What are the latest updates at the Gaspé Copper project?

Gaspé Copper is a past-producing asset that we acquired from Glencore in July 2023, after we decided to diversify into the copper space beyond our Pine Point zinc and lead project in the Northwest Territories. The old mine site closed in 1999 after 45 years of production.

To acquire the site, Osisko Metals issued Glencore a US$25 million secured convertible note that can be converted at a later date for a 21.8% stake in the company. Glencore retains a 1% NSR on the historical Mount Copper open pit and a 3% NSR on all other minerals extracted from Gaspé Copper. Osisko Metals has committed to spending CAD$55 million over four years to bring the project to shovel-ready status. Osisko Metals will pay Glencore US$20 million when commercial production begins. The deal also includes an offtake agreement whereby Glencore will purchase 100% of the concentrates produced at Gaspé Copper. There is as much copper left in the ground as in the past 45 years of production, so we envisage a mine of 25 years that could be the same size as Canadian Malartic.

The resource currently stands at about 456 million tons grading at about 0.31% copper. We are advancing the project through drilling to validate that resource. We drilled 28,000 m in the summer of 2022, and by year-end, the bulk of the resource should be in the measured and indicated status, allowing us to launch a feasibility study in 2024. We also went ahead with the Phase 1 Environmental Baseline Study. We want to get into production in five years. It is ambitious, but relative to the rest of the planet, Québec is the place where it will be possible to get a permit in that timeframe.

Taking Pine Point for example, why is the JV model interesting for developers?

Pine Point is a past-producing zinc and lead mine in the Northwest Territories. Markets are notoriously tough on small-cap companies in the development space. Once you have announced your resource, you enter the down cycle/waning of investor interest in the Lassonde Curve. And as you enter the feasibility study and permitting stages, you become less interesting to investors, and your retail market dries up. Some resource funds used to be long and supportive, but they have disappeared at the expense of retail investors. So, developers are in a tough space, and you cannot do debt financing to a reasonable level as you do not have your permits. Capital markets are not structured to support that stage of development.

The best way to advance projects is to JV. This is what we did at Pine Point: it is better to have a 40% interest in a permitted project than to sit at 100% ownership with no clear path forward toward production. Acquiring assets and advancing them to drilling requires partnerships for most junior explorers now. This is the best solution for most developers in this environment.

What is Osisko Metals’ approach to sustainability?

Social acceptability is essential today, most governments will never approve a project without it. In the case of Gaspé Copper, the mining town of Murdochville is the first impacted community. When this mine goes ahead, it will bring jobs and more money invested into the town. We have started the process with the town council, made a presentation last fall, and kept an open communication to keep residents informed. People have concerns about a new smelter, despite my reassurance that there will not be a new one. We will ship the concentrate to Europe, mostly. I attended a meeting with First Nations in June to address their concerns and discuss business arrangements. Communication starts at the exploration level.

How will Osisko Metals fare in 2023?

One cannot believe in the energy transition without believing in copper. Grid systems, renewable energies, EVs, all these technologies require copper. If you believe in the energy transition, you should be investing in copper projects, and we believe we have in our hands a fantastic project that has an almost guaranteed chance of being permitted in a reasonable timeframe.

At the same time, we are moving swiftly this year to advance the Pine Point project in the NWT toward production.