Osisko Mining Inc. (TSX: OSK), is a mineral exploration company, that engages in the acquisition, exploration, and development of gold resource properties in Canada. Osisko Mining Inc. was incorporated in 2010 and is headquartered in Toronto, Canada.

Key Highlights

• Update on Windfall gold deposit: On January 26, 2022, the company announced related to its exploration across its fully owned Windfall gold deposit, located in Quebec, it found the silica alteration, gold traces with pyrite mineralization. The official figures disclosed by the company states 51.1 g/t Au over 2.0 metres.

• Increase in Losses: For the Q3FY21, the company reported an increase in its Net losses after Income taxes to CAD 7.40 million as compared to the previous quarter's losses of CAD 1.74 million. The increase in losses across recent three quarters is denting the financial position of the company especially when there is no revenue during the same period.

• Negative Valuation: On the NTM (median) basis, the EV/ EBITDA multiple for the company stands at Negative 137.7x as compared to the positive EV/EBITDA multiple for the industry at 4.6x, and similarly on the Price/ Cash flow basis the company attains the Negative multiple of -94.1x as compared to the industry multiple of 4.3x. These negative multiple valuations distort the investor's confidence especially when the prices are skyrocketing.
  

• Steep rise in prices: Recently the stock witnessed a sharp rally from the lows of CAD 2.33 in September 2021, clocking more than 100% gains to the highs of CAD 5.02 in February 2022, with few dips in between, which was bought immediately. The stock showed the strength but only to fill in the hot air to eventually form a bubble, vulnerable to any negative impact happening around the company.
  

Stock recommendation

The company is devoid of reporting any revenues and still, the prices are climbing, which is hard to be sustained in the near term. The capital-intensive sector in which the company operates is poised to lose its grounds in the advent of any rising interest rates or changing government policies and supply chain disruptions happening again. Further, the lack of any supportive rationale because of the negative valuations, makes the stock a risky bet for the investors at least at such elevated levels. Hence, we recommend an “Expensive” rating on the stock at the closing price of CAD 4.76, as on February 14, 2022.

1-Year Price Chart (as on February 14, 2022). Source: REFINITIV, Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

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