Osisko Development surges on permitting milestone for Cariboo gold project

Osisko Development (TSXV: ODV; NYSE: ODV) surged 30% on Thursday after the provincial government granted permits under the BC Mines Act for the company’s Cariboo gold project in central British Columbia.

The approval means that the company can now advance the construction and operation of the underground mine, which is expected to deliver 164,000 oz. of gold production annually over a 12-year life, as outlined in a 2023 feasibility study.

The milestone, says chairman and CEO Sean Roosen, is “a culmination of almost five years of extensive discussion and consultation with provincial regulators, Indigenous nations and host communities to ensure that the project becomes a model for responsible mine development and environmental stewardship.”

The permit granting coincides with this year’s ongoing historic high prices for gold, which hovered at US$2,665.60 per oz. on Thursday morning. 

Osisko Development shares traded for $2.66 apiece by noon, valuing the company at $257.4 million.

With the construction and operating permits secured, Osisko said it is advancing funding discussions for what is expected to be a $588 million project, including $137 million upfront and an additional $451 million for expansion. It is expected to have an after-tax net present value (discounted at 5%) of $502 million and a 20.7% internal rate of return, based on a US$1,700/oz gold price.

A formal positive final investment decision and the engagement on a project financing package in the coming months would allow for full-scale construction to commence in the second half of 2025, with a targeted completion date at the end of 2027, it added. 

Environmental permits

To complete the permitting process, only the Environmental Management Act permits remain. They focus on project-related discharge activities, including water and air, within the areas outside of the immediate mine site boundaries.

The permits have already been referred to the Ministry of Energy and Climate Solutions, which is expected to deliver a decision by the end of this year. Osisko initially received an environmental assessment certificate in October of 2023.

Cariboo represents the first project to be wholly assessed under the new 2018 Environmental Assessment Act, which aimed to increase opportunities for public participation and prescribes measures to meet the B.C. government’s commitment to reconciliation and the implementation of the UN Declaration on the Rights of Indigenous Peoples.

While the Lhtako Dené and Williams Lake First Nations have been supportive during the Cariboo permitting process, the Xatśūll First Nation has expressed concerns over potential damage to nearby communities and wildlife, and even threatened to take legal action.

In Thursday’s release, Osisko said the company is working towards an agreement with the Xatśūll, with whom it continues to engage and consult.

Optimized FS

Meanwhile, the company is advancing work on an optimized feasibility study for the Cariboo project, anticipated to be completed in the second quarter of 2025. The feasibility work follows the framework set out in the existing ongoing permitting process.

This study will take into consideration certain mining and processing optimizations, including improvements to the flotation circuit, an accelerated development timeline with a 4,900-tonnes-per-day throughput, as well as updated cost estimates to reflect the current market environment.

The optimization would bring average gold production at Cariboo to approximately 194,000 ounces.