Osisko Gold grabs Barkerville, creates North Spirit Discovery
Canada’s Osisko Gold Royalties (TSX, NYSE: OR) is buying all the shares it doesn’t already own in fellow miner Barkerville Gold Mines, in a deal valued at C$338 million (about $255m).
The Montreal-based miner said each Barkerville shareholder would receive 0.0357 common share of Osisko for each share of Barkerville held, implying a value of C$0.58/share, based on Osisko’s Sept. 20 closing price on the Toronto Stock Exchange.
The deal gives it access to Barkerville’s touted Cariboo gold project in British Columbia, which Osisko sees as a “potentially world-class asset” with significant infrastructure in place.
The company said the asset has similar attributes to Canadian Malartic mine, when it identified the opportunity.
“Osisko and Barkerville will take advantage of their combined mine building, exploration, permitting, development and construction expertise to advance the Cariboo gold project,” the company’s chief executive chair of the board, Sean Roosen, said in the statement.
According to a preliminary economic assessment (PEA) for the Cariboo project, published last month, the proposed underground mine would produce a high-quality concentrate averaging 20.5 grams of gold per tonne.
Located near a site where the old historic Cariboo Gold Quartz Mine operated from the 1930s to the 1960s, the operation will have a 11-year productive life, providing 320 full-time positions and 120 construction jobs.
The company noted it would fund planned work through available liquidity, future revenue from royalties and streams, project debt as well as outside private equity and joint venture (JV) capital through the creation of a new company — the North Spirit Discovery Group.
The new firm is expected to become a leading resource development and finance company, which may seek joint venture partners and/or private equity capital.
Following the highly publicized multi-billion mergers of Barrick – Randgold and Newmont – Goldcorp, rising gold prices have spurred an anticipated wave of consolidation in the sector, which has favoured Canada and Australia.
Earlier this month, Osisko announced it was buying fellow Canadian Stornoway Diamond, which has filed for bankruptcy protection.
The company, formed in 2014, is a royalty firm, which means that it seeks agreements giving it the right to a share of income from mines operated by other companies.
Its primary focus is the North American precious metal offtake market, with more than 135 royalties and a portfolio of resource companies such as a 16.6% interest in Osisko Mining Inc. and a 19.9% interest in Falco Resources Ltd.