The transaction is valued at C$479m ($424m), reported Reuters. Under the Plan of Arrangement, Osisko will issue 0.92 of its share for each share of Virginia Mines.
The Montreal-based company will have two major gold royalty assets in Québec, Canada, including Osisko’s 5% net smelter return (NSR) royalty on the Canadian Malartic mine, and Virginia Mines’ sliding-scale 2.2% – 3.5% NSR royalty on the Éléonore mine.
Canadian Malartic produces around 525,000oz. gold each year and it achieved commercial production in May 2011.
Goldcorp, which operates the Éléonore mine plans to boost production to around 600,000oz a year by 2018. The mine commenced first gold production in October.
Osisko chairman and CEO Sean Roosen said: "Shareholders of both companies will benefit from increased diversification, superior trading liquidity, a strong balance sheet and a heightened ability to compete for future growth opportunities in the royalty business."
Following the completion of the deal, Osisko and Virginia shareholders will own 61% and 39% stakes respectively in the combined company, which will be named Osisko Gold Royalties.
