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Osisko Advancing Kirkland, Tries to Keep Hounds at Bay

Not only does this release serve to restate Osisko’s opposition to the hostile bid from GoldCorp, but each drill result potentially adds value to the Osisko land holdings.

[box type=”info” align=”aligncenter” ]Disclaimer: This is an editorial review of a public mining company press release and is not an endorsement. It may include opinions or points of view that may not be shared by the companies mentioned in the release. The editorial comments are highlighted so as to be easily separated from the release text and portions of the release not affecting this review may be deleted. [/box]

MONTREAL, QUEBEC–(Marketwired – March 27, 2014) – Osisko Mining Corporation (“Osisko” or the “Corporation”) (TSX:OSK) (FRANKFURT:EWX) is pleased to announce additional new drilling results from Canadian Kirkland, a newly-discovered zone of disseminated gold mineralization located on its 100% owned Kirkland Lake project (see February 21, 2014 press release). The Canadian Kirkland zone is located 750 metres south of Highway 66, approximately 6.5 km southeast of the village of King Kirkland. The table below summarized the results from an additional 12 holes drilled in the mineralized zone:

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When we last talked about Osisko it was in reference to their “secret” exploration project in the Guerrero Gold Belt in Mexico. These results from Kirkland Lake aren’t particularly thrilling but with all the news about Goldcorp’s hostile takeover bid for Osisko, it’s hard not give them some attention.

If you haven’t been following this story, here the short version.

Osisko is a medium sized producer whose jewel is the Canadian Malarctic Gold Mine in Quebec, Canada. Canadian Malarctic has proven and probable reserves of almost 10 million ounces of gold and is still expanding. The company also has several exploration projects including the advanced Hammond Reef and Kirkland Lake projects and the earlier stage Guerrero project.

GoldCorp is a large producer whose has had its eyes on the Malarctic mine for some time. With gold miners trading at bargain prices, the company has decided that the time is right to buy that mine they always wanted. Naturally, Osisko is not impressed. Their stock was trading at nearly $16.00 just a few years ago and GoldCorp’s offer is under $7.00. They are strongly advising their shareholders to reject the offer and have been including a statement to that effect in all their news releases as of late. Regardless of the outcome, GoldCorp is to be commended for taking advantage of this opportunity at a time when other large miners like Barrick are circling the wagons and trimming costs. As Warren Buffet said. “Be fearful when others are greedy and greedy when others are fearful.” Osisko has a fight ahead of them, and I’m sure it will be a good one, but I suspect the end is nigh.

Now, about Kirkland Lake…

The map above shows the large land package held by Osisko in this area. The map also shows the fault systems (red lines) cutting through this area. These large scale structural fault systems extend from Val d’Or, Quebec east to Timmins, Ontario and host several world class gold mining camps. The gold was deposited by structurally controlled hydrothermal activity in the Archean aged (2.5+ billion years old) greenstone belt. Similar large scale fault systems host many of the gold deposits in the Canadian Shield.

Osisko has 5 deposits on their Kirkland Lake property with NI 43-101 compliant resources and a Preliminary Economic Assessment completed for one of those deposits (Upper Beaver). Their goal is to bring all five of the deposits into production and feed a centrally located mill.

These new results are from a newly discovered zone they have called the Canadian Kirkland zone. We’ve included a map of the five deposits from Osisko’s website. The new zone is not marked on the map, but is located near the village of King Kirkland.


The five Main gold deposits of Osisko's Kirkland Lake Property.
The five Main gold deposits of Osisko’s Kirkland Lake Property.
Hole No. From (m) To (m) Length (m) Au g/t
MU14-29 65.0 86.0 21.0 1.31
And 225.4 262.0 36.6 0.46
And 277.0 291.0 14.0 0.77
And 345.0 372.0 27.0 0.50
MU14-30 56.0 119.0 63.0 0.67
And 223.8 241.0 17.2 0.68
MU14-31 148.0 167.0 19.0 0.71
MU14-32 45.0 56.0 11.0 4.77
including 48.0 49.0 1.00 24.7
MU14-33 204.0 309.0 105.0 1.41
MU14-34 46.0 54.0 8.0 3.21
And 87.0 108.0 21.0 1.17
And 195.0 274.0 79.0 0.82
MU14-35 53.0 115.0 62.0 1.03
And 279.0 295.0 16.0 0.54
MU14-36 NIL
MU14-37 46.2 74.5 28.3 0.61
And 134.0 145.0 11.0 0.50
Hole No. From (m) To (m) Length (m) Au g/t
MU14-38 42.0 55.9 13.9 0.45
81.0 108.0 27.0 0.67
MU14-39 54.0 146.0 92.0 0.68
And 281.0 327.0 46.0 0.45
And 364.0 372.0 8.0 1.16
MU14-40 58.0 154.1 96.1 0.71

Holes MU-14-29 through MU14-40, excepting MU14-36, all intersected mineralization within altered volcanics and were located as far as 470 m east and 100 m west of discovery hole MU14-25. Three additional holes were located along a fence located 575 metres west of the discovery hole (MU14-41 and -42) and 260 m NNE of the discovery hole (MU14-43) and did not intersect significant mineralization.

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These results are pretty low grade, but shallow. In a remote or politically unstable area, these assays would be a complete bust. However this zone is only 750m (about 1/2 mile) from a major highway in a politically stable mining friendly district and near to several other company deposits.


Mineralization comprises fine disseminated gold and pyrite in a pinkish-gray to brick red altered lithology that has now been identified as strong potassic alteration that completely replaces and partially brecciates the Temiskaming volcanic package. Potassic alteration is a hallmark of porphyry-related gold deposits, including Canadian Malartic, although no porphyry dykes or intrusions have yet been identified in the immediate area of the mineralized zone. Historical work and outcrop indicate that the alteration zone, with or without gold mineralization, extends as far as 1600 metres NW of the discovery hole and includes the historical Commodore Kirkland and 180 mineralized zones. The system is still open to the NE and is truncated to the south by the Cadillac-Larder Lake fault. True thickness and orientation of the Canadian Kirkland zone will be established as geological interpretation of drill sections is completed.

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The gold is very fine and occurs with the iron sulfide, pyrite. While pyrite was long considered to be “fools gold” many gold deposits actually contains finely disseminated gold particles within pyrite and other sulfide mineral grains. Gold does not react or mix with many other compounds (which why it doesn’t corrode) and in a high temperature melt of hydrothermal fluids it can get carried along as small droplets in an immiscible mixture.

The host rock is a potassium-rich igneous vein system which has partially brecciated the host volcanic rocks. A breccia is a rock that consists of broken up fragments of rock and in this case the break-up was probably caused by fluid pressure. The same fluids that carried the gold along weaknesses in the volcanic host rock also broke it up. The pink color and “potassic alteration” is due to the presence of the mineral feldspar in the rock and is the same sort of alteration that occurs in large copper-gold porphyry systems. The company is speculating that this alteration may be related to a larger porphyry-type system.


All NQ core assays reported above were obtained by standard 50 g fire assaying-AA finish or gravimetric finish at ALS Chemex laboratories in Val d’Or, Quebec, an ISO/IEC guideline 17025-accredited facility. Reported drill core weighted averages were calculated using a minimum of 0.35 g/t Au over successive sample intervals with maximum internal dilution length of 15 metres. All assays were capped at 10 g/t Au. Lost core intervals, constituting less than 0.5% of reported intervals within mineralized intersections, were all less than one metre long and incorporated as the average grade of adjacent intervals above and below in all length-weighted calculations.

Osisko follows strict QA-QC protocol measures in keeping with industry standards and regulatory reporting requirements. Mr. Robert Wares, D.Sc., P. Geo., Senior Vice President Exploration and Resource Development for Osisko, is the Qualified Person who has reviewed this news release and is responsible for the technical information reported herein, including verification of the data disclosed.

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As usual, it’s good to take note of the QA process that a company uses.


Reject the Inadequate Goldcorp Offer

As previously disclosed, the Osisko Board of Directors has unanimously recommended that Osisko shareholders reject the hostile take-over bid initiated by Goldcorp Inc. and not tender their Osisko shares to the Goldcorp offer. The Osisko Board determined that the Goldcorp offer fails to adequately compensate Osisko shareholders for, among others things, the strategic value of Osisko’s world-class asset base, the significant upside potential of Osisko’s Canadian Malartic Mine, or the increased risk inherent in Goldcorp common shares. The full basis for the Osisko Board’s recommendation is available in a Directors’ Circular, a copy of which is available online.

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As we mentioned above, Osisko is strongly opposed to the GoldCorp bid. Not only does this release serve to restate Osisko’s opposition to the hostile bid, but each drill result potentially adds value to the Osisko land holdings.


About Osisko Mining Corporation

Osisko Mining Corporation operates the Canadian Malartic Gold Mine in Malartic, Québec and is pursuing exploration on a number of properties, notably in Ontario and Mexico.

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