Subscribe for 12 months with recurring billing - $199

Buy 12 months of subscription time - $199

 

Search Gold Prices
Gold Price
[Most Recent Quotes from www.kitco.com]
Our RSS Feed

Gold Updates by Mail

Enter your email address:

Follow Us on Twitter
« Dear Comrades In Golden Arms | Main | Gold remains a Dollar Play »
Sunday
Feb072010

NovaGold Resources, Randgold, Agnico-Eagle and Kinross Gold

NovaGold Logo.JPG


One of our readers wrote and asked us is NovaGold Resources (NG) is undervalued so we took a quick look and compared their performance with that of Randgold Resources Limited (GOLD), Agnico-Eagle Mines Limited (AEM) and Kinross Gold Corporation (KGC).

First up we have to say that we are not on top of NovaGold Resources Incorporated (NG) in terms of knowledge and familiarity so we would appreciate any comments/insights that you may have, if for instance, you are a big fan and know the company well enough to add your two cents worth.

We will start with some comments received from one of readers who met up with NovaGold last week at the Orlando Money Show:

I had a chance to speak with IR for NG last week at the Orlando Money show. I ran their reserves with 160 / 30 / 20 and get a value of gold as B$2.9 compared to a market cap of B$1. Note that:

- These numbers assume no value for 9 B lb of CU and 3.5 B lb of ZN.
- The properties are in Alaska and Canada, with much lower political risk.
- They have deep pocket partners, so I am thinking that financing risk is average or less than average.

- The non Gold metals should bring the cost to produce way down and make them a very very low cost producer.

The 3 to 1 difference would be reasonable to me if this was a higher risk play, but I don’t see it. Am I missing something or is this just under valued?

Comment by BC — February 7, 2010


Our thanks and gratitude go to BC for taking the time to share this information with us it is very much appreciated. This comment was added to the recent article 'What’s a Company’s Gold Worth?'

At first glance it reads well and could be well worth a punt however when we compare NovaGold's performance to other gold producers it appears to be perfoming very well over the short term but not so good over the long term.

The following two charts compare NovaGold with Randgold Resources Limited (GOLD) Agnico-Eagle Mines (AEM) and Kinross Gold (KGC) over a one period and a six year period.

NG Chart 1 year 07 Feb 2010.JPG



NG Chart for 6 years 07 Feb 2010.JPG

Over the last year or so NG has been on a roll and outperformed the other stocks by a long way, however, over the last 6 years or so, NG has lagged behind the other stocks showing very little in the way of price performance. It is perhaps worth noting that Donlin Creek’s gold production, a flagship NovaGold project, has costs pegged at $394 an ounce in the first five years of operation.


This could be a true aberration and a wonderful opportunity to cash in as NovaGold plays catch up but the lack of performance over the longer run is worrisome. There maybe reasons for this that we are just not aware of at the moment, so please feel free to enlighten us.

Conclusion: We might be missing something too and stand to be corrected, but for now its not for us, we would need to do a lot more work to thoroughly understand these inconsistencies and ensure that NG has turned the corner and not just spent its 15 minutes in the sun.

NovaGold Resources Incorporated trades on the AMEX under the symbol of NG, has a market capitalization of $1.03 Billion, a 52 week high of $6.98 and 52 week low of $2.11 with 184.70 million shares outstanding.


All the best if you do decide to go with it.

Got a comment then please add it to this article, all opinions are welcome and appreciated.

For those interested in Options Trading please click here.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.



PrintView Printer Friendly Version

EmailEmail Article to Friend

Reader Comments (3)

Hey check this, article says bottom is in for gold, makes sense:

http://www.wallstreetwindow.com/live-stock-market-tips/?p=87

February 11, 2010 | Unregistered Commentermark

Do you know a man call Matt Van Aardt

February 27, 2010 | Unregistered CommenterJacquelyne Tooes

We dont know him, sorry.

February 27, 2010 | Unregistered CommenterGold Prices

PostPost a New Comment

Enter your information below to add a new comment.

My response is on my own website »
Author Email (optional):
Author URL (optional):
Post:
 
Some HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>