Osisko Development (TSXV:ODV) Advancing Canada's High-Grade Cariboo Gold Project Towards Production

Company Interviews

Interview with Sean Roosen, Founder & CEO of Osisko Development Corp.

Our previous interview: https://www.cruxinvestor.com/posts/osisko-development-building-tier-one-gold-and-copper-mines-5487

Recording date: 17th September 2024

Osisko Development Corporation (TSXV:ODV) is advancing its flagship Cariboo Gold Project in British Columbia, positioning itself as a compelling investment opportunity in the gold mining sector. The project, nearing final permitting stages, represents a significant near-term gold production prospect in a tier-one jurisdiction.

The Cariboo Gold Project boasts impressive fundamentals:
2 million ounces of gold in reserves
Over 3 million additional ounces of gold in measured, indicated, and inferred resources
High-grade deposit averaging 3.78 g/t gold
Initial production target of 4,950 tons per day, yielding approximately 220,000 ounces annually

Sean Roosen, founder of the Osisko group, emphasizes the project's exploration potential: "We're averaging 14,000 ounces per vertical meter that we've gone down. For every 100 meters that we've gone down, we've averaged 1.4 million ounces." This metric suggests substantial room for resource expansion, with the deposit tested to depths beyond 1,000 meters.

Osisko Development is implementing innovative technologies to enhance operational efficiency. The company pioneers the use of an all-electric roadheader, potentially reducing development costs by around $1,000 per meter. Access to low-cost hydroelectric power (approximately $0.05/kWh) further positions Cariboo as a potential low-cost producer.

The project's scalability is a key attraction. Management envisions expanding production to 10,000 or even 15,000 tons per day in the future, potentially doubling or tripling annual gold output. Roosen outlines the company's ambitious goals: "Corporately, the big target for me is to set the stage to be a $1 billion company. We have the asset base to do that."

From a financial perspective, the project's economics appear robust. The initial feasibility study, using a conservative $1,700 per ounce gold price, yielded an internal rate of return around 20%. With current gold prices much higher, the project's potential returns could be significantly enhanced. An updated feasibility study using a $2,000 gold price is expected by year-end.

Investors in Osisko Development gain exposure to a management team with a proven track record. Roosen previously led the development of Canadian Malartic, now one of the world's largest gold mines, and founded Osisko Gold Royalties, a $4.3 billion royalty company.

Near-term catalysts that could drive share price appreciation include:
Final permitting approvals (expected in late 2024 or early 2025)
Results from the planned bulk sample (scheduled for October)
Updated feasibility study incorporating higher gold prices
Ongoing exploration results potentially expanding the resource base

While the investment case is compelling, investors should consider risks such as execution challenges in mine development, potential capital cost inflation, gold price volatility, and regulatory hurdles.

In the current macroeconomic environment, with strong gold prices and increasing M&A activity in the sector, Osisko Development represents an attractive opportunity for investors seeking exposure to a large-scale, high-grade gold project on the verge of production in a top-tier jurisdiction. The company's significant insider ownership provides some insulation against hostile takeover attempts while potentially positioning it as an attractive M&A target for larger producers seeking to replenish reserves.

View Osisko Development's company profile: https://www.cruxinvestor.com/companies/osisko-development

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