Windfall resources hit 6.8 million oz gold: Osisko Mining

Osisko Mining (TSX: OSK) has released the updated resource estimate for its Windfall gold project that puts 3.2 million oz. in the inferred category plus 3.6 million oz. in the inferred category. The property is in Eeyou Istchee James Bay region of Quebec in the Abitibi Greenstone Belt.

Using a gold cut-off grade of 3.5 grams gold per tonne, Windfall has 9.5 million measured and indicated tonnes averaging 10.5 grams gold per tonne (3.2 million oz. of gold) and 5.2 grams silver per tonne (1.6 million oz. of silver).

The indicated resource is another 13 million tonnes at 8.6 grams gold per tonne (3.6 million oz. of gold) and 4.7 grams silver per tonne (2 million oz. of silver).

The resource is based on 1.7 million metres of drilling through September 2021. Since then, an additional 70,000 metres have been drilled, and more surface and underground drill results will be integrated into the feasibility study, expected in the fourth quarter of this year.

There are four zones – Lynx, Underdog, Main and Triple 8 – at Windfall and 60% of the gold is contained in the Lynx zone. Lynx has 2.3 million oz. of contained gold in the measured and indicated category grading 12 grams gold per tonne and 1.8 million oz. of contained gold in inferred material grading 10.8 grams gold per tonne. The Lynx zone has potential for additional high-grade zones to the east. Almost all (98%) of the gold found at Windfall is located from surface to a vertical depth of 1,200 metres..

Osisko has driven the exploration ramp to 600 metres below surface at the Lynx zone and is taking a bulk sample.

“Infill drilling has again exceeded our expectations, with excellent conversion, and the measured and indicated resource increasing by 73% with average gold grade moving past double digits to 10.5 grams per tonne,” Osisko CEO John Burzynski stated in a news release. “Windfall is an outstanding, well-defined deposit which still has demonstrable strong upside potential to grow. We are confident that Windfall will grow significantly in the future with continued work.”

The Windfall preliminary economic assessment was updated in April 2021. That report put contained gold at 1.9 million oz. in the measured and indicated portion and 4.2 million oz. in the inferred portion. It assumed a 3,100 tonne per day operation with average gold recovery of 94.8% and an 18-year mine life. The initial capital requirement would be $544 million, including power line construction and a $55 million contingency.

The after-tax net present value was estimated at $1.5 billion and the after-tax internal rate of return was 39.3%. The project would pay for itself in 2.2 years.

During the first seven years of operation, production would average 300,000 oz. of gold annually, with peak recovery coming in year six at 328,000 ounces. The all-in sustaining cost would be US$610 per oz. of gold.

In November, Osisko announced it was creating a 50:50 joint venture with Northern Star Resources (ASX: NST) after the Australian company invested $154 million in the Windfall project.

“With 70,000 metres of drilling since the cut-off date in October 2021, we think Windfall is already over 7M ounces, and going to 10M ounces in the next three years,” Kerry Smith of Haywood Securities wrote in a research note to clients.

“We expect Windfall could be in production by 2025 at ~300,000 oz. per year over a 14-year mine life, with all-in sustaining costs below US$600 per ounce, although we think this is conservative as Northern Star will likely build a bigger mine, given the high probability of significant resource additions over time at Windfall.”