Junior explorer Omineca Mining and Metals Ltd. (OMM:TSX.V; OMMSF:OTCMKTS) intercepted a significant width of high-grade gold at its underground Wingdam project, according to a Research Capital Corp. analyst Bill Newman in a February 8 research note.
The hole, 23-02, averaged 25.41 grams per cubic meter of placer gold over eight vertical meters, confirming Omineca's seismic targets and the potential for resource expansion.
"Results of this first crosscut could be a near-term catalyst for the stock," Newman wrote, giving the company a Speculative Buy rating, with a CA$0.55 target price.
As Newman details, Omineca's partner D&L, recently completed an underground survey to refine specific targets within the paleochannel, identifying five depressions often associated with gold accumulation within the first 300 meters.
Omineca drilled holes 23-01 and 23-02 into the first area identified as a depression. The first depression target is estimated to be about 80 meters long and around 40 meters wide at its maximum width. This target area is downstream from where the company extracted a successful bulk sample back in 2012. The previous bulk sample results were positive, signaling the potential for additional gold concentrations.
With a new crosscut and additional bulk sampling imminent, Newman sees the potential for positive near-term catalysts and news flow even after a reorganization with former partner Hamilton Gold Royalties. The updated agreement with successor entity D&L retains the same terms, costing Omineca CA$850 per ounce of gold produced from its 50% project share.
Newman commented, "The results of the 23-02 drill hole confirm a high gold grade comparable to the 2012 Bulk Sample but over a larger vertical thickness. With the reorganization of OMM former partner now complete and underground operations are once again underway, we are hopeful that the gold recovery phase will commence within the coming weeks/months."
The positive exploration results and advancing underground access lend confidence for Omineca to enter into the recovery phase. With recent financing expanding the share count, Research Capital has reduced its price target to CA$0.55 from CA$0.75. However, further positive bulk sampling and gold production updates could refocus attention on the upside potential here.
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Disclosures for Research Capital Corp., Omineca Mining and Metals Ltd., February 8, 2024
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