Osisko Metals Signs C$100 Million Investment Agreement with Appian Natural Resources Fund for a Joint Venture on Pine Point

22 February 2023

(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 establishment 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:
    • A C$8.3 million initial payment on closing of the Transaction to acquire an initial 9% interest in PPML; and
    • 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).

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 daylights 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 million 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 consist 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.

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.

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