Good Evening NOT
As usual, sorry for the long post. I only post so often so please bare with me.
When I talk to friends about NOT, it seems I always start with Windfall. I enjoy telling the story about the 52ounce hole, and the potential of this project. Usually my friends get very excited about Windfall, especially given Golds price. Then I shift gears and break into DE. My friends often tell me they can feel the excitement in my voice.
By the time I've stopped talking about DE we have to pull out the pen and paper, draw diagrams, discuss the potential value of the DE resource, discuss "The Big Score," and Voiseys Bay, massive sulphide finds, nickel, platinum, etc and the potential pay day. It is exciting and most feel a high degree of comfort having two Priority 1 projects in one company, (granted there are more great projects in Noront's stable.)
The question I have, when is the timing appropriate to unlock the shareholder value we are missing? Is it now? Is it once the ramp at Windfall is complete and more results come out? Is it when DE 6, DE7 come out, or is it when DE is eventually bought out? I assume I know what short term traders would like.... I hope long term holders share there opinion as well, and it may in fact be to split the company now.
Are there other issues to consider? Sure, my biggest one is funding both projects. If there is a split, how much money is allocated to each, and will that be enough to sustain both. I feel Noront currently has a greater ability raising money intact. I know they have a nice cash position currently, but, I think it is fair to say there will be more financing needed for DE, let alone Windfall. How can we ensure both projects get the money they need to maximize value? Not to mention any other projects in the pipeline. In addition, hopefully the credit market returns to normal this year.
One thing I didn't mention when I attended PDAC was a comment Neil made about Windfall. It had to do with partnering, I didn't think much of it at the time... memory may be off, but I ensure you my intent is good.
Neil said they could raise money right now by partnering at Windfall, ($15million was the number he through out.) Neils statement seemed like a question.... was it a good idea to partner at Windfall? I didn't really think about it at the time, maybe it wasn't a rhetorical question afterall. I hope management is weighing this option.
Short term, no doubt there is value in splitting these projects, it may only be short term value.
Is it a good idea to bring in a larger partner for Windfall? Is selling 10% of the whole company to a major a good idea? It would certainly pad the account to pay for a lot of exploration, and potentially tie up another 10% of the shares in "friendly hands" if the deal is struck right.
All I know is these projects will need additional funding to prove up the resource. There is just too much opportunity here. If we have enough funding currently to unlock all of our value, I suspect we will be disappointed in the take out price.
Regarding a major making a bid and stealing the company. It could happen. However, I don't want to rush to a decision to split because I am afraid a major will swallow us whole and we won't get fair value. I get some comfort in seeing the share structure and the fact that nearly 50% of the company is owned between 5 or 6 investment companies and management. I hope that profit motive will take over and they hold out for every last drop.
It is feasable a major makes a bid solely for DE. If you recall Goldcorp and Virginia Mines. Goldcorp got an exceptional property... in addition to Goldcorp shares, Virginia shareholders retained ownership of the other projects, and a few years later, the Virginia stock is doing fine.
I think the odds of us being robbed of our true value when this story plays out are low. In my opinion, if a bid comes in for Noront before the DE resource can be proven sufficiently, that is the only way we will be short changed as I expect a major premium to be paid if this find is what many of us hope. If the bid comes early, the panic to drill and hit as many anomolies as possible will be upon us.
I am open to discussion, both via PM and on the board. I hope this issue of splitting Windfall and DE is considered in terms of long term shareholder value and what is best to see both projects to their own potential.
Finally, welcome to those new to the NOT board. I am only a veteran of a few months. Most of the information you seek has already been posted over and over again since September. Please take the time to read back. It won't hurt to print out the technical posts you find informative for future reference, print Snug's cartoons, ... and don't forget to pick up a copy of "The Big Score."
due your own DD, not financial advise
regards
cwallace
