Osisko sells Victoria Gold shares to Orion

The open pit at the Eagle Gold Project in central Yukon. Source: Victoria Gold Corp.

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Victoria Gold Corp. [VIT-TSXV] shares were active Tuesday June 25 after the company said two of its largest shareholders have agreed to a transaction that will see a fund controlled by Orion Mine Finance Inc. acquiring all of Osisko Gold Royalties Ltd.’s [OR-TSX, NYSE] shares in Victoria Gold.

Under the agreement, Orion Co-VI Ltd. will acquire 154.5 million common shares of Victoria from Osisko for 46 cents a share. Victoria Gold said Orion is paying a 15% premium for the shares, which it said is the maximum allowable premium for a transaction of this type.

As a result, Orion will wind up with direct or indirect control of 318.1 million shares of Victoria Gold, an amount that represents a 37% interest in the company. Orion also owns warrants to purchase an additional 25 million Victoria shares at 62.5 cents a share. The warrants expire on April 13, 2023.

On Tuesday, Victoria Gold shares eased 2.5% or $0.01 to 39 cents on volume of 7.48 million, making Victoria the most actively traded stock on the TSX Venture Exchange. The shares are currently trading in a 52-week range of 30 cents and 55 cents.

Victoria Gold is working to complete construction at its Eagle gold mine project in the Yukon. The Eagle Mine is part of the larger Dublin Gulch Project and is expected to rank as the largest hard rock gold mine in the Yukon’s history.

Located in central Yukon, the Eagle Gold Project is 375 km north of Whitehorse and 85 km north of Mayo. The mine is expected to produce 200,000 ounces of gold annually at an operating cost of approximately US$550/oz using heap leach processing methods. Full construction commenced on March 15, 2018, with completion and first gold pour scheduled for September, one month ahead of previous estimate.

A revised construction capital estimate was finalized at $442 million, the company said in a May 24, 2018 update. However, the construction capital has since risen by approximately 10% to $487 million due to additional earthworks, following unexpected geotechnical conditions.

Construction is over 90% complete with more than 1.25 million hours worked without a loss time incident, the company said recently

“Victoria was pleased to play a small part in assisting Orion and Osisko as they re-balance their equity portfolios to facilitate Orion’s renewed equity commitment to the company’s strategic direction with respect to the Eagle Gold Mine,” said Victoria Gold President and CEO John McConnell.

He said Osisko CEO Sean Roosen will remain on the board of Victoria Gold. “Osisko remains a significant financial partner to Victoria Gold as holder of a 5% NSR royalty on the Eagle Gold Mine,” McConnell said.

The company is currently targeting a first gold pour early in the fourth quarter of 2019.

Back in March 2018, Victoria Gold announced a $500 million financing package that the company said would enable it to continue with construction at the Eagle Gold Project.

Victoria said at the time it had signed agreements with Orion Mine Finance, Osisko Gold Royalties, and Caterpillar Financial Services Ltd. in relation to the financing package.

Under the agreement, Osisko Gold Royalties signed a term sheet with Victoria Gold to acquire a 5% net smelter return royalty for $98 million on the Dublin Gulch property.

Dublin Gulch hosts the Eagle Gold Project, a shovel-ready gold project which hosts 2.7 million ounces of proven and probable gold reserves contained in 123 million tonnes of ore with a grade of 0.67 g/t gold as outlined in a NI 43-101 compliant feasibility study.


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