Dirt Cheap Gold Miner
Over the past while, I've been on the long, lonely search for what I believe to be undervalued and overlooked companies. I feel that Orosur Mining (v.OMI) meets that description based on its mining and financial metrics.
Orosur Mining is a junior Latin American miner with the only operating mine in Uruguay and a portfolio of prospective advanced properties in Uruguay and Chile, including two properties with completed feasibility studies.
What's particularly appealing about this company was their financial metrics released in their Q1 earnings (reporting period end of Aug.). Keep in mind that OMI closed today at 0.94.
In Q1, the company reported:
* earnings of 0.05 / share
* cash flow of $5,410,000 or approximately 0.07 / share
* cash on hand of $10,746,000
on production of 13,000 ozs. gold produced
With OMI last at 0.94 / share, it is trading at approximately 3 X annualized Cash Flow of 0.30 (est.) and under 5X annualized earnings, making Orosur greatly undervalued in my opinion. For comparison sake, a typical valuation for mining cos. is approximately 10 X annual Cash Flow.
Production is set to increase in the second half of the year as the co. mines higher head grades at its San Gregoria Mine. Production guidance for the full year has been targeted by management at 55,000 ozs. Operating costs are also estimated to decrease further.
In addition to this mine, the company has two other advanced projects, both of which have had feasibility studies completed on them. The Pantanillo project in Chile is estimated to contain over 1 million ozs of indicated and inferred gold. Its second advanced project is the Arenal deeps project in Uruguay where a feasibility study has also been completed.
Drilling is to take place in January 2011 on three additional projects.
Given the financial metrics mentioned above and the opportunities to fuel further growth with the inevitable development of one or more of its advanced projects, as well as speculation of its winter drilling, I feel that Orosur Mining (OMI) is greatly undervalued at current price levels.
Thanks murray, mooreman and bobwins.