Gold down $45 no problem!
With gold in negative territory today I find myself looking for bargains. Gold stocks are holding better than the metal at this point. With gold down over 3% many gold stocks are down only a fraction of that. This means that there is still value in gold shares at this time. Translation.. dont sweat it and have a great weekend.
As the gold bull market progresses the volatility will increase and as the price of gold increases the daily swings will become bigger. We expect days of over $100 ups and downs to come. Dont be shaken from your gold by market volatility.
on sedar dated Nov 9, there is a technical report, effective June 5 but submitted to OLE on Oct 27….
is this new? it is huge and I am confused….
huge is right.. 32 megs..
that is the updated resource report that was announced on 22 sep in its entirety..
will take a while to go through..
any theories on the low 1.20 sp…. is this a fall out of the POG…. or BD not officially over ?….i dont get it that they sold 10 mil shares at 1.30 to larger investors…. but now drops to 1.20…
we havent recd any ionfo since sept 22…. outside the BD….. chet knows that the longer no news/info/data released…. the market gets tired and foregts abt Ole, and the sp drops… he’s worked that angle quite nicely for himself ver the years…. he statted in NR’s that the UD would be released in late year 2010….. now its alte Q1. Just another dissappoint ment and delay and non delivery. Thats why he’s called “Delay and Dilute Chet”
Anyone know why Olepf is selling off? Is there a big seller pushing the price down. Doesn’t seem to make any sense.
indygold—No one really knows the answer to that question , but I suspect two reasons may be contributing in addition to price of gold being down for the last two weeks……1)Chet is sitting on Q-3 assay reports and 2) No announcement re completion of BD….Is he also sitting on that ???
Saudi-Ole Mgmt…
The BD is over. Announce it!!
The SP still is horrendous at 1.16. Announce the UpDate as promnised in your last NR’s !
Stop sitting on the new assay reports…. are you with holding News again to suppress the sp… for another PP ?
This stock is a NiteMare ! After 5 years we cant get out w/o losing a bunch of money. PG says you drill for Gold not Investors… that’s a Lie…. you care a Ton for the PP’s investors…. and drive the retail sp down to get them. Story’s out !!
man… you wanna shift a few thousand ole shares and you can only get a buck 15 for them yet the company sells 10 million for a buck 30. what gives… http://tinyurl.com/37bjy3h
Among other good news there is talk on the interwebs of an Alliance That Could Be in Cards for MDL and Oromin via African Intelligence site. Cost 4€ for the report, don’t they know all us ole investors are on the bones of our ass already, who can afford 4€ these days.
Gold still down this A.M. , but at least Ole announced closure of BD…SP now going up some……Now we need the assay reports (later this week??) Gold should resume leg up next week….Harry says rumors of an Alliance with MDL …..Nov could still be a great month..
Good one H-C-V. Bones of our ass. Well put. ! lol… fyi, i also read an Article recently in a Googled search of Junior Gold Mergers/ W Africa Junior Gold etc…. statting the potential of the W African Senegal region…. pointing out Oromin and “the Middle Eastern Investors” !!. Very interesting comment to read in a Mining/Gold Article referring to the Saudis.
this is a Blood Bath ! whats goin on? this may take a long time to recover…. November was supposed to be a Great Month ! back under a buck?
The Sept. Update (was due in Aug.) and included drilling through June……July drilling was approx 16 weeks ago , Aug drilling 12 weeks ago etc ,etc….Does anyone think that Oromin is not sharing with us information on assay reports that they already have ??
I wonder where that “abundant flow of information” is that the Sept release said would be forthcoming…..
This is bizarre…
Over the past few days, as I read it – on the US side – there have been many 10k share blocks sold and at least one 20k share block. Also, a lot of buys… but the sells drive this puppy
I personally think someone has wanted out and has been doing so…
OLE definitely tries your patience…
h1
>>”Does anyone think that Oromin is not sharing with us information on assay reports that they already have ??”
Yes.
: OLE
OTC Bulletin Board: OLEPF
Nov 18, 2010 09:31 ETOromin Announces Positive Drilling Results From Several Aspects of Ongoing Resource Expansion Program
VANCOUVER, BRITISH COLUMBIA–(Marketwire – Nov. 18, 2010) – Oromin Explorations Ltd. (TSX:OLE)(OTCBB:OLEPF) –
New Drill Results include:
And so it goes. Good results with more coming the 1st and 2nd Q 2011. Is this what management was giddy about? SP should react favorably. My guess on the big block selloff are people who need cash now and can’t afford to hold till the end.
If MDL and Oromin merge, would they create a new gold company that would have it’s own stock certificate?
IndyGold – I surely hope that this report was not what they were Giddie about as this was not a giddie report in my opinion!!! My thoughts are that they are considering a Buyout or Merger and they are looking at “BANK” for themselves at this point…..I am talking to a Securities Lawyer about some issues that I am finding borderline fraud…….
Mallard,
I can’t see a Teranga (MDL) merger/buyout at all. The numbers don’t work. Assume a merger of equals. I doubt if currently MDL would agree to anything better for Oromin. Take an optimistic valuation for Teranga IPO at $700 million, multiply by Oromin’s 43.5% of OJVG gives $304.5 $million. Divide by 140 million shares for Oromin gives $2.175 per share for Oromin which would have to be in Teranga stock. Not too exciting.
IMHO, Oromin is worth a lot more than Teranga – meaning that Teranga is way overvalued or Oromin is way undervalued. I believe the latter.
Discussion?
DW,
Agreed, good report but not “giddy” report. I was hoping for some really hot drill holes. Not this time.
DW,
Can you hint at which “issues” you are concerned about?
Re “Giddy” , whatever that means….If Ole hit a really “hot drill hole” or holes in Oct….and caused some to be giddy ,those holes would not have been reported in the assay reports for the third quarter which this 11/18/2010 NR was….Soooo, you dreamers can dream on until next release of assay reports which will include Oct drilling….
As much as they were all Giddie/Happy when I spoke to them over the previous weeks, I would have expected more on this report that would move the stock price back up to at least the $1.30 they just closed……….I am very disappointed with what is going on with this stock….GOLD IN ALL TIME HIGH ERA/LARGE SUMS OF GOLD AND COUNTING/INTERESTED PARTIES WILLING TO PUT LARGE SUMS INTO STOCK/Supposed buyout talks-Merger talks. Yet, this stock seems to always give it up and we fall into the basement…NOW, I realize – There are other Gold Stocks (Miner) that are seeing the same disappointing stock prices, yet I also see some that are not nearly of teh source of glold we are at and they are climbing (But I see reports at least once a wekk)…. That is all I was saying!!! I am not a Master of teh Gold stocks and I have made no bones about stating this fact – Yet, I am a strong stock trader and once upon a time saw great potential here in Oromin – I do not see that today!
Thanks Everyone, Love the input and ongoing talks.
Oh, and by the way Arlene….No dreams here, This is why I may dump my holdings the next time I see $1.40………..I feel that I may be able to jump in again at a lower price a year or two from now and utilize thos efunds in other profitable stocks.
I hope mey attitude changes, But if I sell – It will drag the price down for all again. NO DAY TRADER HERE!!!
DW—Did not mean to inply that you were a dreamer……Was just trying to point out that the people who thought the giddyness was caused by a ‘HOT HOLE OR TWO” shouldn’t have expected it to be in this NR in any event..I am a strong believer in the value of Oromin and still believe a buyout is possible as early as Q-2 ’11……I know that I am in the minority here , but those are my beliefs…..And I don’t really think that it is just dreams..
Hi Arlene, No Problem I wasn’t attacking you – Just wanted you to know I am not a dreamer….Hahahaha
Thanks again to all that keep this discussion alive, I think it really helps to see open discussion and helps us evaluate this stock as it appears to be!!
I will say now that I am under the opinion that the Office personnel should go to Hollywood and start acting because I think they are currently in production of the greatest acting job of there life!!!
Any body checked to see that Goldfather hasn’t lapsed into a coma?
🙂
GF – you doin ok? This sp drop is temporary! (I hope)
h1
H1…. ya thanks. Been trying not to watch it….. this thing is really something, isnt it……. and we all thought Nov and Dec were going to be good.? Unfortunately, this is as unpredictable Now as it was when i got in 5 yrs ago.(thats not a good thing) Was hoping the 1.30 was to be the New Low…. and obviously we were tyhinking if Mr Mining man of the Year sold at 1.30 to his best customers…. that he sold them a big story too….. and dit would go up from there w/ the Assay report (arline) and maybe the IPO…..and now here we are at 1.14…. who can figure? But can anyone tell WHY the sp took such a hit? is it the POG….. or is there something else about Ole…. and does it look from the trades that people were bailing out, and that drove the price down?…. i did talk w/ an analyst that thought MDL/IPO would Pop to 4- 4.50 after the Offering…. should help us here. and that the New Teranga is the Logical Buyer for Ole. And Teranga will also be a great Target once they egt going.
goldfather,
Can you give more detail on what Teranga would offer for Oromin if attempting a buyout, why would Oromin and/or Bendon accept such an offer and please comment on my opinion about Teranga buying Oromin in this thread above on 11/18/2010 4:44 pm.
Socal…. just hearing Teranga is the likely buyer. That when Teragga gets rolling they will be worth a lot more than $3…. maybe a 5 or $6. With the mine and production, a capable Mgmt that has producing expersience, AND marekting exp. They bring so much more to the table than Ole. Also hearing that Teranga doesnt need Ole. Be nice to have… but not a must…. they DO have other land to produce Gold from.
Hearing Chet would have trouble raising money for the MINE…. as its considered stupid to build themselevs. And Perhaps the Saudis dont want to put out the money in $300 mil to build…. but as we all know they have the dough… and love Gold more than Oil. Together they both have a combinde 11 mil oz of Gold potential…. someones going to get a fabulous project. Teranga made the first step w/ the IPO…. went out and got first rate Execs with Producing experience in the barrichk execs….. do the IPo, let the sp increase and the mkt cap to increase…. then make a bid for Ole. Also ehard MDL went to the Saudis for permission to buy 15% of Ole… wanted to stay in good graces w/ the money Gods. Hope that helps Socal.
But if not a b/o… then a merger… but i’d pay for getting rid of Chet, as I see him as part of the problem after he finds the Gold.
goldfather or others,
Please refute any of the following:
Putting lipstick on a pig doesn’t transform the pig.
Teranga has:
1. a body of ore shrinking via production
2. no advantage from rising gold prices for about a year due to an outstanding hedge.
3. mediocre exploration targets. no real blue sky! Partner Axmin has been looking for ore for years in Senegal – nothing. Harmony looked in Senegal – nothing. all on the MDL concession side. on the other side, Randgold finally found a good body or ore (Massawa) but refractory. OUCH! good thing that they have deep pockets.
4. a used mill – not much value without expanding ore bodies.
5. New executives can skillfully hype but can’t change the above facts.
Oromin has:
1. Transformed 9 targets into deposits with huge blue sky potential at depth.
2. Significant number of additional deposits likely to be proven from the 15 targets now being explored. 9 out of 9 success rate so far is why it is likely. More blue sky!
3. Explosion in gold price has and will upwardly revalue the millions of ozs. of gold resources already proven in the ground.
4. High grade, high grade & more high grade.
This will make mining spectacularly profitable. Any loans for a mill would probably be repaid in 1 or 2 years.
5. Some very smart knowledgeable people have predicted eventual 10 to 15 million ounces in the Oromin concessions.
6. Public image of company almost non-existent due to management incompetence in this area. But this has the potential to change quickly if …..????
While I was writing this new post on SH:
http://www.stockhouse.com/Bullboards/MessageDetail.aspx?p=0&m=28879321&l=0&r=0&s=OLE&t=LIST
It flashed to me, that maybe the giddiness in the office is due to talks with Randgold. I repeat the rhetorical question: why did Oromin put all that detailed Randgold information on the Oromin corporate presentation (page 4).
Also giddiness could be due to talks with Bendon about giving Oromin a majority stake. If accomplished, this could get the stock price moving up again and ramp up acquisition inquiries.
Another post:
http://www.stockhouse.com/Bullboards/MessageDetail.aspx?p=0&m=28879437&l=0&r=0&s=OLE&t=LIST
I wouldn’t been looking into this so carefully about Randgold if Oromin hadn’t stealthfully placed all that Randgold information on one of the maps in the corporate presentation. This is the kind of comparisons management should be getting in the hands of every institution in the world that buys gold stocks. That would get the stock flying and the buyout offers coming. Regarding buyouts, maybe it’s already happening and they’re just being stealthful about it. lol.
About Teranga, no wasting time for comparisons, they have nothing to compare.
Social:
For what its worth, I agree. I do not see the “greatness” inTeranga, and doubt any credible ability to acquire OLE.
Great posts on SH, I had not paid any attention to Rangold’s Massawa – 39%…ouch! You may be on to something here… only drawback has been Rangold’s CEO comments about acquisition… maybe he has seen the errors of his ways…
On the last couple of OLE drill results, what hit me were some of the Interval Depths… one hole registered measurable g/t for over 60 some meters..
h1
hoosier1,
Thanks for adding to the discussion. Feedback encourages me to dig ever deeper to try to make sense out of a no-sense situation. Hoosier1, what username do you use at Stockhouse?
Randgold prefers organic growth but they did a buy 50% of a huge DRC project just a year ago. Also they don’t like to pay big premiums.
Randgold likes the word synergy, especially in the context of geographical closeness with access to nearby management & engineering talent at other projects. Buying Oromin would make a marriage made in heaven: kissing close to Massawa and very nearby all their Mali projects. Oromin’s large reserves of clean ore: oxide & non-oxide bulk tonnage and the rapidly increasing high-grade
would take the pressure off the need to immediately solve the issues around the predominantly refractory ore in the Randgold Massawa concession.
I’m looking forward to watching the fun & games at the Teranga IPO – should happen before the end of the month. Once it’s over, we might get more interest back to Oromin.
Oromin news…
VANCOUVER, BRITISH COLUMBIA — 11/23/10 — Oromin Explorations Ltd. (“Oromin”) (TSX: OLE)(OTCBB: OLEPF) on behalf of Oromin Joint Venture Group Ltd. (“OJVG”), reports that it has engaged Ausenco Solutions Canada Inc. (“Ausenco”) to complete a Preliminary Economic Assessment (“PEA”) that will examine the economic potential to heap leach oxide/saprolite and fresh material at the OJVG Gold Property in eastern Senegal.
OJVG’s recently completed Feasibility Study outlined a mineable reserve of 1.42 million ounces of gold (17.5 million tonnes grading 2.52 g/t Au) to be treated by a conventional carbon in leach (“CIL”) process, as set out in Oromin’s July 15th, 2010 news release. OJVG believes there is additional reserve potential in the lower grade oxide/saprolite and fresh resources that were excluded from the reserves in the Feasibility Study as they did not meet the economic cut-off grade criteria for CIL treatment. Preliminary metallurgical testwork indicates that this lower grade material may be amenable to heap leach treatment concurrent with the CIL milling operation.
Ken Kuchling, P. Eng., M.Eng. (Mining), Oromin’s Vice President of Engineering, states that, “The benefits from the economic justification of the heap leaching concept will be twofold. A heap leaching operation can provide additional gold production from lower grade ores that would otherwise not meet the CIL plant cutoff grade. These lower grade ores may have been stockpiled for deferred processing at the end of the mine life but could now be moved forwards in the revenue stream via heap leaching. Additionally the presence of a heap leach plant would provide a processing option for yet undiscovered lower grade bulk mining orebodies.”
Ausenco had been engaged to examine the potential and viability of incorporating heap leach processing in parallel with the CIL plant at the OJVG project. Outcomes of that initial desk-top heap leach trade-off study confirm that if there is sufficient heap leach material available, then this development option will be viable.
An extraction rate of 82.7 % was established by column leach test work on oxide mineralization from the Masato deposit. As part of Ausenco’s examination, additional column leach and bottle roll metallurgical test work will be undertaken on both oxide and fresh mineralization from the Kobokoto, Maki Medina, Niakafiri Southeast and Niakafiri Southwest gold deposits.
Ausenco’s preliminary review prepared capital and operating costs to a level of accuracy of +/- 45% and considered the following scenarios:
1. Stacking rates of 10 million tonnes per annum, 5 million tpa and 2.5
million tpa;
2. Ore cut off grades of 0.2 grams per tonne, 0.3 g/t, 0.4 g/t, 0.5 g/t and
0.6 g/t gold ;
3. Variable gold prices; and
4. Capital and operating cost sensitivities.
The results of Ausenco’s review indicate that the heap leach operation would pay back capital and generate a positive net present value if the leachable tonnage exceeds 8 million tonnes at an average head grade of approximately 0.5 g/t gold. Four of the Masato-style bulk tonnage deposits (Kobokoto, Maki Medina, Niakafiri Southeast and Niakafiri Southwest) cumulatively contain 11.5 million indicated tonnes and 4.3 million inferred tonnes of fresh and oxide resources at a 0.4 g/t Au cut off grade; these tonnes are not currently included in the reserves that form the basis of the Feasibility Study production plan. Over half of this tonnage, 9.93 million tonnes at a grade of 0.81 g/t gold is contained within the Niakafiri Southeast deposit’s oxide and fresh indicated resources alone. (See September 22, 2010 news release and November 9, 2010 Short Form Prospectus for details). In addition to the resources at these four deposits, there is also additional lower grade oxide and fresh resources at the Masato Deposit, within the design pit but below the optimal cut off grade of 0.7 g/t Au used for material being processed at the proposed CIL plant.
Based on the criteria identified in the Ausenco trade-off study, Oromin will be re-modelling some of the known deposits at lower cut-off grades in order to determine what portion of these resources could be economically recovered by heap leaching. This will more accurately define the project parameters and refine capital cost and operating cost estimates to an accuracy of +/- 35%. OJVG expects the heap leach PEA will be completed in Q1 of 2011.
Ken Kuchling, P. Eng and Doug Turnbull, P. Geo., are qualified persons for the purposes of National Instrument 43-101, and have reviewed and approved the data disclosed in this news release. Ken Kuchling, Oromin’s VP of Engineering directs and oversees all mining engineering aspects of the OJVG Gold Project .
MORE NEWS….
ADDING more NPV and Value to OJV
w/ better Mining Methods…. hope someone reads it .
OROMIN Suite 2000, Guinness Tower, 1055 West Hastings Street, Vancouver, B.C. Canada V6E 2E9
EXPLORATIONS LTD. Tel: (604) 331-8772 Toll-free (877) 529-8475
Fax: (604) 331-8773 E-mail: info@oromin.com
November 23, 2010 Trading Symbol: TSX – OLE
OTC/BB – OLEPF
Web Site: http://www.oromin.com
VALUE ENGINEERING INDICATES NET PRESENT VALUE
ADDITIONS OF $23 MILLION TO $39.7 MILLION
FOR OJVG GOLD PROJECT
Oromin Explorations Ltd. (“Oromin”), on behalf of Oromin Joint Venture Group Limited
(“OJVG”), is pleased to provide a status update on the value engineering optimization studies
undertaken for their OJVG Gold Project in eastern Sénégal, West Africa. The value
engineering work has been completed by Ausenco Solutions Canada Inc. (“Ausenco”) and is
being used to define the final project scope for the process facilities in preparation for
detailed engineering.
Ausenco has examined several plant optimizations based on their recommendations in the
2010 Feasibility Study. These include evaluating the costs and benefits of installing a
primary crush stockpile and reclaim system and increasing the leach tank size. Combined
capital costs for these two items is estimated to be $US 6.2 M with a payback period of less
than two years. Both of these optimizations are expected to increase the annual gold
production and the project Net Present Value “NPV” above those defined in the Feasibility
Study (see July 15, 2010 News release). The expected combined increase to the Project NPV
as a result of these two optimizations ranges from $US 23M to $US 39.7 M, as detailed
below.
Ken Kuchling, P. Eng., M.Eng. (Mining), Oromin’s Vice President of Engineering, states that
“When the feasibility study processing plant design was completed, some design assumptions
were made to allow the study to meet required completion timelines. It was recognized that
aspects of the design would be reviewed during the Value Engineering stage to undertake
some cost-benefit analysis prior to freezing the plant flowsheet for detailed engineering.
These trade-off studies have now been completed. They re-examined the leach tank sizing
and the crushed ore stockpiling system. Both of these trade-off studies indicate that some
modifications to the feasibility study flowsheet will result in promising improvements in the
project Net Present Value.”
Stockpile and Reclaim System
The 2010 Feasibility Study was based on a plant design in which mill feed would be
provided by direct truck dumping into the primary crusher which, in turn, would feed directly
to the comminution circuit. During periods when the mining fleet was not operating, a frontPage
2 of 3
end-loader would feed the crusher from an adjacent run-of-mine ore stockpile. This system
has a low capital cost but has certain operational disadvantages.
Ausenco examined the installation of a larger, 10,000 tonne stockpile with an automated
apron feeder reclaim. This enables the plant to continue to operate during mine outages and
provides a steady feed rate to the mill. These enhancements would improve the expected
mill utilization from 88.0% to 91.3% at a capital cost estimated to be approximately $US 5.5
million.
Ausenco estimates that the annual increase in gold production resulting from greater mill
utilization would range from 3,600 to 6,000 ounces per year. Over 9 years of operation the
incremental increase in the Project NPV for this stockpile and reclaim system is estimated to
be $US 15 M and $US 27.7 M at gold prices of $US 880/oz and $US 1,200/oz, respectively.
As a result, OJVG have decided that this stockpile system will be incorporated into the plant
design.
Leach Tank Size Increase
The 2010 Feasibility Study estimated that the plant throughput rate will range from 215
tonnes per hour to 350 tonnes per hour, depending on the percentage of soft ore contained in
the mill feed. At the higher throughput rates, ore residence time in the leach tanks drops by
approximately 40% resulting in less than optimal leaching conditions. Increasing the leach
tank size will lengthen the residence time thereby improving gold recovery when milling at
the high rates.
Ausenco has recommended an increase in the combined leach tank size, to improve residence
time in the leach tanks during periods of higher mill throughput rate. The proposed change
in configuration and size of the leach tanks would result in an expected average gold
recovery increase of about 1.5% (from 89.3% to 90.8%). This would provide an annual
increase in gold production in the range of 1,200 to 2,100 ounces per year. The estimated
additional capital cost to expand the leach tank size is $US 700,000 with a negligible increase
in operating cost. A discounted cashflow model was used to assess the longer term
cost/benefit of increasing the size of the leach tanks. Over 9 years of operation the increased
gold production would generate an incremental increase in Project NPV of $US 8 M and
$US 12 M at gold prices of $US 880/oz and $US 1,200/oz, respectively. As a result, OJVG
have decided to incorporate the larger leach tanks into the plant design.
Qualified Person
Ken Kuchling, P.Eng., Oromin’s Vice President – Engineering, a “qualified person” for the
purposes of National Instrument 43-101, has verified the information disclosed in this news
release. Mr. Kuchling directs and oversees all mining engineering aspects of the OJVG Gold
Project .
More News..!!! Improved NPV….the second NR out Today….. thats 3 this month now….. whats going on?
It seems to me that Chet is setting the stage for some real blockbuster type news during Q-1…….Prelude to 2nd Qtr buyout ?????
Geeez, I wish I could get that excited Arlene 🙂
I think he is setting up to set up for the set up?
Grandich speaks:
“Oromin Explorations (OLE) – The company that likes to drill for ore far more than investors, continues to demonstrate it has multiple significant deposits in West Africa. Two majors have each acquired around 15% of OLE’s shares. The share price has come back to significant support area that barring a fall in gold prices and/or some unforeseen corporate event, should prove to be a very attractive area to prospective shareholders.”
MDL a major? IAMGOLD is a mid-tier producer. MDL is a junior producer.
http://www.grandich.com/2010/11/three-grandich-client-companies-continue-to-buck-the-norm-in-junior-resources-companies/
THIS TALKS ABOUT ACQUISITION AND TARGET PRICES
MINING 27 AUGUST 2010
OROMIN EXPLORATIONS LTD.
OLE-TSX: $1.05 — BUY
TARGET PRICE: $1.50; PROJECTED RETURN: 42.9%
John McClintock 416.860.7613
jmcclintock@mackieresearch.com
Mineral Deposits Ltd. Acquires Strategic Stake in Oromin Explorations Ltd.
Share Price $1.05 Market Cap (mm): $128.4
52 Wk. High: $1.08 Basic Sh O/S (mm) 122.3
52 Wk. Low: $0.59 FD shares (mm) 124.9
Target Price $1.50 NAV/sh $1.49
Return 42.9% Div/sh N/A
FY Feb 28 2009A 2010E 2011E 2012E
Prod’n (000 Au oz) 0.0 0.0 0.0 0.0
Op.Cash flow ($mm) $0.0 ($6.2) ($10.0) ($10.0)
EPS ($0.10) ($0.08) ($0.17) ($0.17)
P/EPS N/A N/A N/A N/A
CFPS ($2.00) ($0.06) ($0.10) ($0.10)
P/CFPS N/A N/A N/A N/A
Target Valuation Parameter
1.0x NAVPS
Financial Metrics (C$)
Courtesy of BigCharts.com
Key Risks
The greatest potential risks associated with an investment in
Oromin are changes in the underlying commodity prices and the
geological risk of variability and reconciliation of actual mined
material to reserve and resource estimates. Additional risks are
Oromin’s ability to raise capital to continue to finance
exploration, for general administration and ultimately
development of the OJVG.
Corporate Profi le
Oromin Explorations Ltd. is a junior exploration company listed
on the Toronto Stock Exchange focused on gold exploration in
Western Africa. Currently, Oromin is developing the OJVG
project that contains 3.3 million gold ounces, of which it owns
43.5%, in the Sabodala district in Eastern Senegal.
EVENT – Mineral Deposits Becomes Strategic Investor in Oromin
Mineral Deposits Ltd. (TSX:MDM PT−C$1.40 BUY) announced that it has
agreed to acquire 18.7 mm shares or 15.01% of the outstanding shares in
OLE. MDM will issue 24.9 mm shares as consideration for the OLE
shares at a price of C$0.87.
RECOMMENDATION – BUY
Our recommendation remains BUY.
HIGHLIGHT – MDM Paid What We Expected It to Pay
MDM is paying a bit of a premium: Based on the shares issued and the
current 3.2 mm gold ounces at OLE’s OJVG project, MDM paid the
equivalent of US$107/oz for its 15.01% interest in OLE. This implies a
valuation of C$144 mm for OLE or a 26% premium to yesterday’s close.
We see upside past current share price: Using precedent transactions of
similar gold projects in West Africa, we derive a take-out value of
US$110-US$130/oz in-situ. Applying this range, and using our internal
3.6 mm ounce resource for the OJVG project, we estimate a fair take-out
value per share of C$1.30-C$1.50 for OLE.
IMPACT – Positive
MDM’s share purchase is proof of concept: This initial purchase of OLE
shares by MDM underscores its strategic importance to MDM, and the
quality of the OJVG project itself. Alternatively, it likely indicates at least
significant potential for MDM to attempt to acquire the remainder of
OLE. We would expect MDM to attempt to acquire the remainder of OLE
post the IPO of MDM’s gold assets, assuming there is not a competing
bidder such as IAMGOLD Corp. (TSX:IMG PT−C$18.00 HOLD) as it
currently owns 17% of OLE.
OLE still can continue to add value through the drill bit: As we do not
see it as likely that MDM will attempt an acquisition during the IPO
process, it affords time for OLE to continue to delineate gold resources
on the OJVG project. Given the drilling success to date on the OJVG, it
may be reasonable to expect OLE to grow the resource to over 4.2 mm
gold ounces by the end of 2010. Applying our take-out range of US$110-
US$130/oz per in-situ gold ounce and a 4.2 mm resource, it could be
possible for OLE shares to trade within a range of C$1.50-C$1.75.
VALUATION – Unchanged
We continue to value OLE based on 1.0x our C$1.50 NAVPS.
CATALYSTS – Updated Resource in September
The next catalysts for OLE will be the release of drilling results in the
coming weeks and the updated resource estimate in Septembe
Saw this on the Ole WS. Says New Target is $2 !……….. bring it on.!
MINING 24 NOVEMBER 2010
Oromin Explorations Ltd.
OLE-TSX: $1.15 — BUY
TARGET PRICE: $2.00; PROJECTED RETURN: 73.9%
John McClintock 416.860.7613
jmcclintock@mackieresearch.com
Optimizing Studies Likely to Add Leaching to OJVG Flow-Sheet
Share Price $1.15 Market Cap (mm): $140.6
52 Wk. High: $1.49 Basic Sh O/S (mm) 122.3
52 Wk. Low: $0.59 FD shares (mm) 132.5
Target Price $2.00 NAV/sh $2.02
Return 73.9% Div/sh N/A
FY Feb 28 2009A 2010E 2011E 2012E
Prod’n (000 Au oz) 0.0 0.0 0.0 0.0
Op.Cash flow ($mm) $0.0 ($6.2) ($10.0) ($10.0)
EPS ($0.10) ($0.08) ($0.17) ($0.17)
P/EPS N/A N/A N/A N/A
CFPS ($2.00) ($0.06) ($0.10) ($0.10)
P/CFPS N/A N/A N/A N/A
Target Valuation Parameter
1.0x NAVPS
Financial Metrics (C$)
Courtesy of BigCharts.com
Key Risks
The greatest potential risks associated with an investment in
Oromin are changes in the underlying commodity prices and the
geological risk of variability and reconciliation of actual mined
material to reserve and resource estimates. Additional risks are
Oromin’s ability to raise capital to continue to finance
exploration, for general administration and ultimately
development of the OJVG.
Corporate Profile
Oromin Explorations Ltd. is a junior exploration company listed
on the Toronto Stock Exchange focused on gold exploration in
Western Africa. Currently, Oromin is developing the OJVG
project that contains 2.5 million gold ounces, of which they own
43.5% in the Sabodala district in Eastern Senegal.
EVENT – Update of Ongoing Optimization Studies
OLE announced an update on the ongoing engineering studies by
Ausenco Solutions Canada Inc. (Ausenco) to further optimize the July
2010 feasibility study.
RECOMMENDATION – BUY
Our recommendation remains BUY.
HIGHLIGHT – Heap-Leach Potential and Processing Efficiencies
Heap-leaching potential: OLE retained Ausenco to complete a PEA to
assess the economic potential of heap-leaching lower grade ore that does
not meet the CIL plant 0.74 Au g/t cut-off grade for open-pit ore.
Processing efficiencies: OLE also released the findings of optimization
studies that could add 4.8-8.1 koz Au of incremental production at a
initial capital costs of US$6.2 mm by (1) reorganizing ore handling
techniques to increase the mill’s estimated utilization rate from 88% to
91%, and (2) increasing the size of the leach tanks to increase expected
Au recoveries from 89% to 91%.
IMPACT – Heap-Leaching Potential Could Be Significant
Heap-leaching is significant: The June feasibility study included only
1.42 Moz Au of the current 3.5 Moz Au resource, as a large amount of
open-pit Au resources are not of sufficient economic value to process
through the CIL plant. However, applying heap-leaching processing to
resources that only fall within SKR constrained open-pit shells, we
conservatively add 650 koz Au to our mine plan. We also see the
additional upside in heap-leaching of other bulk-tonnage deposits on the
OJVG project such as Niakafiri Southeast, Niakafiri Southwest, and
Kobokoto, which may add another 400 koz Au in a best-case scenario
once further detailed engineering is completed.
Processing efficiencies are less significant: We have adjusted our model
to reflect Ausenco’s findings, but we see these as minor “tweaks” rather
than material developments. Additionally, it is likely there will be
additional tweaks, as ongoing drilling will expand resources on the
OJVG project.
VALUATION – Increases
Adding the heap-leach potential and the increased processing
efficiencies, we are increasing our target price from C$1.80 to C$2.00,
based on a 1.0x (no change) our C$2.02 NAVPS (was C$1.79).
CATALYSTS – New Resource Estimate and Heap-Leaching PEA
The release of an updated resource estimate to confirm our global
resource estimate of 3.9 Moz, and the publication of the PEA to confirm
our estimates for heap-leaching on the OJVG in Q1/11.
This report has been created by Analysts that are employed by Mackie Research Capital Corporation, a Canadian Investment Dealer