Osisko Reports Strong Third Quarter 2020 Results
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OSISKO REPORTS STRONG THIRD QUARTER 2020 RESULTS
Montréal, November 9, 2020 – Osisko Gold Royalties Ltd (the “Company” or “Osisko”) (OR: TSX &
NYSE) today announced its consolidated financial results for the third quarter of 2020.
Highlights (amounts in Canadian dollars, except otherwise noted)
Record revenues from royalties and streams of $41.2 million (Q3 2019 – $33.9 million);
Record c ash flows from operating activities of $ 36.1 million (Q3 2019 – $28.3 million);
$31.7 million before changes in non-cash working capital items (Q3 2019 – $25.1 million);
Record c ash operating margin 1 of 96.4% from royalty and stream interests, generating
$39.7 million in operating cash flow, in addition to a cash operating margin of $ 0.7 million from
offtake interests;
Earned 16,739 GEOs2 (Q3 2019 – 18,123 GEOs);
Net earnings of $12.5 million, $0.08 per basic share (Q3 2019 – net loss of $45.9 million, $0.32
per basic share);
Adjusted earnings3 of $17.5 million or $0.11 per basic share (Q3 2019 – $17.5 million, $0.12 per
basic share);
Cash on hand of $160.7 million and over $400.0 million further available under the credit facility
as at September 30, 2020;
Announced the spin-out of mining assets and certain equity positions through a reverse take -
over transaction and the creation of a North American gold development company, Osisko
Development Corp. (“Osisko Development”) , which in conjunction completed a $100 million
bought deal financing;
The Canadian Malartic mine operators announced strong results from the drilling program at
East Gouldie, which are expected to lead to a significant increase in the mineral resources
estimate at year -end 2020 . A preliminary economic assessment is also expected to be
completed in early 2021, which may result in the start of mine shaft construction;
Acquired the San Antonio gold project in Mexico for US$42 million, which will be spin -out to
Osisko Development;
Acquired an additional 15% ownership in a Canadian precious metal royalty portfolio, including
royalties on the Island Gold and Lamaque mines;
Announced that the Renard diamond mine, operated by Stornoway Diamonds Canada Inc. ,
restarted operations in September 2020;
Announced a strategic partnership with Regulus Resources Inc. (“Regulus”) whereby Regulus
has agreed to grant Osisko an initial royalty and certain future royalty rights in exchange for an
upfront cash payment of US$12.5 million ($16.6 million);
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Commercial production was declared by the operator of the Eagle Gold mine on July 1, 2020,
on which the Company holds a 5% NSR royalty; and
Declared a quarterly dividend of $0.05 per common share paid on October 15, 2020 to
shareholders of record as of the close of business on September 30, 2020.
Sandeep Singh, President of Osisko commented on the activities of the third quarter of 2020: “We had
a very strong third quarter with production rebounding well and other significant catalysts. The spin-out
transaction announced on October 5th is an important strategic milestone for the Company. It greatly
simplifies Osisko into a pure -play royalty and streaming company, while maintaining exposure to the
company-making assets contributed to Osisko Development. Our cornerstone Canadian Malartic royalty
continues to create significant value for our shareholders as the joint venture partnership makes
significant strides towards an underground develop ment decision. We anticipate a continued upward
trend in GEO deliveries in the fourth quarter, and we believe that we are in excellent position to meet
our forecast for the second half of 2020.”
Outlook
Osisko’s guidance for the six months and the year ending December 31, 2020 is shown in the table
below. For the full year 2020 guidance, actual results were used for the first semester and added to the
forecast for the second semester of the year. For the outlook of the last 6 months of 2020, silver and
cash royalties have been converted to GEOs using commodity prices of US$1,900 per ounce of gold,
US$22 per ounce of silver and an exchange rate (US$/C$) of 1.33.
Six months ending December 31, 2020 (i) Year ending December 31, 2020 (i)
Low High
Cash
margin Low High
Cash
margin
(GEOs) (GEOs) (%) (GEOs) (GEOs) (%)
Royalty interests 24,800 26,250 100 45,500 46,950 100
Stream interests 8,000 8,450 87 17,150 17,650 81
Offtake interests 200 300 2 850 900 3
33,000 35,000 63,500 65,500
(i) Excluding any potential revenues from the Renard diamond mine for the six months ending December 31, 2020.
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Q3 2020 Results Conference Call
Osisko will host a conference call on Tuesday, November 10, 2020 at 10:00 am EST to review and
discuss its third quarter 2020 results.
Those interested in participating in the conference call should dial in at 1 -(877) 223 -4471 (North
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 EST on November 10, 2020 until 11:59 pm
EST on November 24, 2020 with the following dial in numbers: 1-(800) 585-8367 (North American toll
free) or 1-(416) 621-4642, access code 4896403. The replay will also be available on our website at
www.osiskogr.com.
About Osisko Gold Royalties Ltd
Osisko Gold Royalties Ltd is an intermediate precious metal royalty company focused on the Americas
that commenced activities in June 2014. Osisko holds a North American focused portfolio of over 13 8
royalties, streams and precious metal offtakes. Osisko’s portfolio is anchored by its cornerstone asset,
a 5% net smelter return royalty on the Canadian Malartic mine, which is the largest gold mine in Canada.
Osisko also owns the Cariboo gold project in Canada as well as a portfolio of publicly held resource
companies, including a 14.6% interest in Osisko Mining Inc., 17.8% interest in Osisko Metals
Incorporated and an 18.3% interest in Falco Resources Ltd. On October 5, 2020, Osisko Gold Royalties
Ltd announced the spin-out of mining assets and the creation of Osisko Development Corp., a premier
North American gold development company. This transaction is expected to close in the fourth quarter
of 2020.
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:
Sandeep Singh
President
Tel. (514) 940-0670
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Notes:
(1) 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 o f sales presented in the consolidated
statements of income (loss) and related notes (In thousands of Canadian dollars):
Three months ended
September 30,
Nine months ended
September 30,
2020 2019 2020 2019
$ $ $ $
Revenues 55,707 109,235 149,070 341,567
Less: Revenues from offtake interests (14,464) (75,314) (41,260) (240,365)
Revenues from royalty and stream interests 41,243 33,921 107,810 101,202
Cost of sales (15,236) (77,419) (45,464) (247,616)
Less: Cost of sales of offtake interests 13,738 74,300 39,114 237,452
Cost of sales of royalty and stream interests (1,498) (3,119) (6,350) (10,164)
Revenues from royalty and stream interests 41,243 33,921 107,810 101,202
Less: Cost of sales of royalty and stream interests (1,498) (3,119) (6,350) (10,164)
Cash margin from royalty and stream interests 39,745 30,802 101,460 91,038
96% 91% 94% 90%
Revenues from offtake interests 14,464 75,314 41,260 240,365
Less: Cost of sales of offtake interests (13,738) (74,300) (39,114) (237,452)
Cash margin from offtake interests 726 1,014 2,146 2,913
5% 1% 5% 1%
(2) 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 equivale nt
ounces by dividing the associated revenue 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.
Average Metal Prices and Exchange Rate
Three months ended
September 30,
Nine months ended
September 30,
2020 2019 2020 2019
Gold(i) $1,909 $1,472 $1,735 $1,364
Silver(i) $24 $17 $19 $16
Exchange rate (US$/Can$)(iii) 1.3321 1.3204 1.3541 1.3292
(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.
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(3) The Company has included certain non-IFRS measures including “Adjusted Earnings” and “Adjusted Earnings per basic share” to
supplement its consolidated financial statements, which are presented in accordance with IFRS.
The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with
an improved ability to evaluate the underlying performance of the Company. Non -IFRS measures do not have any standardized
meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies. The
data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS.
“Adjusted earnings” is defined as “Net earnings (loss)” adjusted for certain items: “Foreign exchange gain (loss)”, “Impairment of
assets”, including impairment on financial assets and investments in associates, “Gains (lo sses) on disposal of exploration and
evaluation assets”, “Unrealized gain (loss) on investments”, “”, “Share of loss of associates”, “Deferred income tax expense
(recovery)” and other unusual items such as transaction costs.
Adjusted earnings per basic share is obtained from the “adjusted earnings” divided by the “Weighted average number of common
shares outstanding” for the period.
Three months ended
September 30,
Nine months ended
September 30,
2020 2019 2020 2019
(in thousands of Canadian dollars,
except per share amounts)
$ $ $ $
Net earnings (loss) 12,514 (45,924) 12,244 (79,020)
Adjustments:
Impairment of royalty, stream and
other interests - 60,800 26,300 99,700
Impairment of investments 1,281 12,500 5,304 12,500
Foreign exchange loss (gain) 391 (498) (1,166) 1,145
Unrealized (gain) loss on investments (1,308) (1,529) (16,766) 3,804
Share of loss of associates 760 4,146 3,934 14,688
Deferred income tax expense (recovery) 3,615 (12,001) 1,590 (21,267)
Transaction costs (RTO transaction) 276 - 276 -
Adjusted earnings 17,529 17,494 31,716 31,550
Weighted average number of
common shares outstanding (000’s) 166,110 144,446 162,321 151,570
Adjusted earnings per basic share 0.11 0.12 0.20 0.21
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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 n ot always, identified by the words "expects", "is expected" "plans",
"anticipates", "believes", "intends", "estimates", "projects", "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, that the conditions precedent to the spin-out of mining assets and the creation of Osisko Development Corp. will be
met, that significant value will be created within the accelerator group of companies and Osisko’s ability to seize future
opportunities. Although Osisko believes the expectatio ns 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 differ materially from
those in forward-looking statements include, without limitation: the uncertainties related to the COVID-19 impacts, the 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 financin g and general economic, market or business conditions;
regulations 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 inves tment 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 business
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 diff iculties, 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 related 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 ba sed 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 inco me 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 underlying properties that are not yet in production; and the absence of any other factors that could
cause actions, events or results to differ from those anticipated, estimated or intended. 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 that 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 wi th 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 aft er
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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September 30, December 31,
2020 2019
$ $
Assets
Current assets
Cash 160,705 108,223
Short-term investments 21,568 20,704
Amounts receivable 11,554 6,330
Inventories 10,269 1,656
Other assets 2,944 3,516
207,040 140,429
Non-current assets
Investments in associates 123,946 103,640
Other investments 123,086 67,886
Royalty, stream and other interests 1,121,353 1,130,512
Mining interests and plant and equipment 443,371 343,693
Exploration and evaluation 43,150 42,949
Goodwill 111,204 111,204
Other assets 26,920 6,940
2,200,070 1,947,253
Liabilities
Current liabilities
Accounts payable and accrued liabilities 34,186 18,772
Dividends payable 8,341 7,874
Current portion of long-term debt 49,580 -
Provisions and other liabilities 4,600 1,289
96,707 27,935
Non-current liabilities
Provisions and other liabilities 39,940 29,365
Long-term debt 372,010 349,042
Deferred income taxes 53,235 47,465
561,892 453,807
Equity
Share capital 1,767,460 1,656,350
Warrants 18,072 18,072
Contributed surplus 39,796 37,642
Equity component of convertible debentures 17,601 17,601
Accumulated other comprehensive income 59,851 13,469
Deficit (264,602) (249,688)
1,638,178 1,493,446
2,200,070 1,947,253
Osisko Gold Royalties Ltd
Consolidated Statements of Income (Loss)
For the three and nine months ended September 30, 2020 and 2019
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)
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Three months ended
September 30,
Nine months ended
September 30,
2020 2019 2020 2019
$ $ $ $
Revenues 55,707 109,235 149,070 341,567
Cost of sales (15,236) (77,419) (45,464) (247,616)
Depletion of royalty, stream and other
interests
(9,665) (10,965) (32,057) (35,166)
Gross profit 30,806 20,851 71,549 58,785
Other operating expenses
General and administrative (5,957) (4,559) (18,059) (15,034)
Business development (1,910) (1,375) (4,682) (4,899)
Gain on disposal of an offtake interest - 7,636 - 7,636
Exploration and evaluation (32) (48) (108) (139)
Impairment of assets - (60,800) (26,300) (99,700)
Operating income (loss) 22,907 (38,295) 22,400 (53,351)
Interest and dividend income 1,327 1,091 3,523 3,183
Finance costs (6,440) (5,843) (19,938) (17,382)
Foreign exchange (loss) gain (419) 508 1,299 (1,104)
Share of loss of associates (760) (4,146) (3,934) (14,688)
Other gains (losses), net 27 (10,971) 11,462 (16,304)
Earnings (loss) before income taxes 16,642 (57,656) 14,812 (99,646)
Income tax (expense) recovery (4,128) 11,732 (2,568) 20,626
Net earnings (loss) 12,514 (45,924) 12,244 (79,020)
Net earnings (loss) per share
V
Basic and diluted 0.08 (0.32) 0.08 (0.52)