MONTRÉAL, Dec. 28, 2022 (GLOBE NEWSWIRE) — Osisko Gold Royalties Ltd (the “Corporation” or “Osisko”) (OR: TSX & NYSE) is pleased to announce that its wholly-owned subsidiary, Osisko Bermuda Limited (“OBL”), has entered into a revised binding agreement with Metals Acquisition Corp. (“MAC”) (MTAL: NYSE) with respect to the purchase of a 100% silver stream (the “Silver Stream”) on the producing CSA mine in New South Wales, Australia (“CSA” or the “Mine”) to partially fund MAC’s acquisition of the Mine. MAC has filed a preliminary Form F-4 with the U.S. Securities and Exchange Commission for their review purposes, which includes, among other things, details of its proposed acquisition of 100% of the shares of the owner of CSA from a subsidiary of Glencore plc (the “Acquisition Transaction”).
Separately, OBL and MAC have entered into a backstop financing agreement with respect to an up to US$75 million copper stream (the “Backstop Copper Stream”). The Backstop Copper Stream may be utilized, in whole or in part, by MAC to fund any shortfall in the equity financing required to complete the Acquisition Transaction, subject to certain conditions precedent.
Closing of the Acquisition Transaction, and as a result the Silver Stream and Backstop Copper Stream, is subject to a number of conditions precedent, including MAC raising the necessary financing required to complete the Acquisition Transaction.
Sandeep Singh, President and Chief Executive Officer of Osisko commented: “CSA is one of the highest grade copper mines in Australia with a multi-decade operating history of consistent production and a track-record of reserve and resource replacement. The Silver Stream and contingent Backstop Copper Stream meet all of Osisko’s stringent investment criteria, and will provide near-term and long-life cash flows in a top-tier jurisdiction. MAC has secured commitments totaling approximately US$500 million in debt and stream financing from international mine financiers (including Osisko) to complete the acquisition of CSA and is working on completing the necessary regulatory steps to finalize the required equity financing. We are pleased to continue to support the MAC team, and look forward to the conclusion of the transaction in 2023.”
OBL will be entitled to receive 100% of payable silver produced from CSA for the life of the Mine. The economic effective date of the Silver Stream shall be February 1, 2023.
Between 2019-2021, annual payable silver production from the Mine averaged ~431koz, or ~5,700 gold equivalent ounces annually1.
Under the terms of the revised Silver Stream agreement, the upfront cash payment payable by OBL to MAC has been reduced from US$90 million to US$75 million (the “Silver Deposit”). In the event the silver price averages at least US$25.50 per ounce over the ten business days immediately prior to the closing of the Acquisition Transaction (the “Closing Date”), the Silver Deposit will be increased by US$15 million to a total of US$90 million.
OBL will make ongoing payments for refined silver delivered equal to 4% of the spot silver price at the time of delivery.
MAC will grant OBL a right of first refusal in respect of the sale, transfer or buy-back of any royalty, stream or similar interest in the products mined or otherwise extracted from any property owned or acquired by MAC or an affiliate between the Closing Date and the later of (i) the 7th anniversary of the Closing Date and (ii) the date on which OBL or any affiliate ceases to hold or control more than 5% of the issued and outstanding common shares of MAC.
In conjunction with the Silver Stream, OBL has agreed to subscribe for US$15 million in equity of MAC as part of its concurrent equity financing (the “Silver Equity Subscription”).
BACKSTOP COPPER STREAM
Subject to certain conditions precedent, the Backstop Copper Stream will be made available by OBL until the Closing Date. The Backstop Copper Stream may be utilized by MAC to fund any shortfall in the equity financing required to complete the Acquisition Transaction.
Under the terms of the Backstop Copper Stream agreement, OBL may provide an upfront cash payment of up to US$75 million (the “Available Copper Deposit”) that MAC may draw, in whole or in part.
OBL will be entitled to receive the following amounts of payable copper produced from CSA (the “Copper Stream Quantity”) if the Available Copper Deposit is drawn in full:
from the Closing Date until the 1st anniversary of the Closing Date, nil;
from the 1st anniversary of the Closing Date to the 5th anniversary of the Closing Date, 3.0% (the “First Threshold Stream”);
from the 5th anniversary of the Closing Date until 33,000 metric tonnes of refined copper have been delivered to OBL, 4.875% (the “Second Threshold Stream”);
thereafter, 2.25% for the remaining life of the Mine (the “Tail Stream”).
The Copper Stream Quantity shall be adjusted pro rata in the event the Available Copper Deposit is not fully drawn.
Between 2019-2021, annual copper production from the Mine averaged ~43,000 metric tonnes. Based on historical production levels, average gold equivalent ounces deliverable under the First Threshold Stream and the Second Threshold Stream would equate to between ~5,700 to 9,300 ounces annually2.
OBL will make ongoing payments for refined copper delivered equal to 4% of the spot copper price at the time of delivery.
On the 5th anniversary of the Closing Date, MAC may elect to exercise one of two buy-down options with respect to the Backstop Copper Stream (the “Buy-Down Option”):
reduce the Second Threshold Stream from 4.875% to 3.25% and the Tail Stream from 2.25% to 1.50% and reduce the threshold volume between the Second Threshold Stream and the Tail Stream from 33,000 metric tonnes to 23,900 metric tonnes by paying a one-time cash payment to OBL of US$40 million; or
reduce the Second Threshold Stream from 4.875% to 4.0625% and the Tail Stream from 2.25% to 1.875% and reduce the threshold volume between the Second Threshold Stream and the Tail Stream from 33,000 metric tonnes to 28,450 metric tonnes by paying a one-time cash payment to OBL of US$20 million.
In conjunction with the Backstop Copper Stream, OBL has agreed to subscribe for up to US$25 million in equity of MAC as part of its concurrent equity financing (the “Copper Equity Subscription”). The final amount of the Copper Equity Subscription shall be proportional to the percentage of the Available Copper Deposit drawn by MAC.
CSA MINE OVERVIEW
CSA is a high-grade, long-life, underground copper-silver mine located approximately 12km west-northwest of the town of Cobar in New South Wales, Australia. The Mine is comprised of several mining and exploration leases covering an area of over 350km2 in a proven poly-metallic base metals province. CSA was first discovered in the 1870’s, and large scale production commenced in the mid 1960’s. For more information, please refer to MAC’s public filings on EDGAR at www.sec.gov.
About Metals Acquisition Corp.
MAC was formed as a blank cheque company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses with a focus on the metals and mining sector. MAC is led by a highly experienced management team and board of directors with a track record of creating value for stakeholders.
For more information, please visit MAC’s corporate website at https://www.metalsacquisition.com/.
The scientific and technical content of this news release has been reviewed and approved by Guy Desharnais, Ph.D., P.Geo., Vice President, Project Evaluation at Osisko Gold Royalties Ltd, who is a “qualified person” as defined by National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”).
About Osisko Gold Royalties Ltd
Osisko Gold Royalties is an intermediate precious metal royalty company which holds a North American focused portfolio of over 175 royalties, streams and precious metal offtakes. Osisko Royalties’ portfolio is anchored by its cornerstone asset, a 5% net smelter return royalty on the Canadian Malartic mine, which is the largest gold mine in Canada.
Osisko’s head office is located at 1100 Avenue des Canadiens-de-Montréal, Suite 300, Montréal, Québec, H3B 2S2.