Osisko Options Goldboro Project From Orex

Osisko Mining (OSK-T) has signed a deal with Orex Exploration (OX-V) that includes spending $8 million in exploration by 2013 to acquire up to a 60% interest in the Goldboro project, near Antigonish, N.S.

Located about 185 km northeast of Halifax, the project has been held by Orex since 1988 and two resource estimates have been completed on different areas of the deposit.

Under the deal, Osisko is buying 13 million Orex units at 10¢ apiece for a total of $1.3 million (each unit consists of one share and one warrant). Osisko can earn a 50% interest in the project by spending $8 million on exploration over four years, beginning with $1.5 million the first year with minimum requirements each following year. The company can increase its interest to 60% by completing a prefeasibility study by 2015.

“The Goldboro gold property offers potential for a bulk-minable gold deposit located on a geological structure that has traditionally been mined by underground methods in Nova Scotia,” said Robert Wares, executive vice-president and chief operating officer for Osisko, in a statement. Wares said in an effort to boost resources, the company would be drill-testing the structure to 200 metres depth over 2.5 km of strike length.

The property is underlain by sedimentary rocks, including altered greywacke, sandstone (arsenite) and slates.

Gold mineralization at Goldboro occurs in quartz veins and gold often appears as nuggets. In addition to nuggets, gold mineralization is found in fine disseminations within bordering arsenopyrite crystals and fine grains associated with carbonaceous material.

According to Orex’s website, this distribution of gold could explain why fire assays show lower gold values than metallurgical balances from mill tests. A 2006 comparative analysis of assays and metallurgical tests done in 1989, 1990 and 2005 showed the assays underestimated recoverable gold content in resource estimates because of smaller core samples.

In 2005, Orex completed a National Instrument 43-101 compliant resource estimate on a 225- metre strike length of the Ramp area using a cutoff grade of 0.5 gram gold per tonne.

Measured and indicated resources totalled 13.3 million tonnes grading 1.13 grams gold per tonne for 484,000 oz. gold, plus another 15.6 million inferred tonnes grading 0.63 gram gold for 316,000 oz. gold. For this resource, the company used historical information combined with data from about 2,300 metres of drilling.

In 2008, Orex drilled more than 12,000 metres along 1.5 km of a 2.5- km strike length. A new resource was released in August this year using a cutoff of 1.5 grams gold.

Measured and indicated resources were 2.7 million tonnes grading 4.56 grams gold for a total of 397,000 oz. gold, plus 3.4 million inferred tonnes grading 3.67 grams gold for 406,000 oz. gold.

Osisko shares rose 14¢ on the news to $7.95 apiece on a trading volume of 5.2 million shares.