Amid takeover, Osisko’s drive to define Canadian Malartic as ‘world class’

If not going for a direct hit, Osisko levers record January output to call into question the adequacy of Goldcorp's C$2.6 billion takeover bid, Mineweb's Kip Keen argues.

VANCOUVER, BC (MINEWEB) -

With a ~C$2.6 billion hostile takeover now unfurling it’s hardly an ordinary moment for either Goldcorp or Osisko. So when Osisko Mining does some operational bragging - as it Thursday - and there’s no direct mention of Goldcorp, it’s hard not to look at it without donning a pair of takeover goggles.

Osisko noted that gold production at the Canadian Malartic gold mine in Quebec hit over 50,000 ounces in January, a record for it and also meaning the mine was Canada's largest gold mine in terms of gold output if you annualized the January rate of gold production.

Now this was not Osisko’s first such type of update, though it has been a while. Going by its press release section on its website it last highlighted a monthly record back in November 2012. And, for that matter, a gold miner bragging about its flagship asset as production hits its stride - costs down, ounces up - is hardly anything out of the ordinary. So you could, fairly, argue it was just that. A simple operational update. (I asked Osisko about the context by email Thursday, but had yet to hear back at presstime.)

But I think there’s more to it than a form, record-touting press release. First, it’s not unreasonable to suggest messaging during such a critical moment - a hostile takeover process - would be top of mind, for either party, in describing operational results, which in this case were record setting for Osisko. And second, in adding context to the record, if Osisko did not specifically mention the takeover, it still hit on the central themes of its argument against Goldcorp’s takeover: in essence, that Canadian Malartic is a special asset.

Osisko President and CEO Sean Roosen described the January performance this way:

Canadian Malartic is starting to break away from the pack, showing what a powerful gold producer this world-class asset is. Osisko owns the largest gold mine in Quebec, and at current production rates we are the largest producing gold mine in Canada. We’ve always believed that Canadian Malartic was a “Company Maker” mine, and I think that there should be little doubt left in people’s minds that this is true.

Roosen’s statement harkens back to the main theme Osisko led with at the top of an itemized anti-takeover message it issued back on January 20. Osisko started with the argument: “1. The Goldcorp offer fails to recognize the strategic value of Osisko's world-class asset base.” And in doing so described Canadian Malartic as, among gold mines, a rarity for its size and location in North America.

In releasing the January numbers, it’s taking the same message to the pulpit again; that in Canadian Malartic Osisko owns a world-class asset; that it’s big and in North America; that, as an achievement, it’s hard to replicate. It’s a critical point for Osisko to make to shareholders in its attempt to either stop or to get Goldcorp to sweeten its bid. It needs to convince its shareholders to consider Canadian Malartic special enough that they deserve more than a 28-percent or so premium that Goldcorp put on offer back in early January.

That is a notion Goldcorp, of course, has pushed back against. In its latest release Goldcorp reiterated its standpoint that the offer was fair. As Goldcorp recently put it, for Osisko shareholders “the best opportunity to maximize the value of the Canadian Malartic mine is within Goldcorp's mine portfolio.”

http://www.mineweb.com/mineweb/content/en/mineweb-gold-analysis?oid=228403&sn=Detail

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"Osisko's Board of Directors noted that the 15% premium to Osisko's unaffected share price implied by Goldcorp's Offer is very low and the price opportunistic in light of Osisko's proven high quality asset base"

http://www.osisko.com/2014/01/osisko-mining-corporation-responds-to-unsolicited-proposal-from-goldcorp-inc/