Ever since taking off from one dollar a share on March 1, 2016, the stock of Osisko Mining Corp. (TSX:OSK) has rallied by 321% to $4.21 on March 15, 2017. There is still a lot of momentum in the stock, and investors may reap exponential gains in the next few months.
Osisko Mining is one precious gem that is a rare find in the Canadian mining sector. All fundamentals about this gold exploration and development company look great and too good to be true, yet they are so real. There is significant valuation upside with the current rate of exploration and mineral discovery.
The company is focused on the acquisition, exploration, and development of precious metal resource properties in Canada. Its current focus is on the Windfall Lake gold deposit in Quebec, and it holds several other interests and claims in Quebec and several properties and options in Ontario.
There are several reasons why Osisko Mining shares may soar this year.
More high-grade ore discoveries expected
Osisko Mining’s aggressive drilling program at its Windfall Lake Gold Project in 2016 more than doubled the discovered resource area from its 2015 estimates since acquired from Eagle Hill Exploration Corp in 2015. The discoveries were so compelling that bankers invested $70 million into the exploration firm last year at $3.07 a share, which was a 30% premium to the ruling market price.
The company’s aggressive 250,000 metre exploration budget for 2017 could unlock great value beneath the vastly unexplored land and confirm high-grade deposits at the new Fox Zone and Black Dog sites.
Most interesting is the discovery at Black Dog, where a mere scout hole intersected 32 metres of 3.42 grams per tonne gold in November last year and another intersected a metre of 5.76 grams per tonne gold.
Normally, most scout holes produce nothing.
The estimated mineral deposit ounces for the main zone are likely to more than double in 2017. Chances are now very high that Windfall Lake will become a commissioned gold mine.
Strong cash flow
The company is currently boasting of a strong balance sheet with approximately $200 million in cash and investments accounting for 26% of its 766.7 million market capitalization. The company is adequately liquid, and investors need not worry about dilution for the time being.
Osisko Mining has an experienced management team. This team built and made ready for sale the $3.9 billion Malartic Mine in Quebec. The team is sitting on a world glass yellow metal deposit in Quebec — one of the best mining jurisdictions in the world. The team will do wonders with the Windfall Lake and other properties at Osisko Mining.
Osisko Mining offers a compelling investment theses as a junior gold play. Its tried-and-tested management team is sitting on a world-class gold deposit and is well financed to deliver. The current rate of aggressive exploration may bring more surprises this year.
Enough resources to develop a mine have been discovered at Windfall Lake already. Furthermore, Osisko’s projects will likely be supported by sustainable gold prices going forward, and the company is cash rich enough to allay dilution fears.
There is likely a 100% upside potential in Osisko Mining stock in the next two to three years.
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Fool contributor Brian Paradza has no position in any stocks mentioned.