OSISKO REPORTS THIRD QUARTER 2019 RESULTS Record Cash Flows from Operating Activities of $28.3 Million First Gold Pour at the Eagle Gold Mine
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OSISKO REPORTS THIRD QUARTER 2019 RESULTS
Record Cash Flows from Operating Activities of $28.3 Million
First Gold Pour at the Eagle Gold Mine
Montréal, November 6, 2019 – Osisko Gold Royalties Ltd (the “Company” or “Osisko”) (OR: TSX &
NYSE) today announced its consolidated financial results for the third quarter of 2019.
Highlights
• Cash on hand of $123.7 million, $293.0 million in equity investments 1 and up to $480 million
availability under its credit facility as at September 30, 2019;
• Increased its credit facility from $350.0 million to $400.0 million, with an additional uncommitted
accordion of up to $100.0 million (for a total availability of up to $500.0 million) and extended
the maturity date by one year to November 14, 2023;
• Revenues from royalties and streams of $33.9 million compared to $31.4 million in Q3 2018;
• Generated record cash flows from operating activities of $2 8.3 million compared to $20 .6
million in Q3 2018;
• Earned 18,123 gold equivalent ounces2 (“GEOs”) compared to 20,006 in Q3 2018;
• Incurred non-cash impairment charges stream and offtake interests of $60.8 million ($48.1
million, net of income taxes), mainly on the Renard diamond stream ($47.2 million and $34.6
million, net of income taxes) and Amulsar gold/silver stream and gold offtake ($13.1 million)
and non-cash impairment of net investment in an associate of $12.5 million for total non -cash
impairment charges of $73.3 million ($59.0 million, net of income taxes);
• Net loss of $45.9 million, $0.32 per basic share compared to net earnings of $5.5 million, $0.04
per basic share in Q3 2018. Net earnings of $13.0 million, $0.09 per basic share excluding the
above non-cash impairment charges;
• Adjusted earnings3 of $17.5 million, $0.12 per basic share3 compared to $5.7 million, $0.04 per
basic share in Q3 2018;
• Recorded cash operating margins 4 of 91% from royalty and stream interests , generating
$30.8 million in operating cash flow in the third quarter, in addition to a quarterly cash operating
margin of $1.0 million from offtake interests;
• Closed the second tranche of the share repurchase with Betelgeuse LLC ("Orion") (5,066,218
common shares acquired for $71.4 million, for a total of 12,385,717 common shares acquired
from Orion for $174.6 million and subsequently cancelled), reducing O rion’s ownership of
Osisko’s issued and outstanding common shares to 6.2%;
• Enhanced its silver stream on the Mantos Blancos mine by investing US$25.0 million and
reducing the ongoing transfer price payments per ounce from 25% to 8% of the spot silver
price, cancelling the buy -down option and increasing the tail stream from 30% to 40% of
payable silver after 19.3 million ounces of refined silver have been delivered;
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• Sold the Brucejack gold offtake to Pretium Exploration Inc. for US$41.3 million;
• The Eagle Gold mine operated by Victoria Gold Corp. and on which Osisko holds a 5% net
smelter return ("NSR") royalty announced its first gold pour in September;
• Announced a definitive agreement with Barkerville Gold Mines Ltd. ("Barkerville"), owner of the
Cariboo g old project, pursuant to which Osisko has agreed to acquire all of the issued and
outstanding common shares of Barkerville that it does not currently own, representing 67.4%;
• In November, completed a credit bid transaction with Stornoway Diamond Corporation
alongside other secured creditors, allowing Osisko to maintain its 9.6% diamond stream on the
Renard mine . In connection with the completion of the credit bid, the secured creditors
acquired substantially all of the assets and properties of Stornoway, and assumed the debts
and liabilities owing to Stornoway’s secured creditors as well as the ongoing obligations
relating to the operation of the Renard mine, subject to certain limited exceptions. Osisko
became a 35.1% shareholder of the company now holding the Renard diamond mine, which
will continue to operate in the normal course; and
• Declared a quarterly dividend of $0.05 per common share paid on October 15, 2019 to
shareholders of record as of the close of business on September 30, 2019.
For more details , please refer to the Management’s Discussion and Analysis for the three and nine
months ended September 30, 2019.
Recent Performance
Sean Roosen, Chair and Chief Executive Officer , commented on the activities of the third quarter of
2019: “Our royalty and stream business continues to be strong with record cash flows from operating
activities of $28.3 million. On September 23, 2019, we entered into an agreement to acquire all of the
issued and outstanding common shares of Barkerville. The addition of the Cariboo Gold project to our
portfolio adds a potentially world- class asset in Canada in an impacted brownfield site with significant
infrastructure in place. Osisko expects to fund planned work through its own capital as well as outside
private equity and joint venture capital through the newly created North Spirit Discovery Group. Our
goal is to create significant value within the accelerator group as these assets advance from
incubation/exploration to development and production.”
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 has been reduced from previous guidance, mainly as a result of weak
diamond prices at the Renard mine and the sale of the Brucejack gold offtake. However, cash
operating margins and operating cash flow are expected to be in line with guidance, as a result of
strong gold prices.
Due to the sale of the Brucejack gold offtake, revenues from offtake interests will decrease
considerably, about $75 to 80 million per quarter . As these offtake inter ests have a historical cash
margin of 1%, the impact on cash flows from operating activities will not be material.
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GEOs and cash margin by interest are estimated as follows:
Original Guidance Revised Guidance
Low High
Mid
cash
margin
Cash
margin
Cash
margin
Cash
margin
(GEOs) (GEOs) (million $) (%) (GEOs) (million
$)
(%)
Royalty interests 54,700 61,100 98 99.9 53,100 97 99.7
Stream interests 28,000 31,300 33 65.5 23,100 29 67.4
Offtake interests 2,300 2,600 4 1.2 1,800 3 1.3
85,000 95,000 135 78,000 129
For the 2019 original 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.
For the 2019 revised guidance, silver, diamonds and cash royalties have been converted to GEOs
using average commodity prices of US$1,380 per ounce of gold, US$16.15 per ounce of silver and
US$76 per carat for diamonds from the Renard mine (blended sales price) and an exchange rate
(US$/C$) of 1.32.
Q3 2019 Results Conference Call
Osisko will host a conference call on Thursday, November 7, 2019 at 10:00 am EST to review and
discuss its Q3 2019 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 7, 2019 until 11:59 pm
EST on November 14, 2019 with the following dial in numbers: 1 (800) 585- 8367 (North American toll
free) or 1 (416) 621-4642, access code 4994211.
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 135
royalties, streams and precious metal offtakes. Osisko’s portfolio is anchored by four cornerstone
assets, including a 5% NSR royalty on the Canadian Malartic mine, which is the largest gold mine in
Canada. Osisko also owns a portfolio of publicly held resource companies, including a 32.6% interest
in Barkerville Gold Mines Ltd. and a 4% NSR royalty on the Cariboo Gold project, a 19.9% interest in
Falco Resources Ltd and a 16.3% interest in Osisko Mining Inc.
Osisko’s head office is located at 1100 Avenue des Canadiens -de Montréal, Suite 300, Montréal,
Québec, H3B 2S2.
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For further information, please contact Osisko Gold Royalties Ltd:
Joseph de la Plante
Vice President, Corporate Development
Tel. (514) 940-0670
Notes:
(1) Represents the estimated fair value based on the quoted prices of the investments in a
recognized stock exchange as at September 30, 2019.
(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 equi valent 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,
2019 2018 2019 2018
Gold(i) $1,472 $1,213 $1,364 $1,282
Silver(ii) $16.98 $15.02 $15.83 $16.10
Exchange rate (US$/Can$)(iii) 1.3204 1.3070 1.3292 1.2876
(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
(3) “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 Performance Measures section of the
Management’s Discussion and Analysis for the three and nine months ended September 30,
2019.
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(4) 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
September 30,
Nine months ended
September 30,
2019 2018 2019 2018
$ $ $ $
Revenues 109,235 111,702 341,567 375,135
Less: Revenues from offtake interests (75,314) (80,309) (240,365) (278,306)
Revenues from royalty and stream interests 33,921 31,393 101,202 96,829
Cost of sales (77,419) (82,748) (247,616) (284,705)
Less: Cost of sales of offtake interests 74,300 79,498 237,452 274,220
Cost of sales of royalty and stream interests (3,119) (3,250) (10,164) (10,485)
Revenues from royalty and stream interests 33,921 31,393 101,202 96,829
Less: Cost of sales of royalty and stream
(3,119) (3,250) (10,164) (10,485)
Cash margin from royalty and stream
it t
30,802 28,143 91,038 86,344
90.8% 89.6% 90.0% 89.2%
Revenues from offtake interests 75,314 80,309 240,365 278,306
Less: Cost of sales of offtake interests (74,300) (79,498) (237,452) (274,220)
Cash margin from offtake interests 1,014 811 2,913 4,086
1.3% 1.0% 1.2% 1.5%
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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 Uni ted 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, statement s 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", "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 performanc e of
the assets of Osisko, the estimate of GEOs to be received in 2019, that the required regulatory and shareholders approvals
will be obtained in connection with the proposed transaction with Barkerville, that sufficient funding will be available to f und
work at Ba rkerville, that significant value will be created within the accelerator group of companies and Osisko’s ability to
seize future opportunities . Although Osisko believes the expectations 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 caus e the actual results deriving from Osisko’s royalties, streams and other interests to differ
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; regulations and
regulatory changes in national and local government, incl uding 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; potent ial 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 roya lty, 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 exer cise 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 propertie s 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 proper ties;
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 underlying properties that are not yet in production; and the absence
of any oth er 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 m aterially 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 th is 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 r elease 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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September 30, December 31,
2019 2018
$ $
Assets
Current assets
Cash 123,702 174,265
Short-term investments 25,844 10,000
Amounts receivable 18,241 12,321
Other assets 1,289 1,015
169,076 197,601
Non-current assets
Investments in associates 212,668 304,911
Other investments 53,813 109,603
Royalty, stream and other interests 1,296,798 1,414,668
Exploration and evaluation 92,909 95,002
Goodwill 111,204 111,204
Other assets 11,887 1,657
1,948,355 2,234,646
Liabilities
Current liabilities
Accounts payable and accrued liabilities 10,245 11,732
Dividends payable 7,200 7,779
Provisions - 3,494
Lease liabilities 786 -
18,231 23,005
Non-current liabilities
Long-term debt 347,638 352,769
Lease liabilities 9,533 -
Deferred income taxes 66,666 87,277
442,068 463,051
Equity
Share capital 1,502,978 1,609,162
Warrants 18,072 30,901
Contributed surplus 34,041 21,230
Equity component of convertible debentures 17,601 17,601
Accumulated other comprehensive income 19,998 23,499
Retained earnings (deficit) (86,403) 69,202
1,506,287 1,771,595
1,948,355 2,234,646
Osisko Gold Royalties Ltd
Consolidated Statements of Income (Loss)
For the three and nine months ended September 30, 2019 and 2018
(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,
2019 2018 2019 2018
$ $ $ $
Revenues 109,235 111,702 341,567 375,135
Cost of sales (77,419) (82,748) (247,616) (284,705)
Depletion of royalty, stream and other
interests
(10,965) (13,136) (35,166) (39,637)
Gross profit 20,851 15,818 58,785 50,793
Other operating expenses
General and administrative (4,607) (3,692) (15,173) (13,342)
Business development (1,375) (1,077) (4,899) (3,750)
Gain on disposal of an offtake interest 7,636 - 7,636 -
Impairment of assets (60,800) - (99,700) -
Operating income (loss) (38,295) 11,049 (53,351) 33,701
Interest income 1,041 1,041 3,033 3,581
Dividend income
50 228 150 278
Finance costs (5,843) (6,396) (17,382) (19,291)
Foreign exchange gain (loss) 508 (160) (1,104) 92
Share of loss of associates (4,146) (4,139) (14,688) (6,558)
Other gains (losses), net (10,971) 5,781 (16,304) 1,580
Earnings (loss) before income taxes (57,656) 7,404 (99,646) 13,383
Income tax recovery (expense) 11,732 (1,930) 20,626 (5,088)
Net earnings (loss) (45,924) 5,474 (79,020) 8,295
Net earnings (loss) per share
Basic and diluted (0.32) 0.04 (0.52) 0.05