What is Noront’s true value?

This question has been asked by many but the board hasn’t really discussed the issue except to conclude:

1. That this stock price is an absolute joke based on any merits especially assets in the ground, and

2. The concept of manipulation has crossed a few minds.

True valuation is becoming vey important for all of us minority shareholders.  Why now? Because as we get closer to a few major milestones such as a road announcement, a chosen location for the ferrochrome smelter, blessings of First Nations, and actual shovels in the ground, Noront will no doubt begin to show what direction they have secretly been planning to take. I mean it’s not like they haven’t had the time to put together a very good plan of action the moment things start to move. They can realistically go in 1 of 3 ways:

1. Finance the project solely by themselves,

2. Partnership with a big pocket major mining company,

3. Sell out to the highest bidder.

All three of these options have merit with obviously the last being the quickest payout to you and me!  If there is a buyout proposal, what will Noront except? What would you expect? Will the offer be based on assets in the ground or <> our stock price history?

Let’s run a few back of the napkin very rough numbers just to see what a fair current asset valuation might be:

It has been suggested that there is $60 billion of assets currently know in the ground for all the Ring of Fire.  It is also very likely there is a whole lot more yet to be discovered… maybe multiples of this number. But just for this sake lets use $60B as our total number.  It is also known that Noront has consolidated the Ring of Fire and owns approximately 75%. Since development of these mines is still years away we can generously and very conservatively discount these valuations by say 90%.

So…

Total Assets ($60B) times 75% = $45B times the discount (10%) = $4.5B divided by outstanding shares (rounded up 350 million) = $12.85/share.

Now let’s compare this with a major offering what could be construed as a fair offer of say a 300% multiple of our market capitalization.

Current market cap = $125 million (rounded up) times 300% = $375 million divided by outstanding shares = about $1.07/Share.  Let’s say they were very generous and after stiff negotiations by our CEO offered $1.50/share.

Question to the board, who would be happy with this offer?  Is this a realistic scenario? What would our largest shareholder (RCF) take?  Is this why it seems so plausible that big money is holding the stock price down so low?  At $1.50/share all management with their vested shares, RCF with their holdings and very generous interest payments in shares, all stand to make an instant plethora of money.  How do we know a back-door deal has not already been put in place?

I’m not necessarily a conspiracy theory kind of guy but it’s not like we have Robert Freidland negotiating as a major shareholder like he did with Diamond Fields and Voisey Bay!  

In any case, maybe this board could and probably should discuss how they see things eventually playing out so when things do start to move we the minority shareholders don’t get blindsided.

Just my thoughts.