Osisko enters into binding agreement to acquire silver stream on CSA copper-silver mine for $90M
(Kitco News) - Osisko Gold Royalties (TSX: OR) announced today that it has entered into a binding agreement with Metals Acquisition Corp. (MAC) with respect to a US$90 million silver stream to facilitate MAC's acquisition of the producing CSA mine in New South Wales, Australia.
According to the company's statement, MAC announced today that it has entered into an agreement to acquire 100% of the shares of the owner of CSA from a subsidiary of Glencore plc.
Osisko added that the company has also provided MAC with an option to draw up to an additional US$100 million in upfront proceeds through the sale of a copper stream, subject to the parties finalizing definitive terms and conditions.
Osisko noted that it will make an upfront cash payment to MAC of US$90 million, which will be payable in full on closing of the silver stream, with proceeds to be used to fund in part the purchase price payable by MAC for the acquisition transaction. The company has also agreed to subscribe for US$15 million in equity of MAC as part of its concurrent equity financing.
Importantly, the company pointed out that it will be entitled to receive 100% of payable silver produced from CSA for the life of the mine. Osisko will make ongoing payments for refined silver delivered equal to 4% of the spot silver price at the time of delivery.
"We are excited to partner with MAC on the acquisition of the CSA mine," said President and CEO Sandeep Singh. "The acquisition of a silver stream on CSA meets all of Osisko's stringent acquisition criteria. The stream will provide long-life precious metals cash flow in a top tier jurisdiction at an attractive return. CSA has a long mine life and a tremendous history of reserve replacement with significant further upside. Near-term opportunities to extend the already-long mine life and optimize production have already been identified."
CSA is a high-grade, long-life, underground copper-silver mine located approximately 12km west-northwest of the town of Cobar in New South Wales, Australia.
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Since 2011, CSA has produced approximately 512kt of copper and 6Moz of silver. MAC is currently targeting a mine life of at least 15 years based on existing drill tested zones, with significant further upside from near-mine and regional targets.
Osisko is an intermediate precious metal royalty company focused on the Americas that commenced activities in June 2014. Osisko holds a North American focused portfolio of over 160 royalties, streams and precious metal offtakes. Osisko's portfolio is anchored by its cornerstone asset, a 5% net smelter return royalty on the Canadian Malartic mine, which is the largest gold mine in Canada.