Osisko Rises On South Barnat Infill Grades

VANCOUVER — Infill drilling at the Canadian Malartic project has returned better than expected gold grades for owner Osisko Mining (OSK-T, OSKFF-O).

Osisko has already proven up reserves of 6.3 million oz. gold at the main Canadian Malartic deposit and more recently added inferred resources of 1.8 million oz. from the adjacent South Barnat deposit. Now infill drilling at South Barnat looks set to not only increase confidence in the resource but also boost its average grade.

The infill effort has furnished some lengthy mineralized intersections. Hole 3257 returned 1.75 grams gold per tonne over 375 metres, starting 43 metres down-hole; the hole cut across the entire 75-metre width of the South Barnat zone then followed the downdip projection of the Sladen extension on the south side of the fault for roughly 200 metres.

Other long intervals include 191 metres grading 2.16 grams gold from 144 metres in hole 3277, 92.5 metres of 2.09 grams gold starting at 147 metres depth in hole 3310, and 106.6 metres averaging 2.08 grams gold starting at 161 metres in hole 3316.

Hole 3293 returned several intercepts between 69 and 522 metres depth, including 3.38 grams gold over 59 metres and 1.09 grams gold over 145 metres. And hole 3290 cut 4.39 grams gold over 64.8 metres.

Osisko is also pleased with the results from two holes that pulled mineralized intercepts from a new area some 100 metres north of South Barnat. Hole 3287 hit 32.7 metres of 1.63 grams gold from 18 metres down-hole and then 24.5 metres grading 5.19 grams gold. Nearby, hole 3317 returned 28.5 metres of 1.02 grams gold from 18 metres.

Osisko has traced South Barnat along 850 metres of strike and has found widths ranging from 30 to 120 metres. The zone remains open along strike to the east, where it runs into the old East Malartic mine. In that area, two holes drilled in late 2008 indicated a possible extension over an additional 360 metres when they returned 1.45 grams gold over 44.5 metres, 2.05 grams gold over 15 metres, and 1.39 grams gold over 26 metres, among other intercepts. Further drilling is needed to prove a consistent strike extension.

The deposit at South Barnat extends to 250 to 40 metres depth in the southeast, where the system is still open at depth. In the northwest, mineralization stretches to 130 to 200 metres depth. The gold at South Barnat is disseminated, hosted in multiple sub-vertical, tabular subzones within the silicified greywackes of the Pontiac Group.

Osisko’s first resource estimate for South Barnat pegged the deposit at 36 million inferred tonnes grading 1.74 grams gold. With five drills currently onsite conducting infill drilling, Osisko expects to release a new resource in May and hopes it will upgrade most or all of the resources to measured and indicated status.

The initial South Barnat resource boosted the project’s total resources to 232.2 million measured and indicated tonnes grading 1.03 grams gold, with inferred resources adding 73.7 million tonnes grading 1.05 grams gold, using a cutoff grade of 0.36 gram gold.

A feasibility study for the project found that for an investment of US$789 million, Canadian Malartic could be developed into a 591,000-oz.-per-year mine with a 10-year life and average cash costs of US$319 per oz. It is important to note the study was conducted before Osisko completed a resource estimate for South Barnat and so only considered the Canadian Malartic deposit’s 183.3 million proven and probable tonnes averaging 1.07 grams gold. Even without South Barnat, Canadian Malartic stands to become one of the largest gold mines in Canada.

And Osisko is well cashed up to get going on construction, provided permitting falls into place, as the company recently closed a $402.9-million financing. Osisko sold 88.6 million units for $4.55 apiece, with each unit comprising a share and half a warrant.

Osisko gained 85¢ in the week following news of the drill results, closing at $5.90. The company has a 52-week trading range of $1.40-6.10 and 255 million shares outstanding.