Here’s my extremely superficial analysis of NovaGold. NovaGold’s main asset is its Donlin Gold joint venture with Barrick. Barrick has pretty much come out and said that it doesn’t think that the deposit is worth pursuing. Therefore, this stock is doomed. I don’t care if Seth Klarman owns it.
Some people make the argument that mining stocks are leveraged to commodity prices. (I would agree with this.) One might think that low-margin deposits would be more leveraged to commodity prices than high-margin prices. I’m not so sure that this will work out the way most people will think it will work out.
Originally, I thought that Gold Resources was a scam because they did not try to prove to investors that they had a real deposit/mine. They have no proven and probable reserves according to SEC guidelines. There is so much scumbaggery in the mining sector that I automatically assumed that they were lying. But… I think that they really do have a profitable mine. It’s likely that the management team at Gold Resources felt that it was an unnecessary use of money to put out the necessary technical reports. Hindsight vindicates this view as the stock price is/was high, the mine was financed, etc.
Here are the resources that I found the most helpful for understanding mining…
I wrote a post on Baja Mining on Sept 8, 2011 but never published it because I didn’t really understand the mysterious cost inflation of the project. Around a year later, the stock has gotten crushed as it has revealed that its mine is not as economic as originally expected. Here is my original post:
In brief, Monument Mining goes into the “too hard” pile due to title issues that I don’t understand and a CEO I don’t trust. Continue reading
