Omineca Mining and Metals Ltd. (OMM:TSX.V; OMMSF:OTCMKTS) has successfully entered the placer gold-bearing paleochannel at its flagship Wingam underground project in British Columbia.
Workers saw visible placer gold on entering the paleochannel or buried remnant of an inactive river or stream channel.
The material was being stockpiled and would be processed at the wash plant. The results of the placer gold recovery will be announced when they are tabulated, the company said.
"We believe the announcement of the recovery of first gold from the new mining operation could be a near-term catalyst for the stock," wrote Research Capital Corp. analyst Bill Newman in a March 3 note.
Newman of Research Capital Corp. rated the stock a Speculative Buy with a CA$0.75 target.
Newman rated the stock a Speculative Buy with a CA$0.75 target.
"Although getting to the gold recovery stage has taken longer than expected, … in the coming weeks/months, we expect OMM to report the recovery of placer gold, which we believe could be a major catalyst for the stock," Newman wrote.
Newsletter writer Clive Maund of CliveMaund.com also rated the stock a Speculative Buy when he analyzed it in January, before the Wingdam news.
He said the stock went through a "serious rough patch" over 30 months or so, losing 90% of its value at one point.
"On the latest 6-month chart, we can see that after hitting bottom late last year (2022), Omineca is being shepherded higher by the Bowl pattern shown, which means that the advance should accelerate," he wrote.
The Catalyst: 12 Pounds of Gold
Prospectors have been panning for gold in Lighting Creek since the late 1800s, and it was a bustling mining hub until World War II.
It sat largely undeveloped until a bulk sample late in mid-2012 was extracted from a 2.4-meter by 2.4-meter by 23-meter crosscut. It yielded 173.4 ounces gold — almost 12 pounds.
"After taking forever, it seemed, the news underscores the fact that they are hitting the paleochannel hard and on more than one front, now that they are happy with the front-end engineering work that had to come first," Chris Temple wrote.
The excitement dissipated, however, after the gold market crashed and the project was placed on care and maintenance.
However, Chris Temple, editor of The National Investor newsletter, welcomed what he's seeing now as a "nascent comeback."
"After taking forever, it seemed, the news underscores the fact that they are hitting the paleochannel hard and on more than one front, now that they are happy with the front-end engineering work that had to come first," Temple wrote March 3.
Shifts Working Day and Night
Omineca's Wingdam project is more than 61,000 hectares and about 45 kilometers east of Quesnel, British Columbia. Hamilton Gold Royalties is a 50-50 joint venture partner with the company on the underground placer recovery.
Omineca was spun out from Copper Canyon Resources after its takeover by NOVAGOLD Resources Inc. (NG:TSX; NG:NYSE.MKT) in 2011. The junior initially sought lead-zinc deposits but soon pivoted.
Wingdam has 15 linear kilometers of placer claims covering a portion of Lightning Creek and the valley around it, where conditions created thick layers of unconsolidated gravel and clays that preserved and buried the paleochannel containing the placer gold.
Omineca said Fortis had doubled its workforce and is running on day and night shifts as mining operations continue. Fortis is beginning another crosscut and then will "advance into the heart of the channel on multiple headings to excavate the gold-bearing gravels between crosscuts," Omineca said in a release.
The company said it was pleased with Fortis' execution at the site.
Gold has been a more and more consistent performer than other precious metals when it comes to safeguarding wealth, wrote Anthony Tellez of Forbes.
"With the presence of visible placer gold upon entering the paleochannel in bedrock faults and the nearside extremity of the channel bed, the Company looks forward to the prospects of excavating the gravels from the central portion of the channel, where the majority of the placer gold was recovered in the 2012 bulk sample," Omineca noted.
The company is also exploratory drilling at the site, focusing on two main areas in close proximity to the underground project. The Skopos target is located atop the mountain beside Lightning Creek and the underground placer project, and Mary Creek is on a trend to the north, which shares similar characteristics to Wingdam.
Why Gold?
Investors typically jump back to gold as a safe harbor and a hedge against inflation in tough times. Dan Burrows of Kiplinger said investing in the precious metal "does tend to work in times of trouble."
However, investors need to proceed with caution, or gold will "too often break your heart."
"To be sure, gold ETFs and gold miner stocks can be effective tools in the hands of traders and tactical investors," he wrote. "But that means knowing when to get in — and when to get out."
Streetwise Ownership Overview*
Omineca Mining and Metals Ltd. (OMM:TSX.V; OMMSF:OTCMKTS)
Gold has been a more and more consistent performer than other precious metals when it comes to safeguarding wealth, wrote Anthony Tellez of Forbes.
"Gold can be bought to diversify one’s portfolio as it increases in value when paper investments, such as stocks and bonds, decline in value, even though gold is more volatile in the short term," he wrote.
Ownership and Share Structure
About 37% of Omineca is owned by management and insiders, according to the company. Chief Executive Officer Tom MacNeill's 49 North Resources Inc. owns 31.1% or 45.4 million shares, MacNeill directly owns 4.05% or 5.9 million shares, Chief Financial Officer and Director Andrew Davidson owns 1.92% or 2.8 million shares, and Director Sylvain Laberge owns 0.14% or 205,000 shares, Reuters said.
The rest, 63%, is retail.
Omineca has a market cap of CA$19.7 million, and has about 146 million outstanding shares, including 92.9 million of them free-floating. It trades in a 52-week range of CA$0.20 and CA$0.075.
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