Discussion in 'Stocks' started by Gwhiz, May 24, 2006.
why is nxg's p/e so low?
I am long NXG, so there is my disclosure.
PE is low on NXG, I and many others think, because the mining life past 2009 is somewhat questionable.
Questionable being *currently* there isn't much, although existing production at KS can be extended per the CEO..
Anyway my personal opinion is, this is the most undervalued play in the miners. Hell, quite a few of these miners arn't making at money at these levels, which doesn't bode well for any future corrections. NXG is, and quite a bit.
They have a mine which they are trying to get permitted KN.. It's slow, but longs are still positive on this one.
Also NXG is now trying to pick up Azurion, which would also extend life past 2009.
I think once the street has faith NXG will exist past 2009, it will be rewarded with a PE similar to other miners in the sector.
This is my largest miner holding, I am a believer, so take my advice at that
Check out their website
More specific the presentations from last Qs presentation. You will see things like cash flow and other indicators they are #1 or very close in relation to their competition.
Finally, I like the play mainly because of management. I am a believer of the mgmt of NXG. They have turned this company very quickly, and have the cash in the bank to make future acquisitions and other such activities to make the share price attractive.
At 2.32 copper they have a negative cost of gold production at their mine.
If you check out the yahoo msg boards search for susyare, she has some incredibly valueable insight into NXG.
Not sure what a short term play it in in this current trading env.. but I like it and will hold it long term
Its trading at about 7 times forward PE or so.
Due your DD, and I think you will want to purchase some
VANCOUVER, BRITISH COLUMBIA--(MARKET WIRE)--May 31, 2006 -- Northgate Minerals Corporation (TSX:NGX.TO - News)(AMEX:NXG - News) today announced that during the month of May 2006, it continued to reduce the size of its gold hedge book by repurchasing 24,000 ounces of its gold forward sales position at a cost of approximately US$8.34 million. The cost of closing out these forward contracts in advance of their original settlement dates will be deferred and amortized over the period that the contracts were originally scheduled to settle (June 2006 - September 2006). Northgate now has only 90,000 ounces of gold forward sales contracts remaining at a forward price of $307 per ounce and this position represents only 2.5% of the total proven and probable reserves within the Kemess camp.
Copper is unhedged, and as you can see the gold hedge is very slight. Also, with the closing, if gold gets back in rally mode, it will bode even better.
They have also had their earnings revisions revised upwards 3 times this quarter.
susayre not susyare as previously stated.
Search for her posts on the yahoo msg board.
One more thing. They also recently posted positive drilling from a recent acquired mine YD.
If KD is approved, and the Azurion acquisition goes through, combined with the YD news I feel this stock should be good to go.
You can search around the net, there has been many recommendations on it.
Tobin Smith issued a research report on it a few weeks back, I think he stated anything in the 3.25 range was a massive buy.
Q2 should be a great quarter, Q3 will have larger production, Q4 will have the largest. The company should continue to blowout earnings, with copper/gold at these levels.
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