Osisko Gold Royalties and Virginia Mines announced an agreement in mid-November to combine the two companies and create a new intermediate royalty company with two important gold royalty assets in Quebec. Osisko holds a 5% net smelter return royalty on the Canadian Malartic mine; Virginia holds a sliding-scale 2.2% to 3.5% net smelter return royalty on the Éléonore mine. Both royalties cover not only the operating mines but also high-potential land packages surrounding the mines.
Osisko Gold Royalties was spun out when Agnico Eagle and Yamana Gold acquired Osisko Mining in June. The royalty company is headed by Chairman of the board and CEO Sean Roosen, who had been president and CEO of Osisko Mining.
Osisko Mining discovered and developed the Canadian Malartic mine, which achieved commercial production in May 2011 and is currently producing approximately 525,000 oz/y of gold.
Virginia Mines discovered the Éléonore property and sold it to Goldcorp in 2006, while retaining the royalty. First gold production from the Éléonore mine was announced October. The mine is scheduled to ramp up to approximately 600,000 oz/y of gold by 2018.
The combined company will retain Virginia Mine’s exploration expertise. Virginia’s founder, André Gaumond, will be appointed senior vice president of northern development and exploration and Virginia’s vice president of exploration and acquisitions, Paul Archer, will be appointed vice president of northern exploration of Osisko Gold Royalties.
Special shareholder meetings for each company to vote on the combination are planned for January 2015, with closing expected soon thereafter. Osisko and Virginia shareholders will own approximately 61% and 39%, respectively, of the combined company, which will continue under the Osisko Gold Royalties name. The company will be headquartered in Montreal, Quebec, and will have an estimated market capitalization of C$1.3 billion.
