Osisko Gold Royalties Ltd. (TSX/NYSE: OR), a portfolio company of Orion Mine Finance, through its wholly-owned subsidiary, Osisko Bermuda Limited, has agreed to acquire a gold stream with reference to the future gold produced from the Back Forty property located in Michigan from Aquila Resources Inc. (TSX: AQA).
Osisko Bermuda will purchase 18.5% of the refined gold from the project until Aquila Resources has delivered 105,000 ounces of gold. Thereafter, the stream percentage will be reduced to 9.25% of the refined gold.
Osisko Bermuda will make a staged upfront cash deposit to Aquila of up to US $55 million for the Gold Stream, and will make ongoing payments equal to 30% of the spot price of gold, to a maximum of US $600 per ounce.
Back Forty is a development-stage project located in Michigan’s Upper Peninsula. The deposit is a zinc and gold-rich volcanogenic massive sulfide (VMS) deposit located along the mineral-rich Penokean Volcanic Belt. Over the past 10 years, Aquila and various joint venture partners have invested more than $75 million exploring and advancing Back Forty. Aquila completed a preliminary economic assessment for the Project in 2014 that demonstrated positive economics, and estimated total payable gold production of 532,000 ounces, including 145,000 ounces in the first year. Aquila is currently completing a feasibility study for the Project, which is expected to be released in early 2018.
Osisko Bermuda currently owns a 75% stream on all silver produced on the. The Silver Stream was acquired in July 2017 through the acquisition of the Orion Mine Finance portfolio.
In addition to the Gold Stream, Osisko Bermuda has agreed to purchase units in the amount of US $10 million as part of a concurrent private placement with Aquila.
On closing of the investment, Osisko will own approximately 14.9% of Aquila’s issued and outstanding common shares. As long as Osisko owns at least 10% of the issued and outstanding common shares of Aquila, it will have the right to participate in future equity or equity-linked placements to maintain its interest in Aquila and have the right to nominate one individual for election or appointment to the board of directors.
Effective immediately and pursuant to the strategic investment, Joseph de la Plante, Vice President Corporate Development for Osisko Gold Royalties has been appointed to Aquila’s board of directors.
GMP Securities L.P. and Medalist Capital Ltd. acted as financial advisors to Aquila Resources and McCarthy Tétrault LLP acted as legal counsel.
Orion Mine Finance owns 19.7% of the outstanding common shares of Osisko Gold Royalties.
Osisko investors also include Caisse de dépôt et placement du Québec, Fonds de solidarité des travailleurs du Québec (F.T.Q.), The Public Sector Pension Investment Board (PSP Investments) and Ressources Québec inc., a wholly-owned subsidiary of Investissement Québec (IQ).