THOMPSON CREEK’s $1.5bn Mount Milligan copper-gold mine in British Columbia, which hit commercial production in February last year. Photo: Thompson Creek

 
 

Royal Gold Expected to Bid for Osisko

Issue 111, January 2015

Royal Gold is the most likely bidder for Osisko Gold Royalties, following its C$1.3bn ($1.2bn) merger with Virginia Mines, analysts and insiders tell Global Mining Observer. Royal Gold has unsuccessfully chased blocks of Virginia’s stock within the last year, according to insiders. 

Shareholders voted overwhelmingly in favour of Osisko’s merger with Virginia this week, creating a Quebec-based powerhouse with royalties over both Malartic and Goldcorp’s Eleonore, two of Canada’s largest gold mines.

Both companies ranked individually as bit-part royalty players, but their combination threatens to disrupt the royalty and streaming sector by creating a sizeable new competitor, with C$270m ($227m) in cash, rising royalty revenue, access to ample lending, deal sharing agreements with Quebec’s two largest pension funds and an ambitious chief executive, Osisko’s Sean Roosen.

“We may be the little brother right now,” Roosen has told The Northern Miner, appearing to incite a takeover battle, “but we’re going to be in every drag race to acquire outside royalties and streams. We’re looking to punch above our weight.”

Sweating Bullets

A bid for the combined group will flush out which streaming company is “sweating bullets” over its own portfolio, one analyst says.

Royal Gold is heavily reliant on a 52.5 per cent gold stream over Thompson Creek’s Mount Milligan copper-gold mine in British Columbia for its next spurt of growth, but Thompson’s exposure to molybdenum means an uptick in gold and downturn in copper and moly prices could put pressure on Royal Gold to renegotiate terms, helping to service Thompson’s hefty $977m debt-load.

Copper prices have dropped 8 per cent in the last week, touching a 5-year low, whilst molybdenum has fallen heavily in the last 6 months, idling Thompson’s Endako moly mine.

In October, Royal Gold also agreed to pay up to $175m for a gold stream...

Continue ➤

“We’re going to be in every drag race...”

RELATED NEWS

Osisko Gold's
$1.3bn Merger with Virginia Mines

"I think history will demonstrate that he bought it before the lid of the can tore off…"

............................................

Sandstorm Gold
in Race for AuRico Metals

Young-Davidson royalty clause acts as "poison pill", say sources pursuing AuRico

............................................

............................................

A Gift to Mining Finance: Pierre Lassonde

"Get naked on the freeway and opportunity will come. Be seen and be in the way of opportunity."