Osisko fine-tunes Canadian Malartic

Osisko Mining (OSK-T) continues to improve the performance of its Canadian Malartic gold mine in Malartic, Que., achieving record production levels once 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 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, and crusher problems in March that also hindered production and overall lower mine productivity because of problems with the blasting cycles.

Osisko got the mill fully running again less than two weeks after the May fire, finished installing 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 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. Commercial production was declared on May 19.

The improved production numbers over the summer have helped return the company’s share price to where it was before the May fire. News of the fire, coming right as the broad market was diving, sent Osisko’s shares from $10 to a three-year low of $6.25. With operations going more smoothly, the company’s share price hovered around $9.50 for most of August.

While Osisko is busy getting its sole mine running more consistently, it’s 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 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 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 northwestern Ontario.

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

And the company continues to drill and explore around the Malartic mine itself. As of Jan. 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 higher grade ore at the Barnat deposit.