Research Note - Osino Resources Corp. (OSI:TSXV,$0.85|BUY $3.40 TARGET) - OSI Receives Pre-Development Financing

This afternoon, OSI announced it has entered into an agreement with Nebari for a credit facility of up to US$15M. The Credit Facility provides for an initial draw of US$5M (first tranche), with the potential for two additional tranches at US$5M each. This credit facility is another step in the right direction for the development phase of the Twin Hills Project.

 

The company previously received a “preparedness to grant” confirmation from the Nambian Ministry of mines and Energy for a 20-year mining license. The credit facility proves the Twin Hills project is moving at full steam.

 

The credit facility is an initial US$5M tranche with the potential for two additional tranches of US$5M each, for a total facility of US$15M. The facility has a maturity date two years from the initial draw date of the first tranche and is expected to be repaid upon the arrangement of project financing in 2023. The facility does not give Nebari any pre-emptive rights on arranging project financing.

 

The Credit Facility has an initial arrangement fee of US$50,000 payable to Nebari for the first tranche and additional arrangement fees of US$50,000 payable to Nebari for each subsequent tranche, and bears a coupon of Term SOFR + Margin of 5% p.a. It also has an original issue discount of 10% for the first year of each loan made or to be made under each tranche provided for under the Credit Facility, 12% for the period between 13-18 months (inclusive) of each Loan, and 14% for the period between 19-24 months (inclusive) of each Loan.

 

Osino will also grant to Nebari, for each of the three tranches of the Credit Facility, the number of Warrants equal to US$1,333,333.33 (approximately 26.67% of the amount of each applicable draw on a tranche) divided by the applicable exercise price. The Exercise Price of the Warrants attached to Tranche 1 is equal to a 30% premium to the 10-day VWAP for common shares of Osino for the 10 days immediately preceding the date of the Credit Facility. The Exercise Price of the Warrants attached to Tranches 2 and 3 is equal to a 30% premium to the 10-day VWAP for common shares of Osino for the 10 days immediately preceding the date of written request by Osino to Nebari for a draw on a tranche of the Credit Facility. The Warrants are only issued on the utilization of each respective tranche of the Credit Facility, and are subject to the policies of the TSX-V. Each Warrant entitles the holder to acquire one common share of the Company upon exercise thereof and payment of the Exercise Price for a period of 2 years from the date of issuance.

 

This comes as welcome news and allows Osino to continue rapidly advancing Twin Hills to development. We are maintaining our BUY rating and our target price of $3.40/share for OSI.


20221109 - M Partners - OSI - Pre-development financing
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