By Samuel Williams
Vancouver-based Goldcorp (TSX: G, NYSE: GG) CEO Chuck Jeannes reaffirmed the company's commitment to mining in Mexico, despite its focus on growth in Canada through a planned Cdn$2.6bn (US$2.39bn) acquisition of compatriot Osisko Mining (TSX: OSK).
While Osisko has about 1mn hectares of land in Mexico's Guerrero gold belt, Goldcorp's main focus in the planned acquisition is Osisko's Malartic gold mine in Quebec, which offers a resource of about 10Moz gold, supporting a long mine life and low all-in sustaining costs.
Production at the mine will also provide "immediate free cash flow" to support the construction and ramp-up of projects including Cerro Negro in Argentina and Éléonore and Cochenour in Canada over the coming 18 months.
Goldcorp "continues to be committed to Mexico," Jeannes said in a conference call to discuss the planned takeover, with the country an "outstanding" mining jurisdiction despite the introduction of new taxes on the sector.
But he added: "It's pretty tough to beat Canada."
The company warned earlier it may be forced to divert investment away from Mexican projects, such as Camino Rojo, as a result of the taxes, which include a 7.5% levy on mining sales, minus certain deductions, and a 0.5% gross revenue tax on gold, silver and platinum mines.
THE OFFER
Under Goldcorp's cash and shares offer, the company would pay Cdn$5.95 per Osisko share. Based on closing share prices on January 10, the offer represents a 28% premium on Osisko's 20-day volume weighted average share price, and a 15% premium over Osisko's TSX closing share price on Friday, the company said in a statement.
The offer is open for acceptance until February 19, and requires acceptance by Osisko shareholders holding at least two-thirds of the company's shares.
Goldcorp also has mines and projects in the US, Chile, the Dominican Republic and Guatemala.
Osisko's shares were trading at Cdn$6.19 shortly before 1pm Toronto time, up 19.7% on the previous trading day.
While Osisko has about 1mn hectares of land in Mexico's Guerrero gold belt, Goldcorp's main focus in the planned acquisition is Osisko's Malartic gold mine in Quebec, which offers a resource of about 10Moz gold, supporting a long mine life and low all-in sustaining costs.
Production at the mine will also provide "immediate free cash flow" to support the construction and ramp-up of projects including Cerro Negro in Argentina and Éléonore and Cochenour in Canada over the coming 18 months.
Goldcorp "continues to be committed to Mexico," Jeannes said in a conference call to discuss the planned takeover, with the country an "outstanding" mining jurisdiction despite the introduction of new taxes on the sector.
But he added: "It's pretty tough to beat Canada."
The company warned earlier it may be forced to divert investment away from Mexican projects, such as Camino Rojo, as a result of the taxes, which include a 7.5% levy on mining sales, minus certain deductions, and a 0.5% gross revenue tax on gold, silver and platinum mines.
THE OFFER
Under Goldcorp's cash and shares offer, the company would pay Cdn$5.95 per Osisko share. Based on closing share prices on January 10, the offer represents a 28% premium on Osisko's 20-day volume weighted average share price, and a 15% premium over Osisko's TSX closing share price on Friday, the company said in a statement.
The offer is open for acceptance until February 19, and requires acceptance by Osisko shareholders holding at least two-thirds of the company's shares.
Goldcorp also has mines and projects in the US, Chile, the Dominican Republic and Guatemala.
Osisko's shares were trading at Cdn$6.19 shortly before 1pm Toronto time, up 19.7% on the previous trading day.
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