Moving Forward At A Price

Oct 2nd, 2009 – Comment

Hi Lou Can you take a look at OX TSXV and see what you think. Thanks Lou in Wawa, Ontario Hi Lou, Orex Exploration Inc. ( OX TSXV) just got itself a new partner in Osisko Mining Corp ( OSK TSX) who has entered into a development deal with OX that could see them control […]


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Hi Lou
Can you take a look at OX TSXV and see what you think.

Thanks

Lou in Wawa, Ontario

Hi Lou,

Orex Exploration Inc. ( OX TSXV) just got itself a new partner in Osisko Mining Corp ( OSK TSX) who has entered into a development deal with OX that could see them control 60% of the company should all milestones be met. Some would say they have lost control of their fate. I would say better a smaller piece of something with a qualified partner than control of a slow moving project.

In most areas of business and especially the junior exploration sector the name of the game is to move the project through the gauntlet to a profitable outcome. Profits don’t flow in the exploration business till you sell your deposit to a bigger player or move heaven and earth to build a mine.

Orex now has both positive outcomes in play with the deal that they signed with OSK to advance their Goldboro project in Nova Scotia. OSK knows a thing or two about moving a project along successfully having taken their Malartic project in Quebec to the mine building stage. With the letter of intent with OSK in place the management team at OX can now look further afield in Nova Scotia for new opportunities.

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The three year chart shows that the stock was in a long downtrend that was broken in late 2008 and had a spike early in 2009 which didn’t find support.

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The three month chart shows the spike on the announcement of the OSK deal and then a retreat from the highs. It looks like the move has flushed out a lot of the investors who had been looking for an exit and now the stock is in the hands of investors that have a better appreciation of the opportunity.

Orex is not a stock without risk but the fact that the management team has been able to sign a deal with an experienced partner in a generally awful market for juniors says something. Yes the deal was done at a low price but sometimes those are the decisions that have to be made.

What you have in OX is a carried interest in a property that is being developed and funded from deeper pockets. You can look forward to news from the Goldboro as OSK advances the project. You also have the opportunity to see what OX management has in its pipeline of prospects now that they have Goldboro moving forward.

Happy Capitalism!

Categories: Mining
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