Aug 27, 2010 10:04 AM PDT
Monday morning has seen relatively heavy volume for Canadian small cap gold and copper miner Northgate Minerals Corp. (NXG). April has been a slow month for the stock as it has had only one trading day above average three month volume and has underperformed the SPDR Gold Shares ETF (GLD) by 10% and the Russell 2000 by nearly 25%. Stochastics also show that NXG shares may indeed be oversold on this low volume. Despite a 17% single day drop in mid February, the year-to-date trend here is clearly upward.
In October 2007, Northgate expanded its operations into Australia through the purchase of gold miner Perseverance Corporation. While this $257M purchase may look foolish to some, gold prices are up 20% since that time while equity indices have been nearly halved. At $1.28/share, NXG trades at a 21% discount to tangible book value and is an underappreciated way to play both precious and industrial metals.
