Oromin Coverage
OROMIN EXPLORATIONS LTD.
Price (Sept. 2, 2009) $0.91
52-Week Range $1.55 – $0.385
Shares O/S 94.64 million
Market Cap $86.1 million
50-day Average Volume 65,900
200-day Average Volume 60,200
Fiscal Year-End February 28
Symbol TSX: OLE
Website www.oromin.com
Financial Data
eResearch Analysts:
Anthony G. B. Hayes, CFA;
Bob Weir, B.Sc., B.Comm, CFA
Note: Report prepared with public information only.
Source: www.bigcharts.com
PROFILE
Oromin Exploration Ltd. (“Oromin” or the “Company”) is a
growth-oriented resource company focused on exploring the
Sabodala gold concession in Senegal, West Africa, and the Santa
Rosa Dome oil prospect in Argentina. The Company, in which
IAMGOLD has recently acquired a strategic 17% interest, is well
financed and managed by experienced industry professionals with
an enviable track record of discovery.
INVESTMENT CONSIDERATIONS
Strengths
• Successful, well-respected, aggressive exploration team
• Has net 1 million oz of inferred gold resource at Sabodala
• Pre-feasibility study scheduled for release in September 2009,
with upgrading of resource quality.
• Well-funded with cash of $21 million, or $0.22 per share.
• IAMGOLD owns 17% of Oromin, which it bought in June
and agreed not to buy any further shares for 7 months.
• Take-over candidate.
Challenges
• Exploration and mining in Africa is often considered
politically risky but there have been few problems in Senegal
to date.
• Though adequately financed, Oromin is still a development
company with no revenues and is ultimately dependent upon
its ability to raise equity.
• While management is skilled in exploration, neither that nor
development success is ever guaranteed, regardless of
potential.
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MANAGEMENT ACUMEN
Members of Oromin’s management team have been involved in
significant successful exploration discoveries and mining
developments, including:
● Hemlo gold deposit (30 million ounces gold) in Canada
● Eskay Creek gold&silver deposit (4 million oz.) in Canada
● Arequipa’s Pierina Gold deposit (7 million ounces) in Peru
● Petaquilla copper-gold deposit (1.1 billion tonne reserve) in
Panama.
EXPLORATION ACTIVITIES
Oromin is active in two countries: gold exploration in Senegal;
and oil prospecting in Argentina.
A. SENEGAL
1. Sabodala Gold Concession
Oromin is a 43.5% owner and the operator of OJVG, a private
company formed to hold 100% of the approximate 230 sq. km.
Sabodala exploration concession in eastern Senegal. The
concession surrounds completely the 33 sq. km. exploitation
concession of Mineral Deposits Limited where gold production
has already commenced.
The other members of the OJVG are Bendon International
(“Bendon”), a well-funded, private Saudi-controlled group also
with 43.5%, and Badr Investment & Finance Co., a private
Arab-African well-funded group, with 13%. The expenditures
for the OJVG are funded equally by Oromin and Bendon.
2. Exploration Results
The accompanying map shows how much OJVG has
accomplished since it initiated work on the Sabodala
concession in 2005. Work by OJVG shows great promise with
6 gold deposits and 11 prospects discovered to date. They are
related to shear zones within a 5-8 km wide and about 22 km
long north-east trending structural corridor.
COMMENT: This confirms that a new gold district is
unfolding in the Sabodala area. There is already a NI43-101
inferred resource of 2.3 million ounces of gold, of which
Oromin’s share is 1 million ounces.
The combined resource at OJVG’s three Goloumba deposits
totals 0.94 million ounces gold in 9.7 million tonnes, grading
3.01 g/t gold. The Masato deposit resource totals 1.32 mllion
ounces gold in 35.4 million tonnes, grading 1.16 g/t gold @ 0.5
g/t @ g/t cut-off grade, or 860,000 ounces gold grading 1.74
g/t gold g/t gold @ 1.0 g/t cut-off grade.
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3. Other Active Mining Companies Nearby
In addition to OJVG’s six deposits, there are four others held
by Mineral Deposits Limited (“MDL”) with two, RandGold
Resources Limited with one and IAMGOLD one, making
this district one of the most active and successful gold
exploration areas in Africa.
COMMENT: This activity has highlighted the importance
of this area of West Africa which has attracted the interest of
senior mining companies looking for significant gold
acquisitions. Not the least among them is IAMGOLD with its
17% stake in Oromin.
4. Mineral Deposits’ Mill
The maps (above and below) show that the OJVG
concession surrounds completely the Mineral Deposits’
exploitation permit. MDL expects to produce 160,000
ounces of gold in 2009. Barring a consolidation of the entire
district by a senior company, the MDL plant could be easily
expanded at a fraction of the cost of a new facility to offer a
“toll-milling” opportunity, particularly for OJVG, which has
very similar geology and gold recovery to that of MDL.
OJVG’s Masato Deposit is only 1.4 km due east of MDL’s
mine, and cost efficiencies suggest it should be developed in
conjunction with MDL. Even the three Golouma deposits
that have collectively almost a million ounces are only six
km away from the Sabodala mine and the Niakafiri deposits
of both OJVG and MDL will likely be developed together.
5. Prefeasibility Study
As OJVG moves towards the completion of its Pre-
Feasibility study this quarter, it expects the majority
of its 2.26 million ounce “inferred resources” to be
converted into “mineable reserves”. There is also
positive underground potential that is not included
in the resource calculations. The planned 2009
drilling program of 100,000 metres should also add
significant new gold ounces and identify further
“Blue Sky” potential.
6. Senegalese Mining Convention
Under the Senegalese Mining Convention, the
Government receives:
● A 10% free carried interest after capital
repayment
● A royalty of US$6.50 /oz of gold produced
There will also be:
● No import, export, VAT or withholding taxes
during the exploration and development phases; and
● A minimum 7 years tax-free status during the
mining phase.
B. ARGENTINA
Oromin has a 67.52% interest in an oil prospect in
Mendoza Province, Argentina. In early July, a drill
rig was brought to the site and drilling commenced
in mid July. The shares of Oromin moved up from
the $0.90 level to reach $1.40 during the month in
anticipation of success. At the end of July, Oromin
announced that it had not encountered any
hydrocarbons in the hole. The abandonment of the
hole led to the share price returning to the $0.90
level.
COMMENT: The Company is re-evaluating the
prospect to decide whether or not to proceed
further. Should more drilling be attempted the
shares could again respond positively. However, it
would seem that the market is only paying for
Sabodala, making Santa Rosa a possible bonus.
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CORPORATE INFORMATION
SHARE STRUCTURE
Oromin Explorations Ltd.
Common O/S 94,639,035 Suite 2000, Guinness Tower
Warrants 4,100,000 1055 West Hastings Street
Options 9,470,000 Vancouver, B.C.
Fully Diluted 108,209,035 V6E 2E9
Management owns 11.417 million shares, or 12.1%. Oromin’s website hosts a Corporate Video and a
Corporate Presentation. These may be accessed at:
IAMGOLD owns 16.089 million shares, or 17.0%
http://www.oromin.com/s/Presentations.asp
DIRECTORS AND OFFICERS
Information on the Sabodala project in Senegal is at:
http://www.oromin.com/s/Senegal_Sabodala.asp
Chet Idziszek – Chairman, President, CEO and Director
Ian Brown – Chief Financial Officer
Information on the Santa Rosa project in Argentina is
at:
David Mallo – Vice-President Exploration (Minerals)
James G. Stewart – Secretary/Corporate Counsel/Director
http://www.oromin.com/s/Santa_Rosa_Dome.asp?Re
portID=316202
Derek Bartlett – Director
Robert S. Brennan – Director
Nell M. Dravogan – Director
Robert Sibthorpe – Director
SEDAR
Douglas S. Turnbull – Director
Phil E. Pearce – Advisor
News announcements, press releases, and financial
reporting on Oromin can be found on SEDAR:
http://www.sedar.com/DisplayCompanyDocuments.d
o?lang=EN&issuerNo=00005241
