Research Note - Osino Resources Corp (OSI:TSXV,$0.73|BUY $3.40 TARGET) OSI Acquires Remaining Mineral Licenses of Twin Hills
This morning, OSI announced it has signed an agreement to acquire the remaining minority interests in the Twin Hills Gold Project. The Company acquired the remaining 3%, 10% and 20% minority interests in three of its subsidiary companies holding the Namibian mineral licenses underlying the Twin Hills Project. As a result, OSI’s attributable ownership of the recently announced Twin Hills mineral resource increased from 94.7% to 100%. The agreement is payable in escrowed shares subject to resale restrictions for up to 2 years and includes a four month hold period from the date of issuance. We are maintaining our BUY rating and our 12-month target price of $3.40/share for OSI.
Across the three acquisitions, the Company will issue 2,737,617 shares at a price of $1.10/share plus a cash payment of $96.5K.
On this news our target price would have increased by ~$0.30/share, however, we are taking this opportunity to lower our peer group multiple from 0.70x project NAV to 0.65x to better reflect the depressed environment for gold development companies.
Upcoming Pre-Feasibility Study:
In our recent research note (July 5th), we went ahead in estimating the value of Twin Hills that will be depicted in the upcoming PFS. As a result, our model now values Twin Hills C$530M using an 8% discount rate. We see this valuation on the low end of what the PFS will report as we modelled 150 Koz/yr average annual production but can see the report depicting closer to 200 Koz/yr. Additionally, there exists further upside which we expect to see in the upcoming study with the grade and recovery increasing by as much as 10% while the strip ratio could decrease slightly.
Why We Like OSI:
-
Fast track to production – On pace to be the fastest company in the world to move from discovery all the way to a permitting decision
-
Management has done this before – CEO (Heye Daun) developed the Otjikoto Mine (Namibia) which was later sold to B2Gold
-
Clear acquisition target for B2Gold – BTO is operating the Otjikoto Mine in Namibia and has a cash position of ~US$650M
-
Many upcoming catalysts – OSI will have a news heavy H2/22
Catalysts Ahead:
-
Twin Hills Pre-Feasibility Study – September 2022
-
Ondundu Maiden Resource – Late Q3/22 to Early Q4/22
-
Twin Hills Feasibility Study – Q1/23
Ondundu Preliminary Economic Assessment – Q1/23