Editorial: Osisko trio our Mining Persons Of The Year for 2009

The Northern Miner’s Mining Persons of the Year for 2009 are Osisko Mining’s president and CEO Sean Roosen, vice-president of corporate development John Burzynski, and executive vice-president and chief operating officer Robert Wares.

These three are most responsible for taking Osisko in five short years from just another junior with ho-hum assets trading at 13¢ to a polished, $2.8-billion company on the verge of opening a large, long-life gold mine in one of the world’s best mining jurisdictions.

Osisko’s flagship is its Canadian Malartic project in the town of Malartic, some 20 km west of Val d’Or, Que., where in-pit resources now exceed 10 million oz. gold.

Over those five years, Osisko’s management, led by Roosen, Burzynski and Wares, has time and again showed its ability to seize opportunities and solve problems with creativity, spirit and aplomb — and turning many early shareholders into millionaires along the way.

Osisko’s discovery of Canadian Malartic is already recognized as one of the world’s top gold finds of the past decade, and it’s entirely attributable to Osisko’s radical geological reinterpretation of the Malartic area’s gold potential.

For readers who haven’t travelled the busy 100-km stretch of Highway 117 built along the famed Cadillac structural break between the established Quebec mining centres of Val d’Or in the east and Rouyn-Noranda in the west, it’s hard for us to overstate how this deposit sat completely unnoticed in plain view for decades before Osisko’s free-thinking geos came along.

Over the years, on their way to somewhere else and oblivious to the treasure below, thousands of gold geologists of every stripe have driven on Highway 117 literally on top of the project’s rich South Barnat zone, and the south end of the town of Malartic was unwittingly built on top of Canadian Malartic’s Wolfe and Sladen open-pit gold zones.

Even the mighty Barrick Gold shut its East Malartic gold mill in town and high-tailed it out of the province earlier this decade, preferring locales as distant and difficult as Tanzania and South Africa. Barrick didn’t grasp that the eastern extension of a 10- million-oz., shallow gold deposit was directly under its feet at Malartic, where the gold giant got its humble start.

The reason everyone before Osisko missed out on the Canadian Malartic deposit is that, over the past century, most attention had been focused on high-grade gold veins or massive sulphides within the Cadillac structural break or immediately north of it.

Osisko’s geological team, on the other hand, recognized the tremendous gold-bearing potential of the porphyries immediately south of the Cadillac break. Osisko was the first to assemble scattered, seemly inconsequential drill results from around the area and see that, while there were no flashy high-grade gold grades, there was potential for huge tonnage.

The company actually picked up its cornerstone Canadian Malartic property in November 2004 — a time when the global gold renaissance had already been under way for a full three years — for a mere $80,000 at a McWatters Mining bankruptcy sale, where no reasonable offers on assets could be refused. Holding its breath as it realized it was onto something very big with the porphyries, Osisko then quietly added to the property by staking claims and doing deals with neighbouring claim holders.

The year 2006 was a particularly sweet one for Osisko shareholders, as the stock marched from $1.60 on Jan. 3 to a heady $11.07 on Dec. 29 (the stock was split 2-for-1 in 2007, and today trades at $8.47, or equivalent to a pre-split $16.94).

During 2007 and 2008, the knock for many against the Canadian Malartic project was the reliability of the resource. Sure, on paper you could tally up lots of ounces, but could the deposit hold together and deliver consistent production in a real mining situation?

Osisko management responded to the doubters by launching one of the largest and most intense drilling campaigns in the world, drilling to date more than 800,000 metres of core, much of it on a tight 25-metre spacing.

The drilling frenzy led to the discovery of the higher-grade South Barnat zone to the northeast, which changed the complexion of the project and really put it over the top in terms of respectability. The reason is that ore from South Barnat, when blended with ore from the main Canadian Malartic zone, will raise the mine’s head grade to a comfortable 1.35 grams gold per tonne from a more risky 1.1 grams gold, and boost cash flow by at least US$70 million annually with the same mill throughput.

For its incredible drilling efforts, Osisko today holds a 100% interest in the largest gold reserve in North America not held by a senior-intermediate or senior gold mining company. And few express doubts any more whether the gold is there.

But having a lot of ounces in the ground doesn’t necessarily lead a junior to the promised land of untold riches — just ask the shareholders of NovaGold Resources or Gabriel Resources.

Yes, in the past couple of years there has been constant speculation that Osisko is a prime takeover target, but there was also recognition that its stock may have become too richly priced to be an attractive target.

A lesser management team would have halted work at the site and sat on the drilled-off deposit, all the while bluffing that it was moving it towards production, and secretly praying for higher gold prices to set off a bidding war so management could cash out.

Instead, we’ve seen Osisko clinch many hundreds of millions of dollars in financings from a wide variety of sources, including a critical $403-million equity financing in February 2009, at an extraordinarily difficult time to sell shares in anything to anybody. The company has also brought on board proven mine builders and operators, many of whom are from the old Cambior team that recently built the open-pit Rosebel gold mine in Suriname.

As Osisko advanced the Canadian Malartic deposit towards a production decision in 2008 and 2009, it simultaneously carried out a textbook example of a community relocation done right, moving with great care and kindness some 140 houses and their inhabitants from the south end of town to its north end, as well as building key community buildings — all at a cost of US$86 million.

Osisko gets the side satisfaction of being the town’s saviour, after the closure of East Malartic and a lumber operation left the town without a major employer. Things were so bad a few years ago that even the local Tim Hortons shut down.

Osisko will also earn a pair of environmental angel wings, as its mine plan incorporates the restoration of the abandoned East Malartic tailings pond, one of Quebec’s worst industrial pollution sites.

The new year will see a fine-tuning of the mine plan at Canadian Malartic as more ounces enter the reserve category. It’s still an open question whether the company will be taken over by a major, or whether it will choose a path similar to Agnico-Eagle Mines and its LaRonde asset, and use Canadian Malartic as a base to grow into a multi-mine, mid-tier producer.

Either way, Roosen, Burzynski and Wares have unlocked such incredible wealth from what looked to everyone else like a worn-out corner of the world, that it’s literally transformed and enriched the lives of thousands of people in Canada.

Simply put, our three Mining Persons of 2009 are living examples of Canadian junior mining at its best.