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Osisko ups the ante for Goldcorp with 'friendly' Yamana/Agnico Eagle deal

Canadian Malartic, Quebec.

Canadian Malartic, Quebec.

Photo by Osisko Mining

16th April 2014

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – In a move orchestrated to foil major miner Goldcorp’s C$3.6-billion hostile takeover bid for Quebec-based Osisko Mining, a second ‘white knight’ has stepped forward in a new, less convoluted deal, offering Osisko shareholders an 11% premium to Goldcorp’s sweetened offer.

Montreal-based Osisko on Wednesday announced that it had entered into a new friendly agreement with Latin America-focused precious metals miner Yamana Gold and Canadian gold miner Agnico Eagle to jointly buy all Osisko's issued and outstanding common shares for C$3.9-billion, or C$8.15 a share.

The offer consists of about C$1-billion in cash, C$2.3-billion in Yamana and Agnico Eagle shares, and creating a new company with an implied value of about C$575-million.

After the transaction had been completed, Osisko shareholders would own about 14% of Yamana and about 17% of Agnico Eagle.

The transaction would expand Yamana’s portfolio of operations into a new world-class North American jurisdiction with an immediate increase in output and add to improving its low-cost structure.

For Agnico Eagle, the transaction builds on its 50-year operating history in Quebec by adding a fourth producing mine, which would make Agnico Eagle Quebec's largest gold producer.

Osisko’s announcement came hot on the heels of a statement released by Goldcorp on Wednesday morning, revealing that it was gearing up for a proxy battle in its struggle to gain control of Osisko. Goldcorp had nominated its own slate of 11 candidate Osisko directors, including its CEO, for election at Osisko’s planned annual meeting on May 20.

All the Goldcorp nominees other than Clement Pelletier, who is nominated for election as a director of Goldcorp at its upcoming annual and special meeting, were currently directors or officers of Goldcorp.

Under the terms of the friendly Osisko takeover agreement, Yamana and Agnico Eagle would form a 50:50 joint-acquisition entity, which would acquire Osisko through a plan of arrangement. Upon closing, Yamana and Agnico Eagle would each own Osisko, and would form joint committees to operate the venerated Canadian Malartic mine, in Quebec.

The partners would also jointly explore and potentially develop the Kirkland Lake assets, and continue exploration at Hammond Reef, Pandora/Wood and Pandora properties, all located in Ontario.

When the deal is implemented, each outstanding Osisko common share would be exchanged for C$2.09 in cash; 0.26471 of a Yamana common share (a value of C$2.43 based on the closing price of C$9.18 for Yamana shares on the TSX on Tuesday); 0.07264 of an Agnico Eagle common share (a value of C$2.43 based on the closing price of C$33.45 for Agnico Eagle shares on the TSX on Tuesday); and one new common share of ‘New Osisko’, with a value of C$1.20 a share.

Under the agreement, certain Osisko assets would be transferred to New Osisko, which would be owned by Osisko shareholders as part of payment, and the new company would also be given a 5% net smelter return royalty (NSR) on the Canadian Malartic mine; a 2% NSR on all existing exploration properties including Kirkland Lake, Hammond Reef, Pandora/Wood and Pandora assets; C$155-million cash; all assets and liabilities of Osisko in the Guerrero camp; as well as certain other investments.

Osisko said that its board had unanimously approved the friendly takeover agreement, and recommended that Osisko shareholders vote in favour of the transaction.

“I believe we have delivered shareholders the superior value option to the hostile attempt to acquire our company. The New Osisko will be a company with regular and strong cash flow, strong future potential for increasing cash flow, and tremendous upside exploration potential,” Osisko president and CEO Sean Roosen said.

After being briefly cease-traded on Wednesday morning pending the news release, Osisko’s TSX-listed stock rose by as much as C$0.52 a share, before settling to trade around C$7.91 apiece amidst extreme voluminous trading.

Edited by Creamer Media Reporter

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