TORONTO (miningweekly.com) – When senior gold producer Goldcorp last week said it aimed at lifting its gold output by 50% in two years to about four-million ounces, it certainly did not wait for the other shoe to drop, announcing on Monday a C$2.6-billion bid to buy out Quebec-based gold miner Osisko Mining.

Goldcorp’s TSX-listed stock fell 3.6% to C$24.38 apiece in early Monday-morning trade, while Osisko’s share price jumped 19.54% to C$6.18 a share.

The deal would give Goldcorp control over Osisko's flagship Canadian Malartic mine, which was expected to produce an average of between 500 000 oz and 600 000 oz of gold a year, over a 16-year mine life. It is located in the abundant Abitibi mining district and began commercial production in May 2011.

 Under terms of the unsolicited offer  TSX- and NYSE-listed Goldcorp offered Osisko shareholders 0.146 of a Goldcorp common share and C$2.26 in cash for each Osisko common share tendered. The offer was scheduled to end on February 19.

Based on Goldcorp's TSX closing share price of C$25.29 on Friday, the total consideration offered to Osisko shareholders was C$5.95 a common share, representing a premium of 28% over the 20-day volume-weighted average share price of Osisko from all trading on Canadian exchanges for the period ending on Friday, and a premium of 15% over Osisko's TSX closing share price on the same day.

For Goldcorp, the main attractions of the deal were the large ten-million-ounce gold reserve that, with Goldcorp's financial and technical resources, could support a long mine life and low all-in sustaining costs, and the immediately accretive per-share metrics, including free cash flow, operating cash flow, net asset value, gold production and gold reserves.

Goldcorp said it also valued the deal to provide it with immediate free cash flow as it completed the construction and ramp-up of its key growth projects at Cerro Negro, in Argentina, Éléonore, in James Bay, Canada, and Cochenour, in Ontario, over the next 18 months.

The major said it provided opportunities to leverage its existing investments in Québec and Ontario, with opportunity for corporate and regional synergies.

"This combination offers excellent strategic value as Canadian Malartic and its talented operating team will benefit from Goldcorp's strong financial position, technical expertise and commitments to safety and sustainability. Our clear preference remains to engage with Osisko, as we strongly believe in the compelling strategic and financial merits of this transaction to the mutual benefit of both companies' shareholders," Goldcorp president and CEO Chuck Jeannes said.

Late in the afternoon, Osisko responded to the announcement of the offer by Goldcorp, noting that it had not received a formal offer.

The board said it would consider the announcement as well as any formal offer actually made, but until then Osisko would not comment further or speculate as to any future course of action it might take.