Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Osisko Mining (OSK: TSX) has announced new drill results from the ultra-high-grade Lynx zone at its 100%-owned Windfall gold project in the Eeyou Istchee James Bay region of Quebec.
Highlights of expansion drilling results from outside the current Lynx resource included 5.4 metres grading 187 grams gold per tonne starting from 1,004.6 metres in drillhole OSK-W-21-2601-W1, 5.6 meters grading 23.9 grams gold per tonne starting from 997 metres in drillhole OSK-W-21-2381-W3 and 2 metres grading 22.8 grams gold per tonne starting from 1134 metres in drillhole OSK-W-21-2381-W5.
Highlights from infill drilling within the resource envelope included 431 metres grading 62.6 grams gold per tonne starting from 564.8 metres in drillhole WST-21-0929B, 103 metres grading 32.4 grams gold per tonne starting from 527.7 metres in drillhole WST-21-0907 and 33.9 metres grading 25.9 grams gold per tonne starting from 742 metres in drillhole OSK-W-21-2564-W1.
CEO John Burzynski noted that “a third of today’s intercepts are greater than an ounce per ton gold and a third are greater than five meters in length.”
The company expects to complete a feasibility study for the project by the end of this year.
Located about 700 km away from Montreal, the 125-sq.-km. Windfall project has 9.5 million measured and indicated tonnes grading 10.5 grams gold per tonne and 5.2 grams silver for contained metal of 3.2 million oz. gold and 1.6 million oz. silver, using a cut-off of 3.5 grams gold per tonne.
Inferred resources add another 13 million tonnes grading 8.6 grams gold and 4.7 grams silver for 3.6 million oz. gold and 2 million oz. silver.The property, in the Abitibi Greenstone Belt, contains four zones – Lynx, Underdog, Main and Triple 8 – with the Lynx zone containing a majority of the project’s gold.
In February, Osisko announced it would be developing the Windfall project independently and had broken off joint venture talks with Northern Star Resources (ASX: NST). In the same month, the company signed a preliminary agreement with the Cree First Nation of Waswanipi (CFNW), according to which the CFNW will transport hydroelectric power to the project.
A preliminary economic assessment for the project published last April outlined a 235,000 to 328,000 oz. gold per year underground mine with a life of 18 years. Preproduction construction costs would be C$543 million. Post-tax payback after the start of production would take 2.2 years.
The after-tax net present value with a 5% discount would be C$1.5 billion and the internal rate of return 39.3%. The project could generate gross revenues of C$8.2 billion or operating cash flows of C$2.6 billion over its lifetime. During production, the mine and mill would employ about 400 workers.
