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Takeover target Osisko sees higher production at key Canadian mine

Osisko says its Canadian Malartic mine is expected to produce between 525,000 and 575,000 ounces of gold this year.

Mathieu Dupuis/Osisko Mining

Hostile takeover target Osisko Mining Corp. says its Canadian Malartic mine is expected to produce between 525,000 and 575,000 ounces of gold this year, up from 475,277 ounces last year.

The latest figures were unveiled Thursday as the Montreal-based company continues to stress the "world-class" status of Canadian Malartic in its efforts to fight off the hostile $2.6-billion bid from larger rival Goldcorp Inc.

"With life of mine average gold production of 597,000 ounces, cash costs of $525 [U.S.] per ounce and location in one of the world's premier jurisdictions, it is abundantly clear that Canadian Malartic is a world-class low-cost gold mine," said Osisko president and chief executive officer Sean Roosen.

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Canadian Malartic is one of the biggest precious-metal mines in Canada, with proven and probable in-pit reserves of 9.37 million ounces.

Osisko has stated that Vancouver-based Goldcorp's offer does not fully take into account the value that Canadian Malartic represents. It has also told its shareholders that Goldcorp's shares are a risky bet.

Desjardins Securities analyst Michael Parkin said in a research note Thursday that the updated Canadian Malartic numbers are encouraging, given improved recovery estimates, lower-than-expected capital spending and life-of-mine cash costs.

Goldcorp's bid is set to expire Friday, but an extension of that date is anticipated, Mr. Parkin said.

The Goldcorp offer is 0.146 of a Goldcorp share and $2.26 (Canadian) in cash for each Osisko share.

Osisko shares have been trading above the implied value of Goldcorp's bid since it was first announced in January.

The company says it is aggressively seeking alternatives to the Goldcorp offer.

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