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Osisko Gold Royalties continues expansion with Barkerville Gold Mines takeover

by Greg Klein | September 23, 2019

Already holding around 32.6% of the target company, Osisko Gold Royalties TSX:OR intends to grab the rest of Barkerville Gold Mines TSXV:BGM. The definitive agreement follows a PEA released last month for Barkerville’s Cariboo gold project. Osisko also announced creation of the North Spirit Discovery Group, described as a resource development and finance company that will work with JV partners and/or private equity firms.

Osisko Gold Royalties continues expansion with Barkerville Gold Mines takeover

The takeover offers new expertise and
financing to help revive an historic mining region.

Noting benefits to the takeover target, Osisko said it would provide technical expertise and greater access to financing to develop the central British Columbia project.

Pending approvals, the deal would exchange each Barkerville share for 0.0357 of an Osisko share, representing a 44% premium, the companies stated. The implied price comes to $338 million fully diluted, including the Barkerville shares already held by Osisko. The transaction would leave current Osisko and Barkerville shareholders with about 91% and 9% of Osisko shares respectively.

The companies anticipate closing in November.

Cariboo’s PEA forecast an after-tax IRR of 28% and NPV of $402 million for 11 years of underground mining producing an average 185,000 gold ounces a year. Initial capex would require $305.5 million. Processing would take place at Barkerville’s QR mill, about 140 kilometres by road.

The updated resource gives three main zones and a satellite zone a total of 2.27 million ounces indicated and 1.91 million ounces inferred. Two additional zones bring the totals to 2.44 million ounces measured and indicated, along with 1.92 million ounces inferred.

Drilling continues, with more funding to come through a $7-million bridge loan from Osisko.

Sean Roosen, CEO of Osisko and chairperson of both companies, said Osisko “expects to fund planned work through available liquidity, future revenue from royalties and streams, project debt, as well as outside private equity and joint venture capital through the creation of the North Spirit Discovery Group.”

Earlier this month Osisko signed an LOI to take over Quebec’s Renard diamond mine. The deal would keep the mine operating as Stornoway Diamond TSX:SWY entered creditor protection.

Osisko’s participation also helped finance Victoria Gold’s (TSXV:VIT) Eagle mine into production, following an unexpectedly higher capex for the Yukon project.

Osisko holds over 135 royalties, streams and offtakes including a 5% NSR on the Agnico Eagle TSX:AEM/Yamana Gold TSX:YRI Canadian Malartic, Canada’s largest gold mine, 19.9% of Falco Resources TSXV:FPC and 16.4% of Osisko Mining TSX:OSK. Osisko Mining currently holds 16% of Barkerville.

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