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Bullboard - Stock Discussion Forum Oromin Explorations Ltd OLEPF

GREY:OLEPF - Post Discussion

Oromin Explorations Ltd > Article mentions synergies in OLE, TGZ deal.....
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Post by tony1969 on Aug 11, 2013 1:45pm

Article mentions synergies in OLE, TGZ deal.....

https://www.resourceinvestor.com/2013/08/08/low-cost-high-margin-mining-in-west-africa?ref=hp

Here is the part mentioning them.

TGR:
In June you visited Teranga Gold Corp.'s (TGZ:TSX; TGZ:ASX) Sabodala gold mine in Senegal and the adjoining Oromin Explorations Ltd. (OLE:TSX; OLEPF:OTCBB). Teranga has made a takeover bid for Oromin. How would investors be served by a successful bid?

DH: Because mining is often an isolated and standalone activity, combinations rarely add much synergy. However, the Teranga/Oromin combination would be very synergistic and should significantly benefit the shareholders of both companies. Teranga has a mill, but only two years of effective mine life, whereas Oromin has 43.5% of an open-pittable reserve of 1.4 Moz grading 2.05 g/t, which Teranga could definitely use—a match made in heaven. Teranga would also need to work out an arrangement with the other 56.5% joint venture owners to either buy them out or process their share of the deposit, in order to gain access to the whole deposit.

TGR: How is Teranga controlling costs at Sabodala?

DH: Teranga is stockpiling lower-grade ore (we estimate the stockpile grade is approximately 0.67 g/t on average) and is only processing the remaining higher-grade material for now.

Also, Teranga is implementing margin enhancement initiatives such as optimizing mine plans, re-sequencing pits, renegotiating contractor and supplier contracts, reviewing employment levels and reducing discretionary expenditures such as delaying new mine development, reducing sustaining capital, reducing exploration expenditure and reducing corporate costs. Teranga also has an excellent preventive maintenance program at the Sabodala mine, which has resulted in significant cost savings.

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