Osisko Metals CEO is bullish on zinc ahead of PEA update

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Osisko Metals Inc. [OM-TSXV, BWMXF-OTC] CEO Robert Wares is bullish on the price of zinc as his company prepares to release an updated preliminary economic assessment for the Pine Point project in the Northwest Territories.

Pine Point is expected to be a producer of ultra-clean zinc concentrate, the company has said.

While a lot of market attention is garnered by strong copper and gold prices in 2021, both zinc and lead have been stellar performers throughout the second half of 2021 and have started 2022 near 10-year highs.

“The spot zinc price is very encouraging and remains well in excess of market expectations, starting 2022 above US$1.60 a pound,’’ said Wares. “We believe this is the result of market supply/demand fundamentals and we remain very bullish on zinc,’’ he said.

“The addition of zinc to the critical minerals list by the U.S. Geological Survey in 2021, alongside the approval of massive infrastructure programs in the U.S. and Europe, point to very favourable market demand dynamics. This growing demand, coupled with shrinking supply that is associated with mine closures, will continue to foster strong markets for zinc over the coming years, making Pine Point a key development project globally.’’

Osisko Metals, which is affiliated with Osisko Gold Royalties Ltd. (OR-TSX, OR-NYSE), is a Canadian exploration and development company with a focus on zinc. Its asset portfolio includes Pine Point and the Bathurst Mining Camp properties in northern New Brunswick.

According to a 2020 preliminary economic assessment (PEA) the Pine Point project contains resources that are amenable to open pit and shallow underground development, consisting of an indicated resource of 12.9 million tonnes, grading 6.29% zinc equivalent. On top of that is an inferred resource of 37.6 million tonnes grading 6.80% zinc equivalent.

That material could support 327 million pounds of average annual zinc and 143 million pounds of lead production over a 10-year min-life. The PEA envisages pre-production capital spending of $555 million, including a $71.2 million contingency.

Osisko said the 2020 PEA update, now under way, will incorporate higher long-term zinc and lead prices, anticipated cost savings from the lower dewatering estimates based on a new 3-D hydrogeological model, and updated key assumptions underpinning the life-of-mine plan with the objective of increasing the total tonnage mined.

The updated PEA release date is planned for late first quarter, 2022.

With significant de-risking activities completed in 2021, the company is planning to rapidly progress toward the feasibility phase with completion targeted for the fourth quarter of 2023.

Meanwhile, Osisko also said it will complete and release the results of a new hydrogeological model in the first quarter of 2022. It said work to date has identified substantial cost savings from lower dewatering estimates, the company said.

On January 12, 2022, Osisko Metals shares closed at 37 cents and now trade in a 52-week range of 52 cents and 35 cents.

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