Gold Fields (NYSE:GFI,JSE:GFI) has reached a deal to acquire Osisko Mining (TSX:OSK,OTC Pink:OBNNF) for C$2.16 billion in cash as industry players race to consolidate in today’s high gold price environment.
The definitive agreement, which will see the company purchase all of Osisko’s outstanding shares, will give the South African mining giant full ownership of the Windfall gold project, located in Québec, Canada.
Windfall, which Gold Fields has jointly owned with Osisko since May 2023, is one of the largest high-grade gold deposits in Canada, and the firm sees strong exploration potential in the surrounding Urban Barry and Quévillon districts.
By acquiring Osisko’s 50 percent interest in Windfall, Gold Fields will eliminate existing obligations related to deferred cash payments and exploration costs, and will streamline operations and decision-making processes for the project.
According to Gold Fields, the acquisition price of C$4.90 per share reflects a 55 percent premium over Osisko’s 20 day volume-weighted average trading price on the Toronto Stock Exchange as of August 9.
Gold Fields also emphasizes that the deal aligns with its strategic objective of enhancing its portfolio with high-quality, long-life assets in stable jurisdictions. The transaction is expected to close by the end of 2024.
Mike Fraser, CEO of Gold Fields, expressed confidence in the acquisition in Monday’s (August 12) press release.
‘Deposits with the scale and quality of Windfall, with a highly prospective exploration camp on top of that, are extremely rare, let alone in a world-class jurisdiction like Québec, Canada,’ he commented. “Throughout our joint ownership of the project since May 2023, and the due diligence that preceded it, we have developed a strong understanding of Windfall and its potential and view it as the next long-life cornerstone asset in our portfolio.’
The Windfall project is poised to become a major contributor to Gold Fields’ production.
According to a feasibility study conducted by Osisko in December 2022, the asset is projected to produce approximately 300,000 ounces of gold annually, with an all-in sustaining cost of US$758 per ounce.
This would position Windfall as one of the lowest-cost operations in Gold Fields’ global portfolio, sustained by the mine’s estimated life of 10 years and potential for further extension through ongoing exploration and resource conversion.
Development of the Windfall project is well advanced, according to Gold Fields, with significant investments already made in both underground and surface infrastructure. The project currently employs over 150 full-time staff and contractors and is in the process of obtaining final environmental approvals; these are expected in 2025.
Gold Fields also said it is committed to maintaining strong relationships with the Cree First Nation of Waswanipi and other local communities as it moves forward with the project.
Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.