MONTREAL, QUEBEC--(Marketwired - Feb. 18, 2014) - Osisko Mining Corporation (the "Company" or "Osisko") (TSX:OSK)(FRANKFURT:EWX) today reported net earnings of $10.5 million ($0.02 per share) for the fourth quarter of 2013 compared to $12.9 million ($0.03 per share) for the corresponding period of 2012. The Company generated cash flows from operating activities of $72.5 million during the fourth quarter of 2013 compared to $64.6 million in the fourth quarter of 2012. The Company increased its cash resources(2) by $38.9 million during the quarter to $210.5 million. All figures in the press release are in Canadian dollars unless otherwise noted.
Q4 Highlights
- Record gold production of 137,321 ounces at cash costs(1) of $713 per ounce (US$679 per ounce);
- Earnings from Canadian Malartic of $53.7 million;
- Operating cash flows of $72.5 million;
- Net earnings of $10.5 million or $0.02 per share;
- Investment of $25.2 million in mining assets and projects;
- Tonnage processed at 4.6 million tonnes (average of 54,043 tonnes per operating day).
2013 Highlights
- Record annual gold production of 475,277 ounces;
- Delivered on capital expenditure reduction program over $96 million less than 2013 budget;
- Enhanced flexibility as a result of amendments concluded with lenders;
- Cash resources(2) now stand at $210.5(2) million;
- Net debt position(3) of $118.7 million at December 31, 2013.
January 2014 update
- Record monthly gold production in January 2014 of 50,111 ounces.
Sean Roosen, President and Chief Executive Officer commenting on the fourth quarter results: "Our team continued to deliver record achievements throughout 2013. The strong second half results at Canadian Malartic clearly demonstrated the value of this world class gold mine. Following Q4, in January 2014, Canadian Malartic achieved record monthly production of 50,111 ounces at cash costs(1) of $670 per ounce (US$613 per ounce). The record gold production was achieved despite mill downtime and unusually cold weather conditions. We would like to extend our appreciation to our employees, our suppliers, our financial partners, the Malartic community and the Government of Québec, who contributed to the realization of our success in 2013."
| (1) | Reconciliation of non-IFRS measures is provided under Non-IFRS Measures of Performance of this press release. |
| (2) | Includes cash and cash equivalents and restricted cash. |
| (3) | Gross long-term debt (long-term debt excluding unamortized debt issuance costs and accretion) less cash and cash equivalents and restricted cash. |
The mine operating statement for the production period is as follows:
| 2013 | 2012 (Adjusted)(4) | |||||||||||||||
| Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||
| Gold sales (oz) | 136,826 | 123,151 | 109,503 | 95,511 | 111,104 | 95,424 | 95,675 | 92,400 | ||||||||
| Silver sales (oz) | 106,907 | 117,750 | 95,205 | 73,683 | 74,100 | 49,751 | 48,880 | 52,800 | ||||||||
| ($000 | ) | ($000 | ) | ($000 | ) | ($000 | ) | ($000 | ) | ($000 | ) | ($000 | ) | ($000 | ) | |
| Revenues | 185,774 | 171,298 | 159,195 | 159,381 | 191,080 | 158,503 | 157,134 | 158,658 | ||||||||
| Production costs | (94,876 | ) | (92,265 | ) | (90,619 | ) | (81,422 | ) | (95,307 | ) | (77,684 | ) | (89,494 | ) | (69,932 | ) |
| Royalties | (2,422 | ) | (2,144 | ) | (2,274 | ) | (1,992 | ) | (2,546 | ) | (1,998 | ) | (2,021 | ) | (2,359 | ) |
| Depreciation | (34,791 | ) | (37,902 | ) | (23,683 | ) | (20,982 | ) | (20,058 | ) | (15,318 | ) | (15,635 | ) | (13,909 | ) |
| Total | (132,089 | ) | (132,311 | ) | (116,576 | ) | (104,396 | ) | (117,911 | ) | (95,000 | ) | (107,150 | ) | (86,200 | ) |
| Earnings from mine operations | 53,685 | 38,987 | 42,619 | 54,985 | 73,169 | 63,503 | 49,984 | 72,458 | ||||||||
Key operating results
(in thousands of Canadian dollars, unless otherwise noted)
| Q4 2013 |
Q3 2013 |
Q2 2013 |
Q1 2013 |
Q4 2012(4) |
Q3 2012(4) |
Q2 2012(4) |
Q1 2012(4) |
||
| Gold production (oz) | 137,321 | 120,208 | 111,701 | 106,047 | 101,544 | 103,753 | 92,003 | 91,178 | |
| Gold sales (oz) | 136,826 | 123,151 | 109,503 | 95,511 | 111,104 | 95,424 | 95,675 | 92,400 | |
| Average sale price (US$/oz) | 1,275 | 1,321 | 1,396 | 1,627 | 1,709 | 1,659 | 1,605 | 1,698 | |
| Average market price (US$/oz) | 1,276 | 1,326 | 1,415 | 1,632 | 1,722 | 1,652 | 1,609 | 1,691 | |
| Cash costs per ounce(5) (C$/oz) | 713 | 754 | 781 | 804 | 833 | 851 | 892 | 821 | |
| Cash costs per ounce(5,6) (US$/oz) | 679 | 726 | 765 | 798 | 840 | 855 | 883 | 820 | |
| Cash margin per ounce(5,6) (US$/oz) | 596 | 595 | 631 | 829 | 869 | 804 | 722 | 878 | |
| Revenues | 185,774 | 171,298 | 159,195 | 159,381 | 191,080 | 158,503 | 157,134 | 158,658 | |
| Earnings from mine operations | 53,685 | 38,987 | 42,619 | 54,985 | 73,169 | 63,503 | 49,984 | 72,458 | |
| Net earnings (loss) | 10,488 | 9,755 | (492,762 | ) | 17,416 | 12,866 | 28,343 | 18,984 | 30,595 |
| Net earnings (loss) per share | 0.02 | 0.02 | (1.13 | ) | 0.04 | 0.03 | 0.07 | 0.05 | 0.08 |
| Operating cash flows | 72,476 | 70,665 | 55,947 | 62,478 | 64,608 | 55,806 | 68,212 | 82,879 |
| (4) | Balances related to 2012 have been adjusted to reflect the impact of the adoption of IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine |
| (5) | Reconciliation of non-IFRS measures is provided under Non-IFRS Measures of Performance of this press release. |
| (6) | Using the weighted average exchange rate based on monthly sales and costs. |
The ramp up of the mill was completed in the second half of the year, and optimization work is continuing to seek throughput efficiencies. The mine generated earnings of $53.7 million during the quarter (YTD: $190.3 million), compared to $73.2 million in the corresponding period in 2012 (YTD 2012: $259.1 million). The decrease in profitability is due to a 25% (YTD: 17%) decline in the US$ price realized on the sale of gold and higher depreciation charges due to increased gold output.
During the quarter, approximately 7,670 equipment hours (6.3% of available hours) were lost due to noise and weather constraints, compared to 5,180 equipment hours (4.3% of available hours) in the third quarter of 2013 and 2,840 (2.5% of available hours) equipment hours in the fourth quarter of 2012.
The production statistics are as follows:
| Q4 2013 | Q3 2013 | Q2 2013 | Q1 2013 | Q4 2012 | Q3 2012 | Q2 2012 | Q1 2012 | |
| Tonnes Mined (000's) | ||||||||
| - Ore | 4,906 | 4,423 | 3,604 | 4,091 | 3,553 | 4,853 | 3,234 | 4,037 |
| - Waste(7) | 9,907 | 11,335 | 10,010 | 10,158 | 7,847 | 9,215 | 9,545 | 8,458 |
| Total Mined | 14,813 | 15,758 | 13,614 | 14,249 | 11,400 | 14,068 | 12,779 | 12,495 |
| Overburden | 160 | 305 | 871 | 1,783 | 627 | 1,409 | 1,740 | 1,954 |
| Tonnes Milled (000's) | 4,648 | 4,683 | 4,444 | 4,234 | 4,088 | 3,757 | 3,236 | 2,965 |
| Grade (g Au/t) | 1.04 | 0.90 | 0.87 | 0.88 | 0.87 | 0.97 | 0.99 | 1.05 |
| Recovery (%) | 88.6 | 89.2 | 89.7 | 88.0 | 88.8 | 88.7 | 89.2 | 91.2 |
| Gold production (oz) | 137,321 | 120,208 | 111,701 | 106,047 | 101,544 | 103,753 | 92,003 | 91,178 |
During the fourth quarter, the mine successfully finished its program of near surface blasts over old working areas that required special procedures. The end of these special procedures and the mine operating at greater depths will increase the mining rate, operating efficiencies and will reduce costs.
Production in the fourth quarter of 2013 averaged at 54,043 tonnes per operating day compared to 54,133 tonnes per operating day in the previous quarter and 47,535 tonnes per operating day in the fourth quarter of 2012. A scheduled mill maintenance shutdown of six days occurred in December 2013. Continued optimization of operations at the mill, the two cone crushers and the additional pebble crusher installed in 2012 allowed the mill to reach new records during the year. In coordination with the technical advisors, the Canadian Malartic team continues to work on improving the mill throughput and enhancing operating efficiencies.
| (7) | Including topographic drilling of 4.9 million tonnes in 2013 and 2.5 million tonnes for the year 2012. |
Mill operating statistics demonstrate the progress in all categories made over the past two years.
| Total Available Hours |
Operating Hours |
(%) | Tonnage Processed (t) |
Tonnes per Operating Hour |
Tonnes per Operating Day |
|
| Q4 2013 | 2,208 | 2,054 | 93 | 4,647,677 | 2,263 | 54,043 |
| Q3 2013 | 2,208 | 2,061 | 93 | 4,682,530 | 2,272 | 54,133 |
| Q2 2013 | 2,184 | 2,014 | 92 | 4,444,042 | 2,207 | 52,592 |
| Q1 2013 | 2,160 | 2,082 | 96 | 4,234,001 | 2,033 | 48,667 |
| Q4 2012 | 2,208 | 2,052 | 93 | 4,088,021 | 1,992 | 47,535 |
| Q3 2012 | 2,208 | 2,071 | 94 | 3,756,768 | 1,814 | 43,181 |
| Q2 2012 | 2,184 | 1,960 | 90 | 3,236,281 | 1,651 | 38,074 |
| Q1 2012 | 2,184 | 1,890 | 87 | 2,965,456 | 1,569 | 35,728 |
Operating Costs
Cash costs per ounce(8) for the fourth quarter and the year 2013 stood at $713 and $760 (US$679 and US$738) respectively, compared to $833(9) and $849(9) (US$840 and US$849) in the corresponding periods of 2012. The improvement over the comparative periods in 2012 is mainly the result of increased throughput and gold production, improved efficiencies and reduction in contractors' costs.
The Company continues to pursue operating efficiencies, and has intensified its cost optimization program as the operations are now at near name plate capacity. Management expects that operating costs will continue to decline over the current year as it reaps the benefits of its optimization and cost reduction efforts.
In January 2014, Canadian Malartic achieved record monthly production of 50,111 ounces at a cash costs per ounce(8) of $670 (US$613). The mill throughput averaged 49,070 tonnes per operating day, with the head grade of 1.16 g/t Au being processed, and recoveries were 88.6%. The record gold production was achieved despite mill downtime (one secondary ball mill required an unscheduled bearing change and was out of commission for seven days) and unusually cold weather conditions.
Hammond Reef - Impairment Charge
Following a significant decrease in gold price and preliminary results from the feasibility study, the Company undertook a review of the valuation of the Hammond Reef Project in the second quarter of 2013. Osisko conducted impairment testing in conformity with IFRS practices and determined that an impairment charge of $487.8 million, net of deferred tax recovery of $43.1 million, was necessary. Accordingly, the project value recorded on the Company's books was reduced to nil and all subsequent costs incurred have been expensed.
| (8) | Reconciliation of non-IFRS measures is provided under Note Regarding Certain Non-IFRS Measures of Performance of this press release. |
| (9) | Adjusted to reflect the adoption of IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine. |
Adjusted Net Earnings(10)
Excluding specific non-cash items, adjusted net earnings(10) amounted to $32.9 million ($0.08 per share) during the fourth quarter of 2013 compared to $53.8 million ($0.14 per share) in the fourth quarter of 2012.
(In thousands of dollars, except for amounts per share) |
Three Months Ended | Year Ended | ||||
| Dec. 31, 2013 |
Dec. 31, 2012(a) |
Dec. 31, 2013 |
Dec. 31, 2012(a) |
|||
| Net earnings (loss) | 10,488 | 12,866 | (455,103 | ) | 90,788 | |
| Impairment of Hammond Reef gold project | - | - | 530,878 | - | ||
| Write-off of property, plant and equipment | 950 | - | 17,950 | 617 | ||
| Share-based compensation | 1,956 | 2,017 | 8,015 | 9,629 | ||
| Unrealized loss on investments | (168 | ) | 5,424 | 1,973 | 6,969 | |
| Impairment on investments | 6,013 | 10,912 | 10,645 | 12,434 | ||
| Gain on premium of flow-through shares | (445 | ) | - | (445 | ) | - |
| Deferred income and mining tax expense (recovery) | 14,116 | 22,557 | 2,082 | 79,395 | ||
| Adjusted net earnings10 | 32,910 | 53,776 | 115,995 | 199,832 | ||
| Adjusted net earnings per share10 | 0.08 | 0.14 | 0.27 | 0.51 | ||
| (a) | Comparative figures have been adjusted to reflect the adoption of IFRIC 20. |
The decrease in adjusted net earnings(10) is mainly the result of lower average selling prices of gold during the fourth quarter of 2013 and higher depreciation charges.
Investments
The Company invested $25.2 million in property, plant and equipment during the fourth quarter. These investments were mainly focused on the Canadian Malartic mine (stripping costs, sustaining capital and expansion) and the Kirkland Lake and Upper Beaver exploration projects.
Volatility in the gold price and financial markets earlier this year has led Osisko to review in April its rate of discretionary spending in exploration and advancing new projects. The Company had previously announced to decrease discretionary spending for 2013 by over $80 million, and in actual achieved a total reduction of $96.3 million.
| (10) | Reconciliation of non-IFRS measures is provided under Non-IFRS Measures of Performance of this press release. |
| (in millions of dollars) | Actual | Revised budget(a) |
Original budget |
| Canadian Malartic mine | 82.5 | 80.8 | 98.0 |
| Upper Beaver project | 8.5 | 18.5 | 70.0 |
| Hammond Reef | 5.5 | 7.0 | 10.0 |
| Exploration - capitalized | 27.2 | 31.6 | 42.0 |
| Capital expenditures(b) | 123.7 | 137.9 | 220.0 |
| (a) | Excluding variation in accounts payable related to the Canadian Malartic expansion, Hammond Reef, Upper Beaver and Kirkland Lake projects. |
| (b) | The difference between $123.7 million from the table above and $182.5 million presented on the Statement of Cash Flows is explained by $40.0 million capitalized stripping activity and $18.8 million variation in accounts payable and accrued liabilties related to 2012 capital expenditures which are not a part of the original budget of $220.0 million. |
Liquidity and Capital Resources
As at December 31, 2013, the Company's cash and cash equivalents, short-term investments and restricted cash amounted to $210.5 million compared to $155.5 million as at December 31, 2012, as summarized below:
| (In thousands of dollars) | December 31, 2013 | December 31, 2012 | |
| Cash and cash equivalents | 161,405 | 93,229 | |
| Short-term investments | - | 19,357 | |
| Restricted cash | |||
| Current | 560 | 4,563 | |
| Non-current | 48,490 | 38,362 | |
| 210,455 | 155,511 | ||
Short-term investments were acquired as part of the acquisition of Queenston as at December 28, 2012 and were converted into cash and cash equivalents during the first quarter of 2013 to increase the flexibility of available liquidities. In June the Company also collected the $30.0 million note receivable from Kirkland Lake Gold Inc. related to the sale of properties by Queenston prior to its acquisition by Osisko.
On July 5, 2013, Osisko deposited $11.6 million with the Government of Québec, representing the balance of the total guarantee required to cover the entire future costs of rehabilitating the Canadian Malartic mine site. The aggregate deposits with the Government of Québec amount to $46.4 million. Osisko is the first mining company in Quebec to deposit its full financial guarantee at commencement of operations, exceeding the legislation currently in force at that moment in Québec.
Debt reduction
During 2013, Osisko reduced its debt by $39.2 million, including $10.1 million in the fourth quarter.
Modifications to long-term debt terms
In July 2013, the Company entered into agreements with CPPIB Credit Investments Inc. ("CPPIB"), the Caisse de dépôt et placement du Québec ("CDPQ") and Ressources Québec ("RQ") to modify certain terms of its long-term debt facilities. The documentation of these modifications have been finalized in the fourth quarter of 2013, effective October 1, 2013, and were accounted for as a modification of debt in the consolidated financial statements of the Company.
- CPPIB loan ($150.0 million)
- The loan repayments that were previously based on cash flow availability will now be based on pre-determined fixed amounts. The first repayment is postponed to 2014.
- The fixed interest rate is revised to 6.875% (from 7.5% previously).
- The maturity date of the 12.5 million warrants held by CPPIB is extended to September 30, 2017 and the exercise price is modified to $6.25 per warrant. The exercise of the warrants may be accelerated at the Company's option if the Osisko shares trade at a price above $8.15 for 20 consecutive days.
- The delayed drawdown facility ($100.0 million) established in May 2012 has been cancelled;
- The maturity date of the loan is postponed to June 30, 2017.
- Convertible debentures ($75.0 million)
- The maturity date of the convertible debentures is postponed to November 2017.
- The fixed interest rate is revised to 6.875% (from 7.5% previously).
- The convertible debentures will be convertible into Osisko shares at any time prior to the due date at the price of $6.25 per share (previously $9.18 per share).
The following table presents the new repayment schedules of the CPPIB loan and the convertible debentures per calendar year as a result of the modifications (in millions of dollars):
| CPPIB | CDPQ | RQ | Total | |
| 2014 | 30.0 | - | - | 30.0 |
| 2015 | 40.0 | - | - | 40.0 |
| 2016 | 40.0 | - | - | 40.0 |
| 2017 | 40.0 | 37.5 | 37.5 | 115.0 |
| 150.0 | 37.5 | 37.5 | 225.0 |
Hostile takeover bid by Goldcorp
On January 14, 2014, the Company received an unsolicited bid from Goldcorp Inc. ("Goldcorp") to acquire all of Osisko outstanding shares for consideration of $2.26 in cash and 0.146 share of Goldcorp per Osisko Share.
On January 20, 2014 the Board of Directors of Osisko Mining Corporation, on the recommendation of its Special Committee, unanimously recommended that shareholders reject the unsolicited hostile offer from Goldcorp Inc. The Osisko Board determined that the Goldcorp offer fails to adequately compensate the shareholders for the strategic value of Osisko's world-class asset base, the significant upside potential of Osisko's Canadian Malartic Mine, or the increased risk inherent in Goldcorp shares, which represent more than half of the consideration on offer.
On January 29, 2014, Osisko commenced litigation against Goldcorp in the Quebec Superior Court. Osisko alleges that Goldcorp misused confidential information, breached a confidentiality agreement and failed to honour a standstill agreement in launching its hostile bid for Osisko. The judge presiding over the matter agreed to hear the case on its merits beginning on March 3, 2014. Consequently, Goldcorp will not be able to act on its offer until the court rules on the merits of Osisko's complaints and has said it will extend its bid deadline to March 10, 2014.
The basis for the Board of Directors' recommendation was outlined in a Director's Circular that was filed with Canadian regulators and mailed to Osisko Shareholders on January 29, 2014.
In response to the Goldcorp hostile bid, the Board of Directors has been working, together with Osisko's management and financial and legal advisors, to develop, review and evaluate a range of alternatives consistent with the Board of Director's focus on maximizing value to Osisko Shareholders. These alternatives include building upon existing value-enhancing initiatives, as well as engaging in discussions with third parties regarding strategic alternatives.
Tendering Osisko shares to the Goldcorp hostile bid before the Board of Directors and its advisors have had an opportunity to fully explore all available strategic alternatives to the Goldcorp Offer may preclude the possibility of a superior alternative transaction emerging.
Outstanding Share Data
As of February 18, 2014, 439,547,793 common shares were issued and outstanding. A total of 20,568,425 common share options were outstanding to purchase common shares under the Company's share option plan and 12,500,000 common share purchase warrants were outstanding.
Q4 Conference Call Information
Osisko will host a conference call on Wednesday, February 19, 2014 at 10:00 EST, where senior management will discuss the financial results and provide an update of the Company's activities. Those interested in participating in the conference call should dial in approximately five to ten minutes before the start of the conference to allow ample time to access at 1-416-981-9000 (Toronto local and international), or 1-800-908-8402 (North American toll free). An operator will direct participants to the call.
The conference call replay will be available from 12:00 EST on February 19, 2014 until 23:59 EST on March 5, 2014 with the following dial in number: 1 416 626 4100 or toll-free 800 558 5253, access code 21708937.
Non-IFRS Measures of Performance
The Company has included certain non-IFRS measures including "cash costs per ounce", "cash margin per once", "adjusted net earnings" and "adjusted net earnings per share" to supplement its consolidated financial statements, which are presented in accordance with IFRS.
The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. Non-IFRS measures do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
Comparative figures have been adjusted to reflect the adoption of IFRIC 20.
Cash costs per ounce
"Cash costs per ounce" is defined as the production costs of one ounce of gold excluding non-cash costs for a certain period. "Cash costs per ounce" is obtained from "Production costs" and "Royalties" less non-cash "Share-based compensation" and "By-product credits (silver sales)", adjusted for "Production inventory variation" for the period, divided by the "Number of ounces of gold produced" for the period.
| Three months ended December 31, |
Year ended December 31, |
|||||||
| 2013 | 2012 | 2013 | 2012 | |||||
| Gold ounces produced | 137,321 | 101,544 | 475,277 | 388,478 | ||||
| (in thousands of dollars,except per ounce) | ||||||||
| Production costs | 94,876 | 95,307 | 359,182 | 332,417 | ||||
| Royalties | 2,422 | 2,546 | 8,832 | 8,924 | ||||
| Share-based compensation | (316 | ) | (579 | ) | (1,838 | ) | (2,809 | ) |
| By-product credit (silver sales) | (2,322 | ) | (2,386 | ) | (9,388 | ) | (7,020 | ) |
| Inventory variation | 3,211 | (10,302 | ) | 4,297 | (1,694 | ) | ||
| Total cash costs for the period | 97,871 | 84,586 | 361,085 | 329,818 | ||||
| Cash costs per ounce | 713 | 833 | 760 | 849 | ||||
Cash margin per ounce
"Cash margin per ounce" is defined as the "Average selling price of gold per ounce sold" less "Cash costs per ounce produced" for the period.
| Three months ended December 31, |
Year ended December 31, |
|||
| 2013 | 2012 | 2013 | 2012 | |
| Average selling price of gold (per ounce sold) | 1,341 | 1,698 | 1,433 | 1,668 |
| Cash costs (per ounce produced) | 713 | 833 | 760 | 849 |
| Cash margin per ounce | 628 | 865 | 673 | 819 |
Adjusted net earnings and adjusted net earnings per share
"Adjusted net earnings" is defined as "Net earnings" less certain non-cash items: "Impairment of property, plant and equipment" "Write-off of property, plant and equipment", "Share-based compensation", "Unrealized gain (loss) on investments", "Impairment on investments", "Gain on premium of flow-through shares" and "Deferred income and mining tax expense (recovery)".
"Adjusted net earnings per share" is obtained from the "Adjusted net earnings" divided by the "Weighted average number of common shares outstanding" for the period.
| Three months ended December 31, |
Year ended December 31, |
|||||||
| 2013 | 2012 | 2013 | 2012 | |||||
| (in thousands of dollars, except per share amounts) |
||||||||
| Net earnings (loss) for the period | 10,488 | 12,866 | (455,103 | ) | 90,788 | |||
| Adjustments: | ||||||||
| Impairment of property, plant and equipment | - | - | 530,878 | - | ||||
| Write-off of property, plant and equipment | 950 | - | 17,950 | 617 | ||||
| Share-based compensation | 1,956 | 2,017 | 8,015 | 9,629 | ||||
| Unrealized loss (gain) on investments | (168 | ) | 5,424 | 1,973 | 6,969 | |||
| Impairment on investments | 6,013 | 10,912 | 10,645 | 12,434 | ||||
| Gain on premium of flow-through shares | (445 | ) | - | (445 | ) | - | ||
| Deferred income and mining tax expense (recovery) | ||||||||
| Related to the impairment of property, plant and equipment | - | - | (43,100 | ) | - | |||
| Other | 14,116 | 22,557 | 45,182 | 79,395 | ||||
| Adjusted net earnings | 32,910 | 53,776 | 115,995 | 199,832 | ||||
| Weighted average number of common shares outstanding (000's) | 438,370 | 391,538 | 437,193 | 388,577 | ||||
| Adjusted net earnings per share | 0.08 | 0.14 | 0.27 | 0.51 | ||||
About Osisko Mining Corporation
Osisko Mining Corporation operates the Canadian Malartic Gold Mine in Malartic, Québec and is pursuing exploration on a number of properties in Ontario and Mexico.
Mr. Luc Lessard, Eng., Senior Vice-President and Chief Operating Officer of Osisko, is the Qualified Person who has reviewed this news release and is responsible for the technical information reported herein, including verification of the data disclosed.
Cautionary Notes Concerning Estimates of Mineral Resources
This news release uses the terms measured, indicated and inferred resources as a relative measure of the level of confidence in the resource estimate. Readers are cautioned that mineral resources are not economic mineral reserves and that the economic viability of resources that are not mineral reserves has not been demonstrated. In addition, inferred resources are considered too geologically speculative to have any economic considerations applied to them. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies or economic studies except for Preliminary Assessment as defined under NI 43-101. Readers are cautioned not to assume that that further work will lead to mineral reserves that can be mined economically.
For further information in relation to the Hammond Reef project, please refer to the "Technical Report on the Hammond Reef Gold Property Atikokan area, Ontario" dated December 20, 2011. For further information in relation to the Canadian Malartic project, please refer to the "Feasibility Study - Canadian Malartic Project (Malartic, Quebec)", dated December 2008. Both of these reports are available under the Osisko profile at www.sedar.com.
For further information in relation to the Upper Beaver project, please refer to the "Technical Report on the Upper-Beaver Gold-Copper Project, Ontario, Canada" dated November 9, 2012, which is available under the Queenston profile at www.sedar.com.
Forward-Looking Statements
Certain statements contained in this press release may be deemed "forward-looking statements". All statements in this release, other than statements of historical fact, that address events or developments that Osisko expects to occur, are forward looking statements. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential", "scheduled" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur including, without limitation, that optimization will improve mill throughput and operating efficiencies and reduce operating costs; that the end of near surface blasts special procedures and the mine operating at greater depths will increase the operating efficiencies and reduce costs; the value of the assets of Osisko (including Canadian Malartic Mine) and Goldcorp; the future financial performance of Osisko and Goldcorp and whether or not Osisko's Québec proceeding against Goldcorp will be successful; risks relating to properties, development projects and producing mines of Osisko and Goldcorp. Although Osisko believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, including, without limitation, that all technical, economical and financial conditions will be met in order to achieve such events qualified by the foregoing cautionary note regarding forward looking statements, such statements are not guarantees of future performance and actual results may differ materially from those in forward looking statements.
Factors that could cause the actual results to differ materially from those in forward-looking statements include uncertainty in the outcome of legal proceedings, gold prices, access to skilled consultants, mining development and construction personnel, results of exploration and development activities, Osisko's limited experience with production and mining operations, uninsured risks, regulatory framework and changes, defects in title, availability of personnel, materials and equipment, timeliness of government approvals, actual performance of facilities, equipment and processes relative to specifications and expectations, unanticipated environmental impacts on operations market prices, continued availability of capital and financing and general economic, market or business conditions. These factors are discussed in greater detail in Osisko's most recent Annual Information Form and in the most recent Management Discussion and Analysis filed on SEDAR, which also provide additional general assumptions in connection with these statements. Osisko cautions that the foregoing list of important factors is not exhaustive. Investors and others who base themselves on forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. Osisko believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this press release should not be unduly relied upon. These statements speak only as of the date of this press release.
| Osisko Mining Corporation | |||||
| Consolidated Balance Sheets | |||||
| As at December 31, 2013 and 2012 | |||||
| (Unaudited) | |||||
| (tabular amounts expressed in thousands of Canadian dollars) | |||||
| December 31, | December 31, | ||||
| 2013 | 2012 | ||||
| (adjusted - | |||||
| see note) | |||||
| $ | $ | ||||
| Assets | |||||
| Current assets | |||||
| Cash and cash equivalents | 161,405 | 93,229 | |||
| Short-term investments | - | 19,357 | |||
| Restricted cash | 560 | 4,563 | |||
| Accounts receivable | 24,552 | 32,266 | |||
| Note receivable | - | 30,000 | |||
| Inventories | 79,247 | 70,481 | |||
| Prepaid expenses and other assets | 24,260 | 21,274 | |||
| 290,024 | 271,170 | ||||
| Non-current assets | |||||
| Restricted cash | 48,490 | 38,362 | |||
| Investments in associates | 3,557 | 8,933 | |||
| Other investments | 8,998 | 16,894 | |||
| Property, plant and equipment | 1,870,932 | 2,352,546 | |||
| 2,222,001 | 2,687,905 | ||||
| Liabilities | |||||
| Current liabilities | |||||
| Accounts payable and accrued liabilities | 78,967 | 100,931 | |||
| Current portion of long-term debt | 71,794 | 76,883 | |||
| Provisions and other liabilities | 6,913 | 1,405 | |||
| 157,674 | 179,219 | ||||
| Non-current liabilities | |||||
| Long-term debt | 245,157 | 260,529 | |||
| Provisions and other liabilities | 18,499 | 18,618 | |||
| Deferred income and mining taxes | 69,603 | 67,521 | |||
| 490,933 | 525,887 | ||||
| Equity attributable to Osisko Mining Corporation shareholders | |||||
| Share capital | 2,060,810 | 2,048,843 | |||
| Warrants | 20,575 | 19,311 | |||
| Contributed surplus | 75,626 | 65,868 | |||
| Equity component of convertible debentures | 8,005 | 8,005 | |||
| Accumulated other comprehensive income (loss) | 16 | (1,148 | ) | ||
| Retained earnings (deficit) | (433,964 | ) | 21,139 | ||
| 1,731,068 | 2,162,018 | ||||
| 2,222,001 | 2,687,905 | ||||
| Osisko Mining Corporation | |||||||||
| Consolidated Statements of Income (Loss) | |||||||||
| For the three months and the years ended December 31, 2013 and 2012 | |||||||||
| (Unaudited) | |||||||||
| (tabular amounts expressed in thousands of Canadian dollars) | |||||||||
| Three months ended | Years ended | ||||||||
| December 31, | December 31, | ||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||
| (adjusted - | (adjusted - | ||||||||
| see note) | see note) | ||||||||
| $ | $ | $ | $ | ||||||
| Revenues | 185,774 | 191,080 | 675,648 | 665,375 | |||||
| Mine operating costs | |||||||||
| Production costs | (94,876 | ) | (95,307 | ) | (359,182 | ) | (332,417 | ) | |
| Royalties | (2,422 | ) | (2,546 | ) | (8,832 | ) | (8,924 | ) | |
| Depreciation | (34,791 | ) | (20,058 | ) | (117,358 | ) | (64,920 | ) | |
| Earnings from mine operations | 53,685 | 73,169 | 190,276 | 259,114 | |||||
| General and administrative expenses | (10,149 | ) | (8,411 | ) | (32,371 | ) | (29,361 | ) | |
| Exploration and corporate development expenses | (2,847 | ) | (3,345 | ) | (12,966 | ) | (10,833 | ) | |
| Write-off of property, plant and equipment | ( 950 | ) | - | (17,950 | ) | (617 | ) | ||
| Impairment of property, plant and equipment | - | - | (530,878 | ) | - | ||||
| Earnings (loss) from operations | 39,739 | 61,413 | (403,889 | ) | 218,303 | ||||
| Interest income | 519 | 402 | 1,789 | 1,547 | |||||
| Finance costs | (6,753 | ) | (8,006 | ) | (31,219 | ) | (30,831 | ) | |
| Foreign exchange gain (loss) | (2,859 | ) | (1,237 | ) | (6,317 | ) | 1,923 | ||
| Share of loss of associates | (353 | ) | (85 | ) | (1,149 | ) | (713 | ) | |
| Other losses | (5,689 | ) | (17,064 | ) | (12,236 | ) | (20,046 | ) | |
| Earnings (loss) before income and mining taxes | 24,604 | 35,423 | (453,021 | ) | 170,183 | ||||
| Income and mining tax expense | (14,116 | ) | (22,557 | ) | (2,082 | ) | (79,395 | ) | |
| Net earnings (loss) | 10,488 | 12,866 | (455,103 | ) | 90,788 | ||||
| Net earnings (loss) per share | |||||||||
| Basic | 0.02 | 0.03 | (1.04 | ) | 0.23 | ||||
| Diluted | 0.02 | 0.03 | (1.04 | ) | 0.23 | ||||
| Weighted average number of common shares outstanding (in thousands) | |||||||||
| Basic | 438,370 | 391,538 | 437,193 | 388,577 | |||||
| Diluted | 438,666 | 392,719 | 437,193 | 390,874 | |||||
| Osisko Mining Corporation | ||||||||||
| Consolidated Statements of Cash Flows | ||||||||||
| For the three months and the years ended December 31, 2013 and 2012 | ||||||||||
| (Unaudited) | ||||||||||
| (tabular amounts expressed in thousands of Canadian dollars) | ||||||||||
| Three months ended | Years ended | |||||||||
| December 31, | December 31, | |||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||
| (adjusted - | (adjusted - | |||||||||
| see note) | see note) | |||||||||
| $ | $ | $ | $ | |||||||
| Operating activities | ||||||||||
| Net earnings (loss) | 10,488 | 12,866 | (455,103 | ) | 90,788 | |||||
| Adjustments for: | ||||||||||
| Interest income | (519 | ) | (402 | ) | (1,789 | ) | (1,547 | ) | ||
| Share-based compensation | 1,956 | 2,017 | 8,015 | 9,629 | ||||||
| Depreciation | 35,041 | 20,215 | 118,321 | 65,554 | ||||||
| Write-off of property, plant and equipment | 950 | - | 17,950 | 617 | ||||||
| Impairment of property, plant and equipment | - | - | 530,878 | - | ||||||
| Finance costs | 6,753 | 8,006 | 31,219 | 30,831 | ||||||
| Unrealized foreign exchange loss (gain) | 2,956 | 1,106 | 6,196 | (2,363 | ) | |||||
| Impairment on investments | 6,013 | 10,912 | 10,645 | 12,434 | ||||||
| Provisions and other liabilities | 3,731 | 462 | 5,498 | 2,341 | ||||||
| Income and mining tax expense | 14,116 | 22,557 | 2,082 | 79,395 | ||||||
| Other non-cash items | (83 | ) | 5,918 | 2,476 | 7,424 | |||||
| 81,402 | 83,657 | 276,388 | 295,103 | |||||||
| Change in non-cash working capital items | (8,926 | ) | (19,049 | ) | (14,822 | ) | (23,597 | ) | ||
| Net cash flows provided by operating activities | 72,476 | 64,608 | 261,566 | 271,506 | ||||||
| Investing activities | ||||||||||
| Net decrease in short-term investments | - | - | 19,357 | - | ||||||
| Net decrease (increase) in restricted cash | 770 | (4,301 | ) | (6,125 | ) | 448 | ||||
| Proceeds from note receivable | - | - | 30,000 | - | ||||||
| Acquisition of investments | (19 | ) | (42,329 | ) | (19 | ) | (53,279 | ) | ||
| Proceeds on disposal of investments | - | - | 1,045 | 1,838 | ||||||
| Property, plant and equipment included in accounts payable at the date of acquisition of Queenston | - | - | (6,574 | ) | - | |||||
| Property, plant and equipment, net of government credits | (25,167 | ) | (46,929 | ) | (182,510 | ) | (253,564 | ) | ||
| Proceeds on disposal of property, plant and equipment | 340 | 324 | 1,035 | 324 | ||||||
| Cash received from the acquisition of assets | - | 40,513 | - | 40,513 | ||||||
| Interest received | 593 | 366 | 2,420 | 1,393 | ||||||
| Net cash flows used in investing activities | (23,483 | ) | (52,356 | ) | (141,371 | ) | (262,327 | ) | ||
| Financing activities | ||||||||||
| Long-term debt | - | 14,651 | - | 14,651 | ||||||
| Long-term debt transaction costs | (3,596 | ) | (146 | ) | (3,709 | ) | (262 | ) | ||
| Long-term debt repayments | (3,081 | ) | (1,250 | ) | (11,715 | ) | (5,000 | ) | ||
| Finance lease payments | (7,098 | ) | (6,088 | ) | (27,448 | ) | (22,790 | ) | ||
| Issuance of common shares, net of expenses | 9,727 | 1,199 | 12,823 | 19,095 | ||||||
| Interest paid | (5,310 | ) | (5,649 | ) | (21,970 | ) | (22,314 | ) | ||
| Net cash flows used in financing activities | (9,358 | ) | 2,717 | (52,019 | ) | (16,620 | ) | |||
| Increase (decrease) in cash and cash equivalents | 39,635 | 14,969 | 68,176 | (7,441 | ) | |||||
| Cash and cash equivalents - beginning of period | 121,770 | 78,260 | 93,229 | 100,670 | ||||||
| Cash and cash equivalents - end of period | 161,405 | 93,229 | 161,405 | 93,229 | ||||||
Note on adjustment of 2012 balances
Balances related to 2012 have been adjusted to reflect the impact of the adoption of IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine ("IFRIC 20"). IFRIC 20 provides guidance on the accounting for the costs of stripping activities during the production phase of surface mining when two benefits accrue to the entity as a result of the stripping: useable ore that can be used to produce inventory and improved access to further quantities of material that will be mined in the future periods. The Company adopted IFRIC 20 effective January 1, 2013. Upon adoption of IFRIC 20, the Company assessed the stripping asset on the balance sheet as at January 1, 2012 and determined that there are identifiable components of the ore body with which this stripping asset can be associated, and therefore no balance sheet adjustment was recorded at that date. The adoption of IFRIC 20 has resulted in increased capitalization of waste stripping costs and a reduction in mine operating costs in 2012. If the Company had not adopted IFRIC 20, the net earnings for the three months ended December 31, 2013 would have decreased, the net loss for year ended December 31, 2013 would have increased, the net earnings for the comparative periods would have decreased and capitalized waste stripping costs for the current and comparative periods would have decreased.
The impact of adopting IFRIC 20 in the prior year consolidated financial statements is presented below:
(a) Adjustments to the consolidated balance sheets:
| As at December 31, | Impact of | As at December 31, | ||||
| 2012 | IFRIC 20 | 2012 | ||||
| (previously stated) | (adjusted) | |||||
| $ | $ | $ | ||||
| Inventories | 73,795 | (3,314 | ) | 70,481 | ||
| Property, plant and equipment | 2,329,773 | 22,773 | 2,352,546 | |||
| Deferred income and mining taxes | (60,426 | ) | (7,095 | ) | (67,521 | ) |
| Increase in retained earnings | 12,364 |
(b) Adjustments to the consolidated statements of income:
| Three months ended | Impact of | Three months ended | |||||
| December 31, 2012 | IFRIC 20 | December 31, 2012 | |||||
| (previously stated) | (adjusted) | ||||||
| $ | $ | $ | |||||
| Mine operating costs | |||||||
| Production costs | (101,239 | ) | 5,932 | (95,307 | ) | ||
| Depreciation | (19,198 | ) | (860 | ) | (20,058 | ) | |
| Income and mining tax expense | (20,713 | ) | (1,844 | ) | (22,557 | ) | |
| Increase in net earnings | 3,228 | ||||||
| Increase in net earnings per share and diluted net earnings per share | 0.01 | ||||||
| Year ended | Impact of | Year ended | |||||
| December 31, 2012 | IFRIC 20 | December 31, 2012 | |||||
| (previously stated) | (adjusted) | ||||||
| $ | $ | $ | |||||
| Mine operating costs | |||||||
| Production costs | (353,827 | ) | 21,410 | (332,417 | ) | ||
| Depreciation | (62,969 | ) | (1,951 | ) | (64,920 | ) | |
| Income and mining tax expense | (72,300 | ) | (7,095 | ) | (79,395 | ) | |
| Increase in net earnings | 12,364 | ||||||
| Increase in net earnings per share and diluted net earnings per share | 0.03 | ||||||
(c) Adjustments to the consolidated statements of cash flows:
| Three months ended | Impact of | Three months ended | |||||
| December 31, 2012 | IFRIC 20 | December 31, 2012 | |||||
| (previously stated) | (adjusted) | ||||||
| $ | $ | $ | |||||
| Net earnings | 9,638 | 3,228 | 12,866 | ||||
| Adjusted for the following items: | |||||||
| Depreciation | 19,355 | 860 | 20,215 | ||||
| Income and mining tax expense | 20,713 | 1,844 | 22,557 | ||||
| Change in non-cash working capital items: | |||||||
| Decrease in inventories | 7,394 | 1,661 | 9,055 | ||||
| Net cash flows provided by operating activities | 7,593 | ||||||
| Property, plant and equipment | (39,336 | ) | (7,593 | ) | (46,929 | ) | |
| Net cash flows used in investing activities | (7,593 | ) | |||||
| Net change in cash and cash equivalents | - | ||||||
| Year ended | Impact of | Year ended | |||||
| December 31, 2012 | IFRIC 20 | December 31, 2012 | |||||
| (previously stated) | (adjusted) | ||||||
| $ | $ | $ | |||||
| Net earnings | 78,424 | 12,364 | 90,788 | ||||
| Adjusted for the following items: | |||||||
| Depreciation | 63,603 | 1,951 | 65,554 | ||||
| Income and mining tax expense | 72,300 | 7,095 | 79,395 | ||||
| Change in non-cash working capital item: | |||||||
| Increase in inventories | (24,780 | ) | 3,314 | (21,466 | ) | ||
| Net cash flows provided by operating activities | 24,724 | ||||||
| Property, plant and equipment | (228,840 | ) | (24,724 | ) | (253,564 | ) | |
| Net cash flows used in investing activities | (24,724 | ) | |||||
| Net change in cash and cash equivalents | - | ||||||
Contact Information:
Vice-President Corporate Development
(416) 363-8653
Sylvie Prud'homme
Director of Investor Relations
(514) 735-7131
Toll Free: 1-888-674-7563
www.osisko.com