Osisko Mining continues to hit high-grade mineralisation at Windfall

Osisko Mining (TSX: OSK) has reported the latest drill results from infill and expansion drilling at its 100%-owned Windfall gold project in Quebec’s Abitibi greenstone belt, 200 km northeast of Val-d’Or and 115 km east of Lebel-sur-Quevillon.

Highlights included drillhole WST-21-0729, which was drilled on the Triple Lynx zone, and intersected 2.7 metres grading 124 grams gold per tonne from 304.9 metres, including 0.4 metres of 780 grams gold. Hole WST-21-0703, drilled on the Lynx Southwest zone, returned 2 metres of 78.7 grams gold from 43.2 metres. 

The results from the Lynx and Triple Lynx zones, “demonstrate the continued distribution of high-grade intersected throughout these areas in both infill and expansion drilling,” John Burzynski, Osisko CEO, stated in a press release.

Drillhole WST-21-0729 was part of an infill drill program and lies within the current mineral resource estimate blocks, which comprise the Lynx, Underdog, Main, and Triple 8 zones. The WST-21-070 drillhole was part of an expansion drill program and is outside the current resource area.

The drill results, part of Osisko’s 200,000 metre drill program this year, will be incorporated into an updated resource estimate, which is slated for release in the third quarter of this year.

In April, a preliminary economic assessment for Windfall envisioned an underground mine with an 18-year mine life producing 238,433 oz. of gold and 86,907 oz. of silver per year for a total life-of-mine production of 4.17 million oz. of gold and 1.52 million oz. of silver. 

The early-stage study estimated average all-in sustaining costs of US$610.10 per oz. of gold over the life of the mine. 

Initial capex is forecast to run to $543.5 million, with a payback of 2.2 years, and $666.4 million budgeted for sustaining capital over the mine life.

The PEA estimated an after-tax net present value for the project of $1.5 billion, based on US$1,500 per oz. gold and US$21 per oz. silver, and using a 5% discount rate, with a 39.3% internal rate of return.

The PEA was based on a resource estimate of 6.02 million measured and indicated tonnes grading 9.6 grams gold per tonne and 5.9 grams silver per tonne for 1.86 million oz. contained gold and 1.15 million oz. of silver. Inferred resources add 16.4 million tonnes of 8 grams gold and 2.7 grams silver for 4.24 million oz. of gold and 1.45 million oz. of silver.

Kerry Smith and Danny Ochoa, mining analysts at Haywood Capital Markets, have a buy rating on the stock and a target share price of $7.75 per share. (At press time in Toronto, Osisko was trading at $3.25 per share within a 52-week trading range of $2.68 and $4.85.)

“Windfall is a world-class deposit in a very favourable jurisdiction and will be a very long-life mine once in production,” they wrote in a research report on May 4. “We expect Windfall could be in production by 2025 at [approximately] 300,000 ounces per year and AISC below US$600 per ounce.”