Herb:
Here are some of the main points in the Genunity Report. Looking good.
Snug
Noront’s share price is up +110% in the past two days on volume of 35 million shares – It has taken a few weeks to sink in, but NOT’s June 29, 2009 news release reporting visual drill results of "disseminated to massive sulphides," below Eagle One, has finally captivated the market. Also, over the past week, the new CEO has been meeting with institutional shareholders to raise awareness.
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Extensive mineralization, massive intervals likely ultra-high grade – Two new mineralized zones were encountered at 270-511 metres (241 metre interval) and 750-946 metres (196 metre interval) in hole 49. Sulphide mineralization includes disseminated to massive types. Management is "extremely encouraged" by this drill hole. Massive sulphides from Eagle One grade approximately 5-7% Ni, 2-4% Cu, 10-15 g/t Pt+Pd. We continue to view this drill hole as highly significant.
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Focus and near-term catalysts – We understand that all drills have now been deployed to test Eagle One depth targets and will do so for the next three months. Key catalysts are hole 49 massive sulphide assays and thicknesses. Follow-up drilling will be important to test size potential. Again, we stress that Ni-Cu-PGE deposits are generally very podiform, thus follow-up drilling will likely have a lot of hits and misses.
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Increasing "realistic" expectations in our valuation – We are becoming increasingly confident about NOT’s hole 49 sulphide intersections despite limited disclosure. We believe NOT has a good chance of establishing two new massive sulphide zones that are similar in size and grade to Eagle One (additional +1mt). Therefore, we have increased our conceptual DCF8% model to capture a portion of this upside - underground mine/ direct shipping scenario - for an operating 0.6x NAV of $220 million ($1.33/share). We also ascribe $0.50/share for the chromite deposits based on comparative analysis and $0.10/share for adjusted cash. We continue to recommend NOT as a BUY with an upgraded target of $2.00 (from $1.20).
