Osisko doubles precious metals
Montreal-based Osisko Gold Royalties Ltd. said it is more than doubling its precious metals portfolio with the $1.13 billion acquisition of diamond, gold and silver assets from U.S. private equity firm Orion Mine Finance Group.
Osisko has been seeking out such a “transformational” acquisition since the company formed three years ago, said CEO Sean Roosen. Monday’s announcement positions the company as the “leading growth story” among senior precious metals royalty companies, which also include larger peers such as Franco-Nevada Corp. and Wheaton Precious Metals, he said.
“We have kept our powder dry waiting for a transaction like this, we have deployed and we hope that our shareholders will be very happy with the outcome,” Roosen said on a conference call Monday.
The news sent Osisko shares up more than 10 per cent Monday to $15.92 on the TSX.
Osisko will pay $675 million in cash and $450 million in shares to Orion for the portfolio of 74 royalties, streams and precious metals offtakes. The deal, which is expected to close by July 31, will give Orion a 20 per cent stake in Osisko, and Orion founder Oskar Lewnowski will join its board. Orion had reportedly been in talks to sell or publicly-list the portfolio for months.
The deal comes amid an improved outlook for mergers and acquisition opportunities in the mining space as cautious optimism returns to the sector after years of reticence due to depressed commodity prices, even as economic headwinds continue to force companies to tread lightly.
The acquisition leaves Osisko well-positioned for future growth, said Kerry Smith, an analyst at Haywood Securities.
“Osisko has one of the strongest net cash positions in the royalty space, positioning it well to compete with its peers for future acquisitions,” Smith wrote in a note Monday.
The deal will geographically diversify Osisko’s assets, while maintain its primary focus on properties in the Americas, with more than 80 per cent of its portfolio in either Canada or the United States.