Beaver Creek: Osisko expects ‘world-class’ Windfall deposit to get even better in production

If Osisko Mining’s (TSX: OSK) two Lynx bulk sample programs to date are anything to go by, the market should expect substantial resource reconciliation upside once mining gets started in just over two years, says company president Mathieu Savard.

Savard told the Precious Metals Summit currently underway in Beaver Creek, Colo., that the company is on track to release the results of the third bulk sample taken from the Lynx 600 (Triple Lynx) zone in early October.

The previous bulk sample results returned higher grades than those indicated by drilling. The returned grades for the two previous bulk samples were 26% and 89% higher than anticipated.

He noted the company had continuously taken a conservative approach to develop the resource statements for Windfall Lake. “The bulk samples have demonstrated it in the past, and we expect it to be demonstrated again,” he said.

“If we’re right about the grade potentially being higher once in production, it’s easy to do informal calculations about how each free gram of gold recovered translates to additional free cash flow.”

Savard said Windfall Lake had already attained world-class status since its discovery only 10 years ago. Despite still being an exploration asset, Windfall already ranks among the top-five assets globally and, once in production, will be in the top three.

It is the most recent of only 18 significant discoveries of this magnitude in the past century. “It’s a ‘company-maker’ deposit,” said Savard.

Before releasing a feasibility study on the project by year-end, Osisko recently released an updated gold resource outlining a total of 7.4 million ounces. The updated resource is based on nearly 1.9 million metres of drilling.

In the measured and indicated category, Windfall now contains 4.1 million oz. in 11.4 million tonnes grading 11.4 grams gold per tonne. This is a 26% increase in ounces and an 8% increase in grade from the company’s last resource estimate in January 2022. About three–quarters of the ounces are attributable to the Lynx deposit.

The inferred category holds 3.3 million oz. in 12.3 million tonnes grading 8.4 grams gold. About half of these ounces occur in the Lynx deposits.

Osisko used a gold price of US$1,600, a recovery rate of 93%, and a 3.5 grams gold per tonne cut-off grade to calculate the resource estimate.

Resource upside

The new resource estimate covers the Lynx, Underdog, Main, and Triple 8 deposits to a depth of 1.2 km from the surface and remains open at depth. Osisko has previously drilled to a depth of about 2.7 km vertically, intersecting high-grade material. Savard expects the vertical continuity of the deposit to double over time.

While exploring at these depths is not a priority for the company at present, Savard said it was essential to know it’s there, and it’s just a matter of getting to it decades down the mine’s operating life. It’s the kind of material that makes Osisko internally believe the deposit will “easily be doubled over time.”

Savard also noted the company had completed more than 12 km of ramp development to 635 metres. “That will be a huge advantage for when we receive our construction permits and are allowed to bring ore to the surface. It means that when the build kicks in, we will have ore at the surface to ease up the ramp-up process,” said Savard.

He noted that while only the measured and indicated resources would feed into the feasibility study, Lynx was notable for the level of completed development and positive grade reconciliations.

“If you take Lynx alone and only look at what we’ve discovered since 2016, about 2 million oz. grading 13 grams gold (measured and indicated), you bet, that’s where we are going to start mining,” said Savard.

Meanwhile, the company had assembled a 2,400-sq.-km land package that has received little to no exploration attention to date. But that is set to change with more drills devoted to scouting for the subsequent Windfall discovery.

Savard likened the package to the size of the Val-d’Or and Timmins Gold Camps, which have been explored for over 100 years and produced in excess of 100,000 oz. gold each.

Osisko plans to continue underground and surface exploration drilling, including expansion targets within the Windfall deposit, pursuing mineralization in the Golden Bear discovery area and testing additional high-priority targets close to Windfall.

Despite Osisko’s exploration success, at $2.96, its Toronto-quoted equity is only up a little over 6% in the 12-month frame, ranging between $2.33 and $5.02 per share. It has a current market capitalization of $1 billion.