Osisko confirms deep, high-grade zone at Windfall

Osisko Mining (TSX: OSK) has confirmed that a recent discovery at its Windfall Lake gold deposit in Quebec is the real deal, after producing more high-grade intercepts from the new zone it’s calling “Triple 8.”

The company started drilling two exploration holes in May to test the potential for depth extensions of the Lynx and Underdog mineralized zones, and investigate the intrusion-related geological model it has for the Windfall deposit.

The targets of the two drill holes were located in the outer shell of a porphyry intrusion at depths of 2,500 metres from surface.

The first hole reported on July 11 to test the potential for depth extensions of the Underdog zone — 18-1603 — returned 20.4 grams gold per tonne over 28 metres from 1,491 metres downhole, including a 10-metre interval grading 44.5 grams gold from 1,501 metres downhole.

Osisko noted that Triple 8 did not correlate with any zones, and is 660 metres east of the closest mineralized intercept in the Underdog zone.

On Sept. 13, the company reported results from a new wedge hole 1603-W2 that has extended the Triple 8 zone 50 metres south of the discovery hole announced in July. The latest hole returned 13.7 metres grading 17.4 grams gold from 1,510 metres’ depth downhole and 12.5 metres of 6.31 grams gold from 1,538 metres’ depth below surface.

Drilling at Osisko Mining’s Windfall Lake gold project in northern Quebec. Credit: Osisko Mining.

The mineralization at Triple 8 consists of semi-massive and stringer pyrite, with local visible gold and strong silica alteration, and the zone contains minor sphalerite, chalcopyrite, pyrrhotite and trace arsenopyrite.

Osisko’s president and CEO, John Burzynski, says in a news release that the wedge hole is a “great confirmation that there is significant, high-grade gold at depth in the Windfall intrusive system.

“What we find very exciting is that the Triple 8 alteration zone now extends over 85 metres wide on a scale we haven’t seen before at Windfall, indicating that we may be approaching a main source of the mineralizing system. We are confident that as we progress with drilling the deeper sections of the Windfall deposit, we will continue to have discovery success.”

In July, the company also noted that Triple 8 “appears to be a new style of mineralization … as mineralizing fluids followed flow contacts inside the andesite host rather than felsic intrusive contacts.”

While Osisko continues to work on the geometry of the Triple 8 zone, management says it appears as though it remains open in all directions, and falls well outside the area of the resource estimate announced in May.

Windfall has 2.38 million tonnes of 7.85 grams gold for 601,000 contained oz. gold in the indicated category and 10.61 million inferred tonnes grading 6.70 grams gold for 2.28 million contained oz. gold.

The deposit has been well defined from surface to 900 metres’ depth, and is open along strike and at depth. In some parts of the deposit, mineralization has been found 30 metres from surface, and in other areas, as deep as 1,200 metres.

Mineralization occurs in four zones: Lynx, Zone 27, Caribou and Underdog. All of the zones are comprised of sub-vertical lenses following intrusive porphyry contacts that plunge northeast.

Map of Osisko Mining’s Windfall Lake gold project in northern Quebec. Credit: gps-coordinates.net

In August, the company increased a previously announced bought-deal private placement for gross proceeds of $72.5 million.

Windfall is one of the highest-grade, resource-stage gold projects in Canada.

Osisko owns 100% of the deposit, which is situated between Val-d’Or and Chibougamau in the Abitibi greenstone belt, 115 km from the town of Lebel-sur-Quévillon in Quebec’s James Bay region.

A preliminary economic assessment that looked at developing both the Windfall and Osborne-Bell deposits (17 km northwest of Lebel-sur-Quévillon) was completed in July. But the study focused only on the larger mineralization zones and did not include narrow, high-grade zones in the Lynx zone, or the down-plunge extensions of Underdog, Lynx, Zone 27, or Bobcat and Triple 8.

Its base case uses a US$1,300 per oz. gold price and US$17 per oz. silver price, and outlines a life-of-mine (LOM) just over eight years, with a LOM-payable 1.77 million oz. gold and payable 557,000 oz. silver. All-in sustaining costs — net of by-product credits and royalties over the LOM — are an estimated US$704 per oz. silver.

Pre-production construction costs, including a $51.8-million contingency, amounted to $413.2 million.

The study envisions a long-hole mining approach that extracts large panels with minimum widths of 3.5 metres, and a minimum height of 20 metres.

The preliminary economic assessment estimated a $413-million after-tax net present value and 33% internal rate of return.

At press time, the company’s shares traded at $2.55 apiece within a 52-week range of $1.60 (Aug. 15, 2018) to $4.75 (Sept. 20, 2017).

The junior has 209 million shares outstanding for a $533-million market capitalization.