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Osisko Metals Inc. (TSX-V: OM; FRANKFURT: OB5): Exploring and Developing Canada’s Two Premier Past-Producing Zinc Camps, Interview with Jeff Hussey, President and CEO

on 4/2/2018
Osisko Metals Inc. (TSX-V: OM; FRANKFURT: OB5) is a Canadian exploration and development company creating value in the base metal space, with an emphasis on zinc. We learned from Jeff Hussey, President and CEO of Osisko Metals, that they control two premiere Canadian past-producing zinc camps, known as the Pine Point Mining Camp and the Bathurst Mining Camp. Plans for 2018 include aggressive exploration, with increased drill count in both camps and over 100,000 meters of combined drilling. Mr. Hussey believes they will become the leader of the base metal exploration and development peer group in Canada, and the investors should expect many catalysts throughout 2018.

Dr. Allen Alper: This is Dr. Allen Alper, Editor-in-Chief of Metals News, interviewing Jeff Hussey, President and CEO of Osisko Metals. Could you give our readers/investors an overview of your company, your vision and strategy for Osisko Metals?

Jeff Hussey: About 18 months ago, we started seeing base metal supply demand fundamentals tightening, especially on the supply side and even more so in zinc. That's why we decided to focus on zinc initially. We set out, as a first step, to take a dominant position in a premier past-producing zinc camp, known as the Bathurst Mining Camp (BMC). I worked at the Brunswick No. 12 mine — the largest underground zinc mine in the world during its 50+ years of production — for six years and for Noranda, previous operators of Brunswick No. 12, for close to 20 years. Osisko Metals has also assembled a senior team of geologists, who have explored across the BMC over the last 25 years, giving our exploration team tremendous background knowledge on the geology of the camp.

The Bathurst Mining Camp hosts the former producers known as Brunswick No. 12 and 6. This camp used to be controlled by Noranda, then later by Xstrata, and Glencore. Over recent years, claims were dropping and there was little to no interest in exploration, during a period when the commodities were priced lower and Chinese demand had backed off after the super-cycle. The camp was open, so we staked as much favorable ground as was available. Early on, we staked 25,000 hectares, and today we control over 63,000 hectares of mineral claims, a very dominant position in what was the largest zinc camp in Canada.

We have a number of historical deposits that were sparsely drilled. We have a minimum threshold objective to identify 10 million tonnes of 10% combined zinc + lead, and we currently have three drill rigs turning on two of those deposits. We plan to increase that rig count in the next few months and aggressively pursue our objective; any one of these smaller deposits could be the tip of the iceberg.

In February 2018, we completed the acquisition of the Pine Point Mining Camp. Pine Point was the most profitable zinc mine in Canada for over 20 years, between '65 and '88. In the 2017 JDS PEA, there are 25 million tonnes at around 4% zinc and lead combined. There are 46 undeveloped, historical, near surface deposits across the property. There is a total of 70 million tonnes of historical resources to be evaluated for development. We're planning to drill the camp aggressively and increase the resource base to get into a development scenario as soon as is possible.

Pine Point really ticked all of our criteria boxes, when we were looking for a development-stage project.

There's good infrastructure including railroad from Edmonton up to Hay River, located 65 kilometers from the heart of the camp. The camp itself extends over 60 kilometers. There are over 40 historical deposits and very good exploration upside potential. There's sufficient power available from the Taltson Dam to get started and a substation located next to Pine Point’s former concentrator. This is the most likely location for the planned concentrator. There is a paved highway that runs through the length of the project, and a highway that comes up from Edmonton and connects just south of the property. There are approximately 100 kilometers of 25 metre-wide haul roads on the property from Pine Point’s previous production era. It has all of the expensive infrastructure already in place.

One of our key criteria, was to have good, conventional metallurgy, and Pine Point has exceptional metallurgy. It's probably in the top percentile of quality concentrates globally today. This exceptional quality is a product that most smelters could use as a premium blending concentrate. With lower quality concentrates coming on stream over the next few years, this zinc concentrate could be a sought-after product.

Also, in 2017 we assembled a Quebec GenEx portfolio of 12 untested zinc targets across Quebec. We raised $1.2 million in flow-through money to follow up on these projects. This low cost, blue sky exploration potential will complement our exploration and development work, in both the Bathurst and Pine Point mining camps. At this stage, we're advancing projects in Quebec based on exploration success.

Dr. Allen Alper: That sounds fantastic. It sounds like you're in an excellent position to move forward on base metals and on zinc, and 2018 will be an extremely exciting year for Osisko Metals. Sound’s really great.

Jeff Hussey: Yes, it is very exciting and we're very well established in the Bathurst camp, with our office and team in place, and we will expand as our workload increases.

As for Pine Point, we maintained the technical team to maintain consistency, and we will expand as necessary to increase the rate of exploration. We're quite excited to create significant exploration and development activity and news flow that will be good for both shareholders and stakeholders.

Dr. Allen Alper: That sounds great. Could you say a bit more about the grades that are found at some of these camps?

Jeff Hussey: Yes, the “Brunswick Belt” in the Bathurst camp, produced about 150 million tonnes of 12% combined lead-zinc. This is probably one of the most prolific base metal belts. It's the third-largest volcanogenic massive sulfide camp in the world.

With the dominant position in the camp, and with the seasoned team that have over 100 years of experience in the Bathurst Mining Camp, and probably over 200 in the base metals exploration industry in general, we have the team to meet the challenge in Bathurst.

We're looking for 10 million tonnes, at 10-12% combined lead plus zinc, as our minimum threshold. We are always aiming for more. We plan to use innovative techniques to look deeper as well as laterally.

In the case of Pine Point, the targets are open-pitable and near surface. The JDS PEA outlined a 25 million tonnes resource. There remains another 50 million historical tonnes waiting to be upgraded to NI43-101 standards, explored further and developed.

Dr. Allen Alper: That sounds excellent. Could you tell us, our readers/investors, a bit more about your background, the management team, the board, and maybe some key members of the team in the field?

Jeff Hussey: With pleasure. Actually, that's probably the proudest thing we can talk about. The team, and the Board, and the brand of Osisko are exceptional. It's Osisko Group's first venture into the base metals space. They asked me to lead this effort because I worked for Noranda for close to 20 years. I worked at Brunswick, Gaspe Copper mines and was part of the startup team at Antamina, a large zinc-copper mine in Peru. From 1999 to 2002, Antamina was a $2.3 billion project that was completed on time, and on budget, and it was a great experience for me.

I continued on with Noranda at the research center for a brief period, then I worked at Raglan for five years, which is a nickel mine in northern Quebec, primarily working on optimization projects and managing open pit mining and site services. The next 10 years were spent as a consultant in iron ore and other bulk commodities, more at the development stage. Last year, I started working for the Osisko Group as a consultant. Now I’m leading this Osisko Metals effort with a great team of people.

Our management team consists of Paul Dumas, our Executive VP and CFO. He was the former President of the predecessor company, Bowmore Exploration. Killian Charles is our VP Corporate Development, he is a seasoned mining analyst, looking at opportunities and acquisitions in the base metals space, but right now, we're working hard on our two main assets. Christina Lalli is our Director of Investor Relations. She has over 15 years of professional experience primarily in the mining sector. She also worked for Bowmore and the original Osisko Mining, prior to its successfully negotiated purchase. She’s currently putting together an aggressive marketing campaign for 2018, revolving around all of the news that we expect will come out of the 100,000 metre drilling campaign.

Robin Adair, VP Exploration and Gary Woods, Senior Exploration Manager, Bathurst Camp; I've worked with these two gentlemen before at Noranda, and they were both senior, or managing directors of the Bathurst Mining Camp. We have other colleagues we used to work with that have similar experience, that are consultants supporting the effort. We've assembled a very senior team to initiate our work in the Bathurst camp, which we know well. The best way to explore is with a seasoned team, so we're quite happy to have all of them aboard.

At Pine Point, the technical team is also very seasoned and we hope to strengthen the team over the coming months to advance our interests aggressively, in the Pine Point camp.

I don't think you could find a better Board of Directors than is led by Robert Wares, along with John Burzynski, two of the founders of the original Osisko Mining; Luc Lessard has built 11 mines thus far, the last one being the Canadian Malartic Mine alongside Robert and John, and he is also currently President & CEO of Falco Resources. Amy Satov is also on the Board and formerly Executive Vice President of Legal, Compliance and Distribution and Corporate Secretary of DundeeWealth. Claude Charron, has over 30 years of extensive financial experience and is a tax specialist. Along with Paul and myself, I don’t think you could get a better Board in the junior mining base metals space. We're quite proud and happy with that because we know how important it is to shareholders to have good management and board members.

Dr. Allen Alper: Excellent! You and the rest of the management team and Board of Directors are a proven success team, so very impressive.

Jeff Hussey: Yes, we are a management team, with substantial experience across the mining spectrum, with an accomplished Board. We have everything from exploration, and development, to project financing leaders of the mining industry. The Osisko Metals team in Bathurst was heavily involved in the camp and in discoveries throughout the camp. We're quite happy to have assembled this board and management team, and we look to move forward aggressively on our objectives.

Dr. Allen Alper: Sounds great! By the way, I'm an investor in Osisko Mining, and I've interviewed Robert Wares before, so I'm very impressed with that team and that group.

Jeff Hussey: I agree.

Dr. Allen Alper: Could you tell us a bit more about your share and capital structure?

Jeff Hussey: I'll discuss both the structure now. The shares outstanding are just over 115 million, fully diluted, 147.7 million. Currently, Osisko Gold Royalties and Osisko Mining own 11.5% of our shares. We have very large institutions that own almost 27%, including Renvest, Blackrock, M&G, J.P. Morgan, Zebra Holdings, most of which are large institutional funds from London, and of course the Caisse de Depot et Placement du Quebec that has also been a shareholder for a long time, previously in the predecessor company, at about 4%. Management and insiders own about 8%. Osisko Metals is largely held in long-term hands, at approximately 46% of the stock. We have an approximate cash position of $35 million with a market cap at approximately $80 million.

Dr. Allen Alper: That sounds very good. What are the primary reasons our high-net-worth readers/investors should consider investing in Osisko Metals?

Jeff Hussey: With the acquisition of our position in the Bathurst camp and the acquisition of Pine Point recently completed, I think we're going to become the leader of the base metal exploration development peer group in Canada. We have lots of exploration results that will be coming from our aggressive 100,000-metre drill campaign covering both camps, so investors should expect several catalysts throughout 2018.

We have an emphasis on zinc, because that's where there's the largest opportunity due to fundamentals. Since 2016, the zinc price has risen from a low of 70 cents to range between $1.40 and $1.50. The reason is that there's been an extreme supply destruction since 2013. Supply inventories have decreased 80% in the last five years, and pipeline to fill that gap is relatively depleted. There were significant mine closures recently, one of them being the Brunswick No. 12 Mine, that shut down in 2013, reducing the inventories, and it's been quite evident in the corresponding price rise.

This is partially due to a lack of investment in exploration and development over the last 15 to 30 years. It's really depleted the project pipeline, and that is why the supply side is the real story. There just doesn't seem to be sufficient supply coming on stream. There are large mines slated to come online, but not enough to meet current demand levels that are increasing. The long-term price forecasts remain elevated in the short and medium term, and the potential in the longer term for stable higher prices past three years out is real. Some of the mines that are coming online, have challenges as far as concentrate quality, smelters may not be able to process large volumes and they will be looking for high quality concentrates with low deleterious content, that is our target market and both the Bathurst and Pine Point projects have the potential to deliver just that.

We're hoping to supply a very clean concentrate, from both camps with the exceptional metallurgy in Pine Point and/or in Bathurst. Both are world-renowned former mining camps for quality concentrates.

With the supply side being very distressed, we think investors can look forward to a higher zinc price, which is key to any exploration and development effort as well as a great team and two of the premiere former zinc-producing mining camps in Canada. I think that that this combination is a trifecta that will add value for shareholders.

Dr. Allen Alper: That sounds excellent! Very compelling reasons why our high-net-worth readers/investors should consider investing in Osisko Metals. Is there anything else you'd like to add, Jeff?

Jeff Hussey: We use innovative and new technologies. With a seasoned technical team and some new tools in the toolkit. We think there is significant upside. In the case of Pine Point, it really hasn't been explored since 1988. We will execute a regional airborne gravity gradiometry survey that is a relatively new tool that measures density differences between mineralization and the host waste rock. These types of anomalies along with compiled historical data will allow us to target this type of mineral deposit that is not detectable using magnetic and electromagnetic techniques. This approach could identify a game-changer deposit.

Our first focus, in both the Bathurst and the Pine Point camps, is to go in, reassess the historical deposits, convert them to 43-101 standards, increase their size, and define them to Measured and Indicated categories, then move rapidly towards development.

The best place to look, for new discoveries, is next to former mines. We think that is the case for both Bathurst and Pine Point, so we're really excited and already moving rapidly. We look forward to pursuing our objectives aggressively in the base metals space, so we look forward to 2018 and beyond.

Dr. Allen Alper: Sounds excellent! Sounds like 2018 will be a great year for Osisko Metals, and that our high-net-worth readers/investors should pay close attention. I'm sure a lot of information will be generated throughout the year.

Jeff Hussey: I couldn't agree more. We're doing quite a bit of marketing as well with institutional and retail investors that are really interested now that we have these two camps. I think there are many reasons to become an Osisko Metals shareholder.

Dr. Allen Alper: Sounds excellent!

Jeff Hussey
President & CEO
Osisko Metals Incorporated
(514) 861-4441

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