July 14, 2011
– Comments (13)
If I had to limit myself to just one gold stock, after yesterday it would have to be this one:
This is stupedous for those of us that bought in months ago. I've been sitting on this egg since January, not expecting to feel a wiggle until December.
Because of your article AUQ is going to get its feeling hurt, Chris. You had better send them some flowers and a few words of encouragement. :)
Please excuse my investing ignorance.Is Primero the greatest GOLD stock ?
Northgate is acquiring Primero, so Northgate is the greatest gold stock.
There are no bad questions here. :)
Sitting on Northgate for a while now and just bought Primero on your recent rec! Yea, and YEA!
...and now onto a different topic (cross posted on your July 5th Blog Post). CPFXF has dropped even with what reads as a nice update on resources and an increase in metals prices.Yes a more conservative take on the resources, yet still positive.
I went back and looked at many of the various comments on CPFXF from you and many of your faithful readers including kdakota630 and Gonzhouse.
I am still well in positive territory given a devout following of your work (Thank you! Thank you!), but am I missing something in the update that would warrant such a sell off?
Can anyone provide comment on the update?
Because of trading rules, I am personally unable to provide comment at this time. Perhaps another Fool might care to chime in?
Sinch - I posted this on your previous blog but I'm copying it here in case you don't see it:
Are you familiar with Prophecy Resources (PRPCF)? They recently spun off their metals into Prophecy Platinum (PNIKD) and they are looking at pretty big (indicated and inferred) numbers at their Wellgreen property. Needless to say, the have gone from about $.60 per share two days ago to just over $2 per share today.
Not to detract us from the topic at hand, which is the spectaular move by NXG to aquire Primero, but the link you sent seems to carry good news for Copper Fox. Addmitedly, I'd have to go back to other press releases to compare, but there aren't big undiscovered copper mines out there anymore, so Copper Fox is the next big thing. I'd normally think this is due to spot prices, but cpper is up today whiel copper fox isn't.....can't wait to ehar abtou this oen in the future.
On to the real topic, I have looked through several SEDAR filings on Primero trying to determine if they have a buy-out clause with SLW, assuming that if they do, so would Northgate. Not finding any contract info there, I did come across some interesting filings, in particular a short form prospectus from June of 2010, but I still can't find the answer. SLW has a killer deal with Primero, now Northgate, and I keep thinking that the ability to pay of SLW and have 100% rights to the metal production would allow Northgate to prosper that much more. Do you think Northgate woudl provide contract info if the question was emailed to their investor relations dept.? Am I barking up the wrong tree?
In all honesty, NXG has been on my radar since earlier this year or late last night, but I never acted on it becuase I thought it better to wait to see what happens next year with production at the Y-D mine. I was all set to buy BRD today, but when I read the press release last night and re-read it today, I put money down on NXG this morning. Then I read your article and have been quite chippy since. So kudos to those who ventured eariler, but regardless this is going to be a fantastic ride!
1000 thanks Sinch for your effort, insight, and patience with us !
I'm with you guys, the Copper Fox press release sounded like positive news to me. The only thing I was disappointed in was this:
AMEC determined that the silver should not be reported as a part of the mineral resource estimate due to data quality issues which preclude the classification of Measured and Indicated resources including silver. The silver grades within the Schaft Creek deposit range between 1 g/t and 2 g/t.
Still, that doesn't sound to me like either good news or bad. I certainly wouldn't think it would cause the price to drop the way that it did. It's altogether possible that I missed something.
As for the gold stocks mentioned, I own AuRico, and had my eye on Primero and Brigus, hadn't considered Northgate. Now, as Northgate has acquired Primero, it's also replaces Primero on my list of stocks I plan to acquire.
Everyone seems to want royalty streams to get bought back, but you can't have it both ways. The San Dimas stream was one of the founding contracts for Silver Wheaton when it was still a GG subsidiary, and the stream allowed GG to renovate and expand operations at the mine without incurring debt. I don't think the streams can be bought back, but I will double check next time I speak to SLW mgt. I would not contact NXG mgt about the matter, as they are not likely to be well versed on such a detail this early in the proposed merger process.
If it pains you to think of so much San Dimas silver going to SLW, then pair some SLW shares with your NXG. It's that simple, guys. SLW didn't acquire these streams just to unwind them as soon as silver ran higher. These contracts are here to stay, and I encourage Fools to just let the topic go. :)
"If it pains you to think of so much San Dimas silver going to SLW, then pair some SLW shares with your NXG"
I was thinking that same thing, yet am limited on funds at the moment, hence left only thinking about the act. The inquiry was part wishful thinking, part academic excercise. I never thought asking the companies directly would help answer the question, but I'm still learning so I thought I'd ask here. And maybe its part greed as well, greed to want NXG to get as much profit as possible....
In any case, its indicative of how well thought out SLW's purchases are. That is an amazing deal they scored back when silver prices were soooo low. Then again, NXG also made a agreat aqcuisition and will profit from it handsomely!
I wasn't so bummed that they didn't report silver grades as its not their main focus and the info will bring with it a sweet surprise no one is expecting!
Thanks for sharing your wealth of knowledge with us. I'm glad I stumbled upon your TMF blog.
I bought a few Primero shares on your recommendation (thanks again) on the Toronto exchange just last week before this deal was announced. My question now is what is the best way to play it going forward? Should I hang onto the Primero shares now that the deal is finalized? Northgate was up about 6% today to $3.22 in Toronto, while Primero traded down a little over 2% to $4.33. Since the deal is 1.5 Northgate to 1 Primero, wouldn't that imply those Primero shares are worth $4.83 at Northgate's current valuation? Is this a good opportunity to pick up some more Primero shares because of this discrepancy? Or should I be looking toward acquiring some Northgate shares?
Thanks for your help.
mjmac, very astute. I had the same reaction to today's price action. Definitely an arbitrage opportunity with Primero. Anytime Primero trades for less than 1.5X Northgate, as you point out, Primero is the better choice.
With NXG continuing to hold at 3.31 and Primero dropping today the ratio becomes even more mispriced. Primero should be valued around $4.95, not the current $4.36.
We will see how this shakes out in September when Primero's stock holder's (we) vote.