Osisko Gold Royalties Ltd (the “
Corporation” or
“
Osisko”) (OR: TSX & NYSE) is pleased to
announce that its wholly-owned subsidiary, Osisko Bermuda Limited
(“
OBL”), has entered into a binding agreement with
Metals Acquisition Corp. (“
MAC”) (MTAL: NYSE) with
respect to a US$90 million silver stream (the “
Silver
Stream”) to facilitate MAC’s acquisition of the producing
CSA mine in New South Wales, Australia (“
CSA” or
the “
Mine”). 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 (the
“
Acquisition Transaction”). OBL 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.
“We are excited to partner with MAC on the
acquisition of the CSA mine,” said Sandeep Singh, President and
Chief Executive Officer of Osisko. “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.
We are pleased to have supported, on a bilateral
basis, a team of the caliber of MAC’s, and look forward to the
conclusion of this transaction and further developing our
meaningful relationship. Lastly, the copper stream funding
alternative provides additional value potential to Osisko and
funding alternatives to MAC as they go through their SPAC closing
process.”
TRANSACTION HIGHLIGHTS
- Immediately
Enhances Osisko’s Cash Flow
- 100% of payable
silver delivered to OBL for the life of the Mine, with ongoing
payments equal to 4% of the spot silver price at the time of
delivery
- 2019-2021 average
annual payable silver production of ~431koz, or ~5,600 gold
equivalent ounces annually1
- Exposure to
Premium Copper Asset in a Tier 1 Mining Jurisdiction
- One of the highest
grade copper mines in Australia with a multi-decade operating
history of consistent production
- Track-record of
reserve and resource replacement, with greater than 100% of mined
reserves having been replaced since 2011
- Recent investments
of approximately US$130 million to sustain and optimize operations
through current mine life and beyond
- Near-Term
Opportunities to Extend Mine life and Enhance Value
- MAC targeting a
mine life of 15+ years from existing drill tested zones
- Significant
exploration potential from both near-mine and regional targets
along a highly prospective geological trend within the 350km2
property package
- Several areas
identified to improve process efficiency, optimize operations and
rationalize costs
- Significant
resource and mine life upside by potentially lowering the cut-off
grade
- Experienced
Management Team with Track-Record of Creating Value for
Stakeholders
- Proven Australian
mining professionals with extensive mining experience and
track-record of value creation for stakeholders
- Partnership
opportunities on future strategic activity, as well as a right of
first refusal (“ROFR”) in favour of OBL on
royalties or streams on any asset owned by MAC for three years
following the closing of the Acquisition Transaction
TRANSACTION DETAILS
- OBL will make an
upfront cash payment to MAC of US$90 million (the “Silver
Deposit”). The Silver Deposit 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.
- OBL will be
entitled to receive 100% of payable silver produced from CSA for
the life of the Mine.
- OBL will make
ongoing payments for refined silver delivered equal to 4% of the
spot silver price at the time of delivery.
- MAC and certain of
its subsidiaries, including the operating subsidiary, will provide
OBL with corporate guarantees and other security over their assets
for its obligations under the Silver Stream, which shall be
subordinated only to the senior project debt facility.
- OBL has agreed to
subscribe for US$15 million in equity of MAC as part of its
concurrent equity financing (the “Equity
Subscription”).
- MAC will grant OBL
a ROFR in respect of the sale, transfer or buy-back of any royalty,
stream or similar interest in the products mined or otherwise
extracted from any property owned or acquired by MAC or an
affiliate between the closing date and the 3rd anniversary of the
closing date.
- Closing of the
Silver Stream and Equity Subscription is expected in the second
half of 2022, and is subject to certain conditions precedent,
including, among others, closing of the Acquisition Transaction.
Closing of the Acquisition Transaction is subject to, among other
things, MAC shareholder’s approving the Acquisition Transaction,
and certain regulatory approvals.
- OBL has also
provided MAC an option to draw up to an additional US$100 million
in upfront proceeds through the sale of a copper stream referenced
to production from CSA (the “Copper Stream
Option”). Should MAC elect to utilize any portion of
the Copper Stream Option, upfront proceeds payable by OBL would be
used to fund in part the purchase price payable by MAC for the
Acquisition Transaction. The Copper Stream Option is subject to,
among other things, the parties finalizing definitive terms and
conditions.
CSA MINE OVERVIEW
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. The Mine is comprised
of several mining and exploration leases covering an area of over
350km2 in a proven poly-metallic base metals province. CSA was
first discovered in the 1870’s, and large scale production
commenced in the mid 1960’s.
Mineralization at CSA is classified as a
Cobar-style deposit, which is hosted in siltstone with defined
Zn-Pb to Cu zonation and structurally controlled emplacement.
Mineral reserves and resources as at December 31, 2021 are
presented in Table 1 below.
Underground mining at CSA is performed using
top-down, long-hole open stoping mining methods. In certain areas
of narrower mineralization, the Avoca mining method is also
employed. Mined ore is hauled via truck to one of two primary
underground crushers, following which crushed ore is hoisted to
surface via two hoisting shafts. Ore is currently sourced from
multiple lodes on different mine levels up to a vertical depth of
1.75km.
On surface, ore is processed through
conventional grinding, flotation and filtration circuits with a
nominal capacity of 1.5Mtpa to produce a high-quality copper
concentrate with significant quantities of silver. 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.
Since 2019 the operator has invested
approximately US$130 million in infrastructure to reduce costs and
position the mine for future growth. Major projects included
ventilation upgrades, shaft refurbishment, mill replacements,
processing circuit optimization and construction of an on-site
paste backfill plant. These infrastructure projects will support
further mine life extensions beyond the current mine plan.
CSA is located along a highly prospective
geological trend that is known to host major deposits in the Cobar
region. In recent years, near-mine exploration has led to the
discovery of the QTS Central orebody and the QTS South Upper
orebody, and highlights the potential for additional high value
deposits close to existing infrastructure (see Figure 1 below).
Exploration success has led to mineral reserves increasing by
approximately 31kt of contained copper since 2011, despite
cumulative production of approximately 512kt of copper since that
time. Drilling is ongoing on multiple mineralized lodes and an
updated mineral resource estimate is expected in 2022.
On the broader CSA land package, there has been
limited historical drilling completed by the operator. Recent
exploration focus has been on the implementation of high-resolution
geophysical surveys and structural modelling to create a
sustainable exploration model in support of future drilling
campaigns. Eleven prospective exploration targets have been
identified for further evaluation.
CSA is the largest employer in the Cobar region,
and enjoys strong relationships with local stakeholders. The
company also has a number of environmental programs in place to
ensure best practices are followed, and has committed to working
towards reducing carbon emissions from operations through utilizing
an electric mining fleet where possible and evaluating green energy
alternatives.
Table 1 – Mineral Reserves & Resources (2021).
Resources are reported inclusive of reserves, and are estimated
according to the CIM and JORC codes. The cut-off grade for the
resources and reserves is 2.5% copper. Totals may not sum due to
rounding. Notes regarding the estimations can be found at the
following weblink:
https://www.glencore.com/investors/reports-results/reserves-and-resources?item |
Category |
Ore(Mt) |
Cu Grade(%) |
Cu Contained (kt) |
Ag Grade(g/t) |
Ag Contained (Moz) |
Proven |
4.2 |
4.0 |
168 |
16.4 |
2.1 |
Probable |
2.6 |
3.6 |
94 |
14.1 |
1.1 |
Total Reserves |
6.8 |
3.8 |
262 |
15.6 |
3.3 |
|
|
|
|
|
|
Measured |
3.9 |
5.7 |
226 |
24 |
3.0 |
Indicated |
3.5 |
4.9 |
170 |
20 |
2.2 |
Total Measured and Indicated |
7.4 |
5.4 |
396 |
22 |
5.3 |
Inferred |
4.0 |
5.4 |
217 |
20 |
2.6 |
Figure 1 – Near-Mine Exploration
Potential is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/b14150ad-b0c8-487d-99fd-7e0b083189e6
For more information, please refer to MAC’s press release dated
March 17, 2022 filed on EDGAR at www.sec.gov.
About Metals Acquisition
Corp.
MAC was formed as a blank cheque company for the
purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business
combination with one or more businesses with a focus on the metals
and mining sector. MAC is led by a highly experienced management
team and board of directors with a track record of creating value
for stakeholders.
For more information, please visit MAC’s
corporate website at https://www.metalsacquisition.com/.
Qualified Person
The scientific and technical content of this
news release has been reviewed and approved by Guy Desharnais,
Ph.D., P.Geo., Vice President, Project Evaluation at Osisko Gold
Royalties Ltd, who is a “qualified person” as defined by National
Instrument 43-101 – Standards of Disclosure for Mineral Projects
(“NI 43-101”).
About Osisko Gold Royalties
Ltd
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.
Osisko’s head office is located at 1100 Avenue
des Canadiens-de-Montréal, Suite 300, Montréal, Québec,
H3B 2S2.
For further
information, please contact Osisko Gold Royalties
Ltd: |
Heather TaylorVice President,
Investor RelationsTel: (514) 940-0670 #105Email:
htaylor@osiskogr.com |
|
Forward-looking Statements
Certain statements contained in this press
release may be deemed "forward-looking statements" within the
meaning of the United States Private Securities Litigation Reform
Act of 1995 and “forward-looking information” within the meaning of
applicable Canadian securities legislation. Forward-looking
statements are statements other than statements of historical fact,
that address, without limitation, future events, production
estimates of assets (including increase of production, and
statements relating to gold equivalent ounces (“GEOs”)) of Osisko
Gold Royalties Ltd (“Osisko”), timely developments of mining
properties over which Osisko has royalties, streams, offtakes and
investments, management’s expectations regarding Osisko’s growth,
results of operations, estimated future revenues, production costs,
carrying value of assets, ability to continue to pay dividend,
requirements for additional capital, business prospects and
opportunities future demand for and fluctuation of prices of
commodities (including outlook on gold, silver, diamonds, other
commodities) currency markets and general market conditions, that
all conditions precedent will be met to complete the acquisition of
a silver stream on the CSA Mine, that the performance of the CSA
Mine will be improved and that exploration work around the CSA Mine
will increase its mine life through renewal of mineral resources
and that these mineral resources will be converted into reserves.
In addition, statements and estimates (including data in tables)
relating to mineral reserves and resources and gold equivalent
ounces are forward-looking statements, as they involve implied
assessment, based on certain estimates and assumptions, and no
assurance can be given that the estimates will be realized.
Forward-looking statements are statements that are not historical
facts and are generally, but not always, identified by the words
"expects", "plans", "anticipates", "believes", "intends",
"estimates", "projects", "potential", "scheduled" and similar
expressions or variations (including negative variations), or that
events or conditions "will", "would", "may", "could" or "should".
Forward-looking statements are subject to known and unknown risks,
uncertainties and other factors, most of which are beyond the
control of Osisko, and actual results may accordingly differ
materially from those in forward-looking statements. Such risk
factors include, without limitation: fluctuations in the prices of
the commodities that drive royalties, streams, offtakes and
investments held by Osisko; fluctuations in the value of the
Canadian dollar relative to the U.S. dollar; regulatory changes by
national and local governments, including permitting and licensing
regimes and taxation policies; regulations and political or
economic developments in any of the countries where properties in
which Osisko holds a royalty, stream or other interest are located
or through which they are held; risks related to the operators of
the properties in which Osisko holds a royalty, stream or other
interests; timely development, permitting, construction,
commencement of production, ramp-up (including operating and
technical challenges) on any of the properties in which Osisko
holds a royalty, stream or other interest; the unfavorable outcome
of any challenges or litigation relating title, permit or license
with respect to any of the properties in which Osisko holds a
royalty, stream or other interests or to Osisko’s right thereon;
differences in rate and timing of production from resource
estimates or production forecasts by operators of properties in
which Osisko holds a royalty, stream or other interest, including
conversion from resources to reserves and ability to replace
resources; business opportunities that become available to, or are
pursued by Osisko; continued availability of capital and financing
and general economic, market or business conditions; risks and
hazards associated with the business of exploring, development and
mining on any of the properties in which Osisko holds a royalty,
stream or other interest, including, but not limited to unusual or
unexpected geological and metallurgical conditions, slope failures
or cave-ins, flooding and other natural disasters or civil unrest
or other uninsured risks, the integration of acquired assets and
the responses of relevant governments to the COVID-19 outbreak and
the effectiveness of such response and the potential impact of
COVID-19 on Osisko’s business, operations and financial condition.
The forward-looking statements contained in this press release are
based upon assumptions management believes to be reasonable,
including, without limitation: that Metal Acquisition Corp. will be
successful in meeting all conditions precedent to its acquisition
of the CSA Mine as well as meeting all conditions precedent to the
complete the ongoing operation of the properties in which Osisko
holds a royalty, stream or other interest by the owners or
operators of such properties in a manner consistent with past
practice and with public disclosure (including forecast of
production); the accuracy of public statements and disclosures made
by the owners or operators of such underlying properties (including
expectations for the development of underlying properties that are
not yet in production); no adverse development in respect of any
significant property in which Osisko holds a royalty, stream or
other interest; that statements and estimates relating to mineral
reserves and resources by owners and operators of the properties in
which Osisko holds a royalty, stream or other interest are
accurate; the Company’s ongoing income and assets relating to
determination of its “passive foreign investment company” (“PFIC”)
status; integration of acquired assets; and the absence of any
other factors that could cause actions, events or results to differ
from those anticipated, estimated or intended.
For additional information on risks,
uncertainties and assumptions, please refer to the most recent
Annual Information Form of Osisko filed on SEDAR at www.sedar.com
and EDGAR at www.sec.gov which also provides additional general
assumptions in connection with these statements. Osisko cautions
that the foregoing list of risk and uncertainties is not
exhaustive. Investors and others should carefully consider the
above factors as well as the uncertainties they represent and the
risk they entail. Osisko believes that the assumptions reflected in
those forward-looking statements are reasonable, but no assurance
can be given that these expectations will prove to be accurate as
actual results and prospective events could materially differ from
those anticipated such the forward looking statements and such
forward-looking statements included in this press release are not
guarantee of future performance and should not be unduly relied
upon. In this press release, Osisko relies on information
publicly disclosed by third parties pertaining to its assets and
more specifically to the CSA Mine and, therefore, assumes no
liability for such third party public disclosure. These
statements speak only as of the date of this press release. Osisko
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, other than as required by applicable
law.
____________________________________________________________________________1
Silver ounces are converted to gold equivalent ounces by
multiplying the average payable silver ounces produced annually by
the silver spot price as of March 16, 2022 and dividing by the gold
spot price as of March 16, 2022.
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