Orea Mining Corp. (OTCQX: OREAF) (FSE: 3CG) has been quickly climbing investors’ list of gold stocks. Operating from French Guiana, OREAF is a leader in the gold exploration and development industry. The company has an impressive portfolio of projects in South America and it aims to develop gold deposits through “responsible mining”. Currently, OREAF is working on three projects each in different stages of development. With zero dilution, $40 million in assets, and listed on the OTCQX – this gold stock could be one to watch after its 64% increase over the last four days.
OREAF Stock News
Well-known for its court case with the French government, OREAF was denied permits by the in 2018 – forcing its projects to stall and resulting in a major drop in its stock price. After conducting over two years worth of technical and environmental studies, in December of 2020 the company received a court ruling in its favor. The French government has since filed a final appeal with the Supreme Court which is being evaluated for admissibility. Essentially even if the appeal goes through, OREAF has assured its shareholders that it will not cause the company to suspend its operations.
In light of this litigation, the project in French Guiana – the Montagne d’Or Project – has been updated to fit a more environmentally sustainable scheme. The new modifications have achieved ground-breaking reductions in its environmental impact. According to the update, it installed a solar-power plant on-site that would reduce CO2 emissions by 80%. OREAF also redesigned its access roads to further reduce transportation-related emissions. Through some changes to its on-site operations it has also reduced the occupancy of the surrounding forests by 32%. These modifications, and many more, come at an extremely crucial point in public debate about climate change.
As it stands, the Montagne d’Or project is a joint venture between OREAF (holding 44.99%) and Nordgold (holding 55.01%). Nordgold is a multi-billion dollar Russian company, run by one of Russia’s richest men – Alexei Mordashov – the company boats $2 billion in annual revenue. In addition to over 50% ownership of the mine, Nordgold also owns an 8% stake in OREAF. In response to articles reporting Nordgold’s controlling shareholders were seeking $4.6 billion in compensation for its 55.01% share of the Montagne d’Or project, the company stated that “Orea confirms that it has not been informed of any such claim by Nordgold, and is unable to confirm the accuracy of the aforementioned media articles.”
This came after news that Nordgold was planning to IPO, however, just before the final court ruling they canceled those plans. Investors are speculating that this could be a hint at two possible scenarios. Either Nordgold buys out OREAF completely, or performs a reverse merger. These scenarios are especially compelling because Nordgold has a history of buying out companies and the company’s director of strategy and corporate development – Oleg Pelevin – is also on Oreaf’s board of directors.
As for Oreaf’s Suriname gold project, the company previously announced it acquired up to a 75% interest in the advanced-stage exploration project. OREAF is planning to conduct geological surveys to prepare for a core drilling program in Q1 of 2022. The company has already acquired data regarding the project’s geography and finalized the topographic and orthophotography survey needed to commence drilling.
Meanwhile, OREAF has started to prepare its diamond drilling program at the Maripa gold project. Already awarded drilling approval for 10,000 meters, the company is planning to start by drilling one thousand meters in January of 2022 along the Changement gold zone. According to the company, this area’s total declared historical placer and hard rock gold production is estimated to be approximately 100,000 ounces, with 40,000 ounces from hard rock. Samples taken by the company also revealed numerous high-grade assays
Given the high potential of this project, investors are excited for the project’s initial results. Operational costs can also be reduced, because the infrastructure for the area is already in progress and the site is accessible from the national highway. More importantly, OREAF could acquire up to a 70% interest in Maripa if it proves to be a viable investment.
OREAF’s financials show C$40 million worth of assets, with little debt. The company has issued shares to Sandstrom Gold Ltd. with an agreement of 0.5% net smelter returns royalty from Orea’s ownership interest on gold production from Maripa. However, this is only actionable if and when Orea earns its interest in the project. In 2018, OREAF also entered an agreement with the subsidiary of IAMGOLD Corporation with the option to acquire up to a 70% interest in the Maripa Gold Project over two stages. With interest from these major corporations in OREAF’s, major gold assets – OREAF could make for an appealing buy-out candidate.
As is, investors are eagerly waiting for an update as OREAF begins working on the Montagne d’Or project and Suriname. Once the final verdict from France’s supreme court is heard, investors are expecting major growth for OREAF across its various gold projects.
Media Sentiment
Investors like @StrategicStocks are adding OREAF to their gold stocks list in 2022 with major updates on the company’s horizon
As @TraderBundy points out, once news of the Supreme Court Ruling is released, OREAF could see major growth.
Technical Analysis
Following a downward trend, OREAF has seen a significant 64% increase and is currently trading at $.1026 with a primary resistance at .122 and a support around .0871. It shows a secondary support at .0627 as well. Accumulation is showing a gradual increase following a steep dive at the end of December. The RSI shot up recently but is now resting at 51, while the MACD forms a bearish crossover.
These indicators show that OREAF could be undervalued given its major assets and plans to start drilling at its gold projects. The recent uptick could be a sign of more things to come as accumulation continues to build for one of the OTC’s best gold stocks.
OREAF Stock Forecast
It appears something could be brewing beneath the surface for OREAF as investors wait on numerous catalysts for the company. The expected update regarding the court order, potential buyout interest, access to some of largest gold reserves in the world, and drilling in Q1 of 2022, could all be contributing the stock’s positive momentum recently. In light of this, OREAF is one of the gold stocks to watch in anticipation of an update from the company. With a relatively low float of 183 million, OREAF could move quickly on news and as a penny-exempt OTC company – it has the potential to be a good long-term hold as well.
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