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Osisko Metals (TSXV: OM) has successfully completed its previously announced joint venture with Appian Natural Resources Fund III LP, which would see the companies work together to advance the Pine Point project in Canada’s Northwest Territories.
In late February, the Canadian base metals miner announced that it is setting up a joint venture with the Appian fund and potentially surrendering a majority stake in its flagship project. Under the JV agreement, Appian plans to invest up to C$100 million over an estimated four-year period to acquire a 60% interest in Pine Point.
The Appian fund is advised by Appian Capital Advisory LLP, a London-based private equity group specializing in the acquisition and development of mining assets. Pine Point represents Appian’s third investment in the global zinc market.
As part of the closing of the JV transaction, Appian has purchased over 20 common shares of Osisko Metals at a price of C$0.2481 per share for gross proceeds of approximately C$5 million.
The fund has also acquired share capital in Pine Point Mining Ltd. (PPML), the JV entity that holds the Pine Point project, for a payment of C$8.3 million, and subscribed for share capital in PPML for C$13.1 million.
In addition, the interim loan made by Appian to Osisko in the amount of C$6.7 million has been converted for share capital in PPML.
After giving effect to the transaction, Osisko and Appian now hold approximately 74.7% and 25.3%, respectively, of the share capital of PPML. Subject to closing, and until Appian has acquired 60% interest in PPML or until a final investment decision has been reached, all funding for the Pine Point project will be made by way of cash calls issued by the board of PPML to Appian.
“The Pine Point project is a highly prospective and strategically located project and Appian is delighted to partner with Osisko Metals on its development,” Appian Capital CEO Michael Scherb said in a statement to stakeholders.
Located on the south shore of Great Slave Lake, the Pine Point project is considered to be one of Canada’s premier past-producing zinc mining camps. A preliminary economic assessment published by Osisko last year outlined an after-tax net present value of of C$602 million and an internal rate of return of 25%.
The 2022 PEA integrates updated long-term prices for zinc and lead ($1.37/lb and $0.97/lb respectively) and increased mineral resources at Pine Point, which currently is estimated at 15.7 million tonnes grading 5.55% zinc equivalent in the indicated category and 47.2 million tonnes grading 5.94% zinc equivalent inferred.
