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Utah Business

This week, Tintic Consolidated Metals in Eureka, Utah announced a definite plan to be acquired by Osisko Development Corp.

Tintic Consolidated Metals announces acquisition plan

Eureka— Osisko Development Corp. (“Osisko Development” or the “Company”) (ODV: TSX-V) is pleased to announce that it has entered into definitive agreements (together, the “Agreements”) with IG Tintic LLC (“IG Tintic”) and Ruby Hollow LLC (“Ruby Hollow”, together with IG Tintic, the “Vendors”) to acquire 100 percent of Tintic Consolidated Metals LLC (“Tintic”) (the “Transaction”).
On completion of the Transaction, Osisko Development will acquire 100 percent ownership of the producing Trixie Mine (“Trixie”), as well as mineral claims covering more than 17,000 acres (including over 14,200 acres of which are patented) in Central Utah’s historic Tintic Mining District. Tintic’s recent discovery of an ultra-high grade structure (“T2”) positions Trixie as one of the highest grade gold mines in the world. Ongoing exploration work has demonstrated significant potential for expansion and further discovery both at Trixie and over the broader land package.

Sean Roosen, Chair and CEO of Osisko Development comments: “The proposed acquisition of Tintic further accelerates Osisko Development on its path toward becoming a mid-tier gold miner and represents a unique opportunity to significantly enhance our portfolio of operations by adding a high-grade producing asset in a world-class jurisdiction. In an industry where gold grade is typically quoted in terms of “grams”, we have welcomed the shift to talking in terms of “ounces” for Trixie where we see an excellent opportunity to build and expand upon existing ultra-high grade production with the potential to maintain a low capital intensity.”

Chris Lodder, president of Osisko Development notes: “We have been looking at the Tintic district for over 10 years as a copper-gold porphyry target and with the discovery of the high-grade T2 gold structure, we were given the opportunity by the Tintic partners to visit and carry out due diligence ahead of other competitors, ultimately culminating in the acquisition of this fantastic growth opportunity in one of the top mining jurisdictions in the world with a best-in-their-class management and operating team.”

Transaction summary

Tintic is a joint venture owned as to 75 percent by IG Tintic and as to 25 percent by Chief Consolidated Mining Company  (“Chief”). Ruby Hollow holds an indirect 25 percent interest in Tintic through its ownership, directly and indirectly,  of approximately 83 percent of the stock of Chief. Pursuant to the terms of the Transaction, Osisko Development will acquire 100 percent of Tintic from the Vendors for aggregate payments at closing totaling approximately  US$177 million, of which approximately US$54 million will be paid in cash. In addition to the payments at closing, the Company will pay to the Vendors: (i) US$12.5 million in deferred payments (ii) a 2 percent NSR  royalty, with a 50 percent buyback right in favor of Osisko Development exercisable within 5 years; and (iii) other contingent payments, rights, and obligations.

Thomas E. Bowens, CPG, president of Tintic, and Manager of IG Tintic comments: “What the Tintic team has accomplished in two and a half years, is nothing short of spectacular; from an overlooked and underexplored area to a world-class discovery and mining operation. Osisko Development’s recognition of the value of this property demonstrates a common vision with ours at IG Tintic, 75 percent owner and operator of the Tintic joint venture during this period. With Osisko Development becoming 100 percent owner of this property,  with its technical expertise and financial capacity, IG Tintic members are overwhelmingly excited to continue participating in this one-of-a-kind opportunity as shareholders of Osisko Development. I am convinced the  East Tintic District’s store of precious and base metals will come to light and will be truly world-class in  every way.” 

Geoff Stanley, Executive Chairman of Chief and a Managing Member of Ruby Hollow, comments: “We are delighted to be able to announce this transaction for the benefit of Chief and Ruby Hollow shareholders. We are confident that Osisko Development’s stewardship of this incredibly exciting high-grade gold discovery at the Trixie mine and the other mining opportunities in the Tintic district will bring a  broad array of benefits to the project’s many stakeholders. Our shareholders now have the opportunity to  become shareholders of Osisko Development and enjoy the long-term benefits of the considerable  technical and financial capabilities that it will bring to the project development, as well as exposure to the  overall Osisko Development portfolio.” 

About the Tintic district

The Tintic Mining District is the second most metal endowed district in Utah with excellent potential for high-grade precious metal discoveries and continued expansion of known polymetallic and porphyry mineralization. The property hosts classic porphyry epithermal mineralization with many associated styles of mineralization identified, including high sulphidation precious metal-rich veins and breccias, intermediate sulphidation base metal and precious metal-rich veins, and breccias,lead-zinc-silver-gold carbonate replacement deposits, and copper-molybdenum-gold porphyries. Small scale mining and prospecting started in the 1860’s and organized mining for gold, silver, lead, zinc, and copper began in 1892. The Tintic district’s historical recorded production (1892-2002) totaled 2.9 million ounces of gold, 285 million ounces of silver, 128 thousand tons of copper, 1,163 thousand tons of lead, and 259 thousand tons of zinc.