Osisko enters joint venture with Appian

Osisko Metals Inc. Feb. 22 announced a C$100 million (US$74 million) investment agreement with Appian Capital Advisory LLP, a London-based private equity group that specializes in acquiring and developing mining assets, under which the parties are to form a joint venture for the advancement of the Pine Point zinc-lead project in Northwest Territories, Canada.

Located just south of the Great Slave Lake, Pine Point was home to a former mine operated by Cominco (now Teck Resources) that produced roughly 14 billion pounds of zinc and 4 billion lb of lead from around 64 million metric tons of ore during a roughly 24-year span beginning in 1964.

Acquiring Pine Point in 2018, Osisko completed a modernized preliminary economic assessment for reestablishing a zinc mine, yet quickly found it necessary to update the PEA considering the volatility of present metals prices.

The updated PEA and mineral estimate suggests Pine Point now hosts 15.8 million metric tons of indicated resource averaging 4.17% zinc and 1.53% lead and 47.2 million metric tons of inferred resource averaging 4.43% zinc and 1.68% lead.

Ultimately, this would result in 329 million pounds of zinc and 141 million lb of lead over a 12-year mine life.

The joint venture and funding agreement with Appian is designed to get the project to "shovel-ready" status to begin taking advantage of this remaining substantial resource.

"We are delighted to welcome Appian as a long-term joint-venture partner for the advancement of the Pine Point project," said Osisko Metals CEO Robert Wares. "This milestone agreement is a significant endorsement and daylights the considerable intrinsic value of Pine Point. The transaction allows us to leverage Appian's extensive mine development experience and includes a crucial investment of C$75 million into the project that will advance the development of Pine Point to a 'shovel-ready' status."

Commitment by Appian will be an investment of C$100 million to be paid over an estimated four-year period, which will result in an undivided 60% interest in Pine Point Mining Limited (PPML), the wholly-owned subsidiary of Osisko Metals and owner of the Pine Point project, at a pre-money valuation of C$91.3 million.

The investment will also include a C$75.3 million (US$55.5 million) funding – with an initial C$19.8 million (US$14.6 million) upon establishment of the JV – to advance Pine Point to a final investment decision, or construction approval, and approximately C$24.7 million (US$18.2 million) in cash payments to Osisko. The latter will include:

• A C$8.3 million initial payment on closing of the transaction to acquire an initial 9% interest in PPML.

• A milestone payment upon a positive final investment decision to bring Appian's ownership in PPML to 60%, expected to be approximately C$16.4 million. The final milestone payment will increase or decrease should the actual amount spent on the final investment decision differ from the estimated budget of C$75.3 million.

In addition, Appian has agreed to make a C$5 million investment in the common shares of Osisko Metals on closing, priced at C24.81 cents per share.

"This funding is expected to cover all costs including final definition drilling, additional exploration drilling, feasibility, environmental assessment and permitting, including Indigenous engagements," said Wares. "This joint venture, coupled with Appian's significant cash payments to Osisko Metals and C$5 million equity investment, will allow Osisko Metals to focus on the development of other projects while avoiding excessive dilution to advance the Pine Point project."