"We typically favour those precious metal companies that offer attractive growth profiles, boast quality assets and have strong management teams," Mr. Humphrey said in a note to clients. "Osisko is currently in construction mode an thus an analysis across such metrics is somewhat more challenging." <\/p>\n
Of course, Mr. Humphrey does not fault Osisko for doing such a good job developing the gold project, which has great potential.<\/p>\n
Expected to enter production in the second half of 2011, Mr. Humphrey forecasts eventual output of more than 600,000 ounces a year at a cost of US$365 an ounce over a 15-year life span.<\/p>\n
The conservative stance is instead predicated on the company's stock valuation, which has already largely factored in the mine's value. And a dearth of other news will likely keep Osisko's share price flat for a while.<\/p>\n
"With the company in the construction stage for the next 12 or so months followed by commissioning, the company could be entering a period of relatively quiet news flow," he said. "We believe further upside in the share price is farily limited until the project progresses to production and executes according to design."<\/p>\n
Larger producers may also wait for the mine to enter full ramp-up mode, reducing start up risks, before launching a takeover offer.<\/p>\n