On August 12, South African gold developer Gold Fields Limited announced that it had reached a definitive agreement with Canadian TSX-listed company Osisko Mining to acquire all of Osisko's common shares for CAD 2.16 billion (approximately USD 1.57 billion). This acquisition would give Gold Fields full ownership of the Windfall Gold Project in Quebec, which is currently equally co-owned by both companies.
This acquisition represents the latest move in diversifying the Johannesburg-headquartered company's operations outside its home country. Two years ago, Gold Fields attempted to acquire another Canadian gold mining company, Yamana Gold, but was unsuccessful.
Gold Fields is a globally diversified gold producer with nine mines in Australia, South Africa, Ghana, Chile, and Peru, and one project in Canada. In 2023, the company's total annual gold equivalent production was 2.3 million ounces (71.5 tons). It has gold ore reserves of 46.1 million ounces (1,434 tons), proven and probable gold mineral reserves of 46.1Moz, measured and indicated gold mineral resources (excluding ore reserves) of 31.1 million ounces (967 tons), and inferred gold mineral resources of 11.2 million ounces (348 tons).
Osisko is a mineral exploration company focused on the acquisition, exploration, and development of precious metal resource assets in Canada. Osisko holds a 50% interest in the high-grade Windfall Gold Project located between Val-d'Or and Chibougamau in Quebec and a 50% interest in large land packages in the surrounding Urban Barry area and nearby Quévillon region.
Gold Fields has agreed to acquire Osisko's shares for CAD 4.90 per share in an all-cash deal. This offer values Osisko's fully diluted equity at approximately CAD 2.16 billion (USD 1.57 billion), with an enterprise value of CAD 1.48 billion (USD 1.08 billion), representing a 55% premium to Osisko's 20-day volume-weighted average trading price.
Upon completion of the transaction, Gold Fields will consolidate Osisko's 50% partnership interest, obtaining full ownership and control of the Windfall Project and its entire exploration area. This will eliminate Gold Fields' existing CAD 300 million deferred cash payment and CAD 75 million exploration obligation, which were part of the Windfall joint venture agreement reached with Osisko in May 2023. At that time, Gold Fields paid CAD 60 million to acquire a 50% stake in the Windfall Project and established a joint venture with Osisko. The increased transaction price is influenced by multiple factors, including rising gold prices, increased investment, an additional 160,000 meters of drilling, and the inclusion of the Bonterra project, which is expected to add more resources through joint venture earning.
The transaction requires approval from at least two-thirds of the votes cast at Osisko's shareholder meeting and a simple majority of votes from Osisko shareholders (excluding certain related parties). The shareholder meeting is expected to take place in October 2024. The boards of both companies have unanimously approved and support the transaction, with Osisko's board recommending that shareholders vote in favor.
The arrangement agreement contains customary deal protection provisions, including a non-solicitation covenant by Osisko and a fiduciary out provision in favor of Osisko. Additionally, the agreement provides for a CAD 108 million termination fee payable by Osisko if it accepts a superior proposal or in certain other circumstances. Both Osisko and the acquirer have made customary representations, warranties, and covenants in the arrangement agreement, including covenants regarding Osisko's conduct of business prior to closing.
The transaction will be implemented through a Canadian plan of arrangement. If it receives Osisko shareholder approval and all required regulatory and court approvals, it is expected to close in the fourth quarter of 2024.
Gold Fields CEO Mike Fraser welcomed the deal:
"We are delighted to consolidate the remaining 50% interest in Windfall and its highly prospective exploration area. Deposits of this scale and quality, combined with a highly promising exploration zone, are exceptionally rare. Since May 2023, we have co-owned this project and conducted prior due diligence, gaining a deep understanding of Windfall and its potential, and we view it as the next long-life cornerstone asset in our portfolio. This acquisition aligns with our strategy to enhance portfolio quality by investing in high-quality, long-life assets like Windfall. It provides us with an opportunity to solidify our presence in Quebec (a Tier 1 mining jurisdiction) and leverage our expertise in greenfield exploration, project development, and underground mining."
Osisko CEO John Burzynski commented:
"This premium transaction represents strong short-term returns for our shareholders and reflects the truly world-class nature of the Windfall Project. Over the course of nine years, we have developed Windfall into one of the largest and highest-grade gold development projects globally, and this transaction validates the extraordinary entrepreneurial spirit of the Osisko team. Gold Fields is a globally diversified senior gold producer with an impressive track record of successfully building and operating mines. As our joint venture partner at Windfall, Gold Fields has a deep understanding of this asset and recognizes the importance of the strong relationships we have established with all stakeholders in Quebec. Additionally, Gold Fields shares our core values of operating in a safe, inclusive, and socially responsible manner. They are well-positioned to bring Windfall into production, and we wish them every success in the future."
