Three Years Worth of Stock Market Gains in a Single Day!
WOW. Great day today, April 7th, with the breaking Gold sector news heard round the world… NuLegacy Gold (NUG) announced that OceanaGold Corp, a $2.4 billion mid-tier producer, is acquiring 19.9% of the Company. The market seemed to like the news, sending the share price to 22c, PLUS 46.67% on the day. Shares had not seen 22c since the second week of June, 2012. Yet, even at today’s close, NuLegacy’s market cap is just US$33.5 million, (before OceanaGold’s welcomed investment). What’s the bottom Line here? There may not be a single takeaway except to say that there’s room for the stock to keep running. Why?
Look no further then what has happened with Gold Standard Ventures (GSV) after investments by both OceanaGold (twice, at $0.65 & $1.00) and Goldcorp. GSV’s stock is up 177% in the past six months, with a market cap that’s still 6x NUG’s. This year, Kinross Gold acquired Bald Mountain and the 5% stake in Round Mountain it didn’t already own, both of those assets, in Nevada. And let’s not forget Agnico Eagle’s 100% owned PQX & Summit projects, and its 51% interest in the West Pequop JV, (49% Newmont).
With all of these companies active in Nevada, and Waterton Global as well, it’s more clear then ever that key players want low-risk ounces from one of single best jurisdictions in the world. Glance back at the who’s who of Nevada gold companies, are the stars & planets aligning? How many companies are kicking themselves for not acting on the obvious strategic importance, and valuable call option, on long-term gold prices embedded in Iceberg? All of this, with gold sitting at $1,240/oz. I wonder where NUG shares will be trading when gold retakes $1,400/oz.
If one thinks about it, this is pretty much what was supposed to happen, it’s just happening roughly 30 months later than expected. Even still, the rationales behind these strategic moves makes perfect sense. The battle lines have been drawn, each passing day there are fewer meaningful gold assets to gain control of. NuLegacy is in the driver’s seat, with by far the lowest market cap and a very large, strategic footprint. A doubling in NuLegacy’s market cap would have negligible impact on the aspirations of potentially interested parties.
What excites me most is that the Company now has 3 years of balance sheet liquidity to aggressively explore (if warranted) & carefully investigate additional corporate initiatives, of which there are many. Negotiating from a position of strength, in (eventually) a rising gold price environment, could lead to tremendous opportunities to maximize shareholder value. In the meantime, dozens of very promising drill targets are back in play. Could there be another elephant, another Iceberg? Few technical teams are better suited to find one. Stay tuned.
NuLegacy’s March 2016 Corporate Presentation
For a recent discussion of NuLegacy and Gold Standard Ventures, please visit Caesars Report
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