NFG vs. SGD Lots of noise re. SGD in recent weeks.
Here’s my take to date:
Current Market Caps (source: TMX Money):
SGD: 393M
NFG: 793M
Zones:
SGD has hit one very impressive zone so far (Valley discovery at the Rogue package).
The only other zone they’ve done any real work on is Jupiter (Einarson package) and the results are hardly anything to get excited about to date in my view.
All of SGD’s other scattered land packages (reminds me of NFLD) are anyone’s guess. The only thing we know so far is it will cost a small fortune to drill and assay these remote, disjointed land areas without knowing what if anything impressive will turn up. As I’ve stated in the past re. NFLD and SIC, the more disjointed claims packages you stake, the more expensive it gets to drill and assay all these areas, and if you come up empty at any given package, that’s money down the drain.
Conversely, NFG has hit monster cores in three different zones (Keats, Lotto, Golden Joint). Further, the enormous, contiguous, Queensway land package in an excellent, accessible location will be much easier to undertake further exploration as NFG works their way south at Queensway than what SGD will have to deal with as they hop-scotch around various land packages in isolated areas of Eastern Yukon with little infrastructure to speak of.
Share Structure:
Currently,
NFG appears to be subject to a lot less potential share dilution than
SGD.
Share price movement:
SGD currently reeks of speculators day-trading the shares:
Monday September 12: up over 26% on much higher than normal volume and no news
Tuesday September 13: down over 10% also on much higher than normal volume and no news
Of course this is insignificant in the long run – the company will eventually be appropriately valued based on numerous applicable factors, but I wouldn’t mistake a big move up or down on no news to be indicative of where the share price should be (or will be in the following day or two or three….).
Potential Takeout:
Hard to see a takeout of either of these companies anytime in the near future by a large North American-based producer:
AEM: Recently completed their merger with KL, so will likely focus on creating synergies among the now much larger combined portfolio of assets and advancing these mines / projects.
NGT: Large global portfolio of both producing mines and projects yet to be built, such as the Coffee Project which
which just received approval to proceed by the Federal and Yukon governments in March.
K: Purchased GBR and will likely be focusing large amounts of money into further exploratory drilling activity along with a ramp up to feasibility and environmental / permitting endeavours followed by at least one mine build over the next number of years.
YRI: Recently taken out by Gold Fields.
I suppose it’s possible than a large foreign-based producer like Newcrest (Australia), Anglogold Ashanti (South Africa), or the aforementioned Gold Fields (South Africa) may kick the tires on NFG and/or SGD at some point in the future, but of the two, SGD has the longer slog to put together a large portfolio of assay results to put in the window.
Regardless, anyone think SGD is worth approximately half of what NFG is worth as things stand today given the above?
Of course, stories of these two companies have yet to be written, and anything can happen in the high risk, unpredictable world of junior gold exploration-stage companies, but, in my opinion, SGD is the higher-risk company.
As always, time will tell…..