By Euan Rocha
TORONTO Jan 20 Osisko Mining Corp
rejected on Monday an unsolicited C$2.6 billion ($2.37 billion)
takeover bid from rival Goldcorp Inc, saying the offer
was financially inadequate and not in the best interests of its
The rejection, which sets the stage for a possibly bruising
takeover battle between the two Canadian gold miners, came as no
surprise. In its preliminary response to the bid last week,
Osisko said the 15 percent premium being offered by Goldcorp was
"Goldcorp's offer significantly undervalues Osisko's
world-class Canadian Malartic mine, and the rest of the
company's portfolio of high-potential projects," the
Montreal-based miner said in Monday's statement.
It also reported 2013 production results, which showed a 22
percent increase in gold output in the year, and an 11 percent
decrease in cash costs.
Osisko said it expects its operating costs to continue to
decline in 2014 as it is now able to access higher grade areas
at the Malartic mine in northwestern Quebec. As most of its
costs are denominated in Canadian dollars, the company said the
weakening Canadian dollar is also likely to support its results.
The company said gold production in 2013 totaled 475,277
ounces at an estimated cash cost of C$760 an ounce, compared
with 388,478 ounces at a cash cost of C$849 an ounce in 2012.
Osisko said that with the strong performance of the Malartic
mine, the company was able to increase its cash balance last
year and to reduce debt. As of Dec. 31, Osisko's cash balance
was roughly C$210.5 million, up from C$155.5 million in 2012.
Goldcorp said last week that it decided to proceed with its
unsolicited offer after a long series of frustrated attempts to
engage Osisko in talks about a deal.
In response, Osisko said on Monday that those discussions
had never led to a credible proposal from Goldcorp. The company
also noted that Goldcorp's offer is lower than the current
trading price of Osisko shares.
The shares, which were down 3 Canadian cents at C$6.44 on
Monday, continue to trade significantly higher than the value of
Goldcorp's cash-and-share, which was worth about C$6.02 a share.
The stock has traded above the value of the Goldcorp offer
since it was announced, indicating that investors expect a
sweetened bid to emerge.
Osisko said is exploring strategic alternatives in light of
the Goldcorp offer and it advised its shareholders to reject the
hostile bid and not tender their shares to it.