Osisko Built It, Can Probe?
As a Project Comparison to Borden, Osisko’s Cdn Malartic may be one “Low Grade, Bulk Tonnage” deposits similar, as they also have Silver by-product. I think all would agree, OSK has been successful getting to commercial production and very quickly one might add, with only a few setbacks ie., cyclone fire.
The Osisko “PEA” was initially c/o 5 Jul 2007, then updated for Mar 2008, based on 286.2 MT’s (Probes Global Resource 267.76 MT’s), Avg Grade 0.9 g/t (PRB 0.7 g/t) at a 0.4 g/t cut-off (Probe 0.3 g/t cut-off) for a Resource 8.43 Moz (Probe 5.8 Moz Global).
- They envisioned in the PEA Study a 55,000 tpd operation, producing 428 Koz/yr, with CAPEX $760M (Op Costs - $8.43, Cash Cost $369/oz, using LT AU Price $775)
- We await Probe’s PEA, most analysts envision a 20,000 to 25,000 tpd operation producing 200 Koz/yr (Cormark just raised there LT Gold Pricing to $1400 with Spot over $1750)
The Osisko “Feasibility”was released Dec 2008, with the main changes being Total Resource lowered to a Pit Constrained 6.28 Moz, same 55k tpd operation but producing 591 Koz AU/yr, up from the PEA’s 428 Koz/yr. Operating Costs rose to $9.43/t milled ($8.43) but Cash Costs declined to $319 ($369) and CAPEX also rose to $788.9M ($760M). Note: LT Gold Price still at $775/oz (Spot Gold was below $1000).
Will Probe pass the test today at Spot $1770 and with a rising LT Gold Price now at $1400? The Capex today for a 20-25,000 tpd operation? (Cormark estimates $525M)
Looking at these facts, one can assume Borden will be a very profitable Mine at todays Gold Pricing, Spot and Long-Term. Grade is not a concern to me, as many “Low Grade Bulk Tonnage” deposits can be much cheaper to mine and more profitable than many High Grade Underground Operations.
Osisko Malartic Timeline: (Did you know Barrick once owned Malartic and gave this up! Makes one wonder about Corporate Decision Makers when they will buy in Africa and build on top of the Andes, for +$5B overages, when they give away deposits like this right in their own backyards. Another example Placer Dome giving NovaGold Donlan Creek for peanuts)
First Drill Hole – March 2005 (Probe Aug/Sep 2010)
Initial Resource – Dec 2006 (Probe 26 Aug 2011, 02 Apr 2012, ??? Oct-Dec 2012)
PEA – Mar 2008 (Probe underway)
Environment Impact – Sep 2008 (Probe underway)
Feasibility – Nov 2008
Public Hearings – March-July 2009
Gov’t Decree – Aug 2009
Construction Release – Aug 2009
Construction Completion – Mar 2011
First Gold Pour – April 2011
Commercial Production – May 2011 (6 years from 1st Drill Hole)
(Canadian Malartic now 10.7 Moz P&P)
My view on the Probe PEA, even if total cash costs are $7-800/oz, we make $1000 per oz on 200Koz/yr. Not Bad $200M/yr. I see Cash Costs more like $5-600/oz and Capex $400-450M with today’s rising costs, though we benefit greatly on the Chapleau location and location to Infrastructure.
Osisko did it alone, Probe can too!
Cheers, Mark
