Omai Gold Mines Corp V.OMG

Omai Gold Mines with Probable Multi Million oz Potential

[trooper22]

Check out my link on the full article by the Hedgeless Horseman

Omai Gold Mines (OMG.V): Brownfield Exploration With Probable Multi Moz Potential
Gold juniors are trading at cheap levels overall right now and there are some that trade at pretty absurd valuation. Valuations one would expect at the depths of a bear market and a gold price of around $1,200 or so. In my opinion this is the best investing environment I have yet to see in this space. It’s getting almost impossible to make mistakes (overpaying) when such a vast amount of risk is already discounted in many of these companies. In this piece I will explain why I own shares of Omai Gold Mines, which I think is one of those absurdly cheap juniors, and agreed to have the company come on as a banner sponsor…

Omai Gold Mines in Short

My Case For Omai Gold Mines

The case is very simple in my pinion. The company is trading at a valuation on par with some grassroot explorers even though the company owns an asset that used to be a top tier mine with potentially a couple of millions of ounces left behind (More on this later). If that wasn’t enough there is significant and probable exploration potential all over the project. I do think this project has a good chance of becoming a mine again and I think Silvercorp Metals and Sandstorm Gold Royalties feel the same as they own 15.1% and 9.9% of the company respectively. The only negative factor that I see is that it is in Guyana which is not a tier #1 jurisdiction. With that said I think Omai is way too cheap and that there is a relatively good chance to get at least a 5+ bagger within 24 months. A 5X would have the company valued at US$138 M which I certainly don’t think is a stretch if the company is successful in showing multi million ounce potential (which I see as likely in that timeframe). I get that Guyana should have a discount but this is simply irrationally cheap for an asset of this quality in my opinion…

Lastly I would say that Sandstorm Gold Royalties is in the business of owning ROYALTIES on MINES. A stake by said company basically says, again, that they think it has a decent shot at becoming a mine simply due to the quality of the project. With an Enterprise Value of ~US$23 M one readily can see that nothing of the sort is priced in. So as I see it either Sandstorm Gold (and Silvercorp) are incompetent or Omai Gold Mines is a steal at these prices.

In Short:

• Substantial “inferred” resource
• Great brownfield potential and greenfield potential
• Backed by Silvercorp Metals and Sandstorm Gold Royalties
• It was a previous mine
  • Ground already disturbed
  • Worked at a much lower gold price
  • Obvious that one can have a mine there
• Enterprise Value of US$19.9 M (cheap)

If you are interested in this stock read my link to this full article back a few posts.  Very very interesting!