TORONTO () -- Over the past few months investors in New World Resources [TSXv:NW] have witnessed the value of their shares drop from nearly C$1 to just over C$0.20, after the heavily anticipated drill results on the company's La Juliana gold prospect in Sonora, Mexico failed to meet the company's objectives. While this should serve as a painful reminder to investors in junior exploration companies that only 1 in 3000 plays will become a mine, and that there is no guarantee of success no matter how attractive the target, it is now probably time for the bleeding to stop. Indeed, at these prices the risk to reward profile seems to be heavily favouring the latter.
Net of cash the market is now only valuing the company at C$1.5 million. It's practically being treated like a shell! This would therefore appear to be a good place to bottom, and with any success at its Klondike project in the Yukon investors could see the share price double quite easily in the near term. New World is currently awaiting the results from initial exploration drilling.
Furthermore, according to the company's latest press release, "New project generation has been a priority over the last six months and confidentiality agreements have been signed with major industry contacts. The Company's geological team is presently assessing a short list of projects that meet its criteria and have the potential to advance the Company's goal of becoming a multi-project mining exploration company, focused on the Americas."
So based on Klondike and the potential for New World to add a few more rabbits to its hat, investor's would certainly appear to be getting something for their rather cheap commitment at these levels.
The Klondike project has an interesting background. New World optioned the 20 quartz-mining claims in Klondike, Yukon, from exploration geologist Jim McFaull. According to an article that appeared in the Whitehorse Star this past February, McFaull believes he may have "discovered the original source for all Klondike gold."
The piece states that, "Of the 13 million ounces of Yukon placer gold produced over the last 107 years, the majority came from Klondike workings. Up until now, hardrock prospecting in the Klondike mining district failed to locate the source." The key being that, "Placer mining generally means extracting gold from creeks as opposed to quartz mining that requires drilling and blasting to remove metals from rock."
The article, entitled, "McFaull's Last Chance," also noted that McFaull has found seven mines all of which have gone to production.
Investors should take the time to read the transcript of very interesting interview McFaull did with the CBC in March of this year. One cannot emphasize enough what he has put into this project and its potential.
With shares closing Friday at just C20.5 cents and a man's career hanging in the balance, it would appear that the market is offering investors a free second look for a bargain basement price.
