In a Sept. 5 research note, analyst Bryce Adams reported that CIBC initiated coverage on Osisko Mining Inc. (OSK:TSX) with an Outperformer rating and a price target of CA$2.50 per share. The company is currently trading at around CA$2.34 per share.
Adams reviewed the company's high-quality merits. One, he said, is that the miner's Windfall project offers "significant upside well beyond the conservative preliminary economic assessment (PEA)" and CIBC's base case using spot prices, which offers a NAV5% of CA$318 million.
Upside at Windfall could come in the form of grade and/or tonnage, explained Adams, both of which are near-term catalysts. "Our NPV5% would increase by roughly 80% in our upside scenario," Adams indicated.
The way the grade was estimated in the PEA "limited the area of influence of mineralized intersections." Thus, the additional infill drilling that now is underway could result in a roughly 15% higher resource grade.
As for tonnage, the use of narrower, less than 3.5 meters wide stopes, which were excluded from the PEA, could "nearly double the mineable resource," Adams noted. Further, exploration drilling would also likely increase its size.
Along with Windfall's "significant resource upside potential," Adams noted, its other "high-quality merits" are the moderate risk associated with it and the company's strong management team and its chances of being taken out, all of which "offer compelling investor appeal."
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Disclosures from CIBC, Osisko Mining Inc., September 5, 2018
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Important Disclosure Footnotes for Osisko Mining Inc. (OSK)
· CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from Osisko Mining Inc. in the next 3 months.
This company is a client for which a CIBC World Markets company has performed investment banking services in the past 12 months.
CIBC World Markets Inc. has managed or co-managed a public offering of securities for this company in the past 12 months.
CIBC World Markets Inc. has received compensation for investment banking services from this company in the past 12 months.
