Osisko ‘signs $100M deal’ to launch Pine Point joint venture

Osisko Metals says it has signed a $100-million deal with an investment group to launch a joint venture that will prepare to reopen a mine at Pine Point, NWT.

The Pine Point project, which would resume mining zinc and lead at the site of a former mine that closed in 1988, began the environmental assessment process – a key stage before any mine can open – in 2021.

Regulators are scrutinizing the proposed mine’s potential impacts on the surrounding environment and peoples.

However, beyond regulatory approval, any new mine requires a massive cash injection to fund the transition from proposal to reality.

Quoted in a Wednesday press release, Osisko Metals chairman and chief executive Robert Wares said the deal with a subsidiary of private equity group Appian would provide $75 million over an estimated four years “that will advance the development of Pine Point to a shovel-ready status.”

The remaining $25 million takes the form of separate cash payments from the Appian subsidiary to Osisko, one when the deal closes and another as the project reaches “a final investment decision” – the point at which construction of the new mine would be approved.

Appian is set to receive a 60-percent interest in Pine Point Mining Ltd, the subsidiary of Osisko that owns the Pine Point project.

Wares said the deal, which must still receive shareholder and stock exchange approval, represented a “crucial investment” from a private equity group known for its acquisition and development of mining projects.

Jeff Hussey, Osisko Metals’ president and chief operating officer, will become Pine Point Mining Ltd’s chief executive officer and “spearhead the initiative to advance Pine Point to a final investment decision,” the press release stated.

Wares has previously said Pine Point could become “a top-10 global zinc-lead producer.”

Pine Point, located between Hay River and Fort Resolution, is currently little more than the footprint of its former mining town. The community was once home to almost 2,000 people but disappeared when the first mine, which opened in 1964, ceased operations 24 years later.

The initial mine produced more than 64 million tonnes of zinc-lead ore and was considered a world-class producer at the time.

While Pine Point would not create the same employment as the NWT’s largest diamond mines, Osisko says it would still be a major job creator for the South Slave.

Documents submitted by the company to trigger the environmental assessment process claimed construction will employ at least 280 people at the mine, with a peak of 500, while the operational mine would need about 460 people in two shifts of 230.