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Friday, February 24, 2017 Derek Macpherson

AEM Invests in Otis; Affirms Potential of Kilgore


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Otis Gold Corp. (TSXV:OOO) announced a private placement with Agnico Eagle Mines Ltd. (TSX:AEM, NYSE:AEM) for C$5.047 million to fund working capital and exploration at Otis’ Kilgore gold project in Idaho. The financing consists of 14.42 million common shares priced at a C$0.35/sh which represents a 12.9% premium to the prior day’s close. As a result of the transaction, Agnico Eagle would own ~9.95% of Otis on a non-diluted basis. In conjunction with the financing, Agnico Eagle and Otis are to enter into an investor rights agreement where Agnico Eagle has the right to participate in subsequent financings to maintain its 9.95% interest in Otis. The transaction is expected to close on February 28. In our view, this strategic investment by Agnico Eagle provides confidence for investors and supports our view on the Kilgore project’s technical merits and upside potential. We believe the market does not appear to fully account for Kilgore’s likely resource growth over the current 820k oz Au (47.5M tonnes @ 0.53 g/t Au) resource (indicated + inferred) as indicated by recent drill results and we discussed in a previous post. Coupled with the project being located in a stable jurisdiction in the vicinity of infrastructure, we expect the pending resource update (Q2 2017) and PEA (Q3 2017) to be important catalysts for the company, allowing Otis, which currently trades at C$38/oz, to close the valuation gap to peers (C$47/oz).



Derek Macpherson | VP Mining Analysis
Sunneva Bernhardsdottir | Associate, Mining Analysis
Victoria Ellis Hayes | Associate
 
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Priced as of prior trading day's market close, EST (unless otherwise noted).
All values in USD unless otherwise noted.

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Company Specific Disclosure Details
Otis Gold Corp - TSXV:OOO - None
Agnico Eagle Mines Ltd - TSX:AEM, NYSE:AEM - None

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