Osisko Metals Incorporated (TSX-V: OM) (OTCQX: OMZNF) (FRANKFURT: OB51) is pleased to announce that it has closed its previously-announced “bought deal” brokered private placement offering of an aggregate of (i) 4,600,000 common shares of the Corporation that will qualify as “flow-through shares” (within the meaning of subsection 66(15) of the Income Tax Act (Canada)) at an issue price of C$0.50 per Flow-Through Share, and (ii) 19,166,667 units of the Corporation at an issue price of C$0.54 per Flow-Through Unit, for aggregate gross proceeds of approximately C$12.7 million, including the partial exercise of the option granted to the Underwriters (as defined herein). Each Flow-Through Unit is comprised of one common share of the Corporation and one-half of one common share purchase warrant of the Corporation, each of which will qualify as a “flow-through share” (within the meaning of subsection 66(15) of the Income Tax Act (Canada)). Each Warrant entitles the holder thereof to acquire one common share of the Corporation at a price of C$0.57 per Warrant Share for a period of 60 months following the closing date of the Offering. The Offering was led by Eight Capital, on behalf of itself and Haywood Securities Inc.
The gross proceeds raised under the Offering will be used by the Corporation to, directly or indirectly, incur eligible “Canadian exploration expenses” (as such term is defined in the Income Tax Act (Canada)) that are intended to qualify for the “critical mineral exploration tax credit” announced in the 2022 Federal Budget delivered on April 7, 2022, provided the Corporation meets the requirements under applicable law once released by the Department of Finance (Canada) (or will otherwise qualify as “flow-through mining expenditures”, as defined in the Income Tax Act (Canada)). All Qualifying Expenditures will be renounced in favour of the subscribers of the Flow-Through Shares and Flow-Through Units effective December 31, 2022.
In consideration for their services, the Underwriters were paid a cash commission equal to 6.5% of the gross proceeds of the Offering (other than in respect of subscribers on the President’s List for which 3.25% commission was paid) and 1,416,458 compensation warrants. Each compensation warrant entitles the holder thereof to purchase one common share of the Corporation at a price of C$0.54 per common share until the close of business on the date which is 24 months from the closing date of the Offering.
All securities issued under the Offering will be subject to a hold period expiring four months and one day from the date hereof. The Offering is subject to final acceptance of the TSX Venture Exchange.
Mr. Robert Wares, Chair and Chief Executive Officer of the Corporation, has subscribed for 330,000 Flow-Through Shares under the Offering. Prior to the Offering, Mr. Wares held 37,365,618 common shares, 1,294,200 options and 1,250,000 warrants, representing approximately 18.5% of the issued and outstanding common shares of the Corporation prior to the Offering on a non-diluted basis (approximately 19.5% on a partially diluted basis). Subsequent to the Offering, Mr. Wares holds 37,695,618 common shares, 1,294,200 options and 1,250,000 warrants, representing approximately 16.7% of the issued and outstanding common shares of the Corporation immediately following the Offering on a non-diluted basis (approximately 17.6% on a partially diluted basis).
The subscription by Mr. Wares, an “insider” of the Corporation, is considered to be a “related party transaction” for the purposes of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions. The Corporation will file a material change report on SEDAR (www.sedar.com) under its issuer profile to provide disclosure in relation to the “related party transaction”. The Corporation did not file the material change report more than 21 days before the expected closing date of the Offering as details of the Offering and participation therein by Mr. Wares was not settled until shortly prior to the closing of the Offering, and the Corporation wished to close the Offering on an expedited basis for sound business reasons. The Corporation is relying on exemptions from the formal valuation and minority shareholder approval requirements available under MI 61-101. The Corporation is exempt from the formal valuation requirement in section 5.4 of MI 61-101 in reliance on section 5.5(a) of MI 61-101 as the fair market value of the transaction, insofar as it involves Mr. Wares, is not more than 25% of the Corporation’s market capitalization. Additionally, the Corporation is exempt from minority shareholder approval requirement in section 5.6 of MI 61-101 in reliance on section 5.7(b) of MI 61-101 as the fair market value of the transaction, insofar as it involves Mr. Wares, is not more than 25% of the Corporation’s market capitalization.
The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.
About Osisko Metals
Osisko Metals Incorporated is a Canadian exploration and development company focused on creating value in the base metal space. The Corporation owns one of Canada’s premier past-producing zinc mining camps, the Pine Point Project, located in the Northwest Territories for which the 2020 PEA (as defined herein) has indicated an after-tax NPV of $500 million and an IRR of 29.6%. The 2020 PEA is based on current Mineral Resource Estimates that are amenable to open pit and shallow underground mining and consists of 12.9Mt grading 6.29% ZnEq of Indicated Mineral Resources and 37.6Mt grading 6.80% ZnEq of Inferred Mineral Resources. Please refer to the technical report entitled “Preliminary Economic Assessment, Pine Point Project, Hay River, North West Territories, Canada” dated July 30, 2020 (with an effective date of June 11, 2020) prepared by BBA Inc. and WSP Canada Inc., for Osisko Metals and Pine Point Mining Limited, a copy of which is available on SEDAR (www.sedar.com) under Osisko Metals’ issuer profile. Pine Point is located on the south shore of Great Slave Lake in the Northwest Territories, near infrastructure, paved highway access, and has an electrical substation as well as 100 kilometres of viable haulage roads already in place.
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