WELL !!
Osisko Mining, Gold Fields enter 50/50 JV at Windfall
2023-05-02 08:30 ET - News Release
Mr. John Burzynski reports
OSISKO MINING AND GOLD FIELDS ANNOUNCE 50/50 JOINT VENTURE ON WINDFALL GOLD PROJECT
Osisko Mining Inc. has concluded a 50/50 joint venture agreement with a subsidiary of Gold Fields Ltd. for the joint ownership and development of Osisko's Windfall gold project, located in the Abitibi greenstone belt, Urban township, Eeyou Istchee James Bay, Quebec.
Transaction highlights:
- Gold Fields initial cash payment to Osisko of C$300 million on signing.
- Gold Fields additional ("Deferred") cash payment to Osisko of C$300 million on issuance of the applicable permits authorizing the construction, operation and mining of the Windfall Project.
- Gold Fields to sole fund expenditures for regional exploration up to a maximum of C$75 million, after which regional exploration programs would be proportionately funded by each of Osisko and Gold Fields.
- In addition to the initial cash payment and the Deferred cash payment, Gold Fields to make two additional separate C$17 million cash payments to Osisko (C$34 million in total, the first on July 31, 2023 and the second on December 31, 2023). These represent reimbursement of items already incurred by Osisko as part of pre-construction spend.
- Gold Fields and Osisko share all pre-construction costs (provisional budget estimated at C$250 million) and construction costs (feasibility capital expenditure estimated at C$789 million) on a 50/50 basis going forward.
- Governance arrangements with equal representation in the Partnership from Osisko and Gold Fields, to leverage each party's skill sets.
Osisko's chairman and chief executive officer, John Burzynski, stated: "We are very pleased to partner with Gold Fields on the Windfall project and our exploration property portfolio. Today is the start of what we believe will prove to be a long and fruitful partnership with Gold Fields at Windfall, and in what we both believe is a significant emerging gold district in Quebec. This partnership further strengthens our strong balance sheet, allows us to significantly de-risk Windfall and brings us a very important step closer to realizing our objective of becoming a leading Canadian gold producer. With the proceeds from this Transaction, Osisko is fully-funded for our share of development capital to bring Windfall into production. Osisko shareholders retain considerable upside in the project while also benefiting from the mine building, operating and technical expertise of Gold Fields. Assuming the project is ultimately permitted and approved by the partners consistent with the Windfall Feasibility Study, Gold Fields' acquisition cost, exploration commitment, and contribution to pre-construction and project capital would ultimately represent an investment of C$1.2 billion to acquire its interest, bring Windfall into production and further unlock the regional exploration upside. This Transaction is highly compelling on many fronts and represents the best path forward to maximize value for all stakeholders.
"Osisko Mining would like to acknowledge and thank Sean Roosen in particular and the directors of Osisko Gold Royalties Ltd. ("OGR") for their forward-looking vision in supporting the 2015 re-creation of Osisko Mining - one of the key first investment decisions in OGR's very innovative and successful "accelerator model" concept to create new high-value negative-cost royalties tied to equity investment in new exploration companies. OGR holds a 2% - 3% NSR royalty on the Windfall area claims and 13% of the undiluted equity in the Corporation."
Transaction details
The Transaction closed on May 2, 2023, with Gold Fields acquiring a 50% partnership interest in the "Windfall Mining Group", a partnership formed under the laws of the Province of Ontario (the "Partnership"), which will develop the Windfall project and the surrounding Urban Barry and Quevillon exploration properties (collectively, the "Property"). The Transaction was implemented in accordance with, among other things, a framework agreement dated May 2, 2023 (the "Framework Agreement") among Osisko, Gold Fields, Gold Fields Holdings Company Limited, Windfall Mining Group and 1000516419 Ontario Inc., the manager of the Partnership (the "Manager"). Pursuant to the terms of the Framework Agreement, Gold Fields acquired 50% interest in the Partnership for an aggregate consideration of C$600 million in cash to Osisko. The Partnership Agreement also requires Gold Fields to sole fund up to C$75 million in contributions to the Partnership for regional exploration. Prior to the acquisition of the 50% Partnership interest by Gold Fields, Osisko had contributed to the Partnership the Property together with any claims, permits, leases, all other real property, personal property, contractual rights and other assets currently held or acquired for the benefit of the Property.
The Framework Agreement contains customary representations and warranties, covenants and indemnification provisions for a transaction of this nature. The obligations of Gold Fields are guaranteed by Gold Fields Holdings Company Ltd, a significant intermediate holding company with material indirect interests in a number of Gold Fields operations.
About Windfall Mining Group
The business and affairs of the Partnership are managed by the Manager, which has the exclusive right to act on behalf of the Partnership. Each of Osisko and Gold Fields holds 50% of the common shares in the Manager, as well as a 50% partnership interest in the Partnership (apart from a nominal interest in the Partnership held by the Manager).
The relationship among the parties is governed by a second amended and restated partnership agreement (the "Partnership Agreement") and a shareholders' agreement (together with the Partnership Agreement, the "Governing Documents"). The Governing Documents contain customary transfer rights restrictions, governance and decision-making mechanisms which are typical in a transaction of this nature. The Partnership Agreement contains provisions relating to programs and budgets in respect of the Property, funding obligations and remedies for breaches of funding obligations, cost overruns as well as a mutual standstill.
Advisers
Maxit Capital LP acted as financial advisor to Osisko and Bennett Jones LLP acted as Osisko's legal counsel.
Conference Call
Osisko and Gold Fields will host a joint conference call on Tuesday, May 2, 2023 at 9:00 am ET
About Osisko Mining Inc.
Osisko is a mineral exploration company focused on the acquisition, exploration, and development of precious metal resource properties in Canada. Subsequent to this announcement, Osisko holds a 50% interest in the high-grade Windfall gold deposit located between Val-d'Or and Chibougamau in Quebec and a 50% interest in a large area of claims in the surrounding Urban Barry area and nearby Quevillon area (over 2,300 square kilometres).
Qualified person
The scientific and technical content in this news release has been reviewed and approved by Mathieu Savard, PGeo (OGQ No. 510), President of Osisko, who is a "qualified person" (within the meaning of NI 43-101).
We seek Safe Harbor.
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