Virginia Mines Inc VGMNF

EARLY WARNING REPORT

[20/20/12]

NATIONAL INSTRUMENT 62-103 EARLY WARNING REPORT  
 

1.         The Name and address of the offeror:

 

Osisko Gold Royalties Ltd ("Osisko") 1100 Avenue des Canadiens-de-Montreal Suite 300 Montreal, Québec H3B 2S2

 

2.         The designation and number or principal amount of securities and the offeror's securityholding percentage in the class of securities of which the offeror acquired ownership or control in the transaction or occurrence giving rise to the obligation to file the news release, and whether it was ownership or control that was acquired in those circumstances:

 

On November 24, 2014, Osisko acquired (the "Acquisition") beneficial ownership of 1,000,000 common shares ("Virginia Shares") of Virginia Mines Inc. ("Virginia") at a price of $13.00 per Virginia Share through the facilities of the Toronto Stock Exchange. As a result of the Acquisition, the beneficial shareholdings of Osisko have increased from approximately 7.1% (being 2,387,616 Virginia Shares which Osisko has agreed to acquire pursuant to an agreement dated November 16, 2014 and which acquisition has not yet been completed) to approximately 10.03% of the total issued and outstanding Virginia Shares.

 

3.         The designation and number or principal amount of securities and the offeror's securityholding percentage in the class of securities immediately after the transaction or occurrence giving rise to obligation to file the news release:

 

After giving effect to the Acquisition, Osisko will beneficially own 3,387,616 Virginia Shares, representing approximately 10.03% of the total issued and outstanding Virginia Shares.

 

 
 

4.         The designation and number or principal amount of securities and the percentage of outstanding securities of the class of securities referred to in paragraph 3 over which:

 

(a)       the offeror, either alone or together with any joint actors, has ownership and control:

 

See paragraph 3 above.

 

 
 

(b)       the offeror, either alone or together with any joint actors, has ownership but control is held by other persons or companies other than the offeror or any joint actor:

 

Not applicable.

 

 
 

(c)       the offeror, either alone or together with any joint actors, has exclusive or shared control but does not have ownership:

 

Not applicable.

 

 

5.         The name of the market in which the transaction or occurrence giving rise to the report took place:

 

6.         The value, in Canadian dollars, of any consideration offered per security if the offeror acquired ownership of a security in the transaction or occurrence giving rise to the obligation to file a news release:

 

The Acquisition took place through the facilities of the Toronto Stock Exchange.

 

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The 1,000,000 Virginia Shares were purchased at a price of $13.00 per Virginia Share.

 

7.         The purpose of the offeror and any joint actors in effecting the transaction or occurrence giving rise to the report, including any future intention to acquire ownership of, or control over, additional securities of the reporting issuer:

 

Osisko acquired the 1,000,000 Virginia Shares to support the transaction announced on November 17, 2014 to combine the businesses of Osisko and Virginia, which is structured by way of plan of arrangement, to create a new leading intermediate royalty company with two world-class gold royalty assets in Québec, and intends to hold the 3,387,616 Virginia Shares for such purpose.

 

Osisko may, from time to time, increase or decrease its ownership of Virginia Shares depending on market and other conditions. Pursuant to an agreement ("Voting Agreement") between Osisko and Virginia dated November 16, 2014, Osisko may purchase such number of Virginia Shares as may bring Osisko up to an aggregate maximum ownership of 14.9% of the issued and outstanding Virginia Shares, whether such purchases are completed by Osisko with Virginia shareholders directly, through the facilities of the Toronto Stock Exchange, or on terms acceptable to Virginia, directly with Virginia.

 

8.         The general nature and the material terms of any agreement, other than lending arrangements, with respect to securities of the reporting issuer entered into by the offeror, or any joint actor, and the issuer of the securities or any other entity in connection with the transaction or occurrence giving rise to the report, including agreements with respect to the acquisition, holding, disposition or voting of any of the securities:

 

There is no agreement with respect to the Acquisition.

 

Under the Voting Agreement entered into between Osisko and Virginia in connection with an arrangement agreement (the "Arrangement Agreement") dated November 16, 2014 among Virginia, Osisko and 9081798 Canada Inc., Virginia will permit Osisko to purchase, or Virginia may sell to Osisko, Virginia Shares, which may include Virginia Shares representing more than 9.9%, and up to 14.9%, of the issued and outstanding Virginia Shares ("Additional Shares").

 

The Voting Agreement provides that during the term that Osisko beneficially owns, or directly or indirectly has control or direction over any Additional Shares, Osisko covenants to vote, or cause to be voted, the voting rights attaching to such Additional Shares, in a manner consistent with the recommendation made by the board of directors of Virginia in certain circumstances. Further, if a change of control occurs, at all times thereafter during the specified term that Osisko beneficially owns, or directly or indirectly has control or direction over any Virginia Shares, Osisko covenants to vote, or cause to be voted, the voting rights attached to all such Virginia Shares, in a manner consistent with the recommendations made by the board of directors of Virginia on all matters put before the shareholders of Virginia.

 

In addition, during the specified term that Osisko beneficially owns, or directly or indirectly has control or direction over, any Additional Shares, the Voting Agreement provides Virginia with the right, where Osisko proposes to transfer Virginia Shares in an amount in excess of 2% of the

 

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issued and outstanding Virginia Shares to any one person (or group of persons acting jointly or in concert), to arrange an alternative transaction.

 

Further, in the event of certain financings by Virginia involving the issuance from treasury of Virginia Shares, Virginia shall, where Osisko holds Additional Shares, provide Osisko with the right to subscribe for up to that number of Virginia Shares sufficient for Osisko to maintain the percentage of Virginia Shares that it beneficially owns as of the date of the public announcement of such financing.

 

The Voting Agreement also contains a standstill provision until the earlier of: (a) October 3, 2015; (b) such date, if any, that a party has entered into or publicly disclosed its intent to enter into a definitive agreement with any third party that would reasonably be expected to result in a change of control or ownership of such party or all or substantially all of its assets (excluding for greater certainty the Arrangement Agreement); or (c) such date, if any, upon which any third party has formally commenced a take-over bid of a party and such party's board of directors has announced that it intends to recommend or otherwise support that, neither the other party nor any of its representatives, either directly or indirectly or jointly or in concert with any other person, will (except in respect of the Arrangement and the permitted Osisko purchases), without the prior written consent of such party's board of directors.

 

The term of the Voting Agreement shall begin on November 16, 2014 and terminate on the earlier of the closing of the Arrangement and November 16, 2019.

 

9.         The names of any joint actors in connection with the disclosure required by Appendix E of National Instrument 62-103:

 

Not applicable.

 

10.       In the case of a transaction or occurrence that did not take place on a stock exchange or other market that represents a published market for the securities, including an issuance from treasury, the nature and value of the consideration paid by the offeror:

 

Not applicable.

 

11.       If applicable, a description of any change in any material fact set out in a previous report by the entity under the early warning requirements in respect of the reporting issuer's securities:

 

Not applicable.

 

12.       If applicable, a description of the exemption from securities legislation being relied on by the offeror and the facts supporting that reliance:

 

Not applicable.

 

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Dated this 26^th day of November, 2014.

 

OSISKO GOLD ROYALTIES LTD