Osisko Mining options portfolio of Quebec-based James Bay exploration properties

VANCOUVER (miningweekly.com) – Project consolidator Osisko Mining has taken an option to earn 100% of a prospective portfolio of exploration properties located in Quebec’s James Bay and Labrador Trough areas from fellow TSX-listed streaming firm Osisko Gold Royalties.

Under the terms of the agreement, Osisko Mining can earn 50% of Osisko Gold Royalties' interest in the portfolio following expenditures totalling $19.2-million, and 100% of its interest upon completing the total investment of $32-million over a seven-year period.

Osisko Gold Royalties will retain an escalating net smelter return (NSR) royalty ranging from 1% to a maximum of 3.5% on the properties. New properties acquired by Osisko Mining in the designated area during the seven-year term of the agreement would also be subject to the agreement, under certain conditions. 

“The Osisko group, through the former Osisko Mining Corporation and former Virginia Mines teams, has had a great history of discovering gold at the drill bit, including two significant discoveries that are now both Quebec's newest and largest gold mines – Canadian Malartic and Eleonore. It is our hope and expectation that today's announced transaction will provide further opportunities for Osisko Mining to make significant new discoveries in Quebec,” noted Osisko Mining president and CEO John Burzynski.

Osisko Gold Royalties, which billed the deal as streamlining its operations, undertook not to participate in any exploration activities and would be bound not to compete with Osisko Mining in areas covered by the agreement, except for the continuation of activities at its Coulon copper/zinc project held by Osisko Royalties and other Quebec institutional shareholders.

Osisko Mining will also benefit from the years of expertise brought to bear by the former Virginia Mines exploration team on these projects, which Osisko Gold Royalties acquired in 2015 for $556-million. It will also be able to continue significant exploration programmes through the integration of this team into Osisko Mining, as part of the transaction.

"With today's deal, we continue to pursue our programme of firmly establishing Osisko Gold Royalties as a leading intermediate royalty company, while maintaining exposure to the exciting land position acquired as part of the Virginia Mines acquisition in early 2015, through our holdings in Osisko Mining. This transaction demonstrates our commitment to our focus on the royalty business while indirectly supporting the creation of exploration and development value for our shareholders through our significant position in Osisko Mining," stated Osisko Gold Royalties chairperson and CEO Sean Roosen.

As part of the agreement, Osisko Gold Royalties will exercise its option on properties held by Osisko Mining as at August 25, 2015, by paying $5-million. Under the terms of this agreement, Osisko will receive a 1% NSR royalty on Osisko Mining's Windfall property and Urban Barry property package in return for a cash payment of $5-million, additional to its original equity investment of $17.8-million in August 2015.

Closing of the transaction is subject to finalising documentation, with an effective date of October 1.

Osisko Gold Royalties, including insiders, held about 15.5% of Osisko Mining.

BARKERVILLE DEAL
Meanwhile, Osisko Mining announced on Monday that it would take a 17% stake in Barkerville Gold Mines as part of its strategy of building direct and indirect interests in what it believes will be the next generation of long-life Canadian gold mines.

The company entered into a binding purchase agreement with 2176423 Ontario, a company owned by Eric Sprott, through which Osisko Mining would buy 50-million common shares of Barkerville. Osisko will pay C$20 000 for half the shares it acquires from 2176423 Ontario and the other half in exchange for 8.09-million common shares of Osisko Mining.

Following the sale, Sprott would have indirect and direct holdings of 18.8% of the issued and outstanding Barkerville shares, 16.2% of Osisko Gold Royalties, and 17% of Osisko Mining.

Barkerville has consolidated 1 177 km² of land across a belt that is 60 km long by 20 km wide, in south-central British Columbia’s Cariboo gold district. The company had stated priorities this year to start small-scale production on the property’s Bonanza Ledge and BC vein, expand the resource and initiate a feasibility study at its Cow Mountain deposit, and develop regional targets through greenfield exploration.