Osisko Gold Royalties Ltd (the “
Corporation” or
“
Osisko”) (OR: TSX & NYSE) is pleased to
announce that its wholly-owned subsidiary, Osisko Bermuda Limited
(“
OBL”), in partnership with Franco-Nevada
(Barbados) Corporation (“
FNB”), a wholly-owned
subsidiary of Franco-Nevada Corporation
(“
Franco-Nevada”) (FNV: TSX & NYSE), has
entered into a definitive Purchase and Sale Agreement (Gold) (the
“
Gold Stream”) with SolGold plc and certain of its
wholly-owned subsidiaries (collectively,
“
SolGold”) (SOLG: LSE & TSX), with reference
to gold production from SolGold’s 100%-owned Cascabel copper-gold
project located in Ecuador (the “
Project” or
“
Cascabel”). Osisko also holds a 0.6% NSR royalty
on Cascabel which it purchased from SolGold in 2022.
Pursuant to the terms of the Gold Stream, OBL
and FNB (collectively, the “Stream Purchasers”)
will make initial deposits totaling US$100 million to SolGold in
three equal tranches to fund the Project’s pre-construction costs
(the “Pre-Construction Deposit”). The first
tranche of the Pre-Construction Deposit will be funded at closing,
with the two subsequent tranches subject to the achievement of key
development milestones.
Thereafter, the Stream Purchasers will make
additional deposits totaling US$650 million to SolGold to fund
construction costs once the Project is fully financed and further
derisked (the “Construction Deposit”, and together
with the Pre-Construction Deposit, the “Deposit”).
OBL will provide 30% of the Deposit in exchange for a 30% interest
in the Gold Stream and FNB will provide 70% of the Deposit in
exchange for a 70% interest in the Gold Stream.
Jason Attew, President & CEO of Osisko
commented: “Cascabel is a world-class copper-gold project that has
the potential to become a multi-generational mine. SolGold’s focus
on sustainable development has generated very strong support from
the Government of Ecuador and the local communities near the
Project. This new stream investment, which complements Osisko’s
existing royalty on Cascabel, further enhances Osisko’s peer
leading growth profile at an attractive rate of return. We are
excited to be partnering with Franco-Nevada to continue to support
SolGold and the development of this exceptional asset.”
INVESTMENT HIGHLIGHTS
- Increasing
Exposure to a Long Life, Tier-1i
Copper-Gold Asset
- Cascabel represents
one of the most significant copper-gold discoveries in recent
history and one of the few long life, high production projects that
is not currently owned by a major mining company.
- The 2024
pre-feasibility study for the Project’s Alpala deposit (the
“2024 PFS”) estimates total production over an
initial 28-year mine life of 2.9 million tonnes of copper, 6.9
million ounces of gold and 18.4 million ounces of silver at an
all-in sustaining cost of US$0.69 per pound of copper, placing it
in the 1st quartile on the global copper mine cost curve.
- The Exploitation
Contract signed with the Government of Ecuador on June 5, 2024
outlines the fiscal and legal frameworks for the development of
Cascabel.
- SolGold has
demonstrated a strong commitment to responsible and sustainable
operating practices, with the aim of establishing one of the lowest
carbon footprint copper mines globally.
- Potential
to Materially Extend Mine Life through Near-Mine
Exploration
- The initial 28-year
mine life outlined in the 2024 PFS only considers the exploitation
of 18% of the Measured and Indicated Mineral Resources from the
Alpala deposit.
- There are numerous
regional exploration targets that have similar geophysical and
geochemical characteristics to Cascabel’s known mineralized
porphyry clusters.
- The
Tandayama-America deposit, located just 3km north of the Alpala
deposit, has the potential to be exploited by open-pit mining
methods and could provide additional mill feed and project
development flexibility.
- Robust Gold
Stream with Phased Investment as Project Advances
- Based on the 2024
PFS, annual deliveries to OBL over the initial 28-year mine life
are expected to average approximately 12,000 gold equivalent ounces
(“GEOs”), including an average of approximately
23,000 GEOs per annum for the first 10 years.
- OBL’s investment is
staged and based on the achievement of key development milestones,
with US$30 million available pre-construction and the balance
available for construction once the Project is further derisked and
fully financed.
- The Gold Stream
includes adjustment mechanisms to preserve the economics to the
Stream Purchasers in the event of changes to the scale of the
Project or timeline of development.
STREAM DETAILS (ATTRIBUTABLE TO
OBL)
-
Pre-Construction Deposit: OBL will make initial
cash deposits totaling US$30 million to SolGold to fund
pre-construction costs of the Project, including:
- US$10 million on
closing; and
- two additional
staged deposits of US$10 million each, subject to satisfaction of
key development milestones and other conditions precedent.
-
Construction Deposit: OBL will provide additional
deposits to SolGold totaling US$195 million to fund construction
costs of the Project, subject to customary conditions including
execution by SolGold of an Investment Protection Agreement with the
Government of Ecuador related to the construction and development
of the Project, receipt of all material permits, a board-approved
construction decision and the balance of the construction financing
being available.
- Streamed
Metal: OBL will purchase refined gold equal to 6% of the
contained gold produced from the Project until 225,000 ounces of
gold have been delivered to it, and 3.6% thereafter for the
remaining life of the mine. Over the initial 28-year mine life,
SolGold estimates contained gold production from the Project to
average approximately 253,000 ounces per annum, including an
average of approximately 392,000 ounces per annum for the first 10
years.
- Production
Payments: OBL will make ongoing cash payments for refined
gold delivered equal to 20% of the spot price of gold at the time
of delivery.
- SolGold
Change of Control: In the event of a change of control of
SolGold:
- the Stream
Purchasers have the option to terminate the Gold Stream and receive
repayment of the Deposit that has been advanced by such date plus a
return (the “Purchaser Termination Option”);
or
- if the Purchaser
Termination Option is not exercised, then:
- prior to the third
anniversary of closing, an acquiror of SolGold shall have the
one-time right to repurchase 50% of the Gold Stream; or
- subsequent to the
third anniversary of closing but prior to the fifth anniversary of
closing, an acquiror of SolGold shall have the one-time right to
repurchase 33% of the Gold Stream, in each case, for a one-time
payment of gold equal to 50% or 33% (as applicable) of the then
advanced amount of the Deposit plus an amount equating to a 15%
internal rate of return on the portion of the Deposit being bought
back, plus a change of control fee.
- Other
Considerations:
- OBL has agreed to
commit funds to support environmental and social initiatives being
advanced by SolGold in relation to the Project.
- The Gold Stream is
referenced to production from the entire Cascabel concession as
well as any production from other properties owned by SolGold that
is processed through the Cascabel plant and associated
facilities.
- SolGold has granted
the Stream Purchasers a right of first refusal in respect of the
sale or transfer of any royalty, stream or similar interest in the
Project.
- SolGold and certain
of its subsidiaries have provided the Stream Purchasers with
corporate guarantees and security over their assets related to the
Project.
CASCABEL PROJECT OVERVIEW
Cascabel hosts one of the largest undeveloped
copper-gold mineral resources in the world. The Project is located
in the Imbabura province of northern Ecuador, approximately 100
kilometers (“km”) north of the capital city of Quito and 50 km
north-northwest of the provincial capital of Ibarra, and is in
proximity to power, water and deep-water port infrastructure.
Three significant deposits have been identified
thus far at Cascabel, namely the Alpala porphyry copper-gold-silver
deposit, the Tandayama-America porphyry copper-gold deposit, and
the Aguinaga porphyry copper-gold deposit. These mineralised
systems are hosted within the Andean Porphyry Belt that extends
from southern Chile right through to Ecuador and Colombia to
Panama. The Andean Porphyry Belt hosts the largest concentrations
of copper in the world, including numerous deposits with active
mining operations.
In March 2024, SolGold released the results of
the 2024 PFS for the Alpala deposit at Cascabel. The 2024 PFS
outlined an initial 28-year mine life based on the exploitation of
only 18% of the Alpala Measured and Indicated Mineral Resource. The
2024 PFS envisages the phased development of an underground mine
exploited using the block caving mining method. The target
extraction rate in phase one is estimated to be approximately 12
million tonnes per annum, with production expanding to 24 million
tonnes per annum in year six of the mine life. The proposed process
flowsheet includes a conventional copper-gold flotation process
consisting of a single rougher stage and a multi-stage cleaning
circuit to produce a clean copper-gold-silver concentrate. Over the
current life of mine, the plant is expected to produce 2.9 million
tonnes of copper, 6.9 million ounces of gold and 18.4 million
ounces of silver.
In June 2024, SolGold announced the signing of
the Exploitation Contract for Cascabel with the Government of
Ecuador. The Exploitation Contract and existing legislation and
regulations establish the legal and financial terms and conditions
required for the Project's development.
SolGold has made considerable efforts to
undertake environmental studies and community engagement to
facilitate the advancement of the Project. Several environmental
baseline studies have been initiated in support of future
permitting associated with mine development and submission of an
Environmental and Social Impact Assessment. Cascabel is expected to
bring substantial long-term benefits to the Ecuadorian economy and
local communities through significant investment, job creation, and
sustainable growth.
For more information, please refer to SolGold’s
continuous disclosure documents filed on SEDAR+ at
www.sedarplus.ca.
About SolGold plc
SolGold is a leading resources company focused
on the discovery, definition and development of world-class copper
and gold deposits. SolGold operates with transparency and in
accordance with international best practices. SolGold is committed
to delivering value to its shareholders while simultaneously
providing economic and social benefits to impacted communities,
fostering a healthy and safe workplace, and minimizing
environmental impact.
For more information, please visit SolGold’s
corporate website at https://solgold.com.au/.
Qualified Person
The scientific and technical content of this
news release has been reviewed and approved by Guy Desharnais,
Ph.D., P.Geo., Vice President, Project Evaluation at Osisko Gold
Royalties Ltd, who is a “qualified person” as defined by National
Instrument 43-101 – Standards of Disclosure for Mineral
Projects.
About Osisko Gold Royalties Ltd
Osisko is an intermediate precious metal royalty
company focused on the Americas that commenced activities in June
2014. Osisko holds a North American focused portfolio of over 185
royalties, streams and precious metal offtakes. Osisko’s portfolio
is anchored by its cornerstone asset, a 3-5% net smelter return
royalty on the Canadian Malartic Complex, which is home to one of
Canada’s largest gold mines.
Osisko Gold Royalties Ltd1100, av. des
Canadiens-de-MontrealSuite 300, P.O. Box 211Montreal, QC, H3B
2S2 |
Osisko Bermuda LimitedCumberland House1 Victoria
Street, 5th FloorHamilton HM11Bermuda |
For further
information, please contact Osisko Gold Royalties
Ltd: |
Grant MoentingVice President, Capital MarketsTel: (514) 940-0670
x116Cell: (365) 275-1954 Email: gmoenting@osiskogr.com |
Heather TaylorVice President, Sustainability and CommunicationsTel:
(514) 940-0670 x105Email: htaylor@osiskogr.com |
Cautionary Statement Regarding Forward-looking
Statements
Certain statements contained in this press
release may be deemed “forward-looking statements” within the
meaning of the United States Private Securities Litigation Reform
Act of 1995 and “forward-looking information” within the meaning of
applicable Canadian securities legislation. Forward-looking
statements are statements other than statements of historical fact,
that address, without limitation, future events, and in particular
that the potential of the Project to become a multi-generational
mine and to generate attractive returns, that the project will
continue to be developed in accordance with the 2024 PFS, that the
hypothesis and conclusion of the 2024 PFS will be confirmed by
additional technical studies, that sustainable mining practices
will be implemented at the Project, that regional exploration will
be successful and that additional deposits will be found or will
provide additional mill feed, that expected deliveries to OBL will
be met, that all conditions will be met to release all tranches of
the Deposit, the occurrence of a change of control of SolGold, that
the right of first refusal granted by SolGold to the Purchaser will
ever be exercised, that the expected benefits of the Project to the
Ecuadorian economy will materialize, production estimates of
Osisko’s assets (including increase of production), timely
developments of mining properties over which Osisko has royalties,
streams, offtakes and investments, management’s expectations
regarding Osisko’s growth, results of operations, estimated future
revenues, production costs, carrying value of assets, ability to
continue to pay dividend, requirements for additional capital,
business prospects and opportunities future demand for and
fluctuation of prices of commodities (including outlook on gold,
silver, diamonds, other commodities) currency markets and general
market conditions. In addition, statements and estimates (including
data in tables) relating to mineral reserves and resources and gold
equivalent ounces are forward-looking statements, as they involve
implied assessment, based on certain estimates and assumptions, and
no assurance can be given that the estimates will be realized.
Forward-looking statements are statements that are not historical
facts and are generally, but not always, identified by the words
“expects”, “plans”, “anticipates”, “believes”, “intends”,
“estimates”, “projects”, “potential”, “scheduled” and similar
expressions or variations (including negative variations), or that
events or conditions “will”, “would”, “may”, “could” or “should”
occur. Forward-looking statements are subject to known and unknown
risks, uncertainties and other factors, most of which are beyond
the control of Osisko, and actual results may accordingly differ
materially from those in forward-looking statements. Such risk
factors include, without limitation, (i) with respect to properties
in which Osisko holds a royalty, stream or other interest; risks
related to: (a) the operators of the properties, (b) timely
development, permitting, construction, commencement of production,
ramp-up (including operating and technical challenges), (c)
differences in rate and timing of production from resource
estimates or production forecasts by operators, (d) differences in
conversion rate from resources to reserves and ability to replace
resources, (e) the unfavorable outcome of any challenges or
litigation relating title, permit or license, (f) hazards and
uncertainty associated with the business of exploring, development
and mining including, but not limited to unusual or unexpected
geological and metallurgical conditions, slope failures or
cave-ins, flooding and other natural disasters or civil unrest or
other uninsured risks; (g) that further technical studies
materially depart from the 2024 PFS; (ii) with respect to external
factors: (a) fluctuations in the prices of the commodities that
drive royalties, streams, offtakes and investments held by Osisko,
(b) fluctuations in the value of the Canadian dollar relative to
the U.S. dollar, (c) regulatory changes by national and local
governments, including permitting and licensing regimes and
taxation policies; regulations and political or economic
developments in any of the countries where properties in which
Osisko holds a royalty, stream or other interest are located or
through which they are held, (d) continued availability of capital
and financing and general economic, market or business conditions,
(e) responses of relevant governments to infectious diseases
outbreaks and the effectiveness of such response and the potential
impact of such outbreaks on Osisko’s business, operations and
financial condition;(iii) with respect to internal factors: (a)
business opportunities that may or not become available to, or are
pursued by Osisko or (b) the integration of acquired assets, (c)
the determination of Osisko’s PFIC status (d) Osisko’s ability to
deliver on its climate strategy. The forward-looking statements
contained in this press release are based upon assumptions
management believes to be reasonable, including, without
limitation: the absence of significant change in the Corporation’s
ongoing income and assets relating to determination of its Passive
Foreign Investment Company (“PFIC”) status; the absence of any
other factors that could cause actions, events or results to differ
from those anticipated, estimated or intended and, with respect to
properties in which Osisko holds a royalty, stream or other
interest, (i) the ongoing development and operation of the
properties by the owners or operators of such properties in a
manner consistent with past practice and with public disclosure
(including forecast of production), (ii) the accuracy of public
statements and disclosures made by the owners or operators of such
underlying properties (including expectations for the development
of underlying properties that are not yet in production), (iii) no
adverse development in respect of any significant property, (iv)
that statements and estimates relating to mineral reserves and
resources by owners and operators are accurate and (v) the
implementation of an adequate plan for integration of acquired
assets. All forward-looking statements contained in this press
release are expressly qualified in their entirety by the cautionary
statements contained or referred to in this section.
For additional information on risks,
uncertainties and assumptions, please refer to the most recent
Annual Information Form of Osisko filed on SEDAR+ at
www.sedarplus.ca and EDGAR at www.sec.gov which also provides
additional general assumptions in connection with these statements.
Osisko cautions that the foregoing list of risk and uncertainties
is not exhaustive. Investors and others should carefully consider
the above factors as well as the uncertainties they represent and
the risk they entail. Osisko believes that the assumptions
reflected in those forward-looking statements are reasonable, but
no assurance can be given that these expectations will prove to be
accurate as actual results and prospective events could materially
differ from those anticipated such the forward-looking statements
and such forward-looking statements included in this press release
are not guarantee of future performance and should not be unduly
relied upon. These statements speak only as of the date of this
press release. In this press release, Osisko relies on information
publicly disclosed by other issuers and third parties pertaining to
its assets and, therefore, assumes no liability for such
third-party public disclosure. Osisko undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, other
than as required by applicable law.
i Please see SolGold’s press release titled Key Financial
Developments dated May 14, 2024 available on SolGold’s SEDAR+
profile at www.sedarplus.ca.
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