MONTREAL, QUEBEC--(Marketwired - May 4, 2016) - Osisko Gold Royalties Ltd (the "Company" or "Osisko") (TSX:OR) reports today first quarter adjusted earnings of $8.7 million ($0.09 per basic share).
First Quarter 2016 Highlights
- 9,404 gold ounces earned and 9,417 ounces sold (Q1 2015 - 6,985 ounces earned and sold);
- 8,092 silver ounces earned and 8,100 ounces sold (Q1 2015 - 7,825 ounces earned and sold);
- Revenues of $15.6 million (Q1 2015 - $10.6 million);
- Net loss of $0.1 million, $0.00 per basic share (Q1 2015 - net earnings of $10.2 million, $0.15 per basic share);
- Adjusted earnings1 of $8.7 million, $0.09 per basic share1 (Q1 2015 - $6.5 million and $0.14 per basic share);
- Net cash flows provided by operating activities2 of $13.5 million (Q1 2015 - $5.6 million);
- Total value of working capital and marketable securities1 of $607.6 million at March 31, 2016;
- Entered into a 1.5% NSR royalty agreement with Barkerville Gold Mines Ltd. on the Cariboo gold project for a cash consideration of $25.0 million;
- Closed a $50.0 million financing in the form of a convertible debenture with Investissement Québec;
- Closed a bought deal financing for total gross proceeds of $172.6 million;
- Declaration of a quarterly dividend of $0.04 per common share on February 16, 2016.
- Dividend income from holdings in Labrador Iron Ore Royalty Corporation ("LIORC" of $1.6 million.
| 1 | "Adjusted earnings" "Adjusted earnings per share" and "value of working capital and marketable securities" are non-IFRS financial performance measures which have no standard definition under IFRS. The fair value of working capital and marketable securities corresponds to the accounting value of the working capital as presented on the consolidated balance sheet and the fair value of the investments in marketable securities using the quoted market price on a recognized stock exchange as at March 31, 2016. Refer to the non-IFRS measures provided under the Non-IFRS Financial Performance Measures section of this Management and Discussion Analysis. |
| 2 | Before change in non-cash working capital items. |
Sean Roosen, Chair and Chief Executive Officer, commenting on the first quarter results:
"Osisko is very pleased to provide its first quarter 2016 results. During its first 22 months of existence, the Company has been focused on positioning itself for growth. With approximately $440 million in cash and cash equivalents and up to $200 million in available credit, Osisko is well positioned to grow its royalty portfolio through the addition of a large, high-quality, producing, precious metals royalty or stream."
First Quarter 2016 Results
Revenues increased in the first quarter of 2016 as a result of higher in-kind royalties earned as the Company received royalties from the Éléonore mine, following the completion of the advance royalty payback in November 2015 (production was applied in satisfaction of the advance royalty), as well as royalties from the Island Gold mine. The average selling price of gold in Canadian dollars was also higher in the first quarter of 2016 when compared to the first quarter of 2015.
In the first quarter of 2016, operating income amounted to $7.1 million compared to $2.6 million in the first quarter of 2015. The increase in net operating income in the first quarter of 2016 is mainly the result of higher revenues generated from the sale of gold and silver and lower business development expenses, partially offset by a depletion of royalty interests of $3.0 million. The lower business development expenses in 2016 compared to 2015 is due to fees incurred in 2015 for the acquisition of Virginia Mines Inc. in February 2015.
The decrease in net results in the first quarter of 2016 is mainly the result of a foreign exchange loss of $13.7 million compared to a gain of $1.7 million in the first quarter of 2015, partially offset by an increase in operating income of $4.7 million.
Royalty Interests
Canadian Malartic
Agnico Eagle Mines Limited ("Agnico") and Yamana Gold Inc. ("Yamana"), (together referred to as the "Partners") indicated that during the first quarter of 2016, the Canadian Malartic mill processed an average of 52,314 tpd, compared with an average of 51,988 tpd in the corresponding period of 2015. This represents a record quarter during the winter season.
For the first quarter of 2016, the Partners indicated that production at the Canadian Malartic mine reached 147,226 ounces of gold. This compares with the first quarter of 2015 production of 135,786 ounces of gold. Production was higher during the quarter primarily due to higher throughput levels and higher gold grades.
In February 2016, the Partners indicated the following forecast of annual gold production for the Canadian Malartic mine: 560,000 - 580,000 ounces in 2016, 590,000 - 600,000 ounces in 2017 and 610,000 ounces in 2018. The Partners indicated that the 2016 guidance is based on throughput levels of approximately 53,000 tonnes per day. Any increase in throughput above this 53,000 tonnes per day level remains contingent upon updating the existing operating permits.
The Partners indicated that Permitting activities for the Barnat Extension and deviation of Highway 117 are continuing. Having received answers to two series of questions, in April 2016, the Ministry of Sustainable Development, Environment and the Fight Against Climate Change (Quebec) accepted the Environmental Impact Assessment ("EIA") for the Barnat Extension as admissible. This was the trigger for the public hearings process to start and the first step was the release of the EIA to the public. This will be followed with a public presentation of the project in May and subsequent public hearings in June.
The Partners indicated that during the quarter, drilling continued on the Odyssey North and South Zones and to date, 18 holes totaling 18,581 metres have been completed. Data from these holes are currently being compiled and integrated into the existing database. In 2016, approximately 60,000 metres of drilling has been proposed to infill and expand the known mineralized zones on the Odyssey property. The Partners indicated that the 2016 budget is C$8.0 million. Osisko holds a 5% NSR royalty on the Odyssey South Zone and a 3% NSR royalty on the Odyssey North Zone.
For more information, please refer to the press release of Agnico Eagle dated April 28, 2016 and the press release of Yamana dated April 11, 2016 filed on SEDAR (www.sedar.com).
Éléonore
Osisko, through its wholly-owned subsidiary Osisko Exploration James Bay Inc. (formerly Virginia Mines Inc.), owns a 2.0% to 3.5% NSR royalty in the Éléonore gold property located in the Province of Québec and operated by Goldcorp Inc. ("Goldcorp").
Éléonore declared commercial production on April 1, 2015.
Goldcorp indicated that first quarter gold production totaled 66,700 ounces. Gold production increased as a result of the continued ramp-up in mine development with four horizons compared to two horizons in the first quarter of 2015. Recovery improvements were the result of optimization of the sulphide circuit and an average recovery of 91% was achieved in March. With the folding and faulting of the ore body factored into the mine plan and accounted for in the improved stope designs, Éléonore remains on track to deliver throughput, grade, and recovery expectations for 2016. Work on the production shaft continued in the first quarter of 2016 and focused on the ore handling system on the 690 level and the surface ore transfer building. Hoisting of ore through the production shaft is scheduled to begin in the third quarter of 2016, which will increase efficiencies and reduce operating costs.
Goldcorp indicated that the production shaft is planned to be operational by the end of 2016, which will drive improvements in efficiencies and costs. The underground mining rate continues to ramp-up as planned to meet the nameplate mill capacity of 7,000 tonnes per day. Mine production is expected to average between 4,700 to 5,000 tonnes per day of ore from four production horizons in 2016. Development will continue to support expansion to six mining horizons to enable the ramp-up to a 7,000 tonnes per day mining and milling rate in the first half of 2018.
Goldcorp indicated that production in 2015 included stockpiled material, while mill feed in 2016 comprises solely of material delivered directly from the mine.
Goldcorp indicated that in 2016, $5 million was budgeted for exploration to continue to target the 494 zone for reserve replacement and test the deep projection of the center and southern ore bodies and the 494 zone with a total of 25,800 metres of underground diamond drilling. During the first quarter of 2016, exploration drilling was focused on the lower south portion of the deposit (below 650 metres) with 1,469 metres and in the 494 area with 1,700 metres for a total of 3,169 metres. Exploration expenditures incurred during the first quarter of 2016 were $1 million. In the second quarter of 2016, exploration will be focusing on the 494 zone with 5,760 metres and on the deep projection of the south and central portion of the deposit with 3,000 metres with a budget of $2 million.
In February 2016, Goldcorp indicated that a conservative ramp-up schedule at Éléonore is expected to lead to gold production of between 250,000 and 280,000 ounces for 2016.
For more information, refer to the press releases of Goldcorp dated February 25, 2016 and April 27, 2016 and the Management Discussion and Analysis for the year ended December 31, 2015 and for the three months ended March 31, 2016, all filed on SEDAR (www.sedar.com).
Island Gold Mine (Richmont Mines Inc.)
During the first quarter of 2016, the Company received the first ounces from its Island Gold Mine NSR royalty (212 ounces of gold based on the 2015 fourth quarter production) operated by Richmont Mines Inc. ("Richmont Mines"). On April 12, 2016, Richmont Mines reported that during the first quarter of 2016, Island Gold produced 26,589 ounces of gold, an increase of 147% over the same period in 2015 and an 87% increase over the prior quarter. Increased production for the quarter was positively impacted by higher than expected reconciled grades of 11.31 g/t milled and record mill throughput of 834 tonnes per day. Richmont Mines indicated that the 2016 production guidance for the Island Gold Mine is between 62,000 to 67,000 ounces of gold.
Richmont Mines also indicated that the Island Gold exploration drilling program continues to demonstrate the significant potential to grow production and increase mine life both laterally above the 860 metre level, which could support an upgrade to 1,150 tonnes per day, as well as the vertical extension below the 1,000 metre level. One additional directional drill (for a total of 4 drills) has been added to support the deep exploration program below 1,000 metre level but also to expand the drilling program in order to test the structure to the west of the current target between the 1,000 metre and 1,500 metre levels. It is expected that the previously announced exploration drilling program will be completed by June 2016, at which time Richmont Mines will review all drilling results and subsequently provide an update on additional drilling programs planned for the second half of the year.
For more information, refer to the press releases of Richmont Mines dated April 12, 2016 and filed on SEDAR (www.sedar.com).
Teck Canadian Royalties
The Company announced in October 2015 that it has entered into a definitive agreement to acquire a portfolio of Canadian royalties held by Teck Resources Limited and its subsidiary Teck Metals Ltd. ("Teck") for a cash consideration of $28.0 million, with an additional $2.5 million payable on confirmation of certain rights.
The portfolio consists of 31 royalties, most of which are NSR royalties, including the following key royalties (before the sale of a 15% interest to Caisse de dépôt et placement du Québec ("CDPQ") as described below):
- Three NSR royalties from 2% to 3% on the producing Island Gold Mine properties located in Northern Ontario owned by Richmont Mines Inc.;
- 2% NSR royalty on the Lamaque property located in Abitibi owned by Integra Gold Corp.;
- 2% NSR royalty on the Hewfran Block located in Northern Québec owned by Metanor Resources Inc.;
- 0.5% NSR royalty and right to $5 million payment upon commercial production on the Marban property Québec owned by Oban Mining Corporation and located near the Canadian Malartic mine;
- 1.5% NSR royalty on a portion of the Fenn-Gib property located in northern Ontario owned by Tahoe Resources Inc.; and
- 1.5% to 2% NSR royalty on the Garrcon property located in Northern Ontario and owned by Oban Mining Corporation.
The portfolio also includes other precious metal royalty assets on exploration and development properties. Certain NSR royalties are subject to buy-back clauses.
The first portion of the transaction with Teck was closed in November 2015, consisting of a portfolio of 28 royalties acquired for a cash consideration of $24.2 million with an additional $2.5 million to be paid on confirmation of certain rights. This portfolio includes the royalties on Richmont Mines Inc.'s producing Island Gold Mine and Integra Gold Corp.'s Lamaque property. The Company received its first in-kind royalty from the Island Gold Mine in the first quarter of 2016. The Company expects to close the second portion of its transaction with Teck in the first half of 2016.
CDPQ has exercised its participation right to acquire 15% of the Teck royalty interests acquired by Osisko to date. The transaction was completed in February 2016 for $3.6 million.
Vezza Royalties
The Company acquired a 5% NSR royalty and a 40% net profit interest ("NPI") royalty in the Vezza gold property operated by Ressources Nottaway Inc. for a total acquisition price of $10.0 million. A first payment of $5.0 million was made in 2015 and the balance was paid in January and March 2016. The property is located 25 kilometres from Matagami, Québec. Commercial production is forecasted for the second quarter of 2016.
Cariboo Gold Project
On November 30, 2015, Osisko entered into a binding letter agreement with Barkerville Gold Mines Ltd. ("Barkerville") whereby Osisko had agreed to purchase a 1.5% NSR royalty on the Cariboo Gold Project (the "Royalty Financing"), located in British Columbia, Canada, for a cash consideration of $25.0 million. The royalty agreement was signed in February 2016.
The Cariboo Gold Project consists of 1,164 square kilometres of land along a strike length of 60 kilometres which includes several past producing mines in the Cariboo Gold District, a historically profitable yet still underexplored area of south-central British Columbia. Based upon historic estimates, historical gold production in the Cariboo area is approximately 3.8 million ounces. At Cariboo, the Cow Mountain deposit contains a NI 43-101 compliant mineral resource totaling 2.8 million ounces Au in the indicated category (35.8 million tonnes at 2.4g/t) with an additional 2.0 million ounces Au in the inferred category (27.4 million tonnes at 2.3g/t), both using a 0.5g/t cut-off grade.
As part of the Royalty Financing, Osisko and Barkerville have also agreed to negotiate a gold stream agreement ("Gold Stream Agreement") following the completion by Barkerville of a feasibility study on the Cariboo Gold Project. Following a 60 day negotiation period, if Osisko and Barkerville have not entered into a Gold Stream Agreement, Barkerville shall either grant a right to Osisko to purchase an additional 0.75% NSR royalty for consideration of $12.5 million, or make a payment of $12.5 million to Osisko.
Summary of Producing and Advanced Non-producing Royalties
| Asset | Operator | Interest(1) | Commodities | Jurisdiction | Stage |
| Canadian Malartic | Agnico/Yamana | 5.0% NSR royalty | Au | Québec | Production |
| Éléonore | Goldcorp Inc. | 2.0-3.5% NSR royalty | Au | Québec | Production |
| Island Gold | Richmont Mines | 1.7-2.55% NSR royalty | Au | Ontario | Production |
| Hewfran Block | Metanor Resources | 1.7% NSR royalty | Au | Québec | Production |
| Vezza | Ressources Nottaway Inc. | 5% NSR royalty | Au | Québec | Development |
| Vezza | Ressources Nottaway Inc. | 40% NPI royalty | n/a | Québec | Development |
| Lamaque | Integra Gold | 1.7% NSR royalty | Au | Québec | Development |
| Cariboo | Barkerville | 1.5% NRS royalty | Au | British Columbia | Development |
| Hammond Reef | Agnico/Yamana | 2% NSR royalty | Au | Ontario | Permitting |
| Windfall | Oban Mining Corporation | 0.5% NSR Royalty | Au | Québec | Exploration |
| Marban | Oban Mining | 0.425% NSR royalty | Au | Québec | Exploration |
| Hermosa Sulfides | Arizona Mining | 1% NSR royalty | Zn, Pb, Ag | Arizona, USA | Exploration |
| Pandora | Agnico/Yamana | 2% NSR royalty | Au | Québec | Exploration |
| Malartic - Odyssey North | Agnico/Yamana | 3% NSR royalty | Au | Québec | Exploration |
| Upper Beaver | Agnico/Yamana | 2% NSR royalty | Au, Cu | Ontario | Exploration |
| Kirkland Lake Camp | Agnico/Yamana | 2% NSR royalty | Au, Cu | Ontario | Exploration |
| White Pine North - Copperwood | Highland Copper | 3% sliding-scale NSR royalty(2) | Ag, Cu | Michigan, USA | Exploration |
Summary of Advanced Non-producing Royalty Options
| Asset | Operator | Interest | Price to Exercise | Commodities | Jurisdiction | Stage |
| Neita | Unigold | 2% NSR Royalty | $2.0 million | Au | Dominican Republic | Exploration |
| Yellowknife City Gold | TerraX | 3% NSR Royalty | $4.0 million | Au | Northwest Territories | Exploration |
| Oban Mining Projects(3) | Oban Mining | 1% NSR Royalty | $5.0 million | n/a | n/a | n/a |
| (1) | After the sale of a 15% interest in the Teck royalties to Caisse de dépôt et placement du Québec. |
| (2) | Subject to conversion of Osisko's $10.0 million convertible loan with Highland Copper Company. |
| (3) | Osisko has a one-time right to purchase, prior to August 25, 2020, a 1% NSR royalty on Oban Mining Corporation's wholly-owned projects held as of August 25, 2015. |
Portfolio of Investments
The Company's assets include a portfolio of shares of publicly traded companies. Osisko invests, and intends to continue from time to time investing, in various companies within the mining industry for investment purposes, and with the objective of improving its ability to acquire interests in exploration assets, future royalties or revenue streams. In addition to investment objectives, in some cases, the Company may decide to take a more active role, including providing management personnel, technical and/or administrative support, as well as nominating individuals to the investee's board of directors. These investments are reflected in investments in associates in the consolidated financial statements and include Oban Mining Corporation ("Oban"), Falco Resources Ltd. ("Falco") and Barkerville. Barkerville became a new associate in February 2016 following the nomination of Sean Roosen, Chair and Chief Executive Officer of Osisko, as Co-Chairman of the board of directors of Barkerville and the appointment of Luc Lessard, Senior Vice President, Technical Services of Osisko, as Chief Operating Officer of Barkerville.
Osisko may, from time to time and without further notice except as required by law, increase or decrease its investments at its discretion.
Investment in Associates - Oban
On March 11, 2016, Oban completed the acquisition of Niogold Mining Corporation (which holds the Marban property) and closed a financing of $12.6 million. Osisko participated for $960,000 in this financing. Following these transactions, Osisko holds an interest of 16% in Oban.
For more information, please refer to Oban's profile on SEDAR (www.sedar.com).
Labrador Iron Ore Royalty Corporation ("LIORC")
Since the beginning of 2015, Osisko has acquired a 9.8% interest in LIORC. The Company views this investment as an opportunity to provide asset/commodity diversification to its current portfolio of royalties through exposure to a world-class, long-life iron ore asset in a stable jurisdiction while maintaining the gold focus. LIORC is entirely focused on the Iron Ore Company of Canada ("IOC") operations through:
- A 7% gross royalty on the IOC iron ore operations;
- A $0.10 per tonne marketing fee on all products sold by IOC; and
- A 15% direct interest in IOC.
IOC is a major Canadian iron ore producer held by Rio Tinto (59%), Mitsubishi Corporation (26%) and LIORC. The mine located in the Newfoundland and Labrador Province in Canada has been producing and processing iron ore concentrate and pellets since 1954. The crude ore is processed into iron ore concentrate and then either sold or converted into many different qualities of iron ore pellets to meet its customers' needs. IOC is strategically situated to serve the markets of the Great Lakes and the balance of the world from its year-round port facilities at Sept-Îles, Quebec. The iron ore concentrate and pellets are transported to IOC's port facilities at Sept-Îles via its wholly-owned Quebec North Shore and Labrador Railway, a 418 kilometre rail line which links the mine and the port. From there, the products are shipped to markets throughout North America, Europe, the Middle East and the Asia-Pacific region.
As per LIORC's press release dated March 3, 2016 (filed on SEDAR (www.sedar.com)), the mine has reserves to continue operations for 28 years at current production rate with additional resources of a greater magnitude.
Osisko's share of dividends for the first quarter of 2016 amounts to $1.6 million.
The investment in LIORC provides diversification to gold production and is consistent with Osisko's philosophy of investing in long-life mines operated by world-class mining companies in safe jurisdictions.
For more information, please refer to the press release of LIORC dated March 3, 2016 filed on SEDAR (www.sedar.com) and the press release of Rio Tinto dated April 19, 2016 available on their web site: www.riotinto.com.
Exploration and Evaluation
James Bay and Labrador Trough areas, Québec
Osisko acquired exploration and evaluation projects through the acquisition of Virginia Mines Inc. ("Virginia") in 2015. During the first quarter of 2016, Osisko invested $1.7 million in exploration and evaluation activities on the James Bay territory.
Since the acquisition of Virginia, the exploration program continued on the Coulon project (James Bay area), focusing mainly on a diamond drilling program on Lens 257 and on regional targets. Exploration work also includes ground and borehole geophysical surveys.
A diamond drill program started during winter 2016 on the Coulon project. At the end of March 2016, 23 new holes were drilled and one hole was extended for a total of 19,318 meters; 18 of them and the hole extension were drilled in the main fold area which hosts the majority of the known massive sulfide lenses. Three holes tested the area between lens 43, lens 201 and Tension while the two (2) remaining holes tested electromagnetic anomalies in less explored areas north and northeast of the main fold area.
The Company continued exploration programs on several of its projects located in the James Bay territory and the Labrador Trough in Québec.
Significant Financing Activities
Convertible Debenture
On February 12, 2016, the Company closed a financing with Ressources Québec, a wholly-owned subsidiary of Investissement Québec. Ressources Québec subscribed to a $50.0 million convertible debenture of Osisko, which will mature in five years and will bear interest at an annual rate of 4% payable quarterly. Ressources Québec will be entitled, at its option, to convert the debenture into common shares of the Company at a price of $19.08 at any time during the term of the debenture. Osisko paid a 1% financing fee to Ressources Québec and reimbursed its costs incurred in connection with the financing.
2016 Bought Deal Financing of $173 million
On February 26, 2016, the Company closed a bought deal public offering (the "Offering") of 11,431,000 units of Osisko ("Units"), including the full exercise of the over-allotment option by the underwriters of the Offering, at a price of $15.10 per Unit for aggregate gross proceeds of $172.6 million (net proceeds of $164.6 million).
The Units were sold on a bought-deal basis through a syndicate of underwriters, co-led by BMO Capital Markets and RBC Capital Markets. Osisko plans to use the net proceeds from the Offering for working capital and general corporate purposes, including funding resource royalty and stream acquisitions.
Each Unit is comprised of one common share ("Common Share") of the Company and one-half of one common share purchase warrant (each whole common share purchase warrant being a "Warrant") of the Company. Each whole Warrant entitles the holder thereof to purchase one Common Share of the Company at a price of $19.08 per Common Share, for a period of 36 months following the closing date.
The Common Shares and Warrants (TSX:OR.WT.A) trade on the TSX since February 26, 2016.
Revolving Credit Facility
In 2015, the Company increased its revolving credit facility ("Facility") from $100.0 million to $150.0 million. The Facility was extended by one year and was syndicated between National Bank of Canada and Bank of Montreal. The Facility may be increased by $50.0 million at Osisko's request, subject to standard due diligence procedures. The Facility is to be used for investments in the mineral industry, including the acquisition of royalties and the funding of precious metal streams. The Facility is secured by the Company's assets (including the royalty interests) and has a two-year term (December 23, 2017), which can be extended by one year on each of the two anniversary dates of the amendment. As at March 31, 2016, the Facility was not drawn.
Quarterly Dividend
On May 4, 2016, the Board of Directors has declared the seventh quarterly dividend of $0.04 per common share payable on July 15, 2016 to shareholders of record as of the close of business on June 30, 2016.
On September 21, 2015, the Company announced the implementation of a Dividend Reinvestment Plan ("DRIP"). The DRIP allows shareholders to reinvest their cash dividends into additional common shares either purchased on the open market through the facilities of the Toronto Stock Exchange (the "TSX"), or issued directly from treasury by the Company, or acquired by a combination thereof. In the case of a treasury issuance, the price will be the weighted average price of the common shares on the TSX during the five (5) trading days immediately preceding the dividend payment date, less a discount, if any, of up to 5%, at the Company's sole election. No commissions, service charges or brokerage fees are payable by shareholders who elect to participate in the DRIP.
Financial Position
The Company completed the first quarter with a strong balance sheet. Cash and cash equivalents totaled $439 million and net working capital stood at $438.1 million.
Furthermore, the Company has access to up to $200.0 million in cash under its amended revolving credit facility to acquire royalties and metal revenue streams.
Outlook
Osisko's 2016 outlook on royalties is based on the publicly available forecast for the Canadian Malartic mine published by Yamana and Agnico Eagle, and for the Éléonore mine published by Goldcorp. For royalties earned on properties where no public information is available, Osisko obtains internal estimates from the producers.
Attributable royalty production for 2016 is estimated at 28,000 to 29,000 gold ounces for the Canadian Malartic mine, between 5,500 and 6,200 gold ounces for the Éléonore mine and between 1,000 and 2,000 ounces from other royalties. The Company also expects to continue its exploration programs in the James Bay area for approximately $10.3 million ($8.3 million net of estimated exploration tax credits), of which about $3.8 million will be financed by Québec institutions and other partners.
Q1 2016 Conference Call Information
Osisko will host a conference call on Thursday, May 5, 2016 at 11:00 EDT, where senior management will discuss the financial results and provide an update on the Company's activities. Those interested in participating in the conference call should dial in at 1-(647) 788-4922 (international), or 1-(877) 223-4471 (North American toll free). An operator will direct participants to the call.
The conference call replay will be available from 2:00 pm EDT on May 5, 2016 until 11:59 pm EDT on May 12, 2016 with the following dial in numbers: 1-(855) 585-8367 (North American toll free) or 1-(416) 621-4642, access code 3052867.
About Osisko Gold Royalties Ltd
Osisko is an intermediate mining royalty and exploration company with two world-class gold royalty assets. These two cornerstone assets are a 5% net smelter return ("NSR") royalty on the world-class Canadian Malartic gold mine, located in Malartic, Québec, and a 2.0-3.5% NSR on the Éléonore gold mine, located in James Bay, Québec. Osisko also holds a 1.7-2.55% NSR royalty on certain claims comprising the Island Gold Mine, a 1.7% NSR royalty on the Lamaque South Project, a 3% NSR royalty on the Malartic CHL property as well as a 2% NSR royalty on the Upper Beaver, Kirkland Lake and Hammond Reef gold exploration projects in Northern Ontario. The Company also owns a 9.8% equity interest in Labrador Iron Ore Royalty Corporation.
Osisko's head office is located at 1100 Avenue des Canadiens-de-Montréal, Suite 300, Montréal, Québec, H3B 2S2.
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 future events, developments or performance that Osisko expects to occur including management's expectations regarding Osisko's growth, results of operations, estimated future revenues, requirements for additional capital, mineral reserve and mineral resource estimates, production estimates, production costs and revenue, future demand for and prices of commodities, business prospects and opportunities are forward looking statements. In addition, statements (including data in tables) relating to reserves and resources and gold equivalent ounces are forward looking statements, as they involve implied assessment, based on certain estimates and assumptions, and no assurance can be given that the estimates will be realized. 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 variations (Including negative variations), or that events or conditions "will", "would", "may", "could" or "should" occur including, without limitation, the performance of the assets of Osisko, the realization of the anticipated benefits deriving from its portfolio of investments, achievement of production and operation forecasts published by operators of properties in which Osisko holds a royalty or an interest, timeliness of public hearings and grant of permits at Canadian Malartic, timeliness of full ramp-up by the operator at Éléonore, timely closing of second part of transaction with Teck, timely achievement of commercial production by operator at Vezza and successful results of exploration work conducted by the Company. Although Osisko believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements involve known and unknown risks, uncertainties and other factors and are not guarantees of future performance and actual results may accordingly 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, without limitation: fluctuations in the prices of the commodities that drive royalties held by Osisko (gold and silver); fluctuations in the value of the Canadian dollar relative to the U.S. dollar; regulatory changes in national and local government, including permitting and licensing regimes and taxation policies; regulations and political or economic developments in any of the countries where properties in which Osisko holds a royalty or other interest are located or through which they are held; risks related to the operators of the properties in which Osisko holds a royalty, influence of macroeconomic developments; business opportunities that become available to, or are pursued by Osisko; continued availability of capital and financing and general economic, market or business conditions; litigation; title, permit or license disputes related to interests on any of the properties in which Osisko holds a royalty or other interest; development, permitting, infrastructure, operating or technical difficulties on any of the properties in which Osisko holds a royalty or other interest; rate and timing of production differences from resource estimates or production forecasts by operators of properties in which Osisko holds a royalty or other interest ; risks and hazards associated with the business of exploring, development and mining on any of the properties in which Osisko holds a royalty or other interest, including, but not limited to unusual or unexpected geological and metallurgical conditions, slope failures or cave-ins, flooding and other natural disasters or civil unrest or other uninsured risks. The forward looking statements contained in this press release are based upon assumptions management believes to be reasonable, including, without limitation: the ongoing operation of the properties in which Osisko holds a royalty or other interest by the owners or operators of such properties in a manner consistent with past practice; the accuracy of public statements and disclosures made by the owners or operators of such underlying properties; no material adverse change in the market price of the commodities that underlie the asset portfolio; no adverse development in respect of any significant property in which Osisko holds a royalty, stream or other interest; the accuracy of publicly disclosed expectations for the development of underlying properties that are not yet in production; and the absence of any other factors that could cause actions, events or results to differ from those anticipated, estimated or intended.
For additional information with respect to these and other factors and assumptions underlying the forward-looking statements made in this press release, see the section entitled "Risk Factors" in the most recent Annual Information Form of Osisko which is filed with the Canadian securities commissions and available electronically under Osisko's issuer profile on SEDAR at www.sedar.com. The forward-looking information set forth herein reflects Osisko's expectations as at the date of this press release and is subject to change after such date. Osisko disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by law.
| Osisko Gold Royalties Ltd |
| Consolidated Balance Sheets |
| (Unaudited) |
| (tabular amounts expressed in thousands of Canadian dollars) |
| March 31, | December 31, | ||
| 2016 | 2015 | ||
| $ | $ | ||
| Assets | |||
| Current assets | |||
| Cash and cash equivalents | 439,009 | 258,509 | |
| Short-term investments | 100 | 200 | |
| Accounts receivable | 7,621 | 6,244 | |
| Other assets | 704 | 508 | |
| 447,434 | 265,461 | ||
| Non-current assets | |||
| Investments in associates | 59,959 | 44,011 | |
| Other investments | 115,573 | 105,485 | |
| Royalty interests | 467,287 | 449,439 | |
| Property and equipment | 822 | 835 | |
| Exploration and evaluation | 98,306 | 96,220 | |
| Goodwill | 111,204 | 111,204 | |
| Deferred income taxes | 12,344 | 8,778 | |
| 1,312,929 | 1,081,433 | ||
| Liabilities | |||
| Current liabilities | |||
| Accounts payable and accrued liabilities | 3,685 | 11,469 | |
| Dividends payable | 4,248 | 3,783 | |
| Provisions and other liabilities | 1,427 | 1,264 | |
| 9,360 | 16,516 | ||
| Non-current liabilities | |||
| Long-term debt | 45,110 | - | |
| Provisions and other liabilities | 12,179 | 8,912 | |
| Deferred income taxes | 118,738 | 118,766 | |
| 185,387 | 144,194 | ||
| Equity | |||
| Share capital | 903,369 | 745,007 | |
| Warrants | 30,901 | 18,072 | |
| Contributed surplus | 9,283 | 10,164 | |
| Equity component of convertible debenture | 3,091 | - | |
| Accumulated other comprehensive loss | (30,277) | (41,203) | |
| Retained earnings | 209,181 | 203,800 | |
| Equity attributable to Osisko Gold Royalties Ltd shareholders | 1,125,548 | 935,840 | |
| Non-controlling interests | 1,994 | 1,399 | |
| Total equity | 1,127,542 | 937,239 | |
| 1,312,929 | 1,081,433 | ||
| Osisko Gold Royalties Ltd |
| Consolidated Statements of Income (Loss) |
| For the three months ended March 31, 2016 and 2015 |
| (Unaudited) |
| (tabular amounts expressed in thousands of Canadian dollars, except per share amounts) |
| 2016 | 2015 | ||||
| $ | $ | ||||
| Revenues | 15,606 | 10,632 | |||
| Expenses | |||||
| Depletion of royalty interests | (3,022 | ) | - | ||
| General and administrative | (3,890 | ) | (3,905 | ) | |
| Business development | (2,195 | ) | (3,685 | ) | |
| Exploration and evaluation | (164 | ) | (507 | ) | |
| Cost recoveries from associates | 740 | 111 | |||
| Operating income | 7,075 | 2,646 | |||
| Interest income | 551 | 1,058 | |||
| Dividend income | 1,572 | 1,166 | |||
| Finance costs | (593 | ) | (123 | ) | |
| Foreign exchange gain (loss) | (13,729 | ) | 1,697 | ||
| Share of loss of associates | (982 | ) | (336 | ) | |
| Other gains, net | 5,215 | 5,587 | |||
| Earnings (loss) before income taxes | (891 | ) | 11,695 | ||
| Income tax recovery (expense) | 764 | (1,452 | ) | ||
| Net earnings (loss) | (127 | ) | 10,243 | ||
| Net earnings (loss) attributable to: | |||||
| Osisko Gold Royalties Ltd's shareholders | (60 | ) | 10,273 | ||
| Non-controlling interests | (67 | ) | (30 | ) | |
| Net earnings (loss) per share | |||||
| Basic | - | 0.15 | |||
| Diluted | - | 0.14 | |||
| Osisko Gold Royalties Ltd |
| Consolidated Statements of Cash Flows |
| For the three months ended March 31, 2016 and 2015 |
| (Unaudited) |
| (tabular amounts expressed in thousands of Canadian dollars) |
| 2016 | 2015 | ||||
| $ | $ | ||||
| Operating activities | |||||
| Net earnings (loss) | (127 | ) | 10,243 | ||
| Adjustments for: | |||||
| Share-based compensation | 1,559 | 1,151 | |||
| Accretion on note receivable | - | (355 | ) | ||
| Depletion and amortization | 3,082 | 30 | |||
| Share of loss of associates | 982 | 336 | |||
| Net gain on disposal of investments | (3,410 | ) | (5,583 | ) | |
| Change in fair value of financial assets at fair value through profit or loss | (1,040 | ) | (3 | ) | |
| Deferred income tax expense (recovery) | (764 | ) | 1,452 | ||
| Foreign exchange gain (loss) | 13,720 | (1,692 | ) | ||
| Other | (550 | ) | 57 | ||
| 13,452 | 5,636 | ||||
| Changes in non-cash working capital items | (4,831 | ) | (4,141 | ) | |
| Net cash flows provided by operating activities | 8,621 | 1,495 | |||
| Investing activities | |||||
| Cash acquired - acquisition of Virginia | - | 34,900 | |||
| Net decrease in short-term investments | 100 | 25,908 | |||
| Acquisition of investments | (5,608 | ) | (78,597 | ) | |
| Proceeds on disposal of investments | 2,145 | - | |||
| Acquisition of royalty interests | (29,500 | ) | - | ||
| Proceeds on sale of royalty interests | 3,630 | - | |||
| Property and equipment | (47 | ) | (91 | ) | |
| Exploration and evaluation | (1,674 | ) | (1,506 | ) | |
| Net cash flows used in investing activities | (30,954 | ) | (19,386 | ) | |
| Financing activities | |||||
| Convertible debenture | 50,000 | - | |||
| Issuance of common shares and warrants | 174,982 | 1,187 | |||
| Investment from non-controlling interests | 3,637 | - | |||
| Issuance of special warrants | - | 200,020 | |||
| Issue expenses | (7,760 | ) | (10,239 | ) | |
| Financing fees | (832 | ) | - | ||
| Dividends paid | (3,474 | ) | (1,551 | ) | |
| Net cash flows provided by financing activities | 216,553 | 189,417 | |||
| Increase in cash and cash equivalents before effects of exchange rate changes on cash and cash equivalents | 194,220 | 171,526 | |||
| Effects of exchange rate changes on cash and cash equivalents | (13,720 | ) | 1,692 | ||
| Increase in cash and cash equivalents | 180,500 | 173,218 | |||
| Cash and cash equivalents - beginning of period | 258,509 | 175,171 | |||
| Cash and cash equivalents - end of period | 439,009 | 348,389 | |||
Contact Information:
John Burzynski
Senior Vice President, New Business Development
(416) 363-8653
jburzynski@osiskogr.com
Osisko Gold Royalties Ltd.
Joseph de la Plante
Vice President, Corporate Development
(514) 940-0670
jdelaplante@osiskogr.com
www.osiskogr.com