MONTREAL, May 24, 2022 (GLOBE NEWSWIRE) -- Osisko Development Corp. (“ Osisko Development ” or the “ Company ”) (TSX.V-ODV) is pleased to announce the results from its Preliminary Economic Assessment (“ PEA ” or the “Study”) completed by BBA Engineering Ltd., consultants for the Cariboo Gold Project (“ Cariboo ” or the “ Project ”) in Central British Columbia (“ BC ”). 1
The PEA provides a technical and economic update based on the updated underground Mineral Resource Estimate (“ MRE ”) from the 2021 diamond drill campaign and current costs and economic estimates. The MRE contains 27.1 million tonnes (“ Mt ”) at an average grade of 4.0 grams per tonne gold (“ g/t Au ”) for a total of 3.47 million ounces (“ M oz ”) in the Measured and Indicated Category (consisting of a Measured Resource of eight thousand ounces of gold (47,000 tonnes grading 5.1 g/t Au) and an Indicated Resource of 3.46 million ounces of gold (27 million tonnes grading 4.0 g/t Au)) and 14.4 Mt at a grade of 3.5 g/t Au for a total of 1.6 M oz in the Inferred category (Table 6). These mineral resources have informed an 8,000 tonnes per day ( “tpd" ) scenario over a 12-year operating mine life, which highlights the potential growth of the Cariboo Gold Project. The PEA is available on the Company's website and the profile of the Company at www.sedar.com. The Company notes that mineral resources are not mineral reserves as they do not have demonstrated economic viability. The Company notes that a preliminary economic assessment is preliminary in nature, it includes inferred mineral resources that are considered too speculative geologically to have economic consideration applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment will be realized.
The PEA illustrates potential economics for a low cost, large scale, underground gold mine, with industry leading operating costs. The study outlines total gold production of 2.8 million gold ounces, resulting in an average annual gold production profile of 236,000 ounces with an All-In-Sustaining Cost (“ AISC ”) per ounce of $1,222 (US$962) (AISC is a non-IFRS measure – please see under the heading "Non-IFRS Measures" below). The Project after-tax net present value (“ NPV ”) (5% discount rate) is $764 million with an after-tax internal rate of return (“ IRR ”) of 21.4% at a gold price of $2,223 (US$1,750) per ounce, and $912 million and 24.5% at a spot gold price for May 19, 2022 at $2,343 (US$1,845) per ounce.
The PEA recommends that the Company continues to work towards a feasibility study and completes the following steps:
- Incorporate all drilling results from 2021 and 2022 currently in progress in the resources.
- Complete the development of the ramp and extraction of the 10,000-tonne (“ t ”) bulk sample that will help support the evaluation and testing of the proposed roadheader mining equipment and ore sorting equipment and gain experience to maximize the full potential of these technologies.
- Integrate the information and experience gained with the bulk sample into the development strategy of the mine and the feasibility study planning.
- Continue exploration program with drilling (infill and exploration), geological mapping, and grab sampling to test the depth extensions of known high-grade vein corridors and identify new targets.
The Company plans to proceed with a feasibility study in connection with the work plan recommended by the PEA.
The Company advises that this clarifying news release is being issued at the request of the Autorité des marchés financiers following a continuous disclosure review. Certain previous economics described in the Table 1 below in relation to the Project disclosed by the Company were not supported by a technical report prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and are superseded by the economics set out in the current NI 43-101 report and the Company cautions the reader not to rely on such previous economics. The Company is also filing a restated version of its annual managements' discussion and analysis and annual information form to, as applicable, remove the unsupported technical information and qualify other disclosure.
The previous economics were made public by the Company in connection with the environmental assessment for the Cariboo Project. These economics were prepared in accordance with the requirements for major projects in British Columbia to be assessed for potential environmental, social, economic, health and cultural effects by the Environmental Assessment Office, as required by the Environmental Assessment Act (British Columbia) (the " Environmental Assessment Act "). The previous economics do not include numbers verified to a NI 43-101 standard, and do not include the suite of investor focused economics, including the IRR and NPV for the project. These previous economics were to engineering standards. You will find below a table showing the differences between the previous economics and the economics contained in the PEA.
Table 1: Project Economics
| Information | Previous economics | PEA economics | Explanation of the differences |
| Production Rate (tpd) | 4,750 tpd | Up to 8,000 tpd | Based on the Company’s initial expectation a 4,750 tpd mine was used for the environmental assessment but in accordance with the MRE, its is expected that production could increase during the life of the mine to up to 8,000 tpd |
| Mine Life | 16 years | 12 years | Higher production rate |
| Initial Capital Cost and Total Capital Cost | Projected initial capital cost of $400 to $450 million and total capital cost over the life of mine estimated at just under $900 million | Projected initial capital cost of $122 million, expansion capital cost of $716 million and total capital over the life of mine estimated at $1,364 million |
The differences are influenced by number of factors including:
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The Key Operational Findings of the PEA are:
- Phased construction approach with an initial construction enabling a 2,000-tpd mine and an expansion raising the throughput at 8,000 tpd
- Average life of mine (“ LOM ”) annual production of 236,000 ounces per annum
- Peak production of 316,000 ounces and average of 297,000 ounces when operating at 8,000tpd
- LOM AISC per ounce of $1,222 (US$962)
- Projected to have an initial mine life of 12 years
- First gold pour targeted for Q1 2024
The Key Financial Forecast of the PEA are (at a base case gold price of US$1,750/oz):
- Initial capital requirement of $121.5 million
- Expansion capital requirement of $716.1 million
- LOM pre-tax undiscounted free cash flow of $2.0 billion (post-tax $1.3 billion)
- Annual pre-tax free cash flow averages $167 million over 12 years of commercial production
- Annual after-tax free cash flow of $112 million over 12 years of commercial production
- After-tax NPV (5%) of $764M
- After-tax IRR of 21.4%
- Payback period pre-tax of 5.8 years (post-tax 6.0 years)
Sean Roosen, Chair & Chief Executive Officer of Osisko Development, commented: “ The PEA builds on previous technical work while incorporating the results of extensive drilling together with several improvements and optimizations. The capital and operating cost estimates rely on recent budgetary quotes reflecting the current cost environment and our project execution approach. The recent inflation and difficulty with the supply chain has put to the forefront the challenges the mining industry is facing. The Project provides an attractive potential gold production profile of approximately 297,000 ounces per year when operating at 8,000tpd over an 8-year period , making it one of the premier gold development projects in North America and key socio-economic contributor to the Cariboo region, particularly in Wells, Quesnel, and surrounding areas, and the Province of BC. This PEA highlights a phased approach with an initial project able to produce 75,000oz/year at low capital cost, but most importantly, providing us access to the deposits from underground to do further exploration and seek to unlock more potential value outside of the current mine design that has an average mine depth of 350 meters. We believe this is a more prudent approach in the actual economic context without compromising the full potential of the Cariboo Gold Project.”
Table 2: Key Economic Outputs of the Study
| Description | Units | |
| Production Date (Operations Period) | ||
| Mine Life | year | 12 |
| Average Process Throughput | tpd | 6,424 |
| Average Process Throughput | MMt 2 / year | 2,346 |
| Gold Head Grade | g/t | 3.40 |
| Contained Gold | koz 3 | 3,080 |
| Recovery | % | 92.1 |
| Total Gold Production | koz | 2,837 |
| Average Annual Gold Production | koz | 236,000 |
| Average Annual Full Years at 8,000tpd | koz | 297,000 |
| Operating Costs (Average LOM) | ||
| Mining Cost | $/t mined | 52.73 |
| Processing Cost | $/t mined | 24.00 |
| Concentrate transport | $/t mined | 3.85 |
| Tailings and Water Management | $/t mined | 5.81 |
|
G&A Cost
|
$/t mined | 7.63 |
| Total Site Operating Costs | $/t mined | 94.02 |
| Total Site Operating Costs | US$/oz | 734.85 |
| AISC | US$/oz | 961.6 |
| Capital Costs | ||
|
Initial Capital |
$ MM | 121.5 |
| Expansion Capital | $ MM | 716.1 |
| Life of Mine Sustaining Capital | $ MM | 527.2 |
| Total Capital Costs | $ MM | 1,364.8 4 |
| Financial Evaluation | ||
| Gold Price Assumption | US$/oz | 1,750 |
| USD:CAD FX Assumption | x | 1.27 |
| After-Tax NPV (5%) | $ MM 5 | 763.8 |
| After-Tax IRR | % | 21.4 |
| Payback | year | 5.8 |
Figure 1: Average Annual Production Rate and Gold Production
https://www.globenewswire.com/NewsRoom/AttachmentNg/8afc93c9-ffbc-449c-87ae-11dcb6df1f58
Table 3: Sensitivity Analysis
| Scenario | Unit | Downside Au Price Case | Base Case | Spot Au Price Case (May 19, 2022) | Upside Au Price Case |
| Gold Price | US$/oz | 1,450 | 1,750 | 1,845 | 2,050 |
| After-Tax NPV (5%) | $ MM | 288.2 | 763.8 | 912.4 | 1,231.0 |
| After-Tax IRR | % | 11.2 | 21.4 | 24.5 | 31.2 |
| LOM Free Cash Flow | $ MM | 697 | 1,342 | 1,546 | 1,988 |
| LOM EBITDA | $ MM | 2,298 | 3,325 | 3,650 | 4,351 |
| Payback | years | 7.6 | 6.0 | 5.6 | 4.9 |
Table 4: Operating Cost Summary
| Operating Costs | $/t Mined |
| Mining | 52.73 |
| Transportation | 3.85 |
| Processing (including underground crushing, ore sorting and paste backfill) | 24.00 |
| Tailings, waste & water management | 5.81 |
| General & administration | 7.63 |
| Total | 94.02 |
Table 5: Project Capital Cost Summary
| Area Description | Total Capital Cost ($ MM) |
| Mobile Equipment | 10.6 |
| Underground Mine | 507.0 |
| Water & Waste Management | 101.1 |
| Electrical & Communication | 137.5 |
| Surface Infrastructure | 117.7 |
| Mine Surface Infrastructure | 10.3 |
| Processing - Mine Site Complex | 190.6 |
| Processing - QR Mill | 57.1 |
| Construction Indirect Costs | 86.9 |
| Owner’s Costs | 31.0 |
| Contingency | 98.6 |
| Capitalized Operating Costs | 16.4 |
| Total | 1,364.8 |
| Closure Costs | 18.5 |
| Salvage Value | -61.1 |
PEA Overview
The Company retained BBA Engineering Ltd. as lead consultants, along with other engineering consultants, to complete the Study and prepare a technical report in accordance with NI 43-101.
The Project surface infrastructure and services are designed to support the operations at the Mine Site Complex and at the Quesnel River Mill (“ QR Mill ”). The Project also includes off-site infrastructure, such as a new 69 kV / 138 kV transmission line between the Barlow substation, near Quesnel, BC, and the Mine Site Complex. Warehousing for major components and consumables will be provided by third parties in Quesnel and / or Prince George.
The Project will be comprised of three different sites: the Mine Site Complex, near the District of Wells, BC, the Bonanza Ledge Site, and the QR Mill.
Underground longhole longitudinal retreat with a combination of paste fill and cemented rockfill mining methods will be used for the extraction of the economic mineable inventory, as it is the most economic, and sustainable methodology. The Project is planned in two phases, Phase 1 is at 2,000 tpd for 2.5 years, increasing during Phase II to an average production of 8,000 tpd over a 9.5-year LOM. This Report has focused on five underground zones: Shaft Zone, Valley Zone, Cow Zone, Mosquito Zone and Lowhee Zone. The mining zones are accessed via three main portals and are connected by an internal ramp system.
Property Description, Location and Access
The Project is located in the historic Wells- Barkerville mining camp of British Columbia and the Mineral Claim Block extends for 77 kilometres (“ km ”) from northwest to southeast. The Project falls, in large portion, within the towns of Wells. Wells is situated 74 km east of Quesnel, approximately 115 km southeast of Prince George, and approximately 500 km north of Vancouver.
The Project consists of 412 mineral titles totalling 155,147.09 hectares across two contiguous property blocks known as the Cariboo Main Block and the QR Mill Property. These mineral titles include mineral claims, mineral leases, placer claims and placer leases. A net smelter return royalty of 5% payable to Osisko Gold Royalties Ltd is the only royalty that applies to the Project.
Mineral Resource Estimate
- Measured and Indicated Resource of 3.4 M oz of gold (27.1 Mt grading 4.0 g/t Au)
- Inferred Mineral Resource of 1.6 M oz of gold in the Inferred category (14.4 Mt grading 3.5 g/t Au)
- The 2022 Mineral Resource Estimate includes eight deposit areas: Mosquito, Shaft, Valley, Cow, Bonanza Ledge, BC Vein, Lowhee and KL
- The MRE is based upon over 650,000 metres (“ m ”) of diamond drilling from Osisko Development’s 2015 to 2021 drill programs and historically verified drill hole data for a total of 3,550 holes
- A total of 471 mineralized solids were used for the MRE: 109 solids for Cow, 100 for Valley, 93 for Shaft, 75 for Mosquito, 47 for Lowhee, BC Vein and five splays (a total of 6 solids), 40 for KL, and 1 solid for Bonanza Ledge
- The Approach for the reasonable prospect for an eventual economical extraction for the MRE is met using constrained, potentially mineable shapes, reflecting latest CIM Mineral Exploration Best Practice Guidelines (CIM Exploration Guidelines, November 2019)
- The MRE includes the Cow–Island–Barkerville Mountain Corridor. The Cow-Island segment covers a strike length of 3.7 km and a width of approximately 400 m, down to a vertical depth of 650 m below surface. The Barkerville segment covers a strike length of 3.0 km and a width of approximately 500 m, down to a vertical depth of 500 m below surface
- The BC Vein deposit is 1.7 km in strike length, 0.5 m to 37 m in thickness, and 400 m in depth
Table 6: Mineral Resource Estimate
|
Category
|
Deposit
|
Tonnes | Grade | Ounces |
| ‘ 000 | (g/t Au) | ‘ 000 | ||
| Measured | Bonanza Ledge | 47 | 5.1 | 8 |
|
Indicated
|
Bonanza Ledge | 32 | 4.0 | 4 |
| BC Vein | 1,030 | 3.1 | 103 | |
| KL | 389 | 3.2 | 40 | |
| Lowhee | 1,621 | 3.6 | 188 | |
| Mosquito | 1,795 | 4.3 | 249 | |
| Shaft | 11,139 | 4.3 | 1,531 | |
| Valley | 4,403 | 3.8 | 536 | |
| Cow | 6,645 | 3.8 | 811 | |
| Total Measured Resources | 47 | 5.1 | 8 | |
| Total Indicated Mineral Resources | 27,055 | 4.0 | 3,463 | |
|
Inferred
|
BC Vein | 461 | 3.5 | 53 |
| KL | 1,905 | 2.8 | 168 | |
| Lowhee | 520 | 3.5 | 59 | |
| Mosquito | 1,262 |
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