Osino Resources CEO Heye Daun said once the deal with Yintai Gold is closed, he will look for new mining opportunities in Namibia or elsewhere.
Daun told journalist Chamwe Kaira that as a Namibian citizen, he is motivated to continue contributing to the development of Namibia’s mining industry, attracting high-quality international investors, and helping with the socio-economic upliftment of my country.
Osino Resources has agreed to sell to Yintai Gold and sold the Omaruru Lithium Project to Prospect Resources.
Although the Prospect Resources deal was concluded in March 2024, the Yintai Gold awaits the Namibia Competition Commission’s approval.
In 2011, Daun and Alan Friedman sold their shares in Otjikoto Gold Mine to B2Gold.
Daun denied that he was a speculator, saying the development of the Otjikoto gold project was preceded by AuryxGold, which developed the project to the feasibility stage and then brought B2Gold in as a financing and technical partner through the sale, which financed and built the mine.
According to Daun, this is a perfect example of how juniors like AuryxGold or Osino bring in the foreign risk capital required to discover and advance these projects.
He said these juniors typically bring in significant partners once the capital is required to construct the mines.
“That is the way this business works,” he said, adding that in the case of AuryxGold, they spent close to N$500 million before selling the project to B2Gold.
Exploration in Namibia challenging
Although Daun said Namibia has potential, exploration is technically challenging because most of the country is covered in sand.
He added that exploration is expensive and takes a long time.
Despite these challenges, Daun said additional gold discoveries will likely be made with the continued involvement of credible and driven entrepreneurs, overseas risk capital, determination, innovation, and experience.
Daun said that Osino Resources has already spent close to N$1 billion on the discovery and advancement of the Twin Hills project.
“Yintai will need to spend another N$7 billion, more or less, to construct the mine before it can produce any cash flows.
“What we are doing with Yintai is the same process that we followed with B2Gold, which led to the successful development of the Otjikoto gold mine, as it will lead to the successful development of the Twin Hills gold mine,” he said.
Daun explained that the process has taken him, his Namibian technical team, and financial investors more than eight years, from the company’s inception to the project’s development into a definitive feasibility study and now the sale to Yintai.
“This can hardly be termed speculation, but it was pure hard work under trying circumstances that led to success,” he said.
Daun said Osino is a mining exploration and development company with no income, and they needed a financial investor willing to finance the expected US$400 million in capital investment required to construct the Twin Hills gold project.
A going concern
In a March 2022 report titled Unaudited Interim Condensed Consolidated Financial Statements for the three months ended on March 31 2022, Osino admitted to operating at a loss.
The report said the company had a history of losses with no operating revenue and an accumulated deficit of US$64,5 million as of March 31, 2022, up from US$58,4 million on December 31, 2021.
According to the report, Osino’s working capital was US$11,1 million on March 31, 2022, up from US$9,6 million on December 31, 2021.
“The company will continue to require additional sources of financing to fund ongoing operating costs and the exploration and development of its mineral properties,” the report said.
The report said although Osino raised gross proceeds of US$10,5 million from non-brokered private placements during 2021 and US$7,5m from the exercise of share purchase warrants with an expiry date of January 31, 2022, it needed additional funds during 2022 to fund its ongoing operations.
“There can be no assurance that the company can obtain additional financing. If the company cannot get adequate additional financing, it may need to curtail its activities further until additional funds can be raised.
“It is reasonably possible that certain events could adversely affect management’s estimates of recoverable amounts and require an impairment provision to the carrying value of exploration properties and related assets,” the report further said.
It added that due to operating losses, the company’s continuance as a going concern depends on its ability to obtain adequate financing to fund ongoing operating costs and planned activities at its Twin Hills Gold Project.
“These material uncertainties may doubt the company’s ability to continue as a going concern. Management believes that the company will be able to continue as a going concern for the foreseeable future, realize its assets, and discharge its liabilities and commitments in the ordinary course of business,” the report said.
Secure capital investment
Daun said partnering with Yintai has secured capital investment, which will result in the continued, fast-tracked development of the Twin Hills project.
“Thus, the timing of the company’s sale was driven by the need to finance the construction of the Twin Hills project,” he explained.
Daun said Yintai is a highly credible and well-financed builder and operator of gold mines with the technical skills and financial resources to progress the Twin Hills project through construction and into production.
“We are very proud to have attracted a company of Yintai’s calibre, thereby securing the future development of Twin Hills, which we believe has the potential to become Namibia’s third and largest gold mine,” Daun said.
He said Namibia has benefited from Osino since its inception and will continue to benefit from it.
To date, Daun added, the Namibian economy has attracted approximately C$75 million (N$1 billion) in foreign direct investment, with a further N$7 billion capital investment for the construction of the mine. In addition, the Twin Hills project is expected to create more than 1500 direct jobs during construction and probably around 1. 000 permanent new jobs in the region.
According to Daun, 79% of local procurement was spent in Namibia, of which a quarter was within 75km of Twin Hills.
“The future Twin Hills mine will be taxed under Namibia’s well-established tax code. “The financial modelling of the Twin Hills gold project indicates that the Namibian fiscus will receive around 30% of all cash flows emanating from the project in direct taxes and royalties,” he explained.
The 30% is received after the very high capital expenditures plus sunk costs incurred by the project’s shareholders and financiers.
“In addition, the Namibian fiscus will receive workers’ income tax and other secondary taxes, plus various indirect taxes from procuring goods and services.
“If all of that is added together, it indicates that the fiscus will receive a very substantial and fair part of the economic returns of this project without having had to invest any risk capital in turning the project into reality. That is indeed a very good deal for all stakeholders,” he said.
Heartfelt gratitude
Yintai Gold officials visited Namibian Prime Minister Saraah Kuungogelwa-Amadhila in Windhoek in March.
Among the officials was Yintai Gold president Ou Xingong, who expressed heartfelt gratitude for the audience.
The meeting was also attended by Erasmus Shivolo, the Minister of Mines and Energy of Namibia, Wang Shui, a director of Yintai Gold, Zhang Tianhang, Vice President of Yintai Gold, Heye Daun, President of Osino Resources Corp., and Werner Schckmann, Government Affairs Manager.
He also briefed the Prime Minister on Yintai Gold’s recent achievements and its mining practices and operational investment philosophy in safety, environmental protection, and sustainable development.
Ou Xingong expressed eager anticipation for future mining investment activities in Namibia and pledged to strictly adhere to Namibia’s laws and regulations to ensure the high-standard construction and operation of the Twin Hills project, thereby creating value for all project stakeholders.
During the meeting, Daun first reported on the progress of the approval process for the Twin Hills project and outlined the future development and construction plans.
He expressed that the advancement of the Twin Hills project required cooperation or financial support from international mining companies.
Yintai Gold Co. Ltd. operates non-ferrous metal mining and distributing businesses. The Company mines, processes, and sells gold, tin ingot, silver, lead and zinc concentrate, and other non-ferrous metal products. Yintai Gold markets its products in China.
