Last May, we initiated coverage on Niogold Mining Corporation, symbols “NOX” and “NOXGF.” Our analysis suggested that price weakness in many gold mining stocks may be providing an opportunity for investors. We thought that the price weakness in Niogold was offering investors an opportunity to accumulate the shares while they were in our view “on sale” at the time at .21 cents. The fact is that many Canadian mining development and exploration companies are quite undervalued if one believes as we do that gold bullion should be selling minimally in the $1400 range.

Our analysis suggests that a major bottom in gold and in many gold stocks is being completed. Our analysis consists of fundamental and just as importantly cyclical analysis. But worth noting, two months after our May 2014 report, the Osisko Royalties  group invested $4,900,000 in Niogold which added to their already held position of Niogold now represents a 19.5% ownership in Niogold.  Osisko paid .35 cents a share which was a 65% premium over the cash price for Niogold at the time. That investment lends support to our analysis that suggests that Niogold is undervalued. 

 

  It makes no sense to us to think that a $4,900,000 investment at .35 cents a share was made with expected appreciation in value of  for example .20 cents or so. We feel that the expected investment target price could be in the range of one dollar or more.  We also see that since last July, many mining stocks have seen their historical price lows and have appreciated well. We notice that many stocks do not seem to have offerings of any size. In our opinion, for the next bull market in mining stocks “the stage is set” for exceptional upside.

 

To review, Niogold Mining Corporation, symbol “NOX” on TSXV, is a Canadian gold exploration company founded in 2003. The company’s properties are located in the Cadillac, Malartic and Val d’or mining camps in the Abitibi district of Quebec. Most mining investors are aware that the Abitibi region has an eighty year history of gold production with over 45,000,000 ounces of gold production through 2013. Today the region continues to be one of the most productive gold mining areas in North America.

 

Niogold has a 130 square kilometer land package including its Marban Block with 43-101 resources of over 2,100,000 ounces of gold. That 100% owned property now has a level of 43-101 resources that could be close to mining consideration in itself. As always, the price of gold bullion is a key factor. As well, Niogold’s mining neighbors include seven producing gold mines including Agnico-Eagle, Osisko and Richmont Mines.

 As is the normal strategy with junior exploration companies, our analysis suggests that Niogold’s exploration will continue to add ounces to the resource base since there is substantial further potential in Niogold’s total land package.

The Stock: Who owns it? Osisko Gold Royalties owns 19.5% of Niogold shares; a Connecticut based hedge fund owns approximately 20% of the shares. Quebec institutions own approximately 43% of the shares. Niogold’s officers and directors own 6% with other “friendlies and close associates” holding an additional 16%. Worth noting, a Canadian mining executive with an exceptional history of mining accomplishment owns approximately 4% of the shares. Niogold’s management and directors include people of superb repute and success in the mining industry.

 

The most important factor in the success of a mining company is the management. The recent appointment of Robert Wares as CEO who had tremendous success in bringing the nearby Osisko mine into successful production is a tremendous addition to Niogold. I was in the area of the Osisko project and I had my doubts about its success several years ago; I was wrong. Mr. Wares was the main ingredient of its success. He did an amazing job.

 

Niogold is in the right location and with over $6,000,000 in working capital, no debt, an aggressive drilling program and already impressive resources. We will continue to monitor Niogold closely in view that we feel that the current weakness in gold bullion will not continue although another move down is always a possibility in this market. For Niogold, the test is in patience not judgment.

 

Far off its three year price high of .50 cents and under .30 cents, our analysis suggests that Niogold merits attention for risk oriented gold investors. We will continue to monitor it.