New Osisko study for Cariboo project lifts NPV, costs

An updated feasibility study for Osisko Development’s (TSXV, NYSE: ODV) Cariboo gold project in British Columbia increases net present value (NPV) by 88% even as estimated capital expenditures climb by more than one-third.

Cariboo’s after-tax NPV now stands at $943 million, up from a 2023 estimate of $502 million, Osisko said Monday in a statement. Projected capital expenditures are pegged at $1.41 billion compared with $1.02 billion previously.

With probable reserves estimated at about 2.07 million oz., Cariboo is one of the few undeveloped, permitted gold projects in a developed country. It’s a key property for Montreal-based Osisko, which is focusing on reviving past-producing mining camps across North America.

“The optimized feasibility study shows the permitted Cariboo project cleared another step toward becoming the next mine built in Canada as economics maintain a sizable upside vs. the current valuation,” National Bank Financial analyst Don DeMarco said Monday in a note.

As gold prices hover near all-time highs, “we believe this project is well-positioned to deliver substantial value to all stakeholders,” Osisko founder and CEO Sean Roosen said in the statement. “The results reaffirm our view that Cariboo is a high-quality asset with robust returns and significant upside potential within the existing mine plan.”

Osisko shares rose 2.2% to $2.34 in late afternoon trading Monday in Toronto. That gave the company a market value of about $320 million.

Spot gold rise bonus

Based on an average gold price of US$2,400 ($3,312) per oz., Cariboo’s after-tax internal rate of return (IRR) would be 22.1% with a payback of 2.8 years, up from the 20.7% IRR in the previous study. Using a spot gold price of US$3,300 per oz., the project’s NPV climbs to $2.07 billion while the IRR jumps to 38% and the payback drops to 1.6 years, Osisko said.

Assuming Osisko makes a positive final investment decision and secures project financing in the next few months, construction could start in the second half of 2025. Completion is targeted for the end of 2027, the company said.

Cariboo is projected to be a traditional underground operation, employing mechanized long-hole open stoping to extract ore from gold-bearing vein corridors. Saleable gold doré would be produced at the mine site complex, and the flotation concentrate would be transported by truck to the Port of Vancouver and sold to a smelting partner. 

190,000 oz per year

Over a projected 10-year mine life, annual gold output would average about 190,000 oz., Osisko said. This includes 202,000 oz. annually in the first five years. Mine life was estimated at 12 years in the 2023 study.

All-in sustaining costs are estimated to average US$1,157 per oz. over the life of the mine, Osisko said. This would place Cariboo within the lower half of the cost curve for gold mines globally, the company said.

Cariboo benefits from year-round access and existing infrastructure, as well as support from the provincial government and First Nations. The land package at Cariboo alone exceeds the entire footprint of Quebec’s prolific Val-d’Or mining camp.

British Columbia issued the main permits for project construction and operation in November.