CDPQ, Fonds back Osisko’s acquisition of Orion Mine Finance royalty portfolio

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By Ted Liu

Osisko Gold Royalties Ltd (TSX/NYSE: OR) has entered into a definitive agreement with Orion Mine Finance Group to acquire 61 royalties, 7 precious metal offtakes, and 6 streams for total consideration of $1.125 billion, consisting of $675 million in cash, and 30,906,594 million common shares of Osisko to be issued to Orion at a price of $14.56 per share.

As part of the transaction, Caisse de dépôt et placement du Québec (CDPQ) and Fonds de solidarité FTQ (Fonds) will be subscribing for $200 and $75 million in common shares of Osisko, respectively.

Upon closing of the acquisition, Orion, CDPQ and Fonds will hold respectively 19.7%, 12.7%, and 5.5% of Osisko’s issued and outstanding common shares.

Oskar Lewnowski, Orion’s founder and Chief Investment Officer, will join Osisko’s board of directors. CDPQ will also have the right to nominate a director to Osisko’s board of directors.

Osisko’s lead financial advisor is Maxit Capital LP, with BMO Capital Markets, National Bank Financial and PricewaterhouseCoopers acting as financial advisors. Legal counsel are Bennett Jones LLP and Lavery de Billy LLP in Canada, and Paul, Weiss, Rifkind, Wharton & Garrison LLP in the United States.

Orion’s financial advisors are CIBC World Markets Inc. and Haywood Securities Inc. and legal counsel is Fasken Martineau DuMoulin LLP.

Osisko’s credit facility is provided by the National Bank of Canada acting as administrative agent and Bank of Montreal.

The combination of Osisko and Orion’s portfolios will result in Osisko holding a total of 131 royalties and streams, including 16 revenue-generating assets. The company’s cornerstone asset remains the 5% net smelter return (NSR) royalty on the world class and long-life Canadian Malartic gold mine (Canada’s largest producing gold mine) and its 2 to 3.5% NSR royalty on the world class Éléonore gold mine.

Through the acquisition, Osisko gains a 9.6% diamond stream on the Renard diamond mine (operated by Stornoway Diamond Corporation (TSX: SWY) and backed by Investissement Quebec, CDPQ and Fonds), and a 4% gold and silver stream on the Brucejack gold and silver mine, all of which are new high-quality mines in Canada, in addition to a 100% silver stream on the substantial Mantos Blancos copper mine in Chile.

“Since our creation three years ago, we have been working towards a transformational transaction for Osisko. We are delighted to announce our agreement with Orion Mine Finance today, which will position Osisko as the leading growth story among senior precious metal royalty companies. This transaction adds wide diversity to our portfolio which already holds the world class Canadian Malartic and Éléonore mine royalties as anchor assets, but will now include significant new assets including the Renard diamond stream in Québec, Canada, a gold and silver stream on the recently commissioned high-grade Brucejack mine in British Columbia, Canada and a silver stream on the substantial Mantos Blancos mine in Chile. Combining these tremendous assets from Orion Mine Finance together with Osisko’s existing portfolio will set the stage for the Company to earn over 140,000 GEOs annually by 2023, without compromising its focus on gold and precious metals from properties located principally in North America,” said Sean Roosen, Chair and CEO of Osisko.

“As one of the largest investors dedicated to the mining industry, I am proud to say Orion has been able to build a uniquely top-tier, diversified royalty portfolio with a stellar cash flow growth profile. We are confident Osisko’s management team has the expertise to ensure that, when combined, our complementary asset bases ultimately deliver transformational results for shareholders and we are excited to participate in that upside,” added Lewnowski.

“With this additional investment, la Caisse is enabling Osisko, whose well known and experienced team has proven itself on the Canadian market, to expand its asset portfolio and better position itself on global markets,” said Christian Dubé, Executive Vice-President, Québec at Caisse de dépôt et placement du Québec. “This transaction is part of our commitment to remain a key player in the mining sector in Québec, supporting businesses at all stages in order to foster the development of tomorrow’s leading companies.”

Janie Béïque, Senior Vice-President, Natural Resources, Industries, Entertainment and Consumer Goods, of the Fonds, said, “Having first invested in the Osisko team in its early startup phase in 1999 when its market capitalization was C$1 million, the Fonds de solidarité FTQ is proud to reaffirm its commitment to supporting the Company’s growth. Today’s acquisition of high quality assets from Orion will further consolidate Osisko’s position as a Québec based world class royalty company.”

photo credit: Stornoway Diamond