Orogen Royalties Inc. (OGN:TSX.V) has announced a significant gold-silver discovery, known as the Navidad vein system, within its Ermitano mine concessions in Sonora, Mexico. This discovery falls under the company's 2% net smelter return (NSR) royalty. The Navidad vein system was found 500 meters southwest and 750 meters below the current Ermitano mine, indicating the potential for extended mine life and increased production.
The discovery was made by mine operator First Majestic Silver Corp., which reported several promising drill results from the Navidad vein. These include highlights such as an intercept grading 8.15 grams per tonne (g/t) of gold and 427 g/t of silver over 4.78 meters and another with 10.13 g/t gold and 86 g/t silver over 4.42 meters. The Navidad vein system, which includes both a main and a hangingwall vein, shows an apparent strike continuity of 750 meters and a dip continuity of 250 meters. Currently, the zone remains open in all directions, suggesting significant exploration potential.
Orogen's CEO, Paddy Nicol, emphasized the importance of this discovery, stating in the press release, "The discovery of the Navidad vein system has strong implications for significantly extending the life of the Ermitano mine and for Orogen's 2-per-cent NSR royalty. Only seven holes have been completed in the Navidad vein, but the scale of the discovery is already apparent with high-grade gold intercepts that are approximately 750 meters apart."
The Precious Role of Precious Metals Mining
The precious metals mining sector, where Orogen Royalties Inc. operates, plays a crucial role in the global economy by providing essential minerals used in various industries, from technology to renewable energy.
As highlighted by Resources Victoria in May, "Exploration is an important step in finding minerals so they can be potentially mined," a process that Orogen has successfully demonstrated with the discovery of the Navidad vein system at the Ermitano mine in Sonora, Mexico.
This sector has seen increasing demand for minerals like gold and silver, which are essential for both industrial applications and investment purposes. The metals and mining sector continues to be driven by both economic and industrial demand.
As Richard Mills wrote for Duke University on July 8, "Silver is up 33% year to date (July 8), gold is up 15.8%, and copper has gained 19.1%." These rising prices indicate strong market conditions that could further benefit companies like Orogen as they expand their exploration activities. Mills also noted, "Gold prices are pushing higher due to a shortfall of mined gold," a trend that underscores the importance of discoveries like Navidad in meeting future demand.
What Orogen's Discovery Means For The Company
The Navidad vein system discovery is expected to be a major catalyst for Orogen Royalties Inc., potentially extending the life of the Ermitano mine and enhancing the company's revenue from its 2% NSR royalty. First Majestic has assigned four drill rigs to further explore the Navidad vein, with plans to continue drilling throughout 2024. This early-stage discovery, with its significant high-grade gold and silver intercepts, could lead to an expanded resource base and increased production at the Ermitano mine.
The exploration at the Navidad vein parallels the earlier discovery of the Luna zone on the eastern end of the Ermitano mine, highlighting the area's continued growth potential. As Orogen's CEO noted, the scale of the Navidad discovery, even at this early stage, suggests the potential for further significant findings, which could have a positive impact on the company's future earnings.
In the company news release, Orogen emphasized the strategic importance of this discovery, noting the ongoing potential for exploration and development in the region. With additional drilling planned, Orogen is poised to benefit from any further advancements made by First Majestic in the Navidad vein system.
Analyst Opinion On Orogen
According to Global Analyst Adrian Day, on August 7, Orogen Royalties Inc. appeared to be in a strong position with its recent developments at the Ermitano mine. The discovery of the Navidad zone by First Majestic Silver Corp., the operator of Orogen's sole cash-flowing royalty mine, was particularly noteworthy. Six out of seven drill holes into the Navidad zone successfully hit mineralization, indicating promising prospects for Orogen.
Day rated the stock a "Buy" and noted that although it was still early in the process, First Majestic had already moved four drill rigs to the area, signaling the importance of this discovery. He suggested that, given the depth of the Navidad zone, First Majestic might plan to develop a drift from existing workings rather than drilling from the surface. This approach could potentially lower capital costs and accelerate the timeline for bringing the new zone into production.
Day further highlighted the potential for mining at Navidad to continue seamlessly after the main Ermitano mine is exhausted in four or five years. This continuity could extend Orogen's cash flow well into the 2030s. Additionally, he pointed out that there were other major prospective areas within Orogen's royalty area, such as the Luna zone to the east and the Cumobabi area to the south and east, which had yet to receive significant drilling attention from First Majestic.
Streetwise Ownership Overview*Day also mentioned that there were some gold targets to the east, adding to the long-term potential of the overall mine. He emphasized that the existing mill facilities at Ermitano would be a key advantage in extending the mine's life and reducing costs.
Furthermore, Day indicated that the market was anticipating updates on Silicon-Merlin, particularly regarding extensive drilling to the west when AngloGold Ashanti Ltd. reported later that week. He also noted the ongoing arbitration involving Altius Minerals Corp., which could potentially impact Orogen's royalty interests once resolved.
Ownership and Share Structure
According to Refinitv, institutions own 15.21% of Orogen Royalties, with Sprott Asset Management LP holding 11.60% and Euro Pacific Asset Management owning 3.31%
Management and insiders own 2.77%.
Strategic Investors hold 18.08%. Of those, Altitus Minerals Corp has 18.08%, Director Roland Wayne Butler has 1.39%, and CEO John Patric Nicol owns 1.01%
The rest is retail. Orogen Royalties has 159.5 free float shares, a market cap of US$277 million, and a 52 week range of US$0.5800 - 1.3800.
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Important Disclosures:
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Orogen Royalties Inc.
- James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
- This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.
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