O3 Mining Inc. (TSXV:OIII; OTCQX:OIIIF) updated the timeline for its flagship Marban Alliance gold project in Quebec and closed a small equity financing, reported CIBC analyst Bryce Adams in an Oct. 30 research note.
"With the updated shareholder register and continued derisking of Marban, we expect that the takeout potential for O3 shares increases within the next two years," Adams wrote.
O3 Mining is the third iteration of the successful Osisko Mining Inc. (OSK:TSX) model, focused on acquiring, exploring and developing mineral properties in Canada.
168% return implied
The Canadian company is trading now at about CA$1.12 per share, and CIBC's target price on it is CA$3 per share, noted Adams. These figures reflect a potential return for investors of 168%.
O3 Mining has an Outperformer rating.
PEA coming this quarter
Adams presented O3's timeline for Marban Alliance and noted it aligns with CIBC's projections. The next step is completion of a preliminary economic assessment (PEA), slated for Q4/24, "which we expect will be reported on a standalone basis, with upside from potential toll milling agreements," the analyst wrote. G Mining Services now is the lead consultant on the PEA.
Next, a feasibility study will be done based on the PEA and the 2022 prefeasibility study. Targeted dates are Q1/25 to start it and Q2/25 to finish it.
Also in Q1/25, baseline environmental studies are slated for completion. Impact studies are to be started in Q2/25, and filing is slated for Q1/26.
More strategic investments
O3 Mining completed a nonbrokered private placement of CA$1.4 million with Sidex LP and NQ Investissement Minier, two mining investment funds sponsored by the Quebec government, reported Adams. Subsequently, O3 closed a follow-up offering of US$76,800 to the company's strategic investor at the same terms.
"We view these as smaller issuances, and after model updates, our net asset value per share estimate is now one penny lower at CA$4.48 per share," Adams wrote.
O3 Mining will use the proceeds to drill at Kinebik, where it continues to consolidate land. This project shares the same formation as Hecla Mining Co.'s (HL:NYSE) Casa Berardi mine and Gold Fields Ltd.'s (GFI:NYSE; GFI:JSE) Windfall project.
Takeout target potential
Through its acquisition of Osisko, Gold Fields gained 100% ownership of Windfall (it previously had acquired 50% from Osisko in 2023) and 17% of O3 Mining, Adams pointed out. Gold Fields also unsuccessfully had made a bid for Yamana Gold Inc.'s (YRI:TSX; AUY:NYSE; YAU:LSE) interests in the Canadian Malartic mine in Quebec earlier in 2023 and "has indicated further growth interest in Quebec."
"With Measured and Indicated resources of 2,400,000 ounces (2.4 Moz) and Inferred resources of 0.6 Moz at its flagship Marban project and near-term final permitting submission, O3 has above average takeout potential," purported Adams.
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