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Osisko Mining raises $120m for Windfall, plans JV with Australia’s Northern Star

Core from the Windfall deposit frequently shows visible gold. Credit: Osisko Mining

Osisko Mining (TSX: OSK) has signed an agreement with Australia’s Northern Star Resources (ASX: NST) to raise C$154 million ($120m) for continued work on its Windfall gold project 200 km north of Val d’Or, Quebec.

The two companies have also agreed to negotiate the terms of an earn-in and joint venture allowing Northern Star to earn up to a 50% interest in the Windfall project.

The financing agreement will see Osisko issuing a convertible senior unsecured debenture due December 1, 2025, to Northern Star. The debenture bears an interest rate of 4.75% per year payable semi-annually.

“The potential of joining forces with Northern Star, a well-respected gold producer with a depth of experience in mining underground high-grade deposits similar to the Windfall project, would help de-risk the remaining work ahead to bring the Windfall project to successful production,” Osisko CEO John Burzynski said in a release.

“We are confident that, subject to reaching an agreement with Northern Star on the earn-in joint venture terms, they will be a very strong partner in assuring our development plans for the Windfall project.”

The Windfall gold project falls within the traditional territory of the Waswanipi Cree First Nation. Osisko has identified 1.9 million oz. of gold in the measured and indicated resources (6 million tonnes grading 9.6 g/t gold) and 4.2 million oz. of gold in the inferred resource (16.4 million tonnes grading 8 g/t gold.

Over the first seven years of production, the project would produce an average of 300,000 oz. of gold annually. The Windfall preliminary economic assessment was completed earlier this year, and the feasibility study is due in 2022.

The Osisko debenture may be converted by Northern Star at any time after the first anniversary of closing, subject to certain conditions, at a conversion price equal to C$4 per common share of Osisko Mining. When Northern Star completes its earn-in and joint venture agreement, it may convert the debenture into an interest in the property at conversion premium of 125%.

Further, the debenture may be redeemed by Osisko at any time after the second anniversary of closing for cash or common shares, provided the volume-weighted average trading price of the shares is not less than 125% of the conversion price.

Northern Star is a Western Australia-based gold miner with operations in Australia, plus the Pogo mine in Alaska, which it acquired in 2018. A number of Australian miners, including Newcrest Mining, Evolution Mining, Piedmont Lithium and Sayona Mining, and St Barbara have recently made moves into Canada.

(This article first appeared in the Canadian Mining Journal)