Gold Fields (NYSE:GFI) has entered into a definitive agreement to acquire Osisko Mining (TSX:OSK) to nab control of the Windfall Project in Québec, Canada, in a deal valuing the target at C$2.16 billion ($2.39 billion).
If approved by Osisko shareholders, the transaction will give Gold Fields full control of the Windfall Project, which is jointly equally owned and managed by Gold Fields and Osisko.
Both companies’ boards have approved the deal, with Osisko Mining directors recommending its shareholders vote in favour of the transaction. At least two‐thirds of the votes cast by Osisko shareholders need to approve the deal, as well as a majority of Osisko shareholder votes (excluding certain related parties), at a meeting expected to be held in October 2024.
Gold Fields has agreed to acquire Osisko’s shares at a price of C$4.90 per share in an all-cash transaction. The offer price implies an enterprise value of C$1.48 billion.
The offer price is a premium of 55% to Osisko’s 20-day volume-weighted average trading price on the Toronto Stock Exchange for the period ending 9 August 2024.
Once completed, the deal will consolidate Gold Fields’ 50% partnership stake into full ownership and control of the Windfall Project, and its entire exploration district. It will also eliminate the company’s existing obligations of a C$300 million deferred cash payment and C$75 million exploration obligation, which were part of the May 2023 Windfall JV transaction with Osisko.
The transaction will be implemented by way of a Canadian plan of arrangement. If approved – and once all regulatory and court approvals have been received – it is envisaged that the transaction will be finalised in Q4 2024.
Osisko CEO John Burzynski says the premium transaction represents a strong and near-term outcome for shareholders and is reflective of the truly world class nature of the Windfall Project.
“In the span of nine years, we’ve transformed Windfall into one of the largest and highest-grade gold development projects globally, and this transaction is a testament to the extraordinary entrepreneurial effort of the Osisko Mining team,” Burzynski says.
Gold Fields CEO Mike Fraser adds that over the past two years, beginning with the company’s initial due diligence in 2022 and throughout the joint ownership of the project, “we have developed a strong understanding of Windfall and its potential, and view it as the next long-life cornerstone asset in our portfolio”.
As of 31 March 2024, Gold Fields had a net debt to earnings before interest, taxes, depreciation, and amortisation (EBITDA) of 0.51x, held US$424 million in cash, and about US$1.8 billion in undrawn debt facilities. On 15 May, the company repaid bonds totalling US$500 million.
In addition to cash on hand and the undrawn debt facilities, Gold Fields has also received a commitment from several banks to provide US$500 million via a new bank liquidity facility to fund part of the transaction.
Osisko holds a 50% interest in the high-grade Windfall gold deposit located between Val-d’Or and Chibougamau in Québec, and holds a 50% interest in a large area of claims in the surrounding Urban Barry area and nearby Quévillon area.
The World Gold Council says total gold supply in 2023 increased 3% year-on-year as mine supply and recycling both posted growth – to total 4,898.8 tonnes.
Australian gold production decreased by 4% year-on-year in the March quarter 2024, due to lower grades and disruptions from heavy rainfall, according to the Department of Industry, Science and Resources’ (DISR) latest issue of its Resources and Energy Quarterly: June 2024.
Production is forecast to grow over the outlook period as major new projects and expansions come online. Gold export earnings are expected to reach a record $33 billion in 2023– 24, easing to around $31 billion in 2025–26 as prices gradually decline from record levels in Australian dollar terms.
World gold demand decreased by 5.3% year-on-year to 1,100 tonnes in the March quarter 2024. This fall was largely driven by a 28% decline in investment demand, with central bank demand continuing to be elevated.
Write to Adam Orlando at Mining.com.au
Images: Gold Fields, Osisko
