New Gold $NGD sells Mesquite (from IKN487) - Hallo friendsTODAY'S NEWS AND ACCREDITED, In the article you read this time with the title New Gold $NGD sells Mesquite (from IKN487), We have prepared this article for you to read and retrieve information therein. Hopefully the contents of postings Article BANKING, Article CULTURE, Article ECONOMIC, Article HOTELS, Article POLITICAL, Article SOCIAL, Article SPORTS, Article TOURISTS, Article TRAVELING, We write this you can understand. Alright, good read.

Title : New Gold $NGD sells Mesquite (from IKN487)
link : New Gold $NGD sells Mesquite (from IKN487)

New Gold $NGD sells Mesquite (from IKN487)

It was interesting to watch the way New Gold (NGD) traded yesterday, dumping 15% and removing all the premium priced into the stock the day Renaud Adams was announced new CEO. On the subject, here's the short note we ran on NGD in IKN487, out last Sunday evening  (before yesterday's dump, which doesn't appear on the price chart here):

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

New Gold (NGD) sells Mesquite (all in U$ unless stated)

Last week at this point we ran the note “New Gold (NGD) will sell Mesquite” and this week the only thing that changes is the verb tense. On Wednesday September 19^th, New Gold (NGD) announced (38) that it was indeed selling Mesquite and the buyer was one of the three we outlined as prospective, Equinox Gold (EQX.v). Therefore we got the sale right, the asset right and even pointed a finger at the right buyer. However, my assumption that NGD would want book value for Mesquite was a big mistake because the selling price is U$158m cash.

That compares to the U$386m carry that Mesquite has on the NGD (here’s that chart from last week again, but don’t worry I’m not going to repeat any others) and leaves a U$228m hole in its balance sheet. Or I should probably say another hole, because along with the over-priced Blackwater and the faltering Rainy River, I’m certain the company will have to take more impairments under the new stewardship of Renaud Adams. Here’s how the NGD stock reacted to the news of the sale:

Down 13.5% in the last two days of trading and 4% down on the week, despite the positive macro for mining stocks and its own early week rally.

It was the price agreed by NGD that hit the stock hardest, because although the cash (when it arrives Q4) will be very useful in paying down part of its welter debt burden, it wasn’t as much as I or most of the market expected (I’ll admit in hindsight I assumed too high, but not this low) and moreover, the speed and size of the deal smacks of desperation on the part of NGD, which in turn suggests Rainy River is in worse shape than expected (we’ll find out more in the Q3 production numbers, of course).

If and when NGD can do a deal to sell Blackwater, it may be worth revisiting this stock. Until then it’s an easy pass and on that, I think back to the piece I wrote on NGD in IKN453, dated January 21^st 2018. It was entitled “New Gold (NGD): Cannot get comfortable” and at just under two pages of script, just about the shortest fundies analysis note I’ve ever written on a stock for the main “Fundamentals…” section of The IKN Weekly. After being prompted to look at the stock again on its 4q17 numbers, I was at first enthusiastic about revisiting NGD but as the numbercrunch went on, it became apparent that the company was still in serious financial trouble. I passed on the stock and wrote the short note that I’ve re-printed in Appendix 1 below. It was a U$3 stock at the time. Good call.

Thus Article New Gold $NGD sells Mesquite (from IKN487)

That's an article New Gold $NGD sells Mesquite (from IKN487) This time, hopefully can give benefits to all of you. well, see you in posting other articles.

You are now reading the article New Gold $NGD sells Mesquite (from IKN487) with the link address https://todaysand.blogspot.com/2018/09/new-gold-ngd-sells-mesquite-from-ikn487.html

Tweet

Subscribe to receive free email updates: