Gold Fields to acquire Osisko Mining in $2.16 billion deal
Gold Fields Ltd. [GFI-NYSE, GFI-JSE] has signed a definitive deal to acquire Osisko Mining Inc. [OSK-TSX] in a $2.16 billion transaction that hands full ownership of the Windfall gold project in Eeyou Istchee James Bay, Quebec to the South African company.
Osisko Mining shares soared on the news, rising 63% or $1.85 to $4.79 in heavy trading volume of 12.5 million. Osisko shares had previously traded in a 52-week range of $3.48 and $2.36.
“Given that Gold Fields already owns half of Osisko’s flagship Windfall project, it seems unlikely that another bid emerges for Osisko,’’ Scotiabank wrote in an investment report. It also noted that gold is not on the Canadian government’s critical minerals list. Scotiabank also noted that the deal eliminates Goldfield’s need to pay $300 million in deferred cash payments and $75 million on exploration as required under the terms of a 2023 agreement.
The $2.16 billion transaction amounts to a 55% premium to the 20-day volume weighted average price and a 66.7& premium to the price of Osisko Mining shares on August 5, 2024. Subject to the approval by at least two thirds of the votes cast by Osisko Mining shareholders, the transaction is expected to close in the fourth quarter of 2024.
Goldfields is a globally diversified gold miner with nine operating mines in Australia, South Africa, Ghana, Chile and Peru, plus one project in Canada.
Windfall is among the largest gold deposits in Canada, and a top ten gold deposit globally by head grade.
Based on Osisko’s December, 2022 feasbility study, Windfall is expected to produce approximately 300,000 ounces of gold annually at an all-in-sustaining cost of US$758 per ounce. This positions Windfall to become one of the lowest cost mines in Gold Fields’ portfolio, with a current projected mine life of 10 years.
Gold Fields said development of Windfall is well advanced. Before the May, 2023, Windfall joint venture transaction, Osisko had invested more than $800 million on the project. Since then, Gold Fields and Osisko Mining have each spent a further $158 million, bringing the total investment to date to more than $1.0 billion.
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.
The mineral resources used in the mine plan are contained in three different zones over a strike length of 2,300 metres and span from surface to a depth of approximately 1,100 metres.
The process plant building also includes mine and mill offices, a dry, warehouses and first aid office.
Mineralized material will be extracted using a fleet of 14 and 18-tonne load-haul dumps and 54 tonne haul trucks using a ramp to surface.