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Re: NXG - *SOLD*

By: Decomposed in ROUND | Recommend this post (0)
Fri, 15 Jul 11 5:39 PM | 84 view(s)
Boardmark this board | De's Test Board 		Msg. 33934 of 45510
(This msg. is a reply to 33933 by Decomposed)
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Here's the problem with the Northgate "deal."

Northgate just merged with a company, Primera. Primera operates the San Dimas silver/gold mine in Mexico. However, it has forward sold its silver to Silver Wheaton at just $4/oz... essentially benefiting only from the gold that gets produced.

That isn't so bad. But whereas Primera collects just $4/oz for its silver, IT MUST PAY TAXES AS IF THE SILVER HAD SOLD AT SPOT.

In other words, it is paying vastly higher taxes on that silver. And the situation actually worsens as more silver gets pulled from the mine and as the spot price of silver rises.

This is a *BAD* thing.

The merger comes with a 13 percent premium for P shareholders, so NXG shareholders don't benefit from that. NXG shareholders *do* benefit from an excellent new CEO, and from being a larger company, but I don't think the current runup in NXG's price is factoring in the significant drawbacks to the deal.

Moreover, I think gold is due for a short-term pullback. But we'll see.




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Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months


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The above is a reply to the following message:
NXG - *SOLD*
By: Decomposed in ROUND
Fri, 15 Jul 11 5:30 PM 		Msg. 33933 of 45510

I just sold a 6.7x "standard" block of Northgate Minerals (NXG) shares at $3.05/share. This is more than half of the NXG shares in my primary account.

Figuring out my profit (there IS a profit) will be difficult since I had a bunch of purchases and a few sales... at prices ranging from $3.25 down to perhaps $2.60. I'm guessing that the gain was 7 or 8 percent on money invested for about 6 months.

I am still holding a 5.25x "standard" position in NXG in this account. I'll probably sell it if the price climbs into the $3.20s.

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