Osisko Mining Corporation

Expanding Its Canadian Footprint With Queenston

? OSK has made a friendly offer for all of the outstanding shares of QMI for $550 million ($400 million in enterprise value). With QMI, OSK will get a large and prospective land package in the Kirkland Lake camp. Upper Beaver is the most advanced (and most valuable) asset at this time.

? At CIBC, we have the advantage of covering both OSK and QMI, and we use our detailed QMI model to analyze this transaction, calculating that the QMI acquisition is 7% accretive to OSK’s NAV. On a TAC basis, the purchase price is at a 41% discount to spot gold, in line with past transactions.

? In modeling Upper Beaver, we have assumed higher capex and operating costs at ~$450 million and ~$600/oz, respectively. However, we also assume that management will take advantage of the higher-grade Porphyry zones in the earlier years to enhance payback.

? The QMI acquisition will add new aspects (and challenges) to the OSK story, including underground mining at Upper Beaver. PT goes to $13 from $13.50 due to model changes. That said, in QMI, we believe OSK will get one of the most prospective land packages in Canada with long-term upside