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Osisko Development (NYSE: ODV, TSXV: ODV) shares surged as much as 25% on Thursday morning as it reached a significant permitting milestone for the 100%-owned Cariboo gold project in central British Columbia.
The approval of its BC Mines Act permit means that the company can now move forward the construction and operation of the underground mine, which is expected to deliver 164,000 oz. of gold production annually over a 12-year life, as outlined in a 2023 feasibility study.
The milestone, said chairman and CEO Sean Roosen, is “a culmination of almost five years of extensive discussion and consultation with provincial regulators, Indigenous nations and host communities to ensure that the project becomes a model for responsible mine development and environmental stewardship.”
With the construction and operating permits secured, Osisko said it is advancing funding discussions for what is expected to be a C$588 million project, including C$137 million upfront and an additional C$451 million for expansion. It is expected to have an after-tax net present value (discounted at 5%) of C$502 million and a 20.7% internal rate of return, based on a $1,700/oz gold price.
A formal positive final investment decision and the engagement on a project financing package in the coming months would allow for full-scale construction to commence in the second half of 2025, with a targeted completion date at the end of 2027, it added.
Shares of Osisko Development traded at C$2.52 apiece by 11:30 a.m. ET, for a 23.5% intraday gain and a C$263.7 million ($188.7m) market capitalization. Earlier in the session, it surged as high as C$2.67.
To complete the permitting process, only the Environmental Management Act permits remain. These pertain to any project-related discharge activities to the environment, including water and air, within the areas outside of the immediate mine site boundaries.
The permits have already been referred to the Ministry of Energy and Climate Solutions, which is expected to deliver a decision by the end of this year. Osisko initially received an environmental assessment certificate in October of 2023.
Cariboo represents the first project to be wholly assessed under the new 2018 Environmental Assessment Act, which aimed to increase opportunities for public participation and prescribes measures to meet the BC government’s commitment to reconciliation and the implementation of the UN Declaration on the Rights of Indigenous Peoples.
While the Lhtako Dené and Williams Lake First Nations have been supportive in the Cariboo permitting process, the Xatśūll First Nation has expressed concerns over its potential damages to the communities and wildlife, and even threatened to take legal action.
In Thursday’s release, Osisko said the company is working towards an agreement with the Xatśūll First Nation, with whom it continues to engage and consult.
Meanwhile, the company is advancing work on an optimized feasibility study for the Cariboo project, anticipated to be completed in the second quarter of 2025. The feasibility work follows the framework set out in the existing ongoing permitting process.
This study will take into consideration certain mining and processing optimizations, including improvements to the flotation circuit, an accelerated development timeline directly to 4,900 tonnes per day throughput, as well as updated cost estimates to reflect the current market environment.
The optimization would bring average gold production at Cariboo to approximately 194,000 oz.
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