Osisko Metals Signs C$100 Million Investment Agreement with Appian Natural Resources Fund FOR a Joint Venture ON Pine Point
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OSISKO METALS SIGNS C$100 MILLION INVESTMENT AGREEMENT WITH APPIAN
NATURAL RESOURCES FUND FOR A JOINT VENTURE ON PINE POINT
(Montreal, February 22, 2023) Osisko Metals Incorporated (the " Company or "Osisko Metals")
(TSX-V: OM; OTCQX: OMZNF; FRANKFURT: 0B51) is pleased to announce that it has entered into
an investment agreement dated February 21, 2023 (the "Investment Agreement") with a subsidiary of
Appian Natural Resources Fund III LP ("Appian"), a fund advised by Appian Capital Advisory LLP, a
London-based private equity group specializing in the acquisition and development of mining assets,
pursuant to which Osisko Metals and Appian have agreed to form a joint venture for the
advancement of the Pine Point Project (the "Transaction"), subject to satisfaction of certain terms
and conditions, including shareholder and stock exchange approvals. The Transaction is an arm's
length transaction within the policies of the TSX Venture Exchange (the "Exchange").
Highlights
• Commitment by Appian to invest up to C$100 million over an estimated four-year period,
to acquire an undivided 60% interest in Pine Point Mining Limited (" PPML"), a wholly-
owned subsidiary of Osisko Metals and owner of the Pine Point Project, at a pre-money
valuation of PPML of C$91.3 million.
• The C$100 million investment includes an estimated C$75.3 million of funding (C$19.8
million of which will be provided upon estab lishment of the joint venture, the " Initial
Subscription") to advance the Pine Point Project to a Final Investment Decision ("FID"),
or construction approval, and approximately C$24.7 million in cash payments to Osisko
Metals, comprised of:
o A C$8.3 million initial payment on closing of the Transaction to acquire an initial
9% interest in PPML; and
o A milestone payment upon positive FID 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 to FID 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 C$0.2481 per share (being the 20-day VWAP
calculated as of the date of this announcement).
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Robert Wares, Chairman & CEO, commented: "We are delighted to welcome Appian as a long-
term joint-venture partner for the advancement of the Pine Point Project. This milestone
agreement is a significant endorsement and daylight s 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 m illion 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. 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."
Summary of Joint Venture
Osisko Metals and Appian have agreed to a budget to fund Pine Point to FID as follows:
Definition and Exploration Drilling C$25.2 million
Permitting and G&A C$29.3 million
Feasibility and Technical Studies C$8.7 million
Metallurgical Optimization Studies C$1.0 million
Geotech/Hydrogeological Studies C$4.3 million
Contingencies C$6.8 million
Total C$75.3 million
Subsequent to the closing of the Transaction and until Appian has acquired an ownership interest
of 60% in PPML (the "Target Ownership Percentage"), all funding in respect of the Pine Point
Project will be made by way of cash calls issued by the board of PPML to Appian, the quantum
and speed of which are determined at the sole discretion of the board of directors of PPML. The
Company will not be required to make any cash contributions to PPML until Appian has reached
the Target Ownership Percentage, following which cash calls will be satisfied by each of Appian
and Osisko Metals on a pro-rata basis pursuant to approved annual programs and budgets as
determined by the board of PPML. Pursuant to the terms of the Investment Agreement, in the
event of a protracted intervening event, Appian has a unilateral right to terminate its investment
commitment.
The board of directors of PPML will initially cons ist of four directors with two nominees from
Appian and two nominees from Osisko Metals. Appian will be entitled to appoint the Chair and
the Chair will have the casting vote. Upon Appian earning an interest in PPML above 50%, the
board of directors will consist of five directors with three nominees from Appian and two nominees
from Osisko Metals. The board of directors of PPML will be responsible for, among other things,
approving PPML's annual programs and budgets. Certain material decisions will require a super-
majority approval by the board of directors.
The joint venture agreement in respect of the Transaction, to be signed upon closing of the
Transaction, contains customary dilution mechanisms for failures to meet cash calls and certain
other events, as well as customary share transfer restrictions.
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Jeff Hussey, President & COO of Osisko Metals, will assume the role of Chief Executive Officer
of PPML and spearhead the initiative to advance Pine Point to FID. There are no changes
contemplated to the board of directors of Osisko Metals in connection with the Transaction.
Transaction Details
The Transaction is considered as a "reviewable disposition" under Policy 5.3 of the Exchange, as
it is a potential disposition of more than 50% of the ownership interest in the Pine Point Project,
which is Osisko Metal's only material property as of the date hereof. The Transaction is subject
to the simple majority approval of Osisko Metals' shareholders, Exchange approval and other
closing conditions customary in transactions of this nature. There is no certainty on the timing or
ability of Osisko Metals to complete the Transaction on the terms currently contemplated. The
Investment Agreement includes, among other thi ngs, a non-solicitation provision and a C$4.5
million termination fee payable by Osisko Metals to Appian under certain circumstances.
Concurrent with closing of the Transaction, Osis ko Metals and Appian will enter into an investor
rights agreement (the "Investor Rights Agreement"). The Investor Rights Agreement includes,
among other things, pre-emptive and top-up rights in favor of Appian, a standstill provision for a
period of 12 months and a share transfer restriction provision for a period of six months.
Osisko Metals believes that it will be in compliance with all continued listing requirements of the
Exchange following the completion of the Transaction. Osisko Metals expects to continue to meet
public float requirements and have sufficient working capital and financial resources as well as
experienced management and board. Although the Transaction contemplates a disposition of up
to 60% in the Pine Point Project, Osisko Metals will maintain a substantial 40% interest in the
Pine Point Project. In addition, Osisko Metals had exercised the option to earn a 100% interest in
the past-producing Gaspé Copper Mine with an inferred mineral resource estimate on the Gaspé
property effective April 12, 2022. No assurance can be provided as to Osisko Metals' continued
qualification for listing on the Exchange, whether as a Tier 1 issuer or otherwise. The Transaction,
including the C$5 million investment by Appian in the common shares of Osisko Metals, remains
subject to the approval of the Exchange.
For more details on the terms of the Transaction, please refer to a copy of the Investment
Agreement, which will be available electroni cally on SEDAR (www.sedar.com) under Osisko
Metals' issuer profile.
Fairness Opinion
Maxit Capital LP has provided a fairness opinion to the board of directors of Osisko Metals. The
fairness opinion stated that, as of the date thereof and, based upon and subject to the
assumptions, limitations and qualifications stated in such opinion, the Transaction is fair, from a
financial point of view, to the Company.
Board Approval
The board of directors of Osisko Metals, following consultation with their financial and legal
advisors, has unanimously approved the Transaction. The Board of Directors of Osisko Metals
recommends that shareholders vote FOR the Transaction.
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Voting Support Agreements
Shareholders collectively owning approximately 18.7% of the outstanding shares of Osisko Metals
as of the date hereof have entered into voting support agreements with Appian in support of the
Transaction. Directors and senior officers of Osisko Metals collectively owning approximately
18.2% of the outstanding shares of Osisko Metals have entered into voting support agreements
to support the Transaction. It is currently anticipated that the closing of the Transaction will occur
on or about late Q1 2023 or early Q2 2023.
Interim Funding
Concurrent with the execution with the Investment Agreement, Osisko Metals and Appian entered
into an agreement for the issuance of a convertible instrument to provide PPML with short-term
interim funding of up to C$11.5 million to fund the current drilling program on the Pine Point
Project, in accordance with the agreed initial program and budget. The current 29,000-metre
winter definition drilling program is progressing as planned with six drill rigs operating and this
program, with associated costs, will be integrated into the Investment Agreement and pre-FID
budget, retroactively as of December 1, 2022.
If the Investment Agreement is terminated and the Transaction does not close, the principal
amount then outstanding under the convertible instrument would then become repayable. Subject
to the approval of the Exchange at such a repayment event, the amount then outstanding under
the convertible instrument would be repaid by the issuance of common shares of Osisko Metals,
at the minimum permitted price under the policies of the Exchange, for up to 19.95% of the pro
forma number of issued and outstanding common shares of Osisko Metals, and the remaining
amount (if any) will be converted into a senior secured term loan.
If the Transaction is completed, any outstanding amounts under the convertible instrument would
be converted into an ownership interest in PPML and the Initial Subscription would be reduced
for the amounts outstanding under the convertible instrument. Such a conversion is subject to the
acceptance of the Exchange in respect of the Transaction as a whole.
Advisors and Counsel
Maxit Capital LP is acting as financial advisor to Osisko Metals and Bennett Jones LLP is acting
as the Company's legal counsel.
McCarthy Tétrault LLP is acting as Appian's legal counsel.
Qualified Person
Mr. Robin Adair is the Qualified Person and the Vice President of Exploration for Osisko Metals
Incorporated. He is responsible for the technical data reported in this news release and is a
Professional Geologist registered in the Northwest Territories.
About Osisko Metals
Osisko Metals Incorporated is a Canadian exploration and development company creating value
in the critical metals space, specifically copper and zinc. The Company controls one of Canada's
premier past-producing zinc mining camps, the Pine Point Project, located in the Northwest
Territories, for which the 2022 PEA has indicated an after-tax NPV of $602M and an IRR of 25%,
based on a long-term zinc price of US$1.37/lb and the current Mineral Resource Estimates
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("MRE") that are amenable to open pit and shallow underground mining. The latest MRE consists
of 15.7Mt grading 5.55% ZnEq of Indicated Mineral Resources and 47.2Mt grading 5.94% ZnEq
of Inferred Mineral Resources. Please refer to the technical report entitled "Preliminary Economic
Assessment, Pine Point Project, Hay River, Northwest Territories, Canada" dated July 30, which
has been filed on SEDAR. The Pine Point Project is located on the south shore of Great Slave
Lake in the Northwest Territories, near infrastructure, paved highway access, and has an
electrical substation as well as 100 kilometres of viable haulage roads already in place.
The Company is also in the process of acquiring, from Glencore Canada, a 100% interest in the
past-producing Gaspé Copper Mine, located near Murdochville in the Gaspé peninsula of
Quebec. The Company is currently focused on resource evaluation of the Mount Copper
Expansion Project that hosts a NI43-101 Inferred Resource of 456Mt grading 0.31% Cu (see April
28, 2022 press release). Gaspé Copper hosts the largest undeveloped copper resource in
Eastern North America, strategically located near existing infrastructure in the mining-friendly
province of Quebec.
About Appian
Appian Capital Advisory LLP is a London-headquartered investment advisor to long-term value-
focused private equity funds that invest solely in mining and mining-related companies.
Appian is a leading investment advisor in the metals and mining industry, with global experience
across South America, North America, Europe, Australia and Africa and a successful track record
of supporting companies to achieve their devel opment targets, with a global operating portfolio
overseeing nearly 5,000 employees. Appian has a global team of 60 experienced professionals
with presences in London, Toronto, Montreal, Vancouver, Lima, Belo Horizonte and Perth. The
Appian team, through its private equity funds, has a long history of successfully bringing mines
through development and into production, having completed 8 mine builds in the last 5 years.
For more information, please visit www.appianc apitaladvisory.com, or find us on LinkedIn,
Instagram and Twitter.
For further information on this press release, visit www.osiskometals.com or contact:
Robert Wares, Chairman & CEO of Osisko Metals Incorporated
Email: [email protected]
www.osiskometals.com
Cautionary Statement on Forward-Looking Information
This news release contains "forward-looking inform ation" within the meaning of applicable Canadian
securities legislation based on expectations, estimates and projections as at the date of this news release.
Any statement that involves predictions, expectations, interpretations, beliefs, plans, projections, objectives,
assumptions, future events or performance are not st atements of historical fact and constitute forward-
looking information. This news release may contain forward-looking information pertaining to the Pine Point
Project, including, among other things, the results of the PEA and the IRR, NPV and estimated costs,
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production, production rate and mine life; the expect ation that the Pine Point Project will be a robust
operation and profitable at a variety of prices and assumptions; the abilit y to identify additional resources
and reserves (if any) and exploit such resources and reserves on an economic basis; the expected high
quality of the Pine Point concentrate s; the potential impact of the Pine Point Project in the Northwest
Territories, including but not limited to the potential generation of tax revenue and contribution of jobs; the
Pine Point Project having the potential for mineral resource expansion and new discoveries; the timing and
ability for the Pine Point Project to reach construction decision; the estimated costs to take the Pine Point
Project to construction decision; the timing and ab ility to complete the Transaction on the terms
contemplated (if at all); the ability of the Company to realize on the benefit of the Transaction; and the
impact to the Company of the disposition of ownership interest and control in the Pine Point Project, which
is a material property of the Co mpany. There can be no certainty on t he timing, costs and ability for the
joint-venture parties to take the Pine Point Project to reach construction decision or pursue planned
exploration and development as presently contemplated.
Forward-looking information is not a guarantee of future performance and is based upon a number of
estimates and assumptions of management, in light of management's experience and perception of trends,
current conditions and expected developments, as we ll as other factors that management believes to be
relevant and reasonable in the circumstances, including, without limitation, assumptions about: favourable
equity and debt capital markets; the ability and timing for the parties to fund cash calls to advance the
development of the Pine Point Project and pursue pl anned exploration and development; the ability to
complete the Transactions in the timing and terms contemplated (if at all); the ability to satisfy or waive on
satisfactory terms any conditions to the completion of the Transaction (incl uding but not limited to, the
Exchange acceptance and shareholder appr oval of the Transaction); future prices of zinc and lead; the
timing and results of exploration and drilling programs; the accuracy of mineral resource estimates;
production costs; operating conditions being favourabl e; political and regulatory stability; the receipt of
governmental and third party approvals; licenses and permits being received on favourable terms;
sustained labour stability; stability in financial and capital markets; availability of equipment; the economic
viability of the Pine Point Project; and positive relations with local groups. Forward-looking information
involves risks, uncertainties and other factors that could cause act ual events, results, performance,
prospects and opportunities to differ materially from those expressed or implied by such forward-looking
information. Factors that could cause actual result s to differ materially fr om such forward-looking
information are set out in the Company's public documents filed at www.sedar.com. Although the Company
believes that the assumptions and fa ctors used in preparing the forward-lo oking information in this news
release are reasonable, undue reliance should not be placed on such information, which only applies as of
the date of this news release, and no assurance can be given that such events will occur in the disclosed
time frames or at all. The Company disclaims any in tention or obligation to update or revise any forward-
looking information, whether as a result of new inform ation, future events or otherwise, other than as
required by law.
Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of
the Exchange) accept responsibility for the adequacy or accuracy of this news release. No stock
exchange, securities commission or other regulatory authority has approved or disapproved the
information contained herein.