To all fellow holders and potential investors, due to the consolidation period we are having, i had decided to write up a comprehensive excerpt of where OVR stands in the discovery to production phase.
It is absolutely critical that investors truly understand the nature and relative stages a firm needs to take to bring an a discovery to production. As such, we are now at a critical phase of OVR's life as a mining exploration firm and a stage where every geologists dreams about. Only 5 out of 100 companies ever get to the mine production arena....we are at the brink. OVR is being undervalued and rated as an exploration firm but is actually at the development stage.
Please take your time and read the stages that OVR is moving through. I have used my experience and knowledge to describe what they had just completed [i.e. previous stage], where they stand [i.e. current stage] and what to expect in terms of news flow [i.e. future stage]. As you can see, we have numerous push indicators to process...
Although this is my experience speaking, all exploration and development firms go through these cycles.
The previous stage OVR was in is classified as the Ore Definition Phase.
This stage is primarily to obtain Results in the Mineral Inventory.
During this part of the exploration phase, the target [i.e. Andrew deposit] is tested by drilling. This is so that the company could establish first cut geometry, grade and if they have done enough work and have had taken samples to establish the tonnage factor, they could make an estimation of the tonnage. It is possible that by this stage, about 40%-50% of the resource might already be identified. As such this is usually accomplished in 6-12 months.
The successful result of all of this is the delineation of the geometry, the grade and tonnage guess of an indicated resource. It is not called reserves at this stage until more data is obtained. At this stage, exploration and genetic models are refined and an economic model is developed. Perhaps when a firm confirms the shape and configuration of the target, 50 or 60 additional holes might be drilled. Subsequent drilling will establish cutoff grades and what was the resource might now end up as part of the reserve [i.e. measured resources] in the company's balance sheet.
Samples are then collected for early mining and metallurgical testing. Environmental baseline data collection begins at this time. Conceptual site and facility layout and mining finance is also developed and the costs are estimated. The reason for this, is that the economic model comes in again to decide whether to spend the next increment of money because this next increment of cash will be more expensive then those preceding it.
Finally, the land contract and water testing and rights get reviewed.
Summary of this stage;
- Characterise mineralisation, host rock and alteration; - Test all targets to establish geometry and tenor; - Make discovery - Mineral inventory [i.e. Grade and tonnage guess] - Acquire Preliminary Data on Mining, Metallurgy, Environment - Develop Preliminary Project Concept - Review Land and Water Rights
The current stage OVR is in the Predevelopment Stage.
The result of this stage, if successful is the Feasibility report. In this stage, OVR will be moving an indicated resource to a partly proven and partly probably reserve. Subsequently, OVR will need to come out with a Recommendation and the Feasibility study.
1] The first part of this stage consists of the Ore confirmation/ Basic Engineering Phase. The result of this will be a probable reserve and a completed environmental baseline study. Sufficient close spaced drilling will have to be done to really get confidence in where the reserve is and what it is like. This usually takes another drilling campaign which OVR has just completed. This drilling is done to place confidence in where a company would place the milling and the tailings facilities. From these data, OVR might be able to estimate the mining and milling costs [i.e. + or - 30%] and a cutoff grade and stripping ratio can be estimated.
The environmental baseline study will be ongoing.
There are other activities and they include; identifying and assembling a project team to build this mine and do these studies.The company will need to introduce a planning document with an overview of the entire project. They will have to identify a project concept i.e. what time of mine will it be? what kind of mill will be there? What are the ground conditions and so forth. They will then have to determine the environmental and permitting requirements that are going to come up. Usually, this is the time to implement a community implementation program and will go on through the life of the project.
Fill in drilling will be required. This had to be done now instead for geological purposes for Engineering Data. Rock quality analysis, Metallurgical testing...OVR will want to confirm the shape and placement of the ore bodies so that they would be able to understand the stripping ratio better. Engineering drilling will be done to decide where to place the tailings dam, to get a water supply and also for pollution control. Metallurgical testing will be completed and a socio-economic report will be prepared to deal with such things as if OVR will need to provide a school or medical facilities or a town?
Hydrology will be studied and finally the environmental baseline studies completed. All engineering alternatives will be evaluated and the result of all this will be a RECOMMENDATION TO PROCEED TO A DEFINITIVE FEASIBILITY STUDY
As a summary, to Justify the Feasibility Study,
- Drill to Confirm Geologic Reserves - Acquire General Arrangement Drawings - Complete Environmental Baseline Studies - Determine Project Concepts and Constraints - Refine Mining and Metallurgical Data - Acquire Water Rights
2] The second part of this stage consists of the Engineering Results in Feasibility Report. It is the final stage in the Predevelopment process. It will result, if successful, in a recommendation to BUILD A MINE. And additional 100 - 200 holes might be required to produce a proven reserve base. Costs then can be estimated. During this time, bulk sampling and testing will be done. The ore reserve will be finalised and design engineering will be completed. The environmental impact report will be filed.
The above activities are done to remove as much risk as possible by getting the costs to + or - 20%. This is so OVR really understands what they are going to need to do build a mine.
As a summary,
- Refine Engineering and Costs - Make Recommendations for Production Criteria - Bulk Sample and Pilot Plant if required - Complete Environmental Impact Assessment
The future stage OVR is the Development Stage. This will consists of the Financing and Mine and Plant Construction Phase. Permits will be approved by now. Mining and processing can legally begin.
Now, for the first time, OVR will have an ore reserve. Ore, is an economic term and Ore has to be legally extractable. As such, without the permits, a company does not have an ore reserve, they will just have a resource.
Final Engineering can be completed and pre-production development whether shaft sinking or stripping can be done. Facilities will be built and access to the ore will be achieved. Cashflow is added to the bottom line.
As a summary,
- Final Engineering and Obtain All Permits - Obtaining Financing - Construct Mine and Production Plant
------------------------------------------------------- The above in depth excerpt is my opinion on where they are in the process. Investors should do their own due diligence and come up with their own conclusions based on information already disseminated by OVR. Please understand your risk/reward ratios and invest wisely.
OVR Price at posting:
27.5¢ Sentiment: LT Buy Disclosure: Held
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