Osisko Development Corp. (TSXV:ODV) entered into a definitive agreement to acquire Chief Consolidated Mining Company Inc. from Riverfield Capital Limited and others on January 25, 2022. In a related transaction, Osisko Development Corp. also entered into a definitive agreement to acquire 75% stake in Tintic Consolidated Metals LLC from IG Tintic LLC on January 25, 2022. Pursuant to the terms of the transaction, Osisko Development will acquire 100% of Tintic Consolidated Metals LLC through the purchase of IG Tintic's direct 75% ownership in Tintic; and purchase of all issued and outstanding stock of Chief Consolidated Mining Company from Riverfield Capital Limited and other stockholders of Chief for aggregate payments at closing totaling approximately $177 million, of which approximately $54 million will be paid in cash and the issuance of 35.1 million common shares of Osisko Development. In addition to the payments at closing, Osisko will pay to the vendors: (i) $12.5 million in deferred payments in equal instalments annually over five years in cash or shares at Osisko Development's election (ii) two 1% NSR royalty grants, each with a 50% buyback right in favour of Osisko Development for $7.5 million which is exercisable within 5 years; (iii) a right to receive the financial equivalent of 10% of the net smelter returns from stockpiled ore extracted from Trixie since January 1, 2018 and sitting on surface; (iv) the set-off of a $5 million loan owed to Osisko Development; and (v) $10 million contingent upon commencement of production at the Burgin Mine. On completion of the transaction, Osisko Development will acquire 100% 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. Following the completion, Chief Consolidated Mining Company will be wholly owned by Osisko Development. Osisko Development, through a wholly-owned subsidiary, has entered into a non-binding metals stream term sheet with a wholly-owned subsidiary of Osisko Gold Royalties Ltd. The proceeds from the stream will be used to fund a portion of the cash consideration payable on closing of the transaction.
The transaction is subject to the approval of shareholders of Chief Consolidated Mining Company of the merger to be completed in connection with the transaction. The transaction is also subject to normal course regulatory approvals and the satisfaction of customary closing conditions, including the execution of ancillary agreements and acceptance of TSX Venture Exchange. The IG Tintic and Chief transactions are inter-conditional. The Board of Directors of each of Osisko Development and Riverfield Capital Limited have unanimously approved the transaction. A shareholder meeting to approve the merger will be convened and Riverfield Capital has covenanted to vote its ~83% interest in favour of the merger at such meeting prior to the completion of the transaction. Osisko Development expects the transaction to close in Q2 2022.
Eight Capital is acting as Osisko Development's financial advisor and Bennett Jones LLP is acting as Osisko Development's legal advisor. Holland & Hart LLP is acting as Osisko Development's US legal advisor. Eight Capital has provided a fairness opinion to the Board of Directors of Osisko Development. Minvisory Corp. is acting as Chief's financial advisor; Parr Brown, Gee and Loveless is acting as Chief's US Counsel; and Stikeman Elliott LLP is acting as Chief's Canadian Counsel.