Osisko targets Kirkland Lake assets with Queenston buy

Mon Nov 12, 2012 2:55pm EST
 
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By Bhaswati Mukhopadhyay and Euan Rocha

(Reuters) - Canadian gold miner Osisko Mining Corp OSK.TO will buy Queenston Mining Inc QMI.TO for about C$550 million ($549 million) on a fully diluted basis to gain access to the Upper Beaver project in Ontario's Kirkland Lake region.

Queenston owns one of the largest land parcels around the Kirkland Lake. Its holdings include over half-a-dozen past producing gold mines such as Upper Beaver, Upper Canada, Sylvanite and Golden Gate, which produced over 3.5 million ounces between 1913 and the mid-1980s, historical records show.

"We thought the opportunity was now ... we saw it (Upper Beaver) as a strategic asset," Osisko Chief Executive Sean Roosen said on a conference call.

The Upper Beaver project, which has a relatively low capital exposure, has necessary permit to begin advanced exploration and is expected to go into production in 2016, Roosen said.

Upper Beaver is expected to produce 1.1 million ounces of gold at an average rate of 120,000 ounces annually over a 10-year mine life, according to a preliminary economic assessment conducted in February.

Osisko, which has more than 10.7 million ounces in reserves at its flagship Canadian Malartic project, said the acquisition will add about 16 percent to its global resources.

RIVAL BID

Analysts said there is a possibility of rival bids due to Queenston's large prospective land position in a politically stable, mining-friendly jurisdiction.   Continued...