Orea Mining (OREA.TO) is a top performer today. At time of writing, the stock is up 61% with 3,041,766 shares traded. The stock was even halted at the open and resumed trading at 6:45 am PST/ 9:45 pm EST.
The stock is up big on securing a gold deposit. Orea Mining has entered into a legally binding letter agreement with Nordgold to obtain a 100% total interest in the Montagne d’Or joint venture company in French Guiana, France.
Montagne d’Or is a permitting stage, 5-million-ounce open pit gold mine development project with good grade, excellent metallurgy, and considerable potential to increase ounces by infill and expansion drilling.
Montagne d’Or is an open pit gold mine development project that hosts Measured Mineral Resources of 10.3 Mt at 1.804 g/t gold (600,000 oz), Indicated Mineral Resources of 74.8 Mt at 1.350 g/t gold (3.25 Moz) and additional Inferred Mineral Resources of 20.2 Mt at 1.48 g/t gold (960,000 oz).
The Mineral Resources are confined within a pit shell defined by a gold price of US$1,300/oz and a cut-off grade of 0.4 g/t gold. Mineral Reserves have also been defined with Proven Mineral Reserves of 8.25 Mt at 1.99 g/t gold (530,000 oz) and Probable Mineral Reserves of 45.87 Mt at 1.50 g/t gold (2.2 M oz). The Proven and Probable Mineral Reserves were estimated using a gold price of US$1,200 per ounce at varied cut-off grades from 0.552 to 0.665 g/t gold, dependent on lithological rock types, economics and estimated metallurgical recovery.
“This agreement is very accretive for Orea shareholders“, said Robert Giustra, Chairman of Orea. “Orea previously owned 45% of a gold project with an NPV of US$370 million, based on a US$1,200 gold price for calculating reserves, and US$1,300 for calculating resources. Orea has now signed a deal to control 100% of that project, and is planning to carry-out updated economic studies with current inputs, to determine what will certainly be a much higher NPV at significantly higher current gold prices of over US$1,700“.
There are no up front payments, but Orea will only be obligated to pay Nordgold $100 million CAD when Orea receives all permits and authorizations necessary for construction of a mine that produces a minimum of 100,000 ounces of gold per year.
In the same press release, Orea reported that it is not pursuing closing of additional tranches of the $1 million private placement announced on June 13th 2022. Given the recent acquisition of 100% of Montagne d’Or, management believes it can complete financing on more favorable terms and intends to raise capital in the near future.
Orea mining is a gold exploration and development company operating in an unexplored segment of the Guiana Shield in South America. Not only do they hold 100% interest in Montagne d’Or, but also are advancing the Antino gold exploration project in Suriname. Orea has an option agreement to acquire up to a 75% interest in this project.
When it comes to the chart, there is a lot to be excited about Orea Mining. It meets many of my reversal criteria which means the probabilities for more upside is high. When you combine the fact that the company will look to the market for money, and has the ability to secure financing on favorable terms, you have a winning combination. With that cash, management will have the funds to advance the project and create catalysts for shareholders.
Looking at the chart, Orea Mining has confirmed a basing pattern. The break today above $0.08 has triggered what is known as a cup and handle pattern. This is a very strong reversal pattern. The key to this pattern is that it prints after a downtrend. Orea Mining meets this criteria which increases the chances of reversal.
The trigger will be a candle close above $0.08. With today’s news and over 3 million shares traded, it is looking very likely that Orea Mining will confirm a close above $0.08 and trigger the cup and handle pattern.
The stock could pullback to $0.08 where I would expect to see buyers step in. The next resistance level comes in at $0.15-$0.16.
Good news and a good chart. When the fundamentals and technicals align, there is a lot to be excited about!