Nord Resources Corporation (fka (NRDS))

[pinup22]

Good call cody,

I found this post on stockhouse. This guy put together an excellent summary.
-------------------------------------

SUBJECT: Company Overview - Part 1 Posted By: Voltimier
Post Time: 2/5/04 20:27


Disclaimer: I provide the following information as preliminary research tool and do not warranty this information as being 100% accurate. By providing this information, I am not providing a recommendation for purchase of shares of this company or sale of shares. I strongly recommend that you do your own supportive research and due diligence. I do own shares of this company.

Company Name: Nord Resources Inc.
Trading Symbol: NRDS.PK (www.pinksheets.com)
Exchange: PinkSheets
Shares Outstanding: 22 million (as of 2/2/04 but just announced plans for equity financing).
Float: not available
EPS: n/a
Industry PE: 10 - 15 (estimate for a Intermediate Basic metals company).

Category: Base Metals Exploration Company (soon to be miner – next 6 months)
Copper deposits; precious metal byproducts Gold; Rutile royalty
.
Note: On Feb. 2 2004, Nord announced intentions of seeking 20 million in financing with the intent of bringing along the Johnson Camp Copper Mine as self managed mine project. This would effectively reclassify the company as a miner with continuing exploration efforts. Miners carry a different Price Per Earning ratio than exploration company’s.

Brief History – Nord used to be a major NYSE 100 pound gorilla mining company in the 80’s/90’s. Nord Resources was delisted off the New York Stock Exchange (going to OTC:BB) after rebels sank the dredges on the Sierra Rutile (Nord’s main producing mine asset) . This occurred sometime in 1993-4 timeframe. Nord filed for bankruptcy but came out of it in good standing. They were on the winning side of some court cases that award Nord a settlement. They are now under new managment and trading on the pinksheets. Per Nord’s President, his intention is to list the company on the Toronto Venture Exchange initially, then a dual listing on the TSE/AMEX.

Management-
* Ronald Hirsch (Director, Chairman & CEO) [phone]
* Erland Anderson (Director, President & COO) [phone]
* Stephen Seymour (Director)
* Clive R.G . Bailey (Exploration Manager)
* Mike Attaway (Vic President and General Manager – Johnson Camp Mine.


Website - www.nordresources.com

Major Shareholders
- Constellation Copper Corporation (renamed from Summo Minerals) - 1.6 million shares (as of 1st Qtr 2000).
- Mr. Champagne + 3.0 million; (2,792,500 common shares via private placement Feb. 19 2001, American Metal Market). Terms include 1/2 warrants which have subsequently expired (June 30,2003).
- Ronald A. Hirsch 625,000 common share (via private placement Feb 19 2001, American Metal Market). The additional 1/2 warrants expired June 30, 2003
Note: Technically the warrants have expired, but the possibility of an extension is a real possibility.


Core Assets/Resources (for generating Income)
1. Johnson Camp Copper mine (35 m tons @ .417% Cu ore content, open pit, Leach-SX-EW)
2. Sierra Rutile Net Smelter Return (NSR) interest of 2.5% (in Sierra Leone, West Africa)
3. Significant Stockholder of Nord Pacific common shares (NORPF.PK)
4. Exploration Database – 20 years. (This is under-estimated by the popular shareholder)
5. Option (5 years) to earn 100% of Coyote Springs Copper Property in Arizona (per news release of Jan 29, 2003)
6. Landscape Rock Subsidiary
7. Significant Tax Carry Forward Credits.


***************************************************************
RESOURCE DETAILS

1) JOHNSON CAMP Copper Mine.
* The Johnson Camp property totals 2,743 acres. The existing facilities include a 4,000 gpm solvent extraction plant, a tank farm, a 52,000 pound per day capacity electrowinning plant with 74 electrowinning cells, four solution storage ponds with a capacity of eighteen million gallons, a truck ship, core storage building, administrative and engineering office and warehouse, laboratory, plant mechanical shop, a crusher station dump pocket and adjacent fuel storage tanks, and various other equipment.
* Acquired a vendor option from Constellation Copper Corp. (Summo) in 1999 for 1.6 million shares.
* Exercised the purchase option for cash to acquire 100% of mine from Arimetco Inc. in the spring of 1999.
* Retained Constellation Copper Corps' (Summo’s) Feasibility Study and Development Plan.
* Nord Resources ran the remaining contents of the solution ponds through the Electrowinning process, sold the copper cathode and put the mine on Care & Maintenance status at the end of 1999.
* Proven Ore is 32 mm tons graded @ .417% of Copper Oxide
* Full capacity life expectancy - 10 years +
* Ore production 3.2 m tons per year of Copper Oxide.
* Annual forecasted production – 20 million pounds (10,000 tons) of cathode copper
* No byproducts credits
* Heap leaching and the solvent extraction-electrowinning (SX-EW) process of oxide ores. Sx-EW is now regarded as a mature, low technical risk technology by the copper industry. The copper leach method is the variant that will keep cost of mining down (compared to processing Cu Sulfide deposits). Also capitalization to build out facilities of oxide process is less than a Cu Sulfide processing facility.
* This is a zero discharge configuration.
* Approximately 32 million Tons of Ore is on the Leach pads today.
* From the Restart of Operations (applying acid to the heaps) - they will be producing Cathode Copper in 3 months.
* In 8 months they will be running at full 'Mine' rate processing 9,000 tons a day.
* In 12 months they will be running at full capacity (somewhere in-between they could exercise an option to forward sell).
* Potential to significantly expanding existing oxide reserves (see PR Jan 04 Note: while doing an Water Test hole off of the proven reserves, hit additional copper ore which has the potential to vastly increase proven ore)
* The Burro Pit and the Copper Chief are/will be Open pit mining.
* Strip ratio for production ?
* Potential for adding new copper ore deposits (sulfide) below the existing oxide reserves.
* The company spent $1.5 mm + to resolve all the environmental issues. So all the environmental work is done.

Note: Because this was an active Leach/SX-EW facility, this mine has low technical risk. Since the infrastructure is already in place, capitalization cost for start up will be considerably smaller. Secondly, a substantial amount of Ore is already sitting on the leach pads (standing ready for leaching); the ability of the Ore to leach is proven (about 3 months); Copper extraction rates and yields numbers are dependable because this ore has already been processed; The mines management/Crew are well known in the industry and can produce. They have identified process that will improve the copper extraction percentages and the capacity thru-put (ie. 3 additional leach ponds are scheduled to built (2 exist).


2) Sierra Rutile, Africa
* Held rights to largest natural Rutile property in the world before selling mining rights and facilities for a 2.5% NSF royalty. At peak production it was turning out a third of the worlds TiO2. Revenues when it was going were in excess of $350 mm.
* By vending out Sierra Rutile they effectively took allot of risk out of it for the company, leaving the upside without having to spend any capital or place money at risk.
* New owners expected to have dredges refloated and producing by end of 2004.
* Finished and sized graded TiO2 sell for about $2500 a ton.
* Estimated Potential income for Nord is $5.2 mm a year.

3) Major Shareholder of Nord Pacific (NORPF.PK)
* Nord Resources owns 3,697,561 common stock of Nord Pacific
* An additional option to convert debit ($280,000) to equity (1.4 millions share) exist.
* Ronald A. Hirsch owns 194,000 of common stock of Nord Pacific.
* Cominco Ltd. owns 1,230,921 common stock (June 4, 2001)
* Nord Pacific is involved in the Simberi Gold Joint Venture located in Papua New Guinea.
* The Joint Venture Partner (JV) is PGM (through the Simberi Mining and Tabar Exploration Joint Venture Agreement signed on November 29th, 2002).
* PGM will be the initial operator of the Joint Venture. A feasibility study was completed on the Simberi property in the 3rd Qtr. of 2003 and PGM expects to complete financing package required to place the mine into production.
* Initial output of around 40,000 oz of Gold is now expected to commence during the second quarter of 2005.

Note: A recent agreement for a merger between Allied Gold Limited and Nord Pacific is being highly contested by PGM Ventures.

4) Database of previous exploration studies
* The past exploration of a company can be its future bread and butter. This company has been doing exploration for 20 years plus and has a treasure chest of data about potential exploration sites.


5) Coyote Springs Copper Property in Arizona
* "Elephant Country" type property.
* Northwest fault runs right through Nords Property.
* See press release for details
* The significance of optioning this property above all other suitors should not be discounted.

6) Landscape Rock Subsid.
* Expected to generate 1 - to 1.5 million in revenues/year
* Located on Johnson Camp site and leased with a 30 day option.

7) Significant Tax Carry Forward Credits to off set future income taxes.
* This number is not none for certain, as management at this time could not say, but I would expect it to be in the 5+ million range.
* My understanding is that these credits expire over time and have a must use by date of 9 years.


Industry Related News
·
FalconBridge on strike (February 2, 2004)
·They are a huge producer of Nickle/copper/cobalt
·Average strike length is 3 months. Last strike lasted 6 months
·Because of this look for support in copper (NRDS), Nickle and Cobalt (FCO) commodity prices

Copper production to be below capacity needs for 2004/2005.


ADDITIONAL NOTES:

On February 2, 2004, NRDS announced today that they are seeking 20 million in financing. A large sum. They have about 22 million shares OS now, so 20 million in capital influx would mean adding an additional 80 million shares (if I use .25 cents).

I spoke with the CEO R.Hirsch about the dilution. He stated that he felt the company would not be doing the deal at this level (.30) of share price. His plan was to be as stingy as possible with issuing of shares (since he is a major shareholder also). He also mentioned that they may not need all of the money.

I assume they did this because they could not get an attractive deal on a Joint Venture at Johnson Camp (which meant retaining at least of 30% of total revenues or .12 share). It was probably more attractive to increase the number of shares and keep all of the income - since they will have a steady cash flow in a relative short period of time (3 months).


Again when I asked R.Hirsch about this, he said they had a lot of interest everything ranging from cash offers to JV’s, but at the end – they decided the company had a good team was capable of developing the mine and running it on their own.

Comments, correction, and additions are appreciated.

-Voltimier