Osisko drill results lift Abitibi Royalties to new heights

Yamana Gold (TSX: YRI) and Agnico Eagle Mines (TSX: AEM) bid for Osisko Mining (TSX: OSK) looks just a bit better today than it did yesterday.

Osisko demonstrated the Canadian Malartic project’s longer term potential with the release of results from the first drill intersection into the Odyssey North target on the eastern flank of the property.

The hole was drilled 700 metres east of Jeffrey zone along the Cadillac-Larder Lake Fault, roughly 4.5 kilometres from the Canadian Malartic mill complex.

The highlight intercept came out of the Odyssey North zone and returned 110.2 metres grading 2.85 grams gold at a depth of approximately 1,150 metres. Osisko says the true width of intercept was 70 metres.

The big hit occurred in an area 290 metres below a historic hole that assayed an average of 1.83 grams gold over 51.8 metres. It was also 130 metres below and 140 metres east of a separate historic hole that averaged 2.12 grams gold over 70.1 metres.

Odyssey consists of two zones — North Odyssey and South Odyssey — located at vertical depths of 400 to 1,000 metres on the north and south margins of a 200 to 300 metre wide, south-dipping porphyry intrusion that the company says is similar to the Canadian Malartic porphyry.

When the data from the latest round of drilling is combined with the historic hole, the company says it believes the mineralized zone is a tabular body dipping 70 degrees south with a true average width of 20 to 70 metres.

As for those other two holes, one of them intersected a 0.5 metre-wide, visible gold-bearing sheared gabbro beyond the north porphyry contact and assayed 105 grams gold over one metre. Osisko says the auriferous shear constitutes a new discovery but doesn’t know the extent of the zone at this point.

The other hole of note intersected the South Odyssey zone with the first intersection of 3.3 metres averaging 10.9 grams gold coming above the porphyry in a zone of sheared gabbro. It says all other intersections were within partly silicified grey porphyry with a more sporadic distribution of mineralization within an irregularly shaped body of unknown orientation.

The company has four drills turning on the Odyssey zones as it looks to define the overall size and geometry of both zones to vertical depths of approximately 1,300 metres.

While the results had little impact on Osisko shares — they were up 2% or 16¢ to $7.89 per share in Toronto on April 23 — they did have a big impact on the share price of Abitibi Royalties (TSXV: RZZ) and its majority shareholder Golden Valley Mines (TSXV: GZZ).

That is because Abitibi Royalties has a joint venture agreement with Osisko which gives it a 30% free carry interest on the CHL property and CHL hosts Odyssey North as well as the Barnat Expansion and Jeffrey zone, both of which already have outlined resources.

Abitibi also has a 2% net smelter return royalty on the Gouldie deposit to the south of the Canadian Malartic deposit. Osisko recently put Gouldie into production.

Abitibi’s stock shot up 50% to $1.50 on 28,700 shares traded on April 23 — their highest level since January of 2012 — while Golden Valley, which holds a 63% stake in Abitibi Royalties, saw its shares go up 35%, or 3.5¢, to 13.5¢ on 1.45 million shares traded.