Canada's Largest Gold Mine Eyes Strong Sustainability

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MONTRÉAL-(Kitco News) With Canada's largest gold mine slated to begin production in May, Osisko Mining Corp's CEO assures the company is focused on sustainability.

"Sustainability is a very easy word to say but a very hard thing to do," Sean Roosen, president and CEO of Osisko Mining told Kitco News.

Last week, Osisko poured its first gold bar at its Malartic project. The project is Canada's largest gold reserve and is expected to produce 492,000 ounces of gold by the end of 2011, according to Osisko's 2008 forecasts.

"We've worked on our sustainability budgets, we've put in place the FEMO (Fonds Essor Malartic Osisko) project here in Malartic, which is a developmental sustainability fund that we hope will be perpetual even after the mine is gone," he said.

Among the environmental projects is the Osisko Forest, which is set in the Vallée-de-l'Or region in Quebec. The project, aimed to reduce Osisko's carbon footprint, is a municipal reforestation program which will reforest 100 hectares of land annually over the next nine years.

"We've always had a very strong interaction with our communities," Roosen said. "All of our people are pretty environmentally responsible folk and we want to make sure that we have a company that's a leader in the space."

Quebec approved the mine in 2009. Except for a few voices against the development, the gold mine was slowly embraced by most Malartic residents.

Roosen emphasized the importance of keeping the community atmosphere together as the mine was being constructed.

During construction, Osisko relocated 205 houses and reconstructed six institutional buildings. The company spent about $180 million on infrastructure to support the town in order for the mine to be built. To date the project has cost over $1 billion.

Osisko has been introducing new technology to maintain the eco-friendly projects initiated by the company.

"We've taken a very new technology in terms of tailings disposal to reduce our footprint on the site," Roosen said.

In May 2010, Osisko received the Syncrude Award for excellence in sustainable development, awarded by The Canadian Institute of Mining, Metallurgy and Petroleum ( CIM ).

PRODUCTION

"We're expecting 688,000 ounces of gold in 2012, which includes the ramp up to 60,000 tons a day, which was a revised schedule we put out in 2009," Roosen said. "There will be a revised number coming out next week."

Osisko increased its gold reserve at the Malartic project on March 31 by 19% to 10.71 million ounces of gold, up from the initial 8.97 million ounces estimate from February 2010.

"The overall in pit resource reserve is about 10.7 million ounces with about 85% recovery (is) about 9 million ounces recovered gold," Roosen said. "Once we have the revised mining schedule regarding mine life, it should be around 12 and 16 years."

EMERGING MINING REGULATIONS

With Bill-79 still being talked about, Roosen says governments trying to impose regulations on mining companies is not a new occurrence and believes it will continue to be a central focus as long as commodities continue to perform well.

"All the governments in the world are looking at trying to increase their revenue to cover their deficits, it's an ongoing issue," Roosen said. "The commodities sector (has) been doing well in the last two or three years so I think that it's an issue that's here to stay."

Roosen said the cyclical nature of the commodities market affects the governments' interest in pursuing any mining regulations.

"It usually subsides if there's a pullback in the commodities cycle," Roosen said. "So, we've dealt with this before, anytime there's a good commodities cycle, we end up with more pressure for increased taxations."

When asked about Quebec's fall from top spot in the Fraser Institute's annual mining survey to third, Roosen was not worried about the state of mining in Quebec.

"To drop a couple places for Quebec doesn't really change my view on the province, I think it's still a great place to do business," Roosen said.

"When we look around the world right now, at geopolitical risk versus stability, access to infrastructure and government support … Quebec's still in my mind a top jurisdiction in the world," Roosen said.

The 2010-2011 Fraser Institute survey had Alberta at top spot, followed by Finland and then Quebec.

By Alex Létourneau of Kitco News aletourneau@kitco.com



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Commodities

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