Osisko Gold Royalties: Inside Roosen's Deal Room

Issue 116, February 2015

Osisko’s Sean Roosen means business. Listed in June last year, Osisko Gold Royalties closed a C$1.3bn merger with Virginia Mines this week and a C$200m bought-deal on Wednesday, lifting the company’s cash position to C$470m ($378m).

Roosen, Osisko’s chief executive, timed the bought-deal to send a clear signal to the industry, according to bankers working with the company.

“He wanted the market to understand that he’s out there looking for deals,” one investment banker putting deals to Roosen says. “He’s trying to put out his calling card, to say hey, you got a project that’s interesting? Show it to me, because I might be there for you earlier and with more value than the other guys.”

Roosen is expected to strike deals on earlier stage deposits than industry leader Franco-Nevada, expanding the royalty model into a source of capital for exploration, rather than mine-building and acquisitions, with less certain returns per property, but more potential upside.

“There’s so much competition downstream,” one Toronto-based banker says. “I think Franco will outbid you every time if it makes sense.”

Roosen is thought to be taking a softer approach to negotiations than Franco’s David Harquail. “David’s the first one to say to the CEO across the table, ‘I’m not going to give you what you want, because we just don’t see the value that early, so let’s structure something but my gut is, Mr. CEO, that you’re just not going to go for it.’”

“Sean’s taking a slightly different approach, saying, ‘Okay, I want to see that dealflow. Franco’s seeing it, so I want to see it too.’”

Osisko’s bought-deal also capitalises on takeover expectations in Osisko’s stock, with Royal Gold seen as a likely bidder, according to insiders to Osisko’s merger with Virginia Mines. “We like to be a top takeover target,” Roosen has said. “If you go to bed one day and you’re not a takeover target, you should be very concerned.”

Infographic: How Roosen Has Raised C$715m in a Gold Bear Market

“Franco will outbid you every time if it makes sense.”


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