NST

5.25%

$16.59 northern star resources ltd

Ann: December 2016 Quarterly Activities Report, page-34

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happy Hippy

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30/01/17

14:06

Post #: 22217360
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Originally posted by eshmun ↑

Hi Spec,

Tough question.

I think they could start in a small way by casting their net across Australia and trying to pick-up a few promising greenfield projects either by having the geology boffins dream them up or find small explorers that might be hatching a new discovery with potential for size, ie start kiss a few frogs. There is nothing better than a greenfield discovery that comes good for truly adding value for shareholders.

Then they could cast their eyes across the existing junior ASX producer end of the market. I think a company like RMS (or possibly SLR....I don't follow them closely) would be interesting as they could immediately add ~130,000oz to their production profile and any offer would end up also absorbing RMS's considerable $100 million cash holding. For me a cash and script bid for RMS would be smart because NST would end up winning out on the script component of the bid. That's because of its size and larger resource base it trades with a much higher PE multiple, ie it's overvalued relative to RMS based on profitability metrics alone.(ie NST's script has more purchasing power). I think that there are still some questions over Magnet's mine life so maybe once RMS prove up some more resources it could be an option. Personally I don't think NST could go to far wrong if they moved now as there is enough extractable gold in my estimation to cover the value differential between the cash RMS hold and what price any sensible bid would be pitched at. RMS's management having been doing a great job but up until this year they have adopted a softly softly approach to exploration and resource definition. I'd expect that if NST could get hold of Magnet they could apply their more aggressive and confident approach to expanding resources and you'd probably find that they could expand them significantly in a year or two.

I've also said DCN would be a good buy as you'd be getting in at the LOM ground floor. Probably seems too expensive for them now but if they are looking to the future they must be prepared to find new mines or admit that if they want to expand production they have to pay up. I think a foot hold into the Laverton terrain through DCN would also open the door to the whole area. This area is far les explored than other major terrains in my opinion and I truly believe there are still a few (maybe one) multi million ounce deposits to discover there. Once you have a foot hold with a plus 200,000 oz production centre by buying DCN you are in the box seat for later JV's and acquisitions or ground grabs when ground falls over in the area. You can build your knowledge of the area and even go out on limb and do some greenfield exploration based on out of the box exploration models dreamed up by your geo boffins. I'd expect that this is what DCN will do once they've seriously bedded down their mines.

Aside from options like I've mentioned above they would need to cast their net wider and look internationally. I'd be OK with that as long as they stuck to what they know, high grade, relatively simple to process gold deposits in safe jurisdictions, Canada, the US, etc

I don't follow international gold projects that closely but I'm sure there are some dreamer explorer/developers on TSX that probably are sitting on a jack pot and don't know it yet. Does anyone know of any good TSX companies big or small that could be of interest to NST?

Esh

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Another good candidate would be BLK. Building towards 200 oz pa and long LOM.
Another great quarter from the best company ASX!

NST Price at posting: $3.85 Sentiment: Buy Disclosure: Held
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Last $16.59		Change -0.920(5.25%)		Mkt cap ! $18.16B

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Ann: December 2016 Quarterly Activities Report, page-34

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