Osisko Metals Inc. announced plans to acquire Pine Point Mining Ltd. in an all-share deal, resulting in the latter's share price increasing by about 23%.
Osisko Metals said Dec. 18 that the two companies entered a definitive arrangement agreement dated Dec. 15, under which a new company will be formed to hold all of Pine Point's assets, except the Pine Point zinc-lead project in Canada's Northwest Territories, which will be held by Osisko Metals.
A preliminary economic assessment on the Pine Point property, completed in April, outlined an after-tax net present value of C$210.5 million, using an 8% discount rate, with a 34.5% internal rate of return and a 1.8-year payback period.
Pine Point shareholders will be entitled to receive 0.271 of a common Osisko Metals share, 0.0677 of a common share purchase warrant of Osisko Metals, and 1 common share of the new company for each common Pine Point share held. Each whole warrant is exercisable at C$1.50 per Osisko Metals share for 12 months from closing, while the shares in the new entity will be consolidated on a 10-to-1 basis.
Osisko Metals noted that the exchange ratio implies consideration of approximately 21 cents per Pine Point share, representing a total equity value of approximately C$34 million on a fully diluted, in-the-money basis.
Upon closing, existing Osisko Metals shareholders will own a 62% interest and existing Pine Point shareholders will own a 38% interest in pro-forma Osisko Metals.
The deal is subject to approval of at least two-thirds of Pine Point shareholders, with a special meeting anticipated in February 2018, along with regulatory and other customary closing conditions. Both company boards unanimously approved the arrangement.