Osisko Sells San Antonio Gold Project to Axo Copper

Osisko Development has reached an agreement to transfer its non-core San Antonio gold project in Sonora, Mexico, to Axo Copper in a stock-based deal, retaining a 9.99% ownership in Axo.

Through the transaction, Axo will acquire Sapuchi Minera, the Osisko subsidiary that holds the project’s concessions, with the closing dependent on regulatory approval. Osisko will receive around 15.3 million Axo shares, or enough to maintain its 9.99% non-diluted stake, plus additional contingent payments tied to milestone achievements.

The company will also receive 70% of any VAT refunds owed to Sapuchi. It is set to earn US$2 million, either in cash or shares, once Axo files a National Instrument 43-101 feasibility study, and another US$2 million when gold production begins. If Axo raises US$10 million or more in equity, Osisko will be issued extra shares to keep its ownership level stable.

CEO Sean Roosen stated that the sale allows Osisko to focus capital and management on core assets, noting that Axo is well-positioned to develop San Antonio, which has been inactive since late 2023.

Jonathan Egilo, Axo Copper's CEO, said the company is excited to announce this acquisition. “We welcome new supportive shareholders and partners in Osisko Development and OR International. All parties understand the deep value and high exploration upside that come with the San Antonio project, and we look forward to advancing the late-stage development project. The high-grade oxide resource and existing infrastructure represent a tremendous opportunity to accelerate first production, paving a path for future development of transition and sulphide material. With San Antonio paired with our existing La Huerta project, we could not be more excited for the future of Axo."

The San Antonio Gold Project: Overview

The project is a former oxide copper mine located in Sonora. After acquiring the project in 2020, the company focused on securing the necessary permits and permit amendments to conduct its operations. In the 1Q22, Sapuchi Minera began processing stockpile material using sodium cyanide heap leach pads and a carbon-in-column processing plant. The company recorded its first gold sales in July 2022, ultimately producing 10,478 net ounces of gold that year. By 3Q23, all remaining stockpile material had been processed, and no further production is expected. As of Sept.30, 2023, total gold sold from the San Antonio heap leach pad amounted to 13,591oz.

On June 30, 2022, the company released an initial open pit mineral resource estimate (MRE) for the San Antonio Project. The 2022 MRE covers part of the Sapuchi–Cero Verde trend, which includes five deposits: Sapuchi, Golfo de Oro, California, Calvario, and High Life. These deposits extend approximately 2.8 km along strike, reach up to 600m in width, and extend to a maximum depth of 300m below the surface.

The deposits are modeled within a hydrothermal breccia geologic framework, which represents the primary known control on mineralization. Several drill targets on the property remain underexplored, and additional exploration drilling is recommended to confirm historical data and potentially expand the resource. Further infill and exploration drilling is also advised to enhance understanding of the project.