Osisko Mining continues to grow ‘world-class’ Windfall deposit

Mist surrounds an employee at the portal of Osisko Mining's Windfall project. Credit: Osisko Mining.

Osisko Mining (TSX: OSK) has released an updated resource estimate for its Windfall gold deposit in Quebec, which, according to CEO John Burzynski, “places Windfall among the best high-grade development projects globally.”

Measured and indicated tonnes now total 6 million tonnes at 9.6 grams gold per tonne, for 1.9 million gold oz. and inferred resources add 16.4 million tonnes at 8 grams gold per tonne, for an additional 4.2 million ounces. Gold ounces across all categories now total 6.1 million ounces.

When compared with the prior resource from February 2020, measured and indicated tonnes increased by 47%, alongside an increase in grade, which was previously 9.1 grams gold per tonne. Similarly, inferred tonnes grew by 13% while the grades are now at 8 grams gold per tonne, compared to 8.4 grams gold previously. Cut-off grades are unchanged at 3.5 grams gold.

Osisko noted in a press release that its discovery and definition cost averages $38 per oz., with an average of 4.5 oz. of gold defined per metre drilled.

The high-grade Lynx zone makes up over 60% of the total ounces in the latest resource and Lynx grades average 11.3 grams gold in the measured category, 11 grams gold in the indicated subset and 9.9 grams gold in the inferred classification. Lynx zones remain open down-plunge. Additional resources are contained in the Underdog and Main zones.

The Triple 8 zone is a new contributor, adding 655,000 inferred tonnes at 7.1 grams gold.

“We are pleased to deliver this updated MRE (mineral resource estimate), as Windfall continues to impress with increasing average grade and scale,” Burzynski said in the press release. “We anticipate that by the end of the infill program and in the subsequent MRE, we will see another significant addition to the M&I (measured and indicated) resource with increased grade, and further growth of the deposit scale.”

The latest numbers included drilling completed through to September and results received up to November 30 and the CEO said that since the cut-off, the company has received “strong infill results” not accounted for in the Feb. 17 update.

Since then, the company has drilled approximately 100,000 metres, with a further 200,000 metres expected to be completed by the third quarter. An updated resource would then be released after the infill program is complete. The remainder of the infill drilling will be focused on Lynx, with over 30 drills scheduled.

Additional drills are now targeting down-plunge extensions of Lynx and the nearby Fox trend, as well as targets along strike of Windfall. An exploration ramp is also advancing to extract the third bulk samples from the Triple Lynx zone. Osisko has received approvals to mine Lynx test stopes.

Earlier this month, the company closed a $70 million bought deal private placement of flow-through shares.

Exploration results from January included drill highlights of 10.5 metres of 108 grams gold from Triple Lynx and 11.3 metres of 21.7 grams gold from Lynx.

The Windfall deposit lies between Val-d’Or and Chibougamau in the Abitibi. The mineralization is made up of sub-vertical zones that follow northeast-plunging porphyry contacts. Current resources are defined from surface to a depth of 1,600 metres (to 1,200 metres excluding the T8 zone). The deposit remains open on strike and at depth; mineralization has been identified down to 2,625 metres.

Over the last year Osisko Mining’s shares have traded in a range of $1.67 and $4.85 per share and at presstime in Toronto were trading at $2.99 per share. The company has about 344.2 million common shares outstanding for a market cap of $1.03 billion.

Kerry Smith of Haywood Securities has a target price of $8.00 per share. “The project boasts a large high-grade resource (5.1 million oz. at 8.6 g/t gold) in a mining friendly jurisdiction led by a proven management team,” the mining analyst wrote in a Feb. 17 research note to clients. “Drilling continues and we expect another resource increase in Q3/21 once this drilling program is completed, which will be followed with a feasibility study by early 2022. We expect Windfall could be in production by 2024 at ~300,000 ounces per year and AISC below US$600 per ounce.”

Smith also noted that the Lynx deposit remains open. “We still expect Windfall will grow into a 10 million ounce deposit over time.”

Andrew Mikitchook, an analyst at BMO Capital Markets, has a $5.00 price target on the stock, and wrote in a research note that the resource increase “will have a positive impact on the mine plan to boost grade.” 

“The end of the multi-year drilling is in sight in Q3 of this year and in our opinion the market will re-value the company as it approaches this milestone and transitions into permitting to be followed by development.”

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