GOLD: Osisko Gold Royalties to take over Barkerville Gold Mines

MONTREAL – Osisko Gold Royalties and Barkerville Gold Mines have signed a definitive agreement allowing Osisko to acquire all the issued and outstanding common shares of Barkerville. Osisko currently owns approximately 33% of Barkerville. Each Barkerville shareholder (excluding Osisko) will receive 0.0357 of an Osisko share for each Barkerville share they hold. The implied price of the Barkerville share is $0.58, a 44% premium. The total value of the smaller company is $338 million (including Osisko’s shares). The merged company will become part of the new Northern Spirit Discovery Group. Barkerville’s flagship property is the Cariboo gold project near Wells, B.C. Earlier this month the company filed the preliminary economic assessment for the project with an estimated annual gold production of 185,000 oz. After taxes and mining duties, the project has a net present value of $204.2 million and an internal rate of return of 28.1%. The pre-production costs will be $305.5 million, and that would be paid back after 3.1 years of operation. The mine has a projected 11-year life. Using a gold price of US$1,325, the all-in sustaining cost would be US$796 per ounce. The total resource at the Cariboo project is 12.5 million indicated tonnes grading 5.6 g/t gold for 2.3 million oz. and 11.8 million inferred tonnes at 5.0 g/t gold for 1.9 million contained ounces. Click here to read Osisko’s presentation about the Barkerville takeover.