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 Mon Jan 25, 2021
Tracker: Spec Value Rating for Opus One Gold Corp (OOR-V)
    Publisher: Kaiser Research Online
    Author: Copyright 2021 John A. Kaiser

Opus One Gold Corp (OOR-V: $0.080)


Tracker - January 25, 2021: Spec Value Rating for Opus One Gold Corp (OOR-V)

Opus One Gold Corp was first assigned a Bottom-Fish Spec Value rating at the end of 2018 based on its 100% option of the Fecteau project east of Osisko's Windfall project in Quebec. The rating was affirmed on December 18, 2020 based on the expected resumption of drilling at the Noyell gold project in Quebec in January 2021. Opus is a curious company in that since its 4:1 reorganization on January 17, 2008 as GFK Resources Inc, it has never undergone a speculation cycle and, despite a management team that owns only 2.6 million shares out of 170 million fully diluted, continues to plug away and to any casual observer looks like a rollback candidate. In late 2013 GFK optioned 100% of a group of properties called Casa-Cameron from Adventure Gold Inc of which the Vezza North, Vezza Extension and Bachelour Lake Extension are now 100% owned. In 2015 Opus appointed its IR person Louis Morin as the new CEO and put him in charge of herding cats, its assortment of largely Quebec based shareholders. In 2016 when Probe Metals Inc acquired Adventure Gold the Casa-Cameron deal was rejigged, and Opus optioned an additional group of claims of which only Fecteau survives.

The name was changed to Opus One Resources Inc on July 31, 2017, and to Opus One Gold Corp on October 29, 2020. Fecteau initially intrigued me because it is located 30 km east of the Windfall gold deposit and ended up being almost surrounded through staking by Osisko Mining Inc. I called Opus One an area play "canary in a coal mine" with regard to the Urban-Barry area play; if the Opus canary stopped playing dead it meant Osisko's rethink about the region's gold potential was gaining an audience beyond the Bay Street machine. That never did happen and in April 2019 Opus changed its focus by optioning 100% of the Noyell project.

Noyell straddles the Douay-Cameron Deformation Zone which is parallel to the Casa Berardi Break that is associated with Hecla's Casa-Berardi Gold Mine about 120 km to the west. Noyell is about 10 km east of the smallish Vezza Mine operated by a private company. The structural trend is hosted by meta-sediments which encouraged recessive weathering that turned much of it into bog and swamp, creating access problems and zero outcrop. It is also characterized by lots of graphite and barren iron formation, which generated a lot of EM conductors companies did not start testing until the 1980's. Noyell was first drilled in 1988 by Cominco in the western part which encountered so-so gold mineralization. Noranda drilled a north-south oriented fence of 4 holes in the otherwise undrilled eastern part in 1988. The Quebec agency SOQUEM poked a few holes at Noyell before selling it to a junior called Normabec, which farmed it out in 2006 to a junior called First Gold Exploration Inc which used it as its property of merit to go public in 2007 before optioning another Quebec gold project and eventually branching off into the Rose lithium project which it now owns as Critical Elements Corp. Normabec marched off to Mexico where it outlined a silver project which First Majestic acquired in a 2009 paper deal that valued Normabec at $20 million plus a spinout called Brionor whose assets included Noyell. Brionor branched off into Argentina and changed its name to Magna Terra Minerals before selling Noyell to Opus for $500,000 in cash or stock over 5 years.

In early 2018 Opus had retained Pierre O'Dowd as its geological visionary which proved fortuitous because O'Dowd had run First Gold's 2006-2007 program before that junior moved on despite promising drill results. Louis Morin in turn had done IR work for Normabec and had some familiarity with Noyell. Of course in 2019 the resource junior bear market was in its tenth year, so funding a drill program was a struggle as was appeasing Opus shareholders wondering when they would finally get a run for their money. But Morin managed to raise sufficient flow-thru money from Quebec investors including the flow-thru fund packager Marquest to mount a drill program in Q1 of 2020. Unfortunately, Opus only got 2 holes done before it was forced to shut down drilling due to the breakout of the covid pandemic.

For O'Dowd this was the resumption of unfinished business, and he spotted these holes separated by 160 m to test the zone down plunge 50 metres. These holes confirmed that the sulphide rich stockwork zone persists at depth, but the bluesky potential existed in the 5 km eastern part of the property where an IP survey had outlined a clear continuation of the structural trend, and that remained untested. Opus did manage to get an IP survey done for the eastern part, and it revealed that the IP anomaly after a slight northerly jog persisted for another 2 km. The fence of 1988 Noramco holes did not test these IP anomalies and it remains a mystery as to why they were drilled. However, the entire 10 km "favorable structure" is swampy ground and would require expensive helicopter support to drill during summer.

During the 2020 summer funding window Opus managed to complete a private placement of 35 million units a $0.05 with a full warrant at $0.07 good for 3 years with no acceleration clause. Much of that was placed by Collin Kettell's Pallisades Goldcorp as part of its 2020 funding rampage. Marquest, dreading the end of the 4 month hold period, dumped its Opus position in late 2020, setting the stage for massive PP timebomb liquidation. From Dec 1 through Jan 25 Opus has traded 22.5 million shares at a nickel as Marquest took leave and then the summer PP clip and flippers kicked in. That this paper found a new home is due to the efforts of Louis Morin and his less angelic looking Bid Capital partner Alain Beland.

Noyell drilling is set to begin during the last week of January 2021, later than expected because of the unusually warm winter across Canada. Opus had $1.7 million working capital at the end of 2020 and a $1 million budget for the Noyell program which consists of 13 holes. The first 8 holes will assess the main zone down-plunge in an effort to understand the rake of the gold grade within the two parallel east-west trending zones. The next 2 will test the West Grid IP anomaly, and the final 3 will test the East Grid IP anomaly. Assays are expected to flow from late March into May. The mineralization in the Noyell system is associated with sulphides and does not lend itself to eyeball assays. The initial 8 holes are designed to create a framework for a resource delineation strategy, so those are unlikely to move the market. Market moving potential resides in the results from the final 5 holes which, if positive, open up 5 km of strike for discovery delineation. This is orogenic style mineralization so significant depth potential exists for mineralized zones, which is why O'Dowd is so keen to drill the segment where he knows the gold grade is good.

What happens if Opus One intersects spectacular gold mineralization? The market will demand followup drilling and be willing to fund it. Opus can deal with the access problem created by the swampy nature of Noyell by mounting an expensive helicopter supported drill program. It can also build a 10 km road to create vehicle access, though the time needed to secure permits and the cost is unclear. The alternative, which will be the necessity if results are merely "encouraging", will be to resume work in January 2022. That appears to be a key upside obstacle for Opus in a bull market where "opportunity cost" is on everybody's mind. But there is a Plan B if helicopter supported drilling or road building for Plan A is not viable. During 2020 Opus renegotiated the Fecteau option deadlines and conducted IP survey grids on four up ice targets indicated by till sampling programs conducted in 2018 and 2020. Final interpretations of the IP data are expected some time in February. Fecteau was originally conceived as a VMS type target, but it is now viewed as a gold play. I think Osisko Mining and Windfall are long past any capacity to generate area play interest that would benefit Opus, but Fecteau has just enough gold sizzle that it might become its own center of gravity within the Urban-Barry district. Opus One Gold Corp has a Bottom-Fish Spec Value rating because the nature and quality of its backers remain hidden, and the junior needs a discovery hole in the eastern part of Noyell or at Fecteau to achieve lift-off.


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