Osisko Development falls after $143.8M equity offering dilutes shareholders
Gold explorer completes bought deal at $3.54, stock slips below offering price amid 15.7% dilution
Osisko Development Corp. shares slid Tuesday after the Canadian gold explorer completed a US$143.8 million bought-deal public offering that dilutes existing shareholders by 15.7%, with the stock trading below the offering price in early market action.
The Montreal-based company issued 40.6 million common shares at US$3.54 per share, representing a significant capital raise that includes the full exercise of underwriters' over-allotment options. The stock, which closed Monday at US$3.35, was trading at approximately US$3.38 in Tuesday's session—roughly 5% below the offering price, signaling investor skepticism about the timing and terms of the financing.
Underwriters received a 4.5% cash commission on the gross proceeds, standard for bought-deal financings in the junior mining sector. Notably, Double Zero Capital LP, an existing insider, purchased 8.08 million shares for US$28.6 million, representing roughly 20% of the total offering through exercise of pre-emptive rights under an August 2025 investor rights agreement.
The proceeds will fund an aggressive 70,000-meter drilling program at the company's flagship Cariboo Gold Project in British Columbia, focusing on infill conversion drilling and at-depth exploration. The project, which received key environmental and mining permits in late 2024, is advancing toward a projected commercial production startup in 2027.
A feasibility study released in April 2025 envisions a 10-year underground operation producing approximately 1.89 million ounces of gold, with average annual production of 190,000 ounces during the first five years. The infill drilling program funded by the equity offering aims to upgrade existing mineral resources to proven reserves, potentially improving the project's economics and production profile.
Osisko Development's financing comes amid a challenging period for development-stage mining companies, which typically face high dilution risk as they raise capital to advance projects toward production. The company's market capitalization stands at approximately US$864 million, with one analyst maintaining a price target of US$6.80—roughly double the current share price—reflecting the project's potential if successfully brought online.
The stock's recent performance has been volatile, touching a 52-week high of US$4.21 in January before retreating on the offering announcement. Shares remain well above their 52-week low of US$1.16, set during a broader sector selloff in 2025.
The Cariboo Gold Project represents a significant regional development opportunity, located in the historic Cariboo mining district of British Columbia. Recent infill drilling results in December 2025 showed intercepts including 8.56 grams per tonne gold over 8.5 meters and 130.32 g/t gold over 0.5 meters, which the company said were consistent with modeled reserve stopes and indicated potential for upside mineralization in new areas.
Gold prices have remained elevated following what analysts described as an "explosive 2025 rally," with expectations for prices to consolidate in the US$4,000-US$4,500 per ounce range in 2026. This environment supports project economics for emerging producers like Osisko Development, though the company currently reports negative operating margins as it invests heavily in development activities.
With approximately 29.7% insider ownership and 30.4% institutional holding, Osisko Development's shareholder base includes significant strategic stakeholders. The participation of Double Zero Capital in the offering helps maintain insider ownership levels, though the overall dilution impact on minority shareholders remains substantial.
The company views 2026 as a critical inflection point for the Cariboo project, with construction activities expected to continue through year-end ahead of the targeted 2027 production startup. The success of the upcoming drilling program in converting resources to reserves will be closely watched by investors as the key determinant of whether the dilutive financing ultimately creates shareholder value.