Osisko - Virginia Gold Royalties
gold royalty company - 5% NSR on Malartic.
Message: Osisko Reports Third Quarter 2012 Results
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November 13, 2012
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Osisko Reports Third Quarter 2012 Results
Mine Operating Profits of $60.1 Million, Net Profit of $26.2 Million
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MONTREAL, QUEBEC--(Marketwire - Nov. 13, 2012) - Osisko Mining Corporation (the "Company" or "Osisko") (TSX:OSK)(FRANKFURT:EWX) is pleased to report that it has generated a net profit of $26.2 million ($0.07 per share) during the third quarter of 2012 versus a net profit of $9.3 million in the third quarter of 2011 ($0.02 per share). The higher profitability is attributable to continued progress on the ramp up of the Canadian Malartic mine and improved margins.
Q3 Highlights -- Gold production of 103,753 ounces, a new quarterly record;
-- Operating cash flow of $55.4 million;
-- Continued progress on plant ramp up and optimization with record tonnage
mined and milled being achieved; and
-- Cash costs per ounce of C$864.
-- Drilling program initiated in Mexico in late October;
-- Record daily mill throughput of 58,476 tonnes achieved in the first week
of November; and
-- Announcement of the friendly acquisition of Queenston Mining Inc. in
November.
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Tonnes per Availability Gold Production
Operating Day (%) (oz)
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Q3 2012 43,181 94 103,753
Q2 2012 38,074 90 92,003
Q1 2012 35,728 87 91,178
Q4 2011 33,733 90 79,718
Q3 2011 36,742 86 73,814
Q2 2011 29,894 82 46,606
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During the first nine months of 2012, the Canadian Malartic mine generated a net profit of $171.6 million and Osisko a net profit of $68.8 million ($0.18 per share). In 2011, the year-to-date mine operating profits amounted to $39.9 million from commencement of commercial production on May 19, 2011, and the Company incurred a net loss of $19.8 million ($0.05 per share). In addition to the shorter operation period, the 2011 results were impacted by exploration project write-offs and special incentive awards following the completion of the Canadian Malartic Project. Operating cash flow amounted to $55.4 million for the quarter and $189.8 million for year-to-date, compared to $49.5 million and $46.0 million in the corresponding periods of 2011. Investments in mining assets totaled $189.5 million to date during 2012. The mine operating statement for the production period is as follows: ----------------------------------------------------------------------------
Q3 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2011
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Gold sales
(ounces) 95,424 95,675 92,400 75,100 72,100
Silver sales
(ounces) 49,751 48,880 52,800 42,100 49,800
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($000) ($000) ($000) ($000) ($000)
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Revenues 158,503 157,134 158,658 128,100 122,879
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Production Costs (81,841) (98,837) (71,910) (74,841) (74,647)
Royalties (1,998) (2,021) (2,359) (1,933) (1,192)
Depreciation (14,605) (15,289) (13,877) (11,800) (8,748)
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Total (98,444) (116,147) (88,146) (88,574) (84,587)
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Net Mining
Profit 60,059 40,987 70,512 39,526 38,292
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i. Increased throughput and mill efficiencies;
ii. Lower contractors' costs;
iii.Improved mining conditions (second quarter results were impacted by
defective boosters in the blasting cycle); and
iv. Elimination of inefficiencies caused by the May 9, 2012 mill fire;
(in thousands of Canadian dollars, unless otherwise noted) ----------------------------------------------------------------------------
Q3 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2011
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Gold Production (oz) 103,753 92,003 91,178 79,718 73,814
Gold Sales (oz) 95,424 95,675 92,400 75,100 72,100
Average Sale Price
(US$/oz) 1,659 1,605 1,698 1,655 1,695
Average Market Price
(US$/oz) 1,652 1,609 1,691 1,688 1,702
Cash Costs per Ounce
(C$/oz) 864 1,015 860 936 918
Cash Costs per Ounce
(US$/oz) 867 1,004 858 914 939
Cash Margin per Ounce
(US$/oz) 792 601 840 741 756
Revenues 158,503 157,134 158,658 128,100 122,879
Mine Operating Profit 60,059 40,987 70,512 39,526 38,292
Net Earnings 26,156 13,271 29,359 37,802 9,302
Net Earnings per Share 0.07 0.03 0.08 0.10 0.02
Operating Cash Flows 55,353 55,698 78,716 39,660 49,512
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Q3 Q2 Q1 Q4 Q3
2012 2012 2012 2011 2011
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Tonnes Mined
(000's)
- Ore 4,853 3,234 4,037 3,549 3,005
- Waste 9,215 9,545 8,458 10,590 7,899
- Overburden 1,409 1,740 1,954 1,823 1,029
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Total 15,477 14,519 14,449 15,962 11,933
Tonnes Milled
(000's) 3,757 3,236 2,965 2,935 3,086
Grade (g Au/t) 0.97 0.99 1.05 0.96 0.85
Recovery (%) 88.7 89.2 91.2 88.3 87.0
Gold production
(oz) 103,753 92,003 91,178 79,718 73,814
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During October 2012, mill throughput continued to progress with more than 1.53 million tonnes being milled for an average daily throughput rate of 49,361 tonnes per day. Gold production totaled 36,440 ounces. Ore grade was 0.83 g/t, due to constraints in the mining areas as a result of the delayed blast and processing stockpiled ore. Though throughputs continue to increase in October, recoveries remain above feasibility expectations at 88.9%. In the first eight days of November, the mill processed at an average daily rate of 52,853 tonnes and achieved a record throughput of 58,476 tonnes on November 4, 2012. Mill operating statistics continue to show progress in all categories. ----------------------------------------------------------------------------
Total Tonnes per
Available Operating Tonnage Tonnes Operating
Hours Hours (%) Produced (t) per Hour Day
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Q2 2011 2,184 1,793 82 2,481,196 1,384 29,894
Q3 2011 2,208 1,890 86 3,086,324 1,633 36,742
Q4 2011 2,208 1,995 90 2,934,803 1,471 33,733
Q1 2012 2,184 1,890 87 2,965,456 1,569 35,728
Q2 2012 2,184 1,960 90 3,236,281 1,651 38,074
Q3 2012 2,208 2,071 94 3,756,768 1,814 43,181
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i. Complete planned mill modifications with the installation of the second
pebble crusher;
ii. Stabilize the operating circuit to reach steady-state throughput design
capacity of 55,000 tonnes per day;
iii.Improve productivity of the mine;
iv. Focus on optimization of operations and unit cost reduction.
During the second quarter, the Company amended its $150 million credit facility with CPPIB Credit Investments Inc. ("CPPIB"), a wholly-owned subsidiary of the CPP Investment Board, with CPPIB making available to the Company an additional $100 million delayed draw term loan. The key terms of the amendment are as follows: -- The initial cash repayment schedule has been extended by one year to
June 30, 2013. The reimbursements are based on 50% of free cash flow up
to $60 million per annum.
-- CPPIB will make available a delayed draw term loan of $100 million for
working capital and general corporate purposes. Osisko may draw funds
under this facility in $20 million increments, and any funds outstanding
are reimbursable by December 31, 2013. No funds were drawn to date on
this facility. There are no standby fees related to this tranche.
A summary of the Company's financial position is as follows: ---------------------------------------------------------------------------- ($ Million) September 30, 2012 December 31, 2011 ---------------------------------------------------------------------------- Cash Position(1) 114.9 142.0 Working Capital 37.8 47.4 Total Assets 2,232.5 2,069.2 Total Debt 327.9 331.6 Shareholders' Equity 1,756.2 1,654.1 ---------------------------------------------------------------------------- (1) Includes Cash and Cash equivalents and Restricted cash. Exploration and Development The Company continues to conduct exploration work on a regional basis around the Canadian Malartic infrastructure for additional resources and reserves. At Hammond Reef, the Company has initiated work necessary for the Project Feasibility Study, which is expected to be completed in late 2012 or early 2013. The Minister of Environment of Ontario has approved the Terms of Reference for the Environmental Impact Assessment. The Company has also acquired a significant land package in an emerging Mexican gold belt. To date, approximately 1M hectares of ground have been staked. A systematic greenfield exploration program has been completed, and a significant target has been identified following a high density stream sediment survey, detailed mapping, geochemistry and geophysics work. An initial 10,000 meter drill program was initiated in late October. Proposed Friendly Acquisition of Queenston Mining Inc. On November 12, 2012, Osisko announced that it had entered into a definitive agreement to acquire, on a friendly basis, all of the issued and outstanding common shares of Queenston Mining Inc. ("Queenston") on the basis of 0.611 of an Osisko common share for each common share of Queenston. Queenston is a Canadian mineral exploration and development company with a primary focus on its holdings in the historic Kirkland Lake gold camp comprising 230km2 of exploration lands. Osisko has entered into lock-up agreements with Queenston insiders and certain significant shareholders representing approximately 30% of the issued and outstanding common shares of Queenston. At the date of announcement, the transaction valued Queenston's equity at approximately $550,000,000, and would result in the issuance of approximately 56,000,000 common shares of Osisko, based on the fully diluted in-the-money common shares outstanding of Queenston, representing approximately 12% of Osisko outstanding common shares, post transaction. The board of directors of Queenston has unanimously approved the transaction and will recommend that shareholders vote in favor of the transaction. Completion of the transaction, by way of a plan of arrangement, is subject to customary conditions, including court approval, a favourable vote of at least 66 2/3 % of the holders of Queenston common shares and the receipt of all necessary regulatory and stock exchange approvals. Assuming all of the conditions are fulfilled, it is expected the transaction will be completed in late 2012 or early 2013. Non-IFRS Financial Performance Measures The Company has included certain non-IFRS measures including "cash cost per ounce" and "cash margin per ounce" to supplement its consolidated financial statements, which are presented in accordance with International Financial Reporting Standards ("IFRS"). Refer to the Company's Management Discussion and Analysis for the three months ended September 30, 2012. Q3 Conference Call Information Osisko will host a conference call on Wednesday November 14th at 8:00am EST, 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 (416) 981-9012 (Toronto local and international), or 1-800-909-4792 (North American toll free). An operator will direct participants to the call. The conference call replay will be available from 10:00 a.m. EST on November 14, 2012 until 11:59 p.m. EST on November 29, 2012 with the following dial in number: (416) 626-4100 or Toll-free 1-800-558-5253, access code 21607972. About Osisko Mining Corporation Osisko Mining Corporation operates the Canadian Malartic gold mine in Malartic, Quebec and is pursuing exploration on a number of properties, including the Hammond Reef Gold Project in Northern Ontario. 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. Note Regarding Certain Measures of Performance This press release contains certain non-IFRS measures, including "cash cost per ounce" and "cash margin per ounce". The Company believes that these measures, together with measures determined in accordance with IFRS, provides 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. 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, timely and successful completion of the planned mill modifications with the installation of the second pebble crusher, stabilization of the operating circuit to reach throughput design capacity of 55,000 tonnes per day, improvement of mine productivity, the optimization of the plant and the reduction of cost, positive outcome of any exploration work conducted around the Canadian Malartic infrastructure or at the Hammond Reef project, further development of its Hammond Reef project including timely completion of various studies necessary for the project feasibility study, and positive outcome of any claim to be filed with the Company's explosive contractor. 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
(Unaudited)
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(tabular amounts expressed in thousands of Canadian dollars)
September 30, December 31,
2012 2011
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$ $
ASSETS
Current assets
Cash and cash equivalents 78,260 100,670
Restricted cash 13,006 14,485
Accounts receivable 29,924 39,419
Inventories 82,084 47,552
Prepaid expenses and other assets 8,492 7,174
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211,766 209,300
Non-current assets
Restricted cash 23,608 26,878
Investments in associates 4,871 1,698
Other investments 18,576 16,041
Property, plant and equipment 1,973,716 1,801,325
Deferred income and mining taxes - 14,000
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2,232,537 2,069,242
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Liabilities
Current liabilities
Accounts payable and accrued liabilities 90,489 74,562
Current portion of long-term debt 82,220 86,485
Provisions and other liabilities 1,227 824
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173,936 161,871
Non-current liabilities
Long-term debt 245,696 245,139
Provisions and other liabilities 17,032 6,038
Deferred income and mining taxes 39,714 2,126
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476,378 415,174
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Equity attributable to Osisko Mining
Corporation shareholders
Share capital 1,683,185 1,656,034
Warrants 18,261 13,166
Contributed surplus 57,127 55,909
Equity component of convertible debenture 8,005 8,005
Accumulated other comprehensive income (9,556) (9,397)
Deficit (863) (69,649)
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1,756,159 1,654,068
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2,232,537 2,069,242
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Osisko Mining Corporation
Consolidated Statements of Income (Loss)
For the three and nine months ended September 30, 2012 and 2011
(Unaudited)
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(tabular amounts expressed in thousands of Canadian dollars, except per
share amounts)
Three months ended Nine months ended
September 30, September 30,
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2012 2011 2012 2011
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$ $ $ $
Revenues 158,503 122,879 474,295 135,308
Mine operating costs
Production costs (81,841) (74,647) (252,588) (84,045)
Royalties (1,998) (1,192) (6,378) (1,351)
Depreciation (14,605) (8,748) (43,771) (9,986)
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Earnings from mine
operations 60,059 38,292 171,558 39,926
General and administrative
expenses (7,601) (6,577) (20,950) (24,563)
Exploration and corporate
development expenses (2,852) (7,774) (8,105) (20,934)
Other expenses - - - (485)
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Earnings (loss) from
operations 49,606 23,941 142,503 (6,056)
Interest income 233 454 1,145 1,964
Finance costs (7,983) (6,995) (22,825) (10,766)
Foreign exchange gain
(loss) 3,431 (4,331) 3,160 (2,817)
Share of loss of
associates (353) (29) (628) (480)
Other gains (losses) 82 (1,758) (2,982) 1,326
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Earnings (loss) before
income and mining taxes 45,016 11,282 120,373 (16,829)
Income and mining tax
expense (18,860) (1,980) (51,587) (2,976)
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Net earnings (loss) 26,156 9,302 68,786 (19,805)
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Net earnings (loss) per
share
Basic 0.07 0.02 0.18 (0.05)
Diluted 0.07 0.02 0.18 (0.05)
Weighted average number of
common shares outstanding
(in thousands)
Basic 388,153 384,307 387,588 382,995
Diluted 390,238 394,528 389,653 382,995
Osisko Mining Corporation
Consolidated Statements of Cash Flows
For the three and nine months ended September 30, 2012 and 2011
(Unaudited)
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(tabular amounts expressed in thousands of Canadian dollars)
Three months ended Nine months ended
September 30, September 30,
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2012 2011 2012 2011
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$ $ $ $
Operating activities
Net earnings (loss) 26,156 9,302 68,786 (19,805)
Adjustments for:
Interest income (233) (454) (1,145) (1,964)
Share-based compensation 2,273 2,327 7,612 7,780
Depreciation 14,765 8,730 44,248 10,304
Finance costs 7,983 6,994 22,825 10,765
Write-off of property,
plant and equipment 102 4,895 719 16,276
Gain on disposal of
property, plant and
equipment - - (319) -
Unrealized foreign
exchange loss (gain) (3,644) 5,404 (3,469) 3,395
Share of loss of
associates 353 29 628 480
Gain on sale of
available-for-sale
financial assets (670) (24) (602) (5,041)
Unrealized net loss
(gain) on financial
assets at fair value
through profit and loss (160) 4,044 1,545 8,515
Unrealized loss on
available-for-sale
financial assets - - 152 -
Impairment on available-
for-sale financial
assets 428 - 1,522 -
Deferred gain - premium
on flow-through shares - (2,054) - (4,282)
Provisions and other
liabilities 1,797 260 1,879 395
Income and mining tax
expense 18,860 1,980 51,587 2,976
Other non-cash gain - - - (639)
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68,010 41,433 195,968 29,155
Change in non-cash working
capital items (12,657) 8,079 (6,201) 16,885
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Net cash flows from
operating activities 55,353 49,512 189,767 46,040
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Investing activities
Net decrease in short-term
investments - 3,045 - 17,068
Net decrease in restricted
cash 4,238 954 4,749 1,644
Acquisition of investments (3,404) (989) (10,950) (12,283)
Proceeds on disposal of
investments 1,364 204 1,838 12,038
Property, plant and
equipment, net of
government credits (57,876) (60,231) (189,504) (297,254)
Interest received 232 555 1,027 2,169
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Net cash flows from
investing activities (55,446) (56,462) (192,840) (276,618)
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Financing activities
Debt issuance costs (6) (617) (116) (635)
Finance lease payments (5,736) (3,004) (16,702) (3,823)
Long-term debt
repayments (1,250) (1,250) (3,750) (2,083)
Issuance of common
shares, net of expenses 8,409 18,885 17,896 38,776
Interest paid (5,588) (5,281) (16,665) (7,391)
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Net cash flows from
financing activities (4,171) 8,733 (19,337) 24,844
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Increase (decrease) in cash
and cash equivalents (4,264) 1,783 (22,410) (205,734)
Cash and cash equivalents -
beginning of period 82,524 150,976 100,670 358,493
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Cash and cash equivalents -
end of period 78,260 152,759 78,260 152,759
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CONTACT INFORMATION:
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John Burzynski
Vice-President Corporate Development (416) 363-8653 or Sylvie Prud'homme Director of Investor Relations (514) 735-7131 Toll Free: 1-888-674-7563 www.osisko.com |
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INDUSTRY: Manufacturing and Production - Mining and Metals
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