CREATION OF NORTH SPIRIT DISCOVERY
GROUP
MONTRÉAL, Sept. 23, 2019 /CNW/
- Osisko Gold Royalties Ltd ("Osisko") (OR: TSX & NYSE) is
pleased to announce that it has entered into a definitive agreement
(the "Arrangement Agreement") with Barkerville Gold Mines Ltd.
("Barkerville") (TSXV: BGM), pursuant to which Osisko has agreed to
acquire all of the issued and outstanding common shares of
Barkerville that it does not currently own, by way of a plan of
arrangement (the "Arrangement") under the Business Corporations
Act (British Columbia).
Concurrent to the Arrangement, Osisko also announces the formation
of the North Spirit Discovery Group, the next step in the evolution
of Osisko's accelerator business that Osisko pioneered over the
last five years, with the goal of privatizing and surfacing value
in resource development projects.
Under the terms of the Arrangement, each shareholder of
Barkerville (excluding Osisko) will receive 0.0357 (the "Exchange
Ratio") of a common share of Osisko for each share of Barkerville
held. The Exchange Ratio implies consideration of C$0.58 per Barkerville share, based on the
closing price of Osisko shares on the Toronto Stock Exchange (TSX)
on September 20, 2019, representing a
44% premium based on both companies' trailing 20-day volume
weighted average price (VWAP) as at September 20, 2019. The Exchange Ratio implies a
total equity value of approximately C$338
million on a fully-diluted in the money basis, inclusive of
Barkerville shares held by Osisko.
Upon completion of the transaction, current Osisko and
Barkerville shareholders will hold approximately 91% and 9% of
Osisko shares outstanding, respectively.
Sean Roosen, chair of the board
and CEO of Osisko, stated: "The addition of the Cariboo Gold
project to our portfolio adds a potentially world-class asset in
Canada in an impacted brownfield
site with significant infrastructure in place. Osisko and
Barkerville will take advantage of their combined mine building,
exploration, permitting, development and construction expertise to
advance the Cariboo gold project. Osisko expects to fund planned
work through available liquidity, future revenue from royalties and
streams, project debt as well as outside private equity and joint
venture capital through the creation of the North Spirit Discovery
Group."
In 2018, Osisko generated $82.2
million in operating cash flow at 89.5% cash
margin1 and $46.1 million
at 89.5% cash margin in the first six months of 2019. Osisko
currently has over $800 million in
financial capacity, including a $500
million available revolving credit facility.
Benefits to Barkerville Shareholders:
- Immediate and significant premium of 44% based on both
companies' 20-day VWAPs;
- Continued exposure to the Cariboo project in a broader, more
diversified company;
- Acceleration and enhancement of development of the Cariboo
project by leveraging Osisko's proven technical team;
- Certainty of funding through Osisko's strong balance sheet and
access to capital to advance the Cariboo project on-schedule;
- Direct exposure to a high gold price environment through
Osisko's strong and growing cash flows; and
- Osisko shares offer substantially greater trading liquidity and
an attractive dividend.
Benefits to Osisko Shareholders:
- Greater exposure to a unique, high quality advanced development
project in Canada with world-class
potential;
- Allows Osisko to drive the development strategy and provides
greater certainty with respect to the timeline to production for
the Cariboo project;
- Ability to achieve stronger shareholder returns through full
ownership and control, as compared to Osisko's current equity
position in a Barkerville stand-alone development scenario;
- Meaningfully accretive on a net asset value basis for
Osisko;
- Further enhances Osisko's peer leading growth profile; and
- Substantially increases cash flow and net asset value
contribution from Canada.
Creation of the North Spirit Discovery Group
Concurrent to the Arrangement, Osisko announces the creation of
the North Spirit Discovery Group ("North Spirit Discovery"), its
new project development platform. North Spirit Discovery is the
next step in the evolution of Osisko's accelerator business that
Osisko pioneered over the last five years, with the goal of
privatizing and surfacing value in resource development projects.
Through this platform, Osisko will leverage its industry-leading
technical team with a proven track record of creating value through
resource discovery, project development and mine operation.
North Spirit Discovery aims to become a leading resource
development and finance company with the assistance of joint
venture partners and/or private equity capital.
Particulars of the Transaction
Under the terms of the Arrangement Agreement, holders
("Barkerville Shareholders") of the common shares of Barkerville
(the "Barkerville Shares") will be entitled to receive 0.0357 of a
common share of Osisko (each whole share, an "Osisko Share") in
exchange for each Barkerville Share held immediately prior to the
effective time of the Arrangement, representing an implied offer
price of C$0.58 per Barkerville Share
based on Osisko's closing price as of September 20, 2019 on the TSX and a premium of
44% based on both companies' trailing 20-day VWAP as at
September 20, 2019 (being the last
trading day prior to the announcement of the Arrangement).
The Arrangement will require the approval of Barkerville
Shareholders at a special meeting expected to take place in
November 2019 (the "Barkerville
Meeting"). In order to become effective, the Arrangement must be
approved at the Barkerville Meeting by (i) at least 66⅔ percent of
the votes cast by Barkerville Shareholders, and (ii) a simple
majority of the minority held in accordance with Multilateral
Instrument 61-101 – Protection of Minority Shareholders in
Special Transactions. Directors and officers of Barkerville and
certain Barkerville Shareholders holding approximately 17.9% of the
issued and outstanding Barkerville Shares have entered into voting
and support agreements with Osisko in support of the Arrangement.
The board of directors of Barkerville, on the recommendation of its
independent special committee, has unanimously approved the
Arrangement and will recommend that Barkerville Shareholders vote
FOR the Arrangement.
The Arrangement Agreement includes representations, warranties
and covenants typical of a transaction of this nature, including
with respect to non-solicitation, a right to match, and a
fiduciary-out. In addition, Barkerville has agreed to pay a
termination fee of C$9.8 million to
Osisko upon the occurrence of certain events. The Arrangement
Agreement, which describes the full particulars of the Arrangement,
will be made available on SEDAR under the issuer profile of
Barkerville at www.sedar.com.
Osisko holds approximately 32.6% of the outstanding Barkerville
Shares, accordingly, the Arrangement will be a non-arm's length
transaction for the purposes of the policies of the TSXV and a
"business combination" under Multilateral Instrument 61-101.
Osisko has also agreed to provide Barkerville with a
C$7 million unsecured bridge loan
(the "Bridge Loan") to allow Barkerville to continue to advance the
exploration and development of the Cariboo gold project. The Bridge
Loan will have an interest rate of 10% per annum and a term to
maturity of six months. The Bridge Loan may be increased to
C$13 million, subject to approval of
both Osisko and Barkerville.
It is anticipated that the Arrangement will be completed in
November 2019. Further information
regarding the Arrangement will be contained in a management
information circular that Barkerville will prepare, file and mail
to the Barkerville securityholders in connection with the
Barkerville Meeting. All securityholders are urged to read the
information circular once available as it will contain additional
important information concerning the Arrangement.
Board of Director's Recommendation and Voting Support
The Arrangement has been unanimously approved by the Board of
Directors of both Barkerville and Osisko. Mr. Sean Roosen noted his conflict as a Director of
both Osisko and Barkerville and recused himself from the
negotiations leading up to this announcement. The Arrangement
was negotiated on behalf of Osisko by a special committee of
independent Directors of Osisko (the "Osisko Special
Committee").
The Arrangement was negotiated on behalf of Barkerville by a
special committee of independent Directors of Barkerville (the
"Barkerville Special Committee"). In reaching its conclusions, the
Board of Directors received the unanimous recommendation of the
Barkerville Special Committee and two fairness opinions with
respect to the consideration to be received by Barkerville
Shareholders.
Advisors and Counsel
National Bank Financial is acting as exclusive financial advisor
to Osisko. Bennett Jones LLP is acting as legal counsel to Osisko
and the Osisko Special Committee.
Maxit Capital LP is acting as financial advisor to Barkerville.
Fasken Martineau DuMoulin LLP is acting as special legal counsel to
Barkerville and the Barkerville Special Committee. The Barkerville
Special Committee also retained PI Financial Corp. to prepare a
fairness opinion. Maxit Capital LP and PI Financial Corp.
each provided a fairness opinion to Barkerville's Special Committee
and Board of Directors, to the effect that, as of the date of such
opinions, the consideration to be received by holders of
Barkerville common shares (excluding Osisko), is fair, from a
financial point of view, to such holders, in each case, subject to
the respective limitations, qualifications and assumptions set
forth in such opinions. The written fairness opinions from Maxit
Capital LP and PI Financial Corp. will be set out in the
Barkerville management information circular.
Conference Call Details
Osisko will host a conference call on Monday, September 23, 2019 at 8:30 am EDT to discuss the transaction announced
in this press release.
Those interested in participating in the conference call should
dial in at 1 (877) 223-4471 (North American toll free),
or 1 (647) 788-4922 (international). An operator will
direct participants to the call.
The conference call replay will be available from 11:30 am EDT on September
23, 2019 until 11:59 pm EDT on
September 30, 2019 with the following
dial in numbers: 1-(800) 585-8367 (North American toll free) or
1 (416) 621-4642, access code 9988832.
About Barkerville Gold Mines Ltd.
Barkerville Gold mines Ltd. is focused on developing its
extensive mineral rights package located in the historical Cariboo
Mining District of central British
Columbia. Barkerville's Cariboo Gold Project mineral tenures
cover 1,950 square kilometres; along a strike length of 67
kilometres which includes several past producing placer and hard
rock mines, making it one of the most well-endowed land packages in
British Columbia. Since the
management change in mid-2015, the Corporation has unlocked the
fundamental structural controls of gold mineralization.
Barkerville's brownfields exploration team is focused on developing
and delineating a mineable resource within the 8 kilometers of
principle project area located near the town of Wells, British Columbia. Barkerville's
greenfields team is developing quality exploration assets
throughout the remaining land package through systematic,
scientific, exploration. The operation's team is focused on
completing required studies in order to permit underground mining
on Cow and Island Mountains.
About Osisko Gold Royalties Ltd
Osisko Gold Royalties Ltd is an intermediate precious metal
royalty company that holds a North American focused portfolio of
over 135 royalties, streams and precious metal offtakes. Osisko's
portfolio is anchored by its 5% NSR royalty on the Canadian
Malartic Mine, which is the largest gold mine in Canada. Osisko also owns a portfolio of
publicly held resource companies, including a 32.6% interest in
Barkerville Gold Mines Ltd. and a 4% NSR royalty on the Cariboo
Gold project, a 19.9% interest in Falco Resources Ltd and a 16.4%
interest in Osisko Mining Inc.
Osisko is a corporation incorporated under the laws of the
Province of Québec, with its head office is located at 1100 avenue
des Canadiens-de-Montréal, Suite 300, Montréal, Québec,
H3B 2S2.
Forward-looking Statements
This Osisko and Barkerville joint press release contains
"forward-looking information", as such term is defined in
applicable Canadian securities legislation. Such statements concern
Osisko's and Barkerville's future financial or operating
performance and other statements that express management's
expectations or estimates of future developments, circumstances or
results. Generally, forward-looking information can be identified
by the use of forward-looking terminology such as "pro-forma",
"expects", "believes", "anticipates", "budget", "scheduled",
"estimates", "forecasts", "intends", "plans" and variations of such
words and phrases, or by statements that certain actions, events or
results "may", "will", "could", "would" or "might", "be taken",
"occur" or "be achieved". Such forward-looking information may
include, without limitation, statements regarding the completion
and expected benefits of the proposed business combination and
other statements that are not historical facts. Forward-looking
information is based on a number of assumptions and estimates that,
while considered reasonable by management based on the businesses
and markets in which each of Osisko and Barkerville operate, are
inherently subject to significant operational, economic and
competitive uncertainties and contingencies. Assumptions upon which
forward-looking statements relating to the business combination
have been made include that Osisko and Barkerville will be able to
satisfy the conditions in the arrangement agreement, that any
materially adverse facts or circumstances will not be identified,
that the required approvals will be obtained from the shareholders
of Barkerville, that all required third party, and that regulatory,
court and government approvals will be obtained. Osisko and
Barkerville caution that forward-looking information involves known
and unknown risks, uncertainties and other factors that may cause
Osisko's and Barkerville's actual results, performance or
achievements to be materially different from those expressed or
implied by such information, including, but not limited to:
fluctuations in the prices of the commodities that drive royalties
held by Osisko or the business conducted by Barkerville;
fluctuations in the value of the Canadian dollar relative to the
U.S. dollar; risks related to the operators of the properties in
which Osisko holds an interest; development, permitting,
infrastructure, operating or technical difficulties on any of the
properties in which Osisko and Barkerville hold a direct or
indirect interest; rate and timing of production differences from
resource estimates or production forecasts by Barkerville or be the
operators of properties in which Osisko holds a royalty or other
interest; risks and hazards associated with the business of
exploring, development and mining on any of the properties of
Barkerville or in which Osisko holds a royalty or other interest,
including, but not limited to unusual or unexpected geological and
metallurgical conditions, slope failures or cave-ins, flooding and
other natural disasters or civil unrest; regulatory changes by
national and local government, including corporate law, permitting
and licensing regimes and taxation policies; regulations and
political or economic developments in Canada where Barkerville operates, or in any
of the countries where properties in which Osisko holds a royalty
or other interest are located or through which they are held);
continued availability of capital and financing and general
economic, market or business conditions; business opportunities
that become available to, or are pursued by Osisko and Barkerville;
the possibility to acquire royalties, to fund exploration and
development activities, and to fund precious metal streams; other
uninsured risks. The forward looking statements contained in this
press release are based upon assumptions management believes to be
reasonable, including, without limitation: the ongoing operation of
the properties of Barkerville and those in which Osisko holds a
royalty or other interest by the owners or operators of such
properties in a manner consistent with past practice; the accuracy
of public statements and disclosures made by the owners or
operators of such underlying properties; no material adverse change
in the market price of the commodities that underlie the asset of
each company; no adverse development in respect of any significant
property of Barkerville or in which Osisko holds a royalty, stream
or other interest; the accuracy of publicly disclosed expectations
for the development of underlying properties that are not yet in
production; and the absence of any other factors that could cause
actions, events or results to differ from those anticipated,
estimated or intended. In addition, the factors described, referred
to, or incorporated by reference in the section entitled "Risk
Factors" in the most recent Management Discussion and Analysis of
each of Barkerville and Osisko and the in the section entitled
"Risk Facts" in the Barkerville Circular, once filed, should be
reviewed in conjunction with the information found in this press
release, all of which is, or will be, available on SEDAR at
www.sedar.com. Although Osisko and Barkerville have attempted to
identify important factors that could cause actual results,
performance or achievements to differ materially from those
contained in forward-looking information, there can be other
factors that cause results, performance or achievements not to be
as anticipated, estimated or intended. There can be no assurance
that such information will prove to be accurate or that
management's expectations or estimates of future developments,
circumstances or results will materialize. As a result of these
risks and uncertainties, the proposed business combination could be
modified, restricted or not completed, and the results or events
predicted in these forward-looking statements may differ materially
from actual results or events. Accordingly, readers should not
place undue reliance on forward-looking information. The
forward-looking information in this press release is made as of the
date of this press release, and Osisko and Barkerville disclaim any
intention or obligation to update or revise such information,
except as required by applicable law and neither Osisko nor
Barkerville assume any liability for disclosure relating to the
other company herein
___________________________
1 Cash margin is a non-IFRS financial performance
measure which has no standard definition under IFRS. It is
calculated by deducting the cost of sales from the revenues. The
calculation of cash margins excludes offtakes.
SOURCE Barkerville Gold Mines Ltd.
