Osisko Metals To Joint Venture Pine Point Zinc Project As Part Of $100 Million Investment
Osisko Metals (TSXV: OM) is giving up majority ownership of its Pine Point Project as a means of continuing to advance the project to a construction decision. The firm has reportedly signed a joint venture agreement with Appian Natural Resources Fund to secure a $100 million investment in the property.
“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. This funding is expected to cover all costs including final definition drilling, additional exploration drilling, feasibility, environmental assessment and permitting, including Indigenous engagements,” commented Robert Wares, CEO of Osisko Metals.
The investment is set to occur over a four year term, and will see the London-based private equity group Appian Capital Advisory take a 60% interest in the project. The arrangement as a result values the project at a pre-money figure of $91.3 million.
The Pine Point Project, found in the Northwest Territories on the south shore of Great Slave Lake, based on a 2022 preliminary economic assessment, is said to have an after-tax NPV of $602 million, with the most recent mineral resource estimate reporting that the project has 15.7 million tonnes of 5.55% zinc equivalent indicated resources, and 47.2 million tonnes of 5.94% zinc equivalent inferred resources.
Ownership in the project by Appian will begin with an initial 9% stake via an $8.3 million initial payment upon closing, with subsequent cash infusions to increase that ownership stake. A further cash payment of $16.4 million will be made to Osisko upon a positive final investment decision to proceed with the project. The remaining $75.3 million of funding will go towards advancement of the project, as the venture looks to move towards a final investment decision on whether to proceed with construction.
As part of the joint venture agreement, Osisko will not be required to make further cash contributions to the joint venture until Appian has reached its 60% ownership target, with funding for the venture to come via cash calls to Appian when required. A budget has also been put into place to determine how that $75.3 million figure is to be spent, which is outlined as follows.
Separately, Appian will be taking an interest in Osisko directly as well, having agreed to invest $5.0 million at a price of $0.2481 per common share. The two firms have also entered into a $11.5 million convertible instrument that will be utilized by Osisko to fund the current drill program at Pine Point.
Given the fact that Pine Point was Osisko’s flagship project, which it will now be losing a majority interest in, the company has indicated that it has exercised an option to earn a 100% interest in the past-producing Gaspe Copper Mine, found in the Gaspe Peninsula of Quebec.
Osisko Metals last traded at $0.255 on the TSX Venture.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.
