29 August 2022
MONTREAL, Aug. 29, 2022 (GLOBE NEWSWIRE) -- Osisko Metals Incorporated (the "Company" or "Osisko Metals") (TSX-V: OM; OTCQX: OMZNF; FRANKFURT: 0B51) is pleased to announce that further to its news release dated July 13th “Osisko Metals Releases Positive Update for Pine Point PEA”, it has filed by today the associated National Instrument 43-101 (“NI 43-101”) technical report for its wholly-owned Pine Point Project (the “Pine Point Project” or the “Project”), located near the town of Hay River in the Northwest Territories, Canada. The report, entitled “Preliminary Economic Assessment for the Pine Point Lead-Zinc Project” (the “Report”) is dated effective July 11, 2022.
The Report was prepared in collaboration with independent engineering firms BBA Inc., WSP Canada Inc., & Hydro-Resources Inc. (“HRI”).
The objective of the 2022 PEA Update was to integrate updated long-term prices for zinc and lead, increased mined resources, cost escalations in CAPEX and OPEX, and reduced life-of-mine water management costs resulting from the recently completed hydrogeological model. As previously reported, the latter reduced the estimated dewatering volume by 30% compared to the 2020 PEA with the potential for a further forecasted reduction of 15% as the project advances to feasibility.
A copy of the Report can be found at www.sedar.com. A summary and key highlights are listed below, including non-material edits from the July, 13th, 2022 news release.
|
After-Tax Internal Rate of Return ("IRR") |
25% |
|
After-Tax Net Present Value ("NPV") (Discount Rate 8%) |
$602M |
|
After-Tax Payback Period (Years) |
3.8 |
|
Pre-Production CAPEX (including $106.6M Contingency) |
$653M |
|
Average Annual LOM Production Zinc |
329Mlb |
|
Average Annual LOM Production Lead |
141Mlb |
|
Life of Mine ("LOM") |
12 Years |
|
Total Mineral Resources Mined |
46.9Mt |
|
Average ZnEq Diluted (12%) Grade of Mineral Resources Mined |
5.9% |
|
Gross Revenue After Royalty (LOM) |
$7,623M |
|
After-tax Operating Cash Flow (LOM) |
$2,754M |
|
C1 Costs over LOM (ZnEq)** |
US$0.61/lb |
|
All-In Costs (including sustaining CAPEX, ZnEq)*** |
US$0.80/lb |
|
LOM Zinc Price |
US$1.37/lb |
|
LOM Lead Price |
US$0.97/lb |
|
FX Rate (CAD:USD) |
1.27 |
* See Cautionary Statement below
** C1 cost includes mine site cost plus smelting, transport and royalty
*** All-in costs are C1 plus sustaining CAPEX
The increase in pre-production CAPEX relative to the 2020 PEA is largely due to a 12% inflation factor, nominally natural gas (“NG”), steel and concrete. Sustaining CAPEX has also increased over the LOM as the mine life was extended by two years. The Company also initiated the use of the Deswik mining software in order to facilitate running various LOM plans, balancing between realizing the benefits of using the Cluster mining strategy, that groups open pit mines in close proximity, to reduce dewatering volumes for the overall Life of Mine (“LOM”) and provide a more accurate operating cost compared to the 2020PEA
|
Cost Area |
Pre-Production Capital Costs ($M) |
Sustaining Capital Costs ($M) |
Total Capital Costs ($M) |
|
General Administration (Owner's costs) |
22.8 |
0.0 |
22.8 |
|
Underground Mine |
0.0 |
183.3 |
183.3 |
|
Open-pit Mine |
15.7 |
80.6 |
96.3 |
|
Electricity and Communications |
45.7 |
19.3 |
64.9 |
|
Site Infrastructure |
59.7 |
11.8 |
71.5 |
|
Process Plant |
297.3 |
0.0 |
297.3 |
|
Tailings, Mine Waste and Water Management |
47.7 |
123.6 |
171.3 |
|
Indirect Costs |
76.6 |
0.0 |
76.6 |
|
Contingency |
87.8 |
23.7 |
111.5 |
|
Capitalized Operating Costs |
0.0 |
174.5 |
174.5 |
|
Total |
653.3 |
616.8 |
1270.1 |
|
Site Reclamation and Closure |
0.0 |
68.0 |
68.0 |
|
Salvage Value |
0.0 |
-19.6 |
-19.6 |
|
Total - Forecast to spend |
653.3 |
665.1 |
1318.5 |
The Pine Point Project is expected to be a robust, profitable operation at a variety of prices and assumptions. Metal prices used in the 2022 PEA Update study are based on weighted two-year moving averages, hence $1.37/lb zinc and $0.97/lb lead.
Under more bullish scenarios, especially when considering record low inventory levels and continued lack of investment in the zinc production space, the Project demonstrates even stronger economic returns and is well-positioned to benefit from a higher zinc price. At long term US$1.50/lb zinc, $1.00/lb lead and FX 1.25, the Project returns an NPV of C$787M with an IRR of 29% on an after-tax basis.
A lower commodity pricing scenario was also modeled using US$1.30/lb zinc, $0.95/lb lead and FX 1.29). Even at lower prices, Pine Point would still generate a robust NPV of C$526M and IRR of 23% on an after-tax basis.
|
Mining Costs (per) |
$/Tonne Mined |
|
Surface* |
$3.36 |
|
Underground - West Zone** |
$40.01 |
|
Underground - Central Zone** |
$52.07 |
|
Processing Costs |
$12.27 |
|
Power Operating Cost |
$4.61 |
|
G&A Costs |
$8.11 |
*LOM Average and inclusive of ore, overburden and waste rock
**Inclusive of transport to the mill
The reader is advised that the PEA summarized in this press release is preliminary in nature and is intended to provide an updated high-level review of the project’s economic potential and design options. The PEA Update mine plan and economic model include numerous assumptions and the use of Inferred Mineral Resources. Inferred Mineral Resources are considered to be too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that further work will result in the definition of economic mineral reserves at Pine Point.