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Osino Resources (OSI) - Show Us The Numbers

August 10 2020, 14:20 GMT+01:00

Osino Resources (OSI)

  • TSX-V: OSI
  • Shares Outstanding: 102M
  • Share price C$1.40 (10.08.2020)
  • Market Cap: C$143M

Is this an overvalued gold mining story or not?

Osino Resources (TSXV: OSI) is a "rapidly-evolving" Canadian-based gold exploration and development company. It is focussed on both the acquisition and development of Namibian gold projects.

Osino Resources' Namibian portfolio comprises 18 exclusive exploration licenses, all of which are located within the central zone of Namibia’s prospective Damara belt, 'mostly in proximity to and along strike of the producing Navachab and Otjikoto Gold Mines.'

The company's current focus is on developing its flagship Karibib Gold Project and defining new exploration targets within the Otjikoto East area and on its other licenses.

Karibib is situated c. 130km North-West of Namibia's capital, Windhoek. As a consequence, it benefits from well-established infrastructures such as paved highways, railway lines, power lines and ample water supply in close proximity. Namibia is a strong mining jurisdiction as investors may already know. Karibib covers a sizeable 1,946km2, so there is plenty of room for growth and scale.

With no real concrete numbers or studies beyond prospective preliminary drill results, why are investors buying into this story so enthusiastically? The share price has been growing and the company's market performance has been impressive, but there are companies much further along the developmental curve with much more data that have nowhere near as much value attributed to them. Why?

The answer is the management team's track record. It's clearly giving gold investors some confidence to toss their money into the ring. Heye has over 20 years of experience with top-tier mining companies and financial groups, being integral in the creation of Lumina Gold through the C$200M merger of EGX with Odin Mining. He is also the former President & CEO of Ecuador Gold & Copper, and he is a co-founder of Auryx Gold, co-leading the company through an IPO, capital raising, and project development, up until a C$180M sale to B2Gold. As if this résumé wasn't already impressive enough, he spent the first 10 years of his mining career operating mines in Africa with huge majors: Rio Tinto, AngloGold-Ashanti and Gold Fields. He has benefitted from good timing, a little bit of luck and a dogged and relentless approach to business.

Matthew Gordon talks to Heye Daun, August 2020


The rest of the team might not have quite so glamorous a track record, but there is plenty of in-country technical and commercial experience with an emphasis on developing gold assets. It is not surprising investors are giving them a vote of confidence, nor am I surprised that mining-stalwart Ross Beaty has come to the table. Personal credibility is a key factor here, and Heye believes the only reason that some institutions have even looked at his company is because he is at the helm. Heye's onus on "just getting sh*t done" is exactly the sort of proactivity that investors crave.

In July, Osino Resources announced a close to its oversubscribed C$17.71M bought deal public offering. This capital de-risks Osino Resources and should allow the company to accelerate the timeline to a Maiden Resource, PEA, and further development of the Twin Hills area within the Karibib Gold Project. The company is now fully-funded for an expanded exploration programme and fast-tracked development studies for Twin Hills. The financing has also driven some liquidity into the stock, diversifying the shareholder base.

Daun attributes some of the vacuum of data to the prescriptive regulation of Canadian 43-101 resources. The aim is to turn Otjikoto into an operational gold mine as soon as possible, and Daun sees this as a 2-4-year timeline that the company is right at the start of. He clearly doesn't want to hang around, because missing this gold cycle is something no gold player wants to do. Expect a defined, concrete maiden resource early next year (maybe the end of this year if you're feeling optimistic). Daun expects this to be a substantial resource of between 1Moz and 2Moz gold. It is a resource that is of similar scale, look and size to the other 2 operating gold mines in Namibia. It is a "typical tier-2 open-pit operation." A PEA could follow soon after alongside additional exploration to grow the resource. The company is also positioned for potential M&A. It is located right next to a producing gold mine in Namibia and the owners are keen to sell... watch this space?

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Heye's track record suggests a cookie-cutter approach of acquisition, development and de-risking, followed by a takeout. Heye states he is only interested in delivering shareholder value, even if this means taking the project into production. Ahead of construction, he would be happy to look for a major strategic partner with production experience once the full potential of the resource is delineated and studies are completed.

One could make a strong case for this being an overvalued gold miner, but what price do you really place on expertise and integrity? It's an entirely personal choice for investors. Some will prefer more concrete data sourced through the drill bit, others will be happy to get behind a man who has been there and done it before several times over.

Assay and metallurgy results are "imminent" and should be delivered in the next few weeks. Osino Resources promised such results previously and failed to deliver because of "logistical issues." Let's hope this deliverable is satisfied this time around as reputations rise and fall based on doing what you say, and saying what you do.

What did you make of Heye Daun and Osino Resources?

Company Page: https://osinoresources.com/

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Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

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