Osino shares up 26% on Dundee Precious Metals takeover news
Dundee Precious Metals Inc. [DPM-TSX] has struck a definitive deal to acquire Osino Resoruces Corp. [OSI-TSXV, OSIIF-OTCQX, RSR1-FSE] in a transaction valued at $287 million.
Osino’s key asset is a 100% interest in the advanced state, multi-million-ounce Twin Hills gold project locate in Namibia, a mining-friendly jurisdiction, where Dundee has been operating the Tsumeb smelter since 2010. A June 2023 feasibility study completed by Osino outlined an open-pit project with a 13-year mine life and average annual production of 175,000 ounces of gold in the first five years.
With first production expected by the second half of 2026, Twin Hills has the potential to become Namibia’s third largest gold mine, said Osino President and CEO Heye Daun.
Under the agreement, Dundee will acquire all of the issued and outstanding common shares of Osino by paying $0.775 in cash per Osino share and 0.0801 of a Dundee common share per Osino share. That implies a value of $1.55 per Osino share and a total equity value of $287 million.
Dundee said this represents a premium of 37.2% and 44.3% based on the closing price and 30-day volume weighted average price of Osino shares as of December 15, 2023.
Osino shares advanced on the news, rising 25.6% or 29 cents to $1.42 on volume of 1.42 million in early trading Mondy. The shares previously traded in a 52-week range of $1.30 and 75 cents.
To complete the transaction, Dundee will issue 13.7 million shares to Osino shareholders who will wind of with 7.0% of the combined company. Dundee shares eased 9.01% or 88 cents to $8.88.
Under the terms of a concurrent private placement, Dundee has agreed to purchase $10 million worth of Osino common shares in two equal tranches for $1.13 per share. This would amount to a 7.0% stake in Osino and aims to provide Osino with funding for project activities, including engineering, drilling and other corporate purposes.
Dundee President and CEO David Rae said the deal represents an opportunity to add a high-quality development asset in an excellent mining jurisdiction to the company’s portfolio.
“This transaction also allows us to leverage our strong local relationships in Namibia, which we have built over many years, and continue our focus on growing our portfolio of gold assets,’’ he said. “With Twin Hills and Coka Rakita, Dundee will have an extremely attractive growth pipeline and the financial capacity to fund it internally through out existing cash balance and free cash flow.’’
Dundee recently announced a maiden resource estimate for the company’s 100%-owned Coka Rakita gold project in Serbia, where it announced a high-grade discovery in January, 2023.
The inferred resource estimate is pegged at 9.97 million tonnes at a grade of 5.67 g/t or 1.78 million ounces of gold. The new estimate came in at the high end of expectations on size and grade. Additionally, over half of the inferred resource is in the high-grade core area of mineralization.