Osisko makes for Brazil (January 05, 2004)

Brazilian explorer and developer Amazonia Mineracao will allow Montreal-based Osisko Exploration (OSK-V) to acquire up to a 75% interest in the Barro Alto gold property in Goias state.

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

Osisko can acquire a 60% stake 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 the same deadline, and it must fork over an additional US$100,000 to Amazonia and 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. Costs for property acquisition, feasibility and development work 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 two years from the closing date.

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

Traditionally, Osisko has focused on its Esther and Bellechasse (gold), Payne Bay (nickel-copper), Hbcourt (zinc-copper), and Sirmac-Montagne (tantalum) properties, all in Quebec.

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