Osisko Reports Second Quarter 2019 Results
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OSISKO REPORTS SECOND QUARTER 2019 RESULTS
Montréal, July 31, 2019 – Osisko Gold Royalties Ltd (the “Company” or “Osisko”) (OR: TSX & NYSE)
today announced its consolidated financial results for the second quarter of 2019.
Highlights
• Revenues from royalties and streams of $33.8 million compared to $32.9 million in Q2 2018;
• Generated cash flows from operating activities of $2 1.4 million compared to $19. 7 million in
Q2 2018;
• Earned 19,651 gold equivalent ounces1 (“GEOs”) compared to 20,506 in Q2 2018;
• Adjusted earnings2 of $8.2 million, $0.05 per basic share2 compared to $3.7 million, $0.02 per
basic share in Q2 2018;
• Net loss of $6.5 million, $0.04 per basic share compared to $0.5 million, $0.00 per basic share
in Q2 2018;
• Recorded cash operating margi ns3 of 90% from royalty and stream interests , generating
$30.3 million in operating cash flow in the second quarter, in addition to a quarterly cash
operating margin of $1.2 million from offtake interests;
• Orion’s ownership of Osisko’s issued and outstandi ng common shares was reduced from
19.5% to 6.2%;
• Construction of the Eagle gold mine of Victoria Gold Corp. has reached 95% completion rate;
• Closed a senior -secured bridge credit facility together with certain secured lenders and key
stakeholders to Stornoway Diamond Corporation (“Stornoway”) to support Stornoway during its
strategic review process (up to $2.8 million attributable to Osisko);
• Held $83.6 million in cash, $281.9 million in equity investments 4 and up to $450 million
availability of undrawn credit facility as at June 30, 2019; and
• Declared a quarterly dividend of $0.05 per common share paid on July 15, 2019 to
shareholders of record as of the close of business on June 28, 2019.
For more details, please refer to the Management’s Discussion and Analysis for the three and six
months ended June 30, 2019.
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Recent Performance
Sean Roosen, Chair and Chief Executive Officer, commented on the activities of the second quarter of
2019: “We are very pleased to have completed one of the most significant shar e repurchase
transactions in our sector during the quarter, having repurchased 8% of our outstanding shares. Since
its inception in June 2014, Osisko has returned $320 million to its shareholders through dividends and
share buy backs. We believe Osisko is now very well positioned, with the gold price currently rallying
at six-year highs, to benefit from substantial growth within its royalty and stream portfolio and deliver
growth in our per share metrics over the next years.”
Orion Transaction
Betelgeuse LLC (“Orion”), a jointly owned subsidiary of certain investment funds managed by Orion
Resource Partners, closed a secondary offering, pursuant to which a syndicate of underwriters
purchased from Orion, on a bought deal basis an aggregate of 9,027,500 com mon shares
(“Secondary Offering”) of Osisko at an offering price of $14.10 per common share 5. Concurrently,
Osisko has agreed to purchase for cancellation 12,385,717 of its common shares from Orion (“Share
Repurchase”) at the same price as the Secondary Of fering for a total of $174.6 million (satisfied in
cash and direct transfer of certain equity securities held by Osisko). The purchase price per common
share to be paid by Osisko under the Share Repurchase w as determined to be the Secondary
Offering Price. Payment from Osisko to Orion consisted of a combination of cash ($129.5 million) and
the direct transfer of investments in associates and other investments held by Osisko ($45.1 million).
Benefits of the transaction to Osisko:
• 8% reduction in the number of Osisko’s issued and outstanding common shares at an
attractive price, resulting in an immediate positive impact on Osisko’s earnings per share and
cash flow per share;
• Monetization of certain less liquid equity positions held by Osisko;
• Overall reduction in the weight of Osisko’s equity portfolio in relation to the overall size of the
business;
• Positive impact on demand from index funds; and
• Reduction in expected annual dividend payments by $2.5 million.
On June 28, 2019, Osisko and Orion completed t he first tranche of the Share Repurchase. A total of
7,319,499 common shares of Osisko were acquired from Orion and subsequently cancelled. A portion
of the purchase price of $103.2 million for the first tranche of the Share Repurchase was paid in cash
(from the sale of all of the common shares held by Osisko in Dalradian Resources Inc. to another
entity managed by Orion Resource Partners) and a portion was paid in the form of the transfer from
Osisko to Orion of investments in associates and other investments.
The second tranche of the Share Repurchase closed on July 15, 2019 for the acquisition and
cancellation of 5,066,218 common shares of Osisko. The purchase price of $71.4 million was paid in
cash (from the sale of all of the common shares held by Osisko in Victoria Gold Corp. to another entity
managed by Orion Resource Partners). During the three months ended September 30, 2019, a gain of
$1.7 million will be recognized in the consolidated statement of income (loss) for the difference
between the carry ing value of the Victoria shares (presented as asset held of sale as at June 30,
2019) and the liability for share repurchase.
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Company Settlement
First Tranche
Value
Second Tranche
Value
Dalradian Resources Inc. Cash $58.1 million
Victoria Gold Corp. Cash $71.4 million
Aquila Resources Inc. Transfer $9.7 million
Highland Copper Company Inc. Transfer $3.0 million
Other investments Transfer $32.4 million
$103.2 million $71.4 million
The transaction costs r elated to the Share Repurchase and Secondary Offering were reimbursed by
Orion.
Outlook
Osisko’s 2019 outlook on royalty, stream and offtake interests is based on publicly available forecasts,
in particular the forecasts for the Canadian Malartic mine published by Yamana Gold Inc. and Agnico
Eagle Mines Limited, for the Éléonore mine published by Newmont Goldcorp Corporation, and for the
Renard mine published by Stornoway Diamond Corporation. When publicly available forecasts on
properties are not available, Osisko obtains internal forecasts from the producers, which is the case
for the Mantos Blancos mine, or uses management’s best estimate.
Attributable GEOs for 2019 remains unchanged from previous guidance. GEOs and cash margin by
interest are estimated as follows:
Low High Cash margin
(GEOs) (GEOs) (%)
Royalty interests 54,700 61,100 99.9
Stream interests 28,000 31,300 65.5
Offtake interests 2,300 2,600 1.2
85,000 95,000
For the 2019 guidance, silver, diamonds and cash royalties have been converted to GEOs using
commodity prices of US$1,300 per ounce of gold, US$15.50 per ounce of silver and US$95 per carat
for diamonds from the Renard mine (blended sales price) and an exchange rate (US$/C$) of 1.30.
Q2 2019 Results Conference Call
Osisko will host a conference call on Thursday , August 1, 2019 at 10:00 am E DT to review and
discuss its Q2 2019 results.
Those interested in participating in the conference call should dial in at 1 (877) 223-4471 (Nort h
American toll free), or 1 (647) 788-4922 (international). An operator will direct participants to the call.
The conference call replay will be available from 1:00 pm E DT on August 1, 2019 until 11:59 pm EDT
on August 8, 2019 with the following dial in nu mbers: 1-(800) 585-8367 (North American toll free) or
1 (416) 621-4642, access code 9189095.
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About Osisko Gold Royalties Ltd
Osisko Gold Royalties Ltd is an intermediate precious metal royalty company that holds a North
American focused portfolio of ov er 135 royalties, streams and precious metal offtakes. Osisko’s
portfolio is anchored by its 5% NSR royalty on the Canadian Malartic Mine, which is the largest gold
mine in Canada. As of July 31, 2019, 142,971,526 common shares were issued and outstanding.
Osisko also owns a portfolio of publicly held resource companies, including a 32.6% interest in
Barkerville Gold Mines Ltd., a 16.6% interest in Osisko Mining Inc. and a 19.9% interest in Falco
Resources Ltd.
Osisko’s head office is located at 1100 Avenue des Canadiens -de Montréal, Suite 300, Montréal,
Québec, H3B 2S2.
For further information, please contact Osisko Gold Royalties Ltd:
Joseph de la Plante
Vice President, Corporate Development
Tel. (514) 940-0670
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Notes:
(1) GEOs are calculated on a quarterly basis and include royalties, streams and offtakes. Silver
earned from royalty and stream agreements 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. Diamonds, other metals and cash royalties were converted
into gold equivalent ounces by dividing the associated revenue by the average gold price for
the period. Of ftake agreements were converted using the financial settlement equivalent
divided by the average gold price for the period.
Average Metal Prices and Exchange Rate
Three months ended
June 30,
Six months ended
June 30,
2019 2018 2019 2018
Gold(i) $1,309 $1,306 $1,307 $1,318
Silver(ii) $15 $17 $15 $17
Exchange rate (US$/Can$)(iii) 1.3377 1.2911 1.3336 1.2781
(i) The London Bullion Market Association’s pm price in U.S. dollars
(ii) The London Bullion Market Association’s price in U.S. dollars
(iii) Bank of Canada daily rate
(2) “Adjusted earnings” and “Adjusted earnings per basic share” are not recognized measures
under the International Financial Reporting Standards (“IFRS”). Refer to the non- IFRS
measures provided under the Non -IFRS Financial Per formance Measures section of the
Management’s Discussion and Analysis for the three and six months ended June 30, 2019.
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(3) Cash operating margin, which represents revenues less cost of sales, is a non-IFRS measure.
The Company believes that this non- IFRS generally accepted industry measure provides a
realistic indication of operating performance and provides a useful comparison with its peers.
The following table reconciles the cash margin to the revenues and cost of sales presented in
the consolidated statements of income and related notes:
(In thousands of dollars)
Three months ended
June 30,
Six months ended
June 30,
2019 2018 2019 2018
$ $ $ $
Revenues 131,606 137,819 232,332 263,433
Less: Revenues from offtake interests (97,825) (104,968) (165,051) (197,997)
Revenues from royalty and stream interests 33,781 32,851 67,281 65,436
Cost of sales (100,093) (108,290) (170,197) (201,957)
Less: Cost of sales of offtake interests 96,642 104,118 163,152 194,722
Cost of sales of royalty and stream interests (3,451) (4,172) (7,045) (7,235)
Revenues from royalty and stream interests 33,781 32,851 67,281 65,436
Less: Cost of sales of royalty and stream
(3,451) (4,172) (7,045) (7,235)
Cash margin from royalty and stream
it t
30,330 28,679 60,236 58,201
90% 87% 90% 89%
Revenues from offtake interests 97,825 104,968 165,051 197,997
Less: Cost of sales of offtake interests (96,642) (104,118) (163,152) (194,722)
Cash margin from offtake interests 1,183 850 1,899 3,275
1% 1% 1% 2%
(4) Represents the estimated fair value based on the quoted prices of the investments in a
recognized stock exchange as at June 30, 201 9 and excluding Osisko’s equity position in
Victoria Gold Corp., which was presented as asset held for sale.
(5) On July 11, the secondary offering for 7,850,000 shares was closed and on July 18, the over -
allotment option was exercised in full by the underwriters for 1,177,500 shares for an
aggregate of 9,027,500 common shares of Osisko.
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Forward-looking Statements
This news release contains forward -looking information and forward-looking statements (together, " forward-looking
statements") within the meaning of applicable Canadian securities laws and the United States Private Securities Litigation
Reform Act of 1995. 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 revenue, requirements for additional capital, production estimates, production costs
and revenue, business prospects and opportunities are forward-looking statements. In addition, statements relating to gold
equivalent ounces ("GEOs") are forward-looking statements, as they involve implied assessment, based on certain estimates
and assumptions, and no assurance can be given that the GEOs will be realized. Forward-looking statements are statements
that are not historical facts and are generally, but not always, identified by the words "expects", "is expected" "plans",
"anticipates", "believes", "intends", "estimates", "proj ects", "potential", "scheduled" and similar expressions or variations
(including negative variations of such words and phrases), or may be identified by statements to the effect that certain
actions, events or conditions "will", "would", "may", "could" or "should" occur including, without limitation, the performance of
the assets of Osisko, the estimat e of GEOs to be received in 2019, the growth of per share metrics and Osisko’s ability to
seize future opportunities. Although Osisko believes the expectation s 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 deriving from Osisko’s royalties, streams and other interests to diff er
materially from those in forward-looking statements include, without limitation: influence of political or economic factors
including fluctuations in the prices of the commodities and in value of the Canadian dollar relative to the U.S. dollar,
continued availability of capital and financing and general economic, market or business conditions; r egulations and
regulatory changes in national and local government, including permitting and licensing regimes and taxation policies;
whether or not Osisko is determined to have “passive foreign investment company” (“PFIC”) status as defined in Section
1297 of the United States Internal Revenue Code of 1986, as amended; potential changes in Canadian tax treatments of
offshore streams or other interests, litigation, title, permit or license disputes; risks and hazards associated with the bus iness
of exploring, development and mining on the properties in which Osisko holds a royalty, stream or other interest including,
but not limited to development, permitting, infrastructure, operating or technical difficulties, unusual or unexpected geological
and metallurgical conditions, slope failures or cave-ins, flooding and other natural disasters or civil unrest, rate, grade and
timing of production differences from mineral resource estimates or production forecasts or other uninsured risks; risk relat ed
to business opportunities that become available to, or are pursued by Osisko and exercise of third party rights affecting
proposed investments . 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, stream 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; Osisko’s ongoing income
and assets relating to the determination of its PFIC status, no material changes to existing tax treatments; 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 underlyi ng 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.
However, there can be no assurance that forward-looking statements will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such statements. Investors are cautioned that forward- looking
statements are not guarantees of future performance. Osisko cannot assure investors th at actual results will be consistent
with these forward-looking statements and investors should not place undue reliance on forward-looking statements due to
the inherent uncertainty therein.
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 and with the U.S. Securities and Exchange Commission on EDGAR at www.sec.gov. 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)
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June 30, December 31,
2019 2018
$ $
Assets
Current assets
Cash 83,589 174,265
Short-term investments 16,165 10,000
Amounts receivable 12,816 12,321
Other assets 967 1,015
113,537 197,601
Asset held for sale 69,757 -
183,294 197,601
Non-current assets
Investments in associates 225,855 304,911
Other investments 50,525 109,603
Royalty, stream and other interests 1,367,468 1,414,668
Exploration and evaluation 92,813 95,002
Goodwill 111,204 111,204
Other assets 11,801 1,657
2,042,960 2,234,646
Liabilities
Current liabilities
Accounts payable and accrued liabilities 14,269 11,732
Dividends payable 7,146 7,779
Provisions - 3,494
Liability for share repurchase 71,434 -
Lease liabilities 777 -
93,626 23,005
Non-current liabilities
Long-term debt 326,050 352,769
Lease liabilities 9,733 -
Deferred income taxes 78,679 87,277
508,088 463,051
Equity
Share capital 1,482,860 1,609,162
Warrants 18,072 30,901
Contributed surplus 36,182 21,230
Equity component of convertible debentures 17,601 17,601
Accumulated other comprehensive income 13,437 23,499
Retained earnings (deficit) (33,280) 69,202
1,534,872 1,771,595
2,042,960 2,234,646