Osino to terminate Dundee Precious deal after superior proposal

Osino Resources Corp. [OSI-TSXV, OSIIF-OTCQX, RSR1-FSE], already the target of a takeover offer from Dundee Precious Metals Inc. [DPM-TSX], said it has received a superior proposal from a foreign-based mining company that would value Osino at about $368 million.  It did not name the company.

Back in December, Dundee said it had struck a deal to acquire Osino in a transaction valued at $287 million. Dundee agreed to 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 implied a value of $1.55 per Osino share and a total equity value of $287 million.

Under the terms of a concurrent private placement, Dundee also 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. The aim was to provide Osino with funding for project activities, including engineering, drilling and other corporate purposes.

The foreign based mining company is offering to acquire all of the issued and outstanding shares of Osino for a cash payment of $1.90 per share by way of a plan of arrangement.

Based on the closing price of Dundee common shares February 16, 2024, the new proposal represents a premium of approximately 32% to the implied value of the Dundee offer

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.

The new offer contemplates that the offeror will provide Osino with a loan consisting of a US$10 million facility to enable the fast-track development of the Twin Hills gold project and to fund other liquidity needs. The offeror will also advance an amount equal to a reverse termination fee of US$9.55 million.

Osino shares advanced on the news, rising 25.2% or 36.5 cents to $1.75 on volume of 1.36 million in early trading Tuesday. The shares previously traded in a 52-week range of $1.46 and 75 cents.

Osino said it has been told that Dundee Precious Metals will not amend its offer in light of the new proposal.

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.