Osisko Development's Cariboo Gold Project: A High-Impact Bet on Gold's Rise

The gold market is heating up, and with it, the prospects for Osisko Development's Cariboo Gold Project in British Columbia. This project stands out as a rare combination of robust economics, de-risked development, and strategic positioning in a Tier-1 jurisdiction. While execution risks linger—particularly around financing and permitting—the project's valuation sensitivity to rising gold prices makes it a compelling play for investors willing to navigate near-term hurdles.

The Valuation Case: Gold's Upside Drives Massive NPV Leverage

The Cariboo Gold Project's financials are a textbook example of how rising gold prices can supercharge project economics. Under a base case gold price of $2,400/oz, the after-tax NPV5% is $943 million, with an unlevered IRR of 22.1%. But here's the kicker: at the spot gold price of $3,300/oz (as of April 2025), the NPV5% surges to $2.066 billion, and the IRR rockets to 38.0%. This sensitivity is a gold investor's dream—every $100/oz increase in gold prices adds hundreds of millions to the project's value.

Even more compelling is the project's low-cost positioning. With an all-in sustaining cost (AISC) of $1,157/oz, it sits comfortably in the lower half of global gold producers. Combined with an optimized mine life of 10 years and annual production of 190,000 oz, this project is designed to thrive in volatile markets. The feasibility study also highlights operational improvements, like a streamlined single-phase construction and a gravity circuit boosting recovery rates to 92.6%, further reducing costs and enhancing margins.

Execution Risks: Financing and Permitting Are the Final Hurdles

Despite the project's strong fundamentals, two critical risks remain: financing and permitting. The total capital requirement is $1.406 billion, including $881 million in initial construction costs. While Osisko has secured a $25 million delayed draw term loan, a full financing package for the project is still pending. The company aims to secure a comprehensive debt or hybrid financing deal in the coming months to greenlight construction by Q3 2025, but delays could push back first production (targeted for late 2027).

Permitting risks are also on the table. While key approvals for mining and environmental compliance were secured in late 2024, the transmission line permit—critical for power supply—is still pending and must be finalized by H2 2025. A delay here could stall construction timelines, squeezing project economics by extending capital expenditures and reducing the time value of cash flows.

Why the Project Still Wins: A De-Risked, High-Potential Asset

Despite these hurdles, the Cariboo Gold Project boasts several key de-risking factors:
1. Permitted and Shovel-Ready: With major regulatory approvals already in hand, Osisko avoids the lengthy and uncertain permitting timelines that plague many exploration-stage projects.
2. Tier-1 Jurisdiction: British Columbia's stable regulatory environment and infrastructure support reduce geopolitical and operational risks.
3. Strong Technical Backing: The 2025 Feasibility Study incorporates rigorous metallurgical testing and updated cost estimates, providing a clear blueprint for execution.

Investors should also note the optionality embedded in the project. The mine's design allows for future throughput expansions, and additional drilling could boost Mineral Reserves beyond the current 2.07 million ounces.

Investment Thesis: A Gold-Price Trade with Legs

For investors bullish on gold, the Cariboo Gold Project is a high-conviction leveraged play. At current gold prices (~$3,300/oz), the project's NPV is already $2.066 billion, implying a substantial margin of safety even if gold pulls back modestly. The stock's valuation—currently trading at a discount to its NPV per share—suggests the market is pricing in execution risks rather than the project's true potential.

However, investors must monitor two catalysts closely:
1. Financing Finalization: A formal final investment decision (FID) by Q3 2025 would remove a key uncertainty, likely triggering a re-rating.
2. Transmission Line Approval: Securing this permit by mid-2025 will validate Osisko's ability to execute on its timeline.

The Bottom Line

Osisko's Cariboo Gold Project is a high-reward, high-risk opportunity in the gold sector. Its sensitivity to gold prices and low-cost profile make it a standout in a rising metal environment, but its success hinges on closing financing and navigating permitting. For investors willing to bet on gold's sustained strength and Osisko's execution, this project offers asymmetric upside. Monitor ODC's progress closely—success here could make it one of the decade's top gold stories.

Invest with caution, and always consider your risk tolerance.