Summary
Novadx Ventures is a Canadian coal producer, with operations focused in the Central Appalachian region of the southern United States. Novadx trades on the Toronto Venture Exchange, under the ticker symbol NDX, has two coalmines in production: the Rosa Mine in Alabama and the Rex No.1 Mine in Tennessee. Novadx is focused on metallurgical and specialty coal.
Capital Structure
As of Date : April 20, 2012
Exchange: TSX Venture
Ticker Symbol: NDX
Recent Price: $0.21
52 Week Hi /Low: $0.15 / $0.53
Issued & Outstanding: 79,340,847
Market Capitalization: $17,455,000
Management
Neil Macdonald, BSc., Chief Executive Office & Director
Robert Payne, BS, Chief Operating Officer
Valerie Helsing, CPA, CMA, BA, Chief Financial Office & Corporate Secretary
Gregory Saragas, Vice President of Finance
Scott Ackerman, Director
Jeff Durno, Director
Peter Espig, Director, Chair of Audit Committee
Property Summary
Rosa Mine
Located in Alabama as part of the Warrior Coalfields, Novadx’s Rosa mine produces 10,000 tons of metallurgical and specialty coal per month. Coal is auger mined and processed at an onsite wash plant. The company claims that 100% of production at Rosa is sold at an approximate price of $180 per ton, and plans to expand production through an underground mine. Current NI 43-101 Proven & Probable Reserves for Rosa comprise 652,000 tons.
Rex No. 1 Mine
Rex is a silicon metal-grade coal mine in Tennessee, currently in test production. Novadx boasted commercial production at Rex of 20,000 tons per month by QE2 2012, and the ability to expand production up to 60,000 tons per month as market demand dictates. Rex has NI43-101 Proven & Probable reserves of 11.3 million tons, Measured & Indicated Resources of 38.1 million tons and 9.6 million tons inferred. A coal-wash facility is currently being developed.
Regional Summary
Central Appalachian Coal Belt
The Central Appalachian Coal Belt refers to the middle segment of three coal basins comprising the Appalachian Coal Belt, which is located in the southeastern United States. It covers approximately 23,000 sq. miles over portions of Kentucky, Tennessee, West Virginia and Virginia, and comprises 6 major Pennsylvania-age coal seams. These coal seams also contain approximately 5 trillion cubic feet of coalbed methane.
Warrior Coalfield
Market Summary
Although primarily an energy source, coal has a number of uses which depend on its characteristics and grade. Thermal coal is in great abundance and has a large, stable and growing market, as energy is in demand and coal is considered an inexpensive and reliable source. Thermal coal prices vary, but 2012 spot prices range from $65 – 85 per ton, depending on region, season, etc.
Premium coals are in high demand and their supply is far less abundant than thermal coal. Metallurgical coal, also known as met coal or coking coal, is used as the carbon source in steel production. Demand for met coal is tied largely to industrial demand and global economic growth. Prices for metallurgical coal range from $200 – $350 per ton.
Aside from metallurgical coal, there are niche markets for specialty coals such as for the silicon-metals market and for activated carbon. Novadx supplies coals for both activated carbon and silicon metals. Activated carbon demands a significant premium in the market. Silicon-metals coal, used during the production of silicon metals, has a high BTU rating and also demands a significant premium in the market.
Investment Highlight / Risks
Highlights
• Exposure to the energy market.
• Currently in production and generating revenue.
• Mining assets located in the United States, which is politically stable.
• Metallurgical Coal provides exposure to industrial demand market.
• High demand and premium price for specialty & metallurgical coals.
Risks
• Stock is currently trading under $2 per share, risk of price volatility.
• Market capitalization of the company is less than $50 million.
• Premium coals are vulnerable to price fluctuation.
• Information was derived from public sources, and may not be accurate. Please verify via your own due diligence.
Comparable Companies
CanAm Coal Corp. (TSX:COE)
Lipari Energy Inc. (TSX:LIP)
NEMI Northern Energy & Mining (TSX:NNE.A)
Royal Coal Corp. (TSXV:RDA)
Compliance Energy Corp. (TSXV:CEC)
Cited Information Sources
Novadx Website
Novadx Corporate Presentation
Stockwatch