Oban Mining: An Aggressive Gold Growth Story

Oban Mining (OBM.TO/OBNNF) is in a strong position, cashed up to the tune of $75 million. Management is one of the more aggressive that I’ve seen and they've done 14 transactions since 2015, gobbling up juniors and taking stakes in others. All of that activity in the depths of the gold bear market may pay off in a huge way and Oban seems to have the team to create a giant. Management calls this the “Next Osisko Mining Corp”, where most of the crew came from after Yamana and Agnico Eagle bought them out for nearly $4 Billion in 2014. The team at OBM has cumulatively discovered over 100 Million ounces of gold in their careers they reckon. That’s a lot of gold!The company already has 5.5MM ounces of gold in all categories in Quebec and Ontario, Canada. Prolific drilling will occur in 2016 with over 100,000 meters of drilling programs planned, so news flow will not be weak. The company has some players involved on the board and in the stock. Osisko Gold Royalties (separate company from the mining corp bought out/referenced earlier) owns just under 20% while Wexford, Dundee, and Sprott combine for another 15%. The only negative I see on the surface is that officers/directors own less than 4%, which in my opinion is nominal. But, it’s not nothing.I see the company as large shareholders in plays I like. One example is Metals Creek Mining, which OBM owns a big chunk of and will very likely buy out at some point. This gives them a solid presence in an attractive camp like Timmins and I see their resource base really flourishing in the years to come. Management knows how to build a mining company and they’ve done it before. Discoveries are inevitable with that quantity of drilling as well so I expect big spurts of enthusiasm in the share price this year.It looks like we might be chasing the stock but it has “only” gone up 50-60% this year versus many of our favorites having already doubled tripled, and quadrupled. Plus, it always helps to take a step back and look at a longer term chart, here’s the weekly going back to 2014:This bad boy is just getting started! Since we’ve just broken through the 50 week moving average, I expect the short term to be quite strong for OBM. Look at GDXJ as a comparison on the weekly:The sector is more closely challenging their 200 week moving averages so Oban has some catching up to do. As long as they don’t announce any huge acquisitions the next couple of months, the share price should outperform the sector. Acquisitions are great but you need digestion periods to integrate and also slow down issuing shares. Oban has done a good job though and proof is their huge war chest post 15 deals.My first target for OBM.TO is $2.50-$3…..closer to $3. Then $5 will be next so we still have room for a triple within 12 months. I’m initiating a strong buy on Oban Mining at $1.59 with a 6 month price target of $3 and 12-15 month target of $5. This is a newer player on the block but could become a darling to institutional investors because they are liquid and will be a several hundred million dollar cap soon. If management pulled off another Osisko, we’re talking 18-20 bagger from here. In this new bull cycle, anything will be possible in time for capable companies that execute and aim big.Here’s a quick plug from management themselves:I’m long shares in Oban Mining and may buy more or sell at any time without notice.For updates on Orban Mining and unique ideas on individual mining stocks, please sign up for our free newsletter below.