Gold Fields Limited (JSE: GFI) has agreed to acquire Osisko Mining Inc. (TSX: OSK) through an all-cash transaction valued at approximately C$2.16 billion.
This acquisition aligns with Gold Fields‘ strategy to expand its asset portfolio, particularly by adding the Windfall Project, a high-grade gold development asset in Quebec, Canada.
The deal reflects both companies’ focus on enhancing shareholder value and advancing key gold assets in a stable region.
Deal Structure and Valuation
The deal is an all-cash purchase where Gold Fields will acquire all shares of Osisko at C$4.90 per share and values the total transaction at C$2.16 billion. The deal is not dependent on financing.
The deal price reflects a 55% premium to Osisko‘s 20-day volume-weighted average trading price (VWAP) as of August 9, 2024.
Including the resources at the Quevillon project, the deal values Osisko at an Enterprise Value (EV) of approximately US$200 per ounce of gold resources and US$500 per ounce of gold reserves.
The deal is expected to close in the fourth quarter of 2024 and is subject to court, regulatory, and shareholder approvals.
Strategic Rationale
Gold Fields‘ acquisition of Osisko fits within its broader strategy to improve the quality of its asset portfolio by investing in long-life, high-quality assets.
The Windfall Project is one of the highest-grade gold development projects globally and it will become a key asset for Gold Fields, helping to offset the decline in output from older mines in Peru and Ghana.
The Windfall Project also enhances Gold Fields‘ presence in the Americas, complementing existing operations in Chile and Peru.
FIGURE 1: Gold Fields and Osisko Mining Market Data Summary
The Windfall Project
The Windfall Project is located in the Eeyou-Itschee James Bay territory of Quebec and has 286 claims over 12,523 hectares.
A 2022 feasibility study indicates an after-tax net present value (NPV) of C$1.2 billion, an internal rate of return (IRR) of 34%, and a 2-year after-tax payback period.
The project’s mineral resources include 4.05 million ounces of gold at 11.4 g/t in the Measured and Indicated (M&I) categories, with an additional 3.33 million ounces at 8.4 g/t in the Inferred category.
Windfall is projected to produce 306,000 ounces of gold annually over its mine life, with peak production of 374,000 ounces expected in its second year.
About Osisko Mining
Osisko is a junior mining company based in Canada, primarily focused on exploring and developing precious metals projects in Quebec.
The company’s flagship asset is the Windfall Project and it also holds several other exploration properties within the mineral-rich Abitibi greenstone belt.
About Gold Fields
South African-based Gold Fields is a global gold producer with operations across multiple continents.
The company has diversified away from its South African base, focusing on assets in Australia, Ghana, Peru, and Chile.
Key projects include the Salares Norte gold-silver project in Chile and the Cerro Corona copper-gold mine in Peru. Acquiring the Windfall Project will strengthen Gold Fields‘ North American operations and support its long-term production goals.
Final Thoughts
The acquisition of Osisko by Gold Fields highlights the ongoing pursuit of world-class, high-grade gold development projects by large mining companies.
This deal offers Osisko shareholders a substantial premium and immediate liquidity while enabling Gold Fields to gain full control of the Windfall Project.
FIGURE 2: Gold Fields and Osisko Mining 1-Year Stock Charts
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