Canadian developer Osisko Gold Group (TSX-V, NYSE: OGG) is going ahead with construction of the $841 million Cariboo underground mine in central British Columbia, targeting a first gold pour in early 2029.
Cariboo, which was about 22% complete as of the end of July, carries about $990 million in future capital obligations, Osisko said Monday in a statement. Commercial production is expected to be reached in the second half of 2029, following a 30-month construction period.
Osisko’s final investment decision “formally transitions Cariboo from development to active construction, representing a key de-risking milestone,” RBC Capital Markets mining analyst Harrison Reynolds said Monday in a note.
The move “checks another de-risking box, dispenses with questions on timing and shifts focus to construction ramp-up,” added National Bank Financial mining analyst Don DeMarco.
Main project
Cariboo is the latest venture taken on by Osisko chairman and CEO Sean Roosen. A three-decade industry veteran, Roosen previously developed Canadian Malartic in Quebec — now Canada’s second-largest gold operation under Agnico Eagle Mines (TSX, NYSE: AEM) — and advanced Windfall Lake, sold in 2024 to Gold Fields (NYSE, JSE: GFI) for about C$2.2 billion.
Located in the historic Wells-Barkerville mining camp, about 500 km north of Vancouver, Cariboo is Osisko’s main development project. It includes a permitted underground mine and processing complex.
To help finance construction, Osisko has agreed with global commodities trader Trafigura on a $30 million equity investment as well as a potential $120 million gold prepayment facility.
Under the terms of the deal, Trafigura will acquire about 9.6 million Osisko shares at $3.14 apiece. It will also buy all of Cariboo’s gold concentrate and doré bars in the first four years of production, up to 80,000 dry tonnes.
Closing of the equity investment remains subject to final acceptance of the TSX Venture Exchange and the New York Stock Exchange, Osisko said.
Surplus cash
Osisko’s new prepayment facility should be available to draw for three years from closing, with a maturity date that is at a minimum five years from closing. Osisko will pay the Secured Overnight Financing Rate, plus 6%.
Including about C$837 million in cash, Osisko has about C$1.64 billion in available sources of capital. When factoring in projected expenditures of C$1.44 billion, which include capital obligations, exploration spending, debt service and financing costs, this leaves a projected surplus of about C$201 million, Osisko said.
The formal investment decision “represents a defining milestone for Osisko Gold and a pivotal inflection point toward our objective of becoming an intermediate gold producer,” Roosen said in the company’s statement.
“This decision is a culmination of more than a decade of de-risking work on the project, from early exploration when the first drills hit the ground in 2015, through permitting and technical studies, and into project financing and pre-construction.”
Construction work at Cariboo has been advancing while underground drilling continues to refine the mine plan and test extensions to mineralization beyond the current reserve base. Detailed engineering was about 40% finished as of the end of July while procurement and commitments for long-lead items were 44% complete, Osisko said Monday.
Underground development
About 3 km of underground development have already been completed. Major earthworks are scheduled to ramp up this quarter and continue until the end of 2027. Work on process plant foundations is projected to start next summer, with building enclosure targeted for the second quarter of 2028.
A 2025 feasibility study for Cariboo envisions a scalable underground operation expected to produce about 1.89 million oz. gold over a 10-year life. Based on a 5% discount rate and spot gold prices of US$4,350 per oz., the project has an after-tax net present value of $3.2 billion, after-tax internal rate of return of 43% and average annual free cash flow of $642 million in the first five years.
Cariboo hosts about 17.4 million measured and indicated tonnes grading 2.88 grams gold for contained metal of 1.61 million oz. gold, according to a 2025 resource. It also holds 18.8 million inferred tonnes grading 3.09 grams gold for contained metal of 1.86 million oz. gold.
Osisko shares dropped 1.3% to C$3.90 in Monday morning trading in Toronto, valuing the company at about C$1.2 billion. The stock has traded between C$3.07 and C$6.63 in the past year.
Source: https://www.mining.com/roosens-osisko-greenlights-cariboo-gold-project-in-bc/
