Canaccord Research: Neues Kurziel 5 $ für Osisko Mining!
Following the close of the company’s recent equity offerings, we are providing a valuation update in association with the recent transition of coverage to Kevin MacKenzie (primary) and Tony Lesiak. We are maintaining our SPECULATIVE BUY rating and increasing our target price to C$5.00/sh from C$4.00/sh. Osisko strengthens its balance sheet Earlier this week Osisko announced that it had closed its previously announced (February 6, 2017) equity offerings, the gross proceeds of which totaled $82M. With the proceeds of this recent financing, Osisko now has an estimated $173M in cash/ equivalents, which positions the company well into mid-2018 to continue its aggressive exploration/development schedule at Windfall, and the greater Urban Barry project. Updated project valuations:
• Urban Barry – Given the exploration success to date in further defining/expanding the Windfall deposit, in addition to positive initial regional drill results, we have expanded our modeled resource base to 2.8Moz (previously 1.6Moz). We have correspondingly increased our modeled throughput to 2,700tpd (previously 1,200tpd), and now forecast a 11.5-year mine life at an average rate of 235Koz/yr (previously 11-year LOM at 141Koz/yr). Overall, we now derive an updated NPV7% of $779M and an IRR of 33% (previously NPV5% of $590M and 37% IRR).
• Garrison – Given that the current exploration focus at Garrison has expanded beyond the scope of our previously modified 2011 PEA valuation, we now value the project at $107M on an in-situ basis, assuming US$41/global oz (previously $200M).
• Marban – Given Marban’s close proximity to the Canadian Malartic mine, we now value the asset in terms of a potential satellite operation, and what we view to be reasonable consideration to be paid by the Malartic partnership. Overall, we derive an $80M NAV, modeling the resource at 0.7g/t cut-off (1.38Moz grading 1.72g/t).
Given the exploration momentum associated with Osisko’s ongoing 400,000m drill program at Windfall/Urban Barry, we are optimistic on the prospect of the company delivering a materially expanded project resource in H2/17. Moreover, we believe that the market has not fully embraced the near-term discovery leverage associated with the aggressive step-out/regional testing.
Adjusting for 1) the proceeds of Osisko’s recent equity offering, 2) the additional 20.8M common shares outstanding, 3) our revised project valuations, we derive an updated Corporate NAV for Osisko of $1.31B or $4.90/sh. We believe that the stock remains attractively positioned for investors with an above average risk tolerance, as Osisko continues to advance its flagship Windfall project from advanced exploration through to development.