Gold Fields interim CEO Martin Preece
Photo by: Creamer Media's Donna Slater
Diversified gold producer Gold Fields has partnered with TSX-listed Osisko Mining to develop and mine the Windfall project, in Québec, Canada.
The agreement between the companies, with the joint venture (JV) to be called the Windfall Mining Group, involves Gold Fields acquiring a 50% interest in Windfall through a wholly-owned Canadian subsidiary.
Gold Fields has paid a $220-million, or C$300-million, cash consideration on signing, and will pay another $220-million on the issuance of key permits by the Canadian authorities for the project to be built and operated.
Osisko and Gold Fields will each incur 50% of the interim and construction capital expenditures on the project, and jointly undertake management and operatorship of the project.
Having carried out extensive due diligence, management interaction and site visits for just over a year, Gold Fields believes the Windfall project is on track to become a high-quality, low-cost underground gold mine with a relatively small surface footprint and considerable growth prospects along strike and down plunge, well beyond delineated mineral reserves and the current ten year projected mine life.
Meanwhile, Gold Fields has also acquired a 50% up-front vested interest in Osisko’s Urban Barry and Quévillon district exploration camps, which span 2 400 km2.
These properties will be co-explored and developed by Gold Fields and Osisko. In exchange, Gold Fields will fund the first C$75-million in exploration on these properties over the first seven years of the partnership. Thereafter, exploration spend will be shared equally.
Gold Fields interim CEO Martin Preece says the partnership constitutes a measured strategic entry into a sought-after tier one mining jurisdiction, at an attractive valuation and with significant exploration potential.
He affirms that the cash consideration for the transaction will be funded through existing cash and facilities, with no impact to dividends.
Preece also confirms that the JV will be run as a separate entity from the companies, with three subcommittees and a board comprising three members of each company.
Gold Fields plans on drawing on its more than 20 years of successful brownfield exploration and reserve growth at its Western Australian operations. The company says these gold belts bear a striking similarity to that of the Windfall, Urban Barry and Quévillon prospects.
The company fully intends to propel the three projects into premier, multi-decade mining operations over the next seven years.
Property-wide regional and near-deposit exploration is already in progress, with six drills exploring targets developed by Osisko over the past seven years, including on the Golden Bear, Fox and Shellian prospects within the licence area.
An initial exploration programme developed by Osisko and Gold Fields includes $20-million dedicated to these and other targets in the coming 24 months.
Osisko CEO and president John Burzynski comments that Windfall is an exceptional asset, with its after-tax net present value of C$1.2-billion, internal rate of return of 34% for a two-year payback period and 306 000 oz/y of gold production potential.
Osisko started exploration and development on the project in 2013.
Osisko recently submitted the environmental impact assessment of the Windfall project to the Environmental and Social Impact Review Committee, which is an independent advisory body reporting to the Minister of Environment, Climate Change, Wildlife and Parks in Canada.
The project is on track for first production in 2025 and further expansion of the existing 4.1-million measured and indicated mineral resource.
Construction costs are estimated at C$789-million.