Atrium Research analysts Ben Pirie and Nicholas Cortellucci, in a research report published on October 24, 2024, maintained a Buy rating on Omai Gold Mines (TSXV:OMG) with a target price of CA$0.40. The report follows Omai's announcement of its second batch of assay results from its ongoing 10,000m drill program and plans to include the Gilt Creek deposit in its upcoming PEA.
The analysts highlighted significant drill results, stating, "Assays from six holes were reported today, mostly continuing to target previously untested gap zones, yielding strong gold mineralization in the majority of holes." Notable intercepts included "Hole 24ODD-086: 2.96 grams per tonne gold (g/t Au) over 19.4m and 3.78 g/t Au over 10.5m" and "Hole 24ODD-083: 10.93 g/t Au over 7.5m and 2.33 g/t Au over 17.7m."
The analysts emphasized the potential impact of these results, noting, "Filling in the large untested gaps within the PEA pit and proving these areas to be mineralized could result in a substantial boost to the PEA economics. This is because these gaps are currently treated as uneconomic waste, therefore positive results would not only grow the resource but reduce the strip ratio of the operation."
Regarding Omai's growth potential, the analysts stated, "Since 2022 and the most recent resource update, Omai added 578Koz of new gold to the Wenot deposit by spending just CA$3M, equating to a very low cost of discovery of ~CA$5.2/oz."
The report highlighted several reasons to like Omai Gold Mines, including:
- Past mining camp proven profitable with 3.8 Moz historical production
- 4.2 Moz of economic material
- Highly profitable PEA on Wenot Open Pit deposit
- Significant discount to peers, trading at only 0.1x NAV
The analysts' valuation methodology combines multiple approaches. They explained, "Using the CA$769M NPV (5%, US$1,950/oz) from the PEA, we apply a 0.2x multiple to arrive at our Wenot valuation of CA$154M or CA$0.27/share. For Gilt Creek, we apply a $20 EV/Oz valuation to its total resource, arriving at a valuation of CA$36M or CA$0.07/share."
In conclusion, Atrium Research's maintenance of a Buy rating and CA$0.40 price target reflects confidence in Omai Gold Mines' potential to expand its resource base and improve project economics. The share price at the time of the report represents a potential return of 122% to the analysts' target price, highlighting the significant upside potential as the company advances its exploration and development programs.
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Disclosures for Atrium Research, Omai Gold Mines, October 24, 2024
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