New Interview with the Management:
While most of the analysts within the commodity sector praise the commodity sector to the sky, DYOR is known as a project that looks behind the scenes first and that highlights different aspects of an investment. The Canadian junior explorer Oriental Minerals is a company with two different faces. On the one hand it has been promoted by a few problematic newsletters in 2006, on the other hand it owns several formerly producing tungsten- and gold-mines and – as one of only two foreign companies – several uranium licences in South Korea. DYOR wants to take a look behind the scenes of this controversial discussed exploration company and asked Oriental Minerals’ management a few critical questions – not without disregarding the past.
Oriental Minerals owns several exploration licences for precious and base metals in South Korea. In Europe, South Korea is relatively unknown as a mining nation. What makes South Korea such interesting for an exploration company like Oriental Minerals?
South Korea is an independent country with strong US ties and a key trading partner with Canada and Australia. It is the world's 10th largest economy and welcomes foreign investment. The Country has well-established workable mining laws, locally available trained mining workforce and excellent infrastructure. South Korea is located in the fastest growth region of North Asia, with China to the west and Japan to the east.
In recent years Oriental Minerals identified a number of very attractive base metals, gold and uranium projects - with significant known mineralization and excellent regional potential. The current commodity prices and the advances in mining technology made them even more attractive.
In the past Oriental Minerals has been covered by a few German newsletter writers that also recommended stocks of some very questionable mining companies. What do you think about using newsletter writers as a part of an investor communication strategy?
Newsletter writers are a good way to get a company’s story “out” to the investment community. However, it is important that the newsletters get the proper story out. In Oriental Minerals’ case, I believe that there was some miscommunication in the past by German newsletters in regards to the company’s projects and rate of development. Furthermore, OTL can not control what other companies these newsletters choose to recommend. Investors should always do their own due diligence and contact the company directly for further information.
Your main project is the Sangdong Tungsten-Molybdenum Project. How far is the Sangdong project developed?
To date, we have drilled 86 holes for over 22,000 meters of drilling. There are currently Metallurgical and Environmental studies underway. In March, the company released a NI43-101 compliant resource of 13 million tonnes of 0.32% WO3 and 0.06% MoS2 indicated and 68 million tonnes of 0.29% WO3 and 0.06% MoS2 inferred – making the Sangdong project one of the largest undeveloped tungsten/moly projects in the world. That NI43-101 was based on only 42 holes drilled. Subsequent drill results have come back with further mineralization and the deposit remains open.
Could the existing resources be mined economically and when do you expect the production start?
Currently we are awaiting the results of a Preliminary Economic Assessment (PEA or Scoping Study) for Sangdong. This report is expected to be completed by the end of September and will be a milestone for our company. The PEA will update the resource estimate but more importantly will answer many of the questions regarding the preliminary economics of the project. The company plans to go straight into a Feasibility study after that and if all goes well, a mine would have to be constructed and there would be final permitting. Therefore, production is still a couple of years away.
Oriental Minerals is one of only two foreign companies which have got the granting of several uranium licences in South Korea. What plans do you have for these uranium projects?
To date, we have applied for over 140 uranium exploration licenses and have been granted mining licenses on 5 claims. The company continues to conduct preliminary work on these claims and work with the Korean government towards getting these applications granted. In spring 2008 the Korea Resources Corporation (KORES) agreed to fund Stage 1 drilling at our Ogchon Uranium project. This drill program is expected to commence in the near future and will consist of drilling 5 holes over 800 meters.
Which of your other projects could bring Oriental Minerals bring most forward?
Oriental Minerals has several exciting, early stage projects but the company will focus the vast majority of its efforts on the Sangdong project. We believe that Sangdong can provide value to shareholders in the very near future and we are anxiously awaiting the results of the PEA.
Will you be present at any German commodity conference in the next couple of months and give investors the opportunity to ask you all questions they have?
The company plans to attend at least one German investor conference in fall 2008. Details of our participation will be announced when plans are finalized. Of course, we would like to maintain regular contact with our European shareholders. In the interim, we urge all shareholders or potential shareholders to contact us directly if there are any questions regarding the company or the projects. The company can be reached at info@orientalminerals.comThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it
Why should investors invest in Oriental Minerals right now?
We feel that Oriental Minerals, like many other junior exploration companies, is greatly undervalued at this time. Current market conditions have resulted in a large disconnect between the valuations of companies such as Oriental Minerals and the prices of the actual commodities. Our Stock trades near its 52 week low, while the price of tungsten itself is near all time highs. We have already drilled out a resource at Sangdong that ranks this project as one of the largest in the world and an updated resource estimate is expected soon. Korea is home to some of the world’s largest consumers of tungsten and molybdenum and is very close to China, Japan and many other fast-growing Asian nations.
In 2007, Tiberon Minerals, a company with a tungsten project in Vietnam, was bought out by Dragon Capital Management after they released their Scoping Study. Tiberon’s project was approx 55 million tonnes @ .20% tungsten and the project sold for the equivalent of approx $350 million CAD. While there were some differences in terms of the amount of drilling, it is easy to see the comparison to our company. Currently the Sangdong project is already much larger than Tiberon’s was at the time of their sale, but our current market cap is only $24 million CAD. Major infrastructure work is not a concern for us as Sangdong was a previously operating mine and infrastructure is still there, though it may require an upgrade. Global consumption is expected to rise and the world’s largest producer of tungsten (China) recently became a net importer of tungsten.
As always, I would urge all investors to do their own due diligence prior to making any investment.
We remain extremely excited about the future of our company, mainly our Sangdong project
