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Osisko explores energy metals potential

Mining Explorers 2022 - January 19, 2023

With dewatering plans, an updated preliminary economic assessment, and updated mineral resource estimate out of the way, Osisko Metals Inc. has been exploring ways to maximize the potential of this world-class zinc-lead project that could easily rank it within the top ten zinc mines on the planet.

Located just south of the Great Slave Lake, Pine Point was home to a former mine operated by Cominco (now Teck Resources) that produced roughly 14 billion pounds of zinc and 4 billion lb of lead from around 64 million metric tons of ore during a roughly 24-year span beginning in 1964.

After taking over the site in 2018, Osisko completed a preliminary economic assessment in 2020 for reestablishing a zinc mine at Pine Point, yet quickly found it necessary to update the PEA in 2022 after taking into consideration the turbulent times since then.

The objective of the 2022 PEA update was to integrate updated long-term prices for zinc and lead, of which the former has been seeing a significant increase in demand due to the energy transition; increased mineral resources; cost escalations in capital and expenses; and reduced life-of-mine water management costs that resulted from a completed hydrogeological model.

"In the current inflationary context, I am very pleased that the PEA update still shows a very robust zinc project with viable economic metrics including an after-tax IRR (internal rate of return) of 25% and after-tax NPV (net present value) of C$602 million, as well as significantly increased resources," said Osisko Metals CEO Robert Wares during the announcement of the updated PEA. "The new proposed mine plan, with 18% increased tonnage to the mill, could again make Pint Point a top-ten global zinc-lead producer with an annual average production of 329 million lb of zinc and 141 million lb over a 12-year mine life."

This updated PEA was based on 15.8 million metric tons of indicated resource averaging 4.17% zinc and 1.53% lead; and 47.2 million metric tons of inferred resource averaging 4.43% zinc and 1.68% lead.

Now, Osisko Metals is looking toward advancing feasibility-level studies for Pine Point.

"On a zinc only basis, Pine Point could potentially become a low-cost zinc-lead producer ranking fourth largest in the Americas," said Wares.

Although its zinc is promising, an ongoing issue has been putting a damper on the project in the form of water. Nevertheless, Osisko has gone to great lengths to handle this and has done so with diligent care.

Constant improvements have been made to reduce the costs of dewatering while maintaining a careful approach to its surroundings. With the recent PEA, Osisko added that a Site Wide Numerical Model was generated for Pine Point, a first for the company, which aims to provide insight into further dewatering requirements.

An entirely new approach, announced in November 2021, shows a cluster mining strategy, in conjunction with its forecasted hydrogeological modeling, reduced dewatering estimates by roughly 30% annually.

The goal remains to further optimize the life-of-mine plan strategy to pump less water, use less energy, and continue to reduce dewatering costs. This means reduced natural gas-generated power requirements and overall less greenhouse gas emissions for a smaller footprint.

While work continues steadily at Pine Point, perhaps due to the demands for energy metals in both Canada and the United States, in March, Osisko exercised the option to acquire the Gaspé Copper mine from Glencore Canada Corporation.

Located near Murdochville, Québec, Glencore provided a binding term sheet for Osisko to acquire a 100% interest in the past-producing Gaspé Copper Mine for an up-front payment of US$25 million, to be paid by Osisko Metals by way of convertible note issued to Glencore upon successful closing of the transaction, and a cash payment of US$20 million, payable upon the start of commercial production.

Apparently not wanting to miss this opportunity, Osisko announced a maiden resource estimate for Gaspé in April. While of the inferred category, the initial estimate came out to a whopping 456 metric tons averaging 0.35% copper or around over 3 billion lb of copper.

With both a world-class zinc project and a potentially world-class copper project now under its belt, Osisko Metals has quickly positioned itself to become a major provider of the energy metals needed for electrification now and well into the future.


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