Based upon the results of over 2,300 samples collected on site, Osisko Development (TSX-V:ODV) is spending $177 million (US) in cash and stock to acquire Eureka, Utah-based Tintic Consolidated Metals.
Through the multi-part transaction announced yesterday, Montreal, Canada-based Osisko will end up with ownership of the Trixie Mine along with mineral claims for over 17,000 acres located in the famed East Tintic Mining District, an area within central Utah long known for its precious and semi-precious metal deposits.
Based upon its review of mineral samples found and extracted on site at the newish Trixie-T2 mine, Osisko believes that the Trixie site(s) may become
"one of the highest grade gold mines in the world."
According to its Investor Presentation, Osisko expects the Trixie-T2 mine will ramp-up to 100 tons to 500 tons of earth extracted and processed daily.
Sean Roosen, CEO and Chair of Osisko Development described the purchase in this manner:
“The proposed acquisition of Tintic further accelerates Osisko Development on its path towards becoming a mid-tier gold miner ... In an industry where gold grade is typically quoted in terms of “grams,” we have welcomed the shift to talking in terms of 'ounces' for Trixie where we see an excellent opportunity to build and expand upon existing ultra-high grade production ..."
Historical Context of Tintic Consolidated Metals and the East Tintic Mining District
According to a 1979 report published by the U.S. Geological Survey,
"The East Tintic Mining District is in the east-central part of the East Tintic Mountains, near the east margin of the Basin and Range province in Utah and Juab Counties, Utah. The district occupies the northeastern part of the Eureka quadrangle and is about 5 mi (8 km) wide and 6 mi (9.7 km) long."
Initial mining in the area began in 1870, a little over 20 years after Mormon pioneers arrived in the Utah Territory.
Although little mining success occurred in the region between 1870 and 1910, significant discoveries occurred between 1913–1916 via the Tintic Standard mine, which became "one of the most productive silver mines in the world."
The USGS Report also explained that through 1975 the East Tintic Mining District
"... yielded approximately 4.83 million short tons (4.38 million tonnes) of silver, gold, and base-metal ores."
Located approximately 50 miles south of the massive open pit Bingham Copper Mine in southwestern Salt Lake County, the Tintic Consolidated Metals property shows high promise for the discovery and extraction of gold, silver, and other precious and semi-precious metals.
Trixie-T2 Mine Production and Opportunity
According to the Osisko Investor Presentation, Tintic Consolidated extracted over 14,700 ounces of gold from its Trixie-T2 Mine in 2021 (at 59 grams of gold/ton of extracted earth).
Currently, the Trixie-T2 Mine is only capable of extracting 45 tons/day, the equivalent of 93.65 ounces of gold produced daily.
At today's gold spot price of $1,826/ounce, that means Trixie-T2 Mine is generating over $170,000 in gross revenue on a daily basis.
Put into perspective, if Osisko is successful in ramping-up Trixie-T2 Mine production to a range of 100--500 tons/day of extracted earth, Osisko may be able to generate over 1,ooo ounces of gold each day.
At today's spot price, that would mean upward of $1.9 million in gross revenue. Daily.
Or on an annual basis, that's close to $700 million/year in gross revs.
Yeah, nearly 700 million big ones.
At the end of the day, the $177 million price point might end up being a steal for Osisko and its investors.
Below is the downloaded Osisko investor presentation (as found on YouTube).