MONTREAL, QUEBEC--(Marketwired - May 9, 2013) - Osisko Mining Corporation (the "Company" or "Osisko") (TSX:OSK)(FRANKFURT:EWX) is pleased to report that it has generated net earnings of $17.4 million ($0.04 per share) during the first quarter of 2013 versus net earnings of $30.6 million in the first quarter of 2012 ($0.08 per share).
Q1 Highlights
- Gold production of 106,047 ounces;
- Sales of $159.4 million;
- Net earnings of $17.4 million ($0.04 per share);
- Operating cash flows of $62.5 million;
- Investment of $65.7 million in mining assets and projects;
- Record gold production of 42,521 ounces in March 2013;
- Reduction of $80.0 million in capital budget for 2013;
- Receipt of new more flexible operating parameters;
- Establishment of an escrow account of $30 million by Kirkland Lake Gold Inc. for the note receivable;
- New mining tax regime announced on May 6, 2013 in the Province of Québec.
The mine operating statement for the production period is as follows:
| 2013 | 2012 (Restated)(1) | |||||||||
| Q1 | Q4 | Q3 | Q2 | Q1 | ||||||
| Gold Sales (ounces) | 95,511 | 111,104 | 95,424 | 95,675 | 92,400 | |||||
| Silver Sales (ounces) | 73,683 | 74,100 | 49,751 | 48,880 | 52,800 | |||||
| ($000 | ) | ($000 | ) | ($000 | ) | ($000 | ) | ($000 | ) | |
| Revenues | 159,381 | 191,080 | 158,503 | 157,134 | 158,658 | |||||
| Production Costs | (81,422 | ) | (95,307 | ) | (77,684 | ) | (89,494 | ) | (69,932 | ) |
| Royalties | (1,992 | ) | (2,546 | ) | (1,998 | ) | (2,021 | ) | (2,359 | ) |
| Depreciation | (20,982 | ) | (20,058 | ) | (15,318 | ) | (15,635 | ) | (13,909 | ) |
| Total | (104,396 | ) | (117,911 | ) | (95,000 | ) | (107,150 | ) | (86,200 | ) |
| Earnings from mine operations | 54,985 | 73,169 | 63,503 | 49,984 | 72,458 | |||||
| (1) | Balances related to 2012 have been restated to reflect the impact of the adoption of IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine. |
Key operating results
(in thousands of Canadian dollars, unless otherwise noted)
| Q1 2013 | Q4 2012 | Q3 2012 | Q2 2012 | Q1 2012 | |
| Gold Production (oz) | 106,047 | 101,544 | 103,753 | 92,003 | 91,178 |
| Gold Sales (oz) | 95,511 | 111,104 | 95,424 | 95,675 | 92,400 |
| Average Sale Price (US$/oz) | 1,627 | 1,709 | 1,659 | 1,605 | 1,698 |
| Average Market Price (US$/oz) | 1,632 | 1,722 | 1,652 | 1,609 | 1,691 |
| Cash Costs per Ounce(2),(3) (C$/oz) | 804 | 833 | 851 | 892 | 821 |
| Cash Costs per Ounce(2),(3),(4) (US$/oz) | 798 | 840 | 855 | 883 | 820 |
| Cash Margin per Ounce (US$/oz)(2),(3) | 829 | 869 | 804 | 722 | 878 |
| Revenues | 159,381 | 191,080 | 158,503 | 157,134 | 158,658 |
| Earnings from Mine Operations(3) | 54,985 | 73,169 | 63,503 | 49,984 | 72,458 |
| Net Earnings(3) | 17,416 | 12,866 | 28,343 | 18,984 | 30,595 |
| Net Earnings per Share(3) | 0.04 | 0.03 | 0.07 | 0.05 | 0.08 |
| Operating Cash Flows(3) | 62,478 | 64,608 | 55,806 | 68,212 | 82,879 |
Throughput and production at Canadian Malartic are progressing well. An overall mine production increase of 15% was achieved during the quarter compared to the last quarter of 2012 despite increased maintenance of the loading equipment and reduced availability in February and March. Approximately 15.9 million tonnes of ore and waste (176,305 tonnes/day) and 1.8 million tonnes of overburden were moved during the first quarter of 2013, compared to 13.9 million tonnes of ore and waste (152,757 tonnes/day) and 2.0 million tonnes of overburden during the first quarter of 2012.
On February 13, 2013, the Québec Government approved a new decree which modified the operating parameters of the Canadian Malartic mine. The changes included extending the duration of blasts, increasing the time period during which blasts can be executed, and providing greater access to the northern part of the deposit. The modified parameters will provide greater flexibility in day-to-day operations.
During the quarter, approximately 1,510 equipment hours (1.7% of available hours) were lost due to noise and weather constraints.
| (2) | Reconciliation of non-IFRS measures is provided under Non-IFRS Measures of Performance of this press release. |
| (3) | Balances related to 2012 have been restated to reflect the impact of the adoption of IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine. |
| (4) | Using the average exchange rate for the period. |
The production statistics are as follows:
| Q1 2013 | Q4 2012 | Q3 2012 | Q2 2012 | Q1 2012 | |
| Tonnes Mined (000's) | |||||
| - Ore | 4,091 | 3,553 | 4,853 | 3,234 | 4,037 |
| - Waste(5) | 10,158 | 7,847 | 9,215 | 9,545 | 8,458 |
| - Overburden | 1,783 | 627 | 1,409 | 1,740 | 1,954 |
| Total | 16,032 | 12,027 | 15,477 | 14,519 | 14,449 |
| Tonnes Milled (000's) | 4,234 | 4,088 | 3,757 | 3,236 | 2,965 |
| Grade (g Au/t) | 0.88 | 0.87 | 0.97 | 0.99 | 1.05 |
| Recovery (%) | 88.0 | 88.8 | 88.7 | 89.2 | 91.2 |
| Gold production (oz) | 106,047 | 101,544 | 103,753 | 92,003 | 91,178 |
Production in the first quarter of 2013 improved to an average of 48,667 tonnes per operating day compared to 35,728 tonnes per day in the first quarter of 2012. Optimization of operations at the mill as well as the two cone crushers and the new pebble crusher allowed the mill to reach new records in March 2013: production of 42,521 ounces of gold and processing of 1,594,608 tonnes of material (for an average daily production of 51,439 tonnes). In cooperation with the engineering firm BBA, the Canadian Malartic team continues to work on improving the performance of the mill as well as of drill and blast procedures.
Mill operating statistics continue to show progress in all categories.
| Total Available Hours |
Operating Hours |
(%) | Tonnage Produced (t) |
Tonnes per Operating Hour |
Tonnes per Operating Day |
|
| Q1 2013 | 2,160 | 2,082 | 96 | 4,234,001 | 2,033 | 48,667 |
| Q4 2012 | 2,208 | 2,052 | 93 | 4,088,021 | 1,992 | 47,535 |
| Q3 2012 | 2,208 | 2,071 | 94 | 3,756,768 | 1,814 | 43,181 |
| Q2 2012 | 2,184 | 1,960 | 90 | 3,236,281 | 1,651 | 38,074 |
| Q1 2012 | 2,184 | 1,890 | 87 | 2,965,456 | 1,569 | 35,728 |
Operating Costs
Cash costs per ounce(6) for the first quarter of 2013 stood at $804 compared to $821 in the first quarter of 2012. The improvement over the comparative period in 2012 is mainly the result of increased throughput and gold production, improved efficiencies and reduction in contractors' costs.
Following the issuance of a new IFRS accounting pronouncement with respect to stripping costs in the production phase of a surface mine, the Company adopted the new standard effective January 1, 2013. In accordance with the required practice, Osisko restated its prior periods which had the positive impact of increasing mine operating earnings in prior quarters of 2012.
It is anticipated that as the operations at Canadian Malartic stabilize and that the operations are further optimized, the operating costs will continue their downward trend.
| (5) | Including topographic drilling of 1.4 million tonnes in Q1 2013 and 2.5 million tonnes for the year 2012. |
| (6) | Reconciliation of non-IFRS measures is provided under Non-IFRS Measures of Performance of this press release. |
Earnings
Excluding specific non-cash items, adjusted net earnings(7) amounted to $36.4 million ($0.08 per share) in 2013 compared to $59.6 million ($0.15 per share) in 2012.
| (In thousands of dollars except for amounts per share) | Three Months Ended | |
| Mar 31, 2013 | Mar 31, 2012 | |
| Net Earnings | 17,416 | 30,595 |
| Write-off of Property, Plant and Equipment | 2,024 | 617 |
| Share-based Compensation | 1,796 | 2,631 |
| Unrealized Loss on Investments | 1,925 | 689 |
| Impairment on available-for-sale assets | - | 1,094 |
| Deferred Income and Mining Tax Expense | 13,265 | 23,937 |
| Adjusted Net Earnings | 36,426 | 59,573 |
| Adjusted Net Earnings per Share | 0.08 | 0.15 |
The decrease in net earnings is mainly the result of higher mine operating costs for products sold, higher depreciation and exploration expense.
Investments
The Company invested $65.7 million in property, plant and equipment during the first quarter. These investments were mainly focused on the development of the Canadian Malartic mine.
Recent volatility in the gold price and financial markets has led Osisko to review its rate of discretionary spending in exploration and advancing new projects. As a result, the Company will be decreasing discretionary spending for 2013 by over $80 million.
Upper Beaver Project and Kirkland Lake - Larder Camp
On December 28, 2012, Osisko completed the acquisition of Queenston Mining Inc. As part of the transaction, the Company acquired the Upper Beaver Project and a package of lands covering 230 km2 in the rich Kirkland Lake Gold Camp, which has produced over 40 million ounces in past years. Queenston Mining Inc. changed its name to Osisko Mining Ltd. on January 16, 2013.
The Upper Beaver Project has the following resources as calculated by SRK Consulting, on November 5, 2012.
| Category | Tonnes (000's) |
Au (g/t) |
Cu (%) |
Contained Au (000's ounces) |
Contained Cu (000's pounds) |
| Indicated | 6,870 | 6.62 | 0.37 | 1,461 | 56,006 |
| Inferred | 4,570 | 4.85 | 0.32 | 712 | 32,218 |
The work at Upper Beaver is focused on drilling deep holes to test extensions of known zones. The Company has completed approximately 29,290 meters of drilling since January 1, 2013. Over the next few months, work will be limited to completion of current holes and compiling information generated during the drilling phase to date.
| (7) | Reconciliation of non-IFRS measures is provided under Note Regarding Certain Non-IFRS Measures of Performance of this press release. |
The shaft collar work has recently been completed. Construction of the head frame and surface facilities will be delayed, as well as the shaft sinking. Osisko project personnel are reviewing opportunities to capture savings due to the recent slowdown in the mining sector. This reassessment period will result in a deferral of approximately $50 million of the planned Upper Beaver outlays of $70 million for 2013.
The Queenston transaction also provides the Company with a major foothold in a prolific gold camp that has produced in excess of 40 million ounces. Queenston had consolidated the land package over the past 20 years. To date, there have been several satellite deposits identified that could feed a regional mill.
The Company has completed 31,750 meters on various regional targets in the Kirkland Lake - Larder camp. Drilling activities will be reduced to focus on compilation and assessment of the results. Exploration expenditures at Kirkland Lake for 2013 are estimated at the original budget of $20.0 million.
Hammond Reef Gold Project
Osisko acquired the Hammond Reef gold project located near Atikokan in Northwestern Ontario, through the acquisition of publicly traded Brett Resources Inc. in mid 2010 for $375.0 million. Hammond Reef is a large and growing development project with potential to become a substantial open-pit mine. During the first quarter of 2013, Osisko invested $4.6 million for total of $153.7 million since its acquisition in 2010. In the first quarter of 2013, efforts were focused on the preparation of the feasibility study and the publication of the environmental assessment report.
A new resource estimate for Hammond Reef was released on January 28, 2013. New drilling by Osisko and Brett Resources from January 2010 to July 2011 (approximately 300,000 meters) significantly increased the size of the deposit. Additional drilling subsequent to July 2011 was performed to allow for the upgrade of the entire in-pit deposit to measured and indicated category early 2013. As per the estimate, global measured and indicated resources currently stand at 5.43 million ounces gold at an average grade of 0.86 g/t Au and the global inferred resource stands at 1.75 million ounces gold at an average grade of 0.72 g/t (based on 0.50 g/t Au lower cut-off).
Hammond Reef Global Resource Estimates
| Category | Grade (g/t) | Tonnes (M) | Cut-off (g/t) | Oz (M) |
| Measured | 0.90 | 123.5 | 0.5 | 3.59 |
| Indicated | 0.78 | 72.9 | 0.5 | 1.83 |
| M+I | 0.86 | 196.4 | 0.5 | 5.43 |
| Inferred | 0.72 | 75.7 | 0.5 | 1.75 |
Further, a whittle pit optimized undiluted resource was calculated (US$1,400 whittle pit shell), totaling 5.31 million ounces of gold at an average grade of 0.72 g/t in the measured and indicated category, and 0.28 million ounces of gold at an average grade of 0.65 g/t in the remaining inferred category.
Hammond Reef Undiluted Resource Estimates within US$1,400 Whittle pit shell
| PIT AREA | Category | Grade (g/t) | Tonnes (M) | Cut-off (g/t) | Oz (M) |
| All | Measured | 0.75 | 175.3 | 0.32 | 4.25 |
| All | Indicated | 0.61 | 54.1 | 0.32 | 1.06 |
| All | M+I | 0.72 | 229.5 | 0.32 | 5.31 |
| All | Inferred | 0.65 | 13.3 | 0.32 | 0.28 |
With the completion of the drilling and metallurgical test work, the engineering and construction group intensified its activities on the feasibility phase. Initial studies were launched and a conceptual design and project parameters were established. The process design criteria have been fixed at 60,000 tonnes per day. A feasibility study report is expected to be completed in 2013.
For the Hammond Reef project, permitting is subject to both approvals from Federal (Canadian Environmental Assessment Agency) and Provincial (Ministry of the Environment, Environmental Approvals Branch) authorities.
- The Ontario Minister of Environment provided approval to the Final Amended Terms of Reference for the environmental approval on July 4, 2012 while the Federal Agency had finalized the Environmental Impact Statement Guidelines for the preparation of the Environmental Impact Statement in October of 2011;
- One (single) report will be prepared to meet both federal & provincial requirements;
- A draft Environmental Assessment / Environmental Impact Statement report was submitted on February 15, 2013. The five week comment period ended on April 5, 2013. Comments were received from Aboriginal groups, the public and the government review team and the Company is preparing its responses to the matters raised.
Osisko's engineering and construction group is reviewing various estimates in light of the recent changes in the marketplace and is seeking opportunities to reduce capital costs.
The level of expenditures at Hammond Reef is expected to be reduced by $3.0 million from the original 2013 budget of $10.0 million.
No decision will be made to advance the Hammond Reef project further pending receipt of the final feasibility which is expected later this year.
Exploration
The Company continues to pursue value creation through the discovery of new ore deposits. Osisko has several agreements and has staked properties in various gold camps within the Americas.
The Company has been active in the Guerrero District of Mexico where it has accumulated a large land package in an area with operating gold mines and advanced exploration projects.
Building on its flagship Canadian Malartic Mine, the Company hopes to discover and build new gold mines to ensure continued growth. These new projects will be developed only if they meet rate-of-return criteria and the Company has the financial capabilities to conduct such expansion. As per the Company's recent announcement, the budget for exploration will be significantly reduced through the rest of 2013.
Modifications to the Company's exploration and advanced projects will result in Osisko reducing its workforce by approximately 6% over the next few months.
Liquidity and Capital Resources
As at March 31, 2013, the Company's cash and cash equivalents, short-term investments and restricted cash amounted to $139.3 million compared to $155.5 million as at December 31, 2012, as summarized below:
| (In thousands of dollars) | March 31, 2013 |
December 31, 2012 |
|
| Cash and cash equivalents | 100,358 | 93,229 | |
| Short-term investments | - | 19,357 | |
| Restricted cash | |||
| Current | 558 | 4,563 | |
| Non-current | 38,362 | 38,362 | |
| 139,278 | 155,511 | ||
Short-term investments were acquired following the acquisition of Queenston as at December 28, 2012 and were converted to cash and cash equivalents during the first quarter of 2013 to increase the flexibility of available liquidities.
Outlook for 2013
Following the modifications and commissioning of the pre-crushing circuit and the second pebble crushing unit, it is anticipated that mill throughput should be stabilized in 2013. Gold production is estimated between 485,000 - 510,000 ounces for the year. As a result of gaining access to higher grade material in the second half of the year, it is anticipated that gold output will be higher in the second semester. Cash costs per ounce(8) are estimated between $780 and $825 per ounce, a 9% to 14% reduction in costs from 2012.
Recent volatility in the gold price and financial markets has led Osisko to review its rate of discretionary spending in exploration and advancing new projects. As a result, the Company will be decreasing discretionary spending for 2013 by over $80 million.
Following the issuance of a new IFRS accounting pronouncement with respect to stripping costs in the production phase of a surface mine, the Company expects to capitalize stripping costs for the remainder of 2013 (for Q1 2013, the amount capitalized was $7.4 million). Capitalized stripping costs are not reflected in the below table. The change in policy has no impact on cash and cash equivalents, however, cash costs per ounce(8) are expected to decrease by approximately $50 and capital expenditures are expected to increase by the same amount.
| (8) | Reconciliation of non-IFRS measures is provided under Non-IFRS Measures of Performance of this press release. |
Capital expenditures for 2013 are now estimated at $138 million as follows:
| (In millions of dollars) | Revised budget(b) | Original budget | Reduction | |
| Canadian Malartic mine | 80.8 | 98.0 | 17.2 | |
| Upper Beaver project | 18.5 | 70.0 | 51.5 | |
| Hammond Reef | 7.0 | 10.0 | 3.0 | |
| Exploration - capitalized | 31.6 | 42.0 | 10.4 | |
| Capital expenditures | 137.9 | 220.0 | 82.1 | |
| Exploration - expensed through income statement (a)(c) | 9.3 | 8.0 |
(1.3 | ) |
| Total | 147.2 | 228.0 | 80.8 |
| (a) | Excludes write-off of projects in Q1 2013 for $2.0 million. |
| (b) | Excluding variation in accounts payable related to the Canadian Malartic expansion, Hammond Reef, Upper Beaver and Kirkland Lake projects for $9.6 million in Q1 2013. |
| (c) | Exploration - expensed through income statement is higher in revised budget compared to original budget, due to some investments in Mexico being expensed in Q1 2013 whereas for budget purposes the total investments were capitalized. |
Outstanding Share Data
As of May 9, 2013, 436,669,709 common shares were issued and outstanding. A total of 19,061,259 common share options were outstanding to purchase common shares under the Company's share option plan and 14,517,453 common share purchase warrants were outstanding.
Modifications to the Mining Tax Regime in Québec
On May 6, 2013, the Quebec Government announced modifications to its mining tax regime. Under the new regime, which comes into effect on January 1, 2014, mine operators will be required to pay the greater of:
- Minimum tax of 1% on the first $80 million, and 4% thereafter on mine profit calculated prior to processing; and
- Mining tax based on profits of 16% of the first tranche of 35% of operating income, 22% on next tranche of 15%, and 28% on the remaining balance.
The modifications will ensure that the Government receives a minimum compensation from all mining activities, and shares in an increasing portion as the mine benefits from higher profitability levels.
Q1 Conference Call Information
Osisko will host a conference call on Friday, May 10, 2013 at 9:00am EDT, where senior management will discuss the financial results and provide an update of the Company's activities. Those interested in participating in the conference call should dial in at 1 416 981 9000 (Toronto local and international), or 800 734 8583 (North American toll free). An operator will direct participants to the call.
The conference call replay will be available from 11:00 a.m. EDT on May 10, 2013 until 11:59 p.m. EDT on May 24, 2013 with the following dial in number: 1 416 626 4100 or Toll-free 800 558 5253, access code 21654745.
Non-IFRS Measures of Performance
The Company has included certain non-IFRS measures including "cash costs per ounce", "cash margin per once", "adjusted net earnings" and "adjusted net earnings per 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.
Cash costs per ounce
"Cash costs per ounce" is defined as the production costs of one ounce of gold excluding non-cash costs for a certain period. "Cash costs per ounce" is obtained from "Production costs" and "Royalties" less non-cash "Share-based compensation" and "By-product credits (silver sales)", adjusted for "Production inventory variation" for the period, divided by the "Number of ounces of gold produced" for the period.
| Three months ended March 31, | ||||
| 2013 | 2012 | |||
| Gold ounces produced | 106,047 | 91,178 | ||
| (in thousands of dollars,except per ounce) | ||||
| Production costs | 81,422 | 69,932 | ||
| Royalties | 1,992 | 2,359 | ||
| Share-based compensation | (599 | ) | (744 | ) |
| By-product credit (silver sales) | (2,227 | ) | (1,713 | ) |
| Inventory variation | 4,686 | 5,058 | ||
| Total cash costs for the period | 85,274 | 74,892 | ||
| Cash costs per ounce | 804 | 821 | ||
Cash margin per ounce
"Cash margin per ounce" is defined as the "Average selling price of gold per ounce sold" less "Cash costs per ounce produced" for the period.
| Three months ended March 31, | ||
| 2013 | 2012 | |
| Average selling price of gold (per ounce sold) | 1,645 | 1,699 |
| Cash costs (per ounce produced) | 804 | 821 |
| Cash margin per ounce | 841 | 878 |
Adjusted net earnings and adjusted net earnings per share
"Adjusted net earnings" is defined as "Net earnings" less certain non-cash items: "Write-off of property, plant and equipment", "Share-based compensation", "Unrealized gain (loss) on investments", "Impairment on available-for-sale assets" and "Deferred income and mining tax expense (recovery)".
"Adjusted net earnings per share" is obtained from the "Adjusted net earnings" divided by the "Weighted average number of common shares outstanding" for the period.
| Three months ended March 31, | |||
| 2013 | 2012 | ||
| (in thousands of dollars, except per share) | |||
| Net earnings for the period | 17,416 | 30,595 | |
| Adjustments: | |||
| Write-off of property, plant and equipment | 2,024 | 617 | |
| Share-based compensation | 1,796 | 2,631 | |
| Unrealized loss on investments | 1,925 | 699 | |
| Impairment on available-for-sale assets | - | 1,094 | |
| Deferred income and mining tax expense | 13,265 | 23,937 | |
| Adjusted net earnings | 36,426 | 59,573 | |
| Weighted average number of common shares outstanding (000) | 436,502 | 385,777 | |
| Adjusted net earnings per share | 0.08 | 0.15 | |
About Osisko Mining Corporation
Osisko Mining Corporation operates the Canadian Malartic Gold mine in Malartic, Québec and is carrying out aggressive exploration and project development elsewhere in Canada and Latin America.
Mr. Luc Lessard, Eng., Senior Vice-President and Chief Operating Officer of Osisko, is the Qualified Person who has reviewed this news release and is responsible for the technical information reported herein, including verification of the data disclosed.
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.
For further information in relation to the Hammond Reef project, please refer to the "Technical Report on the Hammond Reef Gold Property Atikokan area, Ontario" dated December 20, 2011. For further information in relation to the Canadian Malartic project, please refer to the "Feasibility Study - Canadian Malartic Project (Malartic, Quebec)", dated December 2008. Both of these reports are available under the Osisko profile at www.sedar.com.
For further information in relation to the Upper Beaver project, please refer to the "Technical Report on the Upper-Beaver Gold-Copper Project, Ontario, Canada" dated November 9, 2012, which is available under the Queenston profile at www.sedar.com.
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 Osisko 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", "scheduled" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur including, without limitation, achieving greater flexibility in day-to-day operations as a result of the new decree, continued downward trend in operating costs as a result of stabilization and optimization of operations at Canadian Malartic, successful decreasing of discretionary spending by over $80 million in 2013 (including deferral of approximately $50 million of the planned Upper Beaver outlays of $70 million for 2013), the development of satellite deposits in the Kirkland Lake area, completion of the Hammond Reef project feasibility study in 2013, positive outcome of exploration work conducted in the Guerrero District of Mexico and elsewhere, successful reduction of Osisko's workforce by approximately 6% in a timely manner, and the successful stabilization and optimization of operations at Canadian Malartic and increase in gold output in the second semester of 2013. Although Osisko 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 achieve such events qualified by the foregoing cautionary note regarding forward looking statements, 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 consultants, mining development and construction personnel, results of exploration and development activities, Osisko's limited experience with production and mining operations, uninsured risks, regulatory framework and changes, defects in title, availability of personnel, 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 Osisko's most recent Annual Information Form and in the most recent Management Discussion and Analysis filed on SEDAR, which also provide additional general assumptions in connection with these statements. Osisko cautions that the foregoing list of important factors is not exhaustive. Investors and others who base themselves on forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. Osisko 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 and such forward-looking statements included in this press release should not be unduly relied upon. These statements speak only as of the date of this press release.
| Osisko Mining Corporation |
| Consolidated Balance Sheets |
| (tabular amounts expressed in thousands of Canadian dollars) |
| March 31, | December 31, | ||||
| 2013 | 2012 | ||||
| (restated - | |||||
| see note) | |||||
| ($) | ($) | ||||
| Assets | |||||
| Current assets | |||||
| Cash and cash equivalents | 100,358 | 93,229 | |||
| Short-term investments | - | 19,357 | |||
| Restricted cash | 558 | 4,563 | |||
| Accounts receivable | 32,572 | 32,266 | |||
| Note receivable | 30,000 | 30,000 | |||
| Inventories | 79,782 | 70,481 | |||
| Prepaid expenses and other assets | 25,717 | 21,274 | |||
| 268,987 | 271,170 | ||||
| Non-current assets | |||||
| Restricted cash | 38,362 | 38,362 | |||
| Investments in associates | 8,813 | 8,933 | |||
| Other investments | 12,601 | 16,894 | |||
| Property, plant and equipment | 2,387,525 | 2,352,546 | |||
| 2,716,288 | 2,687,905 | ||||
| Liabilities | |||||
| Current liabilities | |||||
| Accounts payable and accrued liabilities | 99,486 | 100,931 | |||
| Current portion of long-term debt | 99,378 | 76,883 | |||
| Provisions and other liabilities | 1,392 | 1,405 | |||
| 200,256 | 179,219 | ||||
| Non-current liabilities | |||||
| Long-term debt | 236,571 | 260,529 | |||
| Provisions and other liabilities | 18,611 | 18,618 | |||
| Deferred income and mining taxes | 80,786 | 67,521 | |||
| 536,224 | 525,887 | ||||
| Equity attributable to Osisko Mining Corporation shareholders | |||||
| Share capital | 2,049,852 | 2,048,843 | |||
| Warrants | 19,311 | 19,311 | |||
| Contributed surplus | 68,077 | 65,868 | |||
| Equity component of convertible debentures | 8,005 | 8,005 | |||
| Accumulated other comprehensive loss | (3,736 | ) | (1,148 | ) | |
| Retained earnings | 38,555 | 21,139 | |||
| 2,180,064 | 2,162,018 | ||||
| 2,716,288 | 2,687,905 | ||||
| Osisko Mining Corporation |
| Consolidated Statements of Income |
| For the three months ended March 31, 2013 and 2012 |
| (Unaudited) |
| (tabular amounts expressed in thousands of Canadian dollars, except per share amounts) |
| 2013 | 2012 | ||||
| (restated - | |||||
| see note) | |||||
| ($) | ($) | ||||
| Revenues | 159,381 | 158,658 | |||
| Mine operating costs | |||||
| Production costs | (81,422 | ) | (69,932 | ) | |
| Royalties | (1,992 | ) | (2,359 | ) | |
| Depreciation | (20,982 | ) | (13,909 | ) | |
| Earnings from mine operations | 54,985 | 72,458 | |||
| General and administrative expenses | (7,387 | ) | (7,406 | ) | |
| Exploration and evaluation expenses | (5,103 | ) | (3,290 | ) | |
| Earnings from operations | 42,495 | 61,762 | |||
| Interest income | 458 | 533 | |||
| Finance costs | (7,891 | ) | (7,398 | ) | |
| Foreign exchange gain (loss) | (2,281 | ) | 1,587 | ||
| Share of loss of associates | (121 | ) | (134 | ) | |
| Other losses | (1,979 | ) | (1,818 | ) | |
| Earnings before income and mining taxes | 30,681 | 54,532 | |||
| Income and mining tax expense | (13,265 | ) | (23,937 | ) | |
| Net earnings | 17,416 | 30,595 | |||
| Net earnings per share | |||||
| Basic | 0.04 | 0.08 | |||
| Diluted | 0.04 | 0.08 | |||
| Weighted average number of common shares outstanding | |||||
| (in thousands) | |||||
| Basic | 436,502 | 385,777 | |||
| Diluted | 436,943 | 390,420 | |||
| Osisko Mining Corporation |
| Consolidated Statements of Cash Flows |
| For the three months ended March 31, 2013 and 2012 |
| (Unaudited) |
| (tabular amounts expressed in thousands of Canadian dollars) |
| 2013 | 2012 | |||||
| (restated - | ||||||
| see note) | ||||||
| ($) | ($) | |||||
| Operating activities | ||||||
| Net earnings | 17,416 | 30,595 | ||||
| Adjustments for : | ||||||
| Interest Income | (458 | ) | (533 | ) | ||
| Share-based compensation | 1,796 | 2,631 | ||||
| Depreciation | 21,199 | 14,067 | ||||
| Finance costs | 7,891 | 7,398 | ||||
| Write-off of property, plant and equipment | 2,024 | 617 | ||||
| Loss on disposal of property, plant and equipment | 45 | - | ||||
| Unrealized foreign exchange loss (gain) | 1,962 | (1,777 | ) | |||
| Share of loss of associates | 121 | 134 | ||||
| Net loss (gain) on available-for-sale financial assets | 991 | (87 | ) | |||
| Net loss on financial assets at fair value through profit and loss | 1,073 | 547 | ||||
| Impairment on available-for-sale financial assets | - | 1,094 | ||||
| Provisions and other liabilities | (114 | ) | 640 | |||
| Income and mining tax expense | 13,265 | 23,937 | ||||
| Other non-cash loss (gain) | (139 | ) | 152 | |||
| 67,072 | 79,415 | |||||
| Change in non-cash working capital items | (4,594 | ) | 3,464 | |||
| Net cash flows provided by operating activities | 62,478 | 82,879 | ||||
| Investing activities | ||||||
| Net decrease in short-term investments | 19,357 | - | ||||
| Net decrease in restricted cash | 4,005 | 58 | ||||
| Acquisition of investments | - | (6,446 | ) | |||
| Proceeds on disposal of investments | - | 453 | ||||
| Property, plant and equipment, net of government credits | (65,698 | ) | (71,865 | ) | ||
| Proceeds on disposal of property, plant and equipment | 15 | - | ||||
| Interest received | 388 | 408 | ||||
| Net cash flows used in investing activities | (41,933 | ) | (77,392 | ) | ||
| Financing activities | ||||||
| Long-term debt transaction costs | - | (5 | ) | |||
| Long-term debt repayments | (2,471 | ) | (1,250 | ) | ||
| Finance lease payments | (6,142 | ) | (5,358 | ) | ||
| Issuance of common shares, net of expenses | 608 | 8,392 | ||||
| Interest paid | (5,411 | ) | (5,475 | ) | ||
| Net cash flows used in financing activities | (13,416 | ) | (3,696 | ) | ||
| Increase in cash and cash equivalents | 7,129 | 1,791 | ||||
| Cash and cash equivalents - beginning of period | 93,229 | 100,670 | ||||
| Cash and cash equivalents - end of period | 100,358 | 102,461 | ||||
Note on restatement of 2012 balances
Balances related to 2012 have been restated to reflect the impact of the adoption of IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine. IFRIC 20 provides guidance on the accounting for the costs of stripping activities during the production phase of surface mining when two benefits accrue to the entity as a result of the stripping: useable ore that can be used to produce inventory and improved access to further quantities of material that will be mined in the future periods. The Company adopted IFRIC 20 effective January 1, 2013. Upon adoption of IFRIC 20, the Company assessed the stripping asset on the balance sheet as at January 1, 2012 and determined that there are identifiable components of the ore body with which this stripping asset can be associated, and therefore no balance sheet adjustment was recorded at that date. The adoption of IFRIC 20 has resulted in increased capitalization of waste stripping costs and a reduction in mine operating costs in 2012. If the Company had not adopted IFRIC 20, the net earnings and capitalized waste stripping costs for the current and comparative periods would have decreased.
The impact of adopting IFRIC 20 on the 2012 balances is presented below:
(a) Adjustments to the consolidated balance sheets:
| | As at December 31, 2012 | | Impact of IFRIC 20 | | As at December 31, 2012 | |
| (previously stated) | (restated) | |||||
| $ | $ | $ | ||||
| Inventories | 73,795 | (3,314 | ) | 70,481 | ||
| Property, plant and equipment | 2,329,773 | 22,773 | 2,352,546 | |||
| Deferred income and mining taxes | (60,426 | ) | (7,095 | ) | (67,521 | ) |
| Increase in net assets/retained earnings | 12,364 | |||||
(b) Adjustments to the consolidated statements of income:
| | Three months ended March 31, 2012 | | Impact of IFRIC 20 | | Three months ended March 31, 2012 | | |
| (previously stated) | (restated) | ||||||
| $ | $ | $ | |||||
| Mine operating costs | |||||||
| Production costs | (71,910 | ) | 1,978 | (69,932 | ) | ||
| Depreciation | (13,877 | ) | (32 | ) | (13,909 | ) | |
| Income and mining tax expense | (23,227 | ) | (710 | ) | (23,937 | ) | |
| Increase in net earnings | 1,236 | ||||||
| Increase in earnings per share and diluted earnings per share | - | ||||||
(c) Adjustments to the consolidated statements of cash flows:
| | Three months ended March 31, 2012 | | Impact of IFRIC 20 | | Three months ended March 31, 2012 | | |
| (previously stated) | (restated) | ||||||
| $ | $ | $ | |||||
| Net earnings | 29,359 | 1,236 | 30,595 | ||||
| Adjusted for the following items: | |||||||
| Depreciation | 14,035 | 32 | 14,067 | ||||
| Income and mining tax expense | 23,227 | 710 | 23,937 | ||||
| Change in non-cash working capital items: | |||||||
| Increase in inventories | (15,408 | ) | 2,185 | (13,223 | ) | ||
| Net cash flows provided by operating activities | 4,163 | ||||||
| Property, plant and equipment | (67,702 | ) | (4,163 | ) | (71,865 | ) | |
| Net cash flows used in investing activities | (4,163 | ) | |||||
| Net change in cash and cash equivalents | - | ||||||
Contact Information:
Vice-President Corporate Development
(416) 363-8653
Sylvie Prud'homme
Director of Investor Relations
(514) 735-7131
Toll Free: 1-888-674-7563
www.osisko.com