Osisko GOLD Royalties Reports Strong 2016 Results and Provides 2017 Guidance
OSISKO GOLD ROYALTIES REPORTS STRONG 2016 RESULTS
AND PROVIDES 2017 GUIDANCE
(Montreal, March 15, 2017) Osisko Gold Royalties Ltd (the “Company” or “Osisko”) (OR: TSX &
NYSE) is pleased to report its results for the fourth quarter and full year 2016 and provide 2017
guidance.
Q4 2016 Highlights
• 8,964 gold equivalent ounces (“GEO”)1 earned (10% increase compared to the fourth quarter
of 2015);
• Revenues of $13.7 million (compared to $12.8 million in the fourth quarter of 2015);
• Net cash flows from operating activities of $12.8 million (compared to $8.4 million in the fourth
quarter of 2015);
• Operating income of $6.8 million (compared to $4.0 million in the fourth quarter of 2015);
• Net earnings attributable to Osisko shareholders of $8.7 million or $0.08 per basic and diluted
share (compared to $4.6 million or $0.05 per basic and diluted share in the fourth quarter of
2015); and
• Adjusted earnings of $6.9 million or $0.07 per basic share 2 (compared to $6.1 million or $0.06
per basic share in the fourth quarter of 2015).
2016 Highlights
• Record 38,270 GEO1 earned (25% increase compared to 2015);
• Record revenues of $62.7 million (38% increase compared to $45.4 million in 2015);
• Net cash flows from operating activities of $53.4 million (compared to $28.9 million in 2015);
• Net earnings attributable to Osisko shareholders of $4 2.1 million or $0.40 per basic share
(compared to $28.7 million or $0.32 per basic share in 2015);
• Adjusted earnings of $34.2 million or $0.33 per basic share2 (compared to 29.0 million or $0.33
per basic share in 2015);
• Cash and cash equivalents of $499.2 million as at December 31, 2016;
• Realized gain of $15.9 million on sale of equity holdings;
• Generated proceeds of $129.2 million on sale of investments mainly from the sale of its
interest in Labrador Iron Ore Royalty Corporation (“LIORC”);
• Completed a bought deal public offering for total gross proceeds of over $173 million;
• Completed a $50.0 million financing in the form of a convertible debenture with Investissement
Québec;
• 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;
1 Gold equivalent ounces earned includes NSR royalties in gold, silver and other cash royalties. 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. 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 interests section for average metal prices used.
2 “Adjusted earnings” and “Adjusted earnings per 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.
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• Entered into a 1% net smelter return (“NSR”) royalty agreement with Arizona Mining Inc. on the
Hermosa project for a cash consideration of $10.0 million;
• Entered into a $10.0 million financing agreement with Falco Resources Ltd. for a future stream
financing or a 1% NSR royalty on the Horne 5 project;
• Exercised its right and purchased a 1% NSR royalty on the Windfall Lake gold p roject from
Osisko Mining Inc. for a cash consideration of $5.0 million (bringing the total NSR royalty on
the Windfall Lake gold project to 1.5%);
• On July 6, 2016, Osisko began trading on the New York Stock Exchange (“NYSE”) under the
ticker “OR”;
• Declaration of quarterly dividends of $0.04 per common share for a total of $0.16 per common
share; and
• On October 5, 2016, Osisko announced the closing of an exploration earn- in agreement with
Osisko Mining Inc.
2017 Highlights
• On February 27, 2017, Osisko announced that it has entered into a US$33.0 million ($43.2
million) silver stream agreement with Taseko Mines Limited (“Taseko”) , which was closed on
March 3, 2017;
• On March 15, 2017, declaration of a quarterly dividend of $0.04 per common share payable on
April 17, 2017 to shareholders of record as of the close of business on March 31, 2017.
• On March 15, 2017, received first deliveries of silver from Gibraltar.
Sean Roosen, Chair and Chief Executive Officer, comment ing on the 2016 performance noted : “We
continue to make progress on growing our asset base and increasing our operating cash flows. With
our strong balance sheet, we are in a good position to increase our royalty and stream portfolio in the
near-future. We would also like to express our appreciati on to our partners and team for the
outstanding year.”
Record Gold Equivalent Ounces Earned in 2016
The Company’s portfolio of royalties delivered a record 38,270 GEOs in 2016. Production ramp up at
Éléonore was the major contributor to the record GEOs earned by the Company.
Royalties earned (in GEOs)
For the three months ended
December 31,
For the twelve months ended
December 31,
2016 2015 2016 2015
Gold 8,850 8,029 37,813 30,166
Silver 114 114 457 422
Total GEOs 8,964 8,143 38,270 30,588
Revenues (C$ million)
For the three months ended
December 31,
For the twelve months ended
December 31,
2016 2015 2016 2015
Gold $13.3 $12.5 $61.4 $44.7
Silver 0.2 0.2 0.8 0.6
Cash 0.2 0.1 0.5 0.1
Total $13.7 $12.8 $62.7 $45.4
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For the fourth quarter of 2016 and year -end 2016, revenue was earned 99% from gold sales and
100% from Canada.
Overview of Financial Results
Revenues increased in 2016 as a result of higher in- kind royalties earned and sold. Gold royalties
earned from the Canadian Malartic mine decreased by 3% or 975 ounces (sales decreased by 972
ounces), but the decrease from the Canadian Malartic mine was more than offset by the gold royalties
earned from the Éléonore, Island Gold and Vezza net smelter return (“ NSR”) royalties. The Company
earned and sold 6,568 ounces of gold from the Éléonore mine compared to 402 ounces in 2015. In
addition, the Company received and sold 1,373 ounces of gold from its Island Gold mine NSR royalty
and received 830 ounces of gold fr om its Vezza NSR royalty and sold 730 ounces of gold. The
average selling price of gold per ounce in Canadian dollars was also higher in 2016 at $1,643
compared to $1,486 in 2015.
In 2016, operating income amounted to $29.1 million compared to $18.2 million in 2015. The increase
in net operating income in 2016 is mainly the result of higher revenues generated from the sale of gold
and silver, lower business development expenses, a recovery of exploration tax credits of $2.2 million,
lower exploration and evaluation expenses and higher cost recoveries from associates, partially offset
by the depletion of royalty interests and higher general and administrative expenses (“G&A”). The
increase in G&A expenses is mainly due to higher legal costs and costs related to the listing on the
NYSE as well as higher share-based compensation expenses and was mostly offset by an increase in
cost recoveries from associates The decrease in business development is mainly due to the
$2.2 million fees incurred in 2015 for the acquisition of Virginia and the streamlining of operations in
2016.
The increase in net earnings attributable to Osisko’s shareholders in 2016 is mainly the result of an
increase of $10.9 million in operating income and net gains on investments of $30.2 million compared
to $1.6 million in 2015, partially offset by a loss on foreign exchange of $5.8 million compared to a gain
of $11.1 million in 2015, higher finance costs, higher shar e of loss of associates, higher income tax
expense and lower interest and dividend income. Dividend income decreased as a result of the sale of
the investment in LIORC in the fourth quarter of 2016.
The increase of $5.2 million in adjusted earnings in 2016 compared to 2015 is mainly due to an
increase in operating income of $10.9 million, partially offset by lower interest and dividend revenues
of $1.7 million, higher finance costs of $2.8 million and current income taxes of $1.3 million. As at
December 31, 2016, there is no income tax payable.
Net cash flows provided by operating activities increased in 2016 as a result of higher revenues and
operating income when compared to 2015.
Portfolio Updates
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 Malartic, 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 in 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 Mal artic pit. The Partnership is currently
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forecasting 600,000 ounces, 650,000 ounce s and 640,000 ounces of gold production for 2017, 2018
and 2019 respectively3.
Following the Québec Bureau des Audiences Publiques sur l'Environnement (“BAPE”) public hearings
in June and July 2016, permitting of the Canadian Malartic extension project and Highway 117
deviation reached an important milestone with the issue of the BAPE report on October 5, 2016. The
BAPE report concluded that the project is acceptable and provides several recommendations intended
to enhance social acceptability. Since the spring of 2015, the Partnership has been working
collaboratively with the community of Malartic and its citizens to develop a “Good Neighbour Guide”
that addresses impacts caused by the activities at the Canadian Malartic mine. Implementation of the
recommendations in the Good Neighbour Guide began on September 1, 2016. As of November 30,
2016, which was the end of the claim period for citizens of Malartic to request compensation for the
period from June 2013 through June 2016, approximately 94% of Malartic citizens had registered for
the program. The next step in the permitting process is for the Minister of Sustainable Development,
Environment and the Fight against Climate Change to review the report and present his decision to
Cabinet for approval. No date for the approval has been set, but the Partners anticipate that this may
occur in the first half of 2017. Production activities at Barnat are currently forecast to beg in in late
2018, depending on the timing of the start of construction of the road deviation3.
Canadian Malartic (Odyssey Zones)3
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 t onne “g/t” gold) for North and South Odyssey Zones w ere 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 z one and a 3% NSR royalty on the Odyssey North
zone.
Éléonore Mine
The other Osisko 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%)4. The increase compared to 2016 is
due to the continued ramp up of the mine. The production ramp -up to full capacity is expected to
continue into 2018 with the anticipated addition of a fifth production horizon. A life of mine study is
underway to determine the sustainable mining rate from the Roberto deposit.
Gilbraltar Mine
In the first quarter of 2017, Osisko acquired from Gibraltar Mines Ltd. (“Gibco”), a wholly -owned
subsidiary of Taseko, a silver stream with reference to silver produced at the Gibraltar copper mine
(“Gibraltar”), located in British Columbia, Canada. Osisko will pay Taseko a cash consideration of
US$33.0 million ($43.2 million) for the silver stream. In addi tion, Osisko will make ongoing payments
of US$2.75 ($3.60) per ounce of silver delivered.
Osisko will receive from Taseko an amount equal to 100% of the Gibco silver production until the
delivery of 5.9 million ounces of silver, which is equivalent to Tas eko’s 75% share of the silver in the
current proven and probable mineral reserves, and 35% of silver production thereafter for the life of
3 Refer to Agnico Eagle’s press release dated February 15, 2017, titled: “Agnico Eagle Reports Fourth Quarter and Full Year 2016 Results”
4 Refer to Goldcorp’s press release dated February 15, 2017, titled: “Goldcorp Reports Fourth Quarter and Full Year 2016 Results”
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mine. 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 mi ne 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. First silver deliveries occurred on Wednesday, March 15, Osisko received 21,616 ounces of
silver, which accounts for the month of January and a portion of February.
Island Gold Mine5
In the first quarter of 2017, Richmont Mines Inc. (“Richmont”) announced that the Island Gold Mine is
expected to deliver production growth that exceeds the record production levels achieved by Richmont
in 2016 by up to 12%, driven by increased underground mine and mill productivity of 900 tonnes per
day at an average head grade of 8.9 g/t gold. Annual production at Island Gold for 2017 is expected to
increase to between 87,000 and 93,000 ounces.
Osisko Mining Inc.
In August 2015, Osisko Mining acquired Eagle Hill Exploration Corporation, Ryan Gold Corp. and
Corona Gold Corporation to combine leadership, treasuries and assets to form a new Canadian
focused gold exploration and development company. In 2015, Osisko invested $17.8 million in shares
of Osisko Mining and was granted a right to acquire a 1% NSR royalty on all properties held by Osisko
Mining at the date of the financing. The right was exerci sed in October 2016 for $5.0 million and
includes a 1% NSR royalty on the Windfall Lake gold project (bringing the total NSR royalty on the
Windfall Lake gold project to 1.5%), where Osisko Mining is currently pursuing significant drilling
activities. In M arch 2016, Osisko Mining acquired all of the outstanding shares of NioGold Mining
Corp. In 2016, the Company invested an additional $6.8 million in Osisko Mining.
Falco Resources Ltd.6
In 2016, Falco Resources Ltd. (“Falco”) published an initial PEA on t he Horne 5 Project. Falco is
currently working on a feasibility study and an environmental impact assessment for the Horne 5
Project and is planning to complete the studies in 2017. In February 2017, Falco also announced it
had initiated a 40,000 metre exploration drill campaign on its large 668 square kilometre land package
in the Rouyn-Noranda Camp, which surrounds its 100% owned Horne 5 Project.
In May 2016, Osisko provided a $10.0 million loan to Falco with an 18 month maturity and bearing
interest at 7%. Under the terms of the loan, Falco and Osisko shall negotiate, by the end of October
2017, the terms, conditions and form of a silver and/or gold stream agreement (“Stream Agreement”)
whereby Osisko may provide Falco with a portion of the development c apital required to build the
Horne 5 Project. In this case, the principal amount of the loan and any accrued interest will be applied
against the stream deposit. At the maturity date, if Falco and Osisko have not concluded a Stream
Agreement, the principal amount of the loan will be converted into a 1% NSR royalty on the Horne 5
Project and accrued interests will be paid in cash.
5 Refer to Richmont’s press release dated February 2, 2017, titled: “Richmont Announces 2017 Guidance with Island Gold Mine
Positioned…”
6 Refer to Falco’s press release dated February 20, 2017, titled: “Falco Commences 40,000 Metre Drill Program”
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Barkerville Gold Mines Ltd.7
Barkerville Gold Mines Ltd. (“Barkerville”) is currently exploring and delineating Island Mountai n with
seven drill rigs and has now mobilized an eighth rig to the untested Tailings Zone which occurs in the
valley between Cow and Island Mountains. For 2017, Barkerville intends to perform ~130,000 metres
of diamond drilling in these areas with eight drill rigs.
The Company holds a 1.5% NSR royalty on the Cariboo Gold Project, which is owned by Barkerville.
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.
Labrador Iron Ore Royalty Corporation
Over the course of the fourth quarter of 2016 and January 2017, Osisko sold its 9.8% interest in
LIORC. The Company received $113.4 million in proceeds (including $98.2 million in 2016). Since the
initial investment in LIORC, the Company received $10.7 million in dividends (including $6.3 million in
2016 and $0.2 million in 2017). A 17.4%8 return we realized on our investment in LIORC.
Exploration and Evaluation Activities
Effective October 4, 2016, Osisko entered into an earn- in agreement with Osisko Mining, which was
subsequently amended to create two separate earn-in agreements. Under the first earn-in agreement,
Osisko Mining may earn a 100% interest in 26 of Osisko’s exploration properties located in the James
Bay area (excluding the Coulon copper -zinc project and four other exploration properties) and
Labrador Trough upon completing expenditures of $26.0 million over a 7- year period; Osisko Mining
will earn a 50% interest upon completing expenditures totaling $15.6 million over a 4-year period.
Under the second earn -in agreement, Osisko Mining may earn a 100% interest in the Kan property
(comprised of the Kan and Fosse Au properties) upon completing expenditures totaling $6.0 million,
which represents the guaranteed expenditures to be incurred by Barrick Gold Corporation (“Barrick”),
following an earn-in agreement signed between Osisko Mining and Barrick where Barrick committed to
spend $15.0 million on the Kan property; Osisko Mining may earn a 50% interest upon completing
expenditures totaling $3.6 million over a 4- year period. Osisko will retain an escalating NSR royalty
ranging from 1.5% to a maximum of 3.5% on precious metals and a 2.0% NSR royalty on other metals
and minerals produced from the 27 properties. Additionally, new properties acquired by Osisko Mining
in a designated area during a 7- year term will be subject to a royalty agreement in favour of Osisko
with similar terms. O sisko undertakes not to participate in any exploration activity and is bound not to
compete with Osisko Mining in areas covered by the agreement, except for the continuation of
activities on its Coulon copper-zinc project held by Osisko and other Québec institutional shareholders
and on four other exploration properties. As part of the transaction, Osisko Mining hired all of the
Osisko Québec based exploration team (former Virginia Mines Inc. employees) and took over the
Québec office lease. The transaction in respect of the properties is subject to third parties’ approval,
as applicable.
As a result of this transaction, the exploration and evaluation activities have been significantly reduced
and will be concentrated on the Coulon project (James Bay area). During the fourth quarter of 2016,
7 Refer to Barkerville’s press release dated February 10, 2017, titled: “Barkerville intersects 13.03g/t Au over 9.10 metres at Island Mountain …”
8 Total return on investment is a non- IFRS financial performance measure, which has no standard definition under I FRS. Total return
calculation is the sum of the capital gains and dividends divided by the cost of the investment and represents the return ear ned through the
life of the investment.
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Osisko invested $0.4 million, net of tax credits, in exploration and evaluation activities on the Coulon
project for a total of $3.0 million for the year ended December 31, 2016. As at December 31, 2016, the
carrying value of the Coulon project was $57.8 million ($54.7 million as at December 31, 2015) and
the carrying value of the other properties, including those under the earn -in agreements with Osisko
Mining, was $42.2 million ($41.5 million as at December 31, 2015).
On the Coulon project, a diamond drill program was conducted from January through spring 2016. For
the year 2016, 30 new holes were drilled and one hole was extended for a total of 23,075 metres.
2017 Guidance
Osisko’s 2017 outlook on royalties and strea m is based on the publicly available forecasts, in
particular the forecasts for the Canadian Malartic mine published by Yamana and Agnico Eagle, for
the Éléonore mine published by Goldcorp and for the Island Gold mine published by Richmont.
Henceforth, for 2017, attributable GEOs are estimated between 43,300 and 46,100 and are detailed
as follows:
2017
Canadian Malartic 30,500 – 31,500
Éléonore 6,800 – 7,000
Island Gold 1,400 – 1,600
Gibraltar stream 2,600 – 3,000
Others 2,000 – 3,000
Gold equivalent ounces 43,300 – 46,100
For our 2017 guidance, silver and cash royalties have been converted to GEOs using commodity
prices of US$1,250 per ounce of gold and US$18 per ounce of silver and an exchange rate (US$/C$)
of 1.30.
2016 Year-End Results Conference Call
Osisko will be filing 2016 year -end Financial Statements and Management Discussion and Analysis
after market close on Wednesday, March 15, 2017.
Osisko will host a conference call on Thursday , March 16, 2017 at 11:00 EDT t o review and discuss
its fourth quarter and full-year 2016 results.
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 partic ipants to
the call.
The conference call replay will be available from 2:00pm EDT on March 16, 2017 until 11:59 pm EDT
on March 23, 2017 with the following dial in numbers: 1 -(800) 585-8367 (North American toll free) or
1-(416) 621-4642, access code 49630837.
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About Osisko Gold Royalties Ltd
Osisko Gold Royalties is an intermediate precious metal royalty company focused on the Americas
that commenced activities in June 2014. It holds over 50 royalties, including a 5% NSR royalty on the
Canadian Malart ic Mine (Canada) and a 2.0- 3.5% NSR royalty on the Éléonore Mine (Canada). It
maintains a strong financial position with cash resources of $499.2 million at December 31, 2016 and
has distributed $30.8 million in dividends to its shareholders during the past nine consecutive quarters.
The Company also owns a portfolio of publicly held resource companies, including a 15.0% interest in
Osisko Mining Inc., 13.3% in Falco Resources Ltd, and 16.9% interest in Barkerville Gold Mines Ltd.
Osisko’s head office is l ocated at 1100 Avenue des Canadiens -de-Montréal, Suite 300, Montréal,
Québec, H3B 2S2.
For further information please contact, please contact Osisko Gold Royalties:
Vincent Metcalfe
Vice President, Investor Relations
Tel. (514) 940-0670
Joseph de la Plante
Vice President, Corporate Development
Tel. (514) 940-0670
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