Osisko GOLD Royalties Reports Fourth Quarter and Full Year 2017 Results
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OSISKO GOLD ROYALTIES REPORTS
FOURTH QUARTER AND FULL YEAR 2017 RESULTS
(Montreal, February 20, 2018) Osisko Gold Royalties Ltd (the “Company” or “Osisko”) (OR: TSX & NYSE) is pleased to
report its results for the fourth quarter and full year 2017 and provide 2018 guidance. Amounts are in Canadian dollars unless
otherwise noted.
Sean Roosen, Chair of the Board and Chief Executive Officer, commenting on the 2017 performance: “ 2017 has been a
transformational year for Osisko with the acquisition of the Orion portfolio, which was a significant step forward for our
company in terms of building a dominant, Canada -focused, precious metals royalty and streaming platform. At the same
time, we have continued to mature our accelerator business and to create valu e for our shareholders by helping to create
great Canadian gold projects. Today, not only does Osisko have the greatest growth profile amongst its peers, it has uniquely
positioned itself with a quality pipeline of growth projects that will derive benefits for Osisko’s shareholders for years to
come.”
Highlights – Q4 2017
Record quarterly gold equivalent ounces (“GEOs”)1 earned of 20,990 (134% increase compared to Q4 2016);
Record quarterly revenues from royalties and streams of $32.2 million ($109.6 million including offtakes)
(135% increase compared to Q4 2016; 699% increase including offtakes);
Net cash flows provided by operating activities of $21.5 million (compared to $12.8 million in Q4 2016);
Net loss attributable to Osisko’s shareholders of $64.3 million, $0.41 per basic share reflecting an impairment
charge of $89.0 million on the Éléonore royalty interest ($65.4 million, net of income taxes) (compared to net
earnings of $8.7 million, $0.08 per basic share in Q4 2016); and
Adjusted earnings 2 of $1.0 million, $0.01 per basic share 2 (compared to $ 6.9 million, $0.07 per basic share in Q 4
2016).
Highlights – 2017
Record GEOs earned of 58,933 (54% increase compared to 2016);
Record revenues from royalties and streams of $93.8 million ($213.2 million incl uding offtakes) (50% increase
compared to 2016; 240% increase including offtakes);
Net cash flows provided by operating activities of $48.7 million (compared to $53.4 million in 2016);
Net loss attributable to Osisko’s shareholders of $42.5 million, $0.33 per basic share (compared to net earnings of
$42.1 million, $0.40 per basic share in 2016);
Adjusted earnings 2 of $ 22.7 million, $0.18 per basic share 2 (compared to $34.2 million, $0.33 per basic share in
2016);
Proceeds of $71.1 million on sale of investments, generating a gain3 of $35.8 million, based on the cash cost3 of the
investments. Subsequent to December 31, 2017, Osisko made a gain of $15.5 million from the delivery of the
AuRico Metals Inc. shares to Centerra Gold Inc. bringing the total gain 3 from monetizing investments since 2015 to
$70.1 million, based on the cash cost3 of the investments;
Acquisition of a precious metals portfolio of assets from Orion Mine Finance Group (“Orion”) for $1.1 billion
consisting of 74 royalties, streams and precio us metal offtakes, including a 9.6% diamond stream on the Renard
diamond mine and a 4% gold and silver stream on the Brucejack gold and silver mine, both of which are new mines
in Canada, in addition to a 100% silver stream on the Mantos Blancos copper mine in Chile;
Acquisition of royalty and stream interests for $127.6 million ($80.1 million paid in 2017);
Completed a bought deal offering of convertible senior unsecured debentures of $300.0 million;
Increased the revolving credit facility to $350.0 million (with a potential accordion of up to $100.0 million); and
Declaration of quarterly dividends totalling $0.18 per common share for 2017.
1 GEOs are calculated on a quarterly basis and include royalties, streams and offtakes. Silver earned from royalty and stream ag reements was converted to gold
equivalent ounces by multiplying the silver ounces by the average silver price for the period and di viding by the average gold price for the period. Diamonds, other
metals and cash royalties were converted into gold equivalent ounces by dividing the associated revenue by the average gold p rice for the period. Offtake agreements
were converted using the f inancial settlement equivalent divided by the average gold price for the period. Refer to the portfolio of royalty, stream and other interests
section for average metal prices used.
2 “Adjusted earnings” and “Adjusted earnings per basic share” are non-IFRS financial performance measures which have no standard definition under IFRS. Refer to the
non-IFRS performance measures section of this press release.
3 The cash cost of an investment is a n on-IFRS measure representing the cash paid on the acquisit ion of an investment. The gain or the loss is calculated by subtracting
the cash acquisition cost from the cash proceeds on the sale of an investment.
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Acquisition of Orion’s Portfolio
On July 31, 2017, Osisko acquired a precious metals portfolio of assets from Orion consisting of 61 royalties, 6 streams and
7 precious metal offtakes for $1.1 billion. The final acquisition price was comprised of US$504.8 million ($630.1 million) in
cash consideration, which includes a US$4.2 million ($5.1 million) adjustment for the ac quired working capital, and
30,906,594 common shares of Osisko issued to Orion (the “Purchase Price”) (the “Transaction”). Any sale of the shares
issued to Orion is subject to certain restrictions, including a 12-month hold period and a broad distribution requirement.
The combination of Osisko and Orion’s portfolios resulted in Osisko holding a total of 131 royalties, streams and offtakes,
including 16 revenue-generating assets on July 31, 2017. Through the Transaction, the Company acquired a 9.6% diamond
stream on the Renard diamond mine and a 4% gold and silver stream on the Brucejack gold and silver mine, both of which
are new mines in Canada, in addition to a 100% silver stream on the Mantos Blancos copper mine in Chile. Certain assets
are held through an international wholly -owned subsidiary which was renamed Osisko Bermuda Limited (“OBL”). The
Brucejack stream is subject to certain buyback rights held by Pretium Resources Inc. which could result in the stream being
repurchased on December 31, 2018 and other specific dates.
As part of the Transaction, CDP Investissements Inc., an affiliate of Caisse de dépôt et placement du Québec (“Caisse”) and
the Fonds de solidarité des travailleurs du Québec (F.T.Q.) (“Fonds F.T.Q.”) subscribed for $200 million and $75 million in
common shares of Osisko, respectively, as part of a concurrent private placement (“Private Placement”) to fund a portion of
the cash consideration and support the Transaction. A total of 18,887,363 common shares were issued at a price of $1 4.56
per share under the Private Placement. The Private Placement was subject to a 7% capital commitment payment payable
partially in shares (2% representing 385,457 common shares) and in cash (5% representing $13.8 million).
Following the Transaction, Or ion, Caisse and its affiliates and Fonds F.T.Q. held respectively approximately 19.7%, 12.1%
and 5.5% of Osisko’s issued and outstanding common shares, based on the number of common shares of Osisko
outstanding at the closing of the Transaction on July 31, 2017.
Osisko also drew US$118 million ($147.3 million) under its revolving credit facility with the National Bank of Canada and
Bank of Montreal, settled the foreign exchange forward contracts by disbursing $275 million to acquire US$204.0 million and
paid US$182.8 million ($228.9 million) from Osisko’s then current cash and cash equivalents balance.
The transaction has been recorded as a business combination with Osisko as the acquirer. The assets acquired and the
liabilities assumed were recorded at t heir estimated fair market values at the time of the closing of the acquisition, being
July 31, 2017. The transaction costs related to the acquisition were expensed under business development expenses and
amounted to $8.9 million.
The table below presents the purchase price allocation (in thousands of dollars):
Consideration paid $
Cash(1) 648,385
Issuance of 30,906,594 common shares(2) 445,333
1,093,718
Net assets acquired $
Cash and cash equivalents 8,707
Other current assets 1,217
Royalty, stream and other interests 1,116,115
Current liabilities (435)
Deferred income tax liability (31,886)
1,093,718
(1) Including the net loss on settlement of derivative financial instruments (cash flow hedges) of $18.2 million.
(2) The fair value of the consideration paid in common shares represents the fair value of the shares on July 31, 2017 minus an illiquidity
discount to take into account the twelve-month restrictions on their sales.
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Summary of Main Royalty, Stream and Other Interests Acquired
Asset Operator Interest Commodities Jurisdiction Stage
Renard Stornoway Diamonds
Corporation 9.6% Stream Diamond Canada Production
Mantos Blancos Mantos Copper S.A. 100% Stream Ag Chile Production
Brucejack Pretium Resources Inc. 4% Stream / Offtake Au, Ag Canada Production
Sasa Central Asia Metals plc 100% Stream Ag Macedonia Production
Matilda Blackham Resources Limited Offtake Au Australia Production
Parral GoGold Resources Inc. Offtake Au Mexico Production
San Ramon Red Eagle Mining Corp. Offtake Au Colombia Production
Seabee SSR Mining Inc. 3% NSR(1) Royalty Au Canada Production
Bald Mtn. Alligator Ridge Kinross Gold Corporation 1% NSR Royalty Au USA Production
Bald Mtn. Duke/ Trapper Kinross Gold Corporation 4% NSR Royalty Au USA Production
Brauna Lipari Mineração 1% GRR(2) Royalty Diamond Brazil Production
Kwale Base Resources Limited 1.5% GRR Royalty Rutile, Ilmenite,
zircon Kenya Production
Pan Fiore Gold Ltd. 4% NSR Royalty Au USA Production
Amulsar Lydian International Ltd. 4.22% Au Stream, 62.5%
Ag Stream / Offtake Au, Ag Armenia Development
Back Forty Aquila Resources Inc. 75% Stream Ag USA Development
Casino Western Copper & Gold
Corporation 2.75% NSR Royalty Au, Ag, Cu Canada Exploration
Spring Valley Waterton Global Resource
Management 0.5% NSR Royalty Au USA Exploration
Yenipazar Aldridge Minerals Inc. Offtake Au Turkey Exploration
(1) Net Smelter Return (“NSR”)
(2) Gross Revenue Royalty (“GRR”)
Acquisition of Back-Forty Gold Stream
The Back Forty project is a zinc and gold volcanogenic massive sulfide deposit located in Michigan, United States, owned by
Aquila Resources Inc. (“Aquila”). The Back Forty project is in the development stage an d advancing toward a feasibility study
expected in 2018. Back Forty is expected to produce 532,000 ounces of gold, 721 million pounds (“lbs”) of zinc, 74 million lbs
of copper, 4.6 million ounces of silver, and 21 million lbs of lead. The details of the mi neral inventory can be found under
Aquila’s profile on SEDAR at www.sedar.com. Through the acquisition of Orion’s Portfolio, Osisko acquired t he Back Forty
silver stream, which applies to 75% of payable silver productio n over the mine’s operating life and includes ongoing transfer
payments by OBL to Aquila of US$4.00 per ounce of refined silver delivered under the stream.
In November 2017, OBL acquired an additional gold stream on the Back Forty project. OBL will make s taged upfront cash
deposits to Aquila of up to US$55 million for the gold stream, and will make ongoing payments equal to 30% of the spot price
of gold, to a maximum of US$600 per ounce. The gold stream applies to 18.5% of the refined gold from the project until
105,000 ounces of gold have been delivered, and to 9.25% of the refined gold for the remaining life-of-mine.
The deposit will be paid in four installments, as follows:
1. US$7.5 million was paid on closing of the gold stream transaction;
2. US$7.5 million payable upon receipt by Aquila of all material permits required for the development and operation of
the project, and receipt of a positive feasibility study;
3. US$10 million payable following a positive construction decision for the property; and
4. US$30 million payable upon the first drawdown of an appropriate project debt finance facility, subject to the change
of control provision. In the event of a change of control of Aquila prior to the advancement of the fourth deposit, the
person or entity acquiri ng control over the project may elect to forego the fourth deposit, in which case the stream
will be reduced to 9.5% of the refined gold from the project until 105,000 ounces of gold have been delivered and to
4.75% of the refined gold for the remaining life-of-mine. All other terms and conditions will remain unchanged.
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Gibraltar Stream (Taseko Mines Limited)
On March 3, 2017, Osisko closed the acquisition of a silver stream with reference to silver produced at the Gibraltar copper
mine (“Gibraltar”), lo cated in British Columbia, Canada from Gibraltar Mines Ltd. (“Gibco”), a wholly -owned subsidiary of
Taseko having a 75% interest in Gibraltar. Osisko paid Taseko cash consideration of US$33.0 million ($44.3 million) to
purchase a silver stream and 3.0 mill ion warrants of Taseko. Each warrant allows Osisko to acquire one common share of
Taseko at a price of $2.74 until April 1, 2020. The fair value of the warrants was evaluated at $1,780,000 using the Black -
Scholes option pricing model and the residual value of $42,678,000 was attributed to the silver stream (including $175,000 of
transaction fees). With regards to the silver stream, Osisko will make ongoing payments of US$2.75 per ounce of silver
delivered.
Under the stream, Osisko will receive from Taseko an amount equal to 100% of Gibco’s share of silver production until the
delivery to Osisko of 5.9 million ounces of silver to Osisko and 35% of Gibco’s share of silver production thereafter. Gibral tar
is the second largest open pit copper mine in Canada an d fourth largest in North America. The life of mine yearly average
production from Gibraltar is approximately 140 million lbs of copper and 2.6 million lbs of molybdenum. With a large mineral
reserve of 3.2 billion lbs of recoverable copper and 58 million lbs of molybdenum, the estimated mine life of the project is 23
years (proven and probable mineral reserves as of January 1, 2016). The acquisition is expected to increase Osisko’s
production by approximately 200,000 ounces of silver for the next 14 years, increasing to an average of 350,000 ounces of
silver for the remainder of the 23 -year mineral reserve life of Gibraltar. Any silver in respect of which a delivery was made
after January 1, 2017, was subject to the stream.
Revolving Credit Facility
In November 2017, the Company amended its revolving credit facility (the “Facility”) increasing the amount from $150 million
to $350 million, with an additional uncommitted accordion of up to $100 million, for a total availability of up to $450 milli on.
The accordion is subject to standard due diligence procedures and acceptance of the lenders. The Facility is to be used for
general corporate purposes and investments in the mineral industry, including the acquisition of royalties, streams and other
interests. The Facility is secured by the Company’s assets (including the royalty, stream and other interests) and has a four -
year term (November 14, 2021), which can be extended by one year on each of the first two anniversary dates.
The Facility is subject to standb y fees. Funds drawn will bear interest based on the base rate, prime rate or London Inter -
Bank Offer Rate (“LIBOR”) plus an applicable margin depending on the Company’s leverage ratio. On July 31, 2017, the
Facility was drawn for US$118.0 million (represen ting $148.0 million as at December 31, 2017) to fund the acquisition of
Orion’s Portfolio. As at December 31, 2017, the interest rate was 2.96%, including the applicable margin. The Facility
includes covenants that require the Company to maintain certain financial ratios and meet certain non-financial requirements.
As at December 31, 2017, all such ratios and requirements were met.
Bought Deal of Convertible Senior Unsecured Debentures
On November 3, 2017, Osisko closed a bought deal offering of convertibl e senior unsecured debentures (the “Debentures”)
for $300 million (the “Offering”) with a syndicate of underwriters co -led by National Bank Financial Inc., BMO Capital Markets
and Desjardins Capital Markets (the “Underwriters“). The Offering was comprised of a $184.0 million public offering of
Debentures (the “Public Offering“) and a $116.0 million private placement of Debentures (the “Private Offering“). In
connection with the Offering, the Public Sector Pension Investment Board and Ressources Québec inc., a wholly -owned
subsidiary of Investissement Québec, purchased respectively $100.0 million and $16.0 million of Debentures through the
Private Offering on the same terms and conditions as the Public Offering. The Underwriters have received a commission of
3.55% in relation to the Offering. Net proceeds amounted to $288.5 million.
The Debentures bear interest at a rate of 4.0% per annum, payable semi -annually on June 30 and December 31 of each
year, commencing on June 30, 2018. The Debentures are convertibl e at the holder’s option into Osisko common shares at a
conversion price of $22.89 per common share. The Debentures will mature on December 31, 2022 and may be redeemed by
Osisko, in certain circumstances, on or after December 31, 2020. The Debentures are listed for trading on the Toronto Stock
Exchange under the symbol “OR.DB”. The net proceeds from the Offering will be used to fund the acquisition of precious
metal royalties, streams, working capital, and general corporate purposes.
Record Gold Equivalent Ounces Earned
The Company ’s portfolio of producing royalty, stream and offtake interests delivered a record 20,990 GEOs in the fourth
quarter of 2017 for a total record of 58,933 GEOs for the f ull year 2017. The assets acquired from Orion were the major
contributors to the record quarterly GEOs earned by the Company, while Canadian Malartic continued to generate strong
results.
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Royalties Earned (in GEOs)
Three months ended
December 31,
Years ended
December 31,
2017 2016 2017 2016
Gold
Canadian Malartic royalty 10,177 6,749 33,136 28,748
Éléonore royalty 1,532 1,343 6,390 6,568
Seabee royalty(1) 619 - 1,310 -
Island Gold royalty 379 292 1,706 1,373
Brucejack offtake(1) 321 - 536 -
Vezza royalty 274 342 1,253 830
Other(1) 330 124 869 294
13,632 8,850 45,200 37,813
Silver
Mantos stream(1) 1,910 - 3,060 -
Sasa stream(1) 1,229 - 2,074 -
Gibraltar stream (3 and 11 months) 665 - 2,303 -
Canadian Malartic royalty 138 114 479 456
Other(1) 78 - 129 1
4,020 114 8,045 457
Diamonds
Renard stream(1) 2,839 - 4,686 -
Other(1) 88 - 201 -
2,927 - 4,887 -
Other metals
Kwale royalty(1) 411 - 801 -
Total GEOs 20,990 8,964 58,933 38,270
(1) The effective date of the acquisition of Orion’s Portfolio was June 1, 2017. However, revenues of royalties, streams and offtakes acquired
from Orion are only included in revenues from July 31, 2017 onward, the acquisition date for accounting purposes.
GEOs by Product
65% 99% 77% 99%
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Revenues
Three months ended December 31,
2017 2016
Average
selling price
per ounce /
carats ($)
Ounces
/ Carats
sold
Total revenues
($000’s)
Average selling
price per ounce
($)
Ounces
/ Carats
sold
Total revenues
($000’s)
Gold sold 1,623 56,708 92,043 1,549 8,605 13,328
Silver sold 21 483,192 10,411 21 8,353 179
Diamonds sold 106 43,550 4,603 - - -
Other (paid in cash) - - 2,495 - - 202
109,552 13,709
Years ended December 31,
2017 2016
Average
selling price
per ounce /
carats ($)
Ounces
/ Carats
sold
Total revenues
($000’s)
Average selling
price per ounce
($)
Ounces
/ Carats
sold
Total revenues
($000’s)
Gold sold 1,627 111,501 181,390 1,643 37,402 61,444
Silver sold 22 887,760 19,216 23 32,836 747
Diamonds sold 106 71,150 7,560 - - -
Other (paid in cash) - - 5,050 - - 486
213,216 62,677
Gross Profit ($000)
Three months ended December 31, Years ended December 31,
2017 2016 2017 2016
$ $ $ $
Royalties
Revenues 21,359 13,709 74,041 62,677
Cost of sales (130) (22) (286) (143)
Depletion (4,305) (2,828) (15,475) (11,291)
16,924 10,859 58,280 51,243
Streams
Revenues 10,855 - 19,751 -
Cost of sales (4,378) - (7,385) -
Depletion (7,452) - (11,283) -
(975) - 1,083 -
Offtakes
Revenues 77,338 - 119,424 -
Cost of sales (76,550) - (117,974) -
Depletion (990) - (1,307) -
(202) - 143 -
Total – Gross profit 15,747 10,859 59,506 51,243
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Overview of 2017 Financial Results
Record revenues from royalties and streams of $93.8 million ($213.2 million i ncluding offtakes) compared to
$62.7 million in 2016;
Gross profit of $59.5 million compared to $51.2 million in 2016;
Impairment charge of $89.0 million on the Éléonore NSR royalty interest ($65.4 million, net of income taxes);
Operating loss of $70.4 million compared to an operating income of $29.1 million in 2016;
Net loss attributable to Osisko’s shareholders of $42.5 million or $0.33 per basic and diluted share, compared to net
earnings of $42.1 million or $0.40 per basic and diluted share in 2016;
Adjusted earnings4 of $22.7 million or $0.18 per basic share4 compared to $34.2 million or $0.33 per basic share in
2016;
Net cash flows provided by operating activities of $48.7 million compared to $53.4 million in 2016.
Revenues increased in 2017 mainly as a result of the acquisition of Orion’s Portfolio.
Gross profit reached $59.5 million in 2017 compared to $51.2 million in 2016 as a result of higher revenues. Cost of sales
increased from $0.1 million in 2016 to $125.6 million mainly as a result of the offtake agreements acquired through the
acquisition of Orion’s Portfolio. Under the offtake agreements, the metal is acquired from the producers at the lowest market
price over a certain period of time (quotational period), and is subsequently sold by Osis ko, resulting in a net profit that will
usually vary between 0% and 5% of the sales proceeds.
In 2017, the Company incurred an operating loss as a result of an impairment charge of $89.0 million on the Éléonore royalty
interest. Excluding the impairment c harge, operating income would have amounted to $18.6 million compared to $29.1
million in 2016. The decrease in operating income in 2017, in addition to the impairment charge, is mainly the result of the
transaction costs related to the acquisition of Orio n’s Portfolio, which amounted to $8.9 million and higher general and
administrative expenses (“G&A”), partially offset by higher gross profit. The increase in G&A expenses is mainly due to
higher salary expenses as a result of higher bonuses payable to man agement following the acquisition of Orion’s Portfolio,
higher share -based compensation expenses related to the deferred and restricted share units (higher number of units
outstanding and increase in the objectives achievements related to 2014 RSUs which v ested and were paid in September
2017) and higher general costs due to the increased activities of the Company in 2017. The year 2017 is the first year where
3 years of stock options, RSUs and DSUs are outstanding. Stock options and RSUs vest over a three -year period. Business
development expenses increased by $10.4 million mainly as a result of the transaction costs related to the acquisition of
Orion’s Portfolio, higher bonuses payable to management, higher share -based compensation expenses related to the
deferred and restricted share units and higher general costs due to increased activities in 2017.
The net loss attributable to Osisko’s shareholders in 2017 is mainly the result of the impairment charge of $89.0 million, a
lower operating income, a highe r foreign exchange loss, higher finance costs, the absence of dividend income following the
sale of the shares of Labrador Iron Ore Royalty Corporation in 2016 and early 2017, partially offset by higher interest income.
Adjusted earnings decreased to $22 .7 million compared to $34.2 million in 2016 as a result of higher G&A, lower dividend
income and higher finance costs, partially offset by higher gross profit.
Net cash flows provided by operating activities decreased in 2017 as a result of the fees rela ted to the acquisition of Orion’s
Portfolio and the settlement of restricted share units for $5.5 million, partially offset by higher gross profit.
Investment Portfolio Update
During the year ended December 31, 2017, Osisko acquired investments for $226 .8 million and sold investments for $71.1
million.
The following table presents the carrying value and fair value of the investments in marketable securities as at December 31,
2017 (in thousands of dollars):
Marketable securities Carrying value(i) Fair value(ii)
$ $
Associates 257,433 332,140
Other 106,841 106,841
364,274 438,981
4 “Adjusted earnings” and “Adjusted earnings per basic share” are non -IFRS financial performance measu res which have no standard definition under IFRS. Refer to the
non-IFRS performance measures section of this press release.
8
(i) The carrying value corresponds to the amount recorded on the balance sheet, which is the equity method for the investments in
marketable securities of associates and the fair value for the other investments in marketable securities, as per IFRS 9, Financial
Instruments.
(ii) The fair value corresponds to the quoted price of the investments in a recognized stock exchange as at December 31, 2017.
Main Strategic Investments
The following table presents the main strategic investments of the Company (in thousands of dollars):
Company
Number of
shares held(i)
Ownership(i) Carrying value(i),(ii) Fair value(i),(ii)
% $ $
Osisko Mining Inc. 32,302,034 15.5 73,635 109,504
Barkerville Gold Mines Ltd. 142,309,310 32.7 89,556 106,732
Dalradian Resources Inc. 31,717,687 8.9 40,122 42,026
Falco Resources Ltd. 23,927,005 12.7 15,652 20,817
(i) As at December 31, 2017.
(ii) See table above for definition of carrying value and fair value.
Osisko Mining Inc.
The Company owns a 1.5% NSR royalty on the Windfall Lake gold project (“Windfall Lake”). Osisko Mining Inc. (“Osisko
Mining”) is currently undergoing an 800,000 meter dri ll program at Windfall Lake, where the 400,000 meter milestone was
reached in October 2017. A metallurgical program is ongoing and the construction of the exploration ramp is progressing.
Osisko Mining is planning a resource update in the first half of 2018.
Barkerville Gold Mines Ltd. 5
Barkerville Gold Mines Ltd. (“Barkerville”) is currently carrying out a 160,000 meter exploration drilling program in the Cariboo
Mining District of central British Columbia and reported that it has received all permits t o initiate production from its Bonanza
Ledge underground project at an initial rate of 150,000 tonnes per year. In April 2017, Barkerville announced a new discovery
from its ongoing 160,000 metres Phase II Island Mountain and Valley Zone exploration drilli ng program at its Cariboo Gold
Project.
Osisko holds a 2.25% NSR royalty on the Cariboo gold project and has a right of first refusal relating to any gold stream offer
received by Barkerville with respect to the Cariboo gold project.
Falco Resources Ltd.
In October 2017, Falco Resources Ltd. (“Falco”) released6 a positive feasibility on the Horne 5 project. The feasibility study
indicated that, at a gold price of US$1,300/oz and using an exchange rate of C$1.00 = US$0.78, the Horne 5 Project would
generate an after -tax net present value, at a 5% discount rate, of US$602 million and an after -tax internal rate of return of
15.3%. As per Falco, in this scenario, the mine could become the next significant gold producer in Québec, with a production
profile averaging 219,000 payable ounces annually over the life of mine, with an all -in sustaining cash cost of US$399 per
ounce net of by -product credits and all -in cost, capital expenditures plus operating expenditures, estimated at US$643 per
ounce. The Environmental Impact Assessment study was filed with the authorities in December 2017.
Dalradian Resources Inc.
On October 10, 2017, Osisko entered into a subscription agreement with Dalradian Resources Inc (“Dalradian”) pursuant to
which Osisko made an investme nt of $28. 3 million in Dalradian by way of a non -brokered private placement. The
subscription agreement entered into with Dalradian contains various covenants and rights, including among other things, a
standstill, participation rights to maintain Osisko’s pro rata interest in Dalradian and rights to match other offers for project
financing.
5 Refer to Barkerville’s press release dated April 17, 2017, titled “BGM intersects 19.20 g/t AU over 54.40 meters and 11.42 g/t A U over 28.55 meters at shaft zone” and
Barkerville’s website at www.barkervillegold.com and on SEDAR for additional information.
6 Refer to Falco’s press release dated October 16, 2017, titled: “Falco Announces Positive Feasibility Study Results on Horne 5 Gold Project”.