Northgate Minerals Corp (USA) (NXG)

TheGarcipian (99.51) Submitted: 6/26/07 5:58 AM : Start Price: $2.94 NXG Score: -37.56

Chasing opportunities in North and South America, Northgate has a 100% interest in the Kemess South open pit mine (located in north-central British Columbia) and its associated infrastructure and mineral rights. It has managed its company resources extremely well: in lock-step since 2002 (and perhaps earlier), it has increased cash reserves from $4M to $262M, steadily reduced debt from $77M down to $4.4M (leaving them with a tiny D/E ratio of only 1%), increased its other non-debt liabilities from $10M to $28M (which is a good thing, demonstrating their ability to hold off a creditor with delayed payment plans), and increased overall shareholder equity from $129M to $448M. Their revenue has steadily increased from $110M in 2002 to $411M in 2006, a quadrupling in as many years. Excellent. And they've done it while reducing their debt. Net income has soared from a loss of $34.5M to a profit of $98.2M. Consequently, their EPS has risen from a net loss of $0.28/shr to a gain of $0.45/shr. All excellent numbers!

This company is doing all the right things in the right order, and the results are clearly paying off. This stock should continue to do well for the next 3 years or more. Currently, however, the stock price has languished since May 2006, bouncing between $3 and $4, but I don't think that will last for much longer. With a forward P/E of only 7.2 and the demand for gold & copper rising, the prospects for more money flowing into Northgate's coffers remains very good, even if the discovery of more mineral deposits is delayed.

SOURCEs: TD Ameritrade and Yahoo! Finance.

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