UK-based private equity group Appian Natural Resources has agreed to acquire a 60% interest in the Pine Point zinc project in the Northwest Territories, Canada, from Osisko Metals, for C$100m ($74m).
The two firms will form a joint venture (JV) to advance the development of the Pine Point past-producing zinc mine.
As per the recent preliminary economic assessment (PEA), the mine will have an operational life of 12 years. It will have the capacity to produce 329 million pounds (Mlb) of zinc and 141Mlb of lead.
According to the agreed terms, a fund advised by Appian Capital Advisory will spend up to C$100m over four years to acquire an undivided 60% stake in Osisko Metals’ wholly owned subsidiary Pine Point Mining Limited (PPML), which owns the Pine Point Project.
The investment will include about C$75.3m ($55.62m) funding to set up the JV and advance the project towards a final investment decision (FID) or construction approval.
Appian will pay the remaining C$24.7m ($18.24m) in cash. This will comprise an initial payment of C$8.3m ($6.13m) upon closing of the transaction to acquire an initial 9% stake in the project and a further C$16.4m ($12.1m) upon positive FID on the project.
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Furthermore, Appian will invest C$5m ($3.69m) in the common shares of Osisko Metals upon deal closing.
Osisko Metals chairman and CEO Robert Wares said: “The transaction allows us to leverage Appian’s extensive mine development experience and includes a crucial investment of C$75m 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$5m equity investment, will allow Osisko Metals to focus on the development of other projects while avoiding excessive dilution to advance the Pine Point Project.”