Osisko grabs new Malartic gold (January 02, 2006)

Reconnaissance work by Osisko Exploration (OSK-V) has turned up two new surface gold zones on its flagship Canadian Malartic gold property, 25 km west of Val d’Or, Que.

A total of nine grab samples from the Alpha zone returned assay values up to 4.84 grams gold per tonne. The samples comprise carbonate-altered sedimentary rocks containing minor disseminated pyrite mineralization collected from a few outcrops in an area measuring 110 metres by 25 metres.

Grab samples of sedimentary and porphyritic units with carbonate alteration and minor pyrite mineralization at the Bravo zone yielded values up to 1.46 grams gold. The 17 samples were collected from sparse outcrops over a 70 by 15-metre area.

Osisko says the new mineralization is similar to that observed in the main deposit. The zones are, respectively, 1 km to the southwest and 5 km to the southeast of the main deposit.

“Eighty years of exploration and mining work have been aimed at this property and it is still delivering new discoveries at surface,” says Osisko COO Sean Roosen. “This just goes to show that there is strong potential to add new ounces on this ground.”

The company plans to drill-test the new zones next year.

Meanwhile, two drill rigs are in the midst of a 27,000-metre definition drilling program over the entire deposit in anticipation of delivering a National Instrument 43-101-compliant indicated resource by early 2007. A compliant inferred resource estimate based on more than 5,000 historical surface and underground drill holes and the company’s own drilling is expected by spring.

Osisko figures the property could contain up to 100 million tonnes running between 1-1.35 grams gold, for 3.2 to 4.3 million contained ounces. The company believes the project offers potential for a near-surface gold deposit located near existing infrastructure, which could ultimately be evaluated as an open-pit, bulk-tonnage operation.

A recent round of drilling designed to confirm the grade and distribution of gold along the 1.2-km strike of the main deposit to depths of 250-350 metres returned wide swaths (exceeding 100 metres) of grades running in the suggested range.

The deposit is an Archean porphyry gold system, consisting of a widespread shell of disseminated gold and pyrite mineralization hosted by diorite porphyry and altered metasediments.

Geological modelling of the deposit along 20 vertical sections spaced 60 metres apart indicates that the mineralized system is 1,200 metres long and 350 wide, with a variable true thickness ranging from 60 to 270 metres.

The 15-sq.-km property is home to the Canadian Malartic mine, which produced more than 1 million oz. gold from 9 million tonnes grading 3.37 grams gold between 1935 and 1965. Barrick Gold (ABX-T, ABX-N) retains a 2-3% sliding-scale net smelter return royalty. Osisko can halve the royalty by paying $1.5 million.

Work at Canadian Malartic is being funded by a recently completed private placement with Pacific International Securities, under which Osisko issued some 3.5 million units for gross proceeds of around $2.3 million. Each unit includes one share accompanied by half a transferable warrant. Each warrant is good for an additional share at 80 apiece for two years.

Pacific International was paid a commission equal to 8% of the gross proceeds; the agent was also granted options on like-priced 348,250 units. All of the securities are subject to a 4-month hold period. Osisko plans to soon close another $2.3-million non-brokered placement.