Osisko Gold Royalties Ltd (the “
Corporation” or
“
Osisko”) (OR: TSX & NYSE) is pleased to
announce that its wholly-owned subsidiary, Osisko Bermuda Limited
(“
OBL”), has entered into a revised binding
agreement with Metals Acquisition Corp. (“
MAC”)
(MTAL: NYSE) with respect to the purchase of a 100% silver stream
(the “
Silver Stream”) on the producing CSA mine in
New South Wales, Australia (“
CSA” or the
“
Mine”) to partially fund MAC’s acquisition of the
Mine. MAC has filed a preliminary Form F-4 with the U.S. Securities
and Exchange Commission for their review purposes, which includes,
among other things, details of its proposed acquisition of 100% of
the shares of the owner of CSA from a subsidiary of Glencore plc
(the “
Acquisition Transaction”).
Separately, OBL and MAC have entered into a
backstop financing agreement with respect to an up to US$75 million
copper stream (the “Backstop Copper Stream”). The
Backstop Copper Stream may be utilized, in whole or in part, by MAC
to fund any shortfall in the equity financing required to complete
the Acquisition Transaction, subject to certain conditions
precedent.
Closing of the Acquisition Transaction, and as a
result the Silver Stream and Backstop Copper Stream, is subject to
a number of conditions precedent, including MAC raising the
necessary financing required to complete the Acquisition
Transaction.
Sandeep Singh, President and Chief Executive
Officer of Osisko commented: “CSA is one of the highest grade
copper mines in Australia with a multi-decade operating history of
consistent production and a track-record of reserve and resource
replacement. The Silver Stream and contingent Backstop Copper
Stream meet all of Osisko’s stringent investment criteria, and will
provide near-term and long-life cash flows in a top-tier
jurisdiction. MAC has secured commitments totaling approximately
US$500 million in debt and stream financing from international mine
financiers (including Osisko) to complete the acquisition of CSA
and is working on completing the necessary regulatory steps to
finalize the required equity financing. We are pleased to continue
to support the MAC team, and look forward to the conclusion of the
transaction in 2023.”
SILVER STREAM
- OBL will be entitled to receive
100% of payable silver produced from CSA for the life of the Mine.
The economic effective date of the Silver Stream shall be February
1, 2023.
- Between 2019-2021, annual payable
silver production from the Mine averaged ~431koz, or ~5,700 gold
equivalent ounces annually1.
- Under the terms of the revised
Silver Stream agreement, the upfront cash payment payable by OBL to
MAC has been reduced from US$90 million to US$75 million (the
“Silver Deposit”). In the event the silver price
averages at least US$25.50 per ounce over the ten business days
immediately prior to the closing of the Acquisition Transaction
(the “Closing Date”), the Silver Deposit will be
increased by US$15 million to a total of US$90 million.
- OBL will make ongoing payments for
refined silver delivered equal to 4% of the spot silver price at
the time of delivery.
- MAC will grant OBL a right of first
refusal in respect of the sale, transfer or buy-back of any
royalty, stream or similar interest in the products mined or
otherwise extracted from any property owned or acquired by MAC or
an affiliate between the Closing Date and the later of (i) the 7th
anniversary of the Closing Date and (ii) the date on which OBL or
any affiliate ceases to hold or control more than 5% of the issued
and outstanding common shares of MAC.
- In conjunction with the Silver
Stream, OBL has agreed to subscribe for US$15 million in equity of
MAC as part of its concurrent equity financing (the “Silver
Equity Subscription”).
BACKSTOP COPPER STREAM
- Subject to certain conditions
precedent, the Backstop Copper Stream will be made available by OBL
until the Closing Date. The Backstop Copper Stream may be utilized
by MAC to fund any shortfall in the equity financing required to
complete the Acquisition Transaction.
- Under the terms of the Backstop
Copper Stream agreement, OBL may provide an upfront cash payment of
up to US$75 million (the “Available Copper
Deposit”) that MAC may draw, in whole or in
part.
- OBL will be entitled to receive the
following amounts of payable copper produced from CSA (the
“Copper Stream Quantity”) if the Available Copper
Deposit is drawn in full:
- from the Closing Date until the 1st anniversary of the Closing
Date, nil;
- from the 1st anniversary of the Closing Date to the 5th
anniversary of the Closing Date, 3.0% (the “First Threshold
Stream”);
- from the 5th anniversary of the Closing Date until 33,000
metric tonnes of refined copper have been delivered to OBL, 4.875%
(the “Second Threshold Stream”);
- thereafter, 2.25% for the remaining life of the Mine (the
“Tail Stream”).The Copper Stream Quantity shall be
adjusted pro rata in the event the Available Copper Deposit is not
fully drawn.
- Between 2019-2021, annual copper
production from the Mine averaged ~43,000 metric tonnes. Based on
historical production levels, average gold equivalent ounces
deliverable under the First Threshold Stream and the Second
Threshold Stream would equate to between ~5,700 to 9,300 ounces
annually2.
- OBL will make ongoing payments for
refined copper delivered equal to 4% of the spot copper price at
the time of delivery.
- On the 5th anniversary of the
Closing Date, MAC may elect to exercise one of two buy-down options
with respect to the Backstop Copper Stream (the “Buy-Down
Option”):
- reduce the Second Threshold Stream from 4.875% to 3.25% and the
Tail Stream from 2.25% to 1.50% and reduce the threshold volume
between the Second Threshold Stream and the Tail Stream from 33,000
metric tonnes to 23,900 metric tonnes by paying a one-time cash
payment to OBL of US$40 million; or
- reduce the Second Threshold Stream from 4.875% to 4.0625% and
the Tail Stream from 2.25% to 1.875% and reduce the threshold
volume between the Second Threshold Stream and the Tail Stream from
33,000 metric tonnes to 28,450 metric tonnes by paying a one-time
cash payment to OBL of US$20 million.
- In conjunction with the Backstop
Copper Stream, OBL has agreed to subscribe for up to US$25 million
in equity of MAC as part of its concurrent equity financing (the
“Copper Equity Subscription”). The final amount of
the Copper Equity Subscription shall be proportional to the
percentage of the Available Copper Deposit drawn by
MAC.
CSA MINE OVERVIEW
CSA is a high-grade, long-life, underground
copper-silver mine located approximately 12km west-northwest of the
town of Cobar in New South Wales, Australia. The Mine is comprised
of several mining and exploration leases covering an area of over
350km2 in a proven poly-metallic base metals province. CSA was
first discovered in the 1870’s, and large scale production
commenced in the mid 1960’s. For more information, please refer to
MAC’s public filings on EDGAR at www.sec.gov.
About Metals Acquisition
Corp.
MAC was formed as a blank cheque company for the
purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business
combination with one or more businesses with a focus on the metals
and mining sector. MAC is led by a highly experienced management
team and board of directors with a track record of creating value
for stakeholders.
For more information, please visit MAC’s
corporate website at https://www.metalsacquisition.com/.
Qualified Person
The scientific and technical content of this
news release has been reviewed and approved by Guy Desharnais,
Ph.D., P.Geo., Vice President, Project Evaluation at Osisko Gold
Royalties Ltd, who is a “qualified person” as defined by National
Instrument 43-101 – Standards of Disclosure for Mineral Projects
(“NI 43-101”).
About Osisko Gold Royalties
Ltd
Osisko Gold Royalties is an intermediate
precious metal royalty company which holds a North American focused
portfolio of over 175 royalties, streams and precious metal
offtakes. Osisko Royalties’ portfolio is anchored by its
cornerstone asset, a 5% net smelter return royalty on the Canadian
Malartic mine, which is the largest gold mine in Canada.
Osisko’s head office is located at 1100 Avenue
des Canadiens-de-Montréal, Suite 300, Montréal, Québec,
H3B 2S2.
For further information, please contact
Osisko Gold Royalties Ltd:
Heather TaylorVice President, Investor
RelationsTel: (514) 940-0670 #105Email: htaylor@osiskogr.com
Forward-looking Statements
Certain statements contained in this press
release may be deemed "forward-looking statements" within the
meaning of the United States Private Securities Litigation Reform
Act of 1995 and “forward-looking information” within the meaning of
applicable Canadian securities legislation. Forward-looking
statements are statements other than statements of historical fact,
that address, without limitation, that all conditions precedent
will be met to complete the acquisition of a silver stream on the
CSA Mine, that the performance of the CSA Mine will be improved and
that exploration work around the CSA Mine will increase its mine
life through renewal of mineral resources and that these mineral
resources will be converted into reserves, production estimates of
the CSA Mine (including statements relating to gold equivalent
ounces (“GEOs”)) of Osisko Gold Royalties Ltd (“Osisko”), timely
developments of mining properties over which Osisko has royalties,
streams, offtakes and investments, management’s expectations
regarding Osisko’s growth, results of operations, estimated future
revenues, production costs, carrying value of assets, and
fluctuation of prices of commodities (including outlook on gold,
silver, copper, other commodities) currency markets and general
market conditions. Forward-looking statements are statements that
are not historical facts and are generally, but not always,
identified by the words "expects", "plans", "anticipates",
"believes", "intends", "estimates", "projects", "potential",
"scheduled" and similar expressions or variations (including
negative variations), or that events or conditions "will", "would",
"may", "could" or "should" occur. Forward-looking statements are
subject to known and unknown risks, uncertainties and other
factors, most of which are beyond the control of Osisko, and actual
results may accordingly differ materially from those in
forward-looking statements. Such risk factors include, without
limitation: the ability of MAC to complete the Acquisition
Transaction, that all other conditions precedent to the closing of
the Silver Stream, the Silver Equity Subscription, the Copper
Stream and the Copper Equity Subscription will be met in the timely
manner, fluctuations in the prices of the commodities that drive
royalties, streams, offtakes and investments held by Osisko;
fluctuations in the value of the Canadian dollar relative to the
U.S. dollar; regulatory changes by national and local governments,
including permitting and licensing regimes and taxation policies;
regulations and political or economic developments in any of the
countries where properties in which Osisko holds a royalty, stream
or other interest are located or through which they are held; risks
related to the operators of the properties in which Osisko holds a
royalty, stream or other interests; timely development, permitting,
construction, commencement of production, ramp-up (including
operating and technical challenges) on any of the properties in
which Osisko holds a royalty, stream or other interest; the
unfavorable outcome of any challenges or litigation relating title,
permit or license with respect to any of the properties in which
Osisko holds a royalty, stream or other interests or to Osisko’s
right thereon; differences in rate and timing of production from
resource estimates or production forecasts by operators of
properties in which Osisko holds a royalty, stream or other
interest, including conversion from resources to reserves and
ability to replace resources; business opportunities that become
available to, or are pursued by Osisko; continued availability of
capital and financing and general economic, market or business
conditions; risks and hazards associated with the business of
exploring, development and mining on any of the properties in which
Osisko holds a royalty, stream or other interest, including, but
not limited to unusual or unexpected geological and metallurgical
conditions, slope failures or cave-ins, flooding and other natural
disasters or civil unrest or other uninsured risks, the integration
of acquired assets and the responses of relevant governments to the
COVID-19 outbreak and the effectiveness of such response and the
potential impact of COVID-19 on Osisko’s business, operations and
financial condition. The forward-looking statements contained in
this press release are based upon assumptions management believes
to be reasonable, including, without limitation: that MAC will be
successful in meeting all conditions precedent to its complete the
Acquisition Transaction and all other conditions precedent to the
closing of the Silver Stream, the Silver Equity Subscription, the
Copper Stream and the Copper Equity Subscription in the timely
manner and that MAC will operate the CSA Mine in a manner
consistent with past practice and with public disclosure (including
forecast of production); the accuracy of public statements and
disclosures made by the owners or operators of the CSA Mine; no
adverse development in respect of the CSA Mine; and the absence of
any other factors that could cause actions, events or results to
differ from those anticipated, estimated or intended.
For additional information on risks,
uncertainties and assumptions, please refer to the most recent
Annual Information Form of Osisko filed on SEDAR at www.sedar.com
and EDGAR at www.sec.gov which also provides additional general
assumptions in connection with these statements. Osisko cautions
that the foregoing list of risk and uncertainties is not
exhaustive. Investors and others should carefully consider the
above factors as well as the uncertainties they represent and the
risk they entail. Osisko believes that the assumptions reflected in
those forward-looking statements are reasonable, but no assurance
can be given that these expectations will prove to be accurate as
actual results and prospective events could materially differ from
those anticipated such the forward looking statements and such
forward-looking statements included in this press release are not
guarantee of future performance and should not be unduly relied
upon. In this press release, Osisko relies on information
publicly disclosed by MAC pertaining to its acquisition of the CSA
Mine and the related funding thereof and, therefore, assumes no
liability for such third party public disclosure. These
statements speak only as of the date of this press release. Osisko
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, other than as required by applicable
law.
1 Silver ounces are converted to gold equivalent
ounces by multiplying the average payable silver ounces produced
annually by the LBMA Silver Price on December 22, 2022 and dividing
by the LBMA Gold Price PM as of December 22, 2022.2 Copper tonnes
are converted to gold equivalent ounces by multiplying the average
payable copper tonnes produced annually by the LME Official Copper
Settlement Price on December 22, 2022 and dividing by the LBMA Gold
Price PM as of December 22, 2022. Assumes Buy-Down Option is not
exercised.
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