Last month, Osisko Gold Royalties (TSX: OR)(NYSE: OR) said it was willing to pay C$1.13 billion, about $834 million in U.S. dollars, to buy the precious metals portfolio from U.S. private equity firm Orion Mine Finance Group. As is customary, the acquisition was subject to shareholder approval, which Osisko received this morning with a resounding “yes!”
At a special meeting of shareholders in Montreal, 99.6% of the shareholders representing 76.8% of the outstanding stock voted in favor of the acquisition. To wit, Osisko expects to close the transition later today.
The portfolio coming under the Osisko umbrella consists of 74 royalties, streams and precious metal offtakes. The additions mean that Osisko’s portfolio will now include a total of 131 royalties and streams, including 16 revenue-generating assets.
Osisko’s flagship asset remains the 5% net smelter return royalty it collects from Canada’s largest producing gold mine, Canadian Malartic. Located about 200 kilometres west of Thunder Bay, Ontario, Canadian Malartic is a long-life gold mine which only went into commercial production in in 2011.
Created about three years ago subsequent to Agnico Eagle Mines (NYSE: AEM)(TSX: AEM) and Yamana Gold (TSX: YRI)(NYSE: AUY) $3.9 billion acquisition of Osisko Mining Corp. (TSX: OSK), Osisko Gold Royalties also has sizeable interests in several miners too, including a 15.3% stake in Osisko Mining, 13.2% in Falco Resources (TSX-V: FPC) and 33.4% of Barkerville Gold Mines (TSX-V: BGM).
Royalty companies like Osisko don’t aim to own properties, they invest in companies and seek agreements to share revenue and profits from mines operated by other companies.
Through the Orion purchase, Osisko bolsters its Canadian assets, including a 9.6% diamond stream on the Renard mine in Quebec. Reaching commercial production last year, Renard is expected to produce 1.5 – 2.0 million carats of diamonds annually. Osisko also gains a 4% gold and silver stream on the Brucejack mine located in northern British Columbia. 28 days ago, Pretium Resources (TSX: PVG)(NYSE: PVG) declared commercial production at Brucejack.
Osisko also bought itself a 100% silver stream on the Mantos Blancos copper mine in Chile.
Osisko is paying for the new assets via C$675 million in cash and C$450 million in stock. The company said today it will issue a total of 50.18 million shares as part of the consideration for the purchase, including about 19.3 million related to a private placement with respect to the cash component.
Toronto-listed shares of OR are trading ahead 2.6% in Monday morning action, rising 41 Canadian cents to C$16.16.
