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Quebec gold miner Osisko Mining Corp. has shot back at would-be acquirer Goldcorp Inc. with a golden raspberry, issuing a lengthy and spirited list of reasons Monday why shareholders should say no to its $5.95-per-share offer. The letter makes good points as well as some disingenuous ones, which is hardly a surprise in a hostile takeover defence. But it leaves Osisko shareholders, who have driven the stock price well beyond Goldcorp's bid, without an answer to the question: If not Goldcorp, then what?

Osisko is right that its Canadian Malartic mine, with 10 million ounces of proven and provable gold reserves in northwestern Quebec, is a quality asset located in one of the world's best mining jurisdictions (Quebec beats Argentina or most African countries when it comes to resource nationalism). It is also right to call the Goldcorp bid, representing a 15 per cent premium to the previous closing price earlier this month, "opportunistic." But at what cost do Osisko shareholders hold out for a better opportunity?

The bid is opportunistic for two reasons. Valuations across the gold business are lower than they have been in an era of weak prices for the precious metal – although, as National Bank Financial analyst Steve Parsons points out, investors are now valuing gold companies based on their cash flow rather than their net asset values (a function of reserves multiplied by the investor's forecast for the gold price, a more practical metric for a more cautious period. Meanwhile, most other senior miners who could swallow a company the size of Osisko are either financially or operationally challenged, or like Agnico-Eagle Mines Ltd. or Yamana Gold Inc., uninterested, as they tend to go for smaller fish. That leaves Goldcorp. There is unlikely to be another bidder, and Goldcorp isn't likely to bid against itself.

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For Osisko shareholders to say no, they have to believe the gold price is going up, that acquisition premiums will skyrocket again, and that previously acquisitive – but now financially challenged – majors such as Barrick Gold Corp. and Kinross Gold Corp. will get their houses in order and start buying assets again. While Canadian Malartic's production (at around half a million ounces per year) may be that of a top-flight player, they should remember that its gold grade is not as high as those of other mines, and that the stock is more vulnerable than other miners because the vast majority of its value is tied up in a single property. As Mr. Parsons sees it, "There is a lot of risk to being a single-asset company with [second-tier-quality gold]. The current share price appropriately reflects the value in the context of the current market," he says, where valuations are based on cash flows, not a long-term bet on the gold price.

For Osisko shareholders to hold out for the kinds of valuations bidders have (over)paid in the past, as Osisko recommends, is a bit silly – the going price for gold companies now is much lower because much of the froth has gone out of the business. It's as if the Osisko board is saying "Wait until the price of gold skyrockets and Barrick starts overpaying again – just THINK of how much your stock will be worth."

The majors will likely return to financial health and gold prices may climb to huge levels again. Such an outcome would likely push up Osisko's value. But do those conditions materialize in one year, two, five or more? The higher that number in the minds of shareholders, the more likely they will be to take the best offer they can from Goldcorp – even if it is the one already on the table.

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