Research Note - Osino Resources Corp (OSI:TSXV,$0.73|BUY $3.40 TARGET) OSI Acquires Remaining Mineral Licenses of Twin Hills
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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:
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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
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Management has done this before – CEO (Heye Daun) developed the Otjikoto Mine (Namibia) which was later sold to B2Gold
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Clear acquisition target for B2Gold – BTO is operating the Otjikoto Mine in Namibia and has a cash position of ~US$650M
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Many upcoming catalysts – OSI will have a news heavy H2/22
Catalysts Ahead:
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Twin Hills Pre-Feasibility Study – September 2022
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Ondundu Maiden Resource – Late Q3/22 to Early Q4/22
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Twin Hills Feasibility Study – Q1/23
Ondundu Preliminary Economic Assessment – Q1/23