A stock I am very excited about for a fall end of the year rally is small cap exploration stock Norseman Silver Ltd. (NOC:TSX.V), which trades on the TSXV as NOC and on the US OTC as NOCSF.
I own shares of it and believe that on a technical price basis it is showing great potential, because it has been outperforming its sector.
"I believe that Norseman shareholders are in for a fun ride."
It also is consolidating in a range, which provides new buyers with a great entry point, and should lead to a nice rally to the upside once it is broken.
You can see what I mean from this chart.
As you can see, Norseman shares have been trading in a range between 41 and 45 cents as resistance and 32 cents as support. This makes for a clearly defined entry point for a great trading set up. Stocks that consolidate like this in range typically have big rallies once they break their range. For instance, when this stock cleared 30 cents in December it more than doubled by rallying up to 75 cents.
There are two key reasons why a big move can happen before year end.
First, as I mentioned, shares of Norseman have been outperforming other mining stocks to position itself as an emerging sector leader. They also did this in July and early August while gold pulled back. When a stock holds up like a rock when the sector it is in has a dip it is time to take notice. And Norseman shares did exactly that.
The indicator on the bottom of the price chart is the NOC/GDX relative strength ratio, comparing the performance of Norseman with that of the GDX mining stock ETF. When GDX and gold fell in June and July and early August this ratio simply went sideways. It acted firm, because Norseman simply remained in a range that month while most mining stocks went lower.
In other words, when it comes to the technical price factor of relative strength NOC has now risen to the top of its sector. It is in position to become a leading mining stock starting this month, if not now.
"You can consider it a value play."
Secondly, Norseman is trading with a market cap of roughly $16 million US dollars (USD). Most small cap mining stocks are now trading with market caps over $20 million USD and in past bull cycles just about all small caps gold and silver stocks get to market caps over $25 million USD.
The company announced the launch of an accelerated drill program at the end of August, which should bring it positive news flow from now through the rest of this year.To put it another way, this stock has a much lower valuation than most stocks in its sector and is trading with great relative strength. You can consider it a value play.
Norseman’s property portfolio includes the Cariboo, Silver Vista, and Silver Switchback projects, all based in mining friendly British Columbia. In March the company also issued a LOI “with the Bussandri-McMillan partnership (the “Optionors”) to acquire a 100% interest in the Taquetren Silver Project (the “Project”), which is located in the Rio Negro province of Southern Argentina. The Optionors have agreed to work exclusively with Norseman.”
This project, Norseman summarized in a press release, “covers approximately 285 square kilometers (110 square miles) and is located the within the Somun Cura Massif. The geologic setting of the Project is calc-alkaline, bimodal Jurassic Taquetren Formation volcanic rocks, within the Gastre fault zone. The Gastre fault system is a transcontinental shear zone, which extends from the Andean Cordillera to the Atlantic coast resulting in a series of half grabens and tectonic basins and associated faulting. Work to date has suggested favourable hydrothermal alteration. However, the Company wishes to note that the Project is an early-stage exploration property.”
Sean Hurd, President and CEO for Norseman, commented: “We are very excited to potentially enter one of the most under-explored mining districts in Argentina. The region contains significant discoveries, Patagonia Gold’s Calcatreau (Gold-Silver Deposit) and Pan American’s Navidad (one of the worlds largest undeveloped silver deposits) with a resource in excess of half a billion ounces of silver. Our team and our new partners have extensive experience in Argentina, and in the Rio Negro province in particular. Our entry into Argentina could be a significant move forward as we seek to expand Norseman’s commitment to becoming a premier silver exploration company.”
"Norseman is at a key moment for the life cycle of a small cap mining stock."
Last month Norseman closed a private placement raise of up to $1.5 million to augment its existing $1 million in cash on its balance sheet and to fund a drill program on its B.C. properties and advance its Argentina project, which being new for the company, has the potential to really get attention from other stock market investors.
Some key facts are that it is:
- “Located in the Navidad-Calcatreau Mining District, Argentina”
- “An under explored district hosting one of the largest silver deposits in the world”
- “In the SW of Rio Negro Province ~30 km N of the border with Chubut Province”
- “Comprised by 3 cateos (Prospecting Licences) selected to cover key stratigraphic and structural elements associated with the newly-discovered Navidad-Calcatreau mining district.”
The “Argentinian team includes first-hand participation in the discovery of the Navidad Silver Deposit (M&I: 632M Oz Ag contained in 155.2 Mt @ 127 g/t Ag, 0.85% Pb, 0.05% Cu, 150 g/t AgEq)- Permits have been obtained to conduct initial geological, prospecting and geochemical sampling with work is commencing May 2021- Accessed by high quality and well maintained paved and gravel roads.”
You can find the full corporate presentation for Norseman here in PDF form.
To summarize the situation here for you, Norseman is at a key moment for the life cycle of a small cap mining stock. This could be the reason why its shares have been displaying powerful relative strength in their sector and are now in position. I believe that Norseman shareholders are in for a fun ride.
Go NOC! Go NOCSF!
Mike Swanson is the editor of WallStreetWindow.com.
Streetwise Reports Disclosures
1) Mike Swanson: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: Norseman Silver. Additional disclosures are below.
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Mike Swanson owns shares of Norseman Silver.
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