Osisko Gold Royalties Acquires 74 Assets For C$1.125 Billion
(Kitco News) - Osisko Gold Royalties Ltd (TSX, NYSE: OR) has agreed to acquire a precious-metals portfolio, consisting of 74 royalties, streams and precious metal offtakes, from Orion Mine Finance Group for C$1.125 billion, the company reported Monday.
After the deal, Osisko would hold 131 royalties and streams, including 16 revenue-generating assets, the company said. The company’s cornerstone assets remain the 5% net-smelter-return royalty on the Canadian Malartic mine, described as Canada’s largest producing gold mine, and its 2% to 3.5% NSR royalty on the Éléonore gold mine.
With the transaction, Osisko gains a 9.6% diamond stream on the Renard diamond mine and a 4% gold and silver stream on the Brucejack gold and silver mine, both in Canada, in addition to a 100% silver stream on the Mantos Blancos copper mine in Chile.
The purchase will consist of C$675 million in cash plus C$450 million in Osisko common shares, Osisko said.
As part of the transaction, the Caisse de dépôt et placement du Québec and the Fonds de solidarité FTQ will be subscribing for C$200 and C$75 million in common shares of Osisko, respectively, as part of a concurrent private placement to fund a portion of the cash for the deal. Also, Osisko said it will draw C$150 million under its revolving credit facility with the National Bank of Canada and Bank of Montreal, and C$250 million will be funded from Osisko’s current cash reserves.
Osisko said the transaction, which increases shares outstanding by less than 50%, doubles its near-term cash flow and more than triples Osisko’s cash-flowing assets from five to 16. This also provides Osisko with a growth pipeline that has expected production of over 100,000 gold-equivalent ounces in 2018, rising to over 140,000 by 2023, and pro forma cash flow growth of 10% per annum from 2017 to 2023, Osisko said.
Ninety percent of the cash flow would be from precious-metals assets, with 80% from North America.
Issuance of the Orion shares and the private-placement shares is subject to approval by a simple majority of Osisko’s shareholders. The company said a special meeting of shareholders will be held in July, with closing of the transaction expected around July 31, subject to customary closing conditions. However, the transaction’s economic effective date will be June 1 of this year, Osisko said.
“Since our creation three years ago, we have been working towards a transformational transaction for Osisko,” said Sean Roosen, chair and chief executive officer, commenting that the deal with Orion “adds wide diversity to our portfolio.”