Fire sale: Investors punish Osisko for mill damage

Osisko Mining investors were unimpressed by the fire yesterday at the company's Canadian Malarctic mill.

The stock (TSX:OSK) closed down a buck, or 12.94%, on the Toronto main board Friday as Osisko assessed the damage.

A press release yesterday said the fire was started by welding close to the number four cyclone which spread to the roof:

Initial reports from site indicate the fire was contained around the number four cyclone and immediate area. Preliminary observations are as follows: the mill utilizes four cyclone sets – the number four cyclone set is damaged; the overhead crane in the cyclone bay is damaged; there is limited damage to the overhead crane in the ball mill bay; there is damage to the structure of the roof area above the cyclone bay; there is some limited damage to the wall of that bay. There appears to have been no damage to the SAG or ball mills and other systems of the mill.

Osisko is expected to lose two weeks worth of production as a result of the fire.

The Canadian Malarctic mine has 10.7 million ounces of gold reserves according to the latest resource estimate released in March, 2011. The mine in the Abitibi region of Quebec started producing in June of last year and Osisko estimates it will extract about 9 million ounces up to 2027.