Pine Point Mining (ZINC.V) has reached an agreement with Osisko Metals (OM.V), whereby the latter will acquire all of Pine Point’s outstanding shares in an all-share deal. Pine Point’s shareholders will receive 0.271 shares of Osisko Mining per share of Pine Point, as well as 0.0677 warrants to purchase an additional share of Osisko Metals at C$1.50 within 12 months after closing the arrangement. On top of that, shareholders of Pine Point will receive shares in a SpinCo which will own all other projects except for the Pine Point zinc project.
Rather than continuously diluting itself in a market which doesn’t seem to care about zinc stories right now, Pine Point has found a ‘clean exit’ as Osisko Metals has the financial ability to quickly advance this project with more aggressive exploration plans. The all-share deal seems to be fair (although very few people will make money on a presumed C$0.20 valuation per Pine Point share) as the SpinCo should have some value as well.
As of at the end of September, Pine Point Mining still had a working capital position of C$2.4M which will very likely be a bit lower now, so it explains why Pine Point was willing to entertain serious offers for the company. If anything, Pine Point should be commended for having spent the shareholder funds on the ground. As you can see on the previous image, of the C$5.94M in cash expenses incurred in the first nine months of the year, C$4.7M was effectively spent at Pine Point. This means the non-project related expenses were just above 20% of the total cash burn which is a very reasonable (and low) ratio.
Although we would have liked Pine Point Mining to remain independent, the sale to Osisko Metals is perhaps the best long-term solution as Osisko will always be able to fund the progress. We would recommend to accept the offer and to tender your shares.
Go to Pine Point’s website
The author has a long position in Pine Point Mining and Osisko Metals. Pine Point Mining is a sponsor of the website. Please read the disclaimer
