Opinions
Doren Quinton
Nordex Explosives
NXX-X
WEAK BUY
Mar 19, 2008
Stock price when the opinion was issued
You might be interested:
Make explosives which they sell to gold mining companies. Have a very unique explosive called Bulk Emulsion, which is superior to stick. Doesn’t want to own the gold mines but he wants to own the people who supply them. Because grades are going down, they actually have to blast even more rock than ever. They are in the Kirkland Lake area and surrounded by gold mines and are gaining market share quickly. Has the opportunity to expand into different kinds of mining as they move west. Quarries for gravel, graphite, construction and pipelines.
Manufactures explosives. Based in Kirkland Lake Ont and caters primarily to gold mining operations. Because of restrictions on transporting dynamite, they were limited to servicing an area of 300 km radius. Raised some money in November to build some silos/warehouses, which has allowed them to dramatically expand the area they can sell to. Now able to cater to Toronto construction and aggregate markets. Opening another facility in Sudbury and will be building a 3rd one near Ottawa at the end of this summer.
Manufactures dynamite, primarily for gold mining. Have a plant in Kirkland Lake with about 20% capacity utilization. Raised some money in 2012 for building warehouses because a truck can only go 3 hours in one direction away from their plant. The warehouses effectively extended their reach. Was a little disappointed by management’s execution. Also, profitability of their product wasn’t as high as expected. This is a micro cap so if you have to exit the position, it is very tricky.
Hadn’t worked out as he had hoped. The business has gotten better. Big increase in sales, and profitability is coming back. However, the stock just does nothing. $8 million market cap and $20 million in sales, so it doesn’t look expensive. Have an ambitious growth plan and they need to raise money. When you need to raise money, people don’t buy stock which is probably keeping a thumb on the stock price. Management has said they will not do a cheap financing, but sometimes they don’t have a choice.