SCHEDULE: Osisko Development Grants Key Investor Rights to Double Zero Capital

Osisko Development Corp. has entered into an investor rights agreement with Double Zero Capital LP, granting board nomination, pre-emptive, and voting support rights following a significant private placement.

Summary

• Osisko Development Corp. and Double Zero Capital LP executed an Investor Rights Agreement, Warrant Indenture, and Supplementary Agreement on August 15, 2025.
• Double Zero Capital LP acquired 36,600,000 units at US$2.04 per unit, consisting of one Common Share and one-half of one Common Share purchase warrant.
• The acquisition also included 1,464,000 Common Shares as an investment fee payment.
• Double Zero Capital LP now beneficially owns 47,476,245 shares, representing 19.9% of the class, due to a 'blocker' agreement limiting its stake. Without the blocker, it would own 56,364,000 shares (approximately 23.62%).
• The Investor Rights Agreement grants Double Zero Capital LP the right to nominate one director to the Board and participate in future equity issuances to maintain its pro-rata ownership, provided it holds at least 10% of outstanding Common Shares.
• Double Zero Capital LP has agreed to vote its shares consistent with Board or management recommendations as long as the 10% ownership condition is met.
• The warrants entitle the holder to acquire additional Common Shares at an exercise price of US$2.56 per share, expiring on August 15, 2027, subject to acceleration.
• The Corporation will use commercially reasonable efforts to file a U.S. registration statement for the resale of Common Shares issuable upon warrant exercise within 30 days and have it effective within 4 months and 1 day.

Sentiment

Score: 7

Explanation: The filing outlines a significant capital injection and a structured relationship with a major investor, which is generally positive for the company's stability and future funding. The investor rights, including board representation and anti-dilution provisions, suggest a committed and aligned partner. The only negative is the administrative oversight for the late filing, which is minor in the context of the overall strategic benefits.

Positives

• Secures a significant long-term investor, Double Zero Capital LP, through a substantial private placement.
• The Investor Rights Agreement provides stability with voting support for Board and management recommendations.
• Pre-emptive rights for Double Zero Capital LP ensure continued access to capital from a committed investor for future issuances.
• The 'top-up' right protects Double Zero Capital LP from dilution in non-cash acquisitions, potentially signaling confidence in the company's strategic M&A.
• The capital raise from the private placement strengthens the company's financial position.

Negatives

• The Schedule 13D filing was late due to 'administrative oversight,' which can be a minor governance concern.
• The 'blocker' agreement limits Double Zero Capital LP's immediate voting power to 19.9%, requiring further approvals for increased influence, which could complicate future capital decisions or strategic alignments if not obtained.
• The acceleration clause for warrants introduces uncertainty regarding the exercise window for warrant holders.

Risks

• Dilution Risk: While Double Zero has pre-emptive rights, other shareholders face potential dilution from future equity issuances if they do not participate.
• Regulatory Approval Risk: The 'blocker' agreement requires shareholder, stock exchange, and regulatory approvals for Double Zero to exceed 19.9% ownership, which may not be obtained.
• Market Price Volatility: The acceleration of warrant expiry is tied to the Common Share price exceeding a trigger, exposing warrant holders to market volatility in their exercise decision.
• U.S. Securities Law Compliance: Warrants and underlying shares are not registered under U.S. Securities Act, imposing transfer restrictions on U.S. Purchasers unless specific exemptions or a future registration statement are effective.
• Administrative Oversight: The late filing of the Schedule 13D due to administrative oversight indicates potential internal control weaknesses.

Future Outlook

The Corporation commits to using commercially reasonable efforts to file a U.S. registration statement for the resale of Common Shares issuable upon warrant exercise within 30 days and aims for it to be effective within four months and one day. Double Zero Capital LP intends to review its investment on a continuing basis and may engage in further actions, including purchasing or selling shares, engaging with management, or proposing changes to capitalization or board structure.

Industry Context

This filing reflects a common strategy in the mining and resource development sector where companies secure significant capital through private placements, often granting substantial investors specific governance and anti-dilution rights. Such agreements are crucial for funding capital-intensive projects and ensuring long-term investor alignment. The 'blocker' provision is a standard mechanism to manage control thresholds and avoid triggering certain regulatory or shareholder approval requirements prematurely.

Comparison to Industry Standards

• The grant of board nomination rights and pre-emptive rights to a significant investor like Double Zero Capital LP is a standard practice in the resource sector for substantial equity investments, aligning investor interests with corporate governance.
• The 19.9% 'blocker' agreement is a common threshold used to avoid triggering 'control person' definitions under Canadian securities laws (typically 20%) which would require additional regulatory scrutiny and shareholder approvals for the investor to increase their stake. This is seen in many private placements where a large investor takes a significant, but non-controlling, position.
• The warrant terms, including a 24-month expiry and an acceleration clause based on share price performance, are typical for private placement warrants, offering investors upside potential while providing the issuer with a mechanism to force exercise and remove overhang.

Management Changes

Corporate Governance

Related Party Transactions

• The Investor Rights Agreement, Warrant Indenture, and Supplementary Agreement are between Osisko Development Corp. and Double Zero Capital LP, which is now a significant shareholder.
• Double Zero Capital LP received 1,464,000 Common Shares as an investment fee payment from Osisko Development Corp.

Stakeholder Impact

• Shareholders: Existing shareholders are diluted by the private placement but benefit from the capital injection and the stability provided by a significant, aligned investor. The 'blocker' agreement prevents immediate control changes without further approvals.
• Employees: No direct impact mentioned, but a stronger financial position can support long-term employment stability.
• Customers/Suppliers: No direct impact mentioned.
• Creditors: A stronger equity base from the capital raise generally improves the company's credit profile.
• Double Zero Capital LP: Gains significant influence through board nomination rights, protection against dilution, and potential opportunities to acquire more warrants.

Next Steps

• Corporation to promptly take steps to appoint the Investor Nominee to the Board and consider for committees within 10 Business Days of nomination.
• Corporation to use commercially reasonable efforts to prepare and file a Form F-3 Registration Statement with the SEC within 30 days of August 15, 2025.
• Corporation to use commercially reasonable efforts to have the Form F-3 Registration Statement declared effective by the date that is four months and one day from August 15, 2025.
• Double Zero Capital LP may request the Corporation to cooperate in obtaining Required Approvals to exceed the 19.9% ownership threshold.
• Corporation to notify the Warrant Agent when the Registration Statement becomes effective and of any changes to its effectiveness.
• Corporation to give notice to the Warrant Agent and Warrantholders of its intention to fix a record date for any matter requiring adjustment under the Warrant Indenture, not less than 14 days prior.

Key Dates

Recommendation

The filing details a significant capital raise and a strategic partnership with a major investor, Double Zero Capital LP. While the capital injection and the investor's commitment (including voting support and anti-dilution rights) are positive for the company's stability and future growth prospects, the immediate impact on share price might be limited as the market has likely already priced in the private placement. The 'blocker' agreement prevents an immediate change in control, and the late filing due to administrative oversight is a minor concern. Given the long-term nature of the investor rights and the company's ongoing operations, a 'hold' recommendation is appropriate, awaiting further operational updates and the impact of this new capital.

Keywords

Osisko Development Corp, Double Zero Capital LP, Investor Rights Agreement, Private Placement, Warrants, Equity Investment, Corporate Governance, Pre-emptive Rights, Anti-Dilution, SEC Filing, Schedule 13D, Mining, Resource Development