OSISKO DEVELOPMENT ANNOUNCES PROPOSED ACQUISITION OF TINTIC CONSOLIDATED METALS High grade mining district in central Utah provides new operating mine and exciting frontier for development in one of the best mining jurisdictions in the world
OSISKO DEVELOPMENT ANNOUNCES PROPOSED ACQUISITION OF
TINTIC CONSOLIDATED METALS
High grade mining district in central Utah provides new operating mine and exciting frontier for
development in one of the best mining jurisdictions in the world
Montréal, January 25, 2022 – Osisko Development Corp. ( “Osisko Development ” or the “ Company”)
(ODV: TSX -V) is pleased to announce that it has entered into definitive agreements (together, the
“Agreements”) with IG Tintic LLC (“IG Tintic”) and Ruby Hollow LLC ( “Ruby Hollow”, together with IG
Tintic, the “Vendors”) to acquire 100% of Tintic Consolidated Metals LLC (“Tintic”) (the “Transaction”).
On completion of the Transaction, Osisko Development will acquire 100% ownership of the producing Trixie
Mine (“Trixie”), as well as mineral claims covering more than 17,000 acres (including over 14,200 acres of
which are patented) in Central Utah’s historic Tintic Mining District. Tintic’s recent discovery of an ultra-high
grade structure (“T2”) positions Trixie as one of the highest grade gold mines in the world. Ongoing
exploration work has demonstrated significant potential for expansion and further discovery both at Trixie
and over the broader land package.
Mr. Sean Roosen, Chair and Chief Executive Officer of Osisko Development commented: “The proposed
acquisition of Tintic further accelerates Osisko Development on its path towards becoming a mid- tier gold
miner and represents a unique opportunity to significantly enhance our portfolio of operations by adding a
high-grade producing asset in a world-class jurisdiction. In an industry where gold grade is typically quoted
in terms of “grams”, we have welcomed the shift to talking in terms of “ounces” for Trixie where we see an
excellent opportunity to build and expand upon existin g ultra-high grade producti on with the potential to
maintain a low capital intensity.”
Mr. Chris Lodder, President of Osisko Development noted: “ We have been looking at the Tintic district for
over 10 years as a copper-gold porphyry target and with the discovery of the high grade T2 gold structure,
we were given the opportunity by the Tintic partners to visit and carry out due diligence ahead of other
competitors, ultimately culminating in the acquisition of this fantastic growth opportunity in one of the top
mining jurisdictions in the world with a best-in-their-class management and operating team.”
TRANSACTION HIGLIGHTS
• Transaction supports Osisko Development’s path towards becoming a leading intermediate
gold producer
o Production from Trixie complements the near and medium-term development plans for the
Cariboo and San Antonio projects.
o In the near term, the Company is proposing technical work at Trixie with the objective that
it will justify further development, targeting an increase in production from approximately
20 koz Au p.a. to approximately 100 koz Au p.a. by 2024 through a low-capital intensity
expansion.
• Trixie is one of the highest grade gold mines in the world
o The newly-discovered T2 structure shows excellent continuity of high grades and appears
to be increasing in thickness towards the upper contact with shale.
o More than 2,300 underground samples collected over a 215 m strike length with an
average grade of 93 g/t Au and 135 g/t Ag.
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o Gold production from underground mining and vat leach processing in 2021 was 14,709
ounces at an average head grade of 59 g/t.
o Over the past week, production from exploration and development mineralization, which is
processed, via small-scale vat leaching at approximately 45 tons per day ( “tpd”), was at
blended grades between 1.2 oz/ton (41 g/t) and 5.7 oz/ton (195 g/t) Au with an average of
4.5 oz/ton (154 g/t) Au.
• Clear path to meaningful expansion and operational improvements
o Low capital intensity expansion planned at Trixie, tar geting an increase in throughput to
500 tpd by the end of 2024.
o Equipment and infrastructure in place for a straight -forward cut and fill underground
operation having low environmental footprint.
o Opportunity to significantly improve recoveries (currently 60% to 70% via vat leaching)
through metallurgical test work and implementation of appropriate processing technologies
(targeting greater than 90% recovery with the addition of a grinding circuit).
• Significant exploration upside at Trixie
o Gold mineralization remains open up and down dip and along strike.
o Ongoing exploration outside of the T2 structure will continue along the 5 km Trixie trend to
North Lily trend.
• Exposure to extensive land package in prolific brownfields district
o 100% ownership of more than 17,000 acres of mining claims (including over 14,200 acres
of which are patented) in Utah ’s second most productive mining district after Bingham
Canyon.
o The T2 structure at Trixie represents a new style of mineralization and a key focus will be
to explore with the objective of finding similar structures at other past producing mines in
the district.
o A 2011 preliminary economic assessment published on the Burgin Ag-Pb-Zn project dated
November 17, 2011 (the “2011 PEA”), previously mined by Kennecott, and highlighted the
possibility for an economic project.
o Over 20 brownfields targets within the wider land package, which include the historic
Eureka Standard mine and North Lily prospects.
o Osisko Development also plans to undertake an exploration program around known
polymetallic and copper porphyry targets within the land package.
• Fully permitted for current operations with infrastructure in place
o Existing fully-operational milling and mining facilities and equipment.
o Retaining experienced and qualified full time workforce.
o Grid power, year round paved road access, and sufficient access to water.
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• Ideally located in top-ranked mining jurisdiction
o Utah is ranked in the top- 15 mining jurisdictions globally by the Fraser In stitute and is
ranked as the sixth mining jurisdiction by the Fraser Institute’s Policy Perception Index.
o The Tintic property is located in active and well-controlled brownfields district.
o Close proximity to mining services and suppliers (Provo, Salt Lake City).
TRANSACTION SUMMARY
Tintic is a joint venture owned as to 75% by IG Tintic and as to 25% by Chief Consolidated Mining Company
(“Chief”). Ruby Hollow holds an indirect 25% interest in Tintic through its ownership, directly and indirectly,
of approximately 83% of the stock of Chief. Pursuant to the terms of the Transaction, Osisko Development
will acquire 100% of Tintic from the Vendors for aggregate payments at closing totaling approximately
US$177 million, of which approximately US$54 million will be paid in cash. In addition to the payments at
closing, the Company will pay to the Vendors: (i) US$12.5 million in deferred payments (ii) a 2% NSR
royalty, with a 50% buyback right in favour of Osisko Development exercisable within 5 years; and (iii) other
contingent payments, rights and obligations. See “Transaction Details and Timing” for more details.
Mr. Thomas E. Bowens, CPG, President of Tintic, and Manager of IG Tintic commented: “What the Tintic
team has accomplished in two and a half years, is nothing short of spectacular; from an overlooked and
underexplored area to a world class discovery and mining operation. Osisko Development ’s recognition of
the value of this property demonstrates a common vision with ours at IG Tintic, 75% owner and operator of
the Tintic joint venture during this period. With Osisko Development becoming 100% owner of this property,
with its technical expertise and financial capacity, IG Tintic members are overwhelmingly excited to continue
participating in this one-of-a kind opportunity as shareholders of O sisko Development. I am convinced the
East Tintic District ’s store of precious and base metals will come to light and will be truly world class in
every way.”
Mr. Geoff Stanley, Executive Chairman of Chief and a Managing Member of Ruby Hollow, commented:
“We are delighted to be able to announc e this transaction for the benefit of Chief and Ruby Hollow
shareholders. We are confident that Osisko Development ’s stewardship of this incredibly exciting high
grade gold discovery at the Trixie mine and the other mini ng opportunities in the Tintic distr ict will bring a
broad array of benefits to the project ’s many stakeholders. Our shareholders now have the opportunity to
become shareholders of Osisko Development and enjoy the long- term benefits of the considerable
technical and financial capabilities that it will bring to the project development, as well as exposure to the
overall Osisko Development portfolio.”
ABOUT THE TINTIC DISTRICT
The Tintic Mining District is the second most metal endowed district in Utah with excellent potential for high
grade pr ecious metal discoveries and continued expansion of known polymetallic and porphyry
mineralization. The property hosts classic porphyry epithermal mineralization with many associated styles
of mineralization identified, including high sulphidation precious metal rich veins and breccias, intermediate
sulphidation base metal and precious metal rich veins and breccias,lead- zinc-silver-gold carbonate
replacement deposits, and copper -molybdenum-gold porphyries. Small scale mining and prospecting
started in the 1860’s and organized mining for gold, silver, lead, zinc and copper began in 1892. The Tintic
district’s historical recorded production (1892- 2002) totaled 2.9 million ounces of gold, 285 million ounces
of silver, 128 thousand tons of copper, 1,163 thousand tons of lead, and 259 thousand tons of zinc.
The Trixie Mine
The Tintic property hosts 23 past -producing precious metal and polymetallic mines, including the fully
permitted Trixie which restarted small scale exploration mining in 2020. Recent exploration efforts at Trixie
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lead to the discovery of the high grade T2 structure adjacent to existing underground infrastructure
approximately 625 feet (190 m) below surface. Trixie produced 14,709 ounces in 2021 at an average head
grade of 59 g/t.
Current operations at Trixie are comprised of small scale underground mining and batch vat leaching,
processing approximately 45 tpd. This new discovery of the T2 structure at the historic Trixie mine has led
to initial production of one of the highest grade gold mines in the world with room for significant expansion
and discovery.
Osisko Development’s near term plan will be to continue underground mining and exploration development
while maintaining present production at Trixie. A total of 15,000 meters of surface and underground infill
and exploration drilling is proposed to generate an initial resource by the end of 2022 and concurrently
complete advanced technical studies on the project to generate additional surface and underground targets,
complete metallurgical testing, geotechnical work and environmental studies for future expansion into the
mine plan.
The Company cautions that the Vendors have taken the decision to commence production at Trixie in the
form of small scale underground mining and batch vat leaching without the benefit of a feasibility study, or
reported mineral resources or mineral reserves. The Company cautions that historically, such projects have
a muc h higher economic or technical risks. In continuing current operations at Trixie after closing, the
Company will not be basing its decision to continue such operations on a feasibility study, or reported
mineral resources or mineral reserves demonstrating economic and technical viability.
The T2 structure (as shown in Figure 1) was discovered in 2020 when Tintic reopened the operation. Osisko
Development’s geologists visited the property and collected samples from the T2 structure that assayed
2,952 g/t Au, 2,278 g/t Au and 1,585 g/t Au. Stock work and vein samples adjacent to the T2 structure were
also impressive, grading up to 457 g/t Au and 793 g/t Au. A total of 21 channel samples were collected on
two levels across 150 meters strike length averaging 494 g/t Au and 663 g/t Ag. The true extent of this
structure is evolving, and other, parallel structures have been discovered during exploration and
development.
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Figure 1 – T2 Structure Showing Face Samples
The Burgin Mine
The Burgin mine, previously operated by Kennecott until 1978 , has potential for a significant silver -lead-
zinc-gold deposit. A 2011 PEA outlined a seven-year life of mine plan. The historic resource as outlined in
the 2011 PEA is presented in Table 1. Osisko Development believes that the historic resource continues
to be relevant and reliable as an indication of the potential of the Burgin Mine. Further exploration work
including drilling will be required to upgrade the historic resource to current. Osisko Development cautions
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sufficient work has not been done to classify the historic resources as a current resource and Osisko
Development is not treating the historic resources as a current resource.
Table 1: Burgin Reported Historic Resource, 2011 PEA
Category
Cutoff
(oz
AgEq/t)
Tons
(k)
Ag
(oz/t)
Ag
(k oz)
Au
(oz/t)
Au
(k oz)
Pb
(%)
Pb
(k lbs)
Zn
(%)
Zn
(k lbs)
Indicated 5.00 920 7.28 6,694 0.03 23.00 9.27 170,461 3.45 63,497
Inferred 5.00 1,357 8.71 11,823 0.01 17.00 14.43 391,589 5.19 140,846
The mineralization at Burgin is a carbonate replacement type of deposit and located principally further away
from the magmatic centers and the high grade gold, high sulphidation mineralization of the Trixie trend.
Most of the historical polymetallic production occurred in these areas on the western and eastern margins
of the district. The Burgin deposit has excellent adjacent exploration potential to the north and down plunge
from the existing resource.
Regional Exploration Potential
The Tintic property is a vast mining camp currently focused on the high grade Trixie – T2 structure. The
newly discovered mineralization is rapidly advancing and open at depth and along strike, as well as parallel
structures. T2 and Trixie are part of a 5 km trend of prec ious metal rich former producers and mineral
occurrences which are to be explored on a priority basis over the next few years. Surface data and previous
exploration by major mining companies has also recognized a northerly trending argillic alteration trend
indicative of porphyry mineralization previously demonstrated on the property at targets Big Hill and
Treasure Hill.
Transaction Details and Timing
Pursuant to the terms of the Transaction, Osisko Development will acquire 100% of Tintic through the
purchase of: (i) IG Tintic’s direct 75% ownership in Tintic; and (ii) all issued and outstanding stock of Chief
(“Chief Stock”) from Ruby Hollow and other stockholders of Chief. Immediately following the closing of
Transaction, Chief will complete a merger with a newly -formed Delaware subsidiary of the Company (the
“Merger”), such that, following completion of the Merger, Chief will be wholly owned by the Company.
At closing, Osisko Development will make payments to the Vendors in the aggregate amount of
approximately US$177 million (the “Closing Payments”), comprised of: (i) cash payments of approximately
US$54 million, and (ii) the issuance of 35,099,611 common shares of Osisko Development (the “Shares”)
at a price of C$4.32 per Share for an aggregate value of approximately US$123 million.
Each of Tom Bowens, who holds approximately 27% of the membership interest in IG Tintic, and Geoff
Stanley and Douglas Meadow, who collectively hold 48% of the issued and outstanding Chief Stock
indirectly through Ruby Hollow have entered into 12-month lock-up agreements, which provide that: (i) 33%
of the Shares will be freely tradeable on the four -month anniversary of the Closing date of the Transaction
(the “Closing Date ”); (ii) an additional 33% of the Shares will be freely tradeable on the eight -month
anniversary of the Closing Date; and (iii) the remaining 34% of the Shares will be freely tradeable on the
first anniversary of the Closing Date. No new control person in Osisko Development will be created as a
result of this Transaction.
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In addition to the Closing Payments, the Company will pay the Vendors: (i) deferred payments of US$12.5
million payable in equal instalments annually over five years in cash or Shares at Osisko Devel opment’s
election; (ii) two 1% NSR royalty grants, each with a 50% buyback right in favour of Osisko Development
for US$7.5 million which is exercisable within 5 years; (iii) a right to receive the financial equivalent of 10%
of the net smelter returns from stockpiled ore extracted from Trixie since January 1, 2018 and sitting on
surface; (iv) the set -off of a US$5 million l oan owed to Osisko Development; and ( v) US$10 million
contingent upon commencement of production at the Burgin Mine.
The Agreements include representations and warranties of Osisko Development and each of the Vendors
customary for a transaction of this nature and customary interim period covenants from IG Tintic regarding
the operation of its business in the ordinary course.
Financing
The Company, through a wholly -owned subsidiary, has entered into a non- binding metals stream term
sheet (“Stream”) with a wholly -owned subsidiary of Osisko Gold Royalties Ltd. The proceeds from the
Stream will be used to fund a portion of the cash consideration payable on closing of the Transaction. The
key terms of the Stream include:
• An upfront cash payment totaling at least US$20 million and up to US$40 million.
• In the event that the full amount of US$40 million is drawn, the Company will deliver a maximum of 5%
of all metals produced from the Tintic property up to a maximum of 53,400 ounces of refined gold (the
“Threshold Stream ”). Thereafter, the Company will deliver 4.0% of all metals produced ( the “Tail
Stream”).
• If the Company elects to draw less than US$40 million, the Threshold Stream and Tail Stream shall be
reduced on a pro rata basis.
• The Company will receive ongoing payments for refined metal delivered to the Stream equal to 25% of
the spot prices.
• The Stream is anticipated to close concurrently with the close of the Transaction.
Community Support and Engagement
Tintic and its predecessors have been working and living in the communities surrounding the Tintic property
for over 150 years. The mines and communities are integrated into the social and economic fabric of the
community. Osisko Development will continue to engage and participate under the direction of the local
management team and ensure that our environmental, social and governance standards are maintained
and implemented as we sustainably and responsibly grow this exciting project to the benefit of all
stakeholders.
Approvals and Conditions
The Board of Directors of each of Osisko Development and, the Vendors have unanimously approved the
Transaction. Shareholders of Chief will also be required to approve the Merger to be completed in
connection with the Transaction. A shareholder meeting to approve the Merger will be convened and Ruby
Hollow has covenanted to vote its ~83% interest in favour of the Merger at such meeting prior to the
completion of the Transaction.
The Transaction is also subject to normal course regulatory approvals and the satisfaction of customary
closing conditions , includ ing the execution of ancillary agreements and acceptance of TSX Venture
Exchange (the “TSXV”). The IG Tintic and Chief transactions are inter-conditional, meaning that closing of
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each transaction will happen simultaneously and one cannot close without the other. Subject to the
satisfaction of these conditions, Osisko Development expects the Transaction to close in Q2 2022.
None of the securities to be issued pursuant to the Transaction have been or will be registered under the
United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws,
and any securities issued in the Transaction are anticipated to be issued in reliance upon available
exemptions from such registration requirements pursuant to Section 3(a)(10) of the U.S. Securities Act and
applicable exemptions under state securities laws. This news release does not constitute an offer to sell or
the solicitation of an offer to buy any securities.
Advisors and Counsel
Eight Capital is acting as Osisko Development ’s financial advisor and Bennett Jones LLP is acting as
Osisko Development ’s legal advisor . Holland & Hart LLP is acting as Osisko Development ’s US legal
advisor. Eight Capital has provided a fairness opinion to the Board of Directors of Osisko Development .
Minvisory Corp. is acting as Chief ’s financial advisor; Parr Brown, Gee and Loveless is acting as Chief ’s
US Counsel; and Stikeman Elliott LLP is acting as Chief’s Canadian Counsel.
Osler, Hoskin & Harcourt LLP is acting as IG Tintic’s legal counsel.
Qualified Person, Technical Information
Maggie Layman, P.Geo. Vice President Exploration of Osisko Development , is a Qualified Person within
the meaning of National Instrument 43- 101 – Standards of Disclosure for Mineral Projects , and has
prepared, validated and approved the technical and scientific content of this news release.
QA / QC
Samples were sent to American Assay Laboratories in Nevada and crushed to 70% less than 2 mm, rotary
split off 250g, pulverize split to better than 85% passing 75 microns. Samples were assayed by fire assay
and with a 4-acid digestion with ICP-MS finish. Over limits were assayed by fire assay and gravimetric finish
for Au and Ag and by 4 acid over limit method for CU, Pb and Zn. Standards, blanks, and duplicates were
inserted into the samples at regular intervals as QA-QC checks.
Select Financial Information
The following table, which is provided by IG Tintic, presents the select financial statement information with
respect to Tintic. Such information is derived from the audited financial statements of Tintic for the year
ended December 31, 2020 and the unaudited interim financial statements of Tintic for the nine-month period
ended September 30, 2021.
(provided in 000’s US$) Twelve months ended
December 31, 2020
Nine months ended
September 30, 2021
Total Current Assets 353 1,006
Total Assets 25,334 28,846
Total Current Liabilities 7,196 3,757
Total Liabilities and Equity 25,334 28,846
Net Loss 6,522 —