NuLegacy Gold (NUG.V) has closed at C$0.095 per share on Thursday and we were quite surprised to see a single-digit closing price as this hasn’t happened since January of this year. And since January, the company has made considerable progress at the Iceberg deposit; it has drilled several thousand meters and is on the verge of completing its earn-in agreement with Barrick Gold (ABX). According to our estimates, NuLegacy has to complete less than $200,000 in additional expenses to earn a 70% stake in the project.
Once that happens, Barrick Gold has limited time to decide whether or not it wants to exercise its claw-back agreement. Barrick has the option to gain a 70% stake by completing $15M in exploration expenses on the property, and the main question now is whether or not Barrick really cares enough about Iceberg to spend this cash. If it doesn’t do so, its stake in the project remains at 30% and NuLegacy can continue to explore on the property and demand a 30% participation in future exploration programs from Barrick Gold.
The only reason why NuLegacy’s share price is going down is this sell order as there have been no updates with regards to the fundamentals of the company or the project. Keep a close eye on the trading pattern as this might be an opportunity to average down on your average cost base.
Disclosure: The author holds a long position in NuLegacy Gold. NuLegacy is a sponsor of the website. Please see our disclaimer for current positions.
