High grade mining district in central
On completion of the Transaction,
Mr. Sean Roosen, Chair and Chief Executive Officer of
Mr.
TRANSACTION HIGHLIGHTS
- Transaction supports Osisko Development’s path towards becoming a leading intermediate gold producer
- Production from Trixie complements the near and medium-term development plans for the Cariboo and
San Antonio projects. - In the near term, the Company is proposing technical work at Trixie with the objective that it will justify further development, targeting an increase in production from approximately 20 koz Au p.a. to approximately 100 koz Au p.a. by 2024 through a low-capital intensity expansion.
- Production from Trixie complements the near and medium-term development plans for the Cariboo and
- Trixie is one of the highest grade gold mines in the world
- The newly-discovered T2 structure shows excellent continuity of high grades and appears to be increasing in thickness towards the upper contact with shale.
- More than 2,300 underground samples collected over a 215 m strike length with an average grade of 93 g/t Au and 135 g/t Ag.
- Gold production from underground mining and vat leach processing in 2021 was 14,709 ounces at an average head grade of 59 g/t.
- Over the past week, production from exploration and development mineralization, which is processed, via small-scale vat leaching at approximately 45 tons per day (“tpd”), was at blended grades between 1.2 oz/ton (41 g/t) and 5.7 oz/ton (195 g/t) Au with an average of 4.5 oz/ton (154 g/t) Au.
- Clear path to meaningful expansion and operational improvements
- Low capital intensity expansion planned at Trixie, targeting an increase in throughput to 500 tpd by the end of 2024.
- Equipment and infrastructure in place for a straight-forward cut and fill underground operation having low environmental footprint.
- Opportunity to significantly improve recoveries (currently 60% to 70% via vat leaching) through metallurgical test work and implementation of appropriate processing technologies (targeting greater than 90% recovery with the addition of a grinding circuit).
- Significant exploration upside at Trixie
- Gold mineralization remains open up and down dip and along strike.
- Ongoing exploration outside of the T2 structure will continue along the 5 km Trixie trend to North Lily trend.
- Exposure to extensive land package in prolific brownfields district
- 100% ownership of more than 17,000 acres of mining claims (including over 14,200 acres of which are patented) in Utah’s second most productive mining district after
Bingham Canyon . - The T2 structure at Trixie represents a new style of mineralization and a key focus will be to explore with the objective of finding similar structures at other past producing mines in the district.
- A 2011 preliminary economic assessment published on the Burgin Ag-Pb-Zn project dated
November 17, 2011 (the “2011 PEA”), previously mined by Kennecott, and highlighted the possibility for an economic project. - Over 20 brownfields targets within the wider land package, which include the historic Eureka Standard mine and North Lily prospects.
Osisko Development also plans to undertake an exploration program around known polymetallic and copper porphyry targets within the land package.
- 100% ownership of more than 17,000 acres of mining claims (including over 14,200 acres of which are patented) in Utah’s second most productive mining district after
- Fully permitted for current operations with infrastructure in place
- Existing fully-operational milling and mining facilities and equipment.
- Retaining experienced and qualified full time workforce.
- Grid power, year round paved road access, and sufficient access to water.
- Ideally located in top-ranked mining jurisdiction
Utah is ranked in the top-15 mining jurisdictions globally by theFraser Institute and is ranked as the sixth mining jurisdiction by the Fraser Institute’s Policy Perception Index.- The Tintic property is located in active and well-controlled brownfields district.
- Close proximity to mining services and suppliers (
Provo ,Salt Lake City ).
TRANSACTION SUMMARY
Tintic is a joint venture owned as to 75% by IG Tintic and as to 25% by
Mr.
Mr.
ABOUT THE TINTIC DISTRICT
The Tintic property hosts 23 past-producing precious metal and polymetallic mines, including the fully permitted Trixie which restarted small scale exploration mining in 2020. Recent exploration efforts at Trixie lead to the discovery of the high grade T2 structure adjacent to existing underground infrastructure approximately 625 feet (190 m) below surface. Trixie produced 14,709 ounces in 2021 at an average head grade of 59 g/t.
Current operations at Trixie are comprised of small scale underground mining and batch vat leaching, processing approximately 45 tpd. This new discovery of the T2 structure at the historic Trixie mine has led to initial production of one of the highest grade gold mines in the world with room for significant expansion and discovery.
Osisko Development’s near term plan will be to continue underground mining and exploration development while maintaining present production at Trixie. A total of 15,000 meters of surface and underground infill and exploration drilling is proposed to generate an initial resource by the end of 2022 and concurrently complete advanced technical studies on the project to generate additional surface and underground targets, complete metallurgical testing, geotechnical work and environmental studies for future expansion into the mine plan.
The Company cautions that the Vendors have taken the decision to commence production at Trixie in the form of small scale underground mining and batch vat leaching without the benefit of a feasibility study, or reported mineral resources or mineral reserves. The Company cautions that historically, such projects have a much higher economic or technical risks. In continuing current operations at Trixie after closing, the Company will not be basing its decision to continue such operations on a feasibility study, or reported mineral resources or mineral reserves demonstrating economic and technical viability.
The T2 structure (as shown in Figure 1) was discovered in 2020 when Tintic reopened the operation. Osisko Development’s geologists visited the property and collected samples from the T2 structure that assayed 2,952 g/t Au, 2,278 g/t Au and 1,585 g/t Au. Stock work and vein samples adjacent to the T2 structure were also impressive, grading up to 457 g/t Au and 793 g/t Au. A total of 21 channel samples were collected on two levels across 150 meters strike length averaging 494 g/t Au and 663 g/t Ag. The true extent of this structure is evolving, and other, parallel structures have been discovered during exploration and development.
Figure 1 – T2 Structure Showing Face Samples is available at: https://www.globenewswire.com/NewsRoom/AttachmentNg/b13a2856-c3e2-466e-acf0-1be9653b6f17
The Burgin mine, previously operated by Kennecott until 1978, has potential for a significant silver-lead-zinc-gold deposit. A 2011 PEA outlined a seven-year life of mine plan. The historic resource as outlined in the 2011 PEA is presented in Table 1.
Table 1: Burgin Reported Historic Resource, 2011 PEA | |||||||||||
Category | Cutoff (oz AgEq/t) | Tons (k) | Ag (oz/t) | Ag (k oz) | Au (oz/t) | Au (k oz) | Pb (%) | Pb (k lbs) | Zn (%) | Zn (k lbs) | |
Indicated | 5.00 | 920 | 7.28 | 6,694 | 0.03 | 23.00 | 9.27 | 170,461 | 3.45 | 63,497 | |
Inferred | 5.00 | 1,357 | 8.71 | 11,823 | 0.01 | 17.00 | 14.43 | 391,589 | 5.19 | 140,846 |
The mineralization at Burgin is a carbonate replacement type of deposit and located principally further away from the magmatic centers and the high grade gold, high sulphidation mineralization of the Trixie trend. Most of the historical polymetallic production occurred in these areas on the western and eastern margins of the district. The Burgin deposit has excellent adjacent exploration potential to the north and down plunge from the existing resource.
Regional Exploration Potential
The Tintic property is a vast mining camp currently focused on the high grade Trixie – T2 structure. The newly discovered mineralization is rapidly advancing and open at depth and along strike, as well as parallel structures. T2 and Trixie are part of a 5 km trend of precious metal rich former producers and mineral occurrences which are to be explored on a priority basis over the next few years. Surface data and previous exploration by major mining companies has also recognized a northerly trending argillic alteration trend indicative of porphyry mineralization previously demonstrated on the property at targets Big Hill and Treasure Hill.
Transaction Details and Timing
Pursuant to the terms of the Transaction,
At closing,
Each of
In addition to the Closing Payments, the Company will pay the Vendors: (i) deferred payments of
The Agreements include representations and warranties of
Financing
The Company, through a wholly-owned subsidiary, has entered into a non-binding metals stream term sheet (“Stream”) with a wholly-owned subsidiary of Osisko Gold Royalties Ltd. The proceeds from the Stream will be used to fund a portion of the cash consideration payable on closing of the Transaction. The key terms of the Stream include:
- An upfront cash payment totaling at least
US$20 million and up toUS$40 million . - In the event that the full amount of
US$40 million is drawn, the Company will deliver a maximum of 5% of all metals produced from the Tintic property up to a maximum of 53,400 ounces of refined gold (the “Threshold Stream”). Thereafter, the Company will deliver 4.0% of all metals produced (the “Tail Stream”). - If the Company elects to draw less than
US$40 million , the Threshold Stream and Tail Stream shall be reduced on a pro rata basis. - The Company will receive ongoing payments for refined metal delivered to the Stream equal to 25% of the spot prices.
- The Stream is anticipated to close concurrently with the close of the Transaction.
Community Support and Engagement
Tintic and its predecessors have been working and living in the communities surrounding the Tintic property for over 150 years. The mines and communities are integrated into the social and economic fabric of the community.
Approvals and Conditions
The Board of Directors of each of
The Transaction is also subject to normal course regulatory approvals and the satisfaction of customary closing conditions, including the execution of ancillary agreements and acceptance of
None of the securities to be issued pursuant to the Transaction have been or will be registered under the United States Securities Act of 1933, as amended (the “
Advisors and Counsel
Eight Capital is acting as Osisko Development’s financial advisor and
Qualified Person, Technical Information
QA / QC
Samples were sent to
Select Financial Information
The following table, which is provided by IG Tintic, presents the select financial statement information with respect to Tintic. Such information is derived from the audited financial statements of Tintic for the year ended
(provided in 000’s US$) | Twelve months ended | Nine months ended |
Total Current Assets | 353 | 1,006 |
Total Assets | 25,334 | 28,846 |
Total Current Liabilities | 7,196 | 3,757 |
Total Liabilities and Equity | 25,334 | 28,846 |
Net Loss | 6,522 | — |
Conference call details
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About
For further information about | |
Telephone: (514) 940-0685 Email: sroosen@osiskodev.com | Telephone: (514) 299-4926 Email: jflemonde@osiskodev.com |
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Cautionary Note Regarding Forward-Looking Information
Certain statements contained in this news release may be deemed “forward‐looking statements” within the meaning of applicable Canadian securities laws. The information in this news release about the timeline to complete the Transaction, ability to satisfy or waive on satisfactory terms any conditions to the completion of the Transaction (including but not limited to, TSXV acceptance of the Transaction), the timeline to reach a definitive agreement with respect to the Stream (if at all), the ability to obtain the financing under the Stream and satisfy or waive on satisfactory terms any conditions to the completion of the Stream financing, the general prospects of Tintic, the utility of the existing infrastructure at Tintic, the utility of historic data, expected investor returns, target gold, the focus of Tintic on achieving gold production, the prospects of shallow mining at Tintic, the ability of exploration (including drilling) to accurately predict mineralization, the ability of Tintic to be cash-flow positive in the short- and long-term (including the unknown variables and assumptions inherent therein), base metal discoveries, the significance of the district hosting 23 past-producing mines, the focus on developing Trixie, Tintic having great development opportunities, the scope of rehabilitation work required, including in respect of Trixie, the feasibility of T2 and 4 mines, any references to high-grade deposits (including visible gold, pure gold and gold-rich structure), the unique mineralization of T2; additional resource opportunities (including timing, if at all), target production, the expansion of Eureka Standard; production processes and facilities, the possibility of expanding production facilities, management and employees, the ability to continue operations and to expand operations, identify additional resources and reserves, exploit such resources and reserves on an economic basis, obtain future permits for operations, to obtain additional financing for project development on satisfactory terms, the investment opportunities presented by Tintic, Tintic achieving production (including near-term timing, if at all), the opportunities presented by Trixie, its ore deposit and its ability to be mined (including any potential value, if any), Tintic having a pipeline of projects, both historic and new, Tintic’s ability to realize upon additional projects (if any), grade estimates, the speculative geology of inferred mineral resources, the ability, if any, to achieve the project economics described herein, the ability, if any, of selective mining methods to capture additional mineable resources and to optimize gold and silver recoveries; the mining and processing strategy; potential mineralization; the potential to extend mineralization up and down-plunge and at depth; the ability to realize upon any mineralization in a manner that is economic; the ability to complete any proposed exploration activities and the results of such activities, and any other information herein that is not a historical fact may be “forward-looking statements”. These forward‐looking statements, by their nature, require
For additional information with respect to these and other factors and assumptions underlying the forward‐looking statements made in this news release concerning
Neither the
Figure 1 - T2 Structure Showing Face Samples
Figure 1 - T2 Structure Showing Face Samples
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