Precious Metals

NYSE:OR

Osisko Gold Royalty has entered into an agreement to acquire all the outstanding Barkerville Gold Mines shares it doesn’t already own for C$338 million.

Gold royalty company Osisko Gold Royalty (TSX:OR,NYSE:OR) has entered into an agreement to acquire all the outstanding Barkerville Gold Mines (TSXV:BGM) shares it doesn’t currently own.

Barkerville’s primary asset is the Cariboo gold project in the British Columbian mining jurisdiction of the same name. Last month, Barkerville completed a preliminary economic assessment (PEA) for the project.

The deal will see Osisko spend C$338 million for the Canadian gold junior.

Osisko will offer each Barkerville shareholder 0.0357 of an Osisko common share based on the value of Bakerville shares compared to Osisko as of September 20, 2019.

“The addition of the Cariboo gold project to our portfolio adds a potentially world-class asset in Canada in an impacted brownfield site with significant infrastructure in place,” Osisko CEO Sean Roosen noted. “Osisko and Barkerville will take advantage of their combined mine building, exploration, permitting, development and construction expertise to advance the Cariboo gold project.”

According to the PEA, which was released last month, Cariboo is slated to be developed as an underground mine and is expected to produce high-quality concentrate of 20.5 grams of gold per tonne.

The takeover deal also includes the formation of North Spirit Discovery Group, the natural progression of Osisko’s accelerator business. It is aimed at privatizing and surfacing value in resource projects.

This program from Osisko has grown over the last five years and will play an important role in getting the Cariboo project funded and off the ground, explained Roosen.

“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,” he said.

Barkerville investors can look forward to sector expertise and guidance offered by Osisko, while Osisko stakeholders will gain more portfolio diversity as well as the potential for share price growth.

In 2018, Osisko generated C$82.2 million in operating cash flow, and it currently has more than C$800 million in financial capacity, including an available C$500 million revolving credit facility.

Next up for Cariboo will be a prefeasibility study to gauge the viability of the project.

Shares of Osisko Gold Royalties slipped 7.6 percent on Monday (September 23) to trade at C$14.75. Barkerville closed up 8.7 percent at C$0.50.

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

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