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O3 Mining (OIII) - Osisko Spinout Raises $75M for Val D'Or Targets

March 27 2021, 19:52 GMT

O3 Mining

  • TSX-V: OIII
  • Shares Outstanding: 60.3M
  • Share price C$2.48 (23.03.2021)
  • Market Cap: C$169M

O3 Mining an Osisko Group company, is a Gold explorer and mine developer ready to produce from its highly prospective Gold projects in Québec, Canada. It is well-capitalized and owns a 100% interest in all its properties (137,000 hectares) in Québec. The company is focused on delivering superior returns to its shareholders and long-term benefits to its stakeholders.

We sat down with Jose Vizquerra, President & CEO of O3 Mining to talk about the company’s plans, current valuation and recent share price decline, and how this might actually benefit new investors.

Company Overview

O3 Mining is a prospective Gold mining operation, situated in the famous Val D’Or in the Abitibi-Témiscamingue region of Western Quebec.  A subsidiary of the Osisko Group, O3 Mining is a publicly traded company on the TSX and TSX-V, currently attracting investment with a view to beginning Gold production within 6 years.

O3 Mining is an exploration and development company, which has purchased a 137,000-acre stake in a high-yield region (the Cadillac Break) with a history of Gold production.  3.09Moz have already been extracted in the existing yield and there is a Preliminary Economic Assessment (PEA) of CAD $423M, with a NPV5% discount rate.

The PEA is in part secured by O3’s pedigree. Osisko developed Canada’s largest operating open-pit Gold mine, the Malartic Mine, which extracted over 38,000 ounces of Gold. Malartic was snapped up by Yamana Gold and Agnico Eagle Mines Limited in 2014 and there has been other high-profile M&A activity in the region.

O3 Mining is the only infrastructure-adjacent operation in the region with capital under $200M, making it currently a very desirable investment since it is distinctly undervalued at present.O3 Mining (OIII) - Osisko Spinout Raises $75M for Val D'Or Targets

The O3 Team

O3 Mining is a group of young entrepreneurs.  The executive team includes Louis Gariepy, O3’s Quebecois Vice President of Exploration, who boasts over 30 years in the industry and who previously worked for Noranda.  Also in the team is Business Development Head Alex Rodriguez, from Peru, who worked in silver production with Volcan.  Another key player is Exploration Manager Sebastien Vigneau who has been with Osisko for 15 years.

Asset Optimization in the Val D’Or

In order to produce greater value for investors, O3 Mining’s recent business plan has involved streamlining its portfolio and they sold the Garrison operation near Ontario and consolidated other non-core assets. They are now focused on Val D’Or, in an area where the Cadillac Break goes through, and this will allow them to be very systematic in their exploration.

This systematic approach will utilise data from various sources – geophysics, PhD research theses and even AI-derived information devised by Mira Geoscience Ltd on its Alpha field.O3 Mining (OIII) - Osisko Spinout Raises $75M for Val D'Or Targets

O3 Mining’s Capitalization Strategy

O3 Mining has been bullish about raising investment of late.  In June 2020 it pulled in $40M, and then another $35M in February 2021 through a private offering of flow-through shares, the tax incentive a key benefit of investing in this jurisdiction. It’s a confident stance but one that the company feels is justified because the historic seam has a historical track record of delivering a great yield.

Drilling Methodology and Timescales

Unlike other mining operations, which drill conservatively to satisfy the requirements of the N143-101 standard for valuation, O3 Mining’s Val D’Or project worked on a 500m-by-500m field, drilled every 100m, in order to gain a clearer picture of the local geology.  It will now work on filling in those 50m bores to satisfy the stringent N143-101 criteria for future valuation.  O3 Mining is keen to keep building fundamental value while they keep making discoveries and that is very important.

One of the O3 Mining’s key assets is the Marban property, which secured a highly desirable PEA in February 2021.  They believe it will go into full production within six years, with 2-3 years of that required for environmental permitting.  O3 Mining will raise $250M, which they are confident can be achieved through a combination of $100M cash investment and $150M bank debt. 

They believe they can also make cost reductions in capital expenditure through local collaboration and if they manage to be very creative, and manage to create synergies with other people with facilities around them, the CapEx is reduced by $100M.O3 Mining (OIII) - Osisko Spinout Raises $75M for Val D'Or Targets

Reducing Uncertainty Through Asset Acquisition

Another clever move was buying a $5M option on the Aurbel Mill, just 10km from the O3 Mining Alpha property, which delivers a reduction in CapEx of $55M, should they decide to purchase the site and go into production.

The inferred value of the Alpha and Marbel sites has a plus or minus 30% uncertainty on the valuation, as part of the PEA.  This high level of uncertainty is countered with news of an exciting new acquisition bought for $300,000 in a brand-new area where the pit can be expanded.

The strategy going forward will be to increase the open-pit excavation of low-grade Gold , whilst also focusing on deeper explorations, seeking high-grade seams.  The historic pedigree of the region is known and Val D’Or goes deep up to 3km with Orion and up to 2km for Keina, 1.8km for Lapa and Goldex, so there is a lot of potential going at depth.

Exciting the Marketplace, Despite a Reduction in Share Value

Despite these promising developments, O3 Mining’s potential in the Val D’Or has not been reflected in its share value recently.  Individual shares dropped from $4 at the time of offering to $2.50.  They remain philosophical about this slump, returning to a focus on Fundamental Value, and the promise of a 300% return on a 10% share dilution. O3 Mining thinks that high net worth investors aren’t necessarily put off acquiring shares that have dropped, as buying something for less than it’s worth is the way to make money for investors.

When it comes to the M&A potential of O3 Mining, they believe that it will only make sense if the company continues its two-pronged policy of fundamental value maximization plus exploration and discovery.  The untapped potential of O3 Mining may be just over the horizon.O3 Mining (OIII) - Osisko Spinout Raises $75M for Val D'Or Targets

Conclusion

O3 Mining’s Val D’Or project is a long-term investment for those with an appetite for risk but seeking higher returns. The pedigree of the team is solid and they are very market savvy. It is an exciting development with potentially huge returns and would suit investors in love with Gold speculation within the comparatively secure jurisdiction and proven mineral resources of Quebec .

To find out more, got to  the O3 Mining Website


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