On the Move

The first gold mines in Quebec were discovered in the Malartic gold camp in the mid 1920s, all motivated by the then-recent discovery of the famous Horne Mine (in nearby Rouyn-Noranda), the foundation asset in another great Canadian mining story, Noranda. It’s perhaps a bit ironic but Osisko’s name was originally chosen by geologist Robert Wares to reflect this fact: the Horne Mine was discovered on the shores of Lake Osisko, and Wares felt it was an appropriate name for an ambitious little gold company. And how right he was.

The last of the original underground mines in the Malartic camp, East Malartic, shut its doors in 1983. The East Malartic mill continued to operate until 2002, being operated to process custom mill ores from other deposits in the district. By the time that mill shut, there was a strong sense that the 75-year mining history of Malartic was at an end. After producing well over 8.5 million ounces of gold, the underground ore from the four main mines was depleted and the population of the town had started to drift away, falling from what was a thriving mining town of over 6,500 residents in the 1950s to just over 3,500 residents in 2004. Regardless of sentiment and heritage, the reality and evidence was everywhere and few could deny that Malartic’s future was not promising.

But things were about to change. The three principals behind the founding of the new Osisko-Sean Roosen, Robert Wares and John Burzynski-got together in early 2003 with a common objective. Their original and innovative idea was to focus Osisko on exploring for large tonnage, low grade gold deposits – at the time an exploration target type that was receiving little attention from competing mining companies in Canada. Osisko compiled a list of targets and began systematically moving down the list, signing deals, drilling and moving on from projects that did not show the potential the company was looking for. Canadian Malartic, one of the original properties on that initial list, became available in late 2004 and Osisko jumped at the opportunity to acquire the ground. This was to be the transformational event in the history of the company.

Initial review of the database that was acquired with the property purchase suggested there was very good potential for several million ounces of gold with an average grade of over 1 gram. The low grade nature of the deposit appeared to many casual observers as an insurmountable obstacle to defining a commercial mine at Malartic. However, there was one element that had been completely overlooked by other mining companies who had examined the property over the years. Canadian Malartic was very different from the numerous other gold mines in Quebec and Ontario’s Abitibi Greenstone Belt (mines that have yielded well over 200 million ounces of gold over the last 100 years, predominantly structurally controlled deposits related to large fault systems within the greenstone belt). Upon first examination of some of the available historic drill core, it quickly became apparent to Robert Wares that Canadian Malartic was very likely a porphyry-related disseminated gold deposit. Porphyry-related deposits tend to have very large tonnages with relatively homogenous grades, both key traits that Osisko was looking for. This was the first time that anyone had identified an Archean aged porphyry-gold deposit in the Abitibi, and the implications were large. Huge in fact, as Osisko successfully went on to define well over 10 million new ounces of reserves at Canadian Malartic, and appears to have lots of room ahead to grow the deposit in the coming years. Osisko collared the first exploration drill hole at Canadian Malartic in March of 2005, and has subsequently drilled close to 800,000 metres of core to define the main orebody and surrounding deposits. The exploration model has also been applied to other areas by Osisko in its search for new deposits, and Osisko’s exploration approach has been adopted by numerous other junior exploration companies attempting to follow in the footsteps of their success at Malartic.

While the company was drill defining the gold deposit, it was also moving a portion of the town of Malartic from the future mine site. Osisko relocated 205 homes and built 6 new institutional buildings in a new suburb located at the north end of the town. The relocation project was started in 2008 and is now 100% complete. The new neighbourhood, infrastructure and institutional buildings are a true testament to sustainability that will benefit the town long after the mine has ceased production.

The company has also made a commitment to creating a “Fresh Outlook on Mining”, by taking a greener more sustainable long-term view of precious metal mining. Besides providing the town of Malartic with new infrastructure associated with the relocation project, electrical equipment has been utilized wherever possible and practical (for example electrifying the mining shovels and drills) as opposed to a fossil fuel burning alternative.

The company is also employing an innovative approach to reclamation of the site by undertaking continuous rehabilitation in conjunction with mining. This approach will reduce the potential risks of leaving the site reclamation until the end of the mining cycle. In another innovative green initiative, Osisko has reached a reforestation agreement with the regional County Municipality to fund the planting of 100 hectares annually for nine years. Osisko has consistently been a leader in the development of initiatives that benefit the surrounding community, offering benefits in addition to the increased employment and tax base.

With a gold reserve of over 10 million ounces, the Malartic mine is set to become one of the top-tier gold producers in the world. The company poured its first gold in April and production is underway. Current cash costs are estimated in the $375 – $400 per ounce range over life of mine, which puts Canadian Malartic solidly in the lowest quartile on the worldwide cost curve.

Outside of Malartic, Osisko has been on the path to growth by acquisition as well as direct exploration. The August 2010 friendly takeover of Brett Resources Inc. creates the potential for the development of a second world class mine similar in size to the Canadian Malartic operation. The Hammond Reef property located near Atikokan, Ontario has a current NI 43-101 inferred resource of 6.7 million ounces of gold. Osisko is executing a 350,000 meter drilling program on the property in an effort to confirm the resource and move it into the proven and probable category. The exploration program is in full gear with 16 drill rigs on the property. The initial exploration results show that 97% of the mineralization occurs within 300 metres of surface, suggesting that a large-scale bulk tonnage open pit operation is feasible. The company believes that with the current drilling at Canadian Malartic and the extensive infill program underway at Hammond Reef, there is good potential to double reserves over the next 18 months.

Started as a small group of motivated individuals with an idea, Osisko has transitioned from discovery to development, and now development to production in a very short period of time, emerging as one of Canada’s leading intermediate producers with a large staff of highly trained professionals. Founded on the world-class orebody that is Canadian Malartic, Osisko maintains its entrepreneurial spirit and appears to have all the successful elements necessary to become Canada’s next major mining company. There’s no doubt that Osisko is a true Canadian success story.