Omai Gold Mines Corp. OMG:TSXV
Rating BUY
Target Price $0.30
Return to Target 757%
Market Data
Share Price $0.035
Average Daily Volume (K) 94.5
FD ITM Shares (M) 377.8
Market Cap ($M) $13.2
Cash ($M) $1.7
Debt ($M) $0.0
Enterprise Value ($M) $11.5
Resource Data
Indicated (Moz) 1.9 Moz
Inferred (Moz) 1.8 Moz
Total (Moz) 3.7 Moz
Valuation
EV/Oz $3/oz
South American Median EV/Oz $10/oz
~4 Moz Resource Median EV/Oz $13/oz
Please refer to the applicable disclosures on the back page
Source: Atrium Research, CapitalIQ, Company Documents
November 13, 2023
Ben Pirie | Equity Research Analyst | bpirie@atriumresearch.ca |
647-688-9661 Nicholas Cortellucci, CFA | Equity Research Analyst | ncortellucci@atriumresearch.ca |
647-391-3314 This morning, Omai Gold Mines Corp. (OMG:TSXV, OMGGF:OTC) announced
additional drill results from the Omai Gold Project in Guyana. In 2023, a total of
6,131m have been completed across 16 holes with three holes being reported today
and assays remain outstanding. Holes 23ODD-066 and -067 further tested the
extent of the West Wenot target area (Figure 2 & 3) and Hole 23ODD-068 was drilled
in the mid-pit area but did not reach the planned depth (Figure 4). The highlight
intercepts of today’s results can be found in Table 1 below. Work has now
commenced on an updated mineral resource estimate which is expected before year
end.
The assays reported today yielded strong results which will be important in
expanding the already sizable resource at Wenot (~1.9 Moz Au Indicated +
Inferred). This builds upon a string of stellar drill results reported this year such as
Hole-071 which reported 2.26 g/t Au over 70.0m for 158 g x m on October 23rd
(find our note on this release here) and Hole-065 which reported 1.83 g/t Au over
25.5m for 125 g x m on August 22nd (find our note here). We are excited by
today’s results and look forward to their positive effect on the pending MRE where
we foresee significant resource growth in the West Wenot area.
The West Wenot target area and the high-grade intercepts reported to date are
important value drivers in a future mine development scenario as this area shows
strong potential of being a starter-pit while de-watering of the existing pits takes
place. The Company stated, that following the updated Mineral Resource Estimated
this quarter, it will begin work on a Preliminary Economic Assessment (PEA). We are
maintaining our BUY rating and target price of $0.30/share on OMG.
Table 1: Drill Hole Assay Highlights
Activity in Guyana – More action from the O&G giants in Guyana will only bring in
more capital to upgrade infrastructure in the country and ultimately support the
mining industry. We dive deeper into this below.
Catalysts
• Wenot Deposit extension drill results – Q4/23
• Updated Mineral Resource Estimate – Q4/23
• Preliminary Economic Assessment – H2/24
Hole ID From To Au (g/t) Width (m) g x m
23ODD-066 117.3 125.9 2.45 8.6 21.1
197.7 202.3 8.70 4.6 40.0
Including 197.7 200.0 16.72 2.3 38.5
23ODD-067 185.2 193.3 1.99 8.1 16.1
276.0 288.0 5.89 12.0 70.7
Including 286.0 288.0 19.62 2.0 39.2
23ODD-068 252.0 254.0 6.85 2.0 13.7
What you need to know:
• Today’s results continue to show strong mineralization with good
grades in the West Wenot target area, an area that will be important
for resource growth in the upcoming MRE.
• The best intercept was Hole-067 which intersected 5.89 g/t Au over
12.0m (70 g x m), immediately west of the historic pit.
• The Company has completed 16 drill holes, totalling 6,131m. Two
holes have yet to be reported.
• OMG plans to release an updated resource estimate this quarter.
Omai Gold Mines – More Strong Drill Results; MRE Expected This Quarter
Target Price
$0.30
Unchanged
Rating
BUY
Unchanged
Initiating
Research Note
Omai Gold Mines Corp.
Research Note
2
November 13, 2023
Why We Like OMG
• Past mining camp proven profitable – Historically mined 3.8 Moz of gold over a 13-year mine life
• 3.7 Moz of economic material – 1.5 g/t Open Pit and 4.0 g/t Underground
• Significant discount to peers – OMG trades at just $3/oz in-the-ground compared to its South
American peer group that averages $16/oz
Today’s Results
Hole 23ODD-066 (Figure 1 & 2) was a slightly shallower hole testing an area ~500m west of the
historical pit. The hole tested the mineralized zones ~75-100m west and 100m above hole-063 which
intersected high-grade including 4.04 g/t Au over 31.1m and 2.0 g/t Au over 27.5m. Hole-066
intersected the Central Shear zone at a vertical depth of 90m where it hit 2.45 g/t Au over 8.6m.
Further downhole, it intercepted a 75m wide sediment-hosted shear which hosted the highlight assay of
5.89 g/t Au over 8.7m.
Hole 23ODD-067 (Figure 1 & 3) was drilled immediately west of the past producing pit and ~100m
above hole -052. The hole intersected gold mineralization in all five main gold zones, confirming
mineralization at shallower depths and filling large undrilled gaps in the existing resource. The highlight
intercept of 5.89 g/t Au over 12.0m was found in the Central Shear with the other intercepts within the
Rhyolite-Diorite dike zone, the Sediment-hosted zone, the Volcanic-hosted quartz-ankerite veins, and
the Quartz feldspar porphyry dike.
Hole 23ODD-068 (Figure 1 & 4), was drilled ~150m west of hole -064 and 50m west of holes 21ODD-
001 and -013. The objective of the hole was to test the Central shear contact zone at a greater depth
and to explore the sediment-hosted zone in the central area of the Wenot deposit, however, two
attempts were made to complete this hole without success. Despite not achieving target depth or the
shear contact, the hole still encountered three modest gold intervals.
The drilling completed over the last several months has been focused on testing some of the undrilled
gaps within the Wenot deposit model, expanding the western “starter pit” area. Based on the results
reported in the last few releases, much of this has been achieved as mineralization in the western
extensions appears to occur in wider zones with good gold grades that may be enhanced by a NE-
trending cross structure. However, the 2024 drilling season will continue to fill more gaps and expand
this area with the goal of finding the full extent of the Wenot deposit. The objective of expanding the
western “starter pit” area is an important initiative for the company as in a development scenario, a
starter-pit will bring cash-flows forward, allowing ample time for the existing pits to be de-watered and
open access to the rest of the Wenot resource. This will also positively impact the NPV of the project
when the PEA is released.
Figure 1: Location of Holes 23ODD-066,
-067, & -068 (Source: Company Documents)
Omai Gold Mines Corp.
Research Note
3
November 13, 2023
Figure 2: Cross-Section for Hole 23ODD-066 (Source: Company Documents)
Figure 3: Cross-Section for Hole 23ODD-067 (Source: Company Documents)
Omai Gold Mines Corp.
Research Note
4
November 13, 2023
Figure 4: Cross-Section for Hole 23ODD-068 (Source: Company Documents)
Figure 5: West Wenot Plan Map – Drill Hole Locations, Geology, and Mineralized Zones
Omai Gold Mines Corp.
Research Note
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November 13, 2023
Activity in Guyana
We would also like the highlight the acquisition of E&P company, Hess Corporation (HES:NYSE) by
Chevron (CVX:NYSE) for $53B in stock ($60B EV). Hess has leading positions offshore Guyana, the
Bakken shale play in North Dakota, the deepwater Gulf of Mexico and the Gulf of Thailand. We look at
this as Chevron actively competing with Exxon for market share in Guyana as it represents one of the
key growth markets in oil & gas globally. We remind readers that Exxon has been well positioned in
Guyana with 30% of its forecasted 2027 production coming from the region.
This is important for the mining space in Guyana as it further contributes to the rapidly growing GDP
and tax revenue, leading to infrastructure upgrades across the country which de-risks exploration
companies like Omai Gold.
Existing Resource
We remind readers of the substantial existing resource. In 2022, Omai reported a resource of 3.7
Moz with 1.9 Moz and 1.8 Moz in the indicated and inferred categories, respectively. This resource is
made up of an underground deposit called Gilt Creek and an open pit deposit called Wenot (Table 2).
As mentioned above, the Company plans to update this resource estimate in Q4/23.
Table 2: Gilt Creek & Wenot Resource Estimate (Source: Company Documents)
Valuation
We are maintaining our BUY rating and target price of $0.30/share on Omai Gold Mines.
We view the recent pullback in OMG shares as a buying opportunity as the stock now trades at only
$3/oz and the Company has many significant catalysts coming in the next six months. We derive the
valuation for the Omai Gold Project at $99.5M or $0.26/share using a $27/oz in-the-ground multiple
on its 3.7 Moz resource. OMG has a cash balance of $1.7M which is reflected in the valuation
summary below.
Table 3: Valuation Summary
M+I Resources (Moz) 1.9
Inferred Resources (Moz) 1.8
Total Resources (Moz) 3.7
EV/Oz Multiple ($/oz) 27.0
Omai Project Valuation ($M) $99.5
$M $/share
Omai Project Valuation $99.5 $0.26
(+) Cash & Equivalents $1.7 $0.00
(-) Debt $0.0 $0.00
Equity Value $101.2 $0.27
Current Share Price $0.035
Target Price (Rounded) $0.30
Upside 757%
Target Price Calculation
Deposit Deposit Type Tonnes Au Grade (g/t) Constained Au (oz) Tonnes Au Grade (g/t) Constained Au (oz)
Gilt Creek (1.5 g/t cut-off) Underground 11,120,000 3.22 1,151,000 6,186,000 3.35 665,000
Wenot (0.35 g/t cut-off) Open Pit 17,541,000 1.34 756,600 20,115,000 1.72 1,112,600
Total 28,661,000 2.07 1,907,600 26,301,000 2.1 1,777,600
Indicated Inferred
Omai Gold Mines Corp.
Research Note
6
November 13, 2023
Disclosures
Analyst Certification
Each authoring analyst of Atrium Research on this report certifies that (i) the recommendations and opinions expressed in this research
accurately reflect the authoring analyst’s personal, independent and objective views about any and all of the designated securities discussed (ii)
no part of the authoring analyst’s compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views
expressed in the research, (iii) to the best of the authoring analyst’s knowledge, she/he is not in receipt of material non-public information
about the issuer, (iv) the analyst does not own common shares, options, or warrants in the company under coverage, and (v) the analysts
adhere to the CFA Institute guidelines for analyst independence.
Atrium Research Ratings System
BUY: The stock is expected to generate returns of over 20% over the next 24 months.
HOLD: The stock is expected to generate returns of 0-20% over the next 24 months.
SELL: The stock is expected to generate negative returns over the next 24 months.
NOT RATED (N/R): Atrium does not provide research coverage on the respective company.
RATING COVERED COMPANIES
BUY 10
HOLD 0
SELL 0