Osisko Mining (OSK.TO) is flat at 11.83 as Credit Suisse
initiated coverage on the stock with an Outperform rating and $15
"We believe Osisko is on target for starting production of
Canadian Malartic in Q2/2011, where we are forecasting the mine to
produce an average of 607,000 ounces at an average cash cost of
$374/oz. As our forecasted cash cost is 17% above Osisko's guidance
of $319/oz, upside to our forecasted cash flow, and hence
valuation, is possible," the brokerage said in a morning note.
"Experience gained from developing Canadian Malartic, combined
with our expectations of strong cash flow, should give Osisko the
resources it needs to advance its Hammond Reef gold project, where
are forecasting a 2015 start-up, with annual production of 344 koz
at an average cost of $503/oz. By 2016, we estimate Osisko will be
producing more than 1 Moz of gold.
"Stable mining jurisdictions help make Osisko an attractive
investment, and a possible takeover candidate. With the Malartic
project fully financed, and construction well underway, Osisko
could be viewed as a low risk acquisition opportunity. Once
production begins and operating risk is further reduced, we expect
the valuation gap between Osisko and its larger cap peers to erode.
Goldcorp Inc. currently owns about ~10% of Osisko's common
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