Osisko's logo at its head office in Montreal. Photo: Osisko Gold Royalties

Osisko's logo at its head office in Montreal.
Photo: Osisko Gold Royalties

Osisko's Inexplicable Overhead

Issue 130, June 2015

Continued from Issue 130 ➤

...shares in Oban Mining, privately buying nearly 3 per cent of the company in April, only 2 months before its five-way merger was announced.

Parking Cash

Roosen's arbitrage, raising capital through a royalty company to sink cash into mine construction, will remain effective for as long as Osisko can continue to distract the market with headline-grabbing deals, the latest, a 10 per cent stake in Labrador Iron Ore Royalty.

Analysts accept the company's line that it is simply parking cash in a high-yielding asset, saying Osisko would destroy its gold multiple by branching too far into iron ore.

“They have a ridiculous amount of capital. Iron ore's been beaten up and it's a bit of a side-story for them. You don't want unproductive cash, or investors are going to get mad if you're just sitting there paying yourself a salary.”

But sources involved say Osisko is pre-empting a bigger shakeup at Labrador, allowing Roosen to topple its board, or flip a capital gain. “If anyone knows what's going on in Quebec and Labrador, with respect to construction, the Quebec government, infrastructure and spending, Osisko has a better read on this than almost anyone.”

Bet Against

“Does Sean have the same mentality and discipline as say Virginia?” one investor says. “I don't know, but the man really understands the business he's in and he's certainly not a guy to bet against.”

Osisko last traded at C$17.70, up 23 per cent since listing last year. Shares in Oban Mining and NioGold last traded at C$0.11 and C$0.38.

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