Pine Point Mining Ltd. – which has been exploring deposits remaining from a former mining operation east of Hay River – is now the target of a takeover bid.
On Dec. 18, Osisko Metals Inc. announced it has launched a friendly acquisition, which still has to be finalized.
The transaction, which involves shares, would have a value of $34 million.
It will be voted on by Pine Point Mining shareholders in February.
Jeff Hussey, president and CEO of Osisko Metals, is upbeat about the possibilities for the Pine Point project, a former zinc and lead mine that closed in the 1980s.
"The zinc price is rising," he said. "There's not a lot of development projects in the pipeline. So we think the future is bright for zinc and that's why we were searching for assets that ticked off our boxes as far as upside value and, in the case of Pine Point having its history, it ticked all our boxes."
Hussey said the goal is to apply the Osisko Group's aggressive strategy of consolidating and developing mining camps to the Pine Point project.
"We're well-funded with the ability to rapidly add resources," he said. "What we mean is we're going to come in and explore this very aggressively."
Osisko Metals also owns the Bathurst Mining Camp in New Brunswick. That mainly zinc operation also produces lead, silver, gold and more.
The company is a new division of the Osisko Group, which is a big player in the mining industry. One of its companies owns Canada's largest gold mine in northern Quebec.
"We're not just another junior," said Hussey.
Officials from Osisko Metals went on a site visit to Pine Point in September.
"It's a large project, but we have the people, the experience and the backing and the access to capital to explore and develop aggressively," said Hussey.
And he said Osisko Metals has what it takes to bring a project right to a mining operation.
"If it's good for our shareholders, we'll consider an offer, but we can continue on if it's not a good offer and finish the studies," he said. "We can build it. We can commission it. We can operate it."
As for how confident he is that the Pine Point project might lead to a mine, Hussey said, "It's a little early, but the best place to find a mine is next to a mine."
And he noted that Cominco, which operated the former Pine Point mine, defined about 100 deposits, but only half were mined.
Hussey said, once the transaction is completed, Osisko Metals plans to reach out to stakeholders and local communities to continue the work started by Pine Point Mining.
The company official noted the Pine Point project has existing advantages, including a railway connection in Hay River, available electricity, a paved highway passing right through the project, and more than 100 km of haul roads on site.
Mayor Brad Mapes said from what he knows about Osisko Metals it is a company that has the ability to move the project forward.
"My feelings, and it's just my personal feelings, is I think this company didn't just buy this to mothball it," he said. "From what I understand, it's there to move forward and move forward faster than what was projected by Pine Point."
Pine Point Mining Limited acquired a 100 per cent interest in the Pine Point project in December 2016.
"We are confident the Osisko Metals team will be able to further create meaningful value to the benefit of our collective shareholders while we focus on developing our other assets," said Jamie Levy, the president and CEO of Pine Point Mining.
Those other assets will be spun off into a new company, while Osisko Metals takes over the Pine Point project.
A preliminary economic assessment of the Pine Point project predicted a mining operation which, over a 13-year mine life, would have an after-tax net value of $210.5 million.