Osisko Metals (TSXV: OM; OTC: OMZNF) has signed an option to purchase the former Gaspé copper mine from Glencore Canada. The mine, located near Murdochville, Que., was developed and operated by Gaspé Copper, a subsidiary Noranda Mines.
Osisko has agreed to make an up-front payment of US$25 million to be paid by way of a convertible note when the arrangement closes. A further US$20 million will be payable upon the start of commercial production at the mine. Osisko must also incur $5 million in drilling costs at the property before the end of June 2022.
Osisko believes there is substantial exploration and resource development potential at the underground Gaspé mine and the former Mount Copper open pit, the higher-grade Needle Mountain and E zone underground mines, as well as the undeveloped Porphyry Mountain bulk tonnage deposit.
“Gaspé Copper was a significant copper producer in eastern Canada for over 40 years, and we believe in the potential to unlock value from this asset through drilling and re-evaluation of remaining resources,” Osisko Metal’s chairman and CEO Robert Wares said in a release. “If our internal model is validated, we expect to close the transaction and release a maiden inferred mineral resource estimate on the Mount Copper deposit this year.”
The initial copper discoveries near Murdochville were made in 1921. Production began in 1955 and lasted until 1999. During that time, a total of 150 million tonnes of ore averaging 0.87% copper with minor gold and silver credits was extracted. The project produced 2.8 million tonnes of copper anode.
The original Gaspé development cost $36 million in the 1950s. That included the open pit, underground mine, concentrator, smelter, surface facility, and the town where more than 900 people lived.
The operation began with a 6,500-t/d concentrator and adjacent smelter that treated 550 tonnes of concentrate daily. The project expanded in 1968 and again in 1972 to a mill throughput of 39,000 t/d and smelter capacity of 300,000 tonnes per year, plus a new acid plant and a 5,000 t/d vat leaching circuit. The smelter continued to operate as a toll facility until 2002.
Glencore took over the mine and smelter in 2006 and began a $116 million decommissioning and site rehabilitation program. The project won the Schreyer Award for the technical expertise and overall engineering excellence and presented by the Association of Consulting Engineering Companies.
Read more about this proposed purchase on www.OsiskoMetals.com.