Osisko Metals Update – More Information On The Pine Point Acquisition
Osisko Metals released news yesterday regarding an acquisition of Pine Point Mining. The acquisition now brings the the second largest past producing zinc mine in Canada into the Company. Jeff Hussey, President and CEO of Osisko Metals joins me today to share some further information on the project as well as the strategy of building the current resource.
I will also be picking up shares of Osisko Mining later this week. I feel this is a great time to buy since the stock has been under pressure, the Company has plenty of cash in the bank (just under C$40 million), and has three great land packages in Canada, including two of the largest past producing mines.
Click here to read over the presentation regarding the acquisition.
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Osisko Mining to buy back up to 10% of public float
2017-12-19 08:07 ET – News Release
Mr. John Burzynski reports
OSISKO ANNOUNCES INTENTION TO IMPLEMENT NORMAL COURSE ISSUER BID
Osisko Mining Inc. intends to implement a normal course issuer bid program to purchase for cancellation, from time to time over a 12-month period, common shares of the corporation listed on the Toronto Stock Exchange in an aggregate amount of up to 10 per cent of the public float of the corporation. The commencement of the NCIB program is subject to TSX approval.
Cory when you talk Jeff next time, could you ask him how they plan on addressing the flooding in the mine?
This was the biggest knock against Darnley Bay and Pine Point due to those costs for wells or pumps not being a flushed out clearly in the PEA, and some commentaries worried how this would hamper the economics.
Just to demonstrate how intense things got around this topic, here was a public response that the prior Executive Chairman Kerry Knoll gave on ceo.ca to address an online poster and retired mining engineer that was giving them a very hard time and publicly creating a stink about the water concerns.
It seems this will continue to be a valid point worth clarifying, and to reassure investors on if the strategy outlined is still the best practice.
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@kerryknoll – “@ocotilloredux, my name is Kerry Knoll, and I am executive chairman of Darnley Bay Resources, soon to be called Pine Point Mining. I don’t normally respond to online chat as most of it is not worth commenting on. For some reason, you seem obsessed with the groundwater management issues at Pine Point. You make the following statement: “if these guys will not bring to the forefront the key issue here which is pit dewatering, the comments they have made with respect to the PEA findings are lies.”
“Please feel free to supply us with any information you have in your possession which supports this erroneous statement. You imply that our engineers, the engineers at JDS and also those at our water management consultants, Knight Piesold Ltd. , have simply ignored the water management component of mining at Pine Point. ”
“In our PEA, which you also dismiss without the slightest bit of backup, contains the following statement: “Site water management at the Pine Point Mine has historically been an important aspect of efficient mine operations, which will also be the case for the proposed mine development plan. The substantial historic site-specific data set related to pit dewatering and pumping tests provided a unique opportunity to calibrate an appropriate pit dewatering and management system for the project.”
“Stated another way, with 1960s-80s pumping technology, Cominco successfully mined out 50 open pits in and around the 10 pits we will be mining, and managed the considerable amount of groundwater quite well. Admittedly, they did have groundwater water issues with one of the two underground deposits they mined. Some of the Cominco pits were relatively dry (and still are) while others had significant water inflows, and we are expecting nothing different.”
“We are in the fortunate position of having the historical groundwater data and so are well versed on estimated water volumes. This information is more valuable than what could obtained from any number of studies, as it was gathered over a 25-year period during actual operating conditions.”
“You should also note from the PEA that our capex estimates include nearly $20 million in pumping equipment over the life of the mine. How spending $20 million on pumping equipment fits with your insistence that we are ignoring the groundwater management issue, is beyond me. This is our first ceo.ca posting on this subject, and it will be our last.”
BTW here is the link to that post above:
Here was this guy’s response back to Kerry that I believe still remains unanswered:
@ocotilloredux – ( Page 18)
“The sort of hydrogeology data necessary for feasibility or basic engineering level of design hence +- 15% capital and operating cost estimation is not done at the PEA stage hence the estimates for both have a very wide error bar around them. So don’t go quoting IRR’s NPV’s as if they are certainties when you know you do not have all the data you need to pin it down. I don’t care how good your engineers are if they do not have the data they need. If you do quote these figures please provide the +- error range.” 12 9 Jul 2017
@ocotilloredux – Btw, my “past knowledge” was based on numerous discussions with Pine Point geologists in the mid-80’s. I was in the zinc business back then operating/constructing zinc mines. ” Jul 2017
@ocotilloredux – “So I think Kerry, you need to get KP on the ground for a bit of draw down pump testing on certain pits which would be your upfront mill feed. I don’t think heavy media separation is you savior here but you will need to ration available grid power. Give us a reasonable plan shareholders can get behind. Best of luck.”
A different contributor on ceo.ca has this response to @ocotilloredux describing how outdated his information was, but he got lambasted for standing up that guy:
@Bimbeebop – “@ocotilloredux (DBL) The information you’ve referenced is from the PEA dated Nov 2001. The most recent PEA dated April 18 2017 has addressed the issues no?
“JDS engaged Knight Piesold Ltd. (KP) to develop tailings and water management plans for the Project. Tailings will be conveyed from the centralized milling facility and deposited within historic and new open pits. There will be no need to construct a new on-surface tailings facility. Dewatering of the open pits was an important component of the historic mining at Pine Point. The substantial historic site-specific data set related to pit dewatering and pumping tests provided a unique opportunity to calibrate an appropriate pit dewatering and management system for the Project, such that inflow estimates are based on past site experience rather than models. The Project includes $19.7 million in pre-production and sustaining capital costs for water management equipment, and an additional $32.2 million over the life of the project in operating costs directly related to dewatering.”
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That seems pretty damn clear to me, but maybe Jeff can put some color on this part of the PEA and what their approach will be moving forward.
Lastly, Eric Coffin, and industry insider and Newsletter writer that I have a great deal of respect for had this comment to make, and he is widely followed and listened to:
@HRA-Coffin – “I’m on the fence about $DBL. I wish them luck and there is certainly a resource there but I need more comfort on the costs and practicalities of dealing with water inflow. It’s probably not an insurmountable problem but its definitely a big one. I know it was tough for Tamerlane to get past though, admittedly, zinc prices were not as good. ”
“Vendetta is the company I am most comfortable can take advantage of (i.e. get taken over during) the current zinc cycle. Not sure Tinka can move as fast though its a pretty impressive deposit and still growing so maybe it goes too even if the buyer has to wait longer for permitting, etc. Fireweed needs to show the market the economics make sense. I think they probably do but a PEA with energy and transportation costs laid out will help a lot. It’s the cheapest in relation to the resource they have, the grades are good and I think there is still room for it to get a lot bigger. I prefer those three because they are “new(ish)”. Most of the others have been on the shelf for several zinc cycles and don’t seem to be getting much traction. Rather not fight the tape more than I have to. ”
— 10 Jul 2017, 11:19
Here’s that link BTW:
Thanks for the comments Ex! Next time I chat with Jeff I will get his comments on this. I most likely will not be chatting with him over the holidays but I have sent the comments over to him.
Sandstorm to acquire 2% NSR on Endeavour’s Hounde
2017-12-19 06:31 ET – News Release
Mr. Nolan Watson reports
SANDSTORM GOLD ACQUIRES 2% NSR ROYALTY ON ENDEAVOUR’S HOUNDE GOLD MINE FROM ACACIA MINING