Time to Read: 4 minutes
This is a very brief summary of what was a one-hour interview. Don’t rely on this summary. Watch the full interview which is linked at the end of this post.
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The companies, albeit paying or non-paying, get no questions upfront, no questions off the table, and no editing rights.
Company Overview
O3 Mining, listed on the TSX Venture Exchange under the symbol OIII, is primarily focused on the Marban Alliance project in Quebec’s prolific Malartic gold mining camp. The company has a market cap of approximately $100 million with 88 million shares outstanding, trading at around $1.12 per share. Management holds 5% of the company, while Osisko Mining and institutional investors hold over 50%, leaving less than half in retail hands.
The 2022 Preliminary Feasibility Study (PFS) for Marban Alliance, conducted at $1,700 gold, reveals a robust NPV5 of nearly $500 million and a post-tax IRR of 23.2%, with annual gold production projected at 115,000 ounces at an all-in sustaining cost of $882 per ounce.
Interview with Jose Vizquerra
What’s happening with O3 Mining’s stock price?
The recent stock price decline is primarily due to new Canadian tax regulations that impose a 50% tax on capital gains, effective June 25th. This has led to a significant sell-off by those looking to rebuy shares later. This regulation has caused uncertainty in the market, affecting many companies, not just O3 Mining.
Why did you delay the feasibility study earlier this year?
The decision to delay the feasibility study was influenced by the potential for collaboration with other actors in the Val-d’Or camp, such as Agnico Eagle’s Canadian Malartic, which is transitioning from an open pit to underground mining and may have excess processing capacity. We wanted to explore this opportunity before proceeding with a standalone feasibility study.
What progress have you made in resource conversion and exploration?
We have been converting inferred resources to measured and indicated categories, adding another 300,000 ounces. Our internal studies suggest a significant increase in resources, and we are considering whether to release a Preliminary Economic Assessment (PEA) or proceed directly to the feasibility study. The PEA could highlight new resources and add value.
What improvements have you made to the Marban Alliance project?
Over the past year and a half, we have focused on specific gravity studies, overburden assessments, and understanding the host rock’s properties. This has led to better cost estimates and potentially more efficient pit designs, which could extend the mine life to 14 years.
How does the new information affect your permitting timeline?
The permitting process in Canada is guided by throughput. Since we will need between 15,000 and 16,000 tons per day, we will have to go through both provincial and federal levels, taking approximately 18 months to two years.
How is the environmental baseline study progressing?
We submitted the initial study and are now addressing government questions while engaging with First Nations and the community. This proactive approach helps us understand and address concerns, building trust and ensuring a smoother permitting process.
What are your thoughts on the cost-benefit of ESG initiatives?
We don’t view ESG as an additional cost but as doing the right thing. Good environmental, social, and governance practices are essential for long-term project sustainability and community trust. This approach has earned us recognition and awards, reflecting our commitment to responsible mining.
Can you explain the budget for exploration and evaluation?
We spend about $200 to $250 per meter of drilling. To convert resources, we need to drill extensively, with current plans including 4,000 meters at Kinebik and additional drilling at Marban. This is crucial for accurate resource estimation and mine planning.
How do you protect O3 Mining from hostile takeovers?
With a significant portion of shares held by Osisko and my family, we are well-protected against hostile takeovers. Additionally, the historical trend in mining shows that major companies typically acquire assets during boom times, not downturns.
Do you still aim to build the mine yourself?
While building the mine remains my dream, we are open to various options, including selling the company if it maximizes shareholder value. We are currently exploring the possibility of processing our ore at Canadian Malartic’s plant.
What was the rationale behind terminating the mill option?
The option to buy the mill from QMX, now owned by Eldorado, was based on an outdated premise. Our studies revealed insufficient capacity and logistical challenges. With Canadian Malartic’s potential excess capacity, we decided not to pursue the mill option, saving $400,000 annually.
What is your strategy for divesting non-core assets?
We plan to sell non-core assets in Ontario and Quebec. For example, we have spun out lithium assets in James Bay into a new company, Electric Elements, where we hold a 10% stake. This strategy allows us to focus on our primary projects while potentially benefiting from future discoveries.
Is there anything else important for investors to know?
Our asset is highly derisked, with strong community and governmental relationships. Despite being in a slow phase, we are adding value through exploration and planning. The Marban Alliance project has grown significantly, and with a potential mine life of over 14 years and substantial annual EBITDA, it represents a fundamentally strong investment.
This in-depth O3 Mining CEO interview provides a comprehensive update on O3 Mining’s current status, strategies, and future plans, highlighting the company’s robust fundamentals and commitment to responsible mining practices.
