FP/wire say Osisko's cheap financing sinks shares

2009-02-05 08:55 ET - In the News

The Financial Post reports in a Reuters dispatch Thursday that Osisko Mining shares plunged Wednesday after the Canadian gold junior agreed to sell at least $350.4-million of stock below market prices to finance its Malartic project in Quebec. The unbylined item says the stock sale will get the company most of the way through paying for the $700-million project. Malartic will be Canada's largest open pit gold mine when it opens in 2011. Osisko follows the lead of other gold players that have issued stock recently to shore up balance sheets. "The good news is the company has gone a long way to financing the deposit," said gold bug John Ing, president of Maison Placements in Toronto. "The bad news is that over the near term, the company has devastated their existing shareholders, because it's a huge concession." Osisko said late Tuesday it had entered a bought deal to sell 48.5 million units at $4.55 each -- well below its Tuesday close of $5.45 -- with each unit worth one common share and one-half of a share purchase warrant. Osisko closed at $4.50 Wednesday, down 95 cents on the Toronto Stock Exchange.