Q: would like your view on NFG given current gold price and dilution regarding
recent acquisition of labrador gold kingsway project. assume strictly gold as i
dont see silver mentioned.
thank you
recent acquisition of labrador gold kingsway project. assume strictly gold as i
dont see silver mentioned.
thank you
5i Research Answer:
NFG will issue shares equivalent to $20M to acquire the asset of Labrador Gold (LAB). The asset acquired is a pure bet on gold. We generally don’t like share issuance in an acquisition but it is a form of currency, of course, for deals. That said, LAB is a microcap mining company that trades at a distressed valuation, LAB’s cash is already $8.1M for a $20M purchase price, and NFG is acquiring the asset at a very favourable valuation. We like the deal here, though it is not a very meaningful acquisition, considering the difference in market cap ($948M vs $20M). Still, we think this could be a valuable asset longer term if gold prices continue to perform well.