Osino Resources Cashed Up ($14M) to Advance Its Gold Discovery (Heye Daun & Dave Underwood)

Osino Resources just closed a large C$14 million financing. The company is now fully-funded for at least two years of significant drilling to expand the company’s Twin Hills’ gold discovery and explore other targets within their land package. In this episode, Vice President of Exploration Dave Underwood provides an update on Osino’s Twin Hills’ discovery and CEO Heye Daun provides a corporate update.

Dave Underwood:

0:15 Introduction

1:28 Reviewing Osino’s best drill results to date

3:02 Pending assays still out

3:42 Feedback from geologists regarding discovery

4:08 Exploration plans for 2020

6:24 Comparing Twin Hills discovery to nearby Otjikoto Mine

8:01 Comparing Twin Hills to Gruyere Gold Mine

Heye Daun:

10:47 Reviewing the C$14M financing just closed

13:48 Who participated in the financing?

15:09 Treasury, burn rate and 2020-2021 drilling

16:53 In-the-money warrants an additional funding source

18:28 JV partner still a possibility?

20:30 Feedback from key shareholders

22:09 Final thoughts

OsinoResources.com  TSXV:OSI  –  OTC:OSIIF  –  FSE:R2R1   Osino’s January 2020 Presentation

TRANSCRIPT:

Bill: I am joined now with Dave Underwood. He is the Vice President of Exploration for Osino Resources, to get an update on the company’s progress as they continue to advance the Twin Hills discovery in Namibia. Dave, thanks for joining me and you released a press release on January 9th regarding some phenomenal results as the project continues to advance. Can you review those highlights for us and talk about the significance of these results?

Dave: Thanks Bill and hi to you. Yeah, so those results actually contained our best intercepts to date, so we’re really excited about them. 92 meters at 1.4 g/t gold is really an exceptional result. And not only did we get really long intercepts, but we also got a couple of nice high grade shoots as well. One was 35 meters at 2.5 g/t, and the other was 37 meters a 2.5 g/t. So, that’s what we wanted to see. We wanted to see not only these real woods, but we also wanted the high grade shoots. What we also did is, we expanded the Twin Hills central mineralization out to 1200 meters in strike now. We were at 800 meters previously and we’ve now proved that it extends to 1200 meters and it’s still open at both ends. So, yeah, it was really an exceptional set of results.

Bill: And your deepest holes thus far are about 200 meters, is that right?

Dave: Yeah, we’ve gone to most of our holes are 200, and we’ve got a couple of holes that we lengthened to about 240 or 250 meters because they ended in mineralization. But most of it is down to 200.

Bill: So we’re open at depth and open also in three directions. Is that correct?

Dave: That’s correct.

Bill: And so to prove the continuation of the mineralization, I understand that you still have some pending assays out at different targets.

Dave: Yeah, that’s right. We have two holes still pending at Twin Hills Central, and then we have seven holes at Twin Hills West. We haven’t released any results there yet. We have two holes at Clouds and we have six holes at Barking Dog. And I think we’re particularly excited about the Twin Hills West assay because, as you’ll remember, this is where our highest bedrock results came from. So, yeah, and we’re hoping to get all those results back in the next couple of weeks.

Bill: Can you give us any feedback that you’ve gotten from your peers in the geological field with these results that you put out?

Dave: Well, these results are fairly typical of what these sedimentary-hosted gold deposits look like. So I think within these economic geology or the gold area, people understand this deposit. They like the look of it, they understand how it’s developing and what it could grow into.

Bill: As we look at your 2020 exploration plans, you obviously still have the results that’ll come out in the next couple of weeks that could influence your plans. But as of right now, what are the plans to advance this? Are you focusing more on infill or expansion drilling? Can you break that down for us?

Dave: We’re going to do both. We’re going to do the infill at Twin Hills Central. We want to get the drilling down to 100 by 50 meter grid, and in some areas we may even go down to 50 by 50 meters if we need to. And that’s probably going to look at about, probably going to take about 10,000 meters of drilling. And then we are going to expand obviously, as you said previously, Twin Hill Central’s open to the West and to the East. So, we will look at expanding both those directions for Central, and we might also put in a couple of really deep holes to see what happens at depth.

Then we are also going to probably do some drilling at Twin Hills West. They’ll be influenced by the drill results, but I’m pretty confident we will be doing quite a lot more drilling in that area. And we’ll also look for some new areas of mineralization probably to the south of the Twin Hills Central, and maybe go back to where we started, which was at Twin Hills East, and maybe draw some more holes around there. We found some interesting looking mineralization at the Southern end of Twin Hills East, so we would probably look to go back there and do some more drilling. So, I think in all we’ll drill 20,000 to 25,000 meters this year, and let’s say it’ll probably be 50:50 or perhaps 60:40, with the 60% being expanding and the 40% being infill.

Bill: Should we expect by the end of the year then your first resource?

Dave: We are looking to do a resource, but it will either be the end of this year or more likely early in 2021. But, yes, we are looking to put out a resource, a substantial resource let me put it to you that way.

Bill: One of the things that a press release mentioned was Otjikoto’s advancement and how when you do a comparison, this project seems to be looking even more prospective. Can you talk about the comparison with the Otjikoto gold mine please?

Dave: Yeah. In the recent press release, Heye mentioned that it took Otjikoto six years to put out their first resource, which was 870,000 ounces. And we would be looking to put out a better resource than that within two years. So I think that gives you an idea. I mean if you look at the Otjikoto pit right now, it’s 1200 meters in length. And our Twin Hills Central, just the central part so far, is 1200 meters in strike length and open at both sides. So, that gives you a gross comparison of where we are.

Bill: And I should say for listeners that aren’t familiar with the story, this project is right in the middle of two pits, Otjikoto on one end, and Navachab, which is like a six to eight million ounce multiple deposits on the other end. So even as you explore more targets, it may not be one big super pit, but it could be multiple pits in close proximity. Isn’t that right?

Dave: That’s correct. It looks like Twin Hills Central, if it goes that far will be substantial size pits, but then, as you say, we’ve got Twin Hills West, which is some distance away. We’ve got Clouds on the other side, so it’s entirely feasible that we’ll end up with multiple pits.

Bill: Several years ago there was a project in Western Australia, that moved from RAB drilling to I believe, a four million ounce resource within a year. And this discovery was done undercover, similar to what you’re doing undercover here in Namibia. The company was Gold Road Resources. Are there any comparisons between what you’re doing at Twin Hills right now, and the project that Gold Road Resources advanced quickly within a year?

Dave: Yeah. You’re talking about the Gruyere gold deposit. And we did a case study on Gruyere because the exploration method was almost exactly the same. Their deposit is covered by 18 meters of younger cover and then four meters of sand on top of that. So they followed a very similar procedure to what we did and they made this discovery. But the mineralization at Gruyere is in a very different geological setting. It sits within a porphyry granitic body and it’s a set of these quartz veins. So it’s very well constrained within this granitic body. I mean it’s actually incredible, they did 38,000 meters of drilling to get to their four million ounces. That’s really an exceptional return and not something you’ll see often. By comparison Otjikoto drilled over a 100,000 meters of drilling to get to their full resource, which was two and a half million ounces. And I think that’s more typical. We’d probably have to do more drilling than Gruyere, I would say.

Bill: I have to imagine as the lead geologists on this project, it has to feel good being in the midst of a discovery and now the company is cashed up, so you can really put the drills to work.

Dave: That’s right. So, I think we’ve got to this point exceptionally quickly, and the market’s obviously recognized that and given us a good amount of money to go to work with. So, we’re going to be drilling flat out this year, and as you say, try to get to a resource. It’s been a great year.

Bill: Dave, any final thoughts as we conclude this segment, that you’d like to share with the investors listening?

Dave: I think I just want to portray the level of excitement that we have, and we’re really confident about this project. This is going to go places.

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Bill: Now I’m joined with Heye Daun. He is the CEO, founder and director of Osino Resources. Heye, thanks for joining me, and it looks like, based on your recent press releases, that you’ve been a busy man as people have been beating down your doors to give you money.

Heye: Yeah, certainly we have. Thank you very much Bill, it’s nice to be on your show again, but yeah, this financing has been quite transformative for us.

Bill: How did this come about? It was an overnight marketed financing. Why did you decide to go about it in this manner?

Heye: Yes. A lot of people have asked me that. There’s a couple of simple reasons. Most importantly it has less risk for most people involved in this, except, I guess, for the underwriters. I say that because for us, it’s good to do an overnight marketed deal because it’s much quicker. It took us basically two days to raise the money and now another two weeks to close.

The investors like it because the stock is immediately free-trading. Unlike in a private placement where the Canadians have a four-month hold period which people really don’t like, for investors, the stock is immediately free-trading and that attracts institutional type of investors. We haven’t made it public who’s come in, but it’s really a who’s who list of North American and European institutional investors that came into this financing. They like an overnight type of bought deal. It’s like a bought deal, so that’s the second reason.

Then a third reason is we, as you saw with our share price in November, December, we fell victim to the warrant strippers and people that sell when the four month hold stock becomes loose. All those games that are being played in the Canadian markets, you are not subjected to when you do this style of financing.

The downside, of course, is that it’s much more difficult for us to being in our friends and family, and a lot of the supporters like yourselves and others who subscribe for smaller checks like the retail type of investors. We were able to bring in some through the brokerages that participated, but it makes it a little bit more exclusive, and that’s, I guess, not so good for those investors.

Bill: My broker told me because I’m from the United States, it wasn’t even possible to participate if I wanted.

Heye: Well Bill, you know what? I’ve heard that from a bunch of people and I’m somewhat upset about that because well, I don’t know whether I’m allowed to be upset about it because obviously there are reasons for why he said that, but we made an effort not to be subjected to that, and I was actually in the understanding that Americans can participate. I know there’s some other people that we really like that couldn’t.

To me, the next step is to get this OTC listing going that you actually recommended to me and we discussed previously. Anyway, to the investors I want to say we will do everything we can to make it easier for U.S. Investors to buy our stock and participate in financings.

Bill: Heye, you’ve raised $12.5 million and you’ve done it quite quickly, which is impressive. Can you mention anything or will you in the future mention anything about who came into this financing?

Heye: Bill, I would love to mention. We’ve just closed. In fact it’s $14 million not 12 and a half, because there was an over allotment that Cormark has, which is standard in these type of deals. A 15% extra which they took up, so we ended up raising a total of just under $14 million.

I would like to tell you who these names are, but at the same time I respect these investors, and sometimes they don’t like it, so I’m not going to do in on the air here. But I think just keep a lookout in our presentations in the next little while and around PDAC et cetera. I’ll speak to these people. It’s still so fresh we haven’t actually met some of them personally because quite a few of them came through Cormark, the bank. Let me just respect that for a few days or a few weeks, and then we’ll tell you, but it’s some very well known, large institutional investors.

There’s some generalists in there which we’re very pleased about, some specialist investors, there’s some ultra-high net worth, some additional ones that we don’t have on our register yet. For example, the CEO of Cormark personally wrote a very significant check, which was a real vote of confidence, so it’s that kind of investor in the $500,000 to $1.5 to $2 million range.

Bill: Then the treasury should have about $15 million right now if I understand that correctly? What is going to be your burn rate for the next year? This is a lot of money and money goes far in Namibia as we’ve talked about previously, how are you going to create value with this big treasury now?

Heye: Let me just correct you because yes, theoretically it would be $15 million that we have, because we had a million plus 14 that came in, but these financings aren’t cheap or they don’t come for free, so there’s brokerage and legal fees et cetera, so you can subtract about $1 million off that. We have, as of right now, round about $14 million, which sets us up more or less for two years of intensive work.

Our budget this year, I can tell you the number, we haven’t put the press release out but we will in the next little while, in the next few weeks we’ll put out the work plan for 2021, but I can already tell you what it will be. It’s going to be around about $7 million, seven and a half million dollars. It will include at least 20,000 meters of drilling, which is double of what we did last year, and most of that will go onto the Twin Hill Central project, so lots of drilling, drilling, drilling. Expansion drilling, infill drilling. Then some will be sprinkled also to the other projects that we are advancing as well.

But that’s not what you asked me. You asked me about burn rate. This money will safely last two years. One and a half to two years depending on how we rev things up. But as things stand now, two years, but I have a feeling that we will have ongoing drill success, and with that will be an acceleration in drilling. In fact, we’re hiring some people now and we’re setting ourselves up to jack up our activities substantially.

Bill: As I was thinking about how the company will finance itself, you also have about $5 million of in-the-money warrants and options that I can only imagine will be exercised sooner than later. Then you have another financing built into this current financing you’ve closed, because that would raise, if my calculations are correct, about $8.4 million, assuming the share price continues to rise.

Heye: Yes. Of course that’s dilutive. I’m conscious of this, and that’s always the criticism of these kind of questions, even though you didn’t ask that question but I’ll respond to it anyway. But I have to tell it’s on a personal level, building Osino and bringing it to this point, I’ve owned this company as you know. Financing has been front of mind, basically every day. It’s a very significant pressure, especially in a questionable market as we’ve had leading up to this.

At the end of this year the stars really aligned with gold price and results, and some key relationships with Cormark and so forth coming through, and we decided to take more than we would have typically taken. I think it would have been nice to take maybe a little bit less, not dilute time too much and then finance more later, but the reverse side of that coin is that we now have zero financing risk for the next two years at least. That’s a very comfortable position to be in, especially as we are going to kick off a very significant program. I think strategically and long-term, we’ve done what’s best in the best interests of all our shareholders.

Bill: Are you still in contact with a lot of the majors or mid-tiers in Africas about a potential partnership? Or now, with this financing, are you going to put that on hold and continue to just put the drills to work?

Heye: Look, this is an interview, so I guess I’m always open and I’m just thinking well, how open I should be, but I’ll be open. The reality is last year, 2019, on various channels I spoke a lot about possibly bringing in a strategic partner in the form of a mid-tier or a major. The rationale of that was, of course, access to funding, but also validation. Now with this financing we’ve just done, the need for alternative sources of funding other than straight equity is not there anymore for the next little while, so therefore the motivation to bring in a strategic investor has diminished somewhat.

I still that it would be good for us to have a big name brand attached to us for validation and for other strategic reasons, but I think it’s in the interest of our shareholders and of our company actually, not to be married to anyone right now, and not even to be engaged. I think we’ve got an exciting time ahead of us, we’re well funded, we know what to do, we don’t need other people to tell us what to do, we just need funding and we need to execute our plan. In that regard, the quest to bring in a strategic investor, as I said, has diminished somewhat.

We’re still speaking to these people. Different companies speak to us out of technical interest. In fact, I’m going to attend the mining event over the next couple of days down in Cape Town, and we’re meeting a range of well-known producers and mid-tiers as we have for the last few years. We will continue to pursue those discussions, but I don’t see us doing a strategic financing any time soon. Unless, of course, something amazing happens, we have further amazing drill results, our share price shoots out the lights and somebody offers us a deal that we can’t refuse. That’s always possible. That’s not my base case, but that would be the only circumstance under which I would do a strategic sort of deal in the foreseeable future.

Bill: A few weeks ago you put out excellent geological results, which I just discussed and the listeners to this show just heard me speak about with Dave Underwood, your VP of exploration. In this recent financing, Resource Capital Funds put in some more money, so they’re obviously happy with the results. What other feedback have you gotten from key cornerstone existing shareholders that you can share with us?

Heye: I’ll just give you a feedback from the two key guys or key entities, which is Ross Beatty and RCF. Ross Beatty is known for his approach is not to dilute too much, so I expected him to give us uphill on taking so much money, and he did, but he also sees our rationale and he’s happy, particularly because we were able to do it at a very good price. Very close to market price. Just under 80 cents, 78 cents as you know. He’s very supportive, he participated, and he’s still very supportive and excited about where we’re going.

RCF is the same, and I’m very pleased that they’ve come in. In fact, they’ve increased their position. They had about 8.5% Beforehand, so they were below the reporting level, and they’ve gone over the 10% limit. I think they’re going to end up at just over 12%, which makes them reportable. Subject to reporting if they trade. That shows your commitment, their commitment, and it shows that they like what they’re seeing, so we’re very pleased about that. I think those three entities are our key and larger shareholders, and yeah, so they’re very happy and very excited about the future.

Bill: Dave shared that in a couple of weeks you’ll release the upcoming assay results, so investors can expect that, but Heye, as we conclude, is there anything more investors should be looking for?

Heye: Couple of weeks, it’s true, but we want to release those results as soon as we can. The reason we haven’t is because we were quarantined during this financing. I’m not saying next week, it’s going to take us a week or two to receive the results and put the press release together, so that will come out. Work plan, for sure. Some more flesh to the rough work plan that I gave you earlier, and then ongoing drill results. I think that’s the key.

Bill: As you can hear, Heye is a very straightforward guy, and one of my favorite things from the Beaver Creek summit last year in 2019, was siting down with Heye and discussing. I thanked him for doing such a great job because my shares at that time had already doubled, and he said to me, he said, “Bill, I’m not a greedy guy. I really enjoy creating wealth for my shareholders and my friends and families come into these deals. I get a lot of satisfaction and enjoyment from creating wealth for others.” That’s the type of leader Heye is. You can hear that coming through in his forthrightness and his sincerity through this interview.

I encourage you to go check out the company, it’s www.osinoresources.com. Trades on the Venture Exchange in Toronto under the ticker OSI, and as Heye mentioned in this interview, look for a better OTC listing in the States soon. It does trade on the Pink Sheets in the States, under OSIIF currently, but look for that OTC listing to be upgraded soon. Heye, as always, it’s a pleasure speaking with you. Thank you for coming on the show and giving us an update.

Heye: Thank you Bill. Thank you very much for helping us access, especially the US investing public.