Osisko and Virginia Mines announce merger plan

Virginia Mines Inc. and Osisko Gold Royalties Ltd. have announced their plans to merge, thus creating a royalty company that can profit from revenue from two Quebec gold mines – Éléonore and Canadian Malarctic – plus high-potential land holdings.

In the agreed deal, shareholders of Virginia Mines will receive approximately $14.19 per Osisko share.

The deal values Virginia mines at c. $479 million, which is 41% higher than its closing stock price on Friday. The Solidarity Fund and Caisse, two of the province’s leading institutional investors, are supporting the deal.

The new combined entity will be called Osisko Gold Royalties and will have its headquarters in Montreal. It will have a market capitalization of about C$1.3 billion (US$1.15 billion).

The Boards of Directors of both companies have unanimously recommended the deal. The transaction is also supported so far by 30% of Virginia Mines equity holders and 25% of Osisko’s.

On the event of the deal not going through, each company has agreed to pay a $26 million break fee.

Mr. Roosen says the merger will benefit shareholders from both companies.

Chairman and CEO of Osisko, Sean Roosen, stated:

“The business combination of Osisko and Virginia creates a leading intermediate royalty company with the two most valuable royalty assets in the gold sector, both of which are located in mining-friendly Québec. Shareholders of both companies will benefit from increased diversification, superior trading liquidity, a strong balance sheet and a heightened ability to compete for future growth opportunities in the royalty business. Our teams complement each other and we look forward to integrating their respective skillsets to fuel the future growth of our company.”

Andre Gaumond, President and CEO of Virginia, said:

“We are excited about combining our exploration and value creation expertise in Northern Québec with the development and financial skills of Osisko. Combining the two best performing Québec mining groups will create a strong Québec-based “mining house” that is particularly important at a time when the Québec government is promoting the development of the north through the Plan Nord initiatives.”