Osisko Mining Inc. upped its exploration budget by 85.7% in 2021 — largely by pumping money into its promising Windfall Lake gold project in Quebec — putting the gold miner in the same leagues as diversified heavyweights like Rio Tinto Group.

The Canadian-headquartered explorer's exploration budget jumped to $135.4 million in 2021 and stands 48.1% higher than Osisko Mining's $91.4 million in actual spending in 2020, according to S&P Global Market Intelligence data.

"Osisko's 2021 budget epitomizes the overall trend in Canada, which saw a huge boost from the junior gold sector, although their level of spend is definitely well above the junior norm and is even higher than what we have seen from many major companies," Market Intelligence analyst Kevin Murphy said in an email.

The company's exploration budget for 2021 was the 10th largest globally, including large diversified miners such as Rio Tinto, which at $463 million has the top exploration budget for 2021, according to Market Intelligence data. Amid strong gold prices in 2021, the gold sector overall ramped up exploration budgets by 43% year over year to $6.2 billion in 2021, with Osisko Mining ranking sixth in terms of planned spending. The 2021 surge in gold exploration comes amid a long-term trend of declining gold discoveries, in part related to an industrywide shift away from riskier early-stage fieldwork.

Newmont Corp. had the biggest 2021 exploration budget at $242.0 million, with Osisko Mining among the only two junior companies in the top 25 gold companies in terms of planned exploration spending in 2021.

Osisko Mining's exploration spending has targeted resource growth and definition at the Windfall Lake project, comprising about 400,000 meters of drilling in 2021 with as many as 35 drill rigs on site.

"We would have had more if we could have, but there's a physical limit to the number of drills you can actually have on any project that is dictated by deposit geometry," Osisko Mining Executive Chairman and CEO John Burzynski said in an interview. "Otherwise you turn it into a parking lot."

Drilling at Windfall began to wind down in October, with 15 drill rigs remaining, Burzynski said. The explorer is shifting gears to focus on upgrading the resource estimate by early 2022 and completing a feasibility study of the project for mid-2022.

Burzynski said drilling in 2021 pointed to a likely boost in grade and size of measured and indicated resources with expectations for about 3 million ounces grading over 10 grams per tonne of gold. Osisko Mining last pegged measured and indicated resources at 1.9 million ounces grading 9.6 g/t of gold. It has also outlined 4.2 million ounces grading 8.0 g/t of gold in inferred resources.

Overall, including the lower-confidence inferred resources, the project's gold ounces may grow to about 7 million ounces, Burzynski said.

Burzynski expects a mine life in the 10-year range for the coming feasibility study. But, assuming inferred gold ounces convert to higher-confidence resources and the deposit continues to grow at depth, the executive sees a project that could support several decades of mining.

"We have high-grade gold intercepts down to about 2.5 kilometers below surface," Burzynski said, contrasting that with resources that have only been defined above depths of about 1,200 meters.

New gold discoveries

Among notable outcomes from its 2021 drilling program, Osisko Mining expanded a gold zone called Triple Lynx that it found within the past two years and discovered a new exploration target, dubbed Golden Bear, about a kilometer north of the main Windfall Lake gold deposit. The discovery of Golden Bear confirms that there are new areas of gold mineralization near the main Windfall Lake deposit and brings into focus similar targets for follow-up drilling.

"Really what Golden Bear tells us is that we've got to pay a lot of attention to all of those parallel splays off the main fault," Burzynski said, referring to geological structures that played a role in the genesis of the Windfall Lake gold deposit.

The discovery has also drawn attention from analysts, with the potential for it to add more resources at Windfall.

"Golden Bear looks like it could be a couple of million ounces. That's going to be a pretty good discovery, but of course, they've got a lot of drilling to do before they get there," Haywood Securities analyst Kerry Smith said in an interview.

Smith considers the deposit to be "world-class," with the potential to grow to at least 10 million ounces of gold, and the analyst pegs possible first production in 2025. Smith expects output of about 300,000 ounces per year at all-in sustaining costs under US$600 per ounce.

Osisko Mining stock has largely traded in the C$2.50 to C$3.50 per share range with a market cap of about C$1.1 billion in recent days, which Smith considers low. The stock may be trading sideways in part given the exploration company is in the relatively unglamorous phase of better defining a known resource for a feasibility study.

"People want to see it built and know how much more [share] dilution we are going to see to get the mine built. But it's probably worth a lot more than it's trading at," said Smith, who also noted that investors may start to pay more attention to the company once it produces the feasibility study.