Osisko Gold Royalties Ltd (the “Company” or “Osisko”) (OR: TSX & NYSE) is pleased to announce that it has entered into a binding agreement to acquire a 1.8% gross revenue royalty (“GRR”) on the Dalgaranga Gold project (the “Dalgaranga Royalty” and the “Project”) operated by Spartan Resources Limited (“Spartan”) in Western Australia. In addition, Osisko shall also acquire a 1.35% GRR (the “Exploration Royalty”) on additional regional exploration licenses in proximity to Dalgaranga. The considerations to be paid by Osisko to the seller, Tembo Capital Mining Fund III (“Tembo”), for the Dalgaranga Royalty and the Exploration Royalty, respectively, total US$44 million and US$6 million (collectively the “Transaction”). Closing of the Transaction is subject to approval from Australia’s Foreign Investment Review Board which is expected in the coming weeks.
TRANSACTION HIGHLIGHTS
Exposure to a Premium Gold Development Project in a Top-Tier Mining Jurisdiction
- Dalgaranga is one of the best gold development and production re-start projects globally. The Project is located in Western Australia, one of the most prolific and well-established mining jurisdictions; and
- Dalgaranga, a recently mined open pit operation, has been rejuvenated by very impressive new high-grade discoveries, most notably the Never Never and Pepper deposits, which have shifted the focus towards ore extraction via underground mining methods.
Near-Term Cash Flow Potential
- The Dalgaranga mill is fully-permitted and approvals for future underground mining are in progress, providing a clear path to near-term production. The Project is on the verge of re-starting as one of Western Australia’s next significant high-grade gold mines with first production from underground likely re-commencing within the next 2 years.
Significant Geological Potential
- High-grade discoveries at the Project continue to drive ongoing underground mineral inventory growth;
- Spartan expects to complete a Mineral Reserve Estimate update and Feasibility Study both within the first half of 2025; the new underground mine plan will serve as the basis for Spartan’s Final Investment Decision (“FID”) to re-start operations at Dalgaranga; and,
- In addition to the evolving exploration story at Dalgaranga, the Exploration Royalty provides exposure to a large prospective land package covering mineralization within trucking distance to various mills located in the Murchison Gold District.
Jason Attew, President and CEO of Osisko commented: “Osisko’s ability to uncover and execute accretive near-term cash flow precious metals transactions in Tier-1 mining jurisdictions is synonymous with our strategy. We believe that Dalgaranga is one of the most attractive gold development and re-start projects globally given its high-grade underground nature, and its location in the Murchison Gold District in Western Australia. What the Spartan team has been able to accomplish in terms of resource discovery and definition at Dalgaranga over the past two years is impressive. We believe that Spartan will move forward with an FID at the Project before the end of 2025 and that its team will continue to expand the high-grade resource at Dalgaranga. We’re extremely pleased to be associated with one of Australia’s most exciting gold development and re-start opportunities, and with an asset that boasts such exciting exploration upside potential. We look forward to our partnership with the Spartan team going forward.”
DALGARANGA ROYALTY – ASSET HIGHLIGHTS
Fully-Permitted Processing Plant in a Tier-1 Mining Jurisdiction
- With most material approvals already in place, the Project is in a position to be advanced quickly into development and construction upon FID and final project financing; and,
- Significant infrastructure has already been established on site, including a 2.5 million tonnes per annum sulphide processing mill (gravity and CIL) commissioned in May 2018 and operated until November 2022, and associated tailings, water, power and camp facilities to support the operations (all currently on care & maintenance). Spartan has also commenced construction of twin exploration declines, which is also likely to also be used for near-term production purposes.
High-Grade, Long Life, and Low-Cost Future Gold Mine
- Spartan’s Dalgaranga licenses cover an area of approximately 509 square kilometers (“km2”) in the prospective Murchison Gold District of Western Australia;
- As of June 30th, 2024 the global Mineral Resource Estimate (“MRE”) at Dalgaranga consisted of 8.70 million tonnes (“Mt”) grading 4.98 g/t gold (“Au”) for 1.393 million ounces (“Moz”) in the Indicated category, in addition to 7.44Mt grading 4.56 g/t Au for 1.089 Moz in the Inferred category;
- The Project’s “high-grade core,” which is spread across the Never Never and Pepper deposits, consists of 3.88Mt grading 8.74 g/t Au for 1.09 Moz in the Indicated category, and 2.86Mt grading 8.52g/t Au for 0.78 Moz in the Inferred category and currently contains 75% of the identified gold to date; as such, this area remains a key target for future MRE expansions;
- Spartan is also focused on delineating higher grade underground Mineral Resources for the Four Pillars and West Winds gold prospects, situated under the historic Gilbey’s open pit;
- Based on the above MRE, Osisko currently expects a mine life of 12+ years at Dalgaranga; and,
- Due to the high-grade nature of the deposit, Osisko expects Dalgaranga to be in the lowest quartile on the global gold cost curve, once back in production.
Spartan is a Mid-Sized and Experienced Australian Underground Miner
- Spartan is a mid-sized and well-capitalized miner (~A$90 million in cash at June 30, 2024), led by a management team with a history of exploration success, mine development and operational expertise;
- Spartan has access to Western Australia’s renowned, highly-skilled and trained local mining workforce; and,
- Spartan’s key shareholders include Ramelius Resources Limited (18%) and Tembo (10%).
