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A1M - AIC MINES LIMITED


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MME and Brett, i also agree that NMC is almost too good to be true.

 

I believe it could be the next Kingsgate in terns of the low-risk profit poetential it offers investors.

 

 

Here are some reasons i like it so much:

 

1. It's a very simple story: a a single, low-cost ($300/oz) gold deposit of half a million ounces, which is shallow and high grade, all proven up according to JORC requirements and able to be extracted in 5 years (no complexity risk)

 

2. It's in Australia - not the Congo or Thailand or the Philippines or somewhere scary. (no sovereign risk)

 

3. Some ex-Normandy boys are the brains behind the project, with Colin Jackson being the biggest brain - - he's very mpressive (low dunderhead risk)

 

4. The capital raising for constructing the mine is complete and the mine construction has now started (low funding risk)

 

5. Barminco will do the mining - I believe they have a good reputation (low mining risk)

 

6. The profit that the project will make - around $125 million - compared with the current share price (market cap $40, which includes $17m cash for mine construction) is quite awesome; they do have to pay a royalty on the gold produced -- I don't know what that is - hopefully it's just a standard government tax and nothing sinister!)(low investment risk);

 

7. There is a good chance that the mining life will extend beyond the 5 years as drilling to date has only been to 300 meters - which apparently is quite shallow; once the mine is built, NMC can continue drilling from the 300 m level (high upside potential)

 

8. Production is totally unhedged (no hedging risk if gold soars; high lack of hedging risk if gold plummets)

 

I believe the biggest reason the share price has struggled is the St Barbara Mine factor. (reputation flaw) SBM owns 55% of the shares in NMC. I don't believe SBM has impressed many people with its performance over the last few years; there are now moves afoot to replace the MD Stephen Millar. If that happens that might be the catalyst to wake up NMC, although it does finally seem to be waking up already.

 

By far the biggest fear in my mind is that SBM will in time exercise executive control over the destiny of NMC's profits - and perhaps squander those profits on dud projects rather than feeding the profits back to shareholders in the form of dividends.

 

At the moment there are 5 members of the NMC board: three ex-normandy guys and two SBM guys. That is a safe ratio. Apparently, the only way SBM can access NMC profits is through dividend payments - I hope that is true!

 

Another dampener on the NMC price is a long history of disappointed Taipan investors. (the high disappointement legacy cost). This Paulsens project was discovered years ago and since then, Resolute, Troy and St Barbara Mines have all fought to gain control. In the end SBM won, but they have sat on the project doing nothing for years.

 

Perhaps people think that will always be the case and that the Paulsens deposit will never get mined.

 

But it is and the first gold pour is due next May.

 

Check it out for yourselves - - Fat Prophets did a recent good write-up on it too.

 

Phone Colin Jackson if you have any questions - - gosh , he is impressive! He used to be General Manager - Corporate of Normandy Mines - - Colin apparently was instumental in coming up with the new affordable mine design, he has done over 30 presentations to varoius groups in an effort to raise funds, he does most of the company's writing -- and he succedded in bringing across some very talented staff from Normandy to work for NMC.

 

From a charting point of view. NMC is rather special. It is one of a tiny handful of gold stocks that didn't have a proper run in the last gold boom so it is still in a sideways consolidation phase -- dating back to 2000!

 

It is just pulling off its bottom now of around 3c - the top of the channel is 9c! That's a 200% gain just to get to the breakout point!

 

It is now 4.2c and seems to have broken out of its rather vicious downtrend.

 

The thind factor going for NMC at the moment, apart from some awesome fundamentals and an intriguing chart, is the sector it's in - gold. Gold is looking really strong at the moment, lifting gold stocks with it. If gold stocks stage a mini-rally, then more people will be scouring the gold stocks looking for undiscovered gems - and NMC fits the bill perfectly.

 

So that's why I'm so excited: the fundamentals, technicals and sector sentiment all stack up. Posting this bullish post will probably jinx things though - so be careful!

 

I'd certainly welcome any negative comments on NMC -- I would hate to miss something vital, because as i said before, at the moment it all sounds too good to be true. There's got to be a catch.

 

Cheers Anne

 

 

 

 

 

 

 

 

 

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Thank you Anne for a very informative post. I'm pretty confident about this one too and despite any short term price movements am inclined to put this one in the bottom drawr for a while. I agree with you about any efforts to remove Stephen Millar-this can only be good for the company and SP.

 

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Hi Anne,

 

Great post

- by your writing style, I would hazard a guess that you are Anne from Sharesguru? If so, I thank you for steering me into doing more research on Straits Resources a year ago. There are similarities in NMC (share price v fundamentals wise) .

Straits had 90 cents per share cash at bank plus mining assets and no debt. The share price was hovering around 50 - 60 cents and continued to do so for ages after I bought. Very frustrating but finally the market saw the light

NMC - After the capital raising and restructure, it looked like the project would finally go ahead and so I did the maths and was looking at approx 10 cents per share profits over 5 years. Bought in with the hope of a little upside. I average 4.9 cents on these and have watched them fall to the recent 3 cent depths (once again frustrating and doesn't make sense) http://www.ShareScene.com/html/emoticons/wacko.gif

Then the INDEPENDENTLY ASSESSED upgrade and we have an outlook even better - project works ARE in progress and as you rightfully pointed out, below 300 mtrs has only been partially evaluated and could be anything. Hopefully patience will pay off again as the recent rise to 4.2 cents still doesn't come anywhere near capturing Nustar's true potential

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Hi Anne - just caught up with the latest on guru - should've read it before asking my 1st question before http://www.ShareScene.com/html/emoticons/blink.gif
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Hi Brett

 

Yes, I am the same Anne!

 

I'm glad SRL worked out well for you.

 

i wasn't so lucky. I bought it too early and lost patience with it so sold for a small loss. Then I bought again when it went up but it lost its gains so I lost again. Then when it finally made its big move I was reluctant to buy as i thought it would pull back again - -but it didn't.

 

Some shares are like that!

 

Fortunately, NMC has got a strong gold price to support it so the strong gold sector sentiment hopefully will keep it moving, now it has started making its move.

 

I only discovered NMC after that latest resource upgrade, so this time my timing was lucky - hopefully. It would have driven me nuts to have bought in at 4.9c jst to watch it tumble to 3c! You must have more patience than me - or less fear! I hate any of my shares showing a loss; somehow the story never sounds so compelling when the share price falls!

 

But I should learn to have more faith in compelling stories. What usually happens is that these 'dead-certs" just sit there doing nothing for ages and then whoosh - the re-rating happens fast and furious and the price doubles in just a few weeks.

 

Hopefully that's what NMC will do. Often it just takes one broking firm to push a stock to trigger interest - and then once other influential people read up on the story they start pushing it to and suddenly everyone's talking about it.

 

Cheers Anne

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Hi Anne,

 

I'm glad you got in on the ground floor on this one - good that the luck gets shared around - I feel a bit guilty after reading your story of misery with SRL

 

One of my flaws with equities used to be lack of patience and with sayings (there seems to be a million of them and many contradict each other) that float around like :

"The market can stay irrational longer than you can stay solvent",

I would sell out of something if it didn't react as I expected straight away. This has cost me a lot of money over time (it's funny how the lessons you learn from the sharemarket are never cheap, but then, the more it costs you the more you remember it!)

 

I timed NMC badly but only by a few months - if you look at how many years the Paulsens project has been in the 'gunna do this, gunna do that' stage then I don't feel as bad as many long suffering shareholders would.

I thought the capital raising & reconstruction at the end of last year (and at a price of 5 cents) would mean I couldn't lose. Unless there is an announcement to come which materially affects things, then I still believe this and any fall in price down to the depths we saw recently will only be seen by myself as another chance to capitilize on others impatience.

 

Good luck and I hope it turns out well for us

 

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Hi Anne, excellant post and basically all the reasons I bought into the stock. If all goes to plan IMO it would have to be the gold stock pick of the year with regards to potential return. I picked up most around 3.2 cents, and plan to hold for the time being. Like all stocks there are risks so other viewing this message PDYOR before buying.
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Hi Anne, you've gone quiet on this one. Activities report out today. Looks like a slight change of plan with the 250,000 per annum single mill/gravity/CIL plant. A good move IMO and hopefully debt financing will be organised to fund this. Be interesting to see what happens next week at the St Barbara Mines meeting!!!??? Could have a positive effect on the SP for NMC. I shall say no more.
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H mme

 

I read the activities report - it was a good clear summary. i do like it when I can understand what I'm reading!

 

What I did notice of bigger interest today was DIO's announcement - - this is based on really rough figures, but their mine sounds so-ooo expensive compared with NMC's.

 

They have a market cap around $35m and yet the most they expect to earn as operating profit is $53m after four years, based on what they said in that announcement. That's terrible, isn't it? NMC is looking at $130 -$140m after 6 years (counting the construction year and cost of treatement plant) for a market cap of jsut $43m.

 

Someone also mentioned to me that RSN's figures make that mine look pretty expensive too - -haven't done the sums on it myself though.

 

It would be an interesting exercise to compare all the figures on near-producers and already producers. One other miner that i like is DRA and I own a small parcel -- but I'm buying more for the blue sky than the value of the existing mines as they lok pretty fairly priced as well.

 

That SBM factor must be a really powerful!

 

Cheers Anne

 

 

 

 

 

 

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