JV Article: Osisko Metals Reviving Pine Point Zinc in NWT

Having outlined 38.4 million inferred tonnes running 4.58% zinc and 1.85% lead in a pit-constrained resource, one might think Osisko Metals Inc. (TSXV:OM) President and CEO Jeff Hussey is satisfied with his company's progress toward reviving the 100%-owned past-producing Pine Point zinc mine, east of Hay River, in the Northwest Territories.

You might think that. But then you wouldn't know Jeff Hussey.

He knows there is much more work to be done, despite the 3.9 billion lbs. zinc and 1.6 billion lbs. lead outlined over the previous year.

"We believe there is enormous potential at Pine Point. We plan on continuing to drill to increase both the size of the resource and its quality so we can move toward economic studies as quickly as possible," says Hussey.

In the East Mill zone, Hussey says the mineralization is less than 50 metres below surface. Within the central 20 km of the 60 km strike length - where the lion's share of the resource occurs and where Cominco Ltd. (now part of Teck Resources) mined for over 25 years - the mineralization is no more than 125 metres below surface. All of it is amenable to open pit mining, which is rare as 90% of zinc production worldwide is mined underground.

But in the East Mill zone, not far from where the concentrator once run by Cominco stood, Hussey suggests that the favourable stratigraphy remains very sparsely drilled 100 metres below surface, to say nothing of the unearthed potential along the 60-km Pine Point trend.

"There is potential at depth," Hussey says. "And enormous potential along strike."

Over 25 years at Pine Point, Cominco mined 58 million tonnes at grades of 10% combined zinc and lead in large, high-grade deposits down to an average depth of about 75 metres. Cominco shuttered Pine Point in 1988 owing to low metal prices and a shift in corporate strategy towards the Red Dog mine.

The stratigraphy at Pine Point consists of three massive flat-lying, parallel barrier reef complexes, yet the sphalerite-galena mineralization hosted in limestone has no electro-magnetic or magnetic signature. So, they are essentially blind deposits.

As part of its 2019 work campaign, Osisko Metals plans to conduct a high-resolution airborne gravity-gradiometry survey that relies on the density contrasts between the host rock and the denser sulphide mineralization.

"We think that we could potentially see new deposits quite clearly, including larger high-grade deposits - if they're buried up to a hundred metres and maybe a bit more if they are bigger below surface. And, believe me, we will drill those targets once they are outlined," Hussey says. "That's potential and it exists along tens of kilometres of strike length on our mineral leases."

Cominco drilled about 18,000 holes at Pine Point. Hussey says his team will map all those holes in combination with high resolution LIDAR - to enhance topographic data used for structural geological interpretations - and a digital recompilation of the previous work in the camp.

This, in combination with the gravity survey and other project data from Cominco, should allow Osisko Metals geologists to see circular, collapsed breccia structures commonly associated with larger, higher grade mineralization and traces of other mineralized structures that were not properly investigated.

"We are putting together all the best thinkers that we can get on this," Hussey says.

So far Osisko Metals has drilled about 60,000 metres at Pine Point last year, with more than 40,000 metres of that drilled after the cutoff date for the resources estimate.

Hussey says the company will continue its ongoing drilling program and initiate its brownfield exploration work this year.

But will Osisko Metals sell or develop Pine Point through to production?

"That's the beauty of working with the Osisko team. The Osisko team built the Canadian Malartic gold mine in Quebec. One of our directors Luc Lessard has built eleven mines and is working on his twelfth. I've worked in mines most of my career. All options are open. If there is good value for shareholders (in selling), we are more than willing to bring it to our shareholders but we have the capacity and ability to take this to production," Hussey explains.

Osisko Mining Inc. (TSX: OSK) and Osisko Gold Royalties Ltd. (TSX: OR) together own about 20% of Osisko Metals.

All of this is happening against a backdrop of a tight zinc market. Zinc is trading at US$2,700 per tonne, up more than 30% over the last five years.

A view of the town of Pine Point in the Northwest Territories. Credit: Osisko Metals Inc.

Hussey notes that there is an electric grid substation on-site. Paved roads provide access to Pine Point at several key spots and 25-metre-wide gravel haul roads that link the different deposits.

The most likely production scenario would see a zinc-lead premium concentrate (grading roughly 58% zinc and 75% lead) shipped 60 km west via tractor-trailers to the railroad head at Hay River and ultimately to ports in B.C. for shipment overseas. Hussey suggests, too, that the concentrate could be shipped at similar costs to smelters in Europe.

Local First Nations and Metis communities have helped Osisko Metals with its exploration programs to date. "We are looking forward to continuing to build relationships and working with these communities," Hussey says.

Osisko Metals owns the project outright but there is a 3.0% net smelter return royalty on any production. Osisko Metals has the right to buy half that royalty back for US$3.0 million.

"When we launched this company, there were a lot of projects coming across our desks, so we needed some filters. In base metals the filters were: infrastructure, metallurgy and upside. And in Pine Point we found all three," Hussey says.

Osisko Metals also believes it has found all three at its East Bathurst Mining Camp (EBMC) Project in New Brunswick, which encompasses the Key Anacon and Gilmour South deposits in the legendary Bathurst mining camp.

The company has drilled about 40,000 metres in the camp over the last year and recently published its maiden resource estimate at EBMC. It measures 1.96 million indicated tonnes running 5.77% zinc, 2.38% lead, 0.22% copper and 68.9 grams silver for 249.1 million lbs. zinc, 102.6 million lbs. lead, 9.3 million lbs. copper and 4.3 million oz. silver.

Another 3.85 million inferred tonnes grading 5.34% zinc, 1.49% lead, 0.32% copper and 47.7 grams silver amount to 453 million lbs. zinc, 126.4 million lbs. lead, 27 million lbs. copper and 5.9 million oz. silver.

The jewel in the EBMC crown is the Key Anacon deposit where recently released drill hole KAT-18-11 in the Titan zone hit 10 metres of massive sulphides grading 6.69% zinc, 2.46% lead, 0.54% copper and 58.79 grams silver per tonne.

The intersection occurred less than 150 metres from surface yet the lead-zinc massive sulphide mineralization extends down to 1,100 metres below surface.

Hussey says there is an adjacent copper-rich zone at Titan that will also be tested further.

"We think it's a feeder zone for the volcanogenic massive sulphides. We were getting 3% copper over six metres in a couple holes that are 400 metres apart," Hussey explains. "We look forward to drilling it off."

At press time Osisko Metals was trading at $0.53 with 136.25 million shares outstanding.

- The preceding Joint-Venture Article is PROMOTED CONTENT sponsored by Osisko Metals Inc., and compiled in cooperation with The Northern Miner. Visit www.osiskometals.com for more information.