JOHANNESBURG (miningweekly.com) – Precious metals streaming company Osisko Gold Royalties has signed a term sheet with Victoria Gold to acquire a 5% net smelter return (NSR) royalty on the Dublin Gulch property, which hosts the Eagle Gold project, in Yukon, Canada, for C$98-million.
Osisko will receive a 5% NSR royalty on all metals and minerals produced from the property, which includes the Eagle and Olive deposits, until an aggregate of 97 500 oz of refined gold have been delivered to Osisko. Thereafter, Osisko will receive a 3% NSR royalty.
The Eagle Gold project is a shovel ready gold project with 2.7-million ounces of proven and probable gold reserves.
Once in production, it is expected to produce about 200 000 oz/y of gold at an operating cost of about $550/oz. The project has already been permitted for construction and operations.
Osisko reports that the acquisition of the royalty provides it with near-term cash flow from a “premier jurisdiction” through the addition of an average 10 000 oz/y of gold over Eagle Gold’s projected ten-year mine life, as well as potential growth through further exploration.
As part of the term sheet, Osisko has also agreed to buy 100-million common shares of Victoria at a price of C$0.50 per common share on a private placement basis.
The proceeds of the private placement will be used primarily for advancing construction of the Eagle Gold project, and for working capital purposes.
Following the private placement, Osisko expects to have ownership over about 121-million common shares of Victoria, representing about 15.7% of Victoria’s issued and outstanding shares.
Osisko chairperson and CEO Sean Roosen commented that the company was "very pleased” to partner with Victoria to develop the gold mine and generate benefits for all project stakeholders.
“The addition of the Eagle Gold royalty strengthens our Canadian asset base and adds near-term Canadian gold to Osisko's growth profile from a fully permitted, fully financed and shovel-ready project located in Yukon . . . with the gold price currently at over C$1 700/oz this is a great time to be building a gold project in Canada.”