Now is the time to find solid, undervalued stocks!
As a resourceful investor with a nose for good business, you are always looking for so-called “bargains”. These undervalued stocks don’t have to be bad quality companies by any means. Rather, it is often these investments that can give you a lot of pleasure in the future.
I definitely count OceanaGold on one of those great occasions! OceanaGold (ISIN CA6752221037 / TSX: OGC) is a gold producer that is positioning itself better and better and that you should simply have on your radar.
As part of the stock market crash of the COVID-19 pandemic in April 2020, OceanaGold shares rose from CAD 1.20 to almost CAD 4.00. Then there was another stronger correction, up to almost CAD 1.70 again! Yesterday, however, the stock shot up an incredible 30%! Apparently the course has just been fine-tuned for the future!
Full speed ahead!
Project extension permits extend mine life until at least 2028!
In the press release of December 2, 2020 (LINK to the press release) informs OceanaGold that it has received permits for the ‘Golden Point’ underground mine (‘GPUG’), the expansion of the ‘Deepdell North Stage III’ (‘Deepdell’) and the ‘Frasers West’ expansion.
These permits allow the Company to continue developing new and expanded open pit and underground mining opportunities at ‘Macraes’, including the new ‘GPUG’ mine. It is expected that these projects will extend the life of the ‘Macraes’ operation through 2028.
The Macraes mine on New Zealand’s South Island is the country’s largest active gold-producing mine, having produced over five million ounces of gold since 1990.
Due to the combined gold production and the known remaining resources, the mine is still classified in the category of a “world class” gold deposit, of which there are comparatively few in production worldwide. The operation consists of a large surface mine, an underground mine and an adjacent process facility including an autoclave for pressure oxidation of the ore. About 75% of its gold production, converted on an annual basis, is mined in opencast mining and about 25% underground.
The ‘Macraes’ operation has celebrated several extraordinary milestones in the recent past, including the pouring of the five millionth ounce of gold and the pouring of the 10,000th bar, both in 2019. Between 2007 and 2016, flotation concentrate was produced from the ‘Reefton’ Mine transported by rail and road to use the excess autoclave capacity. The underground mine ‘Frasers’ started operations in 2006, with an expected service life of initially six years. It is still in operation today and is now being expanded again.
This is what Michael Holmes, President and CEO of OceanaGold says:
“We are pleased to announce that we have the permits to develop three deposits that represent a critical opportunity to extend the life of the Macraes mine, which currently extends to 2028. The receipt of the permits for the three projects is a testament to our 30-year history of responsible mining and our outstanding environmental management in one of the greenest countries in the world. We continue to seek additional opportunities to grow through organic growth and exploration in New Zealand, and work closely with government officials and other stakeholders to contribute responsibly to the national and local economies. ”
The most important future milestones of ‘Macraes’ at a glance
- By developing the three deposits, a total of 1.1 million ounces of gold can be produced there over the next 8 years.
- The open pit and underground operations are expected to produce an average of 150,000 to 170,000 ounces of gold per year at a total cost of approximately $ 1,000 per ounce.
- With no gold hedging transactions in New Zealand dollars beyond 2020, we anticipate the operation to generate significant free cash flow in 2021 and beyond.
- The development of the ‘Golden Point Underground’ and the expansion of the existing open pit mine in ‘Macares’ are among several organic growth projects in the OceanaGold pipeline.
- Because the creation of organic growth is the key to long-term ‘shareholder value’.
the next steps
The freshly received permits will significantly facilitate the development of the ‘Golden Point Underground’, ‘Deepdell North Stage III’ and the expansion of the ‘Frasers West’ pit starting this quarter.
Services and earthworks relating to the ‘GPUG’ portal are already in progress and the first section of the portal is expected before the end of the year. OceanaGold expects initial production from ‘GPUG’ in the fourth quarter of next year, which will complement and eventually replace existing underground production in ‘Frasers’ when mining is complete.
The pre-dismantling of the ‘Deepdell’ open-cast mine and the expansion of the ‘Fraser’ open-cast mine are also in full swing!
Rating: Outperform at MEGA price target !!!
The analysts at BMO Personal-Financial.com Markets, one of the world’s best brokerage houses in the precious metals sector, awarded in their latest company update Buy recommendation for OceanaGold, with a price target of 5.25 CAD per share!
The share is currently at a level of around CAD 2.30, so the target price of CAD 5.25 means an unbelievable ‘upside’ potential of around 128%!
In their recommendation, the BMO analysts emphasize the aggressive exploration policy and the extension of the mine life as the key to future corporate success! The analysts see the income from the last equity financing round of approx. 150 million CAD as a huge milestone, as the income to finance the development of ‘Haile Underground’, the exploration and development of the New Zealand assets of ‘OGC’ (‘Waihi ‘and’ Macraes’) and for general corporate purposes. A strengthened balance sheet should be an even stronger incentive to buy for new investors!
Despite the adversity regarding the COVID restrictions at the beginning of the year is driving OceanaGold (ISIN CA6752221037 / TSX: OGC) its organic growth continues. This seems to have closed the last of the imponderables and with the latest equity injection of over CAD 150 million, the company is very well positioned to continue growing and reaching new highs. Similar to the financial market experts from BMO Personal-Financial.com Markets, we are very positive about the future and expect a significant price increase in the near future.
Whether it was father and mother joys that Osisko Gold Royalties Ltd. (ISIN: CA68827L1013 / TSX & NYSE: OR) and Osisko Development Corp. when we announced the launch of Osisko Development, we don’t know. One thing is certain: with the announced launch of the leading North American gold development company, the aim is to open the door to the middle segment of gold producers. The first step in this direction will herald the start of trading for Osisko Development common shares on the TSX Venture Exchange on December 2nd or around this date. Osisko Development will then be listed on the Toronto Stock Exchange under the symbol “ODV”.
‘Reverse takeover’ completed
The spin-out transaction previously announced by Osisko Gold Royalties and Osisko Development has now been completed and resulted, among other things, in the transfer of certain mining properties to Osisko Development Holdings Inc.
These properties include the high-grade, flagship Cariboo Gold project in central eastern British Columbia. A package of tradable securities will also be transferred to Osisko Development Holdings Inc. as part of the now completed spin-off. This, in turn, occurs through the transfer of business units that are direct or indirect owners of such mining properties and marketable securities.
Change under the sign of merger
On November 25th, and thus before the merger came into effect, 13,350,000 Osisko Subco subscription certificates were converted into 13,350,000 ordinary shares in Osisko Subco and 6,675,000 share subscription rights – provided the conditions for fiduciary clearance were met – while at the same time financing Osisko Subco in the amount of 100.1 million dollars, which was completed on October 29, 2020.
Subscription rights of Osisko Subco common shares that were in circulation immediately prior to the merger were exchanged for warrants on Osisko Development common shares at a ratio of 1: 1. The subscription right for one Osisko Development common share at a price of CAD 10 applies for a period of 18 months after the merger takes effect.
New times, different minds
… at Osisko Royalties
With the conclusion of the ‘Reverse Takeover’ (‘RTO’), Sandeep Singh took the “executive chair” at Osisko Gold Royalties, respectively the role of President and CEO. He was also named CEO of the company.
Sean Roosen, in turn, is now the Executive Chairman of the Board of Directors, making the step from CEO of Osisko Royalties to CEO of Osisko Development.
… and at Osisko Development
With the completion of the ‘reverse takeover’, the Osisko Development board of directors was reorganized. In addition to the aforementioned new CEO Sean Roosen, Charles Page as Lead Director as well as John Burzynski, Joanne Ferstman, Michèle McCarthy, Duncan Middlemiss and Éric Tremblay are now on the Board of Directors.
The management of Osisko Development is also happy to see new faces, for example Chris Lodder (President); Luc Lessard (Chief Operating Officer, COO); Benoit Brunet (Chief Financial Officer, CFO) or Maggie Layman as Vice President of the exploration program.
And more new things
In connection with the ‘reverse takeover’, Osisko announced a number of other innovations and changes:
- the voluntary dissolution of Amalco and an associated merger with Osisko Development.
- Osisko Developments moves from the Business Corporations Act (British Columbia) to the Canada Business Corporations Act.
- the postponement of the end of the financial year from May 31st to December 31st, which is also the end of the financial year for the “reverse takeover” buyer.
- PricewaterhouseCoopers LLP was appointed as auditor for Osisko Development.
According to the ‘RTO’: Around 88% of the ODV shares are owned by Osisko Royalties
With more than 100,000,100 shares in Osisko Development, Osisko Gold Royalties will hold approximately 88% of the issued and outstanding shares in North America’s new gold development player after the reverse takeover has been completed and in addition to further beneficial ownership.
There is also plenty of good news from the Royalty and Straming Society Osisko Gold Royalties Ltd. (ISIN: CA68827L1013 / TSX & NYSE: OR). It will also be exciting to see how the resumption of production at the ‘Renard’ diamond mine operated by Stornoway Diamonds Canada Inc. will go in September. Victoria Gold, the company that operates the ‘Eagle Gold Mine’, from which Osisko receives five percent ‘Net Smelter Return’ (‘NSR’) license fees, announced that it would start commercial production on July 1, 2021. That washes away for the exploiter a lot more cash flow into the till! Not least because of this, this share is a precious dividend pearl for us!
Gold production in the ‘Pan’ open pit mine in White Pine County, Nevada, increased by a whopping 11% compared to the same period last year. At 46,031 ounces of gold, production as of September 30, 2020 for the full fiscal year was within the forecast of 45,000 to 48,000 ounces of gold. Reported for the 4th quarter Fiore Gold Ltd. (ISIN: CA31810L1085 / TSX-V: F) a gold production of 12,432 ounces.
In addition to the plus in gold production, the preliminary results also contain other highlights worth reading.
Average of $ 1,681 per ounce
In terms of pan gold sales, Fiore had sold a total of 46,334 ounces in the market by the end of September 2020, at an average price of $ 1,681 per ounce.
In the fourth quarter, a total of 12,455 ounces of gold were sold, at an even higher average price of $ 1,920 per ounce.
“Kassensturz” shows higher cash holdings
At the end of the full fiscal year 2020, Fiore was able to report an increase of USD 5.9 million compared to the first half of the current year. As a result, cash on hand as of September 30, 2020 totaled $ 23.2 million.
If you look at the figures from the same period in the previous year, there is even a cash plus of USD 15.9 million for the full 2020 financial year.
Almost 15,000 tons of ore every day
With a view to the ore mining results, Fiore is within and in some cases even above its own production forecast. Up to the end of September 2020, 14,961 tons of ore were mined daily, with a ‘strip ratio’ of 1.5 and a gold content of 0.015 ounces per ton.
The fact that ore production is above plan, says Fiore, is mainly due to better ore recovery.
The human capital behind the funding success
For the full fiscal year, the employees contributed a total of 297,672 working hours to the mutual success of Fiores ‘Pan’ open-cast mine in Nevada – and that with an accident rate of zero.
For this, too, the ‘Pan’ team received the ‘Small Mine Safety Award’ from the Nevada Mining Association, incidentally for the fifth time in a row.
In order to be able to continue celebrating such successes, the work in the ‘Pan’ mine is of course based on the strict safety protocols, which primarily serve to protect the health of employees.
As a result of this professional discipline, no case of COVID-19 has so far been registered, neither among the employees in the ‘Pan’ mine, nor with the corresponding contractors.
‘Pan’ mine: results defy corona crisis
For Tim Warman, CEO of Fiore, the results achieved are all the more astonishing and gratifying, especially in view of the great challenges that COVID-19 poses for everyone:
“The safety and health of our employees is our top priority. It is all the more important that parallel to these efforts we were able to announce a new gold production record on the ‘Pan’ mine and that the fruits of the transition to ore crushing are now bearing fruit. “
At the same time, Warrant continues, the focus is still on the growth of Fiore and the goal of continuously developing the three plants (‘Gold Rock’, ‘Gold Eagle’ and ‘Pan’) is a few steps closer.
Three plants – one goal: to become a 100% US gold producer
“Some systems are already in operation on ‘Gold Rock’. Together with the solid results of the preliminary economic feasibility study, these prerequisites form a good basis for the feasibility study that we will push forward until 2021 “, Added Fiores CEO.
The published positive update on the Golden Eagle resources, Warrant hopes, could serve as an engine to further develop these previously unrecognized assets together with regional partners.
“The successful ‘Pan’ mine drilling program encourages us to take further steps towards jointly operating this open pit mine with ‘Gold Rock’. Our goal is as simple as it is ambitious, namely to become the only 100% domestic ‘multi-asset’ gold producer in the USA “concluded Tim Warman.
Attracting ‘Pan’ mine production in line with ‘Gold Rock’ project successes
Most recently, Fiore Gold reported great results from its gold rock drilling program. Also located in Nevada, drilling recently revealed ongoing drilling there 2.17 g / t Au over 48.8 meters and 1.41 g / t Ag over 32 meters. This proves the southern part of this deposit as one of the best so far. This is supported by the analysis of two further high-grade drill samples in this very southern area of ’Gold Rock’. With 1.41 g / t Au over 32 meters and 1.11 g / t Au over 38.1 meters Well, drill hole GR20-049 and drill hole GR20-068 actually delivered “brilliant” results.
The 2020 ‘Gold Rock’ drilling program is clearly heading towards an expansion of the entire current resource envelope, just as the inferred resources will be upgraded thanks to the results of the most recent drill samples.
Just yesterday the company announced that they had found more high grade material that would extend mine life for another two years!
Meanwhile, the feasibility study is paused due to the fact that the laboratories must of course also adhere to the Covid-19 protocol when analyzing the drill samples. But Fiore CEO Tim Warman is confident that work on it can be resumed soon and driven forward at full speed.
While work on the ‘Gold Rock’ project is paused, some of the drilling rigs used there are now making their way towards the ‘Pine’ mine. Finally, this is one of the planned steps towards joint operation of these two mines, mentioned above.
Fiore Gold Ltd. (ISIN: CA31810L1085 / TSX-V: F) convinces completely with its services, both in production and in the further development of its mines! With the additional successful drilling program on ‘Pan’, Fiore Gold is taking further steps to operate ‘Pan’ and ‘Gold Rock’ holistically and is well on the way to becoming the only 100% US gold producer to date with multiple plants to become! That’s what we call a tough performance!
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