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Roth Capital Partners tags Minera Alamos again with Buy; C$0.35 price target

Financing deal with Osisko Gold Royalties provides enough cash cushion to kick off production at Minera's Santana gold project in late 2020

Minera Alamos Inc -
The Osisko financing package includes a 3% royalty for a cash payment of C$5 million

Roth Capital Partners is sticking to its Buy rating and a 12-month price target of C$0.35 for Minera Alamos Inc (CVE:MAI) (OTCMKTS:MAIFF) after taking an optimistic view of the gold miner’s Santana gold project in the Mexican state of Sonora. 

Of particular interest to the Roth analysts is the recent unveiling by Minera of a C$14 million royalty and equity financing deal with Osisko Gold Royalties Ltd, which will provide the funding necessary to begin construction at Santana.

READ: Minera Alamos on brink of first mine development down in Mexico

The cash injection, which is set to close by the first quarter of next year, will provide sufficient cushion for the Santana project to remain on track for its first production in late 2020. “As such, we are reiterating our Buy rating and C$0.35 price target,” wrote the Roth team in a recent note to investors.

“Based on our estimates, Minera is now fully funded for the development of Santana,” the Roth analysts added.

The Osisko financing package includes a 3% royalty for a cash payment of C$5 million and the issuance of 30 million shares of Minera at a price of C$0.20 per share for C$6 million.

Osisko has also provided an optional royalty agreement that permits Minera to draw up to an additional C$3 million in C$1 million increments to fund any “capital overruns” stemming from Santana’s development.

“For each C$1 million that Minera Alamos draws on this facility, Osisko will receive a two to three per cent royalty for 36 months on the Santana project,” explained the Roth team in its note. “We do not estimate that Minera will draw on this option, but believe it provides additional security as the company develops Santana.”

Minera shares traded 5.6% higher to hit US$0.19 in early over-the-counter trade on Monday. 

Quick facts: Minera Alamos Inc

Price: 0.235 CAD

Market: TSX-V
Market Cap: $95.56 m

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