|
| Investors looking at gold trading near $2,700/oz. can be excused for thinking they’ve missed the trade.
|
| But nothing could be further from the truth.
Not only is gold set to go much higher as the Fed embarks on its rate-cutting regime but — with the gold stocks only now beginning to move — there are plenty of undervalued plays out there.
If you know where to look.
|
| One well-positioned gold developer that the market is overlooking (for now) is O3 Mining (OIII.V; OIIIF.OTC).
|
| As you’re about to see, O3’s flagship Marban Alliance project has a prestigious address in the heart of the Abitibi Greenstone Belt in Quebec and gold reserves enough for a large-scale gold mine.
Better still, it has a newly discovered deposit at Marban Alliance that could extend that mine life significantly, plus a suite of exciting exploration-stage projects.
And, thanks to a recently completed financing, O3 is fully cashed up to not only move Marban Alliance forward but also fund impactful exploration on its other projects.
But here’s another big factor: M&A activity is heating up in the region, and it’s hard to imagine a better takeout target than O3.
|
| A Premier Risk-Reward Opportunity
|
| Based solely on its gold resources at Marban Alliance, O3 Mining is severely undervalued.
As you can see from the map below, it sits right across on the north side of the Cadillac-Larder Lake Fault from Agnico Eagle’s massive Canadian Malartic Mine.
|
| |
| Click image to enlarge
O3 Mining’s Marban Alliance project lies along the north side of the Cadillac-Larder Lake Fault from Agnico Eagle’s flagship Canadian Malartic gold mine.
|
| Consider this: Canadian Malartic recently poured its seven millionth ounce of gold and has upcoming mill capacity that could allow a mine at Marban Alliance to operate as a toll milling operation...wiping away the need for significant mine-building costs.
But even with those costs included, the Marban Alliance economics are extremely robust: A 2022 prefeasibility study on the project pegged its after-tax net present value, discounted at 5%, at C$463 million and its post-tax, unlevered IRR at 23.2%.
That’s close to four times O3 Mining’s current market cap.
The mine will be a major gold producer, averaging 161,000 ounces of annual production over 10 years at a life-of-mine all-in sustaining cost of just US$882/ounce.
Those are remarkable numbers, but it gets much better...because those projections were run on a base case gold price of just $1,700/oz.
At $2,400 gold, the mine is projected to provide C$464 million (nearly identical to the above NPV) in free cash flow over just the first two years of production.
|
| Now think about this: At the current gold prices nearly $1,000 higher than the $1,700 base case...well, the potential cash flows are massive enough to make O3 one of the premier targets in the gold mining sector.
|
| Other factors will contribute to that status.
For one, as mentioned, the prefeasibility study assumes a stand-alone operation, but a toll-milling arrangement could jibe perfectly with the impending excess of processing capacity at Canadian Malartic.
|
| If the toll-milling scenario materializes, it could cut Marban Alliance’s initial capex in half and dramatically improve the project’s already impressive economics.
|
| Secondly, once you add in a potential mine-life extension from the 342,000 ounces of inferred gold O3 has discovered on Marban Alliance’s Malartic H target, you have a project and a company trading at a perhaps the most severe discount to inherent value to be found in today’s market.
|
| Experienced Management
|
| O3 Mining’s value has a real chance to jump from here, thanks in part to the steady hand of CEO, President and Director Jose Vizquerra.
He was President and CEO of Oban Mining and helped shepherd that company through the four-way merger with Corona Gold, Eagle Hill Exploration and Ryan Gold to create Osisko Mining.
|
| Prior to heading up O3, Vizquerra was Osisko’s Executive Vice President of Strategic Development. Osisko is currently O3 Mining’s largest shareholder.
|
| As you’ll see in a moment, that fact has real M&A implications for Osisko Mining down the road.
|
| Well-Cashed For Development
And Market-Moving Exploration
|
| Another reason to look closely at O3 Mining in the current market is the fact that it just raised C$21 million in a private placement. The company now boasts C$27.1 million in cash and C$19.9 million in investments.
This deep treasury will minimize investor dilution in both the short and medium terms.
The money will allow the company to move Marban Alliance along the development curve, with feasibility study work starting in Q1 2025 and an environmental impact assessment to be submitted by Q1 2026.
The company will also use the money to explore its Horizon project, located northwest of Marban Alliance and its Kinebik project, also located north along the Casa Berardi Break.
|
| Horizon is prospective for polymetallic, VMS-style mineralization, while Kinebik is prospective for orogenic gold.
|
| This exploration upside in Quebec’s segment of the Abitibi makes O3 Mining that much more attractive to a potential acquirer.
|
| A Premier Takeout Target
|
| And speaking of M&A, the region has recently seen industry major Gold Fields acquire the portion of Osisko Mining and its nearby Windfall project that it didn’t already own.
|
| That C$2.16 billion acquisition will make Gold Fields O3 Mining’s largest shareholder.
|
| With gold giants like Gold Fields constantly on the hunt for new resources and reserves to replenish its gold inventory, O3 Mining’s large and growing Marban Alliance project, with its strategic location in mining-friendly Quebec, make it an obvious acquisition target down the road.
If that happens, especially if gold is still in bull market mode, it will be at a very nice premium to O3 Mining’s current market cap.
|
| Gold Is Soaring And
Mining Stocks Are Now Moving:
Time To Do Your Homework
|
| All indicators are that gold will continue to climb from here and bring a horde of generalist investors into this tiny market.
When they arrive, they’ll snap up the best-positioned junior developers...and O3 Mining will stand out from the crowd for all the reasons above.
|
| The fact is, based purely on the inherent value of Marban Alliance, O3 Mining is primed for a re-rating as the gold bull market marches on.
|
| That means your window to do your homework on O3 Mining could close fast. Start doing your due diligence today.
|
| CLICK HERE
To Learn More about O3 Mining Inc.
|
.png)
