I remain bullishSince I joined this board two years ago, one constant has when things are perceived as going wrong, mgmt is incompetent, corrupt and self serving. Actually, I like it when investors complain as it usually presents a good investment opportunity. It has worked tremendously well for me with NSU as I kept buying shares all the way down to $1.88 (and selling 700 put contracts - eqivalent to 70k shares - along the way at a $2.50 price. Come 9/21 and my profits will be $30k, with no cash outlay, from the puts alone.)
I'm not that concerned with the Q2 numbers. Anyone involved in mining knows that the ore body doesn't necessarily perform to expectations. What's important is the trend and the mgmt team did turn around Bisha, and the expectation remains for meeting the full year's guidance, with mine life extended to 2022.
Now the big complaint is that the company isn't selling itself fast enough. If you look at LUN's rationale for their offer, it is that NSU doesn't have the cash to finance the project. As the conference call made clear today, the CFO noted that current cash and cash flow, debt financing and strategic partner funding will give them the necessary money. Why set an artificial deadline by saying they are putting the company up for sell? It creates expectations to do something quickly. Better, as they've done is let LUN know that they can do the project without them, giving them the message that C$4.75 is a joke. Give us a serious number and we can talk.
What I found interesting was that the company has opened up its data room to numerous parties. Yes, potential strategic partners, but Kukielski noted they could also be potential acquirers.
People keep complaining that NSU needs to move faster but time continues to work in the company's favor. The UZ is moving along nicely, with work begun on the decline and necessary land being gradually acquired; the LZ is becoming better defined (with a significant ore body:) and areas around Timok are being found with strong potential. (Yes, ZN and CU prices have fallen in recent months - thanks to DJT - but that's beyond NSU's control and the long term prospects remain quite favorable.)
People also complain that NSU ignored LUN's early July sounding of a cash/stock offer of C$5. Based on today's exchange rate, that equates to $3.83 or only 12 cents more than today's price (and today's closing price is 8 cents more than LUN's current all cash C$4.75). Even had NSU agreed to C$5, closing would likely take 1-2 months, during which time the share price would probably have a 3-5% (minimum) discount. Bottom line, if you think LUN's offers are being ignored, sell your shares. You're geting what you'd get (or more) than what LUN is offering. Plus, there is no indication that LUN is willing to increase their offer.
If you're a strategic with access to the data room, and if you like what you see, why wouldn't you make an offer to buy the company outright? Do you think mgmt and the board can limit the options to a strategic partnership. (Yes, I know mgmt can be self serving but they also respond to the board and shareholders. Plus, people move around in the industry continually. Having had success at NSU gives you credibility and options elsewhere.)
Institutional investors own 70-80% of NSU. They'll call the shots. The fact that they haven't dumped shares and the price is excess of C$4.75 tells you that they think a deal will be done at a higher price. Blackrock and others are following things closely and will push hard if Kukielski and team screw up.
Given the potential of Timok (UZ, LZ and surrounding areas) a fair price would be C$7-8, but is highly unlikely. Nevertheless, a C$6 price should be achievable and is likely around the price institutions are looking for. Holding on to NSU for the long term remains - at least to me - an attractive option as I would expect the share price to continue upwards (with a potential initial drop if LUN disappears).
But, again, if you don't believe in mgmt or their ability to get this, then sell. I respect that. Plus, you don't have to waste anymore time complaining on the board.
In my case, I've reduced my position 30% over the past 3-4 months but want to see how things play out before selling further. C$6 equates to $4.59, or $0.78 more than today's close.