The Cariboo gold project is located in the historic Wells-Barkerville mining camp in British Columbia. — Photo courtesy Osisko Gold Royalties Osisk
The Cariboo gold project is located in the historic Wells-Barkerville mining camp in British Columbia. — Photo courtesy Osisko Gold Royalties
Osisko Gold Royalties Ltd ("Osisko") (OR: TSX & NYSE) is pleased to announce that it has entered into a definitive agreement (the "Arrangement Agreement") with Barkerville Gold Mines Ltd. ("Barkerville") (TSXV: BGM), pursuant to which Osisko has agreed to acquire all of the issued and outstanding common shares of Barkerville that it does not currently own, by way of a plan of arrangement (the "Arrangement") under the Business Corporations Act (British Columbia). Concurrent to the Arrangement, Osisko also announces the formation of the North Spirit Discovery Group, the next step in the evolution of Osisko's accelerator business that Osisko pioneered over the last five years, with the goal of privatizing and surfacing value in resource development projects.
Under the terms of the Arrangement, each shareholder of Barkerville (excluding Osisko) will receive 0.0357 (the "Exchange Ratio") of a common share of Osisko for each share of Barkerville held. The Exchange Ratio implies consideration of C$0.58 per Barkerville share, based on the closing price of Osisko shares on the Toronto Stock Exchange (TSX) on September 20, 2019, representing a 44% premium based on both companies' trailing 20-day volume weighted average price (VWAP) as at September 20, 2019. The Exchange Ratio implies a total equity value of approximately C$338 million on a fully-diluted in the money basis, inclusive of Barkerville shares held by Osisko.
Upon completion of the transaction, current Osisko and Barkerville shareholders will hold approximately 91% and 9% of Osisko shares outstanding, respectively.
Sean Roosen, chair of the board and CEO of Osisko, stated: "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 and Barkerville will take advantage of their combined mine building, exploration, permitting, development and construction expertise to advance the Cariboo gold project. 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."
In 2018, Osisko generated $82.2 million in operating cash flow at 89.5% cash margin and $46.1 million at 89.5% cash margin in the first six months of 2019. Osisko currently has over $800 million in financial capacity, including a $500 million available revolving credit facility.
- Immediate and significant premium of 44% based on both companies' 20-day VWAPs;
- Continued exposure to the Cariboo project in a broader, more diversified company;
- Acceleration and enhancement of development of the Cariboo project by leveraging Osisko's proven technical team;
- Certainty of funding through Osisko's strong balance sheet and access to capital to advance the Cariboo project on-schedule;
- Direct exposure to a high gold price environment through Osisko's strong and growing cash flows; and
- Osisko shares offer substantially greater trading liquidity and an attractive dividend.
- Greater exposure to a unique, high quality advanced development project in Canada with world-class potential;
- Allows Osisko to drive the development strategy and provides greater certainty with respect to the timeline to production for the Cariboo project;
- Ability to achieve stronger shareholder returns through full ownership and control, as compared to Osisko's current equity position in a Barkerville stand-alone development scenario;
- Meaningfully accretive on a net asset value basis for Osisko;
- Further enhances Osisko's peer leading growth profile; and
- Substantially increases cash flow and net asset value contribution from Canada.
Concurrent to the Arrangement, Osisko announces the creation of the North Spirit Discovery Group ("North Spirit Discovery"), its new project development platform. North Spirit Discovery is the next step in the evolution of Osisko's accelerator business that Osisko pioneered over the last five years, with the goal of privatizing and surfacing value in resource development projects. Through this platform, Osisko will leverage its industry-leading technical team with a proven track record of creating value through resource discovery, project development and mine operation. North Spirit Discovery aims to become a leading resource development and finance company with the assistance of joint venture partners and/or private equity capital.
Barkerville Gold mines Ltd. is focused on developing its extensive mineral rights package located in the historical Cariboo Mining District of central British Columbia. Barkerville's Cariboo Gold Project mineral tenures cover 1,950 square kilometres; along a strike length of 67 kilometres which includes several past producing placer and hard rock mines, making it one of the most well-endowed land packages in British Columbia. Since the management change in mid-2015, the Corporation has unlocked the fundamental structural controls of gold mineralization. Barkerville's brownfields exploration team is focused on developing and delineating a mineable resource within the 8 kilometers of principle project area located near the town of Wells, British Columbia. Barkerville's greenfields team is developing quality exploration assets throughout the remaining land package through systematic, scientific, exploration. The operation's team is focused on completing required studies in order to permit underground mining on Cow and Island Mountains.
Osisko Gold Royalties Ltd is an intermediate precious metal royalty company that holds a North American focused portfolio of over 135 royalties, streams and precious metal offtakes. Osisko's portfolio is anchored by its 5% NSR royalty on the Canadian Malartic Mine, which is the largest gold mine in Canada. Osisko also owns a portfolio of publicly held resource companies, including a 32.6% interest in Barkerville Gold Mines Ltd. and a 4% NSR royalty on the Cariboo Gold project, a 19.9% interest in Falco Resources Ltd and a 16.4% interest in Osisko Mining Inc.
