Orefinders Resources Inc
Why Invest in Orefinders?
Orefinders differentiates itself through our value-based approach to increase our share price and shareholder
value over the long term. We know that we cannot control the markets or commodity prices, but we can control
our response to them:
1. When the market presents an opportunity to acquire assets for less than their fair value, we look to
acquire.
2. When the market pays fair value for assets and rewards exploration results, then we will pivot, return to
the drill bit and focus on developing our existing assets.
This flexible approach mitigates risk in what is perceived as a risky business, but requires a long-term outlook,
discipline and an exceptional level of due diligence.
Orefinders goal is to own the next generation of gold mines in the Abitibi, and we believe that our existing
assets—Mirado, Knight and McGarry Mines—clearly fit this profile. However, in this protracted bear market for
gold assets, we see accretive opportunities to increase our footprint through acquisitions that fit our select
criteria
What Orefinders owns & what you can expect us to own. Our asset criteria:
- Gold Only
- Abitibi Greenstone belt of Ontario and Quebec Only
- Advanced Stage assets with well established geology via pre-existing drilling/exploration that can be
- validated and made compliant with minimal additional drilling
- Former Production or near-term production in brownfields environments
- Geologic Upside. Each asset must provide upside potential through additional discovery of deposits
- Assets must offer scale and synergies due to their proximity to the existing Orefinders portfolio
- Assets are or will be drill ready and permitted with detailed exploration and development plans
- Existing Databases. Our team see big value in quality and validated datasets from previous owners
What makes Orefinders different? Our focused & flexible plan to create shareholder value
The usual junior mining business model revolves around raising capital, drilling and then repeating the process.
While excellent drill results and the ability to raise capital are key parts of value creation, it is equally important to
recognize timing, cost of capital and the return on investment as fundamental to shareholder value.
Orefinders is unwilling to follow the herd’s short-term outlook. Our cyclically timed strategy of acquiring assets
over exploring for them is a business decision based on experience, success and long-term thinking. Since we
cannot control the gold cycle, we seek to understand it and plan accordingly over the medium to long term.
We recognize that each of our portfolio assets and target properties require investment to take them to the
Feasibility stage, yet our plan is to be patient to minimize dilution and maximize shareholder value. As the cycle
evolves, so will market dynamics which will rerate gold assets. This is when we pivot.
In the meantime, this prolonged bear market provides us the opportunity to:
1) Make accretive acquisitions
2) Prepare our existing assets for the next phase of the cycle, by fully evaluating what our assets are, what they can be and developing a plan to get them there.
Orefinders view on current market dynamics
Our view considers the mining cycle in its entirety. Its current phase the market is indifferent and unresponsive to
many catalysts. Drill results, short spectacular intersections, receive little reward from the market while great
results have become an opportunity to sell. This is an invalid investment proposition. But all markets present
opportunities and Orefinders sees this bear market for gold assets as the ideal time to grow our portfolio, while
intelligently and patiently developing our owned assets.
To further simplify our rationale:
Acquisition capital is best deployed in a bear market.
Exploration capital is best raised in a bull market.
Market value vs discovery costs
In the current market there is a vastly better risk adjusted return in making acquisitions compared to exploration
and development. It is cheaper and less risky to buy an existing ounce of gold in the ground than to discover and
delineate a ‘new’ ounce by drilling. While ‘in the ground ounces’ are like snowflakes, all else equal, these are the
same ounces. So why pay more, while incurring more risk?
This is the cycle, it is tried and true. This time is not different… The cycle will repeat
As the cycle matures, so does the Market Values vs Discovery Costs proposition. As accretive acquisitions become
scarce, Orefinders will pivot inwards. With higher valuations comes a cheaper cost of capital, less risk and less
dilution for our own exploration phase. While patience is required, demand for metals is growing at a rapid pace,
as are fundamentals for the supply and demand of gold. Undoubtably the cycle will repeat itself. The only real
question is its timing.
Timing the market
Timing the market or predicting the gold price are impossible tasks with too many variables at play. Therefore,
patience is a virtue to endure the markets’ often volatile conditions. Orefinders owns its assets outright with no
option payments, with the core portions of our assets located on patented claims with no recurring work
commitments. This means our assets are solidly entrenched for the benefit our of shareholders. Additionally, we
operate with a low overhead and are not spending millions of dollars on drilling, which yields no return in today’s
market.
When the market turns and mining is once again fashionable, Orefinders will be in front of the cycle.
Gold supply issues
The Systemic Issue: Grades and Major Discoveries are in significant decline and existing deposits are rapidly being
depleted on an industry-wide basis
The average gold grade going through the mill has declined significantly over the last ten years and this downward
trend will continue. It was not long ago that mining one gram of gold per ore tonne was unthinkable, while
double-digit grades were common. As producers continue to deplete their mines in this deceasing grade and
scarce discovery environment, they will have no choice but to consolidate and acquire the pipeline of next
generation assets that are owned by juniors such as Orefinders.
The Market Issue: M&A, Exploration, Sustaining Capital, and Project Development have been Deferred
Since the bear market began in 2012, miners have focused on healing their balance sheets by paying down debt
and slashing expenses. Concurrently, many producers high-graded their deposits, deferred M&A and sustaining
capital to meet investors’ quarterly expectations in the face of a declining gold price.
Additionally, access to capital has been shutoff for exploration companies who are the ones looking to find the
next generation of mines to sell to the majors. Such reductions have had serious impacts on the availability and
scarcity of assets.
The systemic and market issues are independent of each other but together will compound the supply issues on
the horizon. It is inevitable that the miners focus will shift towards replenishing their reserves and growth.
Orefinders sees the focus being on projects with historical resources in established mining camps that operated
when gold prices were lower and cut-off grades were much higher.
Furthermore, Orefinders sees greater opportunity in these projects to define new deposits based on application
of new geologic interpretations and exploration techniques.
Competition for the speculative investor
Traditionally, junior mining has been the sector focus for the speculative investor, i.e. where people assume high
risk for the prospect of high reward. However, with the emergence of the cryptocurrency and cannabis sectors,
speculative investors have been temporarily lured away. These new sectors provided quick returns, but both
appear on the decline.
Most investors now realize that cryptocurrencies smell like tulip-mania and that the cannabis industry looks
overvalued. With cannabis legalized, it offers a viable business model, however, its early performance has been
enhanced by the allure of a new industry. The cannabis frenzy holds similarities to the dot-com bubble of 2000 with misunderstood and untested business models which are not based on fundamentals. The bursting of the tech
bubble also triggered a tremendous bull market for gold and metals.
As the cannabis industry matures, investors are bound to realize that companies in this sector are essentially
agricultural or retail businesses to be valued on cash flows. Furthermore, the cannabis industry lacks the upside
optionality that junior mining can provide by way of new discoveries
Gold sector merger & acquisition wave is inevitable
The public company mining model is based on Mergers and Acquisitions, and simply cannot exist without it. With
balance sheets now healed from the previous cycle, miner’s attention will shift towards production sustainability
and growth. The investment community will demand it and ultimately, the cycle repeats.
Mining is primed for consolidation at all levels, from the majors to the smallest junior. But we predict the large
and mid-tier mining companies will lead the way as this group needs acquisitions to sustain their production
profiles. Since being in the depletion business necessitates replenishment, it will not take much of a catalyst to
spark an M&A rush.
Junior equities are easily mispriced
The market for junior equities is rife with pricing inefficiencies, to the upside and to the downside. If it were
efficient, all juniors would be perfectly priced. But sentiment, illiquidity, metal price volatility and a lack of
understanding the assets within a company often lead to mispricing. These factors are the inherent opportunity
and risk when investing in juniors, and those who exercise a combination of patience and extensive due diligence
can be greatly rewarded.
Why is Orefinders so focused on Gold and the Abitibi district?
Our exclusive focus is on Gold Assets within the Abitibi region of Ontario & Quebec that are former producers, or
have well established resources, access to infrastructure, availability of data, and exploration upside. This focus is
calculated with good reason.
The Abitibi is our backyard where we have operated technically and corporately for decades, and we see greater
value and clarity with a pureplay strategy. Costs are lower when operating in a single jurisdiction and provides for
economies of scale when assets are proximate like those of Orefinders.
Why Gold?
Gold is not just a commodity; it is a currency that holds its value over time and one which all other assets are
fundamentally valued against. Gold has functioned as a benchmark, a medium of exchange and a store of value
for millennia and although the world evolves, gold will continue to serve this purpose. Gold is the ultimate
insurance policy and as with all currencies, whether it be gold, fiat or electronic, it is based on confidence of its
underlying promise, and gold has always held true.
Volatility in the gold price is usually explained by the US Dollar, the currency in which gold price is quoted. But this
volatility is short term noise as gold is not only fundamental to the global economy, it forms its basis. While the US
dollar is the undisputed reserve currency, many forget that the United State owns the world’s largest gold
reserves by a factor of 2.5X… for good reason.
Why the Abitibi? The Abitibi advantage
The Abitibi is one of the world’s most prolific greenstone belts, having been mined for over 120 years. Its mineral
endowment is second to none in North America and will continue to be explored and mined for centuries to
come. The Abitibi hosts some of the best understood geology, has excellent infrastructure, offers an abundance of
available data and is Orefinders’ area of expertise in terms of geology, asset owners, government and community
relations.
Abitibi advantage #1: Cost of exploration and access to infrastructure
The Abitibi’s ease of access and infrastructure results in low exploration, operating and capital expenditures.
Most of the deposits in the Abitibi are accessible via well maintained roads. Exploration drilling in the Abitibi
can be done for <$100 a metre, whereas remote drilling can cost >$1,000 per metre. If costs are 10X the
alternative, then conceptually you need to find 10X the gold to make the investment comparable. This is the
Abitibi Advantage.
Abitibi advantage #2: Data availability
Over a century worth of mining provides a level of drilling and exploration data that is unparalleled. Orefinders
capitalizes on this data and uses proprietary analytics to provide an edge in our evaluation efforts. Geology is
an imperfect science at best but computing power has added to the industry’s ability to discover and delineate
deposits over the past decades. With the current generation of cheap computing power and sophisticated
algorithms, we anticipate additional increases in performance for those who take advantage of them.
Orefinders wants this extra edge. This is the Abitibi Advantage.
Abitibi advantage #3: reability of technical reports
Although the NI 43-101 regime is the backbone of mining’s reporting system, the quality of technical reports
varies greatly. Factors for this include the authorship and the underlying data used from which assumptions
and interpretations have been made. A margin for error will always exist but reports which are benchmarked
using real comparables will always offer superior results. With countless mines, pits and shafts in operation in
the Abitibi, costs are well understood and are more accurately transcribed in technical reports. All else equal,
reports from areas which are well understood are more accurate than those based on remote locations. This is
the Abitibi Advantage.
Abitibi advantage #4: Canada
Canada’s mineral endowment has given rise to world-class expertise in geology, engineering, legal and financial
professionals that cater to the mining industry. Its laws are entrenched, and it is safe to operate in. It is the
world’s leading mining jurisdiction. In an era of increased nationalization and expropriation, mining companies
are looking to reduce their jurisdictional risk and return to safe countries like Canada. When the M&A market
returns, we see Canadian assets being especially prized and valued accordingly. This is the Abitibi Advantage.
Where is the best place to find a new mine? On an old mine.
Not just in the shadow of a headframe, but the best place to find gold is where it has already been found and
mined.
We know the gold exists, its geology and metallurgy are understood and there are solid indications of the
engineering costs and challenges. The Orefinders team has had success in discovering and consolidating the Cote
Lake project, which was a former high grade underground mine, and is now a 10 million ounce open pit gold
deposit owned by IAMGOLD. Our team is sticking with this proven model as there are countless examples of its
success, including Barrick’s Goldstrike, Goldcorp’s Red Lake, Detour Gold, Osisko’s (Agnico) Malartic, Integra’s
Sigma-Lamaque and others.
But these ‘old mines’ must show the promise of geological upside. In many instances these operations shut down
for extraneous circumstances unrelated to the deposit, but it is their reinterpretation accompanied by new
exploration that will yield real value. Sometimes a fresh perspective and some investment is what is required.
Geology is complex and even the largest deposits can be elusive when right under your nose. Orefinders is very
content acquiring projects with previous lives, provided we understand its past and have access to its data.
Orefinders existing gold camps: Mirado, Knight & McGarry
Orefinders currently owns three advanced stage gold projects: Mirado, Knight and McGarry Mines. Each meet our
asset criteria and are premier, advanced stage gold assets that will be the next generation of Abitibi gold mines.
1. Knight - a consolidation of numerous past producers with significant geological upside and potential for a
multi-million ounce deposit abutting Pan American Silver’s 4 million ounce Juby gold project. Click to view
the Knight project planned drill program.
2. McGarry –adjacent to the Kerr-Addison Mine, which produced 12 million ounces, the McGarry itself
produced in the past. McGarry has significant resources with geological upside in place; Orefinders was
able to acquire this asset at a discount due to an environmental liability overhang, which Orefinders has
now resolved with the Province of Ontario.
3. Mirado - a near term producer with a robust PEA.
Source: http://www.orefinders.ca/wp-content/uploads/2020/04/ORX-Investment-Thesis.pdf
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Geologist
If you are a geologist and interested in working with a dynamic team in the Kirkland Lake area, please send your resume and cover letter to careers@oregroup.ca