Under the definitive agreement, Osisko will acquire the remaining shares it doesn't own through a statutory plan of arrangement.
Beaufield shareholders will be entitled to 0.0482 of an Osisko share, implying an offer price of C8.2c per Beaufield share, or a 54% premium based on the 20-day volume weighted average price of both companies' shares at August 14.
An Osisko Mining subsidiary, O3 Investments, had taken a 16.4% stake in Beaufield in February 2017 and had further increased its holding to 27% in January through a share purchase agreement.
Beaufield's Urban-Windfall project in Quebec is next to Osisko's Windfall/Lynx project, where a preliminary economic assessment last month outlined an average annual production of 218,000 ounces of gold over eight years.
Beaufield has several other properties, including Hemlo adjacent to Barrick Gold's mine of the same name and Eleonore-Opinaca next to Goldcorp's Eleonore gold mine.
Beaufield president and CEO Ron Stewart said the company was very pleased to be joining forces with Osisko and said the combination of projects would benefit shareholders of both companies.
"By joining Osisko in our large-scale exploration and development programme at Windfall, Beaufield shareholders have the opportunity to capitalise on the strong premium offered today and to benefit from the future growth of our project," Osisko president and CEO John Burzynski said.
The arrangement will be put to Beaufield shareholders at a meeting likely to be held in October.
Beaufield shares closed up 25% yesterday to C7.5c and Osisko shares climbed off a 52-week low of $1.60 reached intraday to close up 0.59% or 1c to $1.71.