Taking the long road with NorontI really appreciate the enthusiasm many of you display here regarding Noront. It's an exciting project up there in the Ring of Fire. I was just in this stock, but was stopped out in recent days due to the sudden price drop. I hope to get back in, but I am reassessing my timing to do that and will likely wait much longer to do so.
There's a few things you all need to be aware of regarding the elephant in the room . . . the road.
First off, the hiring of the engineering firm, AECON, by Marten Falls First Nation is great, as it is part of the process of fulfilling the environmental assessment for the road. Here's the bad news . . . the goverment can't declare any road until this process is complete. It won't be complete, as both Marten Falls and Noront have recenty and publicly stated, until mid-late 2020 at the earliest.
Unlike the promise made by former premier Kathleen Wynne that there would be shovels in the ground for the road in 2019, a promise that was made in August of 2017, that's now thrown out the window. It takes about two years for the EA to be finished, including all public input and so forth, before the minister can sign off on it, and only then can the government give the OK for any road construction plans. Her promise was made assuming that the EA process would begin almost immediately, but it clearly did not. And since it just started this year, mid-late 2020 is now the target, and only if all goes smoothly with the EA process.
Here's the other caveat in the room — Doug Ford's inner political animal wanting to use any such announcement to his electoral advantage, and therefore saving it until shortly before the next election, meaning 2021 or early 2022. Think about it, if it's that close to the next election, why would he announce a road in 2020 if he could just wait an extra year or so and do it when it will be more fresh in people's minds going into the next election? It's to his advantage to hold off on it until it gives him maximum political leverage.
Meanwhile, any announcement of where they will build the smelter isn't going to move the stock in any permanent way, as it's just a decision to do something down the road, it's not THE road, which unlocks everything. They can't use any smelter until they can build the road to build the mine to send material to the smelter. It's a decision that any company has total control over to make with no real surprise. It's not a road that can only be delivered and paid for by non-company entities. They have no control over it, hence the surprise factor.
And if we have to wait until 2020 at the earliest for a road announcement, who knows where the stock price will be at that point. Judging by where it is now, I'm not holding my hopes up too much for a starting point on the stock prior to the road announcement. Let's hope it doesn't crash too much more before it gets a snap-back on road news — once it finally comes.
It will be interesting to see the effect on the stock price of the continued issuance of more shares over the next two years to keep their lights on and pay their debts, as that usually cracks stock prices downwards. Combining that with the current stock market situation that has been decimating the TSX Venture index to near its 2016 lows, it could get even worse before it gets better.
Don't mean to sound like a downer, but I want people to be informed investors, especially if you want to go long, as this is shaping up to be a very long road, pardon the pun. I hope Noront succeeds in the end, I really do, but there likely are better opportunities for our money during the next 18-24 months while we wait for that success to transpire.