Osisko Development keeps Buy rating with Eight Capital

Eight Capital analyst Ralph M. Profiti is staying bullish on gold mining company Osisko Development (Osisko Development Stock Quote, Charts, News, Analysts, Financials TSX:ODV) in a new report delivered on Wednesday. Profiti said the release of an independent feasibility study on its Cariboo Gold Project is a positive for the stock and company.

Montreal-based Osisko, a multi-asset gold mining company focused on exploring and developing gold projects in North America, announced on Tuesday positive feasibility results for its 100 per cent owned Cariboo project. Osisko, which along with Cariboo in Central BC has its flagship Tixie Project in central Utah and the San Antonio Gold Project in Sonora, Mexico, said the study shows a “robust and scalable” phased development base case with a low initial capital investment of $137.3 million and producing about 1.87 million ounces of gold over the 12-year life of the project.

“This feasibility study demonstrates that the Cariboo Gold Project will be a large-scale, long-life and profitable gold mine,” said Osisko Chair and CEO Sean Roosen in a press release. “By phasing construction, we have minimized our exposure to development risk at Cariboo, optimized the sequencing of the assets in our portfolio and maximized our ability to scale Cariboo to reach its full potential in the future. We envision Cariboo as a project that will be a cash flow engine for the company for decades into the future.”

Commenting on the announcement, Profiti said the low capital model minimizes execution risk as well as external financing risk and allows for the optimization of assets in the company’s portfolio. 

Profiti said next catalysts for the company and stock should be the completion of an Environmental Impact Assessment (EIA) process, receiving final permits by the year end, commissioning of the QR Mill (to occur in the first quarter 2024), Phase 1 at 1,500 tpd achieved (likely fourth quarter 2024), and Phase 2 at 4,9000 tpd (pending permit amendment and expected at Q1 2027).

“ODV currently trades at a discount to our peer group of precious metals developers (0.32x vs 0.38x), with significant revaluation potential upon transition to producer status where intermediate precious metals producers trade at a significant premium to developers (0.71x vs 0.38x),” Profiti wrote.

With the update, Profiti reiterated a “Buy” rating on Osisko and C$20.00 target price, which at the time of publication represented a projected one-year return of 240 per cent.