Gold Fields takes 50% stake in Osisko Mining project
South African giant Gold Fields Ltd. [GFI-NYSE, GFI] has agreed to become an equal joint venture partner with Osisko Mining Inc. [OSK-TSX] in the Windfall gold project in Eeyou Istchee James Bay, Quebec.
Assuming the project is ultimately permitted and approved by the partners consistent with the feasibility study, Gold Fields’s acquisition cost, exploration commitment and contribution to pre-construction and project capital would ultimately represent an investment of $1.2 billion to acquire its interest, bring Windfall to production and further unlock the regional exploration upside,’’ Osisko said in a press release Tuesday.
Osisko Gold Royalties Ltd. (OR-TSX, OR-NYSE), which holds a 13% stake in Osisko Mining, also holds a 2.0% to 3.0% NSR royalty on the Windfall area claims.
Gold Fields is acquiring a 50% partnership interest after Osisko recently released details of a feasibility study for its 100%-owned Windfall project.
The study envisages a nine-year mine life with average production of 306,000 ounces of gold and a average all-in-sustaining cost of US$758 an ounce.
The feasibility study reflects drill results as of June, 2022 and includes a dual ramp-access to the mine, central processing mill on site, and figures from the September, 2022, mineral resource estimate. It shows a measured and indicated resource of 4 million ounces at 11.4 g/t and 2.1 million ounces at 6.0 g/t. Probable minerals reserves are estimate at 3.15 million ounces at an average grade of 8.06 g/t.
Total capital costs are estimated at $1.4 billion including life of mine sustaining capital for the planned underground operation of $652 million., and $788.6 million in pre-production costs.
Under the agreement announced Tuesday, Gold Fields will make in initial cash payment of $300 million on signing, plus an additional $300 million upon issuance of applicable permits authorizing the construction, operation, and mining of the Windfall project
Gold Fields has agreed to sole fund expenditures for regional exploration up to a maximum of $75 million, after which regional exploration programs would be proportionately funded by each of Osisko and Gold Fields. The deal includes additional cash payments of $34 million to reimburse Osisko for items already incurred by Osisko as part of the pre-construction spend.
Gold Fields will share all pre-construction costs (provisional budget estimated at $250 million) and construction costs (feasibility capital expenditures estimated at $789 million) on a 50/50 basis.
Governance arrangements with equal representation in the partnership from Osisko and Gold Fields will be set up to leverage each party’s skill sets. The transaction closed on May 2, 2023.
On May 1, 2023, Osisko Mining shares closed at $3.77 and currently trade in a 52-week range of $4.53 and $2.36.