Roosen: Osisko's Drinking
from a “Fire Hydrant”
Issue 149, December 2015
...for their next mine to build.”
But viewed as a gold developer and Osisko's operating costs are fully-funded by its royalty revenue, the company is cashed-up and Roosen has had a free run at Canadian gold assets, in the midst of a mining downturn.
“They're using the model rather than copying it,” one buy-side analyst says. “In terms of going out and warehousing assets at this point in the cycle, they're doing a very impressive job.”
Whilst the royalty market looks frothy, Osisko has been scooping-up shares in battered gold juniors for as little as $2.20 per ounce in the ground, reviving mining camps and building dominant positions in unloved companies.
Its equity injections have meanwhile created a widening circle of cash-rich sister companies (click to open chart), including Falco, NioGold and Oban Mining, which has made five acquisitions since June.
Roosen stresses that Osisko's equity portfolio is only around C$100m, within the group's C$1.3bn market cap. Its two prime assets are its royalty over Malartic and a second sliding royalty over Goldcorp's underground Eleonore mine.
But Roosen says the company will not “lockdown” to a pure royalty model, because buying equities gives it “access to cheap ounces” and “delta” versus other royalty firms. A discovery in a sister company, he argues, would move the dial further. “We have a little spice in our soup.”
Osisko's gush of deals looks set to continue. Roosen told an audience in London last week that he has six teams “on the road” looking to buy new assets. “We're doing as many deals as we can stay awake for,” he said. “It's like drinking from a fire hydrant most days.”
Canadian gold assets, he adds, are trading at a 30 per cent discount, because of weakness in the Canadian dollar. “We have a bottom of the market business model and it's time for us to work as hard as we can.”
But where, amongst Osisko's sister companies, will the next mine emerge? “Obviously it's hard to say which child you love the most,” Roosen says, “but Falco in Quebec. People don't understand the property, so there's quite a bit of value there.”
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