The direction of the new Osisko (Tor., OR) wasted no time to conclude a major transaction. Less than six months after its inception, the company has a great shot in taking control of another Quebec company specializing in gold, Virginia Mines (Tor., QAG, 10.07).
The union of the two companies will create a gold royalty company through ” by two world-class leaders for a lifespan of royalties, located in Quebec’s prolific mining districts,” argues Officer of Osisko in the statement.
Under the terms of the agreement, shareholders will receive $14.19 in Virginia for each title, which represents a premium of 41% over the closing price of the share of Virginia on November 14. The premium is 27% on the average price of the last 30 meetings.
The new company will be known as the main actor of the union, Redevances Aurifères Osisko, and will have an estimated market value of $1.3 billion.
Once the transaction is completed, Osisko shareholders will own 61% of the combined company, while those in Virginia possess 39%.
Support of the CDPQ and the Fund
The Caisse de dépôt et placement du Québec (CDPQ) and the Fund agreed to participate in the creation of new small Quebec gold giant. The Fund has extended to $50 million and the Fund to $20 million in connection with private placements.
“We are excited to combine our expertise in exploration and value creation in the Nord-du-Québec with expertise in the development and financing of Osisko. The combination of the two most powerful Québec mining groups is of great importance and will help create a strong mining company based in Quebec, at a time when the Quebec government is promoting the development of the north via the initiatives of the Plan Nord” said the famous leader of Virginia, André Gaumond, in his statement.
Gaumond, founder of Virginia, will become Senior Vice President of Development of Nord-du-Québec and exploration of the new entity. He will be assisted by Paul Archer. Together, they lead the Quebec exploration team and sit on the board of Osisko.
The agreement must be approved by shareholders of both companies. They will decide in the context of extraordinary meetings scheduled for January 2015.