Osisko Mining (TSX:OSK) is stitching together a larger land package around its Windfall project in northern Quebec with its proposed $17.5 million all-share acquisition of Beaufield Resources (TSXV: BFD).
Beaufield’s Urban property is adjacent to Osisko’s Windfall project in the Abitibi greenstone belt.
Windfall’s Lynx zone is about 500 metres from Beaufield’s property boundary.
Among Beaufield’s other assets are Eleonore-Opinaca, which lies directly adjacent to Goldcorp’s (TSX: G; NYSE: GG) Elonore property, and Hemlo, which is adjacent to Barrick Gold’s (TSX: ABX; NYSE: ABX) Hemlo mine.
Under the proposed deal, Beaufield’s shareholders will receive 0.0482 of an Osisko common share, representing an implied offer price of 8.2¢ per Beaufield share, based on Osisko’s closing price on Aug. 14. The offer represents a premium of about 54% based on the 20-day volume weighted average price of both companies common shares.
Beaufield’s board of directors and other certain other shareholders holding about 7.5% of the company’s shares have voted in favour of the transaction. A special meeting to canvass all of Beaufield’s shareholders will be held in October.
Andrew Mikitchook of BMO Capital Markets commented that the roughly 5% dilution for Osisko shareholders “is likely immaterial,” and noted that the next catalysts for the company include a Windfall resource update in late 2018 and underground bulk sampling of Windfall in the second half of the year.
The mining analyst also points out that developers Bonterra Resources (TSXV: BTR) and Metanor Resources (TSXV: MTO) “hold the balance of the significant property positions in the Urban-Windfall area,” and that, in June, Bonterra announced it would acquire Metanor in an all-share deal valued at $78 million. That transaction is expected to close in the third quarter of 2018.
Mikitchook has a price target on Osisko of $4.50 per share.
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