Osisko Gold acquiring US$90 million silver stream

Osisko Gold Royalties Ltd. (OR-TSX, OR-NYSE) said Thursday its Osisko Bermuda Ltd unit has entered into an agreement to acquire a cash-flowing silver stream on the high-grade CSA mine in New South Wales, Australia.

Osisko said it has struck a binding deal with Metals Acquisition Corp. [MTAL-NYSE] (MAC) with respect to a US$90 million silver stream to facilitate MAC’s purchase of the CSA mine.

Under a separate purchase deal with Swedish metals giant Glencore AG, MAC is buying CSE for US$1.1 billion, plus a 1.5% copper net smelter royalty. MAC said the acquisition would be consummated via the purchase of the issued share capital of Cobar Management Pty Ltd., a unit of Glencore, which owns CSA.

In a press release, MAC said CSA is a producing, high-grade, long life underground copper mine, which has been in operation since 1967. In 2021, CSE produced 41,000 tonnes of copper and 459,000 ounces of silver at a copper cash cost of US$1.72 per pound.

CSA has a current estimated mine life of over 15 years. Subject to exploration success, MAC said it has identified opportunities to extend the estimated mine life.

“We are excited to partner with MAC on the acquisition of the CSE mine,” said Osisko President and CEO Sandeep Singh. “The stream will provide long-life precious metals cash flow in a top tier jurisdiction at an attractive return.

Under the deal, Osisko is entitled to receive 100% of the payable silver produced from CSA for the life of he mine. Osisko will make ongoing payments for refined silver delivered equal to 4.0% of the spot price at the time of delivery.

Osisko has given MAC the option to draw up an additional US$100 million in upfront proceeds through the sale of a copper stream, subject to the parties finalizing definitive terms and conditions.

The CSA mine consists of several mining and exploration leases covering an area of over 350 square kilometres in a proven poly-metallic base metals province. The mine was first discovered in the 1870s.

Osisko Gold Royalties is an intermediate precious metal royalty company with a focus on the Americas. It holds a portfolio of over 160 royalties, streams and precious metal offtakes. Its portfolio is anchored by a 5% NSR royalty on the Canadian Malartic Mine in Quebec, which ranks as the largest gold mine in Canada. Osisko also owns the Cariboo gold project in Canada as well as a portfolio of publicly held resource companies, including a 15.9% interest in Osisko Mining Inc. [OSK-TSX], a 17.9% interest in Osisko Metals Inc. [OM-TSXV, OMZNF-OTC] and an 18.3% interest in Falco Resources Ltd. [FPC-TSXV].

Osisko Gold shares advanced on the news, rising 2.2% or 40 cents to $18.12 on volume of 399,140. The shares are currently trading in a 52-week range of $18.59 and $13.54.