Will Osisko ever be taken over?

While it’s been going on for years, the speculation surrounding potential takeover target Osisko Mining has ratcheted up in recent weeks, as Kinross Gold has been paying top dollar for gold juniors lately, and rival Goldcorp — which already owns around 12% of Osisko — has cleared its financial decks for another big takeover offer by selling off non-core assets such as San Dimas in Mexico and Escobal in Guatemala.

• As takeover talk swirls, Osisko’s shares have outperformed the rest of the overheated gold market recently, rising from below $12 in late July to $14.21 at presstime.

But Osisko remains a moving target and may yet survive to grow as an independent, multi-mine producer, as it is now wrapping up its own acquisition of Brett Resources and its large, low-grade Hammond Reef gold project in Ontario.

Osisko now owns 77% of Brett, and is reporting long intersections from new drilling at Hammond Reef, including 131 metres of 1.07 grams gold per tonne, 101 metres of 0.87 gram gold and 231 metres of 0.74 gram gold.

At its flagship Canadian Malartic gold mine being built in Quebec, Osisko remains on track for construction to be completed next May. Some $619 million of the $956 million needed to build the mine has already been spent, and the company says the project is about 60% finished. Osisko still had $581 million in cash and equivalents in the coffers in mid-2010.

• In a classic display of Ivanhoe Mines’ ability to raise money, the company’s 81%-owned, Aussie-listed subsidiary Ivanhoe Australia closed a A$251-million institutional equity financing that paves the way for the development of its oddball Conclurry molybdenum-rhenium project in northwestern Queensland.

Some of the money will be used to buy Barrick Gold’s adjacent Osborne mine, processing plant and tenements, which will help in the development of the Merlin portion of Conclurry, which could be fast-tracked into production by 2012.

Ivanhoe Australia expects to raise another A$18 million in equity through an associated retail entitlement offer, and could bag up to A$158 million through the future exercise of options. Ivanhoe Mines will see its shareholding in the subsidiary drop to 65%, even without the options exercised.

Some A$53 million of the money will be used to repay loans from parent Ivanhoe Mines, which needs the money to continue fulfilling its large commitments at the huge Oyu Tolgoi copper-gold project in Mongolia.

• On Aug. 6, Teck experienced its second major coal-production shutdown of the summer, with 168 members of the United Mineworkers of America’s Local 7292 going on strike at the Coal Mountain operation in southeastern British Columbia.

The previous labour agreement at the mine expired last New Year’s Eve, and workers complain their wages are lower than those working at other Teck mines in B.C.

Coal Mountain, which produces both thermal coal and higher-value metallurgical coal, represents about 10% of Teck’s annual coal production capacity. The last strike at the mine was 30 years ago, and it lasted nine months.

Teck had to shut its smaller Greenhills coal mine, also in B.C., for a few days following an explosion on June 28 that damaged a coal dryer building, and forced the company to temporarily ship wet coal to other mines for final processing.

• Beleaguered Axmin actually had some good news to report from the Central African Republic (CAR), as the fickle government there approved development of the company’s Passendro gold mine, which would be the CAR’s first modern gold mine.

Last year Axmin was forced to take a $40.5-million write-down on the property, largely owing to the government’s delays in granting a mining license, and its growing hostility to foreign mining companies.

Axmin’s shares, which now trade around 9¢ (for a $28-million market cap), traded above $1 three years ago, just before the CAR government revoked all of Axmin’s mineral licences in the country that were not for gold.

Axmin’s initial bankable feasibility study on Passendro, completed in April 2008, envisaged a mine that would produce 203,000 oz. gold per year over 5.9 years at cash costs of US$379 per oz. The net present value of the project at the time was pegged at US$311 million, with an internal rate of return of 47%.

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