Osisko Metals raises C$8m through ‘bought deal’ flow-through financing

VANCOUVER (miningweekly.com) – Base metals-focused explorer and project developer Osisko Metals has reached an agreement with Canaccord Genuity, on behalf of a syndicate of underwriters, to raise C$8-million on a ‘bought deal’ private placement of 4.21-million common shares.

The shares will qualify as ‘flow-through’ shares under the Canadian Income Tax Act, and are priced at C$1.90 for each flow-through share.

Flow-through shares allow for the money raised through the sale of such shares for Canadian exploration expenses, to be renounced by the company and flowed through in favour of the buyers of the shares, making it a tax-efficient vehicle for investors.

The underwriters will also have an option to increase the size of the offering by up to a further one-million flow-through shares for additional gross proceeds of C$2-million.

The offering is expected to close on or about September 20, subject to certain closing conditions, including the receipt of necessary approvals such as the conditional listing approval of the TSX-V exchange and the applicable securities regulatory authorities.

Osisko has agreed to pay the underwriters a cash commission of 5% of the gross proceeds of the offering, provided, however, that no cash commission shall be payable to the underwriters on proceeds from any flow-through shares bought by Osisko Gold Royalties and Osisko Mining.

Osisko Metals has acquired significant landholdings in the Bathurst Mining Camp (BMC), of New Brunswick, a significant historical zinc/lead/silver producing district believed to be the third-largest volcanogenic massive sulphide camp in the world.

Since Xstrata Zinc, now Glencore, formally exited the Brunswick zinc/lead mine just south of Bathurst in 2013, several juniors and project developers, including Trevali Mining and its producing Caribou zinc mine, Slam Exploration and Callinex Mines have acquired significant landholdings, in the hope of capitalising on forecasts that zinc demand will far outstrip supply over the coming decade.

The corrosion resistant industrial metal has gained 36% year-on-year to a level of $3 110/t on Tuesday.

Osisko Metals has set itself the goal of establishing a multi-deposit asset base in the prolific BMC that would feed a central concentrator.

Its initial entry to the sector was through the consolidation of the largest land package, comprising more than 40 000 ha in the BMC.

The company, formerly known as Bowmore Exploration, also holds an extensive land package in Quebec, comprising twelve grassroot zinc exploration targets of more than 42 000 ha.

In parallel, Osisko will be monitoring several zinc-oriented peers for other opportunities. TSX- and NYSE-listed Osisko Gold Royalties is a significant shareholder of the company.