Osisko Mining builds critical mass in Quebec

In the first five months of the year, Osisko Mining (TSX: OSK) released resource estimates for two projects in Quebec while keeping in step with an ambitious drill program that is the largest of its kind in Canada.

In early May, Osisko unveiled its first resource estimate on its wholly owned Windfall deposit, 115 km east of the town of Lebel-sur-Quévillon.

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

The company outlined indicated resources of 2.38 million tonnes grading 7.85 grams gold per tonne for 601,000 contained oz. gold and inferred resources of 10.61 million tonnes grading 6.7 grams gold for 2.28 million oz. gold, using a cut-off grade of 3 grams gold per tonne.

The estimate is based on 1,453 drill holes (596,733 metres) completed by previous operators on the project since 1997, and 812 new holes (413,692 metres) that Osisko drilled between October 2015 and March 2018.

Workers in the core shack at Osisko Mining’s Windfall Lake gold project in Quebec. Credit: Osisko Mining.

The resource does not include 131 holes (about 40,000 metres) that were drilled, mainly in Windfall’s Lynx and Underdog zones, since March 5.

The gold-bearing, intrusive-related system is open along strike to the northeast and at depth, and the Lynx and Underdog zones have down-plunge potential for more mineral resources, the company says.

Osisko acquired Windfall in 2015 from its previous owner, Eagle Hill Exploration. At the time, Eagle Hill had defined a resource of 1.5 million oz. gold from two main zones (Cariboo and 27).

In addition to Windfall-Lynx, Osisko reported a new resource for its Osborne-Bell deposit, 15 km northwest of Lebel-sur-Quévillon.

In March, Osisko delineated an inferred resource of 510,000 oz. gold (contained in 2.59 million tonnes grading 6.13 grams gold).

The resource uses a cut-off grade of 3 grams per tonne and is based on 927 holes drilled by previous operators since 1994, including 50 that were drilled after the last resource update was published in 2012, and four new holes that Osisko has drilled since December 2017.

Osborne-Bell is open at depth below 500 metres.

The Windfall and Osborne-Bell deposits will have a single preliminary economic assessment (PEA) — scheduled for the third quarter of this year — that would model a blended mining scenario with processing at a central Lebel-sur-Quévillon mill site.

In April 2017, the company acquired land 103 km west of Windfall and 11 km from Lebel-sur-Quévillon that it says could host a mill complex. The property is next to a Hydro-Québec electric substation and near a former Domtar pulp and paper mill, with access to a water-pumping station that could meet the needs of a mill.

John Burzynski, Osisko’s president and CEO, could not be reached for comment on the resource estimates. But in a press release, he says the company acquired Osborne-Bell less than a year ago for $1.5 million.

“We had made no assumptions regarding resources during the bankruptcy acquisition of the deposit and surrounding properties in 2017,” he said. “This first estimate points to a potentially significant deposit that is located very close to the possible site for a planned, future Windfall-Lynx gold mill in Lebel-sur-Quévillon.”

This would mean capital expenses for Osborne-Bell would be “essentially immaterial,” he said.

In the meantime, Osisko is drilling at both Osborne-Bell and Windfall-Lynx to turn inferred resources to indicated and expand the deposits.

It plans to drill 800,000 metres at Windfall-Lynx (Lynx is northeast of Windfall) and 50,000 metres at Osborne-Bell, and the surrounding Quévillon area.

Osisko’s exploration budget this year for its Quebec projects is $100 million.

The budget includes resource estimation, resource-oriented drilling, exploration ramp and underground bulk sampling of mineralized zones, metallurgical work, permitting, PEA and feasibility studies, and exploration drilling.

Drill core samples from the Windfall Lake gold project in Quebec. Credit: Osisko Mining.

Osisko released the latest batch of assays from 12 drill holes and five wedges at Windfall on May 1. Highlights include 34.3 grams gold over 4.5 metres, 13 grams gold over 5.7 metres, 27.7 grams gold over 2.1 metres and 25.5 grams gold over 2.1 metres.

Although Osisko’s focus is on Quebec, where it is the province’s most active explorer, the company has set aside a $3-million exploration budget this year for its wholly owned Garrison project in Ontario.

This will include exploration drilling, resource estimation, infill drilling, and metallurgical work, and the company expects to finish a resource update on three zones of the deposit (Garrcon, Jonpol and 903).

Between early 2016 and January 2018, Osisko drilled 85,000 metres to add to the 108,000 metres drilled by previous operators.

It also conducted dewatering and geological mapping of the Garrcon bulk-sample pits during 2017.

Osisko Mining has the same management team, engineers and geologists, and many of the same directors, that put Canada’s largest gold mine — Canadian Malartic — into production.

The mine moved from first drill hole to first gold pour in a little over six years, but was taken over in a bidding war that culminated in a $4-billion offer from Agnico Eagle Mines (TSX: AEM; NYSE: AEM) and Yamana Gold (TSX: YRI; NYSE: AUY) in 2014.