UPDATE 1-Osisko stock plunges on C$350 mln equity sale

TORONTO, Feb 4 (Reuters) - Osisko Mining (OSK.TO) shares plunged 17 percent on Wednesday after the Canadian gold junior agreed to sell at least C$350.4 million ($287 million) worth of stock at well below the previous day's market price.

The company said the offering will satisfy the equity requirements to fund its Malartic gold project in western Quebec.

Osisko said late on Tuesday it had entered a bought deal to sell 48.5 million units at C$4.55 each, with each unit worth one common share and one-half of a share purchase warrant.

Early on Wednesday, Osisko said it was increasing the offering to 77 million units, or C$350.4 million, and that the value of the deal could surge to C$402.9 million if an over-allotment is exercised.

Osisko's shares were down 95 Canadian cents at C$4.50 on the Toronto Stock Exchange on Wednesday morning.

Osisko is moving an entire neighborhood in the town of Malartic to build the mine, which is expected to yield 628,000 ounces of gold a year when it begins production in 2011. This would make it Canada's largest open-pit gold mine.

The offering is being underwritten by a syndicate led by Thomas Weisel Partners and BMO Capital markets, and is expected to close on or about Feb. 25.

($1=$1.22 Canadian) (Reporting by Cameron French; editing by Peter Galloway)