Vancouver-based gold mining giant Goldcorp Inc. (TSX:G) intends to buy Osisko Mining (TSX:OSK) for $2.6 billion in cash and shares, the company announced January 13.
Goldcorp is offering 0.146 of its shares plus $2.26 in cash for each Osisko share. The offer values Osisko shares at $5.95 apiece – a 15% premium over Osisko’s January 10 closing price on the Toronto Stock Exchange.
Osisko’s main asset is its wholly owned Canadian Malartic gold mine in Quebec. Canadian Malartic, which started commercial production in May 2011, is a large-scale mine expected to produce between 500,000 and 600,000 ounces of gold per year over a 16-year lifespan. The mine has proven and probable reserves of 10.1 million ounces of reserves, according to Osisko’s website.
Osisko also has gold projects in Kirkland Lake and Thunder Bay, Ont. Neither is in production.
Goldcorp owns the Éléonore gold project in Northern Québec, which Goldcorp expects to be in production later this year. Éléonore is expected to produce 6000,000 ounces of gold per year.
“This combination offers excellent strategic value as Canadian Malartic and its talented operating team will benefit from Goldcorp’s strong financial position, technical expertise and commitments to safety and sustainability,” said Chuck Jeannes, Goldcorp president and CEO, in a statement.
“Our clear preference remains to engage with Osisko, as we strongly believe in the compelling strategic and financial merits of this transaction to the mutual benefit of both companies` shareholders.”
The move comes less than a week after Goldcorp announced a lower long-term production outlook for its Penasquito mine from 19 years to 13 years. According to a Goldcorp release, the company no longer plans to mine the lower-grade gold at Penasquito.
Goldcorp’s offer, unless extended, is open until February 19. Goldcorp has $620 million in cash, a $2 billion credit facility and a recently secured $1.25 billion, non revolving credit facility with the Bank of Nova Scotia to fund the cash portion of its offer.
Goldcorp had previously owned a 10% stake in Osisko, but sold its shares.
