Northern Star Resources is looking to acquire another high-grade gold project after announcing plans to execute a joint venture (JV) with Canada-based Osisko Mining.
The Tier 1 mining company has signed an agreement with Osisko for the raising of $C154 million ($169 million) through a convertible senior unsecured debenture, with a maturity date of December 1, 2025.
The debenture carries an interest rate of 4.75 per cent a year payable semi-annually and can be converted by Northern Star into a JV interest any time after December 1, 2022 at a conversion price of $C4 per Osisko share, subject to certain conditions. There is also a 125 per cent conversion premium on Northern Star’s JV play.
Northern Star has the right to earn up to a 50 per cent stake in Osisko’s Windfall gold project in Quebec, Canada as part of the agreement.
Windfall is considered a high-grade underground gold deposit which is well advanced regarding studies, drilling and development. In April, Osisko announced that it expected Windfall to commence production in 2024.
Northern Star managing director Stuart Tonkin said the JV was a good fit for the company.
“Partnering with Osisko provides a de-risked entry to a high-quality gold province on an advanced development project and aligns with our strategy,” he said.
“A prospective 50/50 JV leverages the skills from both teams to deliver strong returns for our respective shareholders.
“The Osisko team are a complementary partner to Northern Star with a proven track record of discovery and development and a strong commitment to ESG principles.”
Osisko chairman and chief executive officer John Burzynski said Northern Star’s reputation and expertise would assist the Windfall project greatly.
“The potential of joining forces with Northern Star, a well-respected gold producer with a depth of experience in mining underground high-grade deposits similar to the Windfall project, would help de-risk the remaining work ahead to bring the Windfall project to successful production,” he said.
“We are confident that, subject to reaching an agreement with Northern Star on the earn-in joint-venture terms, they will be a very strong partner in assuring our development plans for the Windfall project.
“Going forward, Osisko shareholders can be confident that there should be no significant shareholder dilution needed to successfully bring the Windfall project to production.”
Osisko can redeem the debenture any time after the second anniversary of closing (December 1, 2023) for cash or common shares, subject to certain conditions.