Realizing Value By Being Patient.

Hopes were for volatility to the upside, however, the volatility instead went all over the chart. The outcome was essentially known already, so there had to be a chance that it could become a sell the news situation. As I listened to the call, as soon as the “3-4 years for permitting” was mentioned the shares fell from about 2.16 to 2.06 and selling continued, even though that should not have been a new concept to anyone. The volatility must have left many unsure of where the shares will stabilize.

Now that risks associated with the veto have been removed, institutions are able to buy shares into funds if they want to, and we are seeing that they definitely want to. Goldman 497,000 today etc. The shares should now find price support and more stability due to their desire to accumulate on weakness. Once each institution has accumulated the position they want, then they will come forward and support the share price in instances of a share price decline. Individual shareholders are not invited to speak to the media, however, institutions are invited and they do talk positively about their holdings. Therefore, one can expect they will help to raise the level of awareness to the the media, if and when it suits them.

It seems some have little interest in becoming patient long term shareholders. I’ll give more reasons as to why more people should settle in as long term shareholders next time. Currently, the institutions are able to accumulate with ease, at prices that are even lower following the lifting of the veto! It seems the institutions have had time to look into this, and they have decided they are happy to round up available shares and become long term shareholders. I think the scenario I am describing here, is one where the shares will be supported and appreciating overall gradually throughout the long waits ahead, and not a scenario where the shares slide lower due to a lack of interest with people not wanting to wait through this process. The reason for that being that the shares have a serious fundamental value, that is no longer compromised by a veto.

A wide range of estimates are being tossed about as to the share price if/when in production. As a rough estimate, it may be about reasonable to assume that it should have a market cap comparable to the Turquoise Hill OT mine, that would equate to a share price of about $12/share. For a buy and hold, it would be difficult to find a long term investment that could do better than 1.80 to 12 over seven years, approx. a 30% annual rate of return. In all of the confusion with NAK these days, I think the individual shareholders, us little guys, are in the process of dumping shares over to the institutions at prices that are too low, not fair to the seller. Later on these same institutions would never consider selling at these prices.

The conference call included one statement, that in the months ahead more details will be given about the modifications they are proposing. There may be more to this than many people realize. Criticisms have been made about this project by sincere and well meaning people. However, as I see it, each of the criticisms that have been made has solutions, sometimes multiple solutions. Over the past year the resistance against the project has lowered somewhat.  As the revised design and procedures become known, it may well be that acceptance will grow, and some people on both sides of this issue will say, “Oh, I didn’t know that could be done, I was making assumptions that are not the case now.”

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3 Comments on "Realizing Value By Being Patient."

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[…] Realizing Value By Being Patient. […]


Thank you Ray for your reasoned and thoughtful analysis.

NAK Report

Love reading your post…..Thanks for sharing….. Very patient here.