in down there in the 4s, with the feeling that if it falls from there I would chase it down and back up again, the drill bit results are too good imo for it not to recover into the future. Im not a bottomless pit of cash, but I took a 1/3 to 1/2 pos, so have some room to flesh it out to see if we have a monster. Heck, i almost want it to go to a dollar so I can back up the truck.
My investing in resources is spotty at best: voiseys, lake shore gold, virginia gold, big wins, stornoway diamond amongst numerous other busts, well, a humbling experience, I really would value some investing opinion.
Comment by
DanWarren on Jan 31, 2023 7:47pm
I've done an analysis on this and posted it here over a year ago.....but, I'll answer by private message to you.
Comment by
erieshore on Feb 01, 2023 9:37am
RetiredGEO Thanks for your post. Given your formual and estimate of 5 million ozs as of now, that implies a value of $25 per share. So, the previous high of 13.50 seems reachable again before too many years, one would think. Especially with more discoveries likely. Why do you (or others) think they haven't yet drilled deeper? Erie
Comment by
wajac on Feb 01, 2023 2:05pm
Erie, you can't conclude that the share price will increase when nfg releases an mre of 5 million ozs or some other number. There are other variables involved. Marathon Gold and Osisko are good examples. Marathon has 4 million plus ozs and is trading at $1.03. Osisko with 7 million ozs is trading at about $3.60.
Comment by
Retiredgeo on Feb 01, 2023 6:02am
Welcome to the NFG forum stick2. It has lots of trolls. They will be going after you soon enough. I ignore them. Others choose to fight with them.