Osisko’s Gaspé project in Quebec seeks deep-pockets partner

[Redator]

Osisko Metals (TSX: OM) CEO Robert Wares is confident on expanding the largest copper project east of the Mississippi while getting the permits and partner to develop it.

The Gaspé project at a former Noranda mine in Quebec is due for an update on its 1.5-billion-lb. copper resource across indicated and inferred categories in February, Wares told The Northern Miner by phone last month. The proposed mine is due for a preliminary economic assessment by the end of next year followed by a feasibility study in 2027. It’s already on government permitting radars though it’s too early for a capital spending estimate.

“We’re hoping to get on [Prime Minister] Mark Carney’s Building Canada Act to fast-track the process, and we’re already in discussions with the federal government on that,” Wares said. “By the time we get to the final investment decision, which is now scheduled for the end of 2029 – obviously, if the share price supports it – it’d be standard financing and maybe 60% debt and 40% equity.”

Osisko’s project on the Gaspé Peninsula jutting into the Gulf of St. Lawrence aims to revive one of Canada’s historic mines into a modern large-scale operation in time for surging new-energy demand for copper. It would support throughput of 150,000 to 160,000 tonnes per day, placing it among Canada’s largest operations. Backed by federal and provincial support, discussions with the Mi’kmaq First Nations, and full offtake rights already secured by Glencore (LSE: GLEN), Gaspé might start producing roughly 500,000 tonnes a year of copper concentrate around 2032.

Partner

One of the project’s challenges is finding a copper major willing to make the mine a reality. Wares is betting on the project’s scale and Osisko’s heritage to attract suitors. Part of the Osisko Mining team that expanded and sold Canadian Malartic to become one of the country’s biggest gold mines (now with Agnico Eagle Mines (TSX, NYSE: AEM)), and also sold Windfall to Gold Fields (NYSE, JSE: GFI) – is back together after John Burzynski joined last year as executive chairman.

Glencore might be an option, considering it holds a convertible note that could translate into an 18% equity stake next year. (Franco-Nevada (TSX, NYSE: FNV) and Quebec’s largest pension fund, La Caisse, are also on the share register and 30% is held by board members and employees.)

“I’m speculating, so we haven’t discussed it, but it would be very much an interest, and in Glencore’s interest, to help us on the capex financing,” Wares said. “Glencore, I think, would also be very open, of course, to us bringing a partner, a producing partner, to get this thing built.”

There’s also a small grinding headache among lower hurdles. Original tests suggested crushing ore to 75 microns but plans will likely have to be recalibrated to an industry standard of 150 to 300 microns, the CEO said.

Bus trip

However, challenges found in other locations such as opposition from the local town or from Indigenous groups have mostly evaporated, Wares said. Osisko plans to secure a kind of environmental stewardship deal with the Mi’kmaq First Nations this year, and a recent site visit proved a hit with residents of Murdochville. It was the first time in 50 years the site was opened to the public.

“They were very touched by the fact that early on, we’re willing to fill up a bus full of seniors,” Wares said. “And of course, most of the seniors are people who used to work at the mine.”

The project carries the legacy of one of Canada’s great mines, which operated for decades before closing in 1999. The Copper Mountain deposit was discovered in 1921 and Noranda mined some 150 million tonnes of copper grading 0.87% from the site starting in 1955.

The mineralized system about 825 km northeast of Montreal remains open to the south and southwest. New drilling has intersected mineralization beneath the existing pit model.

Hole 30-1109 cut 134 metres grading 1.04% copper from 727 metres depth, as well as 41 metres of 1.35% copper from 543 metres downhole, Osisko said Sept. 18. Another hole, 30-1106, returned 34 metres of 1.04% copper from 864 metres depth.

“We view these results as positive for Osisko Metals shares,” Scotia Capital mining analyst Eric Winmill said in a note. “Infill drilling returned long mineralized copper intercepts while expansion drilling encountered additional mineralized intercepts outside the current resource area.”

Resource

The project hosts 824 million indicated tonnes grading 0.27% copper, 0.015% molybdenum and 1.74 grams silver per tonne for contained metal of 2.23 million tonnes of copper, 124,000 tonnes of molybdenum and 46 million oz. of silver, according to an estimate released last November.

The inferred resource is pegged at 670 million tonnes grading 0.3% copper, 0.02% molybdenum and 1.37 grams silver for contained metal of 1.99 million tonnes of copper, 133,000 tonnes of molybdenum and 29.5 million oz. of silver.

Quebec has also signalled strong backing for the project, establishing an action committee to coordinate local economic benefits in the Gaspé Peninsula. The province this year saw 350 megawatts of hydropower freed up after Northvolt abandoned plans for a battery plant, and Osisko is already in talks with Hydro-Québec to secure an allocation. Wares said the mine could require about 200 MW, putting it in line with other large-scale industrial users.

The province and Ottawa also have potential funding in the billions of dollars for transition metals like copper.

“If you make this – and that’s our intent, politically, is to make this definitely a Canada building project in the copper space – it’s kind of hard to go wrong on that front,” Wares said. “We’ll get significant funding opportunities from both levels of government.”