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Osisko Enhances Its Silver Stream on Mantos Blancos as Part of Comprehensive Financing Package For Concentrator Expansion

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Osisko Gold Royalties Ltd (TSX:OR) (NYSE: OR) is pleased to announce that its wholly-owned subsidiary, Osisko Bermuda Limited has entered into a definitive agreement with Mantos Copper S.A. to enhance its existing Silver Purchase Agreement  with respect to 100% of the silver produced from the Mantos Blancos copper mine located in Chile.  The Stream Amendment Transaction is part of a comprehensive US$250 million financing package entered into by Mantos Copper to expand the Project’s sulphide concentrator plant.

 

Sean Roosen, Chair and CEO of Osisko stated: “Osisko is pleased to continue to build on its partnership with Mantos Copper and help finance the expansion of the Mantos Blancos mine.  Mantos Blancos is a long-life asset operated by a high-quality team with a proven track record operating in South America.  This transaction is expected to be immediately accretive to Osisko’s cash flow per share and follows Osisko’s strategy of strengthening its portfolio through investment in high-quality projects in top tier jurisdictions.” 

 

Under the terms of the Stream Amendment Transaction, OBL has agreed to provide an additional deposit of US$25 million to Mantos Copper in exchange for certain amendments to the existing Silver Purchase Agreement, including:

 

  1. reduction of the ongoing transfer price payment per ounce from 25% to 8% of the spot silver price on the date of delivery; and
  2. increase in the tail stream from 30% to 40% of payable silver after 19.3 million ounces of refined silver have been delivered.

 

Mantos Copper’s right to buy back 50% of the silver stream in September 2019 or 2020 has also been terminated.

 

Benefits to Osisko include:

 

  1. Additional exposure to a long-life asset with further production upside and mine life extension potential;
  2. Immediately increases cash margin per ounce and annual cash flow from the silver stream; and
  3. Expansion of the Project increases the value of OBL’s existing silver stream.

 

Concurrent with the Stream Amendment Transaction, Mantos Copper has entered into definitive agreements for a US$150 million offtake facility from Complejo Metalurgico Altonorte S.A. and a US$50 million copper royalty agreement with Anglo Pacific Group PLC.  Together with US$25 million of committed equity funding from Mantos Copper’s majority shareholder, Orion Mine Finance, the combined proceeds will fund the US$219 million capital cost of the Expansion and associated working capital requirements.

 

The Expansion is expected to increase the throughput of the Project’s sulphide concentrator plant from 4.3 Mtpa to 7.3 Mtpa by mid-2021 and extend the life of the Project to 2035.  Upon completion of the Expansion, the Project is expected to produce an average of 52 Kt of copper per annum at an average C1 cash cost of US$1.87 per pound (including by-product credits) during the first 10 years, with both production upside and mine life extension potential. 

 

Life-of-mine deliveries of refined silver to OBL under the amended Silver Purchase Agreement are expected to total over 13.9 million ounces, with annual deliveries during the first five years following commissioning of the Expansion expected to average approximately 1.2 million ounces of refined silver per year.

 

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 32.7% interest in Barkerville Gold Mines Ltd., a 16.4% interest in Osisko Mining Inc. and a 19.9% interest in Falco Resources Ltd.

 

Posted September 3, 2019

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