Osisko Metals Announces Friendly Acquisition of Pine Point Mining
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OSISKO METALS ANNOUNCES FRIENDLY ACQUISITION OF PINE POINT MINING
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES
Montréal, Québec and Toronto, Ontario (December 18, 2017) – Osisko Metals Incorporated ("Osisko
Metals") (TSX-V:OM) and Pine Point Mining Limited ("Pine Point" ) (TSX-V:ZINC) are pleased to
announce that they have entered into a definitive arrangement a greement dated December 15, 2017 (the
"Agreement") pursuant to which, among other things, (i) Osisko Metals has agreed to acquire all of the
issued and outstanding common shares of Pine Point, and (ii) a newly formed company ("Spinco") will be
created to hold all of the assets and liabilities of Pine Point , with the exception of the Pine Point project
located in the Northwest Territories (the " Pine Point Project"), all of which is to be completed by way of a
statutory plan of arrangement under the Business Corporations Act (Ontario) (the " Arrangement"). The
Arrangement will result in Osisko Metals acquiring the Pine Poi nt Project in furtherance of Osisko Metals'
stated strategy of consolidating and developing base metal assets at the mining district scale.
Under the terms of the Agreement, holders of common shares of P ine Point (each, a " Pine Point Share")
will be entitled to receive, for each Pine Point Share held imm ediately prior to the effective time of the
Arrangement:
i) 0.271 (the " Exchange Ratio") of a common share of Osisko Metals (each whole common
share, an "Osisko Metals Share");
ii) 0.0677 of a common share purch ase warrant of Osisko Metals (each whole common share
purchase warrant, an "Osisko Metals Consideration Warrant"), with each Osisko Metals
Consideration Warrant entitling the holder thereof to acquire o ne Osisko Metals Share at
an exercise price of C$1.50 per Osisko Metals Share for a perio d of 12 months from the
closing of the Arrangement, and
iii) one (1) common share of Spinco (a " Spinco Share"), which will be consolidated on a 10:1
basis under the Arrangement.
The Exchange Ratio implies consideration of approximately C$0.2 1 per Pine Point Share, based on the
closing price of the common shares of Osisko Metals on the TSX Venture Exchange (" TSX-V") on
December 15, 2017 (which, for greater certainty, attributes no value to the Osisko Metals Consideration
Warrants or Spinco Shares). Further, the Exchange Ratio represe nts a premium of (i) approximately 23%
based on the respective closing prices, and (ii) approximately 27% based on the respective 30-day
volume-weighted average prices, in each case, of Osisko Metals Shares and Pine Point Shares on the
TSX-V as of the close of busines s on December 15, 2017. This im plies a total equity value of
approximately C$34 million on a fully diluted in-the-money basi s. Shareholders of Pine Point will also
benefit from the equity interest in Spinco and the optionality inherent in the Osisko Metals Consideration
Warrants that they are entitled to received under the Arrangeme nt. Upon completion of the Arrangement,
existing shareholders of Osisko Metals and Pine Point will own approximately 62% and 38%, respectively,
of pro-forma Osisko Metals (on a fully diluted in-the-money basis).
Pro-forma Osisko Metals Highlights
• Leading Base Metal Explorer: Solidifies Osisko Metals' posit ion as one of the most aggressi ve
base metal exploration and development companies at a time when base metal supply and demand
fundamentals are exceptional.
• Consolidation of Canada's Two Premier Zinc Producing Camps: The Pine Point Project adds
another cornerstone asset to the Osisko Metals portfolio. Combi ned with the Bathurst Mining Camp,
Osisko Metals now controls a strong development project pipelin e within two world class past-
producing base metal camps.
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• Maintains Strong Balance Sheet: Pro-forma Osisko Metals will continue to have a strong balance
sheet, with approximately C$38 million of cash that is availabl e to aggressively advance both of its
brownfield assets.
• Strong Shareholder Support: Osisko Metals has entered into voting and support agreements w ith
each director and senior officer of Pine Point and certain sign ificant shareholders of Pine Point
(being Global Resource Fund and Zebra Holdings and Investments S.à.r.l.) representing
approximately 39.2% of the outstanding Pine Point Shares. These supporting shareholders of Pine
Point have, among other things, agreed to vote their Pine Point Shares in favour of the
Arrangement.
Pine Point Project Highlights
• Leveraging Substantial Infrastructure: The Pine Point Project is located near Hay River in the
Northwest Territories. Unique among mining projects in the Nort hwest Territories, the Pine Point
Project benefits from substantial infrastructure including pave d road access, rail head in Hay River
and hydro-electric power available on site.
• Ready for Development: The Pine Point Project has had a positive Preliminary Economic
Assessment study that was filed on May 2017, which focused on a restricted subset of open-pit
deposits, totaling 25.8 million tonnes of Indicated Resources g rading 2.9% zinc and 1.1% lead and
3.7 million tonnes of Inferred Re sources grading 2.9% zinc and 0.8% lead, within a larger historical
resource portfolio, which has not been prepared in accordance w ith National Instrument 43-101 –
Standards of Disclosure for Mineral Projects ( "NI 43-101 "). With multiple advanced exploration
targets, Osisko Metals believes the Pine Point Project is one o f the most promising undeveloped
zinc assets in Canada.
• Positive Economics: Pre-Tax Net Present Value of C $340.8 million at a discount ra te of 8%, and
Internal Rate of Return of 47.8%, with a payback period of 1.4 years. After-Tax Net Present Value of
C$210.5 million and Internal Rate of Return of 34.5%, with a pa yback of 1.8 years. Pre-production
capital costs of C$153.8 million, including a 15% contingency, with sustaining capex of C$117.5
million over the life of the mine.
• Significant Exploration Potential at Pine Point: Osisko Metals expects to leverage an exceptional
exploration upside potential to significantly enhance the resou rce of the Pine Point Project before
advancing further economic studies, which is supported by a tec hnical report entitled "NI 43-101
Preliminary Economic Assessment Technical Report on the Pine Point Zinc Project, Northwest
Territories, Canada" , dated June 1, 2017 (with an effective date of April 18, 2017) , prepared by
Garrett Macdonald, P.Eng. (JDS Energy & Mining Inc.), Kelly McL eod, P.Eng. (JDS Energy &
Mining Inc.), Dino Pilotto, P.Eng. (JDS Energy & Mining Inc.), Ken Embree, P.Eng. (Knight Piésold
Ltd.), Albert Daniel Siega, P .Eng. (Independent Consultant) and Paul Gann, P.Geo. (Independent
Consultant) for Darnley Bay Resources Limited (now, Pine Point) (the " Pine Point Technical
Report"). During its 23-year production history, over 98 deposits wer e identified of which 52 were
mined, producing nearly 64 million tonnes of ore at a time when it was Canada's most profitable
zinc-lead mine. Osisko Metals w ill work to selectively convert and upgrade the 46 undeveloped
historical deposits to conform to the disclosure requirements of NI 43-101, as well as deploy modern
exploration tools with innovative strategies across the property to better enable the discovery of new
deposits.
• Exceptional Metallurgy: Osisko Metals expects to benefit f rom simple and proven convent ional
metallurgy at the Pine Point Proj ect. Prior metallurgical testing highlighted the potential to produce
very high concentrate grades, up to 59.5% zinc and 76.7% lead, with negligible deleterious
elements.
Jeff Hussey, President and CEO of Osisko Metals, stated: "We ar e extremely pleased to be announcing
today's transaction with Pine Point. The addition of the Pine P oint Project to our exploration and
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development portfolio is exactly in keeping with our strategy of consolidating world class base metal mining
districts. We look forward to applying an aggressive and innova tive exploration strategy to unlock the full
potential of both former producing mining districts."
Jamie Levy, President and CEO of Pine Point, stated: "We are delighted to have unlocked significant value
for our shareholders since acquiring the Pine Point Project in late 2016. We are confident the Osisko
Metals team will be able to further create meaningful value to the benefit of our collective shareholders
while we focus on developing our other assets."
Benefits to Pine Point Shareholders
• Immediate and significant premi um of approximately 27% based o n the 30-day volume-weighted
average prices of both companies (attributing no value to the O sisko Metals Consideration
Warrants or Spinco Shares).
• Meaningful ownership in Osisko Metals' high-quality, well-fund ed portfolio of assets, including the
highly prospective Bathurst Mining Camp.
• Continued exposure to the Pine Point Project, as shareholders of Pine Point are entitled to receive
Osisko Metals Shares as consideration under the Arrangement.
• Pro-forma Osisko Metals provides significant re-valuation potential as a diversified explorer in the
base metals space.
• Continued exposure to those Pine Point assets other than the P ine Point Project through interest
in Spinco Shares, as shareholders of Pine Point are entitled to receive Spinco Shares as
consideration under the Arrangement. Based on the number of Pin e Point Shares currently
outstanding, Spinco is expected to have approximately 15.5 mill ion shares outstanding upon
completion of the Arrangement.
• Optionality inherent in the Osisko Metals Consideration Warran ts shareholders of Pine Point will
receive as consideration under the Arrangement.
Benefits to Osisko Metals Shareholders
• Accretive acquisition of another high-quality zinc asset in Ca nada with significant shallow
exploration potential upside.
• Osisko Metals' team is well suited to unlock further value thr ough systematic exploration and
development of the Pine Point Project.
• One of the few zinc projects with simple metallurgy potentiall y producing high quality concentrates
during a period of constrained concentrate supply.
• Pro-forma Osisko Metals provides significant re-valuation potential as a diversified explorer in the
base metals space.
Transaction Summary
The Arrangement will be completed by way of a statutory plan of arrangement under the Business
Corporations Act (Ontario), and will require, among other things, the approval of at least 66⅔ percent of
the votes cast by shareholders of Pine Point at a special meeti ng expected to be held in February 2018
(the "Pine Point Meeting "). The Arrangement will also require approval by a "majority of th e minority" of
the shareholders of Pine Point, being a majority of the votes c ast by shareholders of Pine Point whose
votes may be included in determining if minority approval is ob tained pursuant to Multilateral Instrument
61-101 – Protection of Minority Securityholders in Special Transactions . Shareholders of Pine Point
representing approximately 39.2% of the issued and outstanding Pine Point Shares, including all of the
directors and senior officers and certain significant sharehold ers of Pine Point, have entered into voting
and support agreements with Osisko Metals in support of the Arrangement.
In addition to the approvals required from shareholders of Pine Point and the Ontario Superior Court of
Justice (Commercial List), the Arrangement is also subject to a pplicable regulatory approvals and the
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satisfaction of certain other closing conditions customary for a transaction of this nature. The Agreement
includes customary deal protections, including fiduciary-out pr ovisions, non-solicitation covenants, and the
right to match any superior proposals. Additionally, a break fe e of C$1.435 million is payable by Pine Point
to Osisko Metals in certain circumstances, if the Arrangement is not completed.
Full details of the Arrangement will be included in the managem ent information circular of Pine Point
describing the matters to be considered at the Pine Point Meeti ng, which is expected to be mailed to the
shareholders of Pine Point in January 2018, and made available on SEDAR under Pine Point's issuer
profile at www.sedar.com. A copy of the Agreement will also be made available on the SE DAR profile of
Pine Point at www.sedar.com.
The distribution of the Osisko Met als Shares, Osisko Metals Con sideration Warrants and Spinco Shares
under the Arrangement will not be registered under the United S tates Securities Act of 1933, as amended
(the "U.S. Securities Act ") and such securities may not be offered or sold in the United States absent
registration or an applicable exemption from the registration r equirements of the U.S. Securities Act and
applicable state securities laws. This news release shall not c onstitute an offer to sell or the solicitation of
an offer to buy Osisko Metals Shares, Osisko Metals Considerati on Warrants or Spinco Shares, nor shall
there be any offer or sale of such securities in any jurisdiction in which such offer, solicitation or sale would
be unlawful.
Board Recommendations
The Board of Directors of Pine Point, on the recommendation of the Special Committee of the Board of
Directors of Pine Point, composed entirely of independent direc tors, has unanimously approved the
Arrangement and will recommend that shareholders of Pine Point vote in favour of the Arrangement. The
Special Committee of the Board of Directors of Pine Point has r eceived an opinion from Cormark
Securities Inc. that, based upon and subject to the assumptions , limitations, and qualifications stated in
such opinion, the consideration to be received by the sharehold ers of Pine Point pursuant to the
Arrangement is fair, from a financial point of view, to the shareholders of Pine Point. Copies of the Cormark
Securities Inc. fairness opinion, which should be read carefull y and in its entirety, and other relevant
background information will be included in the management infor mation circular that will be mailed to
shareholders of Pine Point in connection with the Pine Point Meeting.
In addition, the Board of Directors of Osisko Metals has unanim ously approved the Arrangement. The
Board of Directors of Osisko Metals has received an opinion fro m Maxit Capital LP that, based upon and
subject to the assumptions, lim itations, and qualifications sta ted in such opinion, the consideration to be
paid by Osisko Metals pursuant to the Arrangement is fair, from a financial point of view, to Osisko Metals.
Advisors and Counsel
Maxit Capital LP is acting as financial advisor to Osisko Metal s and its Board of Directors. Bennett Jones
LLP is acting as Osisko Metals' legal advisor.
Cormark Securities Inc. is acting as financial advisor to the S pecial Committee of the Board of Directors of
Pine Point. Irwin Lowy LLP is acting as Pine Point's legal advi sor. Cassels Brock & Blackwell LLP is acting
as legal advisor to the Special Committee of the Board of Directors of Pine Point.
About Osisko Metals Incorporated
Osisko Metals is a Canadian ex ploration and development company creating value in the base metal
markets with an emphasis on zinc. In 2017, Osisko Metals acquir ed over 50,000 hectares in the Bathurst
Mining Camp. The objective is to develop a multi-deposit asset base that would feed a central
concentrator. In parallel, Osisko Metals is monitoring several base metal oriented peers for acquisition
opportunities. In Québec, Osisko Metals acquired 42,000 hectare s that cover 12 grass-root zinc targets
that will be selectively advanced through explorat ion. Osisko G old Royalties Ltd. (TSX/NYSE:OR) and
Osisko Mining Inc. (TSX:OSK) are significant shareholders of the company.
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For further information about Osisko Metals, visit www.osiskometals.com or contact:
Jeff Hussey
President & CEO
Osisko Metals Incorporated
(514) 861-4441
Email: [email protected]
www.osiskometals.com
Christina Lalli
Director, Investor Relations
Osisko Metals Incorporated
(514) 861-4441
Email: [email protected]
www.osiskometals.com
About Pine Point Mining Limited
Pine Point acquired a 100% interest in the Pine Point lead-zinc project in December 2016. Since that time,
a positive Preliminary Economic Assessment (PEA) on the project showing a robust mining operation
which, over a 13-year mine life, would have an after-tax net pr esent value of C$210.5 million and internal
rate of return of 34.5%, with a payback of 1.8 years. The study assumed a zinc price of US$1.10 per pound
and a lead price of US$1.00 per pound, and used an exchange rat e C$:US$ of 0.75. The Pine Point
Technical Report is based on a mineral resource estimate for th e Pine Point Project, which was prepared
in accordance with NI 43-101 with an effective date of April 18, 2017.
Stanley Clemmer, Chief Geologist of Pine Point, is a "qualified person" under NI 43-101, and has reviewed
and approved the scientific and technical information relating to Pine Point presented in this press release.
For further information about Pine Point, visit www.pinepointmining.com or contact:
Jamie Levy
President & CEO
Pine Point Mining Incorporated
(416) 567-2440
Email: [email protected]
www.pinepointmining.com
Steve Hosein
Renmark Financial Communications Inc.
(416) 644-2020 or (514) 939-3989
Email: [email protected]
www.renmarkfinancial.com
Cautionary Statement Regarding Forward-Looking Information
This news release contains "forward-looking information" within the meaning of applicable Canadian
securities legislation based on expectations, estimates and pro jections as at the date of this news release.
Forward-looking information involves risks, uncertainties and o ther factors that could cause actual events,
results, performance, prospects and opportunities to differ mat erially from those expressed or implied by
such forward-looking information. Forward-looking information i n this news release includes, but is not
limited to: the anticipated benefits of the Arrangement to Osis ko Metals and Osisko Metals shareholders;
the anticipated benefits of the Arrangement to Pine Point and P ine Point shareholders; the value of the
Osisko Metals Shares, Osisko M etals Consideration Warrants and Spinco Shares being delivered as
arrangement consideration; the market capitalization of Osisko Metals following the completion of the
Arrangement; the timing and receipt of the required shareholder , court, stock exchange and regulatory
approvals for the Arrangement; the timing and ability of Osisko Metals and Pine Point to satisfy the
conditions precedent to completing the Arrangement; the anticip ated timing for the Pine Point Meeting to
consider the Arrangement; the closing of the Arrangement; the l ength of the current market cycle and
requirements for an issuer to su rvive in the current market cyc le; future growth potential of Osisko Metals
and Spinco and their respective businesses; and future mine development plans.
These forward-looking statements are based on reasonable assumptions and estimates of management of
Osisko Metals and Pine Point, as the case may be, at the time s uch statements were made. Actual future
results may differ materially as forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performan ce or achievements of Osisko Metals or
Pine Point, as the case may be, to materially differ from any f uture results, performance or achievements
expressed or implied by such forward-looking statements. Such f actors, among other things, include:
satisfaction or waiver of all applicable conditions to closing of the Arrangement (including receipt of all
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necessary shareholder, court, st ock exchange and regulatory app rovals or consents and the absence of
material changes with respect to the parties and their respecti ve businesses, all as more particularly set
forth in the Agreement); the syner gies expected from the Arrang ement not being realized; business
integration risks; fluctuations in general macroeconomic condit ions; fluctuations in securities markets and
the market price of Osisko Metals Shares and Pine Point Shares; fluctuations in spot and forward prices of
zinc, gold, silver, base metals or certain other commodities; f luctuations in currency markets (such as the
Canadian dollar to United States dollar exchange rate); change in national and local government,
legislation, taxation, controls , regulations and political or e conomic developments; risks and hazards
associated with the business of m ineral exploration, developmen t and mining (including environmental
hazards, industrial accidents, unusual or unexpected formations , pressures, cave-ins and flooding);
inability to obtain adequate insurance to cover risks and hazards; the presence of laws and regulations that
may impose restrictions on mining; employee relations; relation ships with and claims by local communities
and indigenous populations; availability of and increasing cost s associated with mining inputs and labour;
the speculative nature of miner al exploration and development ( including the risks of obtaining necessary
licenses, permits and approvals from government authorities); t itle to properties; and those risks set out in
each of Osisko Metals' and Pine Point's public documents filed on SEDAR at www.sedar.com. In addition,
the failure of Pine Point to comply with the terms of the Agree ment may result in Pine Point being required
to pay a break-fee to Osisko Metals, the result of which could have a material adverse effect on Pine
Point's financial position and results of operations and its ab ility to fund growth prospects and current
operations. Although the forward- looking statements contained i n this news release are based upon what
management of Osisko Metals and/or Pine Point, as the case may be, believes, or believed at the time, to
be reasonable assumptions, Osisko Metals and/or Pine Point, as the case may be, cannot assure
shareholders that actual results will be consistent with such f orward-looking statements, as there may be
other factors that cause results not to be as anticipated, esti mated or intended. Both Osisko Metals and
Pine Point disclaim any intention or obligation to update or re vise any forward-looking information, whether
as a result of new information, future events or otherwise, other than as required by law.
Neither the TSX-V nor its Regulation Services Provider (as that term is defined in the policies of the
TSX-V) accepts responsibility for the adequacy or accuracy of t his news release. No stock
exchange, securities commission or other regulatory authority h as approved or disapproved the
information contained herein.