Osisko improving Malartic’s performance

VANCOUVER — Osisko Mining (OSK-T) continues to improve the performance at its Canadian Malartic mine in Abitibi Quebec, achieving record production levels again in August.

The company produced 39,005 oz. gold in August thanks to record throughput of 1.3 million tonnes, or 43,100 tonnes per day, at an average grade of 1.02 grams gold per tonne and recoveries of 89%.

The numbers are an improvement of July’s record output of 37,780 oz. gold from roughly 42,000 tonnes per day at almost the same grade and recovery, while both are an improvement over results earlier this year due to operational hiccups.

The Malartic mill was hit by a fire in May that forced a temporary closure, crusher problems in March that also hindered production, and overall lower mine productivity because of problems with the blasting cycles. Osisko, however, got the mill fully running again less than two weeks after the May fire, finished the installation of a second cone crusher in late July, and has fixed the faulty boosters that were causing the misfired blast holes and lower productivity.

With many of the mine’s kinks getting ironed out company CEO Sean Roosen stated that Osisko should have a significant increase in throughput and gold production in the third quarter at much reduced costs.

Total operating costs in the second quarter were $1,202 per oz. compared with $1,035 per oz. in the first quarter, while cash costs were $1,015 per oz. in the second quarter and $860 per oz. in the first.

For the second quarter operating cash flow amounted to $55.7 million and $134.4 million for the first half of the year. Mine operating profits totalled $41 million for the second quarter while net profit was $13.3 million. The company declared commercial production at the mine on May 19.

The improved production numbers over the summer have helped prop back up the company’s share price to where it was before the May fire. News of the fire in early May, coming right as the market was diving, sent Osisko’s share price down from around $10 to a 3-year low of $6.25. With operations going more smoothly the company’s share price has been hovering around $9.50 for most of August.

And while Osisko is busy getting its only mine running smoothly, the company is also keen to advance its other development projects.

The company will shortly begin work on Midland Exploration’s (MD-V) Casault gold property, which sits 3.5 km west of Balmoral Resources’ (BAR-V) new discovery in the Bug Lake zone and roughly 42 km east of Detour Gold’s (DGC-T) Detour Lake gold deposit. Roughly 4,600 metres were drilled there last winter, while the first order of business this year will be an induced polarization survey.

Osisko can earn 50% of the Casault property by spending $6 million in exploration and paying $600,000 in cash over five years, and then 15% more by finishing a feasibility study. Midland is the operator for the first year of the option agreement.

Other active option deals include one with Global Geoscience (GSC-A) that it signed in the first quarter of 2012 where it can earn a 45% interest in five Nevada gold properties, and an option agreement with Tri Origin Exploration (TOE-V) where Osisko can earn 51% in the Red Lake Extension property in northwest Ontario.

Osisko also owns the Hammond Reef gold project near Atikokan in northwestern Ontario and is working through a 500,000-metre drill program, and environmental and feasibility studies.

And the company continues to drill and explore around the Malartic mine itself. As of January 1, Proven and probable reserves at Malartic stood at 337.7 million tonnes grading 0.99 gram gold for 10.71 million oz. gold, which doesn’t take into account some new discoveries. The company is working with the Quebec Ministry of Transport and the Town of Malartic to potentially move the highway and gain access to the higher grade of the Barnat deposit.