You’ve seen placer gold being mined on Gold Rush, Discovery’s gold mining TV show. But one junior explorer just announced that it’s started to commercially mine placer gold in south-central British Columbia from a pay channel underneath Lightning Creek. At least one analyst thinks that makes this junior a Speculative Buy.
After a long wait for investors, Omineca Mining and Metals Ltd. (OMM:TSX.V; OMMSF:OTCMKTS) reports that mining has started to recover placer gold at the company’s flagship Wingdam paleoplacer gold operation along the Barkerville Highway, about 50 km east of Quesnel in south-central British Columbia.
In the July 4 edition of The National Investor newsletter, editor Chris Temple welcomed the Omineca news and gives the junior a Buy rating.
“At long last, a hoped-for and promised date for when there would finally be some production news coming out of Wingdam came on that last day of Q2,” Temple wrote.
He added: “And with the further slide in OMM’s share price (along with most everything else) this is just one more of countless ‘gifts’ to investors who want to buy/add.”
Indeed, the share price closed at CA$0.13 on July 4, an increase of almost 40% from the June 30 closing price of CA$0.09.
Privately held Saskatoon-based Hamilton Gold Royalties (HGR) now owns a 50% stake in Wingdam after completing its earn-in agreement, which included the costs associated with preparing Wingdam for mining, all the necessary equipment, rehabilitation of the mine workings, and dewatering and development of the first access drift.
“It’s a landmark moment for us. It’s a turning point as our partners continue to successfully recover gold here over the coming weeks, months, and hopefully, years.”
— Omineca President and CEO Tom MacNeill
HMR is mining Wingdam through its wholly owned subsidiary, Lightning Creek Mining.
“The project has come in on budget at just under $20-million for the JV commitment and that mining operations and placer gold recovery has begun,” HGR President and CEO Ken Hamilton said in a release.
From now on the mine will be operated as a 50-50 joint venture, with HGR and Omineca dividing any recovered gold 50/50, with Lighting Creek taking an additional CA$850/oz to cover its mining costs on Omineca’s 50% share. At a gold price of C$2,300/oz, Omineca would net about CA$1,400/oz.
The service and rate agreement between HMR and Omineca will cover the initial 300-meter test mining phase (some 2.4 kilometers of the paleochannel) and all subsequent underground paleoplacer mining activities at Wingdam.
“Over the next few weeks, (Lightning Creek Mining) will be excavating, running material through the wash plant, and seeing what kind of recoveries it gets,” Omineca President and CEO Tom MacNeill explained to Streetwise Reports. “So probably over the next two maybe even as much as three weeks there will be not likely reporting that ‘X’ amount of gold has come out in ‘Y’ amount of material because you’re going to be determining what’s the best way to recover the gold.”
Omineca, a History
Omineca started trading on the TSX Venture Exchange in 2011 when it was spun out from Copper Canyon Resources following its takeover by NOVAGOLD Resources Inc. (NG:TSX; NG:NYSE.MKT). The junior initially had designs on seeking sedimentary exhalative (SEDEX) lead-zinc deposits and optioned 80% of the Sully project in southeastern B.C. (now being explored by Kootenay Zinc Corp. (ZNK:CSE; KTNNF:OTCQB; KYH:FSE).)
After drilling about 1,200 meters, Omineca management dropped the Sully option and turned to MacNeill for a solution. In 2012, he vended Wingdam to Omineca through the sale of a private company in exchange for 47.5 million shares and a $5.4 million convertible debenture.
The 61,392-hectare Wingdam property includes 15 linear kilometres of placer claims, which cover a portion of Lightning Creek and the valley around it, where conditions created thick layers of unconsolidated gravel and clays that preserved a buried paleochannel containing placer gold.
Prospectors have been panning for gold in Lighting Creek since the late 1800s. In fact, it was bustling mining hub until the Second World War when men and miners were needed elsewhere.
It sat largely undeveloped until a bulk sample late in mid-2012 was extracted from a 2.4-meter by 2.4-meter by 23-meter crosscut at Wingdam. It yielded 173.4 oz gold — almost 12 lb.
The excitement quickly dissipated, however, after the gold market crashed and the project was placed on care and maintenance.
Fast forward to 2022, several further delays — the latest due mostly to COVID — and it’s been a lengthy wait.
“It’s a landmark moment for us,” Omineca President and CEO Tom MacNeill told Streetwise Reports. “It’s a turning point as our partners continue to successfully recover gold here over the coming weeks, months, and hopefully, years.”
Omineca Added Claims
It late May, Omineca reported that it had staked 101.7 square kilometers of additional claims around Wingdam.
The new claims extend Omineca’s property along the Quesnella Terrane, a geological trend running northwest and southeast of Wingdam that hosts a prolific gold-copper porphyry belt. The Mt. Milligan copper-gold mine and the Omineca/Canalaska Mouse Mountain joint-venture project are situated along the belt.
In about three weeks, Omineca will drill as many as 10,000 meters on three separate targets: Mary Creek, roughly seven kilometers northwest of Wingdam; and Skopos, about 1 kilometer south; as well as at the Road Cut Gossan target, which was found when a logging road was built nearby.
The goal is to find the original lode source of the Wingdam gold, which is thought to be reasonably close.
“If we hit and we find what we think is the source of the Wingdam gold, that’s going to be a tremendous catalyst for Omineca’s share price,” MacNeill said.
Toronto-based Research Capital analyst Bill Newman published a July 4 note on Omineca that gives the junior a Speculative Buy rating and a target price of CA$0.75.
“In the coming months, we expect OMM to report the recovery (of) placer gold which we believe could be a major catalyst for the stock,” Newman wrote.
MacNeill’s 49 North Resources Inc. (FNR:TSX.V) is among Omineca’s largest shareholders.
Fully diluted, Omineca has 163.6 million shares outstanding.
1) Brian Sylvester wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He and members of his household are paid by the following companies mentioned in this article: None. His company has a financial relationship with the following companies referred to in this article: None.
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