Osisko CEO sees mid-tier status despite M&A talk

TORONTO (Reuters) - Osisko Mining's (OSK.TO) shares jumped 6.5 percent on Tuesday on rising speculation about takeover interest in the company, but its chief executive said the Canadian gold explorer has ambitions of being a significant player in its own right.

"We have set the course to be the next emerging intermediate producer," Osisko CEO Sean Roosen said in an interview on a day the company's stock climbed to an all-time high, helped by Goldcorp's (G.TO) announcement that it has built a 13 percent stake in the company.

In the same breath, however, Roosen acknowledged the matter could quickly fall out of his hands if one of the several cash-rich majors that are believed to covet Osisko come up with an offer he can't refuse.

"In terms of what happens on the playing field on the TSX right now with other players, we'll have to see," he said.

The company's shares have doubled in 2009, bringing its market size to nearly C$2 billion ($1.8 billion) as investors have warmed to the progress of its Malartic project, for which Osisko is moving an entire section of a small town in Quebec.

The $789 million project, which is nearly fully funded, boasts a reserve of 6.3 million ounces and will become one of the largest gold mines in Canada when it opens in 2011.

Osisko's shares were up 46 Canadian cents at C$7.50 at mid-afternoon, as the news of Goldcorp's stake raised expectations that it or another top miner could make a bid.

"The investment suggests a potential acquisition is at least being contemplated," Blackmont analyst Richard Gray said in a note.

Canaccord Adams' Steve Butler agreed, saying the development "underscores our view that Osisko is an attractive M&A target given the project's robust reserve/resource base and potential to produce in excess of 630,000 ounces a year in a favorable mining jurisdiction."

Roosen, meanwhile, called the Goldcorp stake a "big stamp of approval" on the Malartic project.

OTHER POTENTIAL BUYERS

Other top players that have been tapped as potential suitors for Osisko are Kinross Gold (K.TO) and Agnico-Eagle Mines (AEM.TO). Agnico, in particular, is seen as a good fit as its main operations are close to Malartic.

Butler noted that Goldcorp's interest in a project so close to Agnico's operations has similarities to the battle last year for Gold Eagle, which owned the Bruce Channel deposit near Goldcorp's Red Lake mine in Ontario.

Agnico bought about 5 percent of Gold Eagle last June, spurring Goldcorp to bid for the whole company the next month.

Analysts say the biggest hindrance for a potential buyer of Osisko is its hefty price tag, although with gold prices strong and large deposits tough to come buy, there are several players who could afford it.

Roosen said the company hopes to begin construction on the Malartic mine in about a month.

Osisko has been moving houses and public buildings to a new area in the northern part of the town, but still has to agree on terms with four or five homeowners whose houses sit on the future site of the open-pit mine.

"We're working with those folks to come to a final solution, and I think by the end of this year we'll have everything pretty much wrapped up," he said.

($1=$1.10 Canadian)

(Reporting by Cameron French; editing by Rob Wilson)