January 3, 2018
NAPEC Inc. (NPC on TSX), Jan 3/18: C$1.95, 52-week range: 2.04-0.86, market cap: C$203 million
NAPEC was last mentioned in the Latest Picks edition of October 27, 2017 when the shares were trading at C$1.31. It was announced on December 4, 2017 that a takeover offer for all outstanding shares of NAPEC at a cash price of C$1.95 was made by Oaktree Capital Management L.P. The Board of directors of NAPEC unanimously accepted this offer and recommends to shareholders to vote in favor of the transaction. The Company’s largest shareowner with a 19% control interest has indicated its intention to accept the offer. The offer is subject to the approval of at least 66 2/3% of the votes cast by security holders at a special meeting to be held before February 16, 2018. Since this announcement was made the common shares have traded at prices slightly beyond the offering price so there exists speculation that a higher takeover price may ensue.
Precious Metals and Mining Trust (MMP.UN on TSX), Jan 3/18: C$1.99, 52-week range: 3.03-1.68, market cap: C$39 million, div: C$0.24, Yield: 11.88%
Precious Metals and Mining Trust is a small closed-end fund that until September 2017 was managed by Sentry Investments Corp but now is under the wing of much larger CI Financial Corp. It has been paying monthly dividends since 2006. Because of a higher than average yield the units normally trade at a 15% to 20% premium to net-asset-value but currently there appears to be no premium. The latest portfolio indicates the top holding to be in shares of Kirkland Lake Gold that has been a star performer. The questions to ask now are whether CI Financial will continue with the same strategy that Sentry had and will the fund be able to participate in what appears to be heading into a more active mining and exploration market in Canada.
Teranga Gold Corporation (TGZ on TSX), Jan3/18: C$2.94, 52-week range: 5.25-2.36, market cap: C$316 million.
Teranga is a multijurisdictional West African gold company focused on production and development as well as the exploration of more than 5,000 square kilometers of land located on prospective gold belts. Since its initial public offering in 2010, Teranga has produced more than 1.2 million ounces of gold from its operations in Senegal, with, currently, a remaining reserve base of 2.7 million Oz Au at the Sabodalo operation. Over a 14-year mine life Sabodalo is expected to produce 176,000 oz/yr of gold, although at a higher rate of 200,000 oz/yr during the next five years. With a current cash position of $75 million along with a projected cash flow of $95 million over the next 2 years Teranga will be well on its way to bring into production the Banfora gold mine in Burkina Faso at a cost of $230 million. Once in production, possibly in 2020, Teranga would classify as a mid-tier producer at 325,000 of gold a year. The company is meeting with success in an exploration program at its Golden Hill property located along the Hounde greenstone belt also in Bukrina Faso. Teranga has, as well, embarked on greenfield exploration programs in Ivory Coast. Now with an important cornerstone investor that has been adding to its position, Teranga may eventually find its way to become a friendlier stock to its patient followers.
Wesdome Gold Mines Ltd. (WDO on TSX), Jan 3/18: C$2.08, 52-week range: 4.40-1.64, market cap:C$278million
Wesdome is a small mining company with 30 years of continuous gold production in Wawa, Ontario. Its Eagle River Complex consists of two deposits, one underground, the other an open-pit, both feeding a central mill that processes 850 tons/day. Annual production is a modest 52,000 to 58,000 ounces. Past production is 1.1 million ounces and further discoveries of gold in parallel zones suggest that this operation could continue at this rate for many years. Wesdome is hoping to revive the former producing Kiena gold mine at Val d’Or, Quebec. This mine produced 1.75 million ounces over the period of 1981 to 2013. The underground mine and the 2,000 TPD permitted mill has been on care and maintenance since that time. Recent drilling has encountered high grade intersections. The Company’s third property, an open pit gold deposit at Moss Lake near Thunder Bay, Ontario has been temporarily put on the back burner in favor of increased exploration and development at both Eagle River and Kiena. Wesdome has new management, the officers having come from St. Andrews Goldfields and the related Macassa mine where they were involved in putting three underground gold mines into production leading to their acquisition by Kirkland Lake Gold Ltd. Their working experience in the Abitibi Greenstone Belt will be beneficial to the redevelopment of the Kiena gold mine.