Victoria Gold arranges $500 million financing for Yukon project

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Victoria Gold Corp. [VIT-TSXV] on Thursday March 8 announced a $500 million financing package that will enable the company to continue construction at its flagship Eagle gold project in the Canadian Yukon Territory.

Victoria Gold’s Eagle Gold Project camp in the Yukon Territory. Source: Victoria Gold Corp.

Victoria said it has signed agreements with Orion Mine Finance, Osisko Gold Royalties Ltd. [OR-TSX, NYSE], and Caterpillar Financial Services Ltd. in relation to the financing package.

Under the agreement, Osisko Gold Royalties has 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.

When in production, the mine is expected to produce approximately 200,000 ounces of gold annually at an operating cost of approximately US $550/oz. The project is permitted for construction and operations.

Victoria Gold said it has executed a term sheet with respect to the sale of the royalty to Osisko, which has agreed purchase 100 million common shares of Victoria on a private placement basis at 50 cents a share for proceeds of $50 million.

Other key highlights of the financing package include:

  • Two credit facilities totalling US$175 million (approximately $219 million)
  • An equipment financing facility for up to US$50 million ($63 million)
  • A private placement of Victoria common shares to two separate subscribers for a total of $125 million (Canadian)

Victoria Gold shares rose 12% to $0.045 on Thursday to 42 cents. Osisko was down 0.16% or $0.02 to $12.52.

Osisko emerged as a world-class gold-focused royalty and streaming company in July 2017 after the company completed the acquisition of a high-quality precious metals portfolio of assets from Orion Mine Finance Group.

The portfolio consists of 74 royalties, streams and precious metal offtakes for a total consideration of $1.125 billion.

Following the acquisition, Osisko held 131 royalties and precious metal offtakes, including its cornerstone 5% net smelter return royalty on the Malartic gold mine in Quebec, which ranks as Canada’s largest producing gold mine, and a 2% to 3.5% net smelter royalty on the Éléonore gold mine, also in Quebec.

In addition, the company acquired a 9.6% diamond stream on the Renard diamond mine in Quebec and a 4% gold and silver stream on the Brucejack gold and silver mine in northwestern British Columbia, all of which are new, high-quality mines in Canada. Osisko also holds a 100% silver stream on the Mantos Blancos copper mine in Chile.

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