RE:RE:NXE Overvalued BMO picked FCU as its number 1 in the sector. That's coming from a large & well respected firm.
Gotta believe in BMO!! Just a matter of time I think.
bluesteele wrote: The valuation of NXE and FCU's deposits are actually quite close. It seems that the market is interpreting that NXE's inferred resource to be holding up with the current infill drilling of the high grade A2 subcore and the other zones and therefore is comfortable with the higher price ascribed.
Let's look at the break down.
FCU Triple R Deposit : (105,000,000 million pounds) * ($2.90 )per pound = $304.5 million, today's current market cap.
NXE's Arrow Deposit : (202,000,000 million pounds) * ($3.23) per pound = $652 million, today's current market cap.
Conclusion:
The market is giving NXE's deposit a slight premium of 0.33 cents compared to FCU which is likely accounted for by the following reasons:
1. The maiden resource was outdated the day it was published and the market knows this.
2. The ore body is not under a lake and will be permitted quickly unlike FCU's which will be years behind Arrow, if it does get done at all considering the environmental constraints.
3. The management team is highly respected and is aggressively moving the project forward unlike FCU's management team
4. NXE continues to put out impressive drill results including exploration stepouts that demonstrate that the deposit is expanding and has along way to go before it is known how massive Arrow will be.
5. The ore body is expanding with the discovery of the 2 new high grade zones recently.
6. The share price will break a new all time when a new 300 million pound resource estimate for Arrow is tabled which can be based on the current average valuation of $3.07/ lb between the two deposits.
7. Arrow is in the sights of the majors for a take out.
Now here's the big caveat that seems to make things quite interesting.
If as the analysts as well as the market think FCU's Triple R deposit is currently around 140 - 150 million pounds widely speculated here and confirmed by analysts such as TD, and NXE's Arrow upcoming resource estimate comes in around 300 million pounds, also widely speculated then the numbers are quite foretelling.
FCU Triple R Deposit: 140,000,000 million pounds * $2.17/ lb = $304,000,000 which is equal to today's current market cap.
NXE Arrow Deposit: 300,000,000 million pounds * 2.173 / lb = $652,000,000 which is equal to today's market cap.
Now isn't this interesting?
The market valuation for both deposits today is exactly the same ($2.17 / lb) based on "their expected" up coming resource estimates.
And there you have it.....
Right now FCU is not drilling and is doing nothing to move the needle or for that matter their project forward. On the other hand NXE's Leigh Curyer and geological team have been very aggressive so I would expect more drill results and potential momentum driven news in the future that will push the stock to new all time highs. It's clear why NXE's Arrow project is favored by the market and why it will continue to trade a large premium in the future to FCU based on the premise that their current valuation ($2.17/Lbs) is exactly the same based on their expected new resource estimates in the future.