OSISKO GOLD ROYALTIES REPORTS SECOND QUARTER 2017 RESULTS Increases dividend by 25%
OSISKO GOLD ROYALTIES REPORTS
SECOND QUARTER 2017 RESULTS
Increases dividend by 25%
(Montreal, August 3, 2017) Osisko Gold Royalties Ltd (the “Company” or “Osisko”) (OR: TSX &
NYSE) is pleased to report its results for the second quarter of 2017. Amounts are in Canadian dollars
unless otherwise noted.
Highlights – Q2 2017
• On June 5, 2017, announced the acquisition of a precious metals portfolio of assets from Orion
Mine Finance Group (“Orion”) consisting of 74 royalties, streams and 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, all of which are new mines in Canada, in addition to a 100%
silver stream on the Mantos Blancos copper mine in Chile; the acquisition was closed on
July 31, 2017;
• Record quarterly gold equivalent ounces (“GEO”) earned of 10,8631 (12% increase compared
to Q2 20162);
• Record quarterly revenues of $18.4 million (16% increase compared to Q2 2016);
• Net cash flows provided by operating activiti es of $14.1 million (compared to $15.9 million in
Q2 2016);
• Net earnings attributable to Osisko’s sharehol ders of $11.0 million, $0.10 per basic share
(compared to $15.7 million, $0.15 per basic share in Q2 2016);
• Adjusted earnings3 of $7.1 million, $0.07 per basic share 3 (compared to $6.6 million, $0.06 per
basic share in Q2 2016);
• Acquisition of additional common shares of Barkerville Gold Mines Ltd. (“Barkerville”), an
associate of Osisko, for $38.9 million which increased Osisko’s holding to 33.4%;
• Acquisition of an additional 0.75% net smelter return (“ NSR”) royalty on the Cariboo gold
project from Barkerville for cash consideration of $12.5 million, which increased the NSR
royalty held by Osisko on the Cariboo gold project to a total of 2.25% NSR; and
• Declaration of an eleventh quarterly dividend of $0.04 per common share paid on July 17,
2017 to shareholders of record as of the close of business on June 30, 2017.
Highlight – August 2017
• On August 3, 2017, declaration of a twelfth quarterly dividend of $0.05 per common share
payable on October 16, 2017 to shareholders of record as of the close of business on
September 30, 2017, representing a 25% increase from the previous quarter.
1 Gold equivalent ounces includes NSR royalties in gold, silver and other cash royalties and the silver stream. Silver was converted to gold equivalent ounces by multiplying
the silver ounces by the average silver price for the period and dividing by the average gold price for the period. Offtake agreements were converted using the financial
settlement equivalent divided by the average gold price for the period. Cash royalties were converted into gold equivalent ounces by dividing the associated revenue by
the average gold price for the period. Refer to the portfolio of royalty and stream interests section for average metal prices used.
2 Three months ended June 30, 2016 or second quarter of 2016 (“Q2 2016”).
3 “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 measures provided under the Non-IFRS Financial Performance Measures section of this press release.
1
Sean Roosen, Chair of the Board and Chief Executive Officer, comment ing on the second quarter
activities: “Our efforts during the quarter were focused on entering and completing the transformational
acquisition of the portfolio of royalties, streams and offtake assets from Orion. We are also pleased
with the progress of our investee companies, which are part of our accelerator model, in advancing
their respective gold development projects. We believe that Osisko is uniquely positioned to increase
value for its shareholders in the near future with its growth oriented portfolio.”
Acquisition of Orion’s Portfolio
On July 31, 2017, Osisko acquired a precious metals portfolio of assets from Orion consisting of 61
royalties, 7 precious metal offtakes and 6 streams for US $506.8 million ($653.1 million4) in cash
consideration, representing the agreed upon purchase price of US$500.6 million ($645.3 million4) plus
an initial estimate of US $6.2 million ($7.8 million4) for the amounts received by Orion since June 1,
2017, the effective date of the transaction and the working capital acqui red, and 30,906,594 common
shares of Osisko issued to Orion (the “Purchase Price”) (the “Transaction”). The combination of
Osisko and Orion’s portfolios results in Osisko holding a total of 131 royalties, streams and precious
metal offtakes, including 16 r evenue-generating assets. Through the Transaction, the Company
gained a 9.6% diamond stream on the Renard diamond mine and a 4% gold and silver stream on the
Brucejack gold and silver mine, all of which are new mines in Canada, in addition to a 100% silver
stream on the Mantos Blancos copper mine in Chile.
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 (“Private Placement Shares”) were
issued at a price of $14.56 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).
A special meeting of Osisko shareholders was held on July 31, 2017, where the shareholders
approved the Transaction and the Private Placement.
Following the Transaction, Orion, Caisse and its affiliates and Fonds F.T.Q. hold r espectively
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. 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 Company agreed to pay the cash portion of the acquisition in U.S. dollars for a fixed pre-
determined amount of US$500.6 million (representing $675.0 mil lion at the signing of the agreement).
Therefore, the Company entered in June 2017 into foreign exchange forward contracts for
$275 million to acquire US$204 million and designated these contracts as cash flow hedges for
accounting purposes. The balance of the cash portion of the acquisition price paid in U.S. dollars was
paid from current cash and cash equivalent balances denominated in U.S. dollars for US$184.8 million
($230.8 million4) and the available revolving credit facility, which was drawn by US$118 million
($147.3 million4).
The Transaction with Orion will be accounted for as a business combination with Osisko as the
acquirer. The assets acquired and the liabilities assumed are to be recorded at their estimated fair
4 Based on the Bank of Canada daily exchange rate of July 31, 2017.
2
market values at the time of the closing of the acquisition, being July 31, 2017. The total transaction
costs are estimated at $8.5 to $9.0 million, of which $1.0 million and $1.1 million are included in the
statement of income for the three and six months ended June 30, 2017, respectively.
Streams and offtake agreements acquired are subject to purchase commitments of gold, silver and
diamonds, which are summarized in the Contractual Obligations and Commitments section of the
Management and Discussion Analysis for the three and six mont hs ended June 30, 2017 filed on
SEDAR at www.sedar.com and with the U.S. Securities and Exchange Commission on EDGAR at
www.sec.gov.
Summary of Significant Royalty, Stream and Offtake Interests Acquired
Asset Operator Interest Commodities Jurisdiction Stage
Renard Stornoway Diamonds Stream Dia Canada Production
Mantos Blancos Mantos Copper S.A. Stream Ag Chile Production
Brucejack Pretium Resources Stream & Offtake Au Canada Production
Sasa Lynx Resources Ltd Stream Ag Macedonia Production
Matilda Blackham Resources Offtake Au Australia Production
Parral GoGold Resources Offtake Au Mexico Production
San Ramon Red Eagle Mining
Corp. Offtake Au Colombia Production
Seabee Silver Standard 3% NSR Royalty Au Canada Production
Bald Mtn. Alligator Ridge Kinross 1% NSR Royalty Au USA Production
Bald Mtn. Duke/ Trapper Kinross 4% NSR Royalty Au USA Production
Brauna Lipari 1% GRR(1) Royalty Dia Brazil Production
Kwale Base Resources 1.5% GRR Royalty Il, Ru, Zi Kenya Production
Pan GRP Minerals 4% NSR Royalty Au USA Production
Amulsar Lydian International Stream & Offtake Au, Ag Armenia Development
Back Forty Aquila Resources Stream Ag USA Development
Gold Rock GRP Minerals 4% NSR Royalty Au USA Exploration
Casino Western Copper &
Gold 1.25% NSR Royalty Au, Ag, Cu Canada Exploration
Cerro Del Gallo Primero Mining 3% NSR Royalty Au, Ag Mexico Exploration
Sao Jorge GoldMining 1.25% NSR Royalty Au Brazil Exploration
Spring Valley Waterton 0.5% NSR Royalty Au USA Exploration
Nimbus MacPhersons
Resources Offtake Au, Ag Australia Exploration
Yenipazar Aldridge Minerals Inc. Offtake Au Turkey Exploration
(1) Gross revenue royalty (“GRR”)
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Renard (Stornoway Diamond Corporation)
The Renard diamond mine is operated by Stornoway Diamond Corporation and is Québec's first and
Canada's sixth producing diamond mine. It is located approximately 250 kilometres north of the Cree
community of Mistissini and 350 kilometres north of Chibougamau in t he James Bay region of north -
central Québec. Construction on the mine commenced on July 10, 2014, and commercial production
was declared on January 1, 2017. Under the terms of the Renard Streaming Agreement, Osisko is
entitled to a 9.6% of the Renard diam ond mine production in exchange for payments of US$50 per
carat, subject to increase of 1% annually after January 1, 2020.
Mantos Blancos (Mantos Copper S.A.)
Mantos Copper S.A. (“Mantos”) is a mining company focused on the extraction and sale of copper.
The company owns and operates the Mantos Blancos mine and Mantoverde project located in the
Antofagasta and Atacama regions in northern Chile. The Mantos stream agreement is for the life of
mine and is based on 100% of the payable silver from the Mantos B lancos copper mine until
19,300,000 ounces have been delivered, after which the stream percentage will be 30%. The
purchase price for silver under the Mantos stream is 25% of the average silver market price for each
ounce of refined silver sold and deliver ed and/or credited by Mantos to Osisko. Mantos may elect to
reduce the amount of refined silver to be delivered and sold to Osisko by 50%, in which case Mantos
shall make a cash payment of US$70 million to Osisko.
Osisko has a right of first refusal in respect of a financing by Mantos of any royalty, stream,
participation or production interest in gold at the Mantos Blancos copper mine or the Mantoverde mine
prior to June 30, 2018.
Brucejack Stream (Pretium Resources Inc.)
Pretium Resources Inc.’s (“Pret ium”) high- grade underground Brucejack gold mine announced
commercial production on July 3, 2017. The Brucejack gold mine is located in northwestern British
Columbia, approximately 65 kilometres north of Stewart, British Columbia and consists of 122,133
hectares (over 301,798 acres). The term of the Brucejack stream is the date on which Pretium has
sold to Osisko 7,067,000 ounces of gold and 26,297,000 ounces of silver. If Pretium exercises the
2018 stream option, the metal percentage will be 3% (1.5% attri butable to Osisko) and if Pretium
exercises the 2019 stream option, it will be 4% (2% attributable to Osisko) . Pretium may elect to
repurchase all or a portion of the stream by one of the following options:
a) Buy-Back 2018: Pretium has the right to repurc hase the entire stream on December 31, 2018
for US$237 million (US$119 million attributable to Osisko);
b) Buy-Back 2019 : Pretium has the right to repurchase the entire stream on December 31, 2019
for US$272 million (US$136 million attributable to Osisko);
c) Buy-Down 2018 : Pretium has the right to reduce the stream from 8% to 3% by making a
US$150 million payment on December 31, 2018 (US$75 million attributable to Osisko);
d) Buy-Down 2019: Pretium has the right to reduce the stream from 8% to 4% by making a
US$150 million payment on December 31, 2019 (US$75 million attributable to Osisko)
If Pretium does not exercise the right to reduce or repurchase the refined precious metals under the
stream by December 31, 2019, US$20 million will be payable by Pretium (US$10 million attributable to
Osisko) and an 8% (4% attributable to Osisko) stream will apply beginning January 1, 2020, with
ongoing transfer payments of US$400 per ounce of gold and US$4.00 per ounce of silver.
4
Brucejack Offtake
The Brucejack Offtake agreement applies to sales from the first 7,067,000 ounces of refined gold (less
any delivered ounces pursuant to the Brucejack Stream Agreement described above). Osisko is
required to pay for refined gold based on a market referenced gold price in U.S. dol lars per ounce
during a defined pricing period before and after the date of each sale. The offtake obligation applies to
100% (50% attributable to Osisko) of refined gold produced at the Brucejack project less the
percentage of refined gold to be delivered pursuant to the Brucejack stream agreement (being
between 0% and 4% attributable to Osisko), subject to the reduction election described above.
Pretium has the option to reduce the offtake obligation by one of the following options:
a) On December 31, 2018, Pretium can elect to reduce the offtake obligation to either (i) 50%
(25% attributable to Osisko) by paying US$11 per ounce multiplied by 0.50, on the remaining
undelivered gold ounces, or (ii) 25% (12.5% attributable to Osisko) by paying US$11 per ounce
multiplied by 0.75, on the remaining undelivered gold ounces; or
b) On December 31, 2019 Pretium can elect to reduce the offtake obligation to either (i) 50%
(25% attributable to Osisko) by paying US$13 per ounce multiplied by 0.50, on the remaining
undelivered gold ounces, or (ii) 25% (12.5% attributable to Osisko) by paying US$13 per ounce
multiplied by 0.75, on the remaining undelivered gold ounces.
Record Gold Equivalent Ounces Earned in Q2 and in the first semester of 2017
The Company ’s portfolio of p roducing royalty and stream interests delivered a quarterly record
10,863 GEO in the second quarter of 2017 for a total of 21,280 GEO for the first semester of 2017.
Increased production at Canadian Malartic, Éléonore and Vezza and our Gibraltar stream were the
major contributors to the record quarterly GEO earned by the Company, while production at Island
Gold decreased slightly when compared to the second quarter of 2016.
Royalties Earned (in GEO)
Three months ended
June 30,
Six months ended
June 30,
2017 2016 2017 2016
Gold
Canadian Malartic 7,407 7,242 14,890 14,364
Éléonore 1,748 1,585 3,329 3,655
Island Gold 394 440 810 652
Vezza 326 221 675 221
Other 77 78 227 105
9,952 9,566 19,931 18,997
Silver
Gibraltar (3 and 5 months) 800 - 1,109 -
Canadian Malartic 111 105 238 207
Vezza - - 2 -
911 105 1,349 207
Total GEO 10,863 9,671 21,280 19,204
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Revenues
Three months ended June 30,
2017 2016
Average
selling price
per ounce
($)
Ounces
Sold
Total
revenues
($000’s)
Average
selling price
per ounce
($)
Ounces
Sold
Total
revenues
($000’s)
Gold sold 1,692 9,874 16,710 1,631 9,497 15,488
Silver sold 23 66,681 1,519 23 7,583 178
Royalties (paid in cash) - - 130 - - 126
18,359 15,792
Six months ended June 30,
2017 2016
Average
selling price
per ounce
($)
Ounces
Sold
Total
revenues
($000’s)
Average
selling price
per ounce
($)
Ounces
Sold
Total
revenues
($000’s)
Gold sold 1,656 19,843 32,858 1,633 18,914 30,890
Silver sold 23 97,609 2,255 22 15,683 338
Royalties (paid in cash) - - 372 - - 170
35,485 31,398
In 2017 and 2016, 100% of revenues were earned from precious metals and from Canada.
Overview of Financial Results
• Revenues of $18.4 million compared to $15.8 million in Q2 2016;
• Gross profit of $14.4 million compared to $12.8 million in Q2 2016;
• Operating income of $5.9 million compared to $4.8 million in Q2 2016;
• Net earnings attributable to Osisko shareholders of $11.0 million or $0.10 per basic share and
diluted share, compared to $15.7 million or $0.15 per basic and diluted share in Q2 2016;
• Adjusted earnings5 of $7.1 million or $0.07 per basic share4 compared to $6.6 million or $0.06
per basic share in Q2 2016;
• Net cash flows provided by operating activities of $14.1 million compared to $15.9 million in
Q2 2016.
Revenues increased in the second quarter of 2017 as a result of higher in- kind royalties earned and
sold. Gold royalties earned from the Canadian Malart ic mine increased by 2% or 165 ounces (sales
increased by 156 ounces), gold royalties earned and sold from the Éléonore mine increased by 10%
or 163 ounces and gold royalties earned and sold from the Vezza mine increased by 105 ounces. In
addition, Osisko received and sold 58,376 ounces of silver with respect to its Gibraltar silver stream.
The average selling price of gold per ounce in Canadian dollars was higher in the second quarter of
2017 at $1,692 compared to $1,631 in the second quarter of 2016.
Gross profit reached $14.4 million in the second quarter of 2017 compared to $12.8 million in the
second quarter of 2016 as a result of higher sales.
5 “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 measures provided under the Non-IFRS Financial Performance Measures section of this Press Release.
6
During the second quarter of 2017, operating income amounted to $5.9 million compared to $4.8
million in the corresponding period of 2016. The increase in operating income in 2017 is mainly the
result of higher gross profit and cost recoveries from associates, lower exploration and evaluation
expenses and a gain on disposal of exploration and evaluation assets (c ompared to a loss in the
second quarter of 2016), partially offset by higher general and administrative expenses (“G&A”). The
increase in G&A expenses is mainly due to higher share-based compensation expenses related to the
deferred and restricted share units (higher number of units outstanding and increase in the expected
objectives achievements as at June 30, 2017) and higher general costs due to the increased activities
of the Company in 2017. Business development expenses were stable at $2.7 million, but include
transaction costs related to the acquisition of Orion of $1.0 million in the second quarter of 2017.
The decrease in net earnings attributable to Osisko’s sharehol ders in the second quarter of 2017 is
mainly the result of a foreign exchange loss and the absence of dividend income following the sale of
the shares of Labrador Iron Ore Royalty Corporation (“LIORC”) in 2016 and early 2017, partially offset
by higher interest income.
Adjusted earnings increased to $7.1 million compared to $6.6 milli on in the second quarter of 2016 as
a result of higher gross profit, partially offset by an increase in G&A expenses.
Net cash flows provided by operating activities decreased in the second quarter of 2017 as a result of
a lower positive impact of changes in non-cash working capital items when compared to the second
quarter of 2016. Excluding changes in non- cash working capital items, net cash flows provided by
operating activities were $13.7 million compared to $13.0 million in the corresponding period of 2016,
mainly as a result of higher revenues and gross profit.
Producing Royalty and Stream Interests Update
Canadian Malartic Mine
One of t he Company’s cornerstone assets is a 5% NSR royalty on the Canadian Malartic property
which is located in Malarti c, Québec, and operated by the Canadian Malartic General Partnership
(“Partnership”) created by Agnico Eagle Mines Limited and Yamana Gold Inc. (the “Partners”). At
Canadian Malartic, guidance for 2017 and 2018 has been slightly increased due to a change i n the
life-of-mine plan. T he Partners indicated that t he updated plan provides for earlier access to higher
grade zones that are located deeper in the Canadian Malartic pit . The Partnership is currently
forecasting 600,000 ounces, 650,000 ounce s and 640,000 ounces of gold production for 2017, 2018
and 2019 respectively6.
The Québec government has announced the approval of the Canadian Malartic extension project in
April 2017. The expansion project will allow the mine to access the Barnat zone, which has softer ore
and could allow for higher throughputs. Production activities are currently forecast to begin in late
2019, subject to obtaining ancillary certificates of authorization and the progress of the road diversion.
As part of the approval, certain operating parameters were modified and clarified which are expected
to enhance the operating efficiencies of Canadian Malartic.
In July 2017, the Partners announced record quarterly production and mill throughput at Canadian
Malartic largely due to higher grades and increased volumes of softer ore being processed7.
6 Refer to Agnico Eagle’s press release dated February 15, 2017, titled: “Agnico Eagle Reports Fourth Quarter and Full Year 2016 Results”
7 Refer to Agnico Eagle’s press release dated July 26, 2017, titled: “Agnico Eagle Reports Second Quarter 2017 Results”
7
Canadian Malartic (Odyssey Zones)8
In the first quarter of 2017, the Partnership announced an initial inferred mineral resource on the
Odyssey zones at the Canadian Malartic mine. The Odyssey property lies on the east side of the
Canadian Malartic property, approximately 1.5 kilometre east of the current limit of the Canadian
Malartic open pit. Initial inferred mineral resources of 1.43 million ounces (20.7 million tonnes grading
2.15 grams per tonne “g/t” gold) for North and South Odyssey Zones were defined. The Partnership
announced near-term production potential (2018-2020) from the Odyssey South underground. Osisko
holds a 5% NSR royalty on the Odyssey South zone and a 3% NSR royalty on the Odyssey North
zone.
Éléonore Mine
Osisko’s other cornerstone asset is a sliding-scale 2.0% to 3.5% NSR royalty in the Éléonore gold
property located in the James Bay region in Québec and operated by Goldcorp Inc. (“Goldcorp”). Gold
production in 2017 is expected to total 315,000 ounces (+/ -5%)9. The increase compared to 2016 is
due to the continued ramp up of the mine. A life of mine study is underway to determine the
sustainable mining rate from the Roberto deposit.
Goldcorp has reported 10 that gold production for the three and six months ended June 30, 2017 was
11% lower and 2% higher, respectively, than the three and six months ended June 30, 2016. While
the ramp up continues, the tonnes mined in the second quarter of 2017 were consistent with the prior
year, as planned, as Éléonore focused on achieving additional development in order to support the
longer term production rates. The mined grade is expected to increase in the second half of 2017 as a
result of mine sequencing. Éléonore achieved a development rate of 51 meters per day in the first six
months of 2017 compared to 47 meters per day in the first six months of 2016, which is designed to
support the production ramp- up to 7,000 tonnes per day, expected to be achieved in late 2018 as
planned.
Gibraltar Mine
In the first quarter of 2017, Osisko acquired from Gibraltar Mines Ltd. (“Gibco”), a wholly -owned
subsidiary of Taseko having a 75% interest in the Gibraltar copper mine (“Gibraltar”), a silver stream
with ref erence to silver produced at Gi braltar, located in British Columbia, Canada. Osisko paid
Taseko a cash consideration of US$33.0 million ($44.3 million) for the silver stream. In addition,
Osisko will make ongoing payments of US$2.75 per ounce of silver delivered.
Osisko will receive fr om 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, and 35% of Gibco’s share of silver production
thereafter. Gibraltar is the second largest open pit copper mine in Canada and fourth largest in North
America. The life of mine yearly average production from Gibraltar is approximately 140 million
pounds (“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 reserve life of
Gibraltar. Any silver in respect of which a delivery is made after January 1, 2017, is subject to the
stream. Osisko received its first deliv ery silver in March (which accounted for the months of January
and February).
8 Refer to Agnico Eagle’s press release dated July 26, 2017, titled: “Agnico Eagle Reports Second Quarter 2017 Results”
9 Refer to Goldcorp’s press release dated February 15, 2017, titled: “Goldcorp Reports Fourth Quarter and Full Year 2016 Results”
10 Refer to Goldcorp’s Management Discussion and Analysis for the three and six months ended June 30, 2017.
8