Osisko Development announces positive results at Cariboo Gold project

The FS outlines a robust and scalable phased development base case with low initial capital intensity of US$137.3 million and attractive operating costs for the underground development of the Cariboo Gold project, producing approximately 1.87 million oz of gold (Au) over a 12-year mine life.

Initial production (Phase 1) in the first three years contemplates a 1500 t per day (tpd) operation from the Lowhee, Shaft and Mosquito deposits, yielding average annual production of 72 501 oz. Concurrently, underground development will advance to ramp up operations to 4900 tpd in year four, increasing average annual production to 193 798 oz in Phase 2, with potential to scale production further in the future.

Underground mining will be conducted using highly-mechanised, low-cost bulk tonnage methods designed to target the extraction of ore contained in gold vein corridors: a high-density network of mineralised quartz veins hosted mainly within unmineralised sandstone. A pre-concentration ore sorting facility is expected to significantly improve processed grades by separating non-mineralised material from ore, while substantially reducing processing volumes, energy costs, and the overall environmental impact footprint of the operation with fewer tailings, reduced water usage and ability to use waste as backfill.

The company remains on track for completing the environmental assessment (EA) process early in 2Q23 and anticipates receiving final permits by the end of 2023.

Feasibility study highlights:

• US$502 million after-tax net present value at a 5% discount rate (NPV5%) (pre-tax US$691 million) at a base case gold price of US$1700/oz and CAD:USD exchange rate of 0.77.
• 20.7% after-tax internal rate or return (IRR) (pre-tax 24.4%).
• US$79 million average annual after-tax free cash flow (FCF).
• US$901 million cumulative after-tax life-of-mine (LOM) FCF.
• 163 695 oz of Au LOM average annual production.
  • 72 501 oz Au Phase 1 (years 1 – 3) average annual production.
  • 193 798 oz Au Phase 2 (years 4 – 12) average annual production.
• 1.87 million oz LOM total cumulative gold production.
• 3.78 g/t Au average LOM diluted head grade:
  • 4.43 g/t Au in Phase I (post-ore sorting 8.20 g/t Au).
  • 3.72 g/t Au in Phase 2 (post-ore sorting 6.39 g/t Au).
• 92.0% average LOM recovery rate (93.6% in Phase I, 91.8% in Phase 2).
• US$102.6/t mined LOM total unit operating costs.
• Probable mineral reserves containing 16.7 million t at an average grade of 3.78 g/t Au for a total of 2.03 million oz of gold.
• US$792/oz Au LOM average cash costs.
• US$968/oz LOM average all-in sustaining costs (AISC).
• US$137.3 million Phase 1 initial capital expenditures (including US$10.3 million in contingency costs).
• US$451.1 million Phase 2 expansion capital expenditures (including US$36.7 million in contingency costs).
• Peak full labour force (Phase 2) of 550 persons during operations and 635 during expansion construction.

Sean Roosen, Chair of the Board and CEO of Osisko Development, commented:

"This feasibility study demonstrates that the Cariboo Gold project will be a large-scale, long-life and profitable gold mine. It will also produce significant quantities of gold in its initial years at a capital cost below US$140 million. By phasing construction, we have minimised our exposure to development risk at Cariboo, optimised the sequencing of the assets in our portfolio and maximised our ability to scale Cariboo to reach its full potential in the future. We envision Cariboo as a project that will be a cash flow engine for the company for decades into the future. Historic mining in the district was focused on individual veins and replacement bodies with grades in excess of 12 g/t Au, which is consistent with our work completed to date. Once underground, we are excited to apply our strong understanding of the controls on mineralisation to unlock Cariboo’s vast exploration potential at depth within the current mining zones, which we believe have strong potential to continue across Cariboo’s 83 km mineralised trends."

Read the article online at: https://www.globalminingreview.com/mining/04012023/osisko-development-announces-positive-results-at-cariboo-gold-project/