Osisko Development (TSXV: ODV; NYSE: ODV) has closed a $203-million (C$280-million) bought deal private placement to help construct the Cariboo gold project in British Columbia.
The amount adds to a $450-million loan with Appian Capital Advisory the company secured in July. The property, 65 km east of Quesnel, B.C., is shovel ready. Both an underground mine and a carbon-in-pulp recovery plant are planned.
The amounts cover nearly three-quarters of the project’s estimated upfront capital cost of C$881 million in an updated feasibility study released in April. Construction is expected to start in this quarter, with first gold production targeted for the second half of 2027.
Double Zero Capital, a Delaware investment firm, took up non-brokered units worth $75 million, representing about 15% of Osisko Development’s issued and outstanding common shares. Each unit consists of one common share and one-half of one share purchase warrant. Each whole warrant entitled the holder to purchase one share at a price of $2.56 per share.
Shares in Osisko Development see-sawed as low as C$3.44 apiece in Toronto before returning no gain at $3.50 on Monday afternoon, giving the company a market value of nearly C$485 million.
Two parts
The offering consisted of two parts. The company issued 58.6 million units at the issue price for aggregate gross proceeds of $120 million. There was also a non-brokered portion of 40.5 million units for gross proceeds of $83 million. Certain insiders of Osisko Development subscribed for 628,000 units for gross proceeds of about $1.3 million.
Using a current gold price of $3,300 per oz. and a mine life to 12 years, Cariboo’s net present value at a discount rate of 5% is nearly $2.1 billion and the internal rate of return is 38%, according to the feasibility study. In the updated scenario, the annual gold output would average 193,800 oz. in years four through nine.
Proven and probable reserves over all zones are 16.7 million tonnes grading 3.78 grams gold per tonne and containing just over 2 million oz. of gold.
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