Sentiment in the mining sector got a huge boost earlier this year when Sean Roosen’s Osisko Mining was the target of a bitter bidding war between Goldcorp, Yamana and Agnico Eagle which ultimately saw the latter two companies co-acquire Osisko for $3.9 billion in the largest mining M&A deal of the year (so far).
This morning, Falco Resources (FPC:TSXV) announced that Sean Roosen would become Chairman of its Board. This comes 10 days after Mr. Roosen’s spinout vehicle from the Osisko acquisition now known as Osisko Gold Royalties invested $670,000 into Falco giving them control over an additional 1.5 million shares (already held 8 million shares). According to a statement in August, Mr. Roosen intends to own as much as 14.99% in Falco (currently 12.9%).
Shares in Falco are up 7% on the news this morning.
In 2012, Falco Resources acquired a 73,000 hectare land package in the Rouyn Noranda Mining Camp, including the Horne Mine Complex area and 13 other former producers.
“Sean made an enormous contribution to the gold mining industry in the province of Quebec during his tenure as president and CEO of Osisko Mining Corp.,” said Trent Mell, President and CEO of Falco Resources. “Falco stands to benefit from a stronger relationship with its largest shareholder in three ways: access to capital, technical bench strength and first-in-class sustainability practices. I have known Sean for several years and I am looking forward to working with him.”
Osisko Gold Royalties (OR:TSX) is looking to have as many irons in the fire in the most prospective gold belts in Canada. They have a portfolio of high quality gold royalty assets including: a 5% NSR royalty on the Canadian Malartic Mine and a 2% NSR royalty on the Upper Beaver, Kirkland Lake and Pandora properties.
The Canadian Malartic Mine is Canada’s largest gold mine and is expected to produce between 510,000 and 530,000 ounces of gold this year. Their 5% NSR could generate $35 million annually at $1,300/oz gold.
“We know the Abitibi and I believe our expertise can help Falco advance its strategic objectives,” said Sean Roosen, chairman and CEO of Osisko Gold Royalties Ltd. “Falco controls the last of the large Abitibi camps that is not owned by a major gold producer and, as their largest shareholder, we want to help them succeed.”
Osisko Gold Royalties has over $150 million in cash and a market capitalization of $690 million. Clearly not cheap, but almost all gold royalty companies trade at significant premiums to NAV given that they tend to bear the least financial and operating risks.
So far, Osisko Gold Royalties has made two investments; one being Falco and the other being a $4.9 million financing into NioGold Mining.
The focus so far is the Abitibi greenstone belt. Mr. Roosen and his exploration team have had tremendous success there and obviously they believe there is much more gold to be found, despite being a very mature gold camp. The belt has produced over 170 million ounces of gold over its +100 year history.
Mr. Roosen’s is also involved with Condor Petroleum (Chairman), Dalradian Resources (Director) and NioGold Mining (Director).