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Yamana (T.YRI) rides to the rescue as Osisko (T.OSK) moves to thwart Goldcorp (T.G)

Canadian Press, The Canadian Press
1 Comment| April 2, 2014


MONTREAL - Osisko Mining Corp. (TSX: T.OSKStock Forumannounced a deal Wednesday that will see Yamana Gold Inc. (TSX: T.YRI, Stock Forumtake a 50 per cent stake in its mining and exploration assets.

The stock-and-cash deal values Montreal-based Osisko at about $3.4 billion.

The gold miner has been fighting a hostile takeover attempt by 
Goldcorp Inc. (TSX: T.GStock Forum), saying that offer was too low considering the potential of its Canadian Malartic mine.

Under the deal Yamana will acquire a 50% interest in Osisko’s mining and exploration assets for $441.5 million in cash and 95.7 million common shares of Yamana, valuing the agreement at $929.6 million, Yamana said in a press release.

Osisko shares jumped 9% to $7.50 on Wednesday, leaving a market cap of $3.3 billion, based on 439.6 million shares outstanding. The 52-week range is $7.96 and $2.98.

Osisko chief executive Sean Roosen said the Yamana deal gives shareholders the ability to benefit from growth at Canadian Malartic as well as its other projects in development.

"We have worked carefully and diligently over the past two months to bring this deal to shareholders,'' Roosen said in a statement.

"Osisko will continue to follow its ideals and principles, with our primary objective being to maximize shareholder value as we work to grow the free cash flow from our assets and return benefits to Osisko's owners through the planned implementation in 2014 of a significant dividend program.''

Under the deal, Osisko shareholders will receive $2.194 in cash, 0.2119 of a Yamana share and a new share of Osisko, which will continue to hold a 50 per cent stake in its assets. The company valued the offer at $7.60 per share based on a value of $3.35 for the share in the new Osisko.

Only about half of the cash will come directly from Yamana. The rest will come from the CPP Investment Board and the Caisse de depot et placement du Quebec.

The deal will require approval by a two-thirds majority vote by Osisko shareholders and optionholders to held by May 20.

Goldcorp has offered Osisko shareholders 0.146 of a Goldcorp share plus $2.26 in cash for each Osisko share, a deal worth about $6.21 per share as of Tuesday.

Under an agreement with Osisko, Goldcorp has been granted access to Osisko's confidential information to assess before making its next move. The senior gold miner must now decide if it wants to raise its offer or walk away from the bid, which is open until Friday at 5 p.m. ET.

If Osisko receives a bid topping the Yamana deal, Yamana has the right to match the offer and under certain circumstances receive a $70-million break fee.

Yamana chairman and chief executive Peter Marrone said the deal gives his Toronto-based company entry into a world-class North American jurisdiction with low-cost production.

Yamana's current operations are all in South America and Mexico.

"This approach provides the best available opportunity for Yamana to gain access and exposure to a high quality asset with the least risk balanced with immediate growth and the potential for further value enhancement,'' Marrone said in a statement.

The deal announced Wednesday will see Yamana pay $441.5 million in cash and 95.7 million in shares for the 50 per cent stake in the partnership that will hold the Osisko assets.

Osisko also said the partnership has signed a deal with the CPP Investment Board to increase its existing credit facility by $275 million and sold a gold stream of 37,500 ounces per year from Canadian Malartic to the Caisse de depot et placement du Quebec for $275 million that will be used to pay shareholders.


Tags: GOLD

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FindMyMine
What is the real potential of Canadian Malartic? Check out all the properties belonging to Yamana, Gold Corp. and Osisko here: http://www.findmymine.com/
2.5 stars
April 3, 2014
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