Osisko to buy Virginia Mines for $424m, merge gold assets

Osisko to buy Virginia Mines for $424m, merge gold assets

Aerial view of the Canadian Malartic mine facilities, in the Abitibi mining district. (Courtesy of Osisko)

Canadian Osisko Gold Royalties (TSX:OR) announced Monday it has agreed to buy gold explorer Virginia Mines (TSX:VGQ)  for about $424 million (Cdn$479m), which will allow them to profit from royalties coming from two gold mines in Quebec: Canadian Malartic and Éléonore.

The friendly deal values each share of Virginia at $14.19, based on Nov. 14 closing prices, which represents a deal premium of 41%, the companies said.

Osisko, a Montreal-based royalty company formed after Agnico Eagle Mines (TSX:AEM) and Yamana Gold (TSX:YRI) completed the purchase of Osisko Mining Corp. in June, keeping Malartic, Canada’s largest gold mine.

The new merged company will be named Osisko Gold Royalties and is set to be based in Montreal, the firms said in a presentation.

Both the Osisko and Virginia royalties cover the operating mines and the high-potential land packages surrounding the mines, they noted.

“The business combination of Osisko and Virginia creates a leading intermediate royalty company with the two most valuable royalty assets in the gold sector, both of which are located in mining-friendly Quebec,” Osisko chief executive Sean Roosen said in statement. “Shareholders of both companies will benefit from increased diversification, superior trading liquidity, a strong balance sheet and a heightened ability to compete for future growth opportunities in the royalty business.”

Eleonore mine belongs to Goldcorp Inc (TSX:G) (NYSE:GG), but Virginia has a sliding-scale 2.2%-to-3.5% NSR royalty on the mine.

Osisko to buy Virginia Mines for $424m, merge gold assets