The attractions of Northern Tiger were plain enough, and still are: two promising Yukon exploration targets, 3Ace and Sonora Gulch, and enough cash in the bank to drill them, all against a backdrop of rising gold prices. Six weeks ago that prospect gave the company a valuation of more than C$50 million. But that was earlier in the summer, and a few weeks can be a long time in equity markets. Following a period of considerable upheaval Northern Tiger’s shares are now back at C$0.40 giving the company a total market capitalisation of just over C$38 million.

So what happened? The answer is that it has very little to do with Northern Tiger, and everything to do with the sudden appearance of a general fear of equities as an asset class. So, while Northern Tiger has done everything it always said it would, initiating a 10,000 metre drill programme at 3Ace at the end of June, and completing a smaller programme at Sonora Gulch not long after, and while gold has pressed on to new highs, investors have fled the markets on account of European debt levels, a downgraded credit rating for the US, and fears of a slowdown in the Chinese growth rate.

No surprise in that sort of environment to see Kaminak, Golden Predator, Atac, Manson Creek, and Pacific Ridge all significantly weaker too. But in percentage terms, Northern Tiger has experienced one of the bigger drops among the Yukon gold explorers, because it is at such an early stage. Indeed the first significant drill results from 3Ace came as part of a drill programme that was only slotted in right at the end of the last drilling season, on a wing and a prayer.

But what results! Thirty metres of core grading 4.3 grams per tonne was recovered from the first hole the company drilled, and the second hole delivered a not-too-shabby 10.9 metres at 15 grams per tonne. On those kinds of numbers there was no question that 3Ace would be worth another look when the next season came around. Indeed it was instantly transformed into the company’s number one priority. But as to exactly how it’s likely to shape up - the company won’t know that until the end of the current campaign. And the problem is that this is a market that likes certainty.

Still, any buyer of Yukon gold companies in general will note that Northern Tiger’s shares are now trading at a level that completely discounts all the Yukon fever that was around earlier in the summer, but doesn’t take into account all the positive developments of the past few months. The company is just adding a second rig to the one that’s already turning at 3Ace, and Northern Tiger’s president, Greg Hayes, expects to be able to release the first drill results from the current campaign within the next few weeks.

"We believe we’ve found a new high grade gold system at 3Ace", he says simply. And if the imminent drill results confirm that view then there seems little doubt that the market will do an abrupt volte face and start bidding up the shares again. The current campaign, explains Greg, is designed to demonstrate the potential extent of the system, and to outline possible targets for resource definition drilling next year.

"There’s a lot of appetite for Yukon gold", he says, as if we didn’t already know. But it’s on the strength of that basic dynamic that he reckons that raising further finance, should the results come in as positive, will be relatively straightforward. But as to the price of any such raising? – well, the drill results will play a huge part, but so too will wider sentiment towards equities in general. And then there’s the gold price. Who knows where that’ll be come Christmas? It sure is an interesting world these days.

http://minesite.com/company/northern-tiger-resources-inc

-- Posted Wednesday, 31 August 2011 | Digg This Article