Osisko Metals seeks financing partner on huge Gaspé copper project in Quebec

Osisko Metals (TSXV: OM) is advancing the giant Gaspé copper project in Quebec with an economic study planned for February amid efforts to land a 20% partnership with provincial financing agency Investissement Québec.

“No promises, but they’re interested in the project, and for us it would be ideal to get IQ as a partner,” CEO and chairman Robert Wares said in an interview. “That would be a big boost, and as partners obviously they can help us fund the whole project to a final investment decision.”

Wares figures that reopening the former Noranda mine, about 575 km northeast of Quebec City, could see it become the biggest undeveloped copper asset east of the Mississippi. It could cost C$1.8 billion in initial capital spending, he said. The Copper Mountain deposit at the site holds 495 million indicated tonnes grading 0.3% copper, 0.016% molybdenum and 1.75 grams silver per tonne, Osisko said on May 6.

The resource contains 3.2 billion lb. copper, 180 million lb. molybdenum and 27.9 million oz. silver. It could be shovel-ready in early 2029 after acquiring permits by the end of 2028, said the CEO, who was part of the developers of the Canadian Malartic gold mine. That producer, now held by Agnico Eagle Mines (TSX: AEM; NYSE: AEM), is vying to be Canada’s largest.

Wares is bullish on rising copper demand and the lack of adequate new supply to feed global electrification efforts. Developing a project in a jurisdiction with straightforward permitting requirements is also a plus.

“In four years-time, we fully expect the copper price to be extremely healthy,” he said. “The tier one deposits outside of Africa that are going into production, you can count on one hand.”

Partners required

Private equity also could be an option for Gaspé as Wares says developing mining projects these days requires partners. He cited how Osisko Mining (TSX: OSK) — another company founded by the Canadian Malartic team — brought in Gold Fields (NYSE: GFI; JSE: GFI) to advance Windfall.

Then last month the South African major took out the whole company for $1.6 billion. Wares is keen to avoid share dilution from stock offerings or taking on debt that might want the whole project as collateral.

“I’m hoping IQ would step in at 20-25%. They rarely go more than that,” Wares said. “It would allow us to avoid more equity financings in the dismal market, still, for the resource sector.”

The company has completed around half of 8,000 metres of drilling this year, with assays pending. Background studies for the preliminary economic assessment (PEA) due early next year are advancing, the CEO said.

Pine Point

Osisko Metals also holds the Pine Point zinc-lead former mine in the Northwest Territories, which is starting a feasibility study this quarter. London-based private equity firm Appian Capital Advisory plans to spend C$100 million to hold 60% of the project.

In June, Osisko reported a tripling of Pine Point indicated tonnes to 49.5 million grading 4.22% zinc and 1.49% lead (5.52% zinc equivalent) in combined open pit and underground resources. Inferred resources total 8.3 million tonnes grading 4.22% zinc and 1.69% lead (5.64% zinc equivalent).

A 2022 PEA forecast it would cost C$653 million to build a 12-year open-pit and underground operation at Pine Point. The mine would produce an annual average of 329 million lb. zinc and 141 million lb. lead, according to the study. It pegged a C$602 million net present value at an 8% discount, and an internal rate of return of 25%.

Regional hits

At Gaspé, Noranda produced 150 million tonnes of copper concentrate from 1955 until the mine closed in 1999. The area has been hard hit since the closure, with a large sawmill also shutting, then a federal moratorium on cod fishing followed this year by one on shrimp, Wares noted.

Sentiment for the Gaspé project is improving after some initial opposition about potential noise pollution and dust. Members of the community, area mayors and the provincial legislature representative attended the company’s annual information session in the local town of Murdochville this month, Wares said.

“This is the true mining town. They all want to see the mine reopened. Murdochville has obviously been in economic decline since the mine and smelter closed in 2003 so things can’t remain as they are. Like most mining towns, they eventually just follow the decline and turn into ghost towns so this is a great way to revamp it.”