Osisko Mining Corporation

Osisko Mining Corporation

February 28, 2011 14:36 ET

Osisko Releases Year-End Financial Results and Review of 2010

MONTREAL, QUEBEC--(Marketwire - Feb. 28, 2011) - Osisko Mining Corporation (the "Company" or "Osisko") (TSX:OSK)(FRANKFURT:EWX) is pleased to report its review of activities and financial results for the year ended December 31, 2010.


  • Continued progress on the construction of the Canadian Malartic Project ("Project") with outlays of $484.1 million in 2010 for a total project cost to date of $888.0 million;

  • Completed the acquisition of Brett Resources Inc. and the Hammond Reef Project;

  • Continued aggressive exploration and infill drilling with 409,200 metres drilled during the year;

  • Incurred a net loss of $19.5 million in 2010 compared to $20.8 million in 2009;

  • Completed a $17.2 million flow-through financing;

  • Secured additional financing though the drawdown of the second tranche of $75 million under the CPPIB Credit Investments Inc. Credit Facility;

  • Completed the relocation program at the Canadian Malartic Project;

  • Implemented a Shareholder Rights Plan;

  • Signed a Resource Sharing Agreement with the First Nations for the Hammond Reef gold property.

During the fourth quarter of 2010, the Company incurred a loss of $1.2 million ($0.00 per share) compared to a loss of $8.4 million ($0.03 per share) in the corresponding period of 2009. For the year-to-date, the loss amounted to $19.5 million ($0.05 per share) compared to $20.8 million ($0.08 per share) in 2009. Higher administrative costs reflecting the growth in the Company's activities and higher non-cash charges from the issuance of stock options in the third quarter of 2010 were more than offset by foreign exchange gains on mainly the US dollar denominated capital lease obligations following the strengthening of the Canadian dollar against the US currency, higher interest income and higher unrealized gains on held-for-trading financial assets.

Sean Roosen, President and CEO commenting on the 2010 activities noted: "We are pleased with the progress we have achieved in 2010 towards our goal to become a leading intermediate gold producer. Construction has advanced significantly at the Canadian Malartic Project and we look forward to commencing operations in May in a very strong gold price environment".

Canadian Malartic Project

The Canadian Malartic Project is reaching completion, with construction approximately 90% complete at the end of December 2010. Major accomplishments during the quarter include:

  • Advancement of mechanical, electrical and piping installations in the mill to a 90% completion rate;

  • Commissioning of all mobile mining equipment as per the original mine plan;

  • Completion of the relocation program;

  • Completion of the "green wall" to mitigate the impact of the mining activities on the community;

  • Recruitment and training of the workforce for the operational phase;

  • Ramp-up of mining pre-stripping activities.

At year-end, $888.0 million had been directly spent on the Project, with an additional $30.3 million committed.

The Project is scheduled for commencement of operations in May 2011, with capital estimates for the Project under the one billion dollar mark.

Acquisition of Brett Resources

On May 19, 2010, the Company acquired 77% of Brett Resources Inc. ("Brett") following a friendly takeover offer announced on March 22, 2010. Under the terms of the offer, Osisko issued 0.34 shares of Osisko and $0.0001 in cash in return for each share of Brett. On August 11, 2010, 94% of Brett shareholders approved a Plan of Arrangement to combine with Osisko, thereby allowing Brett to become a wholly-owned subsidiary of Osisko. The subsidiary modified its name to Osisko Hammond Reef Gold Ltd. effective October 6, 2010.

The acquisition of the Hammond Reef deposit enhances Osisko's reserve and resource base and provides the opportunity to see Osisko become a one million ounce per year gold producer by 2015-2016.

The Hammond Reef gold project is located near Atikokan, Ontario. A Preliminary Assessment Study (the "Study") was completed in November 2009 outlining an initial 14 year mine life operating at 50,000 tonnes per day. Over the first six years, on average, Hammond Reef is expected to produce 463,000 ounces of gold per year at cash costs of US$382 per ounce (including royalties, net of silver credits). Over the life of mine, Hammond Reef is expected to produce a total of 5.13 million ounces of gold at an average rate of 369,000 ounces per year and average cash costs of US$442 per ounce (including royalties, net of silver credits). Using a gold price of US$990 per ounce the Study shows that Hammond Reef has an after-tax net present value of US$811 million (using a 5% discount rate) and an internal rate of return of 22.9%. The study is available on SEDAR.

In addition to the current resource, Hammond Reef offers exciting exploration potential as recent drilling has confirmed continuity of mineralization down-dip from the existing resource.

In December 2010, the Company signed the Hammond Reef Resource Sharing Agreement with eight First Nations communities. The original terms of the agreement were negotiated with Brett Resources and Osisko concluded the transaction.

Other Highlights

The Company has continued to pursue its efforts to build on its current reserve/resource base. Approximately 409,200 metres have been drilled in 2010, including 78,600 metres drilled during the fourth quarter. The focus has been the Hammond Reef Project with some 176,300 metres being completed and the Duparquet Joint Venture with approximately 123,000 metres being completed.

The Company is continuing its dialogue with the municipal and provincial authorities with respect to the deviation of Highway 117 to allow for the mining of the Barnat deposit. Osisko is working in partnership with the town of Malartic, Quebec Ministry of Transportation and Ministry of Natural Resources and Wildlife.

In the fourth quarter of 2010, the Company completed a flow-through financing by issuing 982,827 shares for gross proceeds of $17.2 million to help fund its exploration program.

Highlights from the Company's financial position are as follows (in millions of dollars):

  2010   2009  
Cash Position(1) 397.9   790.2  
Working Capital 283.1   760.4  
Total Assets 2,064.3   1,338.8  
Total Debt 287.9   180.1  
Shareholders' Equity 1,588.3   1,112.3  
Net Loss (19.5 ) (20.8 )
Net Loss per Share (0.05 ) (0.08 )

(1) Includes Cash and Cash equivalents, Short-term investments, Restricted cash and Cash collateral.

The consolidated financial statements and Management Discussion and Analysis for the year ended December 31, 2010 will be filed on SEDAR prior to March 31, 2011.

Osisko Mining Corporation is currently developing the Canadian Malartic gold deposit, evaluating adjacent areas for a large-scale open pit, bulk-tonnage mining operation and pursuing exploration of the Hammond Reef Project. The Company is well-funded with approximately $400 million on hand.

Cautionary Notes Concerning Estimates of Mineral Resources

This news release uses the terms measured, indicated and inferred resources as a relative measure of the level of confidence in the resource estimate. Readers are cautioned that mineral resources are not economic mineral reserves and that the economic viability of resources that are not mineral reserves has not been demonstrated. In addition, inferred resources are considered too geologically speculative to have any economic considerations applied to them. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies or economic studies except for Preliminary Assessment as defined under NI 43-101. Readers are cautioned not to assume that that further work will lead to mineral reserves that can be mined economically.

Forward Looking Statements

Certain statements contained in this Press Release, may be deemed "forward-looking statements". All statements in this release, other than statements of historical fact, that address events or developments that the Corporation expects to occur, are forward looking statements. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur. Although the Corporation believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, including, without limitation that all technical, economical and financial conditions will be met in order to put the Canadian Malartic Project into commercial production, such statements are not guarantees of future performance and actual results may differ materially from those in forward looking statements. Factors that could cause the actual results to differ materially from those in forward-looking statements include gold prices, access to skilled mining development and mill production personnel, results of exploration and development activities, the Corporation's limited experience with production and development stage mining operations, uninsured risks, regulatory changes, defects in title, availability of materials and equipment, timeliness of government approvals, actual performance of facilities, equipment and processes relative to specifications and expectations, unanticipated environmental impacts on operations market prices, continued availability of capital and financing and general economic, market or business conditions. These factors are discussed in greater detail in the Corporation's most recent Annual Information Form filed on SEDAR, which also provides additional general assumptions in connection with these statements. The Corporation cautions that the foregoing list of important factors is not exhaustive. Investors and others who base themselves on the Corporation's forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. The Corporation believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct.

Contact Information

  • Osisko Mining Corporation
    John Burzynski
    Vice-President Corporate Development
    Osisko Mining Corporation
    Sylvie Prud'homme
    Investor Relations
    Toll Free: 1-888-674-7563