OSIIF - Dundee Precious Metals Announces Acquisition of Osino | Benzinga

TORONTO, Dec. 18, 2023 (GLOBE NEWSWIRE) -- Dundee Precious Metals Inc. (TSX:DPM) ("DPM") and Osino Resources Corp. ("Osino") (TSXV:OSI) (FSE: RSR1) (OTCQX:OSIIF) are pleased to announce that they have entered into a definitive agreement (the "Arrangement Agreement") whereby DPM will acquire all of the issued and outstanding common shares of Osino pursuant to a plan of arrangement (the "Transaction"). The Transaction adds Osino's high-quality, long-life Twin Hills open pit gold project as well as an extensive exploration portfolio in Namibia to DPM's existing portfolio of assets.

As a result of the Transaction, DPM will acquire a 100% interest¹ in Osino's advanced stage, multi-million ounce Twin Hills gold project ("Twin Hills") located in Namibia, a mining-friendly jurisdiction where DPM has successfully operated since 2010. A June 2023 feasibility study ("FS") completed by Osino outlined an open-pit project with a 13-year mine life and average annual production of 175,000 ounces of gold over the first five years, with first production targeted in the second half of 2026.²

Pursuant to the terms of the Arrangement Agreement, DPM will acquire all of the issued and outstanding common shares of Osino ("Osino Shares") for a consideration consisting of C$0.775 in cash per Osino Share and 0.0801 of a DPM common share per Osino Share (the "Consideration"). The Consideration implies a value of C$1.55³ per Osino Share and a total equity value of C$287 million on a fully-diluted in-the-money basis. This Consideration represents a premium of 37.2% and 44.3% based on the closing price and 30-day volume weighted average price ("VWAP") of Osino Shares as of December 15, 2023, on the TSX Venture Exchange, respectively.

Upon completion of the Transaction, DPM will issue 13,766,364 shares to Osino shareholders and existing Osino shareholders will own approximately 7% of the combined company.

Strategic Rationale & Benefits for DPM's Shareholders

• Adds a near-term producing asset in a mining friendly jurisdiction:
  
  • Twin Hills is a multi-million-ounce gold project with 2.15 million ounces of Proven and Probable Reserves, which was discovered by Osino in 2019 and fast-tracked to the pre-construction stage within four years.²
  • Estimated gold production of 175,000 ounces per year over the first 5 years, and 162,000 ounces per year over the 13-year mine life, as outlined in the Twin Hills FS.²
  • Project is substantially permitted, with a 20-year mining licence already granted, subject to certain conditions, with only site-level permits still outstanding.
  • Front-end engineering and design is well-advanced, with all surface rights acquired for mining and related infrastructure.
  • Located in Namibia, a mining friendly jurisdiction with established infrastructure, a skilled labour force, and access to renewable power.
  • DPM has been operating the Tsumeb smelter in Namibia since 2010 and has established strong relationships with the government and local communities in-country.
• Further positions DPM as a leading intermediate gold producer with exceptional assets and growth profile:
  
  • Enhances DPM's asset portfolio, which includes its high-margin production profile of 258,000 ounces of gold per annum from the Chelopech and Ada Tepe mines in Bulgaria.⁴
  • Growth pipeline will now be supported by two new high-quality gold discoveries, including Osino's Twin Hills project in Namibia with targeted production commencing in 2026, as well as DPM's high-grade ?oka Rakita deposit in Serbia, which has an Inferred Mineral Resource of 1.78 million ounces of gold and where DPM recently initiated a Preliminary Economic Assessment.
  • Longer-term optionality and upside potential with DPM's Loma Larga development project and Tierras Coloradas exploration prospect in Ecuador.
  • Further strengthens DPM's Mineral Reserve and Resource base, increasing Proven & Probable Reserves by 43% to approximately 7.2 million gold ounces, and adds 2.9 million ounces of Measured and Indicated Resources and 0.25 Moz. of gold in Inferred Resources.²
• Compelling exploration upside in Namibia's highly prospective Damara Gold Belt and Karibib Gold District:
  
  • Significant exploration land package and large portfolio of targets, prospects and new discoveries assembled by Osino.
  • Potential to continue trend of grade improvement at Twin Hills through infill drilling and further extensions along strike and at depth.
  • The Ondundu deposit, located 130 km northwest of Twin Hills, has an existing Inferred Mineral Resource of 0.9 million gold ounces.⁵
  • New highly prospective Eureka gold discovery, with recent intercepts including 47 metres of 5.92 g/t of gold, located 35 km northeast of Ondundu.⁶
  • 8,000 km² regional package of licences with multiple drill-ready gold targets for further exploration in Namibia's prospective Damara sedimentary mineral belt.

• Leverages DPM's balance sheet strength and free cash flow generation to internally fund development and maintain attractive dividend:
  
  • Strong financial position, including cash balance of approximately US$563 million⁷, an undrawn US$150 million revolving credit facility, and no debt.
  • Robust cash provided from operating activities and free cash flow generation of US$247 million and US$213 million over the last twelve months, respectively.⁸
  • Financial capacity to fund development of Twin Hills and other growth initiatives from existing cash balances and future operating cash flows, while sustaining quarterly dividend.

• Complements DPM's core strengths and unique capabilities to unlock value:
  
  • Osino's strong and established sustainability ethos and focus on responsible project development provides a strong foundation for the project's social licence.
  • Leverages DPM's in-house expertise and proven strengths in Namibia in community engagement, project development, and leadership in ESG.
    

Strategic Rationale and Benefits to Osino Shareholders

• Premium of approximately 44.3% based on Osino's 30-day VWAP on the TSXV, with half of consideration payable in cash and the other half payable in DPM shares, allowing for both liquidity and participation in future upside.
• Continued exposure to Twin Hills' future production and portfolio exploration upside, with lower risk from a dilution, financing, and single asset development perspective.
• Exposure to DPM's diversified portfolio of low-cost operations and strong growth pipeline.
• Experienced DPM management team with demonstrated track record of success in developing and operating projects in Namibia and Europe, focused on fast-tracking the development of the Twin Hills project.
• Leverages DPM's strong balance sheet with US$563 million in cash on hand, no debt, and robust cash flow generation to fund the development of Twin Hills and unlock additional value through exploration.
• Immediate yield by way of participation in DPM's current dividend.
• Enhanced institutional investor following, trading liquidity and capital markets profile.
  

CEO Commentary

David Rae, President and Chief Executive Officer of Dundee Precious Metals, made the following comments in relation to the Osino acquisition:

"Twin Hills represents a unique opportunity to add a high-quality development asset in an excellent mining jurisdiction to our portfolio. The project provides a foundation for our future production profile with production targeted for 2026, as well as significant exploration upside.

"This transaction also allows us to leverage our strong local relationships in Namibia, which we have built over many years, and continue our focus on growing our portfolio of gold assets. With Twin Hills and ?oka Rakita, DPM will have an extremely attractive growth pipeline and the financial capacity to fund it internally through our existing cash balance and free cash flow.

"The Osino team have done an excellent job in discovering and progressing Twin Hills to this point. We are excited to advance the project and build on their efforts to unlock further value for all of our stakeholders."

Heye Daun, President and Chief Executive Officer of Osino Resources, stated:

"On behalf of Osino shareholders, I am very pleased to be delivering the Twin Hills gold project to DPM. DPM is a highly credible and well-financed builder and operator of gold mines with the technical skills and financial resources to progress the project through construction and into production.

"We are very proud to have attracted a company of DPM's calibre, thereby securing the future development of Twin Hills, which we believe has the potential to become Namibia's third and largest gold mine.

"Since 2019, the Osino team has made great strides in discovering and advancing Twin Hills, and de-risking the project from a technical and permitting perspective. We believe that handing over the project to DPM at this critical juncture is in the best interest of our shareholders and local stakeholders. Our well-established and highly credible Namibian exploration and technical team will continue to contribute meaningfully as DPM takes the project to the next level."

Next Steps

DPM intends to advance all remaining engineering activities for Twins Hills to reach a construction decision by the third quarter 2024. Over this period, DPM will pursue opportunities to refine and optimize the mining, construction and execution aspects of the project, given DPM's experience in the development and operation of its existing portfolio. In parallel, DPM will also be reviewing the construction timeline, which is currently targeting first production in the second half of 2026.

Transaction Summary

The proposed Transaction will be completed pursuant to a court approved plan of arrangement under the Business Corporations Act (British Columbia). The Transaction will be subject to the approval of Osino security holders, being: (i) 66 2/3% of the votes cast by shareholders, (ii) 66 2/3% of the votes cast by holders of incentive securities voting as a single class with shareholders; and (iii) a simple majority of shareholders excluding votes held by related parties under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions, at a special meeting of Osino securityholders expected to be held in March 2024.

The directors and senior officers of Osino have entered into voting support agreements, pursuant to which, subject to the terms and conditions set forth therein, they will vote their securities held, as applicable, in favour of the Transaction.

In addition to securityholder and court approvals, the Transaction is subject to applicable regulatory approvals (including approvals of the Toronto Stock Exchange and TSXV and applicable approvals under the Namibia Competition Act) and the satisfaction of certain other closing conditions customary for a transaction of this nature. The Arrangement Agreement includes customary deal protections, including fiduciary-out provisions, non-solicitation covenants, and the right to match any superior proposals. Additionally, a termination fee payable in an amount of C$10 million is payable to DPM by Osino in certain circumstances if the Transaction is not completed.

Pursuant to the Arrangement Agreement, all outstanding Osino stock options, restricted share units and deferred share units, which remain outstanding at the effective time of the Transaction, will be deemed to be exercised or settled, ...

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