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Osisko cuts deal to buy out Pine Point


Last updated 1/12/2018 at 7:25pm

Pine Point Mining Ltd.

Zinc is the fourth most consumed metal in the world after iron, aluminum and copper.

Osisko Metals Inc. Dec. 18 announced a friendly agreement to acquire full ownership of Pine Point Mining Ltd., a deal that will give Osisko Metals full ownership of the Pine Point zinc-lead project in Northwest Territories.

"The addition of the Pine Point project to our exploration and development portfolio is exactly in keeping with our strategy of consolidating world class base metal mining districts," said Osisko Metals President and CEO Jeff Hussey.

Located near the community of Hay River, the Pine Point project benefits from substantial infrastructure that includes road access, rail head in Hay River and hydro-electric power available on site.

A preliminary economic assessment completed in May of last year examined several development scenarios and settled on a mining plan where 10 open-pit deposits are mined in sequence.

The deposits included in the mine plan host 25.8 million metric tons of measured and indicated resources averaging 2.9 percent zinc and 1.1 percent lead, plus 3.7 million metric tons of inferred resources averaging 2.9 percent zinc and 0.8 percent lead.

Roughly 4,000 to 6,800 metric tons of mineralized material would be mined per day and fed into dense media separation plants for pre-concentration prior to being trucked to a centralized 1,800-metric-ton-per-day mill to produce lead and zinc concentrates with a more traditional mining and flotation circuit. The concentrate will then be trucked about 65 kilometers (40 miles) to a railway facility at Hay River. This method is similar to that used by Cominco (now Teck Resources) when it operated a mine at Pine Point from 1964 to 1987.

The mine outlined in the PEA is expected to produce 1.35 billion pounds of zinc and 536 million lb lead over a 13-year mine life. The capital needed to develop this mine is estimated be C$153.8 million, including a 15 percent contingency, with sustaining capital of C$117.5 million per year over the life of the mine.

Osisko Metals said it expects to leverage Pine Point's exceptional exploration upside potential before advancing further economic studies.

Cominco identified 98 deposits at Pine Point during its 23 years of production there, of which 52 were mined. Osisko Metals plans to selectively convert and upgrade the 46 undeveloped historical deposits to conform to the disclosure requirements of NI 43-101, as well as deploy modern exploration tools with innovative strategies across the property to better enable the discovery of new deposits.

To acquire this zinc-lead project, along with the other projects held by Pine Point Mining, Osisko Metals has agreed to exchange 0.271 Osisko Metals shares for each Pine Point share. Based on the share price of the two companies on Dec. 15, this comes to roughly C21 cents per Pine Point share.

In addition, Pine Point shareholders will receive one common share of Spinco, a company being created to hold all assets and liabilities of Pine Point Mining, besides the Pine Point project itself. These include the Davidson molybdenum project in British Columbia; Clear Lake zinc-lead-silver project in the Yukon; and Darnley Bay, an enormous gravity anomaly in Northwest Territories.

Upon completion of the arrangement, existing shareholders of Osisko Metals and Pine Point will own roughly 62 percent and 38 percent, respectively, of Osisko Metals.

"We are delighted to have unlocked significant value for our shareholders since acquiring the Pine Point Project in late 2016," said Pine Point President and CEO Jamie Levy. "We are confident the Osisko Metals team will be able to further create meaningful value to the benefit of our collective shareholders while we focus on developing our other assets."

The acquisition of Pine Point will provide Osisko Metals with two district scale zinc-lead projects in Canada.

The Pine Point Project adds a second district scale zinc-lead project to the Osisko Metals portfolio. Combined with the Bathurst Mining Camp, a high-grade zinc-lead-silver project in New Brunswick that hosts a number of historical underground mines, Osisko Metals now controls a strong development project pipeline within two world class past-producing base metal camps.

"We look forward to applying an aggressive and innovative exploration strategy to unlock the full potential of both former producing mining districts," said Hussey.



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