Osisko Gold Royalties Ltd (the “
Corporation” or
“
Osisko”) (OR: TSX & NYSE) is pleased to
report that the Corporation’s wholly-owned subsidiary, Osisko
Bermuda Limited (“
OBL”), closed the previously
announced silver purchase agreement (the “
Silver
Stream”) and copper purchase agreement (the
“
Copper Stream”, and together with the Silver
Stream, the “
Metals Streams”) with Metals
Acquisition Limited (“
MAC”) (MTAL: NYSE)
concurrently with the closing of the acquisition by MAC of the
producing CSA mine in New South Wales, Australia
(“
CSA” or the “
Mine”) from a
subsidiary of Glencore plc (the “
Acquisition
Transaction”). The closing date of the Metals Stream and
Acquisition Transaction was June 15, 2023 (the “
Closing
Date”).
TRANSACTION HIGHLIGHTS
- Immediately
Enhances Osisko’s Cash Flow
- Starting with an
effective date of February 1, 2023, OBL will purchase refined
silver equal to 100% of payable silver for the life of the Mine.
Between 2023-2025, MAC estimates annual payable silver production
from the Mine to average ~428koz.
- Beginning on the
first anniversary of the Closing Date, OBL will purchase refined
copper equal to between 3.0% and 4.875% of payable copper until
33,000 metric tonnes of refined copper have been delivered, and
2.25% thereafter for the remaining life of the Mine. Between
2023-2025, MAC estimates annual payable copper production from the
Mine to average ~46,000 metric tonnes.
- Exposure to
Premium Copper Asset in a Tier 1 Mining Jurisdiction
- One of the
highest-grade copper mines in Australia with a multi-decade
operating history of consistent production.
- Track-record of
reserve and resource replacement, with greater than 100% of mined
reserves having been replaced since 2011.
- Recent investments
of approximately US$130 million support potential mine life
extensions beyond 15 years.
-
Near-Term Opportunities to Extend Mine Life and Enhance
Value
-
Significant exploration potential from both near-mine and regional
targets along a highly prospective geological trend.
-
Several areas identified to improve efficiencies, optimize
operations and rationalize costs.
-
Significant resource and mine life upside by potentially lowering
the cut-off grade.
-
Experienced Management Team with Track-Record of Creating
Value for Stakeholders
-
Proven Australian mining professionals with extensive mining
experience and a track-record of value creation for
stakeholders.
-
Partnership opportunities on future strategic activity, as well as
a right of first refusal (“ROFR”) in favour of OBL
on royalties or streams on any asset owned or acquired by MAC for a
minimum of seven years following the Closing Date.
METALS STREAMS DETAILS
Silver Stream
- OBL has made an
upfront cash deposit to MAC of US$75 million.
- OBL will purchase
an amount of refined silver equal to 100% of the payable silver
produced from CSA for the life of the Mine and will make ongoing
payments for refined silver delivered equal to 4% of the spot
silver price at the time of delivery. Between 2023-2025, MAC
estimates payable silver production from the Mine to average
~428koz per annum.
Copper Stream
- OBL has made an
upfront cash deposit to MAC of US$75 million.
- OBL will purchase
refined copper equal to the following amounts of payable copper
produced from CSA (the “Copper Stream Quantity”):
- 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, 3.00% (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”); and
- thereafter, 2.25%
for the remaining life of the Mine (the “Tail
Stream”).
Between 2023-2025, MAC estimates payable copper
production from the Mine to average ~46,000 metric tonnes per
annum.
- 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 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.
Other Considerations:
- MAC has granted OBL
a ROFR 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.
- MAC and its
subsidiaries will provide OBL with corporate guarantees and other
security over their assets.
- In conjunction with
the Metals Streams, OBL subscribed for US$40 million in the equity
of 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 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.
Since 2019, Glencore has invested approximately
US$130 million in infrastructure improvements to reduce costs and
position the mine for future growth. Major projects included
ventilation upgrades, shaft refurbishment, mill replacements,
processing circuit optimization and construction of an on-site
paste backfill plant. These infrastructure projects will support
potential mine life extensions beyond 15 years.
CSA is located along a highly prospective
geological trend that is known to host major deposits in the Cobar
region. In recent years, near-mine exploration has led to the
discovery of the QTS Central orebody and the QTS South Upper
orebody and highlights the potential for additional high value
deposits close to existing infrastructure. Exploration success has
led to mineral reserves increasing by approximately 83kt of
contained copper since 2011, despite cumulative production of over
540kt of contained copper since that time. Drilling is ongoing on
multiple mineralized lodes. On the broader CSA land package, there
has been limited historical drilling completed. Recent exploration
focus has been on the implementation of high-resolution geophysical
surveys and structural modelling to create a sustainable
exploration model in support of future drilling campaigns.
CSA is the largest employer in the Cobar region
and enjoys strong relationships with local stakeholders. The Mine
has a number of environmental programs in place to ensure best
practices are followed and has committed to working towards
reducing carbon emissions from operations through utilizing an
electric mining fleet where possible and evaluating green energy
alternatives.
For more information, please refer to MAC’s
public filings on EDGAR at www.sec.gov.
About Metals Acquisition
Limited
MAC is a company focused on operating and
acquiring metals and mining businesses in high quality, stable
jurisdictions that are critical in the electrification and
decarbonization of the global economy.
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 Ltd is an intermediate
precious metal royalty company which holds a North American focused
portfolio of over 180 royalties, streams and precious metal
offtakes. Osisko’s portfolio is anchored by its cornerstone asset,
a 5% net smelter return royalty on the Canadian Malartic mine, one
of Canada’s largest gold mines.
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:
Grant MoentingVice President, Capital Markets Tel: (514) 940-0670
#116Email: gmoenting@osiskogr.com |
Heather TaylorVice President, Sustainability & Communications
Tel: (514) 940-0670 #105Email: htaylor@osiskogr.com |
CAUTIONARY
NOTE REGARDING
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, future events, silver and copper
production estimates of 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, the potential extension of the Mine life, that
opportunities will arise to allow OBL to exercise its ROFR on
royalties or streams on assets acquired by MAC within seven years
of the Closing Date, the potential exercise by MAC of its Buy-Down
Option, production estimates of Osisko’s assets (including increase
of production), 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, ability to continue to pay dividend, requirements
for additional capital, business prospects and opportunities future
demand for and fluctuation of prices of commodities (including
outlook on gold, silver, diamonds, other commodities) currency,
markets and general market conditions. In addition, statements and
estimates (including data in tables) relating to mineral reserves
and resources and gold equivalent ounces are forward-looking
statements, as they involve implied assessment, based on certain
estimates and assumptions, and no assurance can be given that the
estimates will be realized. 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, (i) with respect to properties in which Osisko holds a
royalty, stream or other interest; risks related to: (a) the
operators of the properties, (b) timely development, permitting,
construction, commencement of production, ramp-up (including
operating and technical challenges), (c) differences in rate and
timing of production from resource estimates or production
forecasts by operators, (d) differences in conversion rate from
resources to reserves and ability to replace resources, (e) the
unfavorable outcome of any challenges or litigation relating title,
permit or license, (f) hazards and uncertainty associated with the
business of exploring, development and mining 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, (g) that
exploration can lead to Mine life extension, (h) that operational
optimization will lead to performance improvement of the CSA Mine;
(ii) with respect to other external factors: (a) fluctuations in
the prices of the commodities that drive royalties, streams,
offtakes and investments held by Osisko, (b) fluctuations in the
value of the Canadian dollar relative to the U.S. dollar, (c)
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, (d) continued
availability of capital and financing and general economic, market
or business conditions, and (e) responses of relevant governments
to infectious diseases outbreaks and the effectiveness of such
response and the potential impact of such outbreaks on Osisko’s
business, operations and financial condition, (f) that MAC will
acquire other assets within seven years of the Closing for which
OBL’S ROFR will be triggered; (iii) with respect to internal
factors: (a) business opportunities that may or not become
available to, or are pursued by Osisko, (b) the integration of
acquired assets or (c) the determination of Osisko’s PFIC status.
The forward-looking statements contained in this press release are
based upon assumptions management believes to be reasonable,
including, without limitation: that MAC will minimally operate the
CSA Mine in a manner consistent with past practice and with public
disclosure (including meeting its forecast of production) but will
also be able to improve the performance of the Mine and achieve
exploration success; 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; that MAC will be
able to acquire other assets in the next seven years; and the
absence of any other factors that could cause actions, events or
results to differ from those anticipated, estimated or intended and
the absence of significant change in the Corporation’s ongoing
income and assets relating to determination of its PFIC status; the
absence of any other factors that could cause actions, events or
results to differ from those anticipated, estimated or intended
and, with respect to properties in which Osisko holds a royalty,
stream or other interest, (i) the ongoing operation of the
properties by the owners or operators of such properties in a
manner consistent with past practice and with public disclosure
(including forecast of production), (ii) the accuracy of public
statements and disclosures made by the owners or operators of such
underlying properties (including expectations for the development
of underlying properties that are not yet in production), (iii) no
adverse development in respect of any significant property, (iv)
that statements and estimates relating to mineral reserves and
resources by owners and operators are accurate and (v) the
implementation of an adequate plan for integration of acquired
assets.
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 future operation 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.
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