This sunny winter morning has my spirits high as I peruse the mountains above and the Junior and Exploration stocks below. As I watch Gold hit near its all time high near $930 and see Silver slither up to $17.55 I am smiling all the way to the bank...or will be.
In the last great gold rush while gold was strolling up to its launch pad the Junior and Exploration stocks lagged. While smart money accumulated these shares the precious metals kept marching on up. One day a couple of years later the shares awoke to multiples of their lows and kept going, surpassing the gains of Gold and Silver and not looking back until Gold had dropped almost 50%. Quite simply, in bull markets the large companies go first then the juniors then the exploration stocks finally catch up and surpass them all. Since the bull began in 2000 Gold has gone up over 260% while the HUI index of large Gold companies has gone up over 1,200%, this kind of leverage will look small in comparison to the right Junior and Exploration stocks.
Today I am going to show you one of my favourite companies....but to see the rest you will have to visit my new and still under construction website. Now I am NOT saying this is a rocket shot tomorrow, although it may be, but I am saying if you can use this time wisely and accumulate as many shares as possible you will be rewarded beyond your richest dreams. Always invest with diversification though and like Mr. Warren Buffet says, put all your eggs in one basket and watch it closely. That’s why I am fully invested in the ongoing Gold and Silver bull market. My favourite quote is from a man some may know and exemplifies the simple strategy I employ when I know I am right, as in now.
The market does not beat them. They beat themselves, because though they have brains they cannot sit tight. --Jesse Livermore
So please if you are investing in this area study history, not daily gyrations keep the big picture in sight and enjoy the ride. But how will you know when to sell? Leave that up to me; just follow my FREE weekly newsletter.
Today’s company is Northern Dynasty, NDM on the TSX and NAK on AMEX. I have my shares on the TSX since it is a currency play at the same time, but that’s a different story all together, but one of the main reasons why Gold and Silver are in such a bull market.
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Technically it looks strong and every time the price has dipped below the 50 DMA has turned out to be a great buying opportunity. I expect it to rise to $14 to $15 minimum in the short term and much higher once a takeover offer is issued.
Fundamentally, the most pressing concern is management. NDM’s team has a proven track record and is a part of the Hunter Dickenson Company which has a huge amount of resources and experience to draw upon. I have complete faith in them and could hardly wish for a better team working on my side.
Second is property. The U.S. Geological Service marks this area as one of the most mineralized areas in the world. It’s flat easily accessible and near major oil and gas production. Although it does have some opposition from an NGO, a deposit of this size and quality cannot be ignored and will be put into production.
Third, is major shareholders. They have had much interest from Rio Tinto others unnamed and this past summer Anglo American has purchased 50% of the project and terms require Anglo to fund everything through development up to $1.425 Billion. Even better is that Mitsubishi Corporation has increased its stake this Friday past to 9.1%. These are big players and they want big deposits. There are other major players involved in exploration in the area as well but I won’t go into that here. And the most important is the fact that management own over 13% of the shares which gives them a huge say in any potential deals coming forward.
Why this stock will return 200% to 300%.
It will happen overnight and you won’t have a chance to get in as you will wake up to a takeover offer and it will be at a huge premium to its price today. The stock will gap up and today’s trading range will hardly be visible on the chart.
So far this is the second largest Copper Molybdenum Gold deposit in the world and is still wide open for expansion. Just today they announced drill results from their latest drill campaign. The holes were over 4000 feet deep. Imagine the time it would take to drill that hole, let alone have the rock analysed. Well the results finally came out today and they include and all compare to 2449 feet of 1.19% Copper equivalents, this is phenomenal and hard to compare to ANY other drill results...ever. By the time this deposit is fully delineated I expect it to be the largest Copper Molybdenum Gold deposit in the world by a long shot. Ok a hint, the company who controls the largest deposit in the world is also exploring in a joint venture near NDM’s Pebble deposit.
As it is it’s a great company with a great team and super interest by major international companies. Here are some calculations from a recent Northern Dynasty Minerals presentation and does not include its drill results from today.
• Market pays on average $0.05/lb for Copper resource. NDM has 67 Billion lbs. = $3.35 Billion.
• Market pays >$80/oz. Gold resource. NDM has 82 million oz. = $6.56 Billion.
Today’s results will increase these numbers substantially. Not even including Molybdenum which should account for around 11% annual revenue, NDM should have a market cap of at least $9.91 billion. Taking 50% away for Anglo American’s stake leaves us with a market cap of $4.955 billion. Today the stock is trading around $10.84 on the TSX and AMEX since the USD and CDN are roughly equal. This gives Northern Dynasty a market cap today of $979 million. So even to trade up to an average company’s valuation this stock would have to increase by over 400%. These are the numbers fortunes made of. I could go on and on but there are more company gems to discover. So do your due diligence and feel free to check out my new and still under construction but working website. You can also contact me through it. Have a great day and enjoy the ride!
Warren Bevan,
www.preiousmetalstockreview.com.