Osisko clinches ‘transformational’ C$1.13bn deal with Orion Mine Finance Group

VANCOUVER (miningweekly.com) – Intermediate precious metals royalty company Osisko Gold Royalties has sealed a “transformational” transaction with Orion Mine Finance Group to acquire a precious metals portfolio of assets comprising some 74 royalties, streams and precious metal offtakes for C$1.13-billion.

Osisko says the acquisition will create a leading world-class growth royalty company with 131 royalties and streams, as well as 16 revenue-generating assets.

Osisko's TSX-listed stock rose as much as 14.3% on Monday to an intraday high of C$16.46 a share.

"Since our creation three years ago, we have been working towards a transformational transaction for Osisko. Combining these tremendous assets from Orion Mine Finance together with Osisko's existing portfolio will set the stage for the company to earn over 140 000 gold equivalent ounces annually by 2023, without compromising its focus on gold and precious metals from properties located principally in North America,” Osisko chairperson and CEO Sean Roosen commented.

Included are a 9.6% diamond stream on the Renard mine, in Quebec; a 4% gold and silver stream on the Brucejack mine, in British Columbia; and a 100% silver stream on the Mantos Blancos copper mine, in Chile. The company's cornerstone asset remains the 5% net smelter return (NSR) royalty on Canada’s largest producing gold mine, the Canadian Malartic gold mine, in Quebec, and its 2% to 3.5% NSR royalty on the world-class Éléonore gold mine, in the James Bay region of Quebec.

The company says its growth pipeline is forecast to produce over 100 000 gold equivalent ounces in 2018, which will grow to 140 000 oz of gold equivalent by 2023. At the same time, it will enjoy a pro forma cash flow growth of 10% a year.

The acquisition will be settled by C$675-million in cash and C$450-million in Osisko common shares. Orion will hold a 19.7% interest in Osisko when the deal is concluded.

To raise the cash portion of the transaction, the Caisse de depot et placement du Quebec and Fonds de solidarite FTQ will be subscribing for C$200-million and C$75-million in Osisko common shares, respectively. Osisko will also draw down C$150-million under its revolving credit facility. The remaining C$250-million will be funded from the company’s current cash reserves.