Osisko Mining, a Canadian-based minerals exploration company, and Gold Fields, a South African-based globally diversified gold producer with mines across the world, announced on May 2 their plans to begin a joint venture agreement for ownership and development of Osisko’s Windfall gold project, now known as the Windfall Mining Group. Located in the Abitibi region of Quebec, Canada, the Windfall Mining Group project sits between Val-d’Or and Chibougamau, offering substantial reserve potential for both parties.
Gold Fields will acquire 50% interest in the Windfall project after fulfilling a cash payment of C$300 million upon signing, plus a few other terms. The company will make an additional cash payment of C$300 million “payable on the issuance of key permits by the Deputy Minister of Québec’s Ministère de l’Environnement, de la Lutte contre les changements climatiques, de la Faune et des Parcs (MELCCFP) to the Partnership authorising the construction and operation of the Windfall Project.”
The companies will share a 50/50 responsibility for all construction and pre-construction costs moving forward. They estimate the budget for pre-construction costs at C$250 million and construction costs at C$789 million.
Gold Fields will fund regional explorations of up to a maximum of C$75 million. Following this expense, Osisko Mining will fund further exploration programs for the venture.
Aside from the initial cash payment of C$300 million, Gold Fields will also make separate reimbursement payments for items that Osisko Mining has already spent on pre-construction expenses. The payments will include two separate $17 million fulfilments: one on July 31 and one on December 31.
The joint venture will offer each company equal representation in partnership and governance agreements “to leverage each party’s skillsets,” according to Osisko Mining’s report.
“We are very pleased to partner with Gold Fields on the Windfall project and our exploration property portfolio. Today is the start of what we believe will prove to be a long and fruitful partnership with Gold Fields at Windfall and in what we both believe is a significant emerging gold district in Québec. This partnership further strengthens our strong balance sheet, allows us to significantly de-risk Windfall, and brings us a very important step closer to realizing our objective of becoming a leading Canadian gold producer,” John Burzynski, the CEO and Chairman of Osisko Mining, announced in the statement.
“With the proceeds from this Transaction, Osisko is fully funded for our share of development capital to bring Windfall into production. Osisko shareholders retain considerable upside in the project while also benefiting from the mine building, operating, and technical expertise of Gold Fields. Assuming the project is ultimately permitted and approved by the partners consistent with the Windfall Feasibility Study, Gold Fields’ acquisition cost, exploration commitment, and contribution to pre-construction and project capital would ultimately represent an investment of C$1.2 billion to acquire its interest, bring Windfall into production and further unlock the regional exploration upside. This Transaction is highly compelling on many fronts and represents the best path forward to maximize value for all stakeholders,” the statement concluded.
The Windfall gold deposit is a world-class gold resource offering one of the highest grading potentials in Canada. According to Gold Fields, “This transaction constitutes a measured, strategic entry into a sought-after, Tier 1 mining jurisdiction, at an attractive valuation, underpinned by a world-class near mine asset, with significant camp scale exploration potential.”
After extensive research, Gold Fields believes the project has the potential to deliver high yields with minimal costs or surface footprints. The project’s considerable strike and down plunge show excellent future exploration potential, with currently defined resources at a depth of 1,600 meters, with some areas as deep as 2,625 meters.
“Having carried out extensive due diligence, management interaction, and site visits for just over a year, Gold Fields believes the Windfall Project is on track to become a high-quality, low-cost underground gold mine with a relatively small surface footprint and considerable growth prospects along strike and down plunge, well beyond delineated Mineral Reserves and the current ten year projected mine life set out in Osisko’s December 2022 Windfall Feasibility Study,” Gold Fields continues.
Gold Fields currently maintains operations in the Americas, Australia, South Africa, and West Africa. The joint venture will allow the company to further expand its North American exploration plans.
As gold demand soars worldwide with more pressure from central banks and investors, analysts expect to see many moves like this in the future. Mining companies want to capitalize on the opportunity to meet growing demand rates as gold performs better than ever.
