Osisko set for accelerated momentum at Cariboo after raising $300m
NYSE and TSX-listed Osisko Development expects net proceeds from its recently offerings to be $290-million, which it will use to cover capped call transactions ($40.2-million) and development of the Cariboo gold project, in the historic Wells-Barkerville mining camp in central British Columbia.
The "robust and scalable underground operation" is expected to produce 1.89-million ounces of gold over a ten-year mine life.
The Montreal-based miner on May 29 closed an additional $75-million of 4.125% convertible senior notes due 2031, consisting of $25-million of notes sold pursuant to the full exercise of the initial purchasers' option to buy additional notes from the company's previously announced offering and $50-million of notes sold in a concurrent private placement with Double Zero Capital.
Together with the company's closing of its offering of $225-million of notes in a private placement on May 26, total gross proceeds from the offerings were $300-million.
Osisko CEO and chairperson Sean Roosen says the company is pleased to have executed on this opportunistic and strategic capital markets transaction, which he believes provides several key benefits to shareholders.
"By accessing senior unsecured capital at an attractive 4.125% coupon, we are able to bolster our balance sheet to support the development of the Cariboo gold Project, fund continued pre-construction activities and accelerate momentum toward a final investment decision, while preserving meaningful financial and operational execution flexibility.
"To mitigate potential dilution impacts, we also entered into cash-settled capped call transactions that are structured to deliver the net effect of increasing the effective conversion premium price on the notes from 25% to 100%, or double our share price immediately prior to announcement," Roosen states.
He further explains that the covenant-light and lower-cost structure provides an efficient source of capital relative to other traditional project financing alternatives, and carries no project-level security, completion tests or restrictive financial constraints.
Importantly, the notes also provide flexible settlement mechanics, allowing for settlement in cash, shares, or a combination thereof, at Osisko's election, as well as the ability to redeem the notes early after three years, under certain conditions.
These features provide additional flexibility to manage our capital structure over time as Osisko continues to de-risk the Cariboo project.
Osisko welcomes strong participation from a broad new group of institutional investors in its latest offerings, including some of the world's largest asset managers. This is expected to enhance Osisko's market and liquidity profile, while it continues to be supported by its largest shareholder, Double Zero.
