Osisko Metals closes acquisition of Gaspe Copper project

Osisko Metals has completed the acquisition of a 100% interest in the past-producing Gaspe Copper Mine pursuant to a purchase agreement dated July 8, 2022 between the Company and Glencore Canada Corporation, a wholly-owned subsidiary of Glencore. In connection with the Transaction: Glencore was issued a $25M senior secured convertible note of the Company which is convertible into units of Osisko Metals at a price of $0.40 per unit, comprised of one common share of the Company and one-half Common Share purchase warrant of the Company. Each Warrant will be exercisable by Glencore at an exercise price of $0.46 per Common Share until July 14, 2026.The Convertible Note will bear interest at a rate equal to the Secured Overnight Financing Rate + 4%, payable annually and, subject to adjustment or acceleration in certain circumstances, all outstanding principal and interest under the Convertible Note will be repaid in full by July 14, 2026. The Convertible Note will be secured against all of the present and after acquired property of the Company. Upon full conversion of the Convertible Note and exercise of the underlying Warrants in full, Glencore would acquire 71,347,826 Common Shares, representing approximately 21.8% of the Common Shares that would be issued and outstanding upon the conversion of the Convertible Note and the exercise of the Warrants issued upon such conversion. Glencore did not own or control, directly or indirectly, any securities of Osisko Metals immediately prior to the closing of the Transaction. Glencore retained a 1% net smelter returns royalty on the historical Mount Copper open pit and a 3% NSR royalty on all other minerals extracted from Gaspe Copper. Osisko Metals will make a cash payment of $20M to Glencore upon the commencement of commercial production at Gaspe Copper. Osisko Metals is required to incur a total of C$55M in exploration, development and environmental expenditures, including permitting expenditures, over a period of four years, which commenced on March 25, 2022, with a minimum of C$20M to be incurred by March 25, 2024. Osisko Metals has entered into an offtake agreement with Glencore to purchase 100% of the concentrates produced at Gaspe Copper. The Company and Glencore entered into an investor rights agreement, pursuant to which Glencore has been granted certain investor rights, provided that it maintains certain ownership thresholds in the Company. Among other things, the Investor Rights Agreement provides Glencore with the right to designate one director for appointment to the board of directors of the Company, participation rights in future equity issuances, piggyback registration rights and the right to maintain its pro-rata position in Osisko Metals. Upon conversion of the Convertible Note by Glencore, Glencore may hold, on a post-conversion basis, such number of Common Shares and Warrants that would exceed 20% of the pro forma issued and outstanding Common Shares, both on a non-diluted and partially-diluted, post-conversion basis, thus resulting in Glencore becoming a Control Person of the Company. Accordingly, in accordance with the policies of the Exchange, the disinterested shareholders of the Company were required to approve Glencore as a Control Person of the Company, which approval was obtained at a meeting of shareholders held on June 23, 2022. In accordance with the terms of the Investor Rights Agreement, Mr. Peter Wright will be appointed to the board of the Company. Mr. Wright has served as Director and Vice President, Legal, with Glencore since 2018, having joined the company in 2014.