Osisko Development Corp. (“
Osisko Development” or
the “
Company”) (ODV: TSX-V & NYSE) is pleased
to announce the completion of its previously announced acquisition
of Tintic Consolidated Metals LLC (“
Tintic”),
which owns the producing Trixie test mine
(“
Trixie”), as well as mineral claims covering
more than 17,000 acres (including over 14,200 acres of which are
patented) in Central Utah’s historic Tintic Mining District (the
“
Transaction”). For additional details regarding
the Transaction, please refer to the Company’s news release dated
January 25, 2022.
Mr. Sean Roosen, Chair and Chief Executive
Officer of Osisko Development commented: “With the acquisition
of Tintic we have inherited not only a highly prospective test mine
in the Trixie project, but also a large, historic land package in
one of the world’s premier mining jurisdictions. Through
underground exploration, we hope to continue to expand the
mineralization footprint along the T2 and T4 zones. We have engaged
drilling contractors and look forward to sharing the results with
you as we progress the understanding of this ground. We are also
looking forward to working with, and supporting, the stakeholders
in our project, including the local communities in Utah and Juab
counties.”
Osisko Development’s near term plan is to
initiate underground and at surface drilling while it continues
exploration development and processing of the mineralized material
at the Trixie project. Drilling is targeting support for
preparation of an initial resource statement pursuant to National
Instrument 43-101 over the next twelve months. Concurrently, the
Company will complete advanced technical studies on the project to
generate additional surface and underground targets, conduct
metallurgical testing, geotechnical work and environmental studies
to justify further development as well as increase production
through a low-capital expenditure expansion.1
Under the terms of the Transaction, Osisko
Development will fund the acquisition through the issuance of (i)
12,049,449 common shares in the capital of the Company
(“Common Shares”), (ii) aggregate cash payments of
approximately US$54 million, (iii) the issuance of an aggregate of
2% NSR royalties, with a 50% buyback right in favour of the Company
exercisable within five years, (iv) US$12.5 million in deferred
payments, and (v) the granting of certain other contingent
payments, rights and obligations.
The Company is also pleased to announce that it
has entered into a binding term sheet with Osisko Bermuda Limited
(“OBL”), a wholly-owned subsidiary of Osisko Gold
Royalties Ltd, for a stream on the metals produced from Tintic
(“Stream”) for total cash consideration of US$20
million. Under the Stream, the Company will deliver to OBL 2.5% of
all metals produced from Tintic at a purchase price of 25% of the
relevant spot metal price. Once 27,150 ounces of refined gold have
been delivered, the Stream rate will decrease to 2.0% of all metals
produced. Closing of the Stream is expected to take place on or
before July 31, 2022 and is subject to customary closing
conditions, including receipt of applicable regulatory and stock
exchange approvals. The proceeds from the Stream will be used for
to advance the development of Tintic.
The Stream is a "related party transaction" for
purposes of Multilateral Instrument 61-101 – Protection of Minority
Security Holders in Special Transactions ("MI
61-101") as OBL is a "related party" of the Company for
purposes of MI 61-101. The Company intends to rely upon exemptions
from (i) the formal valuation requirements of MI 61-101 in reliance
on Section 5.5(b) of MI 61-101, and (ii) the minority approval
requirements of MI 61-101 in reliance on Section 5.7(1)(a) of MI
61-101 insofar as the fair market value of the subject matter of,
and the consideration for, the Stream does not exceed 25% of the
market capitalization of the Company. The Stream has been approved
by the independent directors of the Company. Completion of
the Stream is subject to the negotiation and execution of
definitive documentation, and obtaining any regulatory, including
approval of the TSX Venture Exchange.
In addition, with the closing of the
Transaction, the Company has satisfied the escrow release
conditions relating to the 13,732,900 subscription receipts of the
Company (the “Subscription Receipts”) issued at a
price of C$4.45 per Subscription Receipt for gross proceeds of
approximately C$61.1 million, which were issued on a bought deal
private placement (the “Offering”). The gross
proceeds of the Offering and accrued interest thereon, net of the
commission (accrued interest thereon) and expenses payable to the
underwriters of the Offering, will, upon the delivery of the escrow
release notice, be released to the Company and each Subscription
Receipt will be converted into (i) one-third of one Common Share,
and (ii) one-third of one Common Share purchase warrant of the
Company (each whole warrant, a "Warrant"), with
each Warrant entitling the holder thereof to purchase one Common
Share at a price of C$22.802 until March 2, 2027. The net proceeds
of the Offering will be used to advance the development of the
Company's mineral assets.
About Osisko Development
Osisko Development Corp. is uniquely positioned
as a premier gold development company in North America to advance
the Cariboo Gold Project and other Canadian and Mexican properties,
with the objective of becoming the next mid-tier gold producer. The
Cariboo Gold Project, located in central British Columbia, Canada,
is Osisko Development's flagship asset. The considerable
exploration potential at depth and along strike distinguishes the
Cariboo Gold Project relative to other development assets. Osisko
Development's project pipeline is complemented by its interest in
the San Antonio gold project, located in Sonora, Mexico and the
Trixie gold test mine, located in Utah, USA.
For further
information about Osisko Development Corp., please
contact: |
Jean Francois Lemonde, VP
Investor RelationsTelephone: (514) 299-4926Email:
jflemonde@osiskodev.com |
|
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Cautionary Note Regarding Forward-Looking
Information
This news release contains forward-looking
statements which constitute “forward-looking information” within
the meaning of applicable Canadian securities legislation and
“forward-looking statements” within the meaning of the “safe
harbor” provisions of the Private Securities Litigation Reform Act
of 1995 (collectively, “Forward-looking Statements”). All
statements included, other than statements of historical fact,
which address activities, events or developments that the Company
expects or anticipates may or will occur in the future, are
forward-looking information. The Forward-looking Statements in this
news release may include, without limitation, statements about the
Company’s current expectations, anticipated synergies and benefits
of the Transaction, the Stream and the use of proceeds of the
Offering. Readers are also cautioned that such additional
information is not exhaustive. Often, but not always, these
Forward-looking Statements can be identified by the use of words
such as “anticipated”, “estimated”, "expected", “potential”,
“future”, “assumed”, “projected”, “planned”, “to be”, "will" or
statements that events, “could” or “should” occur or be achieved
and similar expressions, including negative variations. The impact
of any one risk, uncertainty or factor on a particular
forward-looking statement is not determinable with certainty as
these factors are independent and management's future course of
action would depend on its assessment of all information at that
time. Information contained in the Forward‐looking Statements is
based upon certain material assumptions that were applied in
drawing a conclusion or making a forecast or projection, including
management's perceptions of historical trends, current conditions
and expected future developments, public disclosure from operators
of the relevant mines, as well as other considerations that are
believed to be appropriate in the circumstances. The Company
considers its assumptions to be reasonable based on information
currently available, but cautions the reader that their assumptions
regarding future events, many of which are beyond the control of
the Company, may ultimately prove to be incorrect since they are
subject to risks and uncertainties that affect the Company, and its
business. Readers are urged to consult the disclosure provided
under the heading "Risk Factors" in the Company’s annual
information form for the year ended December 31, 2021, as amended,
which has been filed on SEDAR (www.sedar.com) under the Company's
issuer profile and on the U.S. Securities Exchange Commission’s
EDGAR website (www.sec.gov), for further information regarding the
risks and other factors applicable to the Transaction. Although the
Company’s believes the expectations conveyed by the Forward-looking
Statements are reasonable based on information available at the
date of preparation, no assurances can be given as to future
results, levels of activity and achievements. The Company disclaims
any obligation to update any Forward-looking Statements, whether as
a result of new information, future events or results or otherwise,
except as required by law. There can be no assurance that these
Forward-looking Statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on Forward-looking Statements.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this news release. No stock exchange,
securities commission or other regulatory authority has approved or
disapproved the information contained herein.
________________________________________________________________________________________________
1 The Corporation cautions that the owners of
Tintic have taken the decision to commence production at Trixie in
the form of small scale underground mining and batch vat leaching
without the benefit of a feasibility study, or reported mineral
resources or mineral reserves, demonstrating economic and technical
viability, and, as a result there may be increased uncertainty of
achieving any particular level of recovery of material or the cost
of such recovery. The Corporation cautions that historically, such
projects have a much higher risk of economic and technical failure.
There is no guarantee that production will continue as anticipated
or at all or that anticipated production costs will be achieved.
The failure to continue production may have a material adverse
impact on the Corporation's ability to generate revenue and cash
flow to fund operations. Failure to achieve the anticipated
production costs would have a material adverse impact on the
Corporation's cash flow and potential profitability. The
Corporation cautions that historically, such projects have a much
higher economic or technical risks. In continuing current
operations at Trixie after closing, the Corporation will not be
basing its decision to continue such operations on a feasibility
study, or reported mineral resources or mineral reserves
demonstrating economic and technical viability. The Corporation
cautions that test mining at Trixie could be suspended at any
time.2 On May 4, 2022, the Common Shares were consolidated on the
basis of three old Common Shares for each new Common Share (the
"Consolidation"). Accordingly, the Warrants were
adjusted such that each Warrant entitles the holder thereof to
purchase one-third of a Common Share. Accordingly, a Warrant holder
will be required to exercise three Warrants in order to purchase
one Common Share.
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