Osisko Gold to buy Virginia Mines with PE backing: Reuters

(Reuters) – Osisko Gold Royalties Ltd (OR.TO) said it would buy royalty company Virginia Mines Inc for about $479 million to create a company valued at $1.3 billion.

Osisko said its all-stock offer was worth $14.19 per Virginia Mines share, representing a 41 percent premium to the stock’s close on Friday.

Under the deal, each Virginia share will be exchanged for 0.92 Osisko shares.

The combined company would be owned 61 percent by Osisko, the companies said in a statement on Monday.

Osisko has a 5 percent of net smelter return (NSR) royalty from the 525,000 ounce-per-year Malartic gold mine in Québec.

Virginia has a 2.2-3.5 percent NSR royalty from production at the Eleonore gold mine in Québec.

Output from the Eleonore mine, which started production in October, is expected to increase to 600,000 ounces annually by 2018, the companies said.

The Caisse de dépôt et placement du Québec and the Fonds de solidarité FTQ have agreed to contribute to the deal with private placements totaling $70 million. They are both existing minority investors in Osisko and Virginia.

The Caisse and Fonds will also be granted a combined 15 percent right to participate in all future royalty or stream transactions entered into by Osisko and Virginia.

Osisko Gold Royalties was formed earlier this year through an acquisition by Yamana Gold Inc and Agnico Eagle Mines Ltd.

Osisko’s financial adviser was Maxit Capital LP, while Macquarie Capital Markets Canada Ltd was its strategic adviser. Legal counsels were Bennett Jones LLP and Lavery de Billy LLP.

BMO Capital Markets advised Virginia. Xplora Mines SA also advised the company, with the support of McCarthy Tetrault LLP.

(Reporting By Shubhankar Chakravorty in Bangalore; Editing by Savio D’Souza and Ted Kerr)

(This story has been edited by Kirk Falconer, editor of peHUB Canada)

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