Tuesday, 24 May 2016

Oban Mining to become Osisko 2.0

Anyone familiar to the gold mining business knows about the acquisition of mid-tier producer Osisko Mining by Agnico Eagle and Yamana Gold. Excess working capital of Osisko was pooled in a new gold streamer named Osisko Royalties.

While executives of a mining company being acquired face an uncertain professional future, during the ongoing miner bear market the geology and exploration director simply knows he will have to leave office. Such was the situation for John F. Burzynski, awarded Prospector of the year in 2007.
After the Osisko acquisition, John Burzynski was appointed to Senior Vice President, New Business Development and Director of Osisko Gold Royalties since its inception in June 2014.
No need explaining that one needed a good stomach to start up a new gold exploration business during the harsh gold miner bear market. But at the same time, while financing ran dry and budgets were low, opportunities were there.

Oban Mining

Using his Business Development budget John F. Burzynski bought a major stake in Oban Mining, a languishing explorer in Ontario, Canada during June 2015.  The advantage of such operation was cash actually bought at a discount. In August 2015 John Burzynski, now President and Chief Executive officer of Oban Mining Corporation decided on a 20:1 consolidation, reducing the float of outstanding penny stock shares.

Acquisitions

Oban Mining Corporation completed fifteen transactions in the last eight months since reorganizing the company in August 2015, which included the acquisition of five exploration/development companies, the acquisition of two 100% owned mining properties, five investments resulting in significant ownership in four exploration/development companies, and three financings. The transactions have resulted in a strong shareholder base, with over 33% of Oban's shares held by four funds and one corporation. Osisko Gold Royalties Ltd owns over 16% and close to 20% including insiders. Sprott Asset Mgt has a 2.7% stake in Oban Mining.

Major deals have been the combined acquisitions of Eagle Hill Exploration, Ryan Gold and Corona Gold, the acquisitions of Northern gold and of Niogold and the acquisition of the Timmin's Area Property and the  Desantis Claims from Excellon Resources. Few more projects were studied but not withheld and the planned deal with Temex eventually was rejected after a higher bid by Lake Shore Gold.

From the onset of the completion of the first transaction in August 2015, the Corporation's principal objectives have been to grow the company to a point where critical mass was achieved in terms of owning gold resources and high-potential gold deposits; to establish a strong financial position; to attain significant market capitalization; to establish a solid shareholder base and to improve shareholder value. The Corporation has grown at a rapid rate from a position in June 2015 when Oban had no defined mineral resources, $10 million in cash and a market capitalization of less than $10 million.

Following the completion of the Niogold acquisition in March 2016, the three main deposits owned by the Corporation currently contain 3.49 million ounces of global resources in Measured and Indicated categories and 2.27 million ounces of global resources in Inferred category. Oban Mining holds approximately $74 million in cash and investments as of March 31, 2016 and it has a significant market capitalization of over $135 million. Management of the Corporation believes these fundamental elements provide the solid base necessary to build a mining company that will provide growing value to its shareholders over time.

Explorations success

Work is progressing well on Oban's 100% owned Windfall Lake (resulting from the acquisition of Eagle Hill) and the Marban projects (resulting from the acquisition of Niogold). At Windfall Lake (Québec), the 55,000 meter drill program commenced in October 2015 continues with four drill rigs, and there are approximately 20,000 metres left to complete in the current program. Results to date have been very encouraging, providing verification and good correlation with historic drilling performed by previous operators on the property. The deposit remains open at depth below the Red Dog intrusion, and is open at both the eastern and western ends. The results of the current program will be modeled along with historic drilling in the second half of 2016, and a resource update is anticipated in Q4 2016. A decision on extending the current drill program will be made by the end of Q2 2016.

Oban Mining to become the Osisko 2.0

Eventually there is no escape to the inevitable.  A name change been proposed to Oban Mining shareholders, with the new name being ... Osisko Mining Inc.  This needs to be decided on during an extraordinary shareholder meeting next month on June 8, 2016.
Update: The name change to Osisko Mining Inc. was carried through.

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Author's comment: Oban Mining first came into focus after its intention to acquire Niogold in January 2016.  Niogold was the only successful explorer quoting on the Toronto Venture Exchange which was included on our 'Gold Miner Pulse' list. After John Burzynski has taken control at Oban Mining, the corporation made a successful turnaround from a doomed penny stock with no perspective to a flourishing explorer with world class assets. Upon completing the acquisition of Niogold, Oban Mining has been included on our GMP list, inheriting thereby the Niogold track record.
Ever since, Oban Mining only has been adding value. By mid May Oban Mining is one of the few miners/explorers on our GMP list having more than doubled.  Note that such investment success is definitely not the shared among the very long term investors in Oban Mining, having coped with two share consolidations and still facing stiff losses.
All main mineral deposits are Canadian, situated in Québec and Ontario. Oban Mining has its HQ in Toronto. Press releases are published in English and French.

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