Canadian exploration and development company Osisko Metals has agreed to divest a majority stake in the Pine Point zinc project to a subsidiary of Appian Natural Resources Fund III, a fund advised by Appian Capital Advisory.

Under the investment agreement, Appian Natural Resources will invest up to CAD 100 million ($74 million) over a period of four years to acquire an undivided 60% interest in Pine Point Mining, a wholly-own subsidiary of Osisko Metals.

The past-producing Pine Point zinc mine, which is owned by Pine Point Mining, is situated on the south shore of Great Slave Lake in Canada’s Northwest Territories.

The 2022 preliminary economic assessment (PEA) study indicated the Pine Point zinc project consists of 15.7Mt grading 5.55% zinc equivalent metal grade (ZnEq) of Indicated Mineral Resources and 47.2Mt grading 5.94% ZnEq of Inferred Mineral Resources.

Robert Wares — Osisko Metals Chairman and CEO said: “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.

“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.”

The investment of Appian Natural Resources constitutes an estimated CAD 75.3 million ($55.62 million) of funding. Of this, CAD 19.8 million will be released upon establishment of the joint venture in the form of an initial subscription to advance the Pine Point zinc project towards a final investment decision (FID) or construction approval.

Appian Natural Resources will pay the remaining approximately CAD 24.7 million ($18.24 million) in cash to Osisko Metals. This includes an initial payment of CAD 8.3 million on the closing of the transaction to acquire an initial 9% interest in Pine Point Mining and a milestone payment of CAD 16.4 million contingent on positive FID to bring the fund’s ownership in Pine Point Mining to 60%.

Besides, Appian Natural Resources has agreed to invest CAD 5 million in the common shares of Osisko Metals on the closure of the transaction.

The transaction is expected to close on or about late Q1 2023 or early Q2 2023, subject to certain customary conditions.

  Appian Capital Advisory, Appian Natural Resources Fund II, Appian Natural Resources Fund III, Canada, Northwest Territories, Osisko Metals, Pine Point Mining, Pine Point project, Robert Wares, zinc