Norsemont Mining (CAD: NOM & US: NRRSF)

In the gold mining sector, because of the INCREDIBLE CYCLICALITY and the capital-intensity of it, companies often sell assets at STEEP DISCOUNTS.

It’s not often, but I’ve seen it happen before, where at the DEPTHS OF BEARISH SENTIMENT, a company would announce that it bought a property with historical resources and existing infrastructure at a sale price of 25% or 35% of its REPLACEMENT VALUE. I’ve seen them sold for 50% off, but in my 20 years in the investment world, I’ve only seen them sold for a discount of more than 75% once, which happened with a company we profiled.

The record HAS BEEN BROKEN, though, because a gold/silver project in stable Chile with a historical resource (not 43-101 compliant) of 5.5M ounces of gold-equivalent was sold in May for between 90% and 96% BELOW REPLACEMENT COSTS!

In some distressed real estate markets in 2008, it was cheaper to buy an existing house than to build a new one as well. These types of deals resulted in 10x returns for real estate investors who PAID CASH and bought foreclosures in ‘09 and ‘10.

With gold trading near all-time highs, it takes a GRANDMASTER NEGOTIATOR to pull off such a feat today!

The Choquelimpie gold project is a PAST-PRODUCING mine in Chile, previously operated by Royal Dutch Shell, among other owners. In the 1990s, it was the THIRD-LARGEST gold mine in Chile!

Between Shell, Northgate, and Copec, 135,000 meters of drilling have already BEEN CONDUCTED, an effort costing around USD$50M; every meter of drilling costs around $400 (all-in). The property is already equipped with year-round road access, water permits, an ADR effluent treatment plant, power and water, a fully equipped camp, offices and warehouse, a 3,000 ton/day mill, and even a lab for sample preparation! It is estimated that these have a PRICE TAG of USD$200M according to the company’s engineers and veteran industry executives.

Choquelimpie, then, has already been developed to the tune of USD$250M, but Marc Levy, the founder of AURORA CANNABIS, which is a huge success story, managed to buy Choquelimpie in May 2020 for USD$3.3M in cash and 15M shares of Norsemont Mining (CAD: NOM & NRRSF) at 40c/share, for a total of USD$7.8M. Even if we take a CONSERVATIVE APPROACH on the value of the infrastructure and drilling done and only ascribe a value of USD$156M to it (a 40% REDUCTION), Marc Levy negotiated a smoking deal at a 95% discount!

It’s time to consider shares of Norsemont Mining (CAD: NOM & US: NRRSF)!

Now that they own this project, their FIRST PRIORITY is to bring the property UP TO SPEED, which means releasing a NI 43-101 report on it since the 5.5M ounce gold resource is historical.

Once that occurs in the months ahead, it will SOLIDIFY THE SIZE of their project in the eyes of the market and could prove to be a BIG CATALYST.

To give you an idea, companies with 5.5M ounces of gold that receive the NI 43-101 normally trade for about a minimum CAD$58/ounce, so that’s 5.5M * $58 = CAD$320M market cap, compared to today’s valuation of a mere CAD$100M.

Secondly, the BLUE-SKY potential of this project is in DRILLING IN DEPTH!

Imagine dining in a 3-star Michelin-rated restaurant, ordering the first course, enjoying every bite of it, and then immediately afterward asking for the check and leaving. You’re going home after a great dish but missing out on the MAIN COURSE, the dessert, and the whole ambiance.

This is, metaphorically speaking, what Shell, Northgate, and Copec did. They only drilled to 70 meters range and then THEY STOPPED in mineralization.

David Laing, a world class engineer who works for Norsemont Mining (CAD: NOM & NRRSF) today but has worked on Choquelimpie for decades during the era of Shell, believes that at 250 meters, once drilled, the resource could be bigger. The management is targeting a 300%-400% INCREASE!

If they’re even REMOTELY CORRECT, the resource size could be 10-20M ounces. At CAD$58/ounce, that makes this a VERY ATTRACTIVE risk/reward situation.

At 10M, the market cap is over CAD$500M; at 20M, it is KISSING A BILLION dollars.

The company is commencing drilling shortly, so the ONE PERSON who has eaten the dirt of Choquelimpie for over 20 years is targeting a very successful drilling program and the opportunity is to make 5-10 times one’s money once drilling results ARE PUBLISHED!

Consider shares of Norsemont Mining (CAD: NOM & US: NRRSF)!

The way I found Norsemont Mining (CAD: NOM & US: NRRSF) is by challenging myself with finding a company with a 500% upside potential REGARDLESS of how gold behaves in the near-term.

Quite simply, I wanted a company run by people that know how to sell gold projects to the giants and whose GAME PLAN is to charge like Pamplona bulls for 12-24 months while advancing a property to the point of sale.

Marc Levy sold companies before for BIG BUCKS. He’s well-connected and knows the job; he founded Aurora Cannabis, among other big success stories. David Laing, who knows Choquelimpie best, is a mining legend – any company in the world WOULD BE pleased to retain his services, in my opinion.

As I said yesterday, the most important aspect of this opportunity is that Marc Levy’s negotiation skills landed Norsemont Mining (CAD: NOM & US: NRRSF) a truly ROCK-SOLID gold deposit at a drastically reduced price.

GOING FORWARD, the game plan is to spend over CAD$20M on drilling, which amounts to about 50,000 meters of drilling at depths of approximately 250 meters, in order to REALLY SEE what’s underneath the existing Choquelimpie 5.5 million gold equivalent ounces.

Norsemont’s world class team is targeting that there’s 3-4 times the amount that’s disclosed in the historical data, which will make this a BIG ORE BODY, so robust that the large-cap miners would potentially bid on it. Their team has had billions in previous exits, and we expect they will do it again.

So, CAD$20M goes into drilling, creating a value-add of potentially CAD$600M-$800M in appreciation of market cap. This is all without gold RISING A CENT from today’s prices.

If you believe that in twelve months, gold could trade for anywhere between $2,500 and $3,000 or more, the POSITIVE LEVERAGE with this company is huge.

Remember one thing: Marc Levy wakes up in the morning with one goal in mind, which is to advance this process at the SPEED OF LIGHT.

His team wants to get the NI 43-101 published, drill at depth, prove that there’s a robust resource of gold & silver, and sell it at a premium. How much? If this works out, the gains could be in the high triple-digits.

Consider shares of Norsemont Mining (CAD: NOM & US: NRRSF) Now!

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