The one mining and exploration stock I would buy today
November 21st, 2008Northern Dynasty continues to be my favorite mining stock to own. I now own the largest ever personal position in it. Below is the text from a report issued by Raymond James regarding the drill results announced yesterday. I truly believe their target price of $13 would be where it would be trading now if not for the crash in the stock market. Those with a one year+ timeframe have an excellent chance of seeing that target hit IMHO.
While I’m not engaged by NDM I do work for other companies that share the same management of NDM
It trades on the Amex symbol NAK and the Toronto stock Exchange under NDM
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Subject: MEYER: Northern Dynasty (STRONG BUY) Pebble Drill Results; Progress in the Real World
Northern Dynasty Minerals Ltd. NDM-TSX | NAK-AMEX
RATING STRONG BUY 1
Target Price (6-12 mths) (C$) 13.00
Closing Price (C$) 2.51
Total Return to Target 418%
Event
Northern Dynasty released positive results from a combination of step-out and infill drill holes on the Pebble East deposit before market open yesterday.
Action
We recommend buying Northern Dynasty shares. In our opinion, Pebble is a world class Cu-Au-Mo project, backed by a financially strong partner.
Analysis
- In our view, the drill results show good grade continuity and indicate the deposit’s potential for resource expansion. There are currently six drill rigs on site. The main objective of the 2008 drill program is to upgrade a large portion of the Pebble East deposit to the Indicated category from the Inferred category. The data is required in order to complete a new resource estimate before year-end and to finalize a pre-feasibility study in the second-half of 2009.
- Highlights from the 18 drill holes assayed: hole 8405 intersected 2,460 feet grading 1.20%CuEq (0.78% Cu, 0.25 g/t Au, 0.046% Mo); hole 8410 intersected 1,525 feet grading 1.21%CuEq (0.80% Cu, 0.44 g/t Au, and 0.023% Mo); hole 8412 intersected 1,301 feet grading 1.76%/CuEq (1.11% Cu, 0.69 g/t Au, and 0.038% Mo); hole 8413 intersected 2,469 feet grading 1.15%CuEq (0.80% Cu, 0.20 g/t Au, and 0.040% Mo); hole 8414 intersected 1,224 feet grading 1.27%CuEq (0.60% Cu, 0.80 g/t Au, and 0.027% Mo); hole 8515 intersected 2009 feet grading 1.15%CuEq (0.64% Cu,
0.54 g/t Au and 0.029% Mo).
- According to management, the Pebble project team is on track to finalize a pre-feasibility study in the latter half of 2009 and commence project permitting in early 2010.
Valuation
Northern Dynasty shares trade at a P/NAV of 0.08 times versus its peer group at 0.19 times. Our target price is derived from a risk and liquidity adjusted historic P/NAV multiple of 0.40x.
Tom Meyer, P. Eng., CFA
Base Metals & Mining Analyst
Raymond James Ltd.
Scotia Plaza - Suite 5300
40 King St. West, P.O. Box 415
Toronto, Ontario M5H 3Y2
Phone: 416 777 4912
Fax: 416 777 4933
November 21st, 2008 at 3:59 pm
Would have liked to have seen Raymond James keep their price target at their initial price target of approx. $25.00 that was set while NAK made its run to over $13.00 a while back. I don’t really understand why the target price gets cut in 1/2 just because the market has taken the current market price down under $2.50. Anyway…$13.00 would give me $1M profit, so it works for me…bring it on!
November 21st, 2008 at 4:04 pm
Unfortunately, a lot of people bought shares in the $13 handle when Peter was looking for a buyout in the $25 range.
Those folks (and I have some of my shares at that price too) need $13 just to break even. Likely as not, they will be selling (or have sold) for tax loss this year.
Although, unless a person took profits early in the year, or have profits from shorting the market, why sell for a loss when Uncle Hussein only allows a measly $3000 loss and requiring the rest to be carried forward - forever if necessary.
November 21st, 2008 at 5:34 pm
Well nice rally for gold…so will it hold???
November 21st, 2008 at 6:29 pm
Yes, I have taken a small position on NDM @ market price today. Thanks.