North American precious metals royalty company Osisko Gold Royalties says it is progressing the spin-out transaction and formation of Osisko Development Corporation with Barolo Ventures.
Osisko earlier this month announced the creation of a new North American gold development company to advance the Cariboo project, in British Columbia, as well as other Canadian and Mexican properties.
Osisko entered into an agreement to transfer certain mining assets, including Cariboo and a portfolio of marketable securities valued at C$116-million to TSX-V-listed Barolo in a reverse takeover transaction.
On October 23, a definitive amalgamation agreement in respect of the reverse takeover was executed among Osisko, Barolo, an Osisko subsidiary and a wholly-owned subsidiary of Barolo.
The amalgamation agreement provides for a three-cornered amalgamation, pursuant to which the Osisko subsidiary will amalgamate with the Barolo subsidiary to form one corporation.
The securityholders of the Osisko subsidiary will receive securities of the amalgamated company in exchange for their securities of the Osisko subsidiary, effecting a merge with Barolo’s subsidiary, resulting in a reverse takeover of Barolo.
The common shares of Barolo, outstanding immediately prior to the effective time of the amalgamation, will be consolidated on the basis of one post-consolidation Barolo share for every 60 pre-consolidation Barolo shares and the name of the amalgamated company will be changed to Osisko Development Corporation.
As part of the deal, the companies entered into an engagement letter with Canaccord Genuity and National Bank Financial, on behalf of a syndicate of underwriters, for a C$100-million bought-deal equity offering.
The underwriters agreed to sell 13.3-million subscription receipts of the Osisko subsidiary at a price of C$7.50 apiece.
The financing is expected to close at the end of October, with the net proceeds to be used for the development of the Cariboo project and the San Antonio gold project, once the reverse takeover closes.
Once the reverse takeover closes, Osisko Development will be launched, with the aim of developing Cariboo into one of the predominant mining camps in Canada.
The Cariboo gold project is advancing through permitting as a 4 750 t/d underground operation with a feasibility study on track for completion in the second half of 2021, full permits expected in 2022, followed by a short construction period given the significant infrastructure already at site.
Osisko Royalties chairperson and CEO Sean Roosen previously described the Cariboo project as an “extremely scarce” asset with current resources totalling 3.2-million ounces in the measured and indicated resource category and 2.7-million ounces in the inferred resource category.
The spin-out transaction will simplify Osisko into a pure-play royalty and streaming company, while maintaining exposure to assets contributed to Osisko Development.
The board and management of Osisko Development will include Roosen as chairperson and CEO, Charles Page as lead director, and John Burzynski, Joanne Ferstman, Michèle McCarthy, Duncan Middlemiss and Éric Tremblay as directors.
Chris Lodder will serve as president and Luc Lessard as COO, while Benoit Brunet will take up the role of CFO and corporate secretary.