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Osino Resources (TSX-V: OSI) - Gold Player With a Bit More to Prove (Transcript)

August 24 2020, 17:10 GMT+01:00

Osino Resources (TSX-V: OSI).

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

This was an encouraging first conversation with Heye, and he has a track record of exiting mining companies having made investors money, but investors will need to make their own minds ups. Osino Resources is a TSXv-listed gold explorer & developer with assets in Namibia.

What Osino Resources needs sooner rather than later is report numbers. A Maiden Resource has been long in the making. Highly prospective gold geology is all well and good, and the market might buy into it, but eventually, this potential has to be proven through the drill bit. Gold investors are not short of opportunities to make money right now, and Osino Resources needs to keep them interested if it wants to create interest and show a growth story.

A PEA and PFS are on the horizon, and next year has been earmarked as the start of more concrete drilling data from this gold player. Can Heye accelerate the consolidation of this gold value proposition?

We Discuss:

  1. 2:18 - Update on South Africa and COVID-19
  2. 3:57 - Company Overview
  3. 4:49 - History and Track Record
  4. 9:41 - Foundation of Business: Asset Potential
  5. 13:49 - Turnaround Story: Problems Solved
  6. 18:36 - Backed by Ross Beaty: Why?
  7. 21:29 - $17M Raised: Plans of Allocation
  8. 23:37 - Mining in Namibia: Impact of Restrictions
  9. 25:19 - What They Have & What's Coming: Lack of Data
  10. 31:05 - Gold Environment + Project Stage = Overvalued?
  11. 35:02 - M&A Possibilities
  12. 38:36 - End Goal: How Much Will They Manage?
  13. 42:54 - Asset Metallurgy: Drill Results Coming

Matthew Gordon: Heye, how are you doing, sir?

Heye Daun: Great. Thank you. It's great to be on your show. Thanks for having me.

Matthew Gordon: Thanks for joining us. So, first time we've spoken, first time we've met.

So, you are down in South Africa at the moment. So how are things down there?

Heye Daun: Things are pretty stable. I live in Cape town. Our projects are in Namibia, but because I live in Cape Town I've got my office here. We are locked down. We obviously were affected by COVID, South Africa has got a big outbreak. Gold price is high, we are funded and so I'm pulling the strings by remote control. I've got a very good team in Namibia, so it's working fine.

Matthew Gordon: We caught up with someone earlier this week on what's happening down in South Africa. Sounds tough for people, and the government is doing what I can to help out, but what's your take on how the government has reacted?

Heye Daun: They are trying their best, but the biggest issue is that they don't have the fiscal power that European governments have. The economy is heavily impacted by the lockdown, but there's no relief package from the government, or just a very limited relief package.  the everyday man on the streets is suffering. For us it's okay because for a Gold company, the macro environment is good. And also we raise money in hard currency in Canadian dollars, but operating in Namibia, we have the Namibian dollar, which is linked to the South African Rand, which is very weak. We get a lot more bang for our buck. We are actually in a great position.

Matthew Gordon: I hope you guys come out of that soon. It's always sad to hear what's going on in various countries around the world. Why don't we kick off with that one-minute overview of the business and then we'll pick it up from there.

Heye Daun: I'm the CEO and founder of a company called Osino Resources Corp. Osino was a Gold exploration company active in Namibia. I say was, because we are rapidly evolving out of the exploration stage into the development stage. We made a very significant Gold discovery which we announced towards the end of last year. And we have since, in the last 10-months or so, we are doing everything we can to accelerate that discovery to demonstrate and turn it into an economic Gold mine. It's really exciting times for us.

Matthew Gordon: It's worth, for people new to this story to maybe go back a bit. You're sitting at USD$125M worth of market cap today. Share price has been going up steadily. We've seen companies way ahead of you in terms of where they are on the curve, but not getting those sorts of valuations. You have got a track record that people really buy into and your ability to deliver access. Before we get into what I normally start with what is the plan? Can we just talk about that track record, what you have done in the past?

Heye Daun: That's a good intro. I'm a Namibian citizen. I'm a mining engineer. I used to work for Anglo, but I've built and operated Gold mines in a previous life in West African oil places. I know the Gold space very well. I really know what works in terms of Gold mining. So, fast-forward a couple of years: in 2009, I became an entrepreneur after many twists and turns, I spent some time in finance and other places after having been an engineer. In 2009 there was a project in Namibia that became available in in a bank-run sales process called Otjikoto. At the time it had a 1.5Moz Gold. It was seen to be marginal and people didn't think it could work. I came in together with my partners. I recognised its potential, so we acquired it. We raised money, did a classic TSX junior mining listing in 2010. Took the company public. Drilled the hell out of it. Did various things. Basically brought it out into the open to about 2Moz. And we ended up selling that project to B2Gold in 2012 for USD$200M. And B2Gold subsequently went ahead and actually built a very successful Gold mine on it.

So that was great for us because it demonstrated our thesis. B2 made us look very good because they demonstrated that these type of lower-grade Gold deposits could be highly profitable. And so that was a nice success. I made some money, but more importantly, I learned how to do it, how it's done, had a nice success.

So, subsequent to that, the markets fell out of bed, so it became very difficult to do anything. I took another job, I did various other things. But then in 2016, I had another breakthrough where I ran a company, it was a turnaround situation in Ecuador, which I ended up selling to Ross Beaty. Ross Beaty is a big Canadian, one of the top Canadian mining investors. And, he was obviously on the other side of the table from me and we negotiated that deal. He took a liking to me and that process he liked my style. And he became my cornerstone investor in this company, Osino. Basically, at the time, I told him my vision, which was, I've done it once in Namibia before. B2Gold turned my project, which I sold for $200M, B2Gold turned that into a billion-dollar company, I can do that again so will you help me? And so that's when Ross came on board. I put up a lot of family money and a lot of my money and a lot of my friends and family came in. And then with Ross came a lot of other credible money. That's basically how we got started.

Actually, I am quite proud because Osino literally started as a dream, and the dream was, it was going to be a consolidation player, put some licenses together, credible management, quality money, and then see if we can make a discovery. Because geologically, we knew that the potential was there to make a discovery, but discoveries aren't made every day. These things usually take many years and lots of capital. And so, as Osino we succeeded in doing that, again for a number of reasons, but primarily, knowing what we are doing, being well-funded and having dedication and good execution capacity. We pulled it through and that culminated in this discovery, which we made last year. Now, you must remember that it was a process from 2016, 2015, 2016, when we started all the way to 2019, when we ultimately made the discovery after having spent about USD$50M of risk money. So that's a long journey. Now it's very satisfying because it just, sorry, I'll just say this: the discovery has been made and now, obviously, the company has evolved into something very different.

Matthew Gordon: I want to back management teams who are competent and know what they are doing and have done it before. I also like to discover whether they did it by accident, by good timing, by good fortune by planning, or just having the money available to do it.

Heye Daun: All of them!

Matthew Gordon: All of the above. Let me take you back to Otjikoto. I’m intrigued because someone else had looked at it, thought this isn't going to go anywhere, but you came and said ‘actually, based on what I can see, I can see potential’. What was it that you saw that they didn't? What was that moment where you go, because most people think, oh, someone's looked at this, it doesn't work, move on to the next thing. But was it because that's all that was available or did something that they didn't?

Heye Daun: A couple of reasons: the one thing is it was owned by a company that was actually focused on base metals in the Zambian copper belt, and they had this Gold project. It was clear that they weren't going to give it the attention that it deserves. That was the one thing. The other thing is dogma - never underestimate dogma -mining like all industries are written with dogma. And I would say one of my key strengths amongst a few other things, but one of my key strengths is not to take no for an answer. I've got, usually when I have conviction in something, I'm not scared to bang the table and to go for it. And in this case it was pretty simple; I used just good money planning and expertise that I had built up at Anglo Gold. I took the existing resource model that was there. I gave it to some consultants. I said, can you re-evaluate this to me, for me with this operating philosophy and mine, and could that work? And they said, yes, it could work. It was literally that simple.

The dogma, I just want to come back to quickly, because this is very important to what Osino does now. And that is in those days, people were not that familiar yet, or some people weren't that familiar with these high tonnage, lower grade deposits, especially not your retail investors, possibly listening to your show, none of the Canadians, they love these epithermal, low tonnage, high-grade next pop, share price pops – we can shoot. This is not it. This is large tonnage, continuous or lower grade, however, very profitably mined, and much more likely to actually become a Gold mine because of the continuous, disseminate nature. So that's a technical aspect. And having mined these type of deposits before as a mining engineer, obviously, I had the conviction. And then there were other things like Namibia is at that stage, wasn't known, wasn't seen to be a Gold jurisdiction. It only had one other gold mine. It just didn't have any track record. And that's changed now with the success that B2Gold had with a Gold mine. I don't know if that answers your question?

Matthew Gordon: It answer sthe question, but then you  segu over to Chile,  - the other side of the world. I know you sold that to Lumina Gold. Again, that was another moment for you. Tell me about the project first. We've had, , the Lumina Group on here, so we understand a little bit, but why did he go all the way to South America when you're an expert in Africa?

Heye Daun: To be honest, I was doing all of that from this very same room that I'm sitting in right now. The beauty of our business is that strategic management of junior money companies can be done from just about anywhere, because it's largely you work with consultants, with banks, with brokers, you travel a lot, but you can be anywhere. But to answer the question, the reason I got into that was just, I was just being opportunistic because one of the shareholders that made money on that B2 Gold deal on us was a large shareholder, an Ecuadorian company. And it was in the downturn in 2015, when they ran out of options, they had a problematic CEO, and they needed somebody that understands what's going on, that can deliver a turnaround. And I just took the job. And for a couple of reasons, there was some unique aspects. It only took a year, year and a half and it ended in the sale to Ross. But more or less in parallel, I started putting Osino together, which I went back to then.

Matthew Gordon: Tell me about these couple of unique problems. I like problem solvers. I want to back people who can solve problems. Because mining is not easy, mining is a tough things happen. So when you go and do a turnaround what were the things that you were equipped to do that their previous CEO wasn’t?

Heye Daun:  well, the one thing is credibility, it is obviously hugely important. And Ross will back me up, Ross probably would confirm this if he were sitting here: they only looked at that company because I was the CEO. They wouldn't have looked at it otherwise. So personal credibility is key. Obviously, the good old values: honesty, integrity, all the good stuff, I would say that that is a key aspect. Another aspect is ability to execute. It's a high-flying term for just getting shit done - excuse my language. And I'm very good at that. I'm very good at crossing the T's and dotting the I's. I guess it's just my German heritage; I tend to be thorough, detail-oriented. I make sure that stuff gets done. And I would say, you asked me earlier, what have been the ingredients of the success in Osino from getting it to a dream to a USD$120M market cap? Probably, the largest aspect is execution because that's stuff that you can control. The markets and all that stuff is also important, but you can't control it. So I tend to focus on the things that I can control, which very clearly in my case, it's execution, and living in Cape town, close to where the assets are, helps me in niche. Sorry, I got side tracked, but that's a key aspect of it.

Matthew Gordon: There's no aspect in terms of a technical component that you had to solve. It was literally just joining the dots. Is that what you're saying?

Heye Daun: No, neither. It's always there in many, many aspects. There was a, actually, this is a great question, thank you. Thank you for asking it. There was a unique technical challenge that we solved in Namibia, which we are very proud of, which was a major factor, and that was exploration through cover. Everybody knows that in today's world, most of the big deposits that are exposed out in the open have been found. So therefore, any new stuff will either be found in very difficult jurisdictions, like the ‘Stans, or Russia or complicated places like that, or in the jungle or undercover.

Namibia, if you look at it, remember it was largely under cover. It's covered by desert sand. And although it is physically accessible, and it's so easy to operate there it is actually totally under-explored or even unexplored because of the cover. And in Namibia, there's a sand layer of about 20m, 10m to 20m that covers just about everything. Not everything but most areas. So we applied, well, first step: what I did was I found 2 very credible geologists that have a perfect combination of innovation and experience and ability to deliver, and those guys came up with a conceptual exploration model. I had the money with Ross and others, and I have enough self-confidence and experience that I could trust those geos, and I took a view on them and I said, okay, carry out a long term, large scale exploration program, which they did. And as part of that, they looked to Australia to find solutions for exploring through cover, because it has been done elsewhere before so we didn't invent it. We just applied these Western Australian techniques to the Namibian situation because climatologically, it's very similar.

So basically, just in a nutshell, when you have a lot of evaporation, you have ground water that percolates upwards, and it carries with it minute quantities of Gold which precipitate out near the top. And there were certain Western Australians and the CSI, a research organisation there, in the last 20 years, came up with assay techniques to analyse the minute quantities. And that resulted in some significant discoveries in Western Australia. And all we did is we imported those techniques. We applied it to Namibia and it worked. And so, by the beginning of last year or so, using these techniques, we delineated a very large surface expression of a Gold system through this cover. 15km system, which we call the Twin Hill system. And we then followed it up with the multiple rounds of drilling, and it ultimately resulted in this discovery, which is completely undercover, completely blind, which we are drilling now.

Matthew Gordon: You just raised some money: USD$17.1M - you can tell me what you did with that, but I just want to come back to this Ross Beaty moment, because it's important. He's backing you, the man, he likes your style, likes what you did. Okay. But you have still got to sell, he's not going to pump money into something which isn't going to work. How long was that conversation in terms of, here's what I've got, Ross. I'm a good guy. I've made you some money. We've all made each other some money. Here's what I've got today and here's how I'm going to convert that into value and dollars for you. What was that conversation like? It could save us all a lot of time, right?

Heye Daun: It took 6-months to be honest, because that deal that I negotiated with his group on the sale of my company at that time, which became Lumina Gold, which by the way, I'm still on the board of, well, it was an extremely complicated transaction that took us probably almost a year to complete. 6-months of intensive negotiations. You can imagine in that process and we got to know each other intimately. Obviously, a relationship like that you don't take lightly. I didn't ask him on day one, whether he would invest in my new company. I asked him that after the other deal had closed and everything was done and dusted. Then the conversation automatically came to, what are you doing next? And I was already on the roach, and I said, what don't you want to participate in? And at that point, it was a very, very quick conversation. Ross is always a tough negotiator. He negotiated me down and made me issue warrants and various other things that I didn't want to do. But I wasn't entirely reliant on him either because , this is a key lesson I just want to bring here:  one of the other key aspects that I've paid attention to, and in every deal I've done is to diversify my sources of funding, not to be reliant on one single funder, not even Ross Beaty. And so at that time that gives you a strength and Ross thrives on that. , if you come to Ross with your tail between your legs, you won't get anything. So you have to face him. I did that. And so, yes.

Matthew Gordon: I'm building a points system of how do you go about building this and protecting your own shareholders, not putting his company in a position where it's dependent on someone else, or something else in this case: money or individuals. But he did raise the awareness of this, because there's a cult of Ross Beaty; people who will only invest in Ross Beaty projects. And that's fine fair enough for some people's strategy. He did raise their awareness for you, which helped. And the money helped because some companies struggle to raise the capital to actually get things going. And it slingshots you through the painful exploration process. Now, you've gone and raised some more money now, what are you going to do with it?

Heye Daun:  Did you say I have to, or I have?

Matthew Gordon: You have. It says here you oversubscribed at USD$17.7M.

Heye Daun: No, never. So just to finish off on Ross and then I'll come onto the new financing. So you are absolutely right: Ross gave us credibility. And we were able to raise the USD$10M of risk money in a dead market that we use to bring us to this point. So absolutely. And, with him came other quality institutional money. That's what it does often. So that is what Ross did for us.

Of course, once we made the discovery, which was towards the end of last year, it de-risked our company substantially from a technical perspective, because all of a sudden we weren't just a dream with some quality money behind it anymore, but we were now a real project with a significant footprint. And at that point it opened us up to a different audience, a more institutional type of audience. So we did our first real institutional raise in January of this year where we raised about USD$15M or so, and that really set us free.

Most people at that time thought that that was going to be at for a while. And it would have been enough for a while. But you asked me earlier about the ingredients of success and one of those is also prudency. So when I felt, when I saw the money market heating up in the last couple of months, and I just saw one financing after the other, and our share price was performing, I felt it was prudent to take some more and make sure that we funded well into the development phase, not taking things for granted. And that's why we did it. There were quite a few sceptics who said, maybe we took too much, we shouldn't have done it, but I'm very confident that it was the right thing. And so, yes, we've got about USD$25M in the bank now. We've got significant warrants that are in the money and we can do whatever we want to do in terms of ramping up the project and executing to get it to the mining stage.

Matthew Gordon: Now, we know Namibia through a few Uranium companies operating in-country. And it's tough out there as well. The government has had to make some decisions and they have restricted mining operations. How has that affected you?

Heye Daun: It is very tough, primarily because of tourism; Namibia is heavily dependent on tourism. So again, fiscally speaking, for the economy, socio-economically, it's very complicated for them. The mining industry has plodded through. So yes, they had some restrictions. The operators were locked down for about 6-weeks. So basically, we just stopped our drill programs from about March to May. And then in May, we started up again and we are basically on full tilt.

We have four drill rigs drilling at the same time. And we are looking to add more rigs and ramp up our activities more. I guess the difficulty that we have is that we can’t travel there. I can't go there and visit my own operations because of the international travel restrictions. But we are fortunate in that we have got a very credible Namibian team who are operating quite happily. So yes, so it hasn't affected us much. But we are waiting sorely to be able to travel there again.

Matthew Gordon: Given the amount of money that you've got, and you've got 4 total rigs running at the moment, what are you working towards? When I looked through the presentation, you do talk about your experience and track record, and you've got some nice names there. Nice shareholders. You have got reasonable institutional coverage now, but there is not a lot of meaningful data compiled together to tell the story of what it is that you've got and what you're going to do. So when is that coming?

Heye Daun:  Yes, thank you. That's good criticism, fair criticism. I guess one of the reasons it isn't there is because of 43-101: , the Canadian Stock Exchange approach, which is very prescriptive on what you are allowed to talk about on projects and economic information. So therefore, I'm allowed to paraphrase, but I can't give you exact numbers. But in a nutshell, we used to be an exploration company. We made the discovery and we are now developing that discovery as fast as we can into an operating Gold mine. Now, that process that I'm talking about, that's a 2 to 4-year timeline and we are right in the beginning of that timeline. And there are a couple of steps that we have to follow in order to do that. Firstly, we have to define an economic resource. So that's step number one. And the plan is to put that out early next year, with a bit of luck maybe this year, but I don't want to promise. And the idea is we feel confident that, and this is also,  why our market cap is where it is, we are going to put out a substantial initial resource, , in the, who knows, I don't want to mention numbers, but it's going to be between 1Moz and 2Moz, hopefully closer to 2Moz type of thing. It's a resource that is of similar scale and look and size to the other 2 operating Gold mines in Namibia: the B2 Gold one, which produces 150,000oz pa. So it's a typical tier-2 type of open pit operation.

That's our target, that's where we want to go. Our discovery promises or indicates this, it certainly shows the potential to achieve that. So that's first. The initial resource. At the same time, ongoing exploration to make it bigger and better. And then at the same time, in parallel with this, somewhat offset, is to do a PEA. A PEA as a Canadian term, it's a Preliminary Economic Assessment. It's basically a Pre-feasibility Study but you have to do it if you're going to speak about economics on a project, and you can't do as many of these as you like. Typically operators usually explore, build a large resource and then later they do a PEA. I'm going to accelerate all of that because we want to put the project on the map and we want to show the true potential that it has.

So that's what we are doing in the next 6 to 12-months. Beyond that it's a full on development timeline then. Assuming that the resource is big enough and assuming that the economic numbers in the PEA are good enough, you would then look to do detailed Feasibility Studies, financing, start of construction and actually getting into mining.

Now, when I spoke about a 2 to 4-year timeline, so resource PEA is the first year, second year: financing, detailed Feasibility Studies, commencement of construction maybe, and third year, fourth year: construction and operation. So  in 3 or 4-years’ time there's a good chance that there might be an operating Gold mine here. Of course, many other things could happen in the meantime from a corporate perspective; there is MNA, there's all sorts of stuff that can happen that we position ourselves for. But that's a different angle.

Matthew Gordon: I want to know what I'm getting into here: I know you have built mines with some big companies before, but your recent history is taking them through to a stage where you're taken out, right? You are seeking that. Are you seeking that again here? It's just the cookie cutter approach or do you genuinely want to get into it production?

Heye Daun: A lot of people ask me that, and it sounds too glib sometimes to say, oh no, we'll just sell out, because it's actually not about that. It's ultimately about shareholder value. And as a CEO, of course I've got personal interests, I've got interest as a Namibian citizen. And they will converge, but ultimately my role is to deliver shareholder value in the best way possible. And shareholder value is not just returns. It's also risks. So that's why, you alluded to, I've sold some companies in the past, and I did the right thing, like B2Gold is the best example. I don't think in 2012, if we had stuck with that project, likely we would have gone down in flames with the rest of the Gold market. Maybe we would have lost the project, who knows? We sold it at the right time to B2 Gold, who took on all that project risk and all the financing risk and they built a very successful Gold mine. And yes, we left some value on the table. That's comes with the territory - I'm just painting a picture here. I can't answer your question directly. I cannot say, yes, we definitely want to sell the company. We want to deliver shareholder value. And I do believe that the best way to achieve that is at the appropriate time, which is probably close to once we've delineated the true potential of what we have through exploration and through technical studies. And once it therefore, gets to the construction stage, that is an appropriate time to look for senior partners that have production expertise, that are well financed, et cetera. It's possible that that outcome that you are painting will happen. But you never know. If we have to, we will construct and operate.

Matthew Gordon: It's a great Gold environment at the moment. It has never been better for Gold companies. Given the stage that you're at and given the market conditions at the moment, do you think you're perhaps overvalued?

Heye Daun: Firstly of course, I'm the CEO of the company. What would I say? But apart from that, genuinely I'll tell you very simply why I don't think we are overvalued: I don't know. You're an ex-banker, so you've seen the comp tables. And that's what you should look at, obviously it all depends on your valuation methodology, beauty is in the eye of the beholder. So, if you consider development, expert, advanced exploration development companies, like we are, what they trade for, and you look at the reasonable comps for us. I don't know if your listeners know these companies like TA Resources in Ivory Coast, or Roscan in Mali, or Oclo, all these companies are well-run, well-financed, successful explorer/developers that have a range of valuations. Now, if you compare us to them, our valuation is reasonable.  our Achilles heel at the moment, which is probably why you say what you said, is the fact that we don't have a resource out. People see us as just an exploration company. And we cannot talk about this resource which we are working towards because we haven't done it yet and we are constricted by 43-101. And that's why I am accelerating and going hell for leather on our drilling to get that resource out as fast as I can. But in doing so, I will only do it if it is substantial, because otherwise you shoot yourself in the foot. But if you and I talk again in 6 months’ time and we have a substantial resource out, and you apply our current market cap to that, let's pick a number - let's say 2 Moz. I'm not saying it, well, but let's say 2Moz by next year. We will have that as a maiden resource, which would be a great achievement. I am not saying we will achieve that. And you apply our current market cap - that's USD$50/oz. That's half of what we sold to B2 Gold for. And that was 10-years ago, in a decent Gold environment with no track record. All of that is better now: better Gold market, much more track record. Namibia has got track record. We should easily achieve the valuation multiple of $100/oz, $150/oz at the resource stage. Once you get to production, of course, those multiples go up. Now, these numbers that I'm giving you is like 2x our current market cap. So I believe actually, let me just make this point, which  is a key point in terms of the value that Osino offers as an investment opportunity: I believe we are one of the best risk-return opportunities out there because  the risks, the key risks in junior exploration: financing, discovery, technical and management, have all been mitigated. We have got the money in the bank. We've made the discovery. What we are doing now is largely a mechanical process; ticking the boxes, drilling holes. So therefore, we totally de-risked and we've got significant upside opportunity through delivering this project and turning it into a feasible Goldmine. And there are other factors that we haven't even spoken about, the M&A environment that's unfolding in Namibia.

 So we were in a great position.  I'm not promising a 10-bagger, but the likelihood of us delivering on the plans that I've outlined is very high, that will be reflected in share prices.

Matthew Gordon: You're good at joining the dots, you told me you were, so it should be nice and easy. But I'm interested in the M&A component, because Ross Beaty said to me when he was on the show, he said, Pan-American Silver, last big bet he is going to make. So he's not going to be building up the next big thing in Africa with you, it sounds like to me. So with him or without him, do you think you've got the credibility to go and raise more capital for M&A in the market? I get in a very positive bull environment like this, everything is getting financed, but is that a conversation you seriously want to have? Is that something you want to take before you've really got this company established on the Twin Hill projects?

Heye Daun: To be honest, no, because I like to stick to my knitting, and building companies and creating things as we've done with Osino, that's my core competence and I'm good at it. And I know what I know. I focus on the things that are under my control. However, we are in a unique situation Namibia because we are right next to an operating Gold mine which has many very interesting attributes, but it is owned by a group of people that want to sell it. So that mine it's a couple of hundred, it's well, anyway, let me not…

Matthew Gordon: It will cost dollars, right?

Heye Daun: It's an open pit goldmine that Anglo used to own that's been in production for 30-years. That's got a large resource endowment. It's got 4Moz or 5Moz left in production. It has a couple of issues. It's been starved of capital for a long time, and it's got absentee parents so it needs a new owner. Now, that mine is 20km away from our Twin Hills discovery, so there are obvious, glaring, operational synergies, where we have growth, they have established infrastructure. Putting us together is an just such an obvious case of 1+1 is going to be substantially more than 2. Not just operating synergies, also rerating. When I spoke to you earlier about the valuation of our ounces, that's just on a standalone basis, but if you look at other examples that are out there, successful deals, like for example, Turanga bought that Massawa project from Berwick some time ago and the share price, , tripled or quadrupled subsequently.

There was a substantial rerate that took place. Now that rerating is value that could accrue to shareholders. Now, Osina, I would prefer for someone else to do all that hard lifting, and for us to just keep on exploring, delivering an excellent project, but I'm not sure I'm going to have that luxury. And that's why, when M&A happens, we are going to be part of that in some shape or form, either as an acquirer or being acquired or in a JV or whatever. We are hopefully going to be the King-maker in all of this. And we are positioning ourselves for that. And that has mostly opportunity, but it also has some threats, obviously, because, , if you're an exploration investor, do you all of a sudden want to be turned into operator, operational turnaround, et cetera. So it's not all a silver bullet to a slam dunk, but it is downside protection for investors because it's highly likely that this M&A, specifically in our neighbourhood, is going to come. 

Matthew Gordon: Your shareholders and people interested in you want to know what part you're going to play. Because your CAD$125M market cap, Canadian market cap company. People are talking about the JV, but what they want to understand is, it is all well and good to say we are going to be the king-makers, but why aren't you leading from the front and saying, well, actually we will manage this entire process. Or are you? What can you tell me?

Heye Daun: Yes, obviously this is all highly speculative because at the moment the process hasn't even started. And we believe that it will start at some stage. We don't know exactly when, but personally, I'm interested to buy time, because the more time I have to put a resource on the book and a PEA and get the share price up and so forth, the better position I am in. So that's the first aspect. However, this is an aspect that we cannot control because the owners will decide themselves when to sell. And, considering that we are at a record Gold prices, I could imagine it would be soon. Probably soon after the lockdown restrictions have been lifted.

Now, how will we act then? Obviously, this is a public forum. I can’t tell you, but there are many permutations possible: we could seek partners, we could try to do it ourselves. We could set up a new co, which Osina will merely participate in, and that new co could be led by Ross Beaty and I'm not suggesting anything. This is just me. I cannot speak on behalf of Ross. I'm just painting a picture of us being in a beautiful position where we've got all the options in the world. We just, if we decide to, we can also just sit there and keep delivering and the deal will come to us, but that's not in my nature. I tend to be more proactive in that. So for now, that's all I can say. But it's a very interesting aspect of the whole evolution of that gold mining district, where we are in the centre of.

What you need to bear in mind is, if you take a step back and look at the combined package, it would have something approaching 5Moz, 6Moz of Gold resources. It would have all the infrastructure in place in a brilliant jurisdiction like Namibia. And you can apply your own valuation metrics to that. That's substantial value. And that's why I do think this is a very interesting deal that one should pursue.

Matthew Gordon: I know you wouldn't talk about it if you weren't serious about it, because of the impact on your stock if it doesn't come off would be extremely negative, so I do appreciate you are serious about it.

Heye Daun: Yes. Can I correct you there? I wouldn't say so, because when I say, ‘one should pursue’, I'm not saying that Osina should pursue it. Remember: I'm a Namibian citizen, ex-Anglo. I used to be there. I could have different hats, but I would not do anything that's prejudicial to Osina, that goes without saying, so whichever way one would do this, it would be advantageous for Osina. But I don't think that our evaluation has a built-in M&A factor. I do think that it is downside protection to some extent, but if the deal doesn't happen, if somebody else like, for example, a Chinese entity, Chinese tend to be very active these days. If they end up buying that mine and outbidding us, because one thing we won’t do is compete on price. So that's possible. And then, but then it's still going to be good for Osina because it's highly likely, it looks like the resource that we are going to be delivering at the end of this year, likely it's going to be better than what's remaining at Novachock. So, whoever ends up owning Novachock would want to own us. So whichever way it goes, it will end up being positive for Osina.

Matthew Gordon: Thanks for clarifying your position. Can you talk to me about, just before we finish, because I have a really, really enjoyed learning, getting an idea of how you think and how you operate. Can you talk to me about assays and metallurgy? What, what do about what you have got on under the ground there?

Heye Daun: Now, you see, I'm very conscious of the fact that I promise people results sometime ago already, and we haven't delivered. Mainly because they had some logistical issues. So yes -drill results. In the next few weeks, there will be some significant drill results. Metallurgical test work has been positive. We haven't put it out because we were really busy with the next phase. So again, in the next week or so we will put something out on metallurgical test work, which generally it's been no issues, it's actually quite positive. But more excitingly is the progress that we've made. In fact, I can say it: we have appointed a very well-known engineering group that's going to do a substantial follow-on metallurgical tests with program that's actually already kicked off. We'll report that too, and then also imminently, hopefully next week, we'll put out some news on ongoing exploration and an IP survey, which has fielded some very interesting results that we are very excited about. It's going to be quite a detailed press release on ongoing exploration and ramping up of activities that we are planning.

Matthew Gordon: That's good to hear. And I'll tell you why, because, there's been conversation around the games that are played in the industry, assay results are promised, metallurgy results are promised and then it goes silent because they are fundraising. And, it usually is a case that the results aren't to be what they should be- it might spoil the fundraise, but here you're saying we should expect good news around the metallurgy?

Heye Daun:  Yes. The difficulty is, I'd love to report results as we receive them. But the problem is that it's in the interpretation of those results. And what we've seen in the past is that people often misinterpret results. The market is very greedy. They only like good results, excellent results. And that's why it's actually, from a company perspective, the prudent approach is to report in significant batches because then you just see things in perspective, and that's what we want to do. So that's why we waited a bit; just because we wanted to get a nice spread of results across the area where we are drilling and we are waiting for a few additional ones and then we will put them out. But no, nothing, nothing strange.

Matthew Gordon: Heye, good man. Really enjoyed this. Thank you very much. Loved hearing about Osina, what you're doing. I like the track record. You're planning ahead on the optionality that you may have an M&A, but we'll see what that turns out to look like. Thank you very much for your time, when you do have news pick up the phone, let us know.

Heye Daun: Will do. Thank you for the opportunity of being on your show. Thank you.

Company Page: https://osinoresources.com/

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