Northern Freegold Resources Ltd. V.NFR

LOM report on NFR

[mooneyes]

Tuesday, January 08, 2013

Northern Freegold Resources Ltd (NFR-TSXV) 1,2,3	Speculative BUY – Target:  $1.44
	January 7, 2013/12 closing price:  $0.11
Michael Fowler, M.Sc, MBA	416-964-4440
Western Copper’s Feasibility Study Implications For Northern Freegold Project Economics – Positive: Western Copper and Gold (WRN-TSX—not covered) tabled a very positive definitive feasibility study on its Casino project, Yukon. The project is located about 70 kilometres to the north west of Northern Freegold’s Nucleus deposit. The Casino project consists of a large open pittable copper, gold and molybdenum deposit, similar to that of Northern Freegold. Western Copper’s feasibility study had the following highlights: Initial capital investment -$2.46 billion, 2) Payback period- 3 years, 3) NPV $1.83 billion, 4) IRR 20.1%, 4) Mine Life 22 years, 5) 1.12 billion tones of reserve. The feasibility was based on the following metal prices- gold $1400 per ounce, copper $3.00 per lb, molybdenum $14.00 and an exchange rate of $0.95 to US$1.00. The reason that this feasibility study is positive for Northern Freegold is that: a) the Nucleus/Revenue projects are already connected by road. Western Copper will have to build a road, which will in fact add-on to the Freegold access road, b) Northern Freegold metal grades are more favourable than Western Copper’s, c) Northern Freegold metal recoveries appear better, d) Northern Freegold may connect its operation to the power grid, potentially being more economic than Western Copper’s LNG proposal. These advantages could translate into better project economics for Northern Freegold. Northern Freegold will table a PEA during this quarter. We continue to rate the company a Speculative Buy with a $1.44 per share target price based on comparable and fundamental valuations .The company’s shares are trading at a meager $2.7 per equivalent resource ounce of gold. This compares to the $30 per ounce figure in other deposits.

 

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