We met with OSI management during PDAC and want to reiterate our conviction in the Osino story ahead of upcoming catalysts. The Twin Hills Gold Project in Namibia is progressing at a rapid rate towards a construction decision by Q1/23. With a Pre-Feasibility Study (PFS) expected in the next two to three months, we want to get ahead of the potential value this study will outline and have made some positive alterations to our model in anticipation. With that said, we are maintaining our BUY rating and increasing our 12-month target price to $3.40/share for OSI (previously $3.10/share).

Upcoming Pre-Feasibility Study:

The previously reported Preliminary Economic Assessment (PEA) outlined an NPV5% of US$377M based on an annual throughput of 99 Koz/yr for a 15-year mine life. With the updated resource we believe the PFS could outline an annual throughput of between 150 Koz/yr and 200 Koz/yr for a 12–15-year mine life. Additionally, OSI now has a better understanding of the mineralization, metallurgy, and geotechnical factors of the project. All that considered, we believe the economics outlined in the upcoming PFS will be substantially improved from that of the PEA. These improvements could include annual throughput & production, grade, metallurgy/recovery, and strip ratio.

Valuation Leaping Forward:

In anticipation of a larger PFS our model previously estimated an average annual production of 131Koz/yr. Building on this, we now model the lower end of our estimate for the annual production that will be depicted in the PFS of 150 Koz/yr. We also increased our CAPEX accordingly, accommodating the larger annual throughput as well as inflationary pressures, to $325M. From this, we derive a new project valuation of $484M8%. Additionally, there exists further upside which we expect to see in the upcoming study with the grade and recovery increasing by as much as 10% while the strip ratio could decrease slightly.

Why We Like OSI:

• Fast track to production – On pace to be the fastest company in the world to move from discovery all the way to a permitting decision

• Management has done this before – CEO (Heye Daun) developed the Otjikoto Mine (Namibia) which was later sold to B2Gold

• Clear acquisition target for B2Gold – BTO is operating the Otjikoto Mine in Namibia and has a cash position of ~US$650M

• Many upcoming catalysts – OSI will have a news heavy H2/22

Catalysts Ahead:

• Ondundu Acquisition Closing – Early Q3/22

• Twin Hills Resource Update – Q3/22

• Twin Hills Pre-Feasibility Study – Q3/22

• Ondundu Maiden Resource – Late Q3/22 – Early Q4/22

• Twin Hills Feasibility Study – Q1/23

• Twin Hills Project Financing & Permitting – Q4/22 & Q1/23

• Ondundu Preliminary Economic Assessment – Q1/23

• Twin Hills Drill Results – Ongoing