Osisko Reports First Quarter 2013 Results
Earnings from Mine Operations of $55.0 Million, Net Earnings of $17.4 Million
MONTREAL, QUEBEC -- (Marketwired) -- 05/09/13 -- 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
Quebec.
The mine operating statement for the production period is as follows:
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2013 2012 (Restated)(1)
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Q1 Q4 Q3 Q2 Q1
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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
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($000) ($000) ($000) ($000) ($000)
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Revenues 159,381 191,080 158,503 157,134 158,658
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Production Costs (81,422) (95,307) (77,684) (89,494) (69,932)
Royalties (1,992) (2,546) (1,998) (2,021) (2,359)
Depreciation (20,982) (20,058) (15,318) (15,635) (13,909)
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Total (104,396) (117,911) (95,000) (107,150) (86,200)
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Earnings from mine
operations 54,985 73,169 63,503 49,984 72,458
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(1) Balances related to 2012 have been restated to reflect the impact of
the adoption of IFRIC 20, Stripping Costs in the Production Phase of a
Surface Mine.
Key operating results
(in thousands of Canadian dollars, unless otherwise noted)
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Q1 2013 Q4 2012 Q3 2012 Q2 2012 Q1 2012
--------------------------------------------------
Gold Production (oz) 106,047 101,544 103,753 92,003 91,178
Gold Sales (oz) 95,511 111,104 95,424 95,675 92,400
Average Sale Price
(US$/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
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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 Quebec 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:
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Q1 2013 Q4 2012 Q3 2012 Q2 2012 Q1 2012
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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
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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
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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.
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Total Tonnage Tonnes per Tonnes per
Available Operating Produced Operating Operating
Hours Hours (%) (t) Hour Day
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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
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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.
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(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
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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.
Tonnes Au Cu Contained Au Contained Cu
Category (000's) (g/t) (%) (000's ounces) (000's pounds)
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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
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Category Grade (g/t) Tonnes (M) Cut-off (g/t) Oz (M)
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Measured 0.90 123.5 0.5 3.59
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Indicated 0.78 72.9 0.5 1.83
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M+I 0.86 196.4 0.5 5.43
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Inferred 0.72 75.7 0.5 1.75
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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
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PIT AREA Category Grade (g/t) Tonnes (M) Cut-off (g/t) Oz (M)
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All Measured 0.75 175.3 0.32 4.25
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All Indicated 0.61 54.1 0.32 1.06
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All M+I 0.72 229.5 0.32 5.31
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All Inferred 0.65 13.3 0.32 0.28
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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.
i. 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;
ii. One (single) report will be prepared to meet both federal & provincial
requirements;
iii.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:
March 31, December 31,
(In thousands of dollars) 2013 2012
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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
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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:
Revised Original
(In millions of dollars) budget(b) budget Reduction
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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
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Capital expenditures 137.9 220.0 82.1
Exploration - expensed through
income statement (a)(c) 9.3 8.0 (1.3)
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Total 147.2 228.0 80.8
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(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 Quebec
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:
i. Minimum tax of 1% on the first $80 million, and 4% thereafter on mine
profit calculated prior to processing; and
ii. 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, Quebec 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
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(tabular amounts expressed in thousands of Canadian dollars)
March 31, December 31,
2013 2012
--------------------------------
(restated -
see note)
($) ($)
Assets
Current assets
Cash and cash equivalents 100,358 93,229
Short-term investments - 19,357
Restricted cash 558 4,563
Accounts receivable 32,572 32,266
Note receivable 30,000 30,000
Inventories 79,782 70,481
Prepaid expenses and other assets 25,717 21,274
--------------------------------
268,987 271,170
Non-current assets
Restricted cash 38,362 38,362
Investments in associates 8,813 8,933
Other investments 12,601 16,894
Property, plant and equipment 2,387,525 2,352,546
--------------------------------
2,716,288 2,687,905
--------------------------------
--------------------------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 99,486 100,931
Current portion of long-term debt 99,378 76,883
Provisions and other liabilities 1,392 1,405
--------------------------------
200,256 179,219
Non-current liabilities
Long-term debt 236,571 260,529
Provisions and other liabilities 18,611 18,618
Deferred income and mining taxes 80,786 67,521
--------------------------------
536,224 525,887
--------------------------------
Equity attributable to Osisko Mining
Corporation shareholders
Share capital 2,049,852 2,048,843
Warrants 19,311 19,311
Contributed surplus 68,077 65,868
Equity component of convertible debentures 8,005 8,005
Accumulated other comprehensive loss (3,736) (1,148)
Retained earnings 38,555 21,139
--------------------------------
2,180,064 2,162,018
--------------------------------
2,716,288 2,687,905
--------------------------------
--------------------------------
Osisko Mining Corporation
Consolidated Statements of Income
For the three months ended March 31, 2013 and 2012
(Unaudited)
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(tabular amounts expressed in thousands of Canadian dollars, except per
share amounts)
2013 2012
--------------------------------
(restated -
see note)
($) ($)
Revenues 159,381 158,658
Mine operating costs
Production costs (81,422) (69,932)
Royalties (1,992) (2,359)
Depreciation (20,982) (13,909)
--------------------------------
Earnings from mine operations 54,985 72,458
General and administrative expenses (7,387) (7,406)
Exploration and evaluation expenses (5,103) (3,290)
--------------------------------
Earnings from operations 42,495 61,762
Interest income 458 533
Finance costs (7,891) (7,398)
Foreign exchange gain (loss) (2,281) 1,587
Share of loss of associates (121) (134)
Other losses (1,979) (1,818)
--------------------------------
Earnings before income and mining taxes 30,681 54,532
Income and mining tax expense (13,265) (23,937)
--------------------------------
Net earnings 17,416 30,595
--------------------------------
--------------------------------
Net earnings per share
Basic 0.04 0.08
Diluted 0.04 0.08
Weighted average number of common shares
outstanding
(in thousands)
Basic 436,502 385,777
Diluted 436,943 390,420
Osisko Mining Corporation
Consolidated Statements of Cash Flows
For the three months ended March 31, 2013 and 2012
(Unaudited)
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(tabular amounts expressed in thousands of Canadian dollars)
2013 2012
--------------------------------
(restated -
see note)
($) ($)
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 As at
December 31, Impact of December 31,
2012 IFRIC 20 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 Three months
ended ended
March 31, Impact of March 31,
2012 IFRIC 20 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 Three months
ended ended
March 31, Impact of March 31,
2012 IFRIC 20 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 -
--------------
--------------
Contacts:
John Burzynski
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
