Gold Co. Buys Remaining Royalty Interests at Newfoundland Project
New Found Gold Corp. (NFG:TSX.V; NFGC:NYSE.American) announced it has decided to purchase the remaining royalty on its Golden Bullet property from three arms-length royalty holders. Read why one analyst says the company's exploration has "surpassed our initial valuation in quality, width, length, and depth."
New Found Gold Corp. (NFG:TSX.V; NFGC:NYSE.American) announced it has decided to purchase the remaining royalty on its Golden Bullet property from three arms-length royalty holders.
The Golden Bullet property covers a key target area on the company's Queensway Project in Newfoundland, including the extension of Keats South and the TCH, Knob, Bullet, Rocket, Grouse, and Quarry zones.
New Found purchased 0.6% of the vendors' 1.6% net smelter return (NSR) royalty on the company's Golden Bullet property and had the right to purchase the remaining 1%. The company said it has now elected to purchase the remaining royalty for aggregate cash consideration of CA$1 million.
"New Found finds itself in a rare and strong position with a minimal outstanding royalty burden, ranging from 0% to 0.4%, covering key zones along the Appleton North corridor," Chairman and Chief Executive Officer Collin Kettell said in a release. "Golden Bullet encompasses the recent discovery of deep mineralization at Keats South as well as several other notable zones along a 5-kilometer segment of the Appleton fault."
Roth MKM analyst Mike Niehuser, writing an updated research note on October 3, said, "NFGC has exceeded our expectations for the quality of its exploration programs.Roth MKM analyst Mike Niehuser, writing an updated research note on October 3, said, "NFGC has exceeded our expectations for the quality of its exploration programs. This has accelerated its success in making significant discoveries along the east side of the 9.5km Appleton Fault, with complementary discoveries along the west side, presenting an opportunity for 12km along the fault onto the recently acquired Kingsway Project and drilling targets to over 820m. In addition, ongoing excavation and trenching have added a dimension of quality that is unique in resource exploration."
Niehuser rated the stock as a Buy with a CA$9 per share price target.
"We believe that NFGC's exploration success has surpassed our initial valuation in quality, width, length, and depth," he wrote. "In addition, we believe its use of excavation, 3D seismic technology coupled with deep directional drilling, plus Chrysos PhotonAssay methods, have added multiple dimensions of quality programs. This is useful for accelerating exploration success and derisking the project."
Analyst: 'We Have Reason for Optimism'
In September, the company announced the results of the first phase of channel samples from the Keats Trench and an update on the Iceberg Trench at Queensway.
Highlights included channel intervals including 300 grams per tonne gold (g/t Au) over 5.10 meters, 215 g/t Au over 5.21 meters, 38.9 g/t Au over 16.60 meters, 13.4 g/t Au over 26.60 meters, 10.4 g/t Au over 13.70 meters, and 27.7 g/t Au over 6.55 meters, The results confirmed "good continuity of high-grade mineralization while comparing well with neighboring drill holes and demonstrating the broad distribution of gold mineralization," the company said in a release.
Prior to trenching and channel sampling, the Keats Zone was fully obscured by overburden and defined entirely by diamond drilling, New Found said. Exposing the bedrock surface and sampling it at this resolution "represents an important step to fully understand the extent, distribution and variability of gold mineralization across this portion of the Keats Zone."
This new exposure has also enabled validation of the 3D geologic model, which controls, constrains, and dictates the geometries of gold mineralization at Queensway, New Found said in the September release.
"Short of mining, we believe that the trenching has revealed mineralization at Keats that could be extrapolated along the Appleton Fault and possibly onto the recently acquired Kingsway Project," Niehuser with Roth MKM wrote. "In our opinion, as orogenic mineralization at Queensway North is consistent in tenor, we have reason for optimism. We applaud NFGC for its continued investigation."
The Catalyst: Bull Market Just Starting
Gold hit a record high of US$2,685.42 in September, and most experts agree its bull market has not ended. The price was US$2,663 per ounce Tuesday morning.
The yellow metal "edged higher on Tuesday, lifted by retreating Treasury yields, while investors cautiously awaited for more data that could offer fresh clues on the Federal Reserve's monetary easing cycle," Anushree Ashish Mukherjee wrote for Reuters.
Goldman Sachs has raised its forecast for gold in early 2025 to US$2,900 from the previous US$2,700, Investing.com reported.
According to Reuters, gold is on-track for its best quarter in four years. The recent rise was "fueled by the U.S. Federal Reserve's half-percentage-point cut and flare-ups in the Middle East," author Sherin Elizabeth Varghese wrote.
Gold is even falling into more consumer hands as Costco said its gold bares are flying off the shelves, according to Bloomberg. A survey of stores in 46 states found it was hard for the retailer to keep gold products stocked right now.
Streetwise Ownership Overview*
New Found Gold Corp. (NFG:TSX.V; NFGC:NYSE.American)
*Share Structureas of 10/15/2024Source: Thomson Reuters"Costco's one-stop shopping convenience is bringing gold buying to the masses by offering prices that undercut traditional precious metals dealers and extra rewards for its most loyal customers," Bloomberg author Yvonne Yue Li wrote. "Add to that gold's appeal as a safe haven and hedge against inflation, and it's easy to see why bullion buyers are turning to the warehouse retailer."
Ownership and Share Structure
According to Reuters, about 5% of the company is held by management and insiders, including the CEO Kettell owns 2.59% and Founder and President Denis Laviolette with 1.09%.
About 39% is with strategic investors, including Palisades Goldcorp Ltd. with 21.82%, Sprott Mining Inc. with 12.22%, and holding company 2176423 Ontario Ltd. with 5.24%.
About 4% is held by institutions. Van Eck Associates Corporation is the largest institutional investor with 2.68%.
The rest is in retail.
The company has 198.84 shares outstanding with a market cap of CA$664.12 million. It trades in a 52-week range of CA$3.19 and CA$6.30.
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