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Windfall

Property Summary

The Windfall Lake Gold project is located in the province of Quebec, approximately 200 kilometres northeast of Val-d’Or and 115 kilometres east of the town of Lebel-sur-Quévillon and is accessible year-round through a network of well-maintained logging roads (Figure 1). The property is located north of the 49th parallel and is subject to the provisions of the James Bay and Northern Quebec Agreement executed in 1975. The Windfall Lake Gold project falls within the traditional territory of the Waswanipi Cree First Nation.

The Windfall Lake property is 100 percent owned by Osisko Mining Inc. and comprises 285 individual claims covering an aggregate area of approximately 12,400 hectares.

Figure 1. Location of the Windfall Gold project.

Eagle Hill Exploration Corporation, recently acquired by Osisko Mining Inc., has established an Advance Exploration Agreement with the Cree First Nation of Waswanipi, the Grand Council of the Crees (Eeyou Istchee), and the Cree Regional Authority regarding exploration and development of the Windfall Lake Gold Project.

Geology

The Windfall Lake property occurs within the Urban-Barry Greenstone Belt located in the eastern part of the Abitibi Subprovince. The Urban-Barry Greenstone Belt has an east-west extent of 135 kilometres and is 4 to 20 kilometres wide. Osisko Mining is currently the largest stakeholder in the Urban Barry Greenstone Belt with over 40% of the land staked.

At the Windfall Lake deposit, the volcanic stratigraphy trends to the northeast and dips moderately towards the southeast. The tholeiitic volcanic rocks are intruded by a series of NE- to E-trending calc-alkalic porphyry dikes that are intimately associated in space and in time with the important gold mineralization. Alteration is principally silica-sericite-tourmaline with a peripheral chlorite-carbonate halo.

Figure 2. Geology map of the Abitibi Greenstone Belt with location of the Windfall Property in the Urban-Barry belt

Gold mineralization

The most significant gold mineralization defined to date on the Windfall Lake Property occurs in the Main Zone, located in central-south portion of the property. Additional gold mineralization is also present in the peripheral F-11, F-17, and F-51 zones.

The gold mineralization in the Main Zone occurs in several sub-vertical, northeast-trending lenses measuring between 2 and 35 meters in horizontal thickness. To date, better lateral and vertical continuity has been identified as a series of sub parallel lenses along the corridors of Zone 27, Caribou, and Mallard that all have the same style of gold mineralization associated with sulphide replacement, generally pyrite, occurring as disseminations, stockworks and breccias. Within the lenses, there are a number of sub-horizontal to shallow easterly plunging, higher grade, and more continuous shoots extending for over 700 meters along strike.

The gold-bearing pyrite stockwork mainly consists of pyrite stringers with minor tourmaline needles; the stringers are typically less than 1 centimeter in thickness and are oriented in several directions (Figure 3). Trace amounts of chalcopyrite, sphalerite, pyrrhotite, arsenopyrite, tetrahedrite, and bismuth sulfosalts are also present around pyrite grains but also as inclusions in pyrite of the pyrite stockwork. Specks of gold are sometimes visible in the pyrite stringers and also in semi-massive sulphide bands, tourmaline veins or in the altered part of the rock around these features.

The stockwork mineralization is hosted within volcanic rocks and various generations of porphyry dikes except for the Red Dog dikes, which postdate the emplacement of the pyrite stockwork. Some of the fragments in porphyry dikes were altered and mineralized prior to being brecciated and porphyry dikes locally crosscut the pyrite stockwork mineralization, suggesting that emplacement of the gold mineralization was broadly coeval with the intrusion of the porphyry dikes. The distribution of the pyrite stockwork is greatly influenced by the geometry of the dikes, specifically for Zone 27 and the Caribou corridor, which are spatially associated with 2- to 30-metre thick northeast-trending porphyry dikes.

Gold mineralization (several ounces per tonne) is locally associated with brecciated quartz veins with colloform and crustiform banding (Figure 4). The veins are moderately dipping and trend northeast-southwest. The largest zone is vein 466 in the Zone 27 corridor with a strike extent of 300 metres and a dip extent of 200 metres. At a minimum width of 0.5 metres and an average width of approximately 1.5 metres, the colloform-crustiform veins can reach a thickness nearly 6 metres, locally.

The auriferous zones are cross-cut at depth by the quartz monzonite Red Dog sill, which is up to 100 meters thick and dips approximately 30 degrees to the southeast. Drilling by Eagle Hill indicates that the gold mineralization continues below the Red Dog sill to a depth of at least 870 meters below surface and remains open along strike and at depth.

The characteristics of the gold mineralization in the Main Zone are similar to intrusion-related gold mineralization described as atypical greenstone-hosted deposits by Robert (2007). Although these atypical deposits display similar regional-scale controls and commonly occur in the same camps as orogenic deposits, they differ in styles of mineralization, metal association, interpreted crustal levels of emplacement, and relative age. Those atypical greenstone-hosted gold deposits show a close spatial association with high level porphyry stocks and dykes. The Kanowna Belle gold deposit in Western Australia would be a good analogy to Windfall Lake gold deposit.

Figure 3. Typical gold-bearing pyrite mineralization at Windfall Lake Gold Deposit. a) Outcrop of  pyrite stockwork; b) Fresh sample with pyrite stockwork and silica-sericite alteration; c) pyrite stockwork in core. Red numbers are gold values in grams per tonnes; d) pyrite stockwork and disseminated pyrite with tourmaline needles (small black dots).

Figure 4. Core pictures of the high grade crustiform-colloform veins. Impressive visible gold in figure b.

High-grade gold resource

A mineral resource update completed by SRK (Canada) in November 2014 estimated 748,000 ounces of gold at 8.42 g/t gold in the indicated category, and 860,000 ounces of gold at 7.62 g/t gold in the inferred category. The bulk of mineralization averages ~10 g/t over 5 metres, with very high-grade pockets up to 248 g/t over 12.4 metres in some areas. Drill holes in the gold zones demonstrate good grade distribution along the entire mineralized interval. Preliminary metallurgical tests indicate a gold recovery of 95.7% using a standard gravity and flotation circuit, followed by cyanidation.

Table 1. Mineral Resource Statement (From SRK Consulting, November 13, 2014).

Reported at a cut-off grade of 3.0 g/t gold, assuming an underground extraction scenario with an assumed gold price of US$1,200/oz and metallurgical recovery of 96%. Inferred resources have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. It cannot be assumed that all or any part of the inferred resources will ever be upgraded to a higher category. Mineral resources are not mineral reserves and do not have demonstrated economic viability.

Preliminary Economic Assessment (PEA)

In April 2015 Eagle Hill released the results of an independent Preliminary Economic Assessment for the Windfall Lake Gold Project, outlining the design for a 1,200 tpd underground mine producing 106,200 ounces of payable gold annually for 7.8 years at an average total cash cost of C$778/oz (US$480/oz). At a base case of US$1,200/oz gold and US$0.86:C$1, the project has a pre-tax IRR of 23.6% (post-tax 17.2%) and a pre-tax NPV5% of C$241.4 million (post-tax C$135.2 million) with estimated pre-production capex of C$240.6 million. The mine plan uses the existing ramp with development of another portal to access the western portion of the deposit. The predominant extraction method is longitudinal longhole retreat with cemented rockfill for the sub-vertical lenses (69% of the production) and mechanized cut and fill (19%) for the inclined lenses.

Table 2. Parameters of the Preliminary Economic Assessment.

The Preliminary Economic Assessment base case was calculated using US$1200/oz gold and an exchange rate of US$0.86:C$1 . See Cautionary Notes – Preliminary Economic Assessment. Operating cash cost = all on site operating costs. Total cash cost = operating cash cost plus royalties plus refining plus transport. Total cash cost plus sustaining = total cash cost plus sustaining capital costs (excludes initial capex). The sensitivity analysis on the post-tax results assumes the same tax rate used for the base case for all sensitivity ranges. The reader should be cautioned that tax rates may change with changes in revenues and affect the values of the variations.

Advancing forward

Osisko is actively advancing the Windfall Lake Gold Project, with the objective of moving the project to a production stage as quickly as possible. During the rest of 2015 and into 2016, Osisko will focus on increasing resource confidence, expanding the resource, and providing new target areas for follow-up. Osisko will continue the baseline environmental studies in preparation for permitting activities, and will maintain the good relationship that the project is benefitting from with local communities and First Nations.