In a November 20, 2013, interview on SmallCapPower.com, Ubika Research
Senior Analyst Vikas Ranjan mentioned
Osisko Mining (TSX: OSK) as a ‘solid gold’ pick for gold stock
investors (see the entire
interview here).
Mr. Ranjan favoured Osisko due to the fact that it is a low-cost producer,
has potential for very strong free cash flow during the next year, and
it is operating in a stable jurisdiction (Quebec, Canada). He referred
to its Malartic mine as “one of the largest new discoveries in Canada
as far as gold mines are concerned.”
Shares of Osisko Mining have soared about 49% since Mr. Ranjan’s recommendation
to its recent price of $6.23 a share. This, in large part, is due to Goldcorp
Inc.’s $2.6-billion, or $5.95 per share, unsolicited takeover bid for
Osisko that was announced on January 13, 2014. The share price, though,
did increase by about 24% up until the day of Goldcorp’s announcement.
Mr. Ranjan believes that the pace of consolidation in the junior/intermediate
gold producers and near term producers’ space can accelerate as many companies
with high quality projects represent good value at current market levels
for major producers like Goldcorp and Newmont mining. Large and intermediate
producers with strong balance sheets and little or no debt will in a particularly
better position to capitalize on such merger and acquisition opportunities.
His other picks from past interviews include Alamos Gold and ArgonautGold
(see the
interview here).
Osisko Mining responded to the takeover attempt on January 15, 2014, saying
the 15% premium Goldcorp offered was “very low and the price opportunistic
in light of Osisko’s proven high-quality asset base.”
Fund manager David Taylor of Taylor Asset Management, in
an interview with the
Financial Post, commented that Goldcorp was interested in paying
about $10 to $12 a share for Osisko a few years ago, but Osisko’s board
did not want to sell.
According to the
Financial Post, a rival bid is possible, but “analysts see it as highly
unlikely.” Nonetheless, the fact that Osisko’s stock price continues to
trade above the $5.95 per share offer price seems to suggest that the market
believes Goldcorp will sweeten its bid.
