Toronto’s Osisko Mining Inc. (TSX: OSK) has inked an agreement with the major South African miner Gold Fields Limited (JSE: GFI) (NYSE: GFI) for a 50/50 joint venture aimed at developing Osisko’s Windfall gold project in northern Quebec.
The transaction closed on Tuesday and consists of an initial $300 million cash payment from Gold Fields followed by an additional $300 million paid to Osisko once the government issues certain operating and construction permits.
Gold Fields will also be solely funding additional exploration in the region with expenditures up to $75 million over seven years and paying Osisko another $34 million for expenses already incurred at the project. Construction expenditures for the operation going forward will be split by the two companies and are expected to cost about $789 million.
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The Windfall project will produce about 306,000 ounces of gold per year, according to a feasibility study from 2022. The site has a measured and indicated resource estimate of 4.1 million ounces and an inferred resource estimate of about 3.3 million ounces of gold.
“Osisko shareholders retain considerable upside in the project while also benefiting from the mine building, operating and technical expertise of Gold Fields,” said John Burzynski, CEO and Chairman of Osisko.
“This transaction is highly compelling on many fronts and represents the best path forward to maximize value for all stakeholders,” he added.
The Windfall property owned by Osisko spans an aggregate area of 30,945 acres and consists of 286 different claims. The Windfall project is expected to create 670 permanent jobs during the mine’s 10-year lifespan.
Windfall project. Photo via Gold Fields
In March, Osisko signed an agreement with the Cree First Nation of Waswanipi’s company Miyuukaa Corp. for the transport of hydroelectric power to Windfall. The company is building a 69-kilovolt transmission line to supply power to the mining operation.
Osisko shares dropped by 1.59 per cent Tuesday to $3.71 on the Toronto Stock Exchange.
Gold Fields stock rose by 5.57 per cent to US$16.29 on the New York Stock Exchange.
rowan@mugglehead.com