Osisko makes for Brazil (December 22, 2003)

A recently signed deal with private Brazilian explorer and developer Amazonia Mineracao paves the way for Osisko Exploration (OSK-V) to take up to a 75% stake in the Barro Alto gold property in Brazil’s Goias state.

The property will be held by a registered Brazilian limited liability partnership owned 85% by Amazonia, with Copoeste, the current owners retaining a 15% undivided and free-carried interest.

Under the deal, Osisko can acquire a 60% interest in the partnership from Amazonia by spending at least US$200,000 on exploration by May 1. Osisko is also responsible for defining an indicated gold resource and completing a final exploration report by that time. Osisko must fork over another US$100,000 to Amazonia plus US$150,000 to Copoeste once the Brazilian government approves the report.

Once Osisko has its 60% stake, it is required to bring the property to the feasibility stage. The final property acquisition, feasibility and development costs will be funded via a loan to the partnership from Osisko; the company will be repaid out of production. The partnership can acquire the property for US$350,000 once the government issues a mining concession.

Osisko can, at any time, boost its stake in the project to 75% by acquiring Copoeste’s 15% interest for US$3 million.

The deal is subject to Osisko’s due diligence and regulatory approval.

To help finance the acquisition, Osisko recently agreed to sell up to 4 million units at 25 apiece to Germany’s EurAsia Holding. Each unit comprises a share and warrant, with each warrant good for an additional share at 36 per share for 2 years from closing.

Shares in Osisko were 4, or 15.4%, higher at 30 in early trading in Vancouver following the news on Dec. 22.