Osisko Metals Inc. has filed a preliminary economic assessment for the proposed Pine Point lead-zinc mine near Hay River, a step CEO Jeff Hussey called a milestone, for moving “a critical mineral project through the development phase and into production.”

An update to the 2020 PEA, the recently filed report factors in economic changes, including higher costs due to inflation, newly completed hydrogeological modeling and the latest projections on the long-term prices of lead and zinc.

“The project is still a robust project,” said Hussey. “We know that inventories are low and we have a high-quality product, so we’re continuing on towards the feasibility study.”

Once a feasibility study is complete, permits and a project design will be needed to secure enough financing to build the mine. “That’s the process,” he said.

The company, which took ownership of the project in 2018, wants to redevelop a former zinc mine near Pine Point, an abandoned site on the south shore of Great Slave Lake about halfway between Hay River and Fort Resolution.

The mine is projected to produce 329 million pounds of zinc and 141 million pounds of lead a year, over a 12-year lifespan.

A drilling campaign scheduled to last into 2023 is expected to help upgrade some of the mineral resources from the “inferred” into the “indicated” category for the feasibility study.

“The Pine Point Project is expected to be a robust, profitable operation at a variety of prices and assumptions,” states a news release announcing the new PEA. “Metal prices used in the 2022 PEA Update study are based on weighted two-year moving averages, hence $1.37/lb zinc and $0.97/lb lead.”

“Under more bullish scenarios, especially when considering record low inventory levels and continued lack of investment in the zinc production space, the project demonstrates even stronger economic returns and is well-positioned to benefit from a higher zinc price,” it continues.

The report used Deswik mining software to calculate how different mining strategies would affect operating costs over the life of the mine.

Total capital costs to build the mine are estimated at $1.3 billion and include pre-production capital costs of $653.3 million. This increase relative to 2020, factors in 12% inflation in natural gas, steel and concrete.

The report, prepared by the independent engineering firms BBA Inc., WSP Canada Inc., and Hydro-Resources Inc., also includes hydrogeology highlights. Hussey calls this an important part of the project, as managing the volume of water inside an open-pit mine can be an expensive process.

New software used to produce a hydrogeological Site Wide Numerical Model (SWNM) for the Pine Point Project, shows “reduced dewatering estimations by 30 per cent on an annual basis for various key operating and sustaining capital expenditures directly associated with dewatering when compared to mining the open pits individually,” states the release.

“Current data suggests that there is potentially an additional reduction of up to 15 per cent beyond the current simulation estimates,” it continues. “Ongoing modelling will further optimize the (life of mine) plan strategy to pump less water, use less energy, and continue to reduce dewatering costs. This also means reduced NG-generated power requirements, and less GHG emissions for a smaller footprint.”

Further optimization of the SWNM and the life of mine plan will be the main objectives of the feasibility study, it continues.

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