Overview and Mineral Resource Estimate
The Pine Point lead-zinc project has a storied history, having been first discovered in 1898 by prospectors heading to the Klondike gold rush. Cominco Ltd. began exploration at Pine Point in 1929, with test-pitting, drilling and shaft sinking. In 1948, Cominco began major exploration work, using the Mississippi-Valley-type model to guide exploration. In the early 1960s, Cominco advanced the project to construction which included a railroad, hydro-electric dam and a town where up to 2000 people could live.
Cominco commenced large-scale mine production in 1964 on the basis of 21.5 million tons averaging 7.2% zinc and 4% lead (1,2). The mine eventually ramped up to a production rate of 10,000 tons per day. The “Pine Point Mine” was actually an assemblage of 50 separate open pits and two underground deposits, lying along a 60-km trend. Some 64 million tonnes grading 7.0% zinc and 3.1% lead (1,3) were mined between 1964 and 1987. A decision was made to close the mine in 1987. About 90 deposits in total were discovered by Cominco and several others were discovered west of the Buffalo River by Westmin Resources Ltd. Previous drilling on the property totals approximately 1.3 million metres in 18,422 holes by Cominco, Westmin and Tamerlane Ventures Inc.
Osisko Metals acquired the project in February 2018 and has reported Inferred Mineral Resources of 52.4 Mt grading 4.64% zinc and 1.83% lead (6.47%Zinc Equivalent (“ZnEq”)) containing approximately 5.3 billion pounds of zinc and 2.1 billion pounds of lead in-situ. (4)
The project is located on the south shore of Great Slave Lake in the Northwest Territories, and is accessible directly and year-round by an all-weather highway from Hay River, the economic “Hub of the North”. The project is comprised of mineral claims and mineral leases covering an area of 22,213 hectares containing key stratigraphy that hosts zinc and lead mineralization. The center of the property is located 96 km east of Hay River that has rail transportation and loadout options as well as other available services. On-site infrastructure consists of approximately 100km of intact haulage roads that link the mineralized zones and an active electrical substation located in the middle of the property that previously serviced mine and mill operations.
2019 Mineral Resource Estimate
The company has reported Inferred Mineral Resources of:
52.4Mt grading 4.64% zinc and 1.83% lead (6.47% Zinc Equivalent (“ZnEq”)) (4)
The resource is based on optimized pit shells using a zinc price of US$1.15/lb and a lead price of US$0.95/lb. Cut-off grades are based on estimated long-term metal prices, mining costs, metal recoveries, concentrate transport, and smelter costs. The 2019 MRE is divided into five geographic zones. At the deposit scale, the grade and tonnage show little variability at lower cut-off grades.
The 2019 MRE (effective date: November 10, 2019,) was prepared by Jeffrey Cassoff P. Eng., Colin Hardie P. Eng., and Pierre-Luc Richard P. Geo., of BBA Inc., supporting the disclosure of the independent Inferred Mineral Resource estimate.
Compared to the previous MRE (see press release dated December 6, 2018), the tonnage of the 2019 MRE increased by 36% with a minor 0.11% drop in the ZnEq grade. Tonnage increase is attributable to the 2018-2019 drilling campaign, historical resources on newly acquired claims and the inclusion of newly modelled underground resources.
The Company estimates that the 2019 MRE equates to contained metals of 5.3 Blbs. of zinc and 2.1 Blbs. of lead.
· Underground mineral resources were incorporated into the 2019 MRE and totaled 4.5 Mt grading 5.76% zinc and 2.43% lead (8.19% ZnEq). For the underground resource, a cutoff of 5% ZnEq was used.
· The central core of the Project (East Mill,Central and North Zones) now contains approximately 31.9 Mt grading 6.22% ZnEq or 3.1 billion pounds of zinc and 1.1 billion pounds of lead in situ.
· Even though drill density in certain portions ofthe Project would have permitted resource classification in the Indicated category, management decided to classify the entire resource as Inferred until such time as the entire historical database can be validated, including an ongoing resampling of the historical drill core from Cominco Limited era.
Following metallurgical test work completed during Q2-2019, zinc and lead mineralization demonstrated recoveries and concentrate grades with conventional flotation (see press release dated August 7. 2019). Historically, Pine Point produced among the cleanest concentrates globally over its 24-year mine life. The resulting zinc and lead concentrates from our test work were analyzed for impurities and deleterious elements. Based on the results, at this time, Osisko Metals does not anticipate any smelter or refinery penalties for Pine Point concentrate sand believes the historical quality will be replicated.
Results from the optimized cleaner testwork are as follows:
· Zinc recovery ranged between 93.1 to 94.5%
· Lead recovery ranged from 87.4 to 91.4%
· Zinc concentrate grade ranged between 63.6 to 64.1% Zn
· Lead concentrate grade ranged between 67.9 to 72.1% Pb
· Zinc concentrate is significantly below penalty thresholds for all deleterious impurities except MgO, which is at threshold limits.
1.The Company is reporting the historical resources for reference purposes only. These resources were mined and fall under past production reported by Rhodes et al. (1984).
2. Giroux and McCartney (2001).
3. Rhodes et al. (1984), conversion tons to tonnes in Hannington (2007).
4. These mineral resources are not mineral reserves as they do not have demonstrated economic viability. The quantity and grade of reported Inferred resources in this MRE are uncertain in nature and there has been insufficient exploration to define these Inferred Mineral Resources as Indicated or Measured. Resources are presented as undiluted and in situ for an open-pit scenario and are considered to have reasonable prospects for economic extraction. The cut-off grade used for the Mineral Resource Estimate ranges from 1.70% to 2.00% equivalent zinc. The reason for the cut-off grade variation is due to the fact that different haulage costs are applied depending on the distance of the deposit to the assumed mill site. It should be noted that no mill is currently present on the Property, and that mill transport distances to the mill were estimated based on the most likely location where a mill could potentially be built if the project moves forward. Additionally, different mine dewatering costs were used for several of the deposits and lower mill recoveries were used for the N-204 deposit. Zinc equivalency percentages are calculated using metal prices, forecasted metal recoveries, concentrate grades, transport costs, smelter payable metals and charges.