Osisko Gold Royalties has agreed to acquire a silver stream at the Gibraltar copper mine in British Columbia, Canada, from Gibraltar Mines, a fully owned subsidiary of Taseko Mines.
Under the deal, Osisko will pay $33m as cash consideration to Taseko. Furthermore, Osisko will make ongoing payments of $2.75 per ounce of silver delivered.
Osisko CEO Sean Roosen said: "Osisko is pleased to partner with Taseko on the Gibraltar mine to create our first silver stream.
"Our agreement with Taseko further strengthens and diversifies our Canadian portfolio with a long-life asset with a proven operator that will immediately be accretive to our portfolio of assets. This investment also provides Osisko shareholders with silver price optionality over multiple cycles, with potential exploration and expansion upside."
Osisko will acquire Taseko’s 75% share of payable silver production from the Gibraltar mine until delivery of 5.9 million ounces of silver, and then Taseko’s 35% share of payable silver production.
Gibraltar is the second largest open-pit copper mine in Canada and fourth largest in North America.
Gibraltar’s yearly average production is approximately 140 million pounds of copper and 2.5 million pounds of molybdenum.
With reserves of 3.2 billion pounds in recoverable copper and 58 million pounds of molybdenum, the estimated mine-life of the project is 23 years.
Following the addition of the Gibraltar silver stream, Osisko’s 2017 production is expected to come entirely from mines in Canada.
The transaction is expected to close in early this month after receipt of regulatory approvals.
Image: Canadian Malartic mine of Osisko Gold Royalties. Photo: courtesy of Osisko Gold Royalties.