Osisko Gold Royalties Makes A Move For Virginia Mines, Becomes Takeover Target
Five short months following the acquisition of the Canadian Malartic gold mine, Osisko Gold Royalties has taken a big step with its "natural evolution" acquisition of fellow Quebec-based royalty company, Virginia Mines.
It's been a few months since Osisko Mining's (TSX:OSK) Canadian Malartic gold mine was jointly acquired by Agnico Eagle Mines (TSX:AEM,NYSE:AEM) and Yamana Gold (TSX:YMI), leaving behind Osisko Gold Royalties (TSX:OR). Now, five short months later, the burgeoning royalty company has taken a big step with its "natural evolution" acquisition of fellow Quebec-based royalty company Virginia Mines. Osisko announced on Monday that it has taken steps to acquire Virginia Mines in a $479-million all-stock deal. Together, Osisko and Virginia will become a powerful Quebec-based royalty company, raking in cash from the province's two largest gold mines, Osisko's former Canadian Malartic and Virginia Mines' former Éléonore, which was recently put into production by Goldcorp (TSX:G,NYSE:GG). Speaking to BNN, Andre Gaumond, president and CEO of Virginia Mines, said, "[w]e have put together the two best gold companies that are not in the hands of royalty companies." He added, "[t]hey are both based in Quebec, operated by world class operators with a long mine life." Beyond that, the CEO noted that the merger of the two companies is natural progression. "Virginia has the reputation to be among the best exploration teams in Canada and Osisko has the reputation of being outstanding developers," he said. In combining the two companies, Osisko has risen in the ranks of royalty companies, transforming into a $1.3-billion company that can compete with the likes of royalty heavyweights Franco-Nevada (TSX:FNV), Royal Gold (TSX:RGL) and Silver Wheaton (TSX:SLW,NYSE:SLW). Osisko a prime takeover target? With Osisko Gold Royalties now joining the big leagues, the company has positioned itself as a prime target for takeover. As TD Securities analyst Carey MacRury highlighted to in a note, with the acquisition of Virginia, Osisko's $1-billion-plus market cap makes the company a "logical target for the mining industry's biggest royalty firms."