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Osisko lifts gold reserve to 10.7 million ounces, but warns 2012 production “may fall”

Published: 09:51 31 Mar 2011 EDT

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Osisko Mining (TSX:OSK) will be sure to capture plenty of column inches in the press today after the company announced that it had lifted its total gold reserve by 19% to 10.7 million ounces.  The reserve boost came about from a combination of additional resources defined at its 100% owned Canadian Malartic Project in Quebec, and the new calculation using US$1000/ounce gold price, up from $825/ounce in the last estimate completed in February 2010. The new proven and probable reserve has a average grade of 0.97 grams per tonne gold.


Osisko also reported a 5.4% increase in total measured and indicated resources, using a cut off grade of 0.3 grams per tonne gold, to 11.8 million ounces of gold, while the inferred resource jumped 150% to 0.85 million ounces.


Other interesting notes highlighted by Osisko this morning included confirmation that 9 million tonnes of rock in the current pit could potentially be converted to reserves through infill drilling. The rock is currently classified as inferred resources with an average grade of 0.68 grams per tonne gold, and currently viewed as ‘waste rock’.

Clearly moving this material into the reserve category would have a beneficial impact on economics and the strip ratio for the open pit.


Recoverable gold also increased  from 7.72 million ounces to 9.19 million ounces, assuming a overall recovery of 85.8%. 


"This is a very significant increase in reserves which will positively impact the mine life and economics of the project,” Sean Roosen, President and CEO, noted. “Ongoing drilling continues to define new mineralization in areas such as the Jeffrey and Western Porphyry Zones, which has not been included in this reserve/resource estimate".
A further report is expected this quarter on production schedules, capital expenditure and mine life.


Details on updated costs, mine plan, production schedules and mine life will be provided in Q2 2011, though Osisko did note this morning that previous projections for 2011 and 2012 production may fall due to the increase in the reserve.  This would be due to a modified mine plan taking into account more tonnage from lower grade zones within the new reserve and requirements by the company to undertake noise reduction measures imposed by the Quebec government.


Osisko had previously forecast 688,000 ounces of gold production in 2012.

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