Osisko's Bonterra deal to grow Windfall

The agreement also covers 22,500 hectares in the adjoining Duke and Lac Barry properties. Duke is 70% owned by Bonterra and 30% by Osisko. Lac Barry is 85% owned by Bonterra and 15% owned by Gold Royalties. These are immediately south of where Osisko and JV partner Gold Fields own a large area of claims. Importantly, they also bring resources of 3Moz to add to Windfall's 7.4Moz.

Osisko will make an initial upfront cash payment of US$1 million upon signing and $4 million upon the parties entering into the definitive agreement. Osisko will also fund $30 million in work expenditures over three years. After Osisko has competed its 70% earn-in it will form a JV with Bonterra.

District

While overshadowed by the 2Mm drilling by Osisko at Windfall, more than 503,928m have been drilled at both Barry and Gladiator, of which only 385,128m was incorporated into the 2021 resource estimates. The inferred grade at Gladiator is 7.37gpt, about one gram less than the 8.4gpt at Windfall.

Osisko Mining chair and chief executive John Burzynski sees the development of Windfall as the keystone in the development of an entire district with similar potential to the legendary Val d'Or district to the south. A key aspect of Osisko's May JV deal with Gold Fields is that the South African major will invest some $75 million in exploration at Windfall and its property package. Windfall has 10 rigs operating with drilling focusing on near-mine drilling, testing laterally extensions to the deposit.

With Gold Fields now picking up the tab for that, Osisko can thus dedicate its exploration dollars to advancing the potential on the Bonterra ground.

"Windfall shouldn't be a singularity. There should be dozens of windfalls and this was one of the things that attracted Gold Fields into the partnership. That whole land claim package has become part of the partnership with Gold Fields. [Windfall] is a company-builder asset, and where we're unlocking a district," Burzynski told Mining Journal at the 2023 Gold Forum Americas in Colorado Springs, Colorado, USA.

Defence

While Gold Fields will help fund the development of Windfall, the JV is also a defensive move so that Osisko does not lose out on the fruits of its labour as happened in 2014 when it lost Canadian Malartic following a hostile takeover bid. With junior developer share prices at low levels, another hostile approach was a possibility.

"We sold that company for C$9 a share. If we'd have kept half of that production to date, and it has done everything that we said it would, the original Osisko Mining share price would be a lot higher than $9. It's thrown off about $7 billion of free cash flow in the interim."

"Agnico Eagle Mines paid a little over $2 billion for the first half when they came in with Yamana Gold in 2014. The second half they bought recently for about $3 billion. It would have been much more profitable to the original Osisko shareholders if we'd have kept it. That was the thinking behind this. Selling half to a partner guarantees we get to keep it, we're fully-financed and the last derisking we have is permitting and building," said Burzynski.

Shares in Bonterra Resources opened up 23c, valuing the company at C$28 million.

Shares in Osisko Mining are trading at C$2.49, valuing the company at C$938 million.