Mining Markets


Quebec gov’t says ‘oui’ to Osisko

Osisko Mining (OSK-T) has jumped another big hurdle in the rapid development of its $1-billion Canadian Malart...

Osisko Mining (OSK-T) has jumped another big hurdle in the rapid development of its $1-billion Canadian Malartic gold project in Malartic, Que, with the provincial government today approving an order in council authorizing the completion of the mine.

Osisko says construction work on the mine and mill will begin shortly, as soon as the formal authorization certificates are issued.

The construction work is slated to take 18 months, with the mine and mill due to be fully operational by the second quarter of 2011. The mine is set to produce 500,000 to 650,000 oz. per year, chewing up 55,000 tonnes of ore per day.

Mine construction will create about 800 direct jobs, while there will be 465 permanent direct jobs during the currently envisaged 10-year mine life.

It’s already been a remarkable summer for Osisko, with the junior entering into a $149.5-million bought-deal financing on Aug. 12 with brokers Thomas Weisel Partners Canada and BMO Capital Markets. Assuming an over-allotment option is exercised, the two will pick up 21.26 million shares at $7 apiece.

A couple of days earlier, potential suitor Goldcorp (G-T, GG-N) announced it had bought in the open market 8,462,500 Osisko shares and 4,271,500 warrants with each warrant exercisable for one Osisko share for $5.45 per share until Nov. 17, 2009.

Goldcorp now beneficially owns or controls 33.8 million Osisko shares (12.9% of the outstanding shares) plus 4.3 million warrants.

And that’s not all: in early July, Osisko struck a deal with the provincially owned Societe generale de financement du Quebec for a $75-million convertible-debenture financing.

The debentures would carry an interest rate of 7.5% and be convertible at $9.18 per share. The twist on the SGF financing is that it requires an additional $225 million in financing – which will be in large part fulfilled with the closing of last week’s $149.5-million bought deal.

Plus, in June, Osisko closed $10.6 million in flow-through financing by placing 1.2 million shares at $8.75 per share.

Osisko’s biggest financing closed in February, with the company raising $403 million. The company issued 88.55 units with a single unit comprised of a share and half a warrant, with a full warrant exercisable into a share at $5.45 until Nov. 17, 2009.

These well-in-the-money warrants will most likely bring another $241 million into the Osisko treasury when exercised in the fall.

At the moment, not counting the hundreds of millions of dollars yet to flow in, Osisko’s treasury stands at $400 million with no debt.

Osisko’s shares responded well to today’s go-ahead from the provincial government, rising 24 cents to $7.28 and re-approaching the all-time high of $7.70 which was struck immediately after the $149.5-million bought deal was announced.

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