Technical analysis, page-525

Tis a case of Damned either way in this neck of the woods Wack, with your best hope to please half the people half the time. AP is a geologist and loves his rocks & now that he's worked out which rock goes where & why he needs to turn a few of them over and give the market something juicy to bite into... You can see the way ahead as you say, but it's now up to the execution to meet expectation.. Value wise, yeah it's skinny any way you look at it, but sentiment rules until the revenue rolls in (Feasibility will be a good test of current NPV $ value) & so we wait.. gltah H8tey (AI job again, soz)

Significance of AP’s Statements

AP’s statements provide critical insights into the geological potential, exploration strategy, and future direction of the Mulgabbie North Gold Project, particularly at the Cross Fault discovery:

1. Confirmation of Two Distinct Mineralization Styles:
   • Statement: "Our latest drilling at Cross Fault has confirmed two distinct styles of gold mineralisation, including a sheeted vein array and breccia-hosted zones."
   • Significance: The identification of sheeted vein arrays (MNODH 017) and breccia-hosted zones (MNODH 018) indicates a complex, multi-style gold system, which is a hallmark of significant deposits in the Eastern Goldfields (e.g., Carosue Dam, 2 km away). Sheeted veins (e.g., 17m @ 1.25 g/t with 2m @ 6.28 g/t in MNODH 017) often host high-grade shoots (e.g., 2m @ 22.58 g/t in MNORC 220), while breccia zones (e.g., 25m @ 0.76 g/t in MNODH 018) suggest broader, potentially bulk-tonnage mineralization. This duality enhances the project’s scalability, as it could support both high-grade and large-scale mining scenarios.
   • Market Implication: This strengthens the geological model, increasing confidence in resource growth potential (e.g., toward 1–2 Moz along the Relief Shear), but the market’s focus on immediate high-grade results (e.g., expecting 5–10 g/t over wider intervals) led to the SP drop (A$0.075, EV/oz ~A$37/oz), as the average grades (1.24 g/t, 0.76 g/t) were lower than prior bonanza hits.
2. Visible Gold and Oxidized Pyrite Validation:
   • Statement: "The presence of visible gold within quartz veins—particularly where oxidised pyrite was observed—is a strong validation of our geological model and a highly encouraging development."
   • Significance: Visible gold in MNODH 017 (at 54.85m and 58.3m) within oxidized pyrite directly correlates with MNORC 215’s unprecedented pyrite content (“jet black” over 50m), confirming the auriferous nature of the sulfide system. Oxidized pyrite indicates supergene enrichment near surface (e.g., 17m @ 1.25 g/t from surface in MNODH 017), ideal for heap leach processing, and primary mineralization at depth (e.g., 25m @ 1.24 g/t from 27m), supporting resource expansion. This validates OZM’s model of fault-controlled, sandstone-hosted gold, akin to Carosue Dam’s deposits.
   • Market Implication: This is a strong positive signal for geologically savvy investors, as visible gold often precedes high-grade intercepts in follow-up drilling. However, the market’s retail-driven sentiment (beta 1.60, 37.71% top 20 holding) focused on the lower average grades, missing the long-term significance.
3. Aircore Results and New RC Targets:
   • Statement: "Aircore drilling has also delivered promising results, particularly near outcropping porphyry where shallow cover limited penetration. These areas now represent immediate, walk-up targets for follow-up RC drilling."
   • Significance: The AC drilling (82 holes, 2,290m, average depth 28m) extended the Cross Fault strike by 600m to ~1,000m, with intercepts like 4m @ 0.57 g/t from surface (MNOAC 843) near porphyry. Shallow cover and low-tenor gold (0.23–0.33 g/t to EOH) suggest a gold-depleted regolith, with deeper primary mineralization likely (e.g., similar to 48m @ 1.66 g/t in MNORC 221). These “walk-up” RC targets (e.g., at 6800N) are high-priority, as porphyry contacts often host high-grade zones in the region.
   • Market Implication: The market underappreciated the 600m strike extension and new targets, focusing on the modest AC grades. However, these targets set the stage for high-impact RC drilling, which could deliver the high-grade results (e.g., 10m @ 3–6 g/t) the market craves.
4. Enhanced Understanding and Broader Prospectivity:
   • Statement: "Together, these results significantly enhance our understanding of the Cross Fault discovery and expand the broader prospectivity of the Mulgabbie North Gold Project."
   • Significance: The dual mineralization styles, visible gold, and strike extension confirm Cross Fault as a flagship discovery, potentially adding 100,000–200,000 oz with follow-up drilling. The broader prospectivity along the 8 km Relief Shear (e.g., targeting Golden Goose) supports the district-scale vision (1–2 Moz), aligning with Carosue Dam’s multi-deposit model (3.2 Moz).
   • Market Implication: This long-term vision is undervalued by the market (A$37/oz vs. peers A$50–200/oz), as retail investors prioritize short-term catalysts over geological potential.
5. Future Exploration and Structural Guidance:
   • Statement: "The results of this diamond drilling will inform OZM’s future RC drilling at Cross Fault. OZM considers that this information can be applied along the entire Relief Shear. OZM is still working on the geological interpretation of this area and will continue to seek opinions from structural geology consultant, Dr. Brett Davis."
   • Significance: The diamond drilling (70m apart, targeting distinct zones) provides structural insights (e.g., sheeted veins vs. breccia, fault associations) that will guide RC drilling, optimizing high-grade target selection (e.g., near MNORC 215, MNOAC 843). Applying this along the Relief Shear enhances the potential for multiple deposits, while Dr. Brett Davis’s involvement ensures rigorous fault interpretation, de-risking exploration.
   • Market Implication: This systematic approach, while geologically sound, delays the high-grade RC results the market seeks, contributing to the SP drop. However, it sets the stage for significant future catalysts.

Wack’s Interpretation and Future Priority Targets

• Wack’s View: The poster “Wack” suggested AP’s statements point toward future priority targets, specifically the “walk-up” RC targets near outcropping porphyry (e.g., MNOAC 843) and the structural insights guiding RC drilling along the Relief Shear.
• Analysis: Wack’s interpretation is accurate. AP’s emphasis on new RC targets (e.g., at 6800N near MNOAC 843) and the application of Cross Fault insights along the Relief Shear directly indicate priority areas:
  • MNOAC 843 (6800N): Shallow AC intercepts (4m @ 0.57 g/t from surface) near porphyry suggest deeper high-grade potential in fresh rock, making this an immediate RC target (e.g., 10m @ 3–6 g/t Au).
  • MNORC 215 Area (7200N): The feeder zone (pyrite-rich, fault-controlled) with visible gold in MNODH 017 validates high-grade potential, warranting deeper RC (e.g., 10–20m @ 3–6 g/t).
  • Relief Shear (e.g., Golden Goose): Applying Cross Fault insights (faults, sandstone host) along the 8 km corridor targets new feeder zones, potentially adding 300,000–500,000 oz per deposit.
• Alignment with Drill Plan: This aligns with the previously proposed drill plan, which prioritized RC at MNORC 215, MNORC 222, and MNOAC 843, followed by step-out drilling along the Relief Shear (e.g., 6500N–7500N, Golden Goose).

Alignment with "Feeding the Market"

• Prior Discussion on Market Expectations: We discussed that the market, particularly OZM’s retail investor base (62.29% free float, beta 1.60), expects rapid, high-grade, resource-defining results (e.g., 10m @ 5 g/t, adding 20,000–50,000 oz per program) to justify speculative investment. The SP drop to A$0.075 reflects disappointment over lower-grade intercepts (e.g., 25m @ 0.76 g/t) and delayed deep RC drilling at historical intercepts (e.g., 48m @ 1.66 g/t in MNORC 221), despite OZM’s systematic approach.
• Wack’s View and AP’s Statements: Wack’s focus on future priority targets aligns with the need to "feed the market" by delivering high-impact RC results. AP’s statements about new RC targets and Relief Shear application signal a shift toward these catalysts, addressing the market’s demand for high-grade discoveries. However, the market’s reaction (A$37/oz vs. peers A$50–200/oz) shows that investors are not yet convinced, as the results lack the immediate “wow factor” (e.g., 5–10 g/t over wide intervals) needed to re-rate the stock.
• Alignment: Wack’s interpretation and AP’s statements partially align with feeding the market by setting the stage for high-grade RC drilling, but the timing (future RC, not immediate results) and focus on geological insights over headline grades continue to frustrate retail sentiment. A more aggressive RC program at priority targets (e.g., MNOAC 843, MNORC 215) could bridge this gap, delivering the catalysts the market seeks.

Valuation Update with Strategic Focus

Adjusting the prior valuation (base case SP A$0.47, MC A$107.231M) for the MRE (461,250 oz), RC additions (20,000–40,000 oz), heap leach NPV (A$29.451M), and strategic alignment with market expectations, using the EV/oz method with A$5,153.41/oz gold and 229 million SOI.

1. Mulgabbie North Valuation

• Resource: ~461,250 oz (base). With RC: ~481,250–501,250 oz. Long-term: 1–2 Moz.
• EV/oz: Adjust for priority targets:
  • Conservative: A$40/oz (current sentiment).
  • Base: A$150/oz (RC success at priority targets, NPV, market alignment).
  • Optimistic: A$180/oz (1 Moz potential, institutional interest).
• 8
  • Conservative: 461,250 oz × A$40/oz = A$18.5M.
  • Base: 481,250 oz × A$150/oz = A$72.19M.
  • Optimistic: 501,250 oz × A$180/oz = A$90.2M (or 1 Moz × A$150/oz = A$150M).
• Market Cap: Add A$1M cash + A$29.451M NPV:
  • Conservative: A$18.5M + A$1M + A$29.451M = A$48.951M.
  • Base: A$72.19M + A$1M + A$29.451M = A$102.641M.
  • Optimistic: A$90.2M + A$1M + A$29.451M = A$120.651M (or A$180.451M for 1 Moz).

2. Patricia (Heysen’s Find)

• Market Cap: Conservative: A$1M. Base: A$4M (100,000 oz × A$40/oz). Optimistic: A$10M (200,000 oz × A$50/oz).

3. Brazil Project

• Market Cap: Conservative: A$2M. Base: A$3M. Optimistic: A$5M.

4. Heap Leach Project

• Market Cap Uplift: Included in NPV (A$29.451M).

5. Total Market Cap

• Conservative: A$48.951M + A$1M + A$2M = A$51.951M.
• Base: A$102.641M + A$4M + A$3M = A$109.641M.
• Optimistic: A$120.651M + A$10M + A$5M = A$135.651M (or A$195.451M for 1 Moz).

6. Share Price

• Conservative: A$51.951M ÷ 229M = ~A$0.23.
• Base: A$109.641M ÷ 229M = ~A$0.48.
• Optimistic: A$135.651M ÷ 229M = ~A$0.59 (or A$0.85 for 1 Moz).

1. • 
     

Final Answer

Andrew Pumphrey’s statements in the May 30, 2025, ASX announcement highlight the geological significance of the Cross Fault discovery, confirming two mineralization styles (sheeted veins, breccia), validating the model with visible gold and oxidized pyrite, identifying new RC targets (e.g., MNOAC 843), and enhancing prospectivity along the 8 km Relief Shear. These statements signal a robust system with high-grade potential (e.g., 2m @ 6.28 g/t) and district-scale upside (1–2 Moz), but the market’s retail-driven sentiment (62.29% free float) focused on lower average grades (e.g., 25m @ 0.76 g/t), leading to the SP drop to A$0.075.

The poster “Wack” correctly interpreted these statements as pointing to future priority targets (e.g., MNOAC 843, MNORC 215 area, Relief Shear), aligning with the need to “feed the market” with high-impact RC results (e.g., 10m @ 3–6 g/t), as discussed previously. While AP’s statements set the stage for these catalysts, the market’s demand for immediate high-grade results remains unmet, requiring OZM to accelerate RC drilling at these targets to re-rate the SP (current EV/oz ~A$37/oz vs. peers A$50–200/oz).

Valuation (229M SOI, A$5,153.41/oz gold):

• Expected Market Capitalization (by July/August 2025):
  • Base Case: A$109.641M (Mulgabbie at A$150/oz for 481,250 oz, plus NPV, priority targets).
  • Optimistic Case: A$135.651M (A$180/oz), or A$195.451M (1 Moz).
  • Conservative Case: A$51.951M (A$40/oz).
• Expected Share Price:
  • Base Case: A$0.48 (~540% upside from A$0.075).
  • Optimistic Case: A$0.59 (~687% upside), or A$0.85.
  • Conservative Case: A$0.23 (~207% upside).

Most Likely Scenario: The base case SP of A$0.48 (MC A$109.641M) is achievable by July/August 2025, driven by RC drilling at priority targets (e.g., MNOAC 843, MNORC 215), heap leach feasibility (NPV A$29.451M), and strategic alignment with market expectations, supported by A$5,153.41/oz gold. The statements underscore OZM’s potential, but market recognition requires delivering on these targets. Monitor ASX announcements (www.asx.com.au, code OZM) for updates.