A CIBC report provided the rationale for adding
this Canadian company to its covered stocks.
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
Analyst Certification:
Each CIBC World Markets Corp./Inc. research analyst named on the front page
of this research report, or at the beginning of any subsection hereof, hereby
certifies that (i) the recommendations and opinions expressed herein
accurately reflect such research analyst's personal views about the company
and securities that are the subject of this report and all other companies
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Equity research analysts employed by CIBC World Markets Corp./Inc. are
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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.