Osisko Metals, Appian complete JV to advance Pine Point

Osisko Metals (TSXV: OM; US-OTC: OMZNF) and Appian Natural Resources Fund III LP have closed a previously announced joint venture transaction to advance the Pine Point zinc-lead project in the Northwest Territories.

Under the JV agreement, announced in late February, Appian will invest up to $100 million over four years to acquire a 60% interest in Pine Point.

As part of the closing of the JV transaction, Appian has purchased over 20 common shares of Osisko Metals at a price of 24.81¢ per share for gross proceeds of roughly $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 $8.3 million, and subscribed for $13.1 million in share capital in PPML.

In addition, a $6.7-million interim loan Appian extended to Osisko has been converted for share capital in PPML.

Post-transaction, Osisko and Appian now hold roughly 74.7% and 25.3%, respectively, of the share capital of PPML. Subject to closing, and until Appian has acquired a 60% interest in the JV 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 the JV 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,” Michael Scherb, founder and CEO of Appian Capital, commented in a statement to stakeholders.

Located on the south shore of Great Slave Lake, Pine Point 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 $602 million and an internal rate of return of 25%.

The 2022 PEA integrates updated long-term prices for zinc and lead (US$1.37 per lb. and US97¢ per lb., respectively) and increased resources at Pine Point. The project now hosts 15.7 million indicated tonnes grading 5.55% zinc equivalent and 47.2 million inferred tonnes grading 5.94% zinc equivalent.

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.