The quiet on the threads is deafening…lol…perhaps a sign that not many of the HC "traders" are on board yet?
Well...I think this will not last long.
As posted on TS...
I have been pointing to the potential of a significant upgrade to OVR's value here for some time...at first it was of a preliminary nature, mostly based on the recently acquired Andrews Zinc project, details of which were still of a preliminary nature.
I did some early numbers based on interpretations of the results released, recognising of course the very incomplete and patchy nature thereof.
It was on the same lines as the numbers I ran for CQT at 20c...CDU at $1 (ish) and MMB at 23c.
As the records show, my CQT numbers were within 10% of the resource numbers eventually released...the CDU numbers were within 2% and, well...the MMB story is still ongoing.
On each occasion, the preliminary numbers pointed to significant hidden value not yet recognised by the markets.
So this brings me back to OVR.
Over a month ago I presented my initial rough JORC "guesstimations" for OVR's Andrews project...and came up with the following numbers...
5.328m tonnes x 8%zn = 426,240 tonnes of contained metal.
Interesting to compare this to today's announcement from OVR...
5.92m tonnes x 7.59%zn (eq) = 449,328 tonnes of contained metal.
Seems I over did the grade slightly, but under did the tonnage!
No, I am not having a boast here…lol...the importance to me here is the obvious confirmation that my methods are more or less right…and that maybe we can apply them to the potential upside of the resource, the figures for which I also discussed in my earlier post…remembering Andrews is open along strike in each direction and at depth.
The key in my view is the geochem...both for the relationship with mineralisation at depth...as well as the lack of correlation in some parts (perhaps a function of dip?)
Anyway in my amateur view, based on the shallow, high grade nature of this JORC resource, combined with the particular metals mix, regional specifics, pro-mining stance of authorities and likelihood of considerable resource upside, I calculate a fair and reasonable value...just for this Andrews resource...of between $1.50-$2.50 per share (today), based on a fully diluted share structure of just 40m shares (making no consideration for cash at hand or future money from options conversion re dilution)
Even at this early stage, OVR appear to have a minimum in-situ metal value of some AUD$2b...that’s an in-ground metal value of some $50 per share in a resource that could arguably be fully recovered within just 3 years of mining (2mtpa)…remembering of course we are talking a JORC “inferred” resource, although some already falls in the indicated category.
In my view, the likelihood of this resource increasing significantly is very real with a near tripling of the resource tonnage by no means a stretch of the imagination down the track...which once again brings me back to my initial calculations, but this time the more conservative version of my upside projections…
14.92m tonnes x 5% zn = 745,920 tonnes of contained metal.
That’s $3b of in-situ resource at a very healthy $210 of metal value per ton (5%), just for the zinc...and ignores the Pb, Ag and Ge credits, which equate to another $100 per tonne…lol…thinks…perhaps we shouldn’t ignore them?
To draw a comparison…always a nice way to determine likely market valuations…lets take a look a CQT. Iterestingly, it looks to me likethey will be looking at an upside target of close to $3b of in-situ metal...more or less the same upside target as OVR...only difference is OVR's endowment per tonne is about three times that of CQT!
CQT's Mt Carlton = $107 of contained metal per tonne.
OVR's Andrews = $310 of contained metal per tonne.
Now here comes the good bit...
Using an in-situ metal value of $1.5b for CQT’s current JORC, we can see they are currently trading on a market cap of some 11.2% of in-situ value, which of course equates to a market cap of some $168m.
If we were to apply the same in-situ market cap percentages to OVR's Andrews resource ($2b), we get a market cap for OVR of $224m...or $5.60 per share.
Even if we reduce this in-situ percentage to just a quarter of CQT's we still get $1.40 per OVR share.
Remember…OVR’s resource has 3 times the metal value per tonne than CQT’s…perhaps we should be using 3 times CQT’s in-situ percentages rather than one quarter thereof?
Lol.
Now once again I remind everyone…this is just for OVR’s Andrews resource, I have not even begun to look at their other resources, of which their Peel Nickel-Copper project alone could arguably support current prices…which by the way they are drilling right now!
At the risk of sounding a bit too excited...I don't think I have ever seen a more undervalued speculative resource stock than OVR at 89c tonight!
Lol…yes, that does sound a little over the top, but I think for good reason…I liked their potential based on my earlier figures of last month, but today's official confirmation from the company has tipped me over the edge in a big way here.
I'm already holding these from last month…bought more today…and will be buying more on the dips ahead. May or may not trade the swings because as I learnt in the early days of SRK (under 70c), some stocks are virtually impossible to trade successfully…in my view, OVR will become one of those.
Anyway…I will no-doubt be accused of ramping over this post, although I fail to see how presenting an opinion based on factual data, albeit with some interpretation thrown in, could possibly be accused of such.
I am sincerely happy to express my views here for the benefit or otherwise of other…it is 100% up to you if you pay heed or not.
Cheers!
OVR Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
(20min delay)