TORONTO (miningweekly.com) – The target of a C$2.9-billion hostile takeover offer, Osisko Mining, on Thursday updated the mining plan of its flagship Canadian Malartic gold mine, in Quebec, saying that output was expected to rise and costs would decrease.

The Montreal-based company said that it expected to produce between 525 000 oz and 575 000 oz of gold this year, up from 475 277 oz in 2013, as the mine was still ramping up output since declaring commercial production in May 2011.

Speaking during an analyst conference call, Osisko president and CEO Sean Roosen said that at a net present value (NPV) of $3.1-billion, the Canadian Malartic mine had the second-highest NPV of any gold asset in North America, second only to Barrick Gold’s Cortez mine, in Nevada.

Located north-west of Val D'Or, Quebec, Canadian Malartic has National Instrument 43-101-compliant proven and probable reserves of 9.37-million ounces of gold, contained in 281.2-million tonnes grading 1.04 g/t.

For 2014, cash costs were estimated at between C$580/oz and C$635/oz this year, about 24% lower year-on-year. In US dollars costs were estimated at $527/oz to $577/oz.

“In a sector that is seeing increased cash costs, Canadian Malartic is one of the few mines that's actually coming down in costs. This is going to be a ‘screamer’ of a mine for some time to come,” Roosen said.

The company said that it expected the average gold output over the next five years to be 610 000 oz/y, at cash costs of $516/oz.

Over Canadian Malartic’s 14.2-year life, gold output was expected to average 597 000 oz/y, at cash costs of $525/oz.

Osisko said that it planned to spend about C$148-million on capital expenditures this year, including $125.8-million at Canadian Malartic.

HOSTILE BID

Vancouver-based Goldcorp’s C$2.94-billion offer for Osisko is the largest unfriendly bid for a mining company since First Quantum Minerals bought Inmet Mining for $4.7-billion in November 2012.

Goldcorp last week extended the date on which its C$2.94-billion hostile cash-and-scrip takeover bid for Osisko would close, to April 15.

Earlier this month, Osisko settled a lawsuit against its suitor, under which Goldcorp agreed not to take up and pay for shares deposited to its hostile takeover bid before April 15.

In return, Osisko agreed to waive the application of its shareholder rights plan before April 14, to provide Goldcorp access to due diligence materials and to terminate its court proceeding against Goldcorp.

Osisko had rejected the takeover bid several times since January, and had launched a legal challenge to Goldcorp's bid, accusing the company of breaking a confidentiality agreement and failing to honour a verbal agreement to extend an expired standstill agreement.

Osisko underlined that it was continuing to manage a “robust” process to aggressively pursue a range of value maximising alternatives that were in the best interests of the company.

Under terms of the offer, Osisko shareholders are entitled to receive 0.146 of a Goldcorp common share and $2.26 in cash for each Osisko common share tendered.

The TSX-listed shares of Osisko closed unchanged at $7.59 on Thursday, while Goldcorp shares lost C$0.04 a share to close at C$29.96, which resulted in the implied current value of the offer being $6.63 a share.

“Canadian Malartic is an exceptional asset and we need to make sure it gets paid for,” Roosen affirmed.