April 13th, 2011:|
Nautilus Minerals Inc. (TSX: NUS)
Current Price: $2.59
NIA is pleased to bring you our favorite gold stock suggestion for the next three years. The company is Nautilus Minerals Inc. trading in Canada on the TSX under ticker symbol NUS and in the U.S. on the pink sheets under ticker symbol NUSMF.
NIA has been absolutely thrilled about the long-term success of its stock suggestions. We would like to congratulate our members on our most recent stock suggestion PC Gold (TSX: PKL), which reached a high this week of $1.13 for a gain of 36% since we suggested it on March 7th at $0.83!
NUS has 155.6 million shares outstanding giving it a current market cap of $403 million at the current price per share. In our opinion, we believe NUS is undervalued and has a significant amount of upside potential. NUS is extremely unique and focused on a very attractive niche market that is completely undiscovered.
NUS is the only company of its kind in the entire stock market and we believe could receive major publicity in the near future as precious metals continue to rise substantially. NUS is the first company to commercially explore the ocean floor for gold, silver, copper, and zinc deposits and is currently developing its first project! NUS is developing a production system using existing technologies adapted from the offshore oil and gas industry to enable the extraction of these high grade Seafloor Massive Sulphide (SMS) systems of gold, silver, copper, and zinc on a commercial scale!
Let us give you a little insight as to what exactly SMS is. SMS deposits form directly on the ocean floor where superheated water carrying metals deep in the earth, mixes with cold seawater at the bottom of the ocean, depositing metal-rich minerals. They are considered the modern analogues of volcanogenic massive sulphide deposits, historically a major source of the world’s copper, zinc, gold and silver.
There are hundreds of companies drilling offshore for oil and gas. In fact, the U.S. is currently producing 565 million barrels of oil annually (1.5 million barrels of oil per day) offshore. With oil at $106 per barrel, that's $60 billion worth of oil produced offshore each year in U.S. federal waters alone! NUS is the ONLY company using this technology for precious metals. NUS is making history!
NUS holds approximately 186,269 square kilometers of granted tenements, and approximately 274,422 square kilometers of applications for tenements in the territorial waters and exclusive economic zone of Papua New Guinea (PNG), Tonga, the Solomon Islands, Fiji, and New Zealand.
NUS's main focus is the Solwara 1 Project, which is the world's first seafloor copper-gold project located in the territorial waters of Papua New Guinea in the western Pacific Ocean. You can read a study on this project by clicking here.
The Solwara 1 Project completed a SMS NI43-101 compliant resource estimate after 116 drill holes. NUS has an indicated mineral resource of 4.8g/t gold, 23g/t silver, firstname.lastname@example.org% copper, and 0.4% zinc and inferred mineral resources of 7.2g/t gold, 37g/t silver, 1,email@example.com% copper, and 0.8% zinc. Check out NUS's recent press release confirming high grade gold mineralisation at Solwara 1.
NUS made a very important milestone this year when it received the world’s first deep sea mining lease granted in January 2011, by the Government of PNG for a 20 year term. NUS anticipates production in 2 1/2 years with plans to produce ore at an annual rate of 1.3 million tonnes containing approximately 150,000-200,000 ounces of gold and 80,000 tonnes of copper. Based on current gold and copper prices, that equals approximately $1 billion in potential annual revenues!
NUS is such an amazing ground-floor opportunity that even the Government of PNG has signed an agreement and exercised its option to take up a 30% stake in the Solwara 1 project!
NUS has an amazingly strong management team, and has some of the world's leading geologists, contractors, and suppliers already on board! NUS has the expertise to develop this global opportunity.
NUS's largest shareholders are three of the world's leading international resource companies. Anglo American (AAUKY), a $62 billion mining company, owns 11.1% of NUS. Teck Resources (TCK), a $31 billion mining company, owns 6.8% of NUS. Metalloinvest, Russia’s biggest iron ore miner, owns 21% of NUS. Reuters just reported last month that Sberbank may buy 20% of Metalloinvest for $2.5 billion, which values the company at $12.5 billion.
These three companies, worth a combined $105.5 billion, own a combined 38.9% of NUS and are obviously banking that there is a HUGE future for deep ocean mining for precious and base metals, and that NUS will be the leader!
NUS currently has over $165 million in cash and no debt. Quite simply put, NUS has a very solid and strong balance sheet and will have no problem reaching production and becoming the first and only company in history to produce precious and base metals from deep in the ocean!
If you subtract NUS's cash position from its market cap, the market is valuing their technology, projects and resources at only $238 million! It wouldn’t surprise us if NUS is worth over $1 billion soon, and possibly tens of billions of dollars in about three years time! If oil companies are making billions from this same underwater technology and NUS is the ONLY company using this technology for precious and base metals, there is no reason why NUS should only be worth $403 million or a shockingly low $238 million after subtracting their huge $165 million cash position! Remember, we believe precious metals have more upside then oil and with gold, copper, and silver continuing to boom this could be the perfect storm. Although all of NIA's stock suggestions should be considered high risk, NIA considers NUS to be a sure thing at this time, in comparison to our other gold stock suggestions.
At its current price of $2.59, we believe NUS to be a solid long-term stock suggestion and a great hedge against the current currency crisis and upcoming hyperinflation crisis! Very few stocks will outperform the price of gold this decade, but NUS is a stock that NIA believes could perform many times better than gold.
NIA does not own a position in NUS. NIA could accumulate a position in NUS in the future. If NIA decides to purchase NUS shares, it will be fully disclosed here.