News

April 22, 2009

What’s Driving Norseman Gold’s Share Price?

By Alastair Ford

Big isn’t always beautiful, as anyone who’s been laid off by a large investment bank in the last year or two will know full well. Sometimes the smaller operations are more fleet of foot, both in terms of holding on to existing business, and in terms of the way they think. Some of the more original thinking in London’s mining scene comes out of the smaller broking houses, where compliance departments aren’t yet of a size to leach all that’s interesting and insightful out of research, and where analysts still feel it’s actually worth saying what they think, because someone will listen. So it wasn’t altogether surprising to see a clever bit of research coming out of boutique broking house Ocean Equities in support of long-standing client Norseman Gold. And it’s worth travelling at least some of the way on the journey Ocean wants us to take towards an investment in Norseman, because even if you don’t believe in the final destination, you’ll be exposed to some interesting ideas along the way.

Like all great tactical ploys, the Ocean line involves closing off all the other alternatives. First, says the broker, gold has significantly outperformed gold mining equities lately, to such an extent that we are now experiencing the largest divergence between the two that we’ve had since 1983. Aging spreadsheet users might remember that year as the one in which Lotus 1-2-3 was released; but 1983 also witnessed the first “Now That’s What I Call Music” on our record players, and the theft of...