The Tintic property hosts 23 past-producing precious metal and polymetallic mines, including the fully permitted Trixie, which restarted small-scale exploration mining in 2020, and produced 14,709 ounces of gold in 2021 at an average head grade of 59 grams per tonne, Osisko said.
Canaccord Genuity Capital Markets analyst Kevin MacKenzie noted the acquisition would support Osisko's goal of reaching 500,000oz of gold production in five years.
"While still early days in terms of fully understanding the Tintic project, we believe that the acquisition strongly complements the company's late-stage Cariboo (BC, Canada) and San Antonio (Sonora, Mexico) projects, and provides a basis for an increase in overall exploration momentum," he added.
The deal was for Osisko to acquire the Tintic joint venture for an upfront consideration of US$177 million, which included US$54 million in cash and the issuance of 35 million common shares at C$4.32/share.
Tintic is currently 75%-owned by IG Tintic and 25% by Chief Mining Company.
The company expected the transaction to close in Q2.
Osisko Development intended to, in part, fund the transaction through a stream with Osisko Gold Royalties, which included an upfront cash payment of at least $20 million and up to US$40 million.
If the full amount is drawn, Osisko Development would deliver a maximum of 5% of all metals produced from the property up to a maximum of 53,000oz of refined gold. After that, it would deliver 4% of all metals produced.
BMO Capital Markets analyst Jackie Przybylowski said he expected further information on the asset's upside in the coming months, "which could add to the already attractive 6% IRR" of Osisko Gold Royalties.
"We assume life-of-mine extends to 2040, but we recognise potential for further extension," Przybylowski said.
On January 25, Osisko Development closed on the Toronto Stock Exchange at C$4.65/share, which was up 5.92% day-on-day. It had a market capitalisation of C$619.4 million.
Osisko Gold Royalties closed the session at C$14.51/share, falling 1% day-on-day. Its' market capitalisation was C$2,416 million.
