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.