The objective of the 2022 PEA Update was to integrate updated long-term prices for zinc and lead, increased mined resources, cost escalations in CAPEX and OPEX as well as reduced life-of-mine water management costs that resulted from the recently completed hydrogeological model. The latter reduced the estimated dewatering volume by 30% compared to the 2020 PEA with potential for a further forecasted reduction of 15% as the project advances to feasibility.

Table 1: Updated PEA Update Highlight Results
(all figures in CAN$ unless otherwise noted)*

After-Tax Internal Rate of Return (“IRR”) 25%
After-Tax Net Present Value (“NPV”) (Discount Rate 8%) $602M
After-Tax Payback Period (Years) 3.8
Pre-Production CAPEX (including $106.6M Contingency) $653M
Average Annual LOM Production Zinc 329Mlb
Average Annual LOM Production Lead 141Mlb
Life of Mine (“LOM”) 12 Years
Total Mineral Resources Mined 46.9Mt
Average ZnEq Diluted (12%) Grade of Mineral Resources Mined 6.1%
Gross Revenue After Royalty (LOM) $5,625M
After-tax Operating Cash Flow (LOM) $1,279M
C1 Costs over LOM (ZnEq)** US$0.61/lb
All-In Costs (including sustaining CAPEX, ZnEq)*** US$0.80/lb
LOM Zinc Price US$1.37/lb
LOM Lead Price US$0.97/lb
FX Rate (CAD:USD) 1.27

* See Cautionary Statement below
** C1 cost includes mine site cost plus smelting, transport and royalty
*** All-in costs are C1 plus sustaining CAPEX

Cautionary Statement

The reader is advised that the 2022 PEA Update summarized in this press release is preliminary in nature and is intended to provide an updated high-level review of the project’s economic potential and design options. The 2022 PEA Update mine plan and economic model includes numerous assumptions and the use of Inferred Mineral Resources. Inferred Mineral Resources are considered to be too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that further work will result in the definition of economic mineral reserves at Pine Point.

Hydrogeology Highlights:

  • This is the first time a hydrogeological Site Wide Numerical Model (“SWNM”) has been used for the Pine Point Project, providing insight into dewatering requirements.
  • The new Cluster mining strategy in combination with the hydrogeological modelling reduced dewatering estimations by 30% on an annual basis for various key Operating and Sustaining Capital Expenditures directly associated to dewatering when compared to mining the open pits individually.
  • Current data suggests that there is potentially an additional reduction of up to 15% beyond the current simulation estimates.
  • Ongoing modelling will further optimize the LOM plan strategy to pump less water, use less energy, and continue to reduce dewatering costs. This also means reduced NG generated power requirements, and less GHG emissions for a smaller footprint.
  • Further optimization of the SWNM and the LOM plan will be a main objective of the feasibility study.

Updated Mineral Resource estimate (MRE) Highlights:

  • Indicated Mineral Resource: 15.8Mt grading 4.17% Zn and 1.53% Pb representing approximately 25% of the declared tonnage in the updated 2022 MRE
  • Inferred Mineral Resource: 47.2Mt grading 4.43% Zn and 1.68% Pb
  • Indicated and Inferred Mineral Resource tonnages increased by 22% and 26%, respectively
  • The differences in tonnage/grade between the 2020 and 2022 MRE are attributable to parameter changes used for the pit shells and the cut-off grade calculation.
  • The feasibility study will include drilling from 2019 until the end of the drill campaign in H1 2023. This will upgrade the Inferred Resources to the Indicated category for the feasibility study Mineral Resource Estimate.

Table 2: LOM Capital Cost Summary (in C$M)

Cost Area Pre-Production Capital Costs ($M) Sustaining Capital Costs ($M) Total Capital Costs ($M)
General Administration (Owner’s costs) 22.8 0.0 19.1
Underground Mine 0.0 118.3 118.3
Open-pit Mine 15.7 80.6 96.3
Electricity and Communications 45.7 19.3 64.9
Site Infrastructure 59.7 11.8 71.5
Process Plant 297.3 0.0 297.3
Tailings, Mine Waste and Water Management 47.7 123.6 171.3
Indirect Costs 76.6 0.0 76.6
Contingency 87.8 18.8 106.6
Capitalized Operating Costs 0.0 174.5 178.3
Total 653.3 546.8 1200.1
Site Reclamation and Closure 0.0 68.0 68.0
Salvage Value 0.0 -19.6 -19.6
Total – Forecast to spend (CAPEX + SCAPEX) 653.3 595.2 1248.5

Table 3: Operating Costs

Mining Costs (per)
Surface* $/Tonne Mined $3.36
Underground – West Zone** $/Tonne Mined $40.01
Underground – Central Zone** $/Tonne Mined $52.07
Processing Costs $/Tonne Milled $12.27
Power Operating Cost $/Tonne Milled $4.61
Waste rock, Tailings and Water Management Costs*** $/Tonne Milled $1.63
G&A Costs $/Tonne Milled $8.11

*LOM Average and inclusive of ore, overburden and waste rock

**Inclusive of transport to the mill

***Previously included in Mining and Processing Cost in the 2020 PEA

Sensitivity
The Pine Point Project is expected to be a robust, profitable operation at a variety of prices and assumptions. Metal prices used in the 2022 PEA Update study are based on weighted two-year moving averages, hence $1.37/lb zinc and $0.97/lb lead.

Under more bullish scenarios, especially when considering record low inventory levels and continued lack of investment in the mining industry, the Project demonstrates even stronger economic returns and is well-positioned to benefit from a higher long-term zinc price. At US$ US$1.50/lb zinc, $1.00/lb lead and FX 1.25, the Project returns an NPV of C$787M with an IRR of 29% on an after-tax basis.

A lower commodity pricing scenario was also modeled using US$1.30/lb zinc, $0.95/lb lead and FX 1.29). Even at lower prices, Pine Point would still generate a robust NPV of C$526M and IRR of 23% on an after-tax basis.

Hydrogeological Modelling
The current dewatering plan was updated for the Project’s PEA Update by HRI using the FeFlow V7 software. This is an important step in the process of better estimating dewatering volumes as it utilizes the Pine Point Project 3D Geological model and GIS Database and is corroborated with Profile Tracer Tests (“PTT”) in 23 holes that were tested until the cutoff date of December 2021. Additional testing is ongoing and will be used to calibrate future simulations.

For the North, Central and East Mill Zones (see map below), open pit mines were grouped into clusters measuring 3 kilometers long and 1 kilometer wide. Generally, pits located within a cluster are mined in sequence to reduce dewatering requirements. Lowering the water table within the deepest pit within a cluster would potentially reduce water management at that time for surrounding pits. Utilizing this type of dewatering strategy will help to optimize overall pumping rates and power requirements.

To reduce water management in underground mines in the West Zone, grouting was selected as the preferred water inflow restriction methodology. Discussions with experts and previous employees of Pine Point Mines during the Cominco Ltd. era benefitted the analysis and grouting (till injection) was chosen as the preferred method to reduce water inflow.

Using contemporaneous measurement systems, and dewatering management techniques the Company will continue to optimize mine sequencing, and the overall LOM plan to better manage water. One strategy being used is to evaluate if dewatering the deepest pit within a Cluster area reduces the dewatering of adjacent open pits. The ultimate objective is to focus on each Cluster to maximize mining efficiency and reduce dewatering volumes to manage. This will help to focus on reducing production timelines per open pit and per Cluster, potentially further reducing dewatering volume estimates.

The strategic placement of water wells targeting structures and discontinuities will be an innovative approach never previously applied to Pine Point.

Mining
In the 2022 PEA Update the Pine Point Project LOM plan would still consist of simultaneously mining open pit deposits in the East Mill, Central, North and N204 Zones concurrent with underground operations in the West and Central Zones as in the 2020 PEA.

The overall schedule has changed using the Deswik software platform but the general strategy is the same with an average LOM production rate of 11,250 tonnes per day mined.

The open pit LOM plan is still proposing to mine 47 open pits and 9 underground deposits over a strike length of 50 kilometres, mainly located above 125 metres depth from surface. Most of the deposits are characterized by multiple shallow tabular panels dipping approximately 2-5 degrees towards the West.

The open pit mining method is essentially the same as in the 2020 PEA, incorporating five metre benches in mineralized material, ten metre benches in waste with an overall open pit wall angle of 45 degrees. The mining fleet would include long-haul trucks with a payload of 90 tonnes. The production rate would vary between 8,000 tpd and 11,250 tpd. The strip ratio is lower due to the inclusion of more mineralization and is expected to average 5.6 to 1.

Underground operations would still use 45 tonne haul trucks with ramp access and would produce at a rate of 4,000 tpd in the West Zone and 2,000 tpd in the Central Zone. The mining methods used are a mixture of Long Hole Stoping (85%) combined with Room and Pillar (15%).

Processing and Smelting
The Pine Point processing plant is still designed to treat up to 11,250 tpd Run of Mine (“ROM”) material. The processing plant would consist of a three-stage crushing circuit as well as an XRT-based mineral sorting system that would reject approx. 40% waste material. The sorted concentrate would be blended with the primary crushing circuit fines to feed a ball mill (6,700 tpd) followed by conventional lead and zinc flotation circuits.

Overall zinc and lead recoveries, inclusive of material sorting, over the LOM, are expected to be approximately 87 % and 93%, respectively. Flotation tailings would be thickened and pumped for disposal within mined out pits. The flotation concentrates would be filtered and trucked to Hay River for transloading into rail cars for shipment to smelters.

Pine Point zinc and lead concentrates are not encumbered by any offtake agreements. It is expected that this type of high-quality material would be sought after by most smelters. The forecasted future zinc supply will be dominated by concentrates with high impurities which will require blending with concentrates similar to that of Pine Point.

Supplemental Table

Element Symbol Unit Reported Concentration Typical Smelter Penalty Threshold
Antimony Sb ppm Less than 0.5* 1,000
Bismuth Bi ppm Less than 0.1* 1,000
Cadmium Cd ppm 864 4,000
Cobalt Co ppm 3 1,000
Copper + Lead Cu + Pb % 0.23 3
Fluorine F ppm Less than 20* 300
Iron Fe % 2.6 8.0-9.0
Magnesium MgO % 0.36 0.35
Manganese Mn ppm 100 12,500
Mercury Hg ppm 0.31 50
Silica SiO2 % Less than 0.21* 3.5

The Pine Point zinc concentrates are expected to be predominantly smelted in North America using long-term benchmark contract prices with positive adjustments to account for its high-quality. The remaining portion is expected to be sold into both the Asian spot and benchmark contract markets.

Lead concentrates would be mainly sold into the Asian spot and benchmark contract markets with only a minor North American component.

Table 4: Processing Overview

Crushing and Pre-Concentration Circuit Throughput 11,250tpd
Coarse Fraction 70%
Fine Fraction 30%
XRT Mass Recovery 42%
Total Mass Recovery (including crusher fines) 59%
Grinding and Flotation Circuit Throughput 6,700tpd
XRT LOM Recoveries
Zinc 93.4%
Lead 99.0%
Flotation LOM Recoveries
Zinc 92.9%
Lead 94.1%
Overall LOM Recoveries
Zinc 87.0%
Lead 92.9%

Proposed Infrastructure Upgrades and Indirect Costs
The Project is located 60 km east of the town of Hay River in the Northwest Territories, on the south side of Great Slave Lake. Established infrastructure consists of an active power substation, paved GNWT highway access and one hundred kilometres of 25-metre-wide haul roads from the original Cominco era mining operation that provide access to all major deposit areas.

The town of Hay River is serviced by an airport and a paved road from Alberta. The town is also host to a railway head operated by the Canadian National Railway.

The proposed Project would be comprised of 55 mining sites (47 open pits and 8 underground deposits), one central concentrator plant site, and envisions the main electrical substation would feed 7 MW during the winter and 10 MW during the summer. The power requirements could be provided by the Northwest Territories Power Corporation through the Taltson hydro-electric grid.

Additional power would be supplied by mobile NG-fueled generators that could be moved to various sites requiring power and minimizing the amount of transmission lines needed as several open pit mines have a mine life of less than three years. Further studies will aim to optimize the number and capacity of these NG power generation units.

Overburden stockpiles and waste rock stockpiles would be located nearby planned open pit mines where necessary and waste rock would also be deposited in former historical open pit mines. Overburden and waste rock would also be used for progressive reclamation where appropriate.

There would be no Tailings Management Facility (“TMF”) as certain designated former open pits from the Cominco Ltd. era and future proposed open pits for tailings disposal and then the tailings would be covered by Pre-concentrator reject waste rock material and finally capped with coarser sterile waste rock.

Indirect costs such as engineering, procurement and construction management, temporary facilities for construction and other related items are estimated at $76.6 million. An additional $106.6 million has been budgeted over the LOM as contingency for specific costs.

Environment and Closure Plan
All mining projects located in the Northwest Territories are assessed in accordance with the Mackenzie Valley Resource Management Act (“MVRMA”). Environmental assessments are conducted by the Mackenzie Valley Environmental Review Board (“MVEIRB”) and includes all relevant federal agencies, such as ECCC and DFO, as parties to the process.

At the completion of the environmental assessment (“EA”), if the board recommends the Project be approved, the Mackenzie Valley Land and Water Board (“MVLWB”) will process the proponents’ applications for a Water License and Land Use Permit through a public process.

A closure and rehabilitation plan estimate for the Project has been developed by WSP as required by the MVRMA. Reclamation costs were estimated at $68.0 million.

Activities during closure would include the dismantling of the buildings and infrastructure erected for mine operations and for the processing plant, the closure of the tailings deposition areas, waste rock stockpiles and water management infrastructure and the reclamation of other areas that would be disturbed during the life of the Project. This cost estimate includes both the cost of site reclamation as well as post-closure monitoring.

Stakeholder Engagement
The Company is proactively working and consulting with local indigenous and non-indigenous communities that would be impacted by the Project. Consultation on the Project with the communities was initiated in 2017 and has continued with frequent notifications on project activities, meetings, and virtual open house presentations during the pandemic. During the exploration program efforts have been made to offer employment and contracting opportunities whenever possible.

Both the Aboriginal and non-Aboriginal communities have expressed strong support for the Project, with the objective of maximizing the economic benefits for local communities – specifically with a focus on employment and entrepreneurial opportunities throughout the various Project phases.

The realized Project would have a significant impact in the Northwest Territories, with the potential of generating over C$804M in combined federal and territorial tax revenue and contributing approximately 456 well remunerated jobs during the production phase and approximately 395 jobs during the construction period.

MRE Overview:
All tonnages in Table 6 are rounded to nearest thousand tonnes. ZnEq percentages are calculated using metal prices, forecasted metal recoveries, concentrate grades, transportation costs, smelter payable metals and charges. The pit constrained cut-off grade range is mostly due to the variable transportation distances from the mining zones to the presumed plant site location.

Table 6: 2022 Mineral Resource Estimate for Pine Point

Table 6: 2022 Mineral Resource Estimate for Pine Point

Notes Regarding Mineral Resource Estimate

  1. The independent qualified person for the 2022 MRE, as defined by National Instrument 43- 101 guidelines, is Pierre-Luc Richard, P.Geo., of PLR Resources Inc. The effective date of the 2022 MRE is March 10,
  2. These mineral resources are not mineral reserves as they do not have demonstrated economic viability. The quantity and grade of reported Inferred Resources in the 2022 MRE are uncertain in nature and there has been insufficient exploration to define these Inferred Resources as Indicated or However, it is reasonably expected that the majority of Inferred Resources could be upgraded to Indicated Resources with continued exploration.
  3. Resources are presented as undiluted and in situ for an open-pit and underground scenario and are considered to have reasonable prospects for economic The constraining pit shells were developed using overall pit slopes of 45 to 50 degrees in bedrock and 26.6 degrees in the overburden. Resources show sufficient continuity and isolated blocks were discarded; therefore, the herein 2022 MRE meet the CIM Guidelines published in November 2019.
  4. The 2022 MRE was prepared using GEOVIA GEMS 6.8.3 and is based on 19,509 surface drillholes and 166,376 samples, of which 7,852 drillholes and a total of 47,998 assays were included in the modeled mineralization. The drillhole database includes recent drilling of 78,195 metres in 1,182 drillholes since 2017 and also incorporates Cominco ’s historical drillholes, the use of which was partially validated by a drillhole collar survey, twinning programs, and a partial core resampling program. The cut-off date for the drillhole database was December 31, 2019. Approximately 35,000m in 550 drillholes were added to the project since the drillhole database cut-off date.
  5. The 2022 MRE encompasses 254 zinc-lead-bearing zones, each defined by individual wireframes with a minimum true thickness of 2.5 m. A value of zero grade was applied in cases of the core not
  6. High-grade capping was performed on the composited assay data and established on a per-zone basis for zinc and Capping grades vary from 10% to 35% Zn and 5% to 40% Pb.
  7. Density values were calculated based on the formula established and used by Cominco during its operational period between 1964 and 1987. Density values were calculated from the density of dolomite, adjusted by the amount of sphalerite, galena, and marcasite/pyrite as determined by metal assays. A porosity of 5% was assumed. Waste material was assigned the density of porous dolomite.
  8. Grade model resource estimation was calculated from drill hole data using an Ordinary Kriging interpolation method in a percent block model using blocks measuring 10 m x 10 m x 5 m in
  9. Zinc equivalency percentages are calculated using long-term metal prices indicated below in (10), forecasted metal recoveries, concentrate grades, transport costs, smelter payable metals, andThe estimate is reported using a ZnEq cut-off varying from 1.25% to 1.50% for open-pit resources and 4.15% to 4.50% for underground resources. Variations take into consideration trucking distances from the pit constrained mineralization to the mill and metallurgical parameters for each area. The cut-off grade was calculated using the following parameters (amongst others): zinc price = USD1.30/lb; lead price = USD1.00/lb; CAD:USD exchange rate = 1.27. The cut-off grade will be re-evaluated in light of future prevailing market conditions and costs.
  1. The 2022 MRE presented herein is categorized as Inferred and Indicated Mineral Resources. The Inferred Mineral Resource category is constrained to areas where drill spacing is less than 100 metres and the Indicated Mineral Resource category is constrained to areas where drill spacing is less than 30 In both cases, reasonable geological and grade continuity were also a criterion during the classification process.
  2. The pit optimization to develop the resource constraining pit shells was done using Hexagon’s Mine Plan Version 15.8.
  3. Calculations used metric units (metre, tonne). Metal contents are presented in percent or pounds. Metric tonnages were rounded and any discrepancies in total amounts are due to rounding
  4. CIM definitions and guidelines for Mineral Resource Estimates have been
  5. The QP is not aware of any known environmental, permitting, legal, title-related, taxation, sociopolitical, or marketing issues, or any other relevant issues that could materially affect the 2022

Independent Qualified Persons
This PEA was prepared for Osisko Metals by BBA Inc, WSP Canada Inc., and other industry consultants, all Qualified Persons (“QP”) under National Instrument 43-101. The study was coordinated by the Company’s Project Manager Xavier Pouchain PMP in collaboration with the Osisko Development Technical Services Group.
The independent QPs have reviewed and approved the content herein of and they include:
Colin Hardie, P.Eng., (BBA Inc.)
Pierre-Luc Richard, P. Geo. (PLR Resources Inc.)
Zakaria Moctar, P. Eng., (WSP inc.)
Paul Gauthier, P. Eng., (WSP Inc.)
Trent Purvis, P. Eng., (WSP Inc.)
Simon Latulippe, P. Eng., (WSP Inc.)
Michael Verreault, P. Eng., M.Sc.A. (Hydro-Ressources Inc.)

Pine Point - Project Areas