ORS has $35M invested in process plant (150,000 tpa) and mine development at Union Mine. Maldon, Victoria. The underground development work has advanced onto the top of a major gold system that has an inferred resource of around 200,000 ounces. This system includes a high grade vein that is around 2-3 metres wide and a much larger bulk gold target that is about 9 metres wide.
Historical mining within the old mines indicate that typical and multiple high grade ore systems carried around 200,00 ounces with over a million ounces extracted. ORS has found BOTH a high grade gold system AND a much larger bulk higher grade gold body that run parallel. Both occurrences are located in a significant fault zone within the old mining field and may be indicative of the presence of much larger volumes of gold.
We do not know the full horizontal extent of these two parallel gold bearing systems, nor do we know the vertical extent. Earlier drilling clearly indicates that there is significant vertical extension in the current work area. IMHO this looks like (at the moment) a half sized Doray Minerals situation like at Andy Well in WA.
ORS has a current workforce of 20 -30 people at Union along with mobile trucking units and underground drill rigs for development and production. The Company has no debt and is aiming at production of high grade gold for an output of about 35,000 ounces per annum from 150,000 tpa at around 8 g/t au (my estimate) which is a little over half of the output at Doray Minerals . Andy Well.
The Company has two mining teams extracting small volumes of high grade ore and advancing the decline below the 1,100 level. The aim is to build this up to four mining teams over the next 6-10 months and get into full production.
Assuming that the Andy Well analogy is valid then we get a valuation of around $40M for the Union Mine AND this does not take into account other assets (and cash of over $3M) of the Company which are quite significant in terms of the current valuation of $10M. More about this later.
ORS Price at posting:
5.8¢ Sentiment: Buy Disclosure: Held
