The stars are aligning on NES. Gold is on its way up, the junior market is getting its legs and Newstrike is charging ahead with 4 drills turning on the Ana Paula project as we speak.
The new discovery in the South West and the continued de risking of the project have received little recognition in the market. The share price is essentially where it was at the end of August (with several excellent buying opportunities in between). That in itself is a testament to the importance and magnitude of the discoveries since many other stocks are down significantly over the same period. We feel that is about to change. Newstrike has added George Brack to the board, he was previously an advisor along with John Morganti, who remains as advisor.
Mr. Brack is a mining industry veteran with extensive experience in the areas of investment banking and corporate development. Most recently Mr. Brack acted as the Managing Director and Industry Head, Mining Group, of Scotia Capital where he led a team responsible for the identification, evaluation and execution of strategic mergers and acquisitions, as well as the provision of equity financing.
The market has begun to notice Newstrike of late with over $20,000,000 in buying coming into the market in the last 30 days. The analyst site tour in early January went well with coverage beginning from Cormark and Desjardins. Cormark coincidently has been the largest buyer of late with over 8.2 million dollars in the last 30 days. The institutional buying is beginning. We feel there have been many eyes on NES. With continuing excellent results and consistently moving the project forward with the purchase of lands adjacent to AP and the initial 43 101 pending the more astute institutions are coming into the market. We feel the trend will continue with a re adjustment of share price upward to reflect the significant milestones achieved in the last 4 months.
We can easily compare Newstrike with Torex and see the comparative undervaluation of NES relative to TXG. Torex is on its way to updating their current ounce count to to 5 million ounces of gold. We have confidence that the Newstrike deposits will outweigh 5 million ounces within the current year with an initial 43 101 coming in between 3 and 5 million ounces. Given the market cap of TXG we feel NES should be closer to $8.50, and feel confident the market will agree once the full extent of AP is realized.
Mineralization has been found in every hole drilled to date. This is a credit to the geological team we have working at AP, with constant modeling and evaluation of every hole, sample, and road cut they are able to determine the optimum drill locations to move the project forward. The mineralization has now been shown to exist over an area of 1Km x 2Km with a high grade Breccia Zone measuring 250x150x250 meters deep. The breccia will provide an excellent high grade starter pit with mineralization from surface to the breccia body. This will give the project excellent economics and will shorten payback significantly to the prospective buyers of the property.
Technically the stock has just completed a bullish continuation diamond within a very wide ascending channel. The current price target based on this trend is 4.20 to 4.60. Almost every other technical tool is calling NES a BUY.
The market is playing catch up with NES and we feel that within a very short period of time the share price will catch up with the fundamental value the company has demonstrated.
We believe the step out discovery to the SW will prove to be at minimum a typical GGB deposit (that so far have averaged 3+ million ounces) and hopefully much more if they are again blessed with a mineralized breccia!
We maintain our overweight position in NES and expect it to outperform the market and its peers!
Disclosure: I am long OTCPK:NWSKF.