Dundee Precious Metals (TSX: DPM) is buying Osino Resources (TSXV: OSI) for C$287 million ($214 million) in cash and shares to acquire the advanced stage Twin Hills gold project in Namibia.
The half-stock, half-cash deal gives Dundee all of Osino’s shares for C$0.775 each plus 0.0801 of a Dundee share, representing a 44% premium to Osino’s 30-day volume weighted average share price as of 15 December. Osino shareholders will receive 7% of the company in the transaction, which is expected to be completed by June.
Twin Hills is an open-pit project with a 13-year mine life and average annual production of 175,000 ounces of gold in the first five years, with first production targeted for the second half of 2026, according to a feasibility study released in June. Namibia has granted the project a 20-year licence, with only site-level approvals remaining.
The acquisition enhances Dundee’s portfolio as an intermediate producer with its high margin 258,000 ounce per annum gold production from the Chelopech and Ada Tepe mines in Bulgaria, while advancing the Čoka Rakita deposit in Serbia through a Preliminary Economic Assessment. It increases Dundee’s proven and probable reserves by 43% to approximately 7.2 million ounces of gold.
“The project provides a foundation for our future production profile with production targeted for 2026, as well as significant exploration upside,” Dundee president and CEO David Rae said in a release. “This transaction also allows us to leverage our strong local relationships in Namibia that we have built over many years, as we continue to focus on growing our portfolio of gold assets.”
The company already owns a copper smelter in the country, which it uses to process concentrate from Chelopech.
Osino shares jumped by more than a quarter to C$1.43 each in Toronto on Monday, valuing the company at nearly C$232 million. Dundee’s shares fell more than 9% to C$8.86, giving it a market value of C$1.6 billion.
Dundee says it has $563m in cash, an undrawn $150m revolving credit facility, no debt and free cash flow generation of $213m in the last 12 months to fund development in Namibia and Eastern Europe, while maintaining a quarterly dividend.
Osino discovered Twin Hills in 2019 and has fast-tracked it to the pre-construction stage in less than four years. Front-end engineering and design is well advanced, and all rights for mining and associated infrastructure have been acquired.
“Transferring the project to Dundee at this critical juncture is in the best interests of our shareholders and local stakeholders,” Osino president and CEO Heye Daun said in the release. “Twin Hills has the potential to become Namibia’s third and largest gold mine.”
The Ondundu deposit, located 130km northwest of Twin Hills, contains 900,000 inferred ounces of gold, while the Eureka gold discovery, located 35km northeast of Ondundu, has a drill intercept of 47 metres grading 5.92 grams of gold per tonne, the company said. Dundee has 80km² in the country’s Damara sedimentary mineral belt available for further exploration.
This month, Dundee reported an initial resource of 1.8 million inferred ounces of gold at the Coka Rakita deposit in Serbia. BMO Capital Markets expects Dundee to report by July that the project could cost $300 million to build as an underground mine with an annual throughput of 850,000 tonnes to 120,000 ounces of gold.
Based on BMO Capital Markets models, it could have an after-tax net present value of $400 million at a 5% discount rate and an internal rate of return of 23% using a long-term gold price of $1,500 an ounce, mining analyst Raj Ray said on 11 December. First gold could come in 2028, he said.
“There remains significant upside in terms of size and potential grade that can be found along strike to the northwest and southeast of the deposit,” Rae said. “The development timeline has the potential to be relatively rapid. The company has been active in Serbia for some time and has strong relationships.”
