ORS developing underground gold resources at Union Mine and high grade open pit resources at Croydon / London Hill which are fully permitted for mining. Inferred Resource is 73,000 ounces of gold.
The Company owns a 150,000 tpa process plant that is currently processing small volumes of high grade ore from the 1,100 level of the Union Mine. Total investment at Union is $35M with no debt. Inferred Resource in and around the 1,100 level is around 200,000 ounces of gold (someone might dig up the actual number as I am relying on memory). ORS has had a lot of success on developing both a high grade vein system and a wider bulk mining target that appears to straddle the top of this inferred resource. They are currently pulling small volumes of high grade ore from this system, and intend to develop multiple and lower levels for production over the next 10 - 11 months.
My sense is that this ore could running anywhere from 6 - 12 grams per tonne from the 1,100 level. ORS is due to report on production and development by end of this quarter and my guess is that they will report a significant increase in gold production from earlier quarters. 12 month target puts this into a production range of around 38,000 ounces at 8 g/t au recovered.
ORS held off from processing ore from Croydon when gold was falling towards US$1,245 per ounce. BUT gold is now skyrocketing. They could easily bring in 4,500 tpm from Croydon at around 3.5 g/t au and produce a total of around 1,000 -1,200 ounces per quarter (including small volumes of underground ore) as they build up underground infrastructure. Creating quarterly revenues of $1.4M - $1.7M.
At a market cap of $9M, cash of $3M and 12 month forward estimated revenue of $50M (A$1,400 gold price for 36,000 ounces annual production) ORS is extremely undervalued.
ORS Price at posting:
5.6¢ Sentiment: None Disclosure: Unspecified
