John Embry New Gold Inc. NGD-T BUY Aug 28, 2008

The knock against this is the climbing costs of their Rainy River mine that they would like to get into production. He prefers companies that have very robust projects to start with. Things like this one were not robust to start with, even before they acquired it. He is not interested in this.

Chart shows a bunch of lower highs. The group of sellers are accepting lower and lower prices and are willing to sell. The buyers are sticking to a certain price (about $3.75 or $4) and are not willing to step up. Sellers are getting more aggressive and buyers are not. If he owned, he would be selling.

Operational risks with its smaller operation. 

 NGD has had a nice run recently alongside the price of gold, and while its fundamentals are fairly strong we might expect a slight pullback here as it has run up ~65% in the past month. 
Debt levels are OK, its free cash flow can be lumpy, but it has a strong cash balance of $236.4M and an equity position of $959.5M. 
It is expected to report earnings in a couple of weeks and we would prefer to wait until earnings have been released and reassess the company's prospects at that time before jumping in.  
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Collection of Tier 2 assets. Never been fond of Ontario assets. He likes higher quality. Could do very well with a rising price for gold, which tends to favour the marginal over the lower-cost producer.