Osisko snaps up Barkerville Gold Mines

Osisko Gold Royalties Ltd. [OR-TSX, NYSE] said Monday September 23 that it has struck a deal to acquire all the shares of Barkerville Gold Mines Ltd. [BGM-TSXV; BGMZF-OTC] it doesn’t already own by way of a plan of arrangement.

Osisko already owns 32.6% of Barkerville. So the arrangement will be a non-arms length transaction under TSX Venture Exchange regulations.

Under the agreement, each shareholder of Barkerville will receive 0.0357 of a common share of Osisko for each share of Barkerville, implying a consideration of 58 cents per share, based on the closing value of Osisko shares on September, 20, 2019. Osisko said that represents a 44% premium based on both companies’ trailing 20-day volume weighted average price as at September, 20, 2019.

News of the agreement sent Barkerville shares up 11% or $0.05 to 51 cents on heavy volume of 21.7 million. The shares had previously traded in a 52-week range of 30 cents and 48 cents.

Osisko Gold shares eased 9.5% or $1.54 to $14.72 on volume of 1.67 million. Osisko shares are trading in a 52-week range of $9.27 or $17.47.

News of the takeover comes as Barkerville moves ahead with big plans to develop an underground mine and milling operation on the company’s 100%-owned Cariboo gold project in east-central British Columbia.

Back in August, 2019, Barkerville released positive results from an independent Preliminary Economic Assessment (PEA) for the Cariboo Project, which is located on a land package, covering 1,950 km².

The company said the NI 43-101-compliant PEA provides a base case assessment for developing the project as an underground ramp access mine with a gold pre-concentration plant in nearby Wells, B.C., and gold processing in its existing upgraded Quesnel River mill.

The project contains 8.1 million measured and indicated tonnes grading 6.1 g/t gold or 1.6 million oz. gold and 12.7 million inferred tonnes at 5.2 g/t gold for 2.16 million oz. gold.

“The addition of the Cariboo Gold Project to our portfolio adds a potentially world-class asset in Canada in an impacted brownfield site with significant infrastructure in place,” said Osisko Chairman Sean Roosen. “Osisko and Barkerville will take advantage of their combined mine building, exploration, permitting, development and construction expertise to advance the Cariboo gold project,” he said.

Osisko Gold Royalties holds a portfolio of over 135 royalties, streams and precious metal offtakes. Its portfolio is anchored by its 5% NSR royalty on the Canadian Malartic Mine in Quebec, which ranks as the largest gold mine in Canada.

Osisko said it generated $83.2 million in operating cash flow in 2018, and has over $800 million in financial capacity, including a $500 million available revolving credit facility.

Concurrent with the Barkerville plan of arrangement, Osisko has also announced the formation of the North Spirit Discovery Group, which it described as the next step in the evolution of Osisko’s accelerator business that Osisko pioneered over the past five years, with the goal of privatizing and surfacing value in resource development projects.

Through this platform, Osisko said it will leverage its industry-leading technical team and proven track record for creating value through resource discovery, project development and mine operation.

It said North Spirit Discovery aims to become a leading resource development and finance company with the assistance of joint venture partners and/or private equity capital.

Meanwhile, Osisko has agreed to provide Barkerville with a $7 million unsecured bridge loan to allow Barkerville to continue to advance the exploration and development of the Cariboo Gold Project.

The bridge loan will have an interest rate of 10% annually and a term to maturity of six months. Subject to the approval of Osisko and Barkerville, the bridge loan may be increased to $13 million. It is expected that the plan of arrangement will close by November, 2019.

The restored ghost town of Barkerville was the site of a gold rush in 1858.