Osisko Gold Royalties Ltd (the “Company” or “Osisko”) (OR: TSX
& NYSE) today announced its consolidated financial results for
the first quarter of 2019.
Highlights
- Earned 19,753 gold equivalent
ounces1 (“GEOs”) compared to 20,036 in Q1 2018;
- Revenues from royalties and streams of $33.5 million compared
to $32.6 million in Q1 2018;
- Generated cash flows from operating activities of $24.8 million
compared to $23.3 million in Q1 2018;
- Adjusted earnings2 of $5.8 million, $0.04 per basic share2
compared to $8.9 million, $0.06 per basic share in Q1 2018;
- Recorded cash operating margins3 of 89% from royalty and stream
interests, generating $29.9 million in operating cash flow in
the first quarter, in addition to a quarterly cash operating margin
of $0.7 million from offtake interests;
- Closed the previously announced senior secured silver stream
facility with reference to up to 100% of the future silver produced
from the Horne 5 property owned by Falco Resources Ltd.;
- Repaid in full the revolving credit facility in January 2019
(payment of $30.0 million);
- Incurred an impairment charge of $38.9 million ($28.6 million,
net of income taxes) on the Renard diamond stream. This impairment
is mainly due to a significant impairment charge of $83.2 million
announced on March 28, 2019 by the operator of the Renard diamond
mine in Québec, Canada, reflecting a lower diamond pricing outlook
than expected;
- Acquired for cancellation 852,500 of our common shares for
$10.2 million (average acquisition cost of $11.96 per share);
- Held $108.5 million in cash and $403.8 million in equity
investments4 as at March 31, 2019;
- Declared a quarterly dividend of
$0.05 per common share paid on April 15, 2019 to shareholders of
record as of the close of business on March 29, 2019.
For more details, please refer to the
Management’s Discussion and Analysis for the three months ended
March 31, 2019.
Recent Performance
Sean Roosen, Chair and Chief Executive Officer
commented on the first quarter of 2019 activities: “Our Q1 results
were in-line with our expectation and we anticipate to meet our
guidance with stronger GEO deliveries from our asset base during
the remainder of the year. With stronger deliveries from the Renard
and Gibraltar streams as well as growth expected this year from the
Lamaque and Eagle Gold royalties, Osisko looks forward to enhanced
financial flexibility and to potentially increase its dividend
towards the end of the year, and continues to be in a great
position to deploy capital as opportunities present themselves in
the current depressed market environment. We congratulate the
Eldorado Gold Corporation team for achieving commercial production
at its Lamaque mine in Québec”.
Outlook
Osisko’s 2019 outlook on royalty, stream and
offtake interests is based on publicly available forecasts, in
particular the forecasts for the Canadian Malartic mine published
by Yamana Gold Inc. and Agnico Eagle Mines Limited, for the
Éléonore mine published by Newmont Goldcorp Corporation, and for
the Renard mine published by Stornoway Diamond Corporation. When
publicly available forecasts on properties are not available,
Osisko obtains internal forecasts from the producers, which is the
case for the Mantos Blancos mine, or uses management’s best
estimate.
Attributable GEOs for 2019 remains unchanged from previous
guidance. GEOs and cash margin by interest are estimated as
follows:
|
|
Low |
|
High |
|
Cash
margin |
|
|
(GEOs) |
|
(GEOs) |
|
(%) |
|
|
|
|
|
|
|
Royalty
interests |
|
54,700 |
|
61,100 |
|
99.9 |
Stream
interests |
|
28,000 |
|
31,300 |
|
65.5 |
Offtake
interests |
|
2,300 |
|
2,600 |
|
1.2 |
|
|
85,000 |
|
95,000 |
|
|
|
|
|
|
|
|
|
For the 2019 guidance, silver, diamonds and cash
royalties have been converted to GEOs using commodity prices of
US$1,300 per ounce of gold, US$15.50 per ounce of silver and
US$95 per carat for diamonds from the Renard mine (blended sales
price) and an exchange rate (US$/C$) of 1.30.
Q1 2019 Results Conference
Call
Osisko will host a conference call on Thursday,
May 2, 2019 at 10:00 am EDT to review and discuss its Q1 2019
results.
Those interested in participating in the
conference call should dial in at 1 (877) 223-4471 (North
American toll free), or 1 (647) 788-4922 (international).
An operator will direct participants to the call.
The conference call replay will be available
from 1:00 pm EDT on May 2, 2019 until 11:59 pm EDT on May 9, 2019
with the following dial in numbers: 1-(800) 585-8367 (North
American toll free) or 1 (416) 621-4642, access code
2691455.
About Osisko Gold Royalties Ltd
Osisko Gold Royalties Ltd is an intermediate precious metal royalty
company that holds a North American focused portfolio of over 135
royalties, streams and precious metal offtakes. Osisko’s portfolio
is anchored by its 5% NSR royalty on the Canadian Malartic Mine,
which is the largest gold mine in Canada. Osisko also owns a
portfolio of publicly held resource companies, including a 32.7%
interest in Barkerville Gold Mines Ltd., a 16.6% interest in Osisko
Mining Inc., an 18.8% interest in Victoria Gold Corp. and a 19.9%
interest in Falco Resources Ltd.
Osisko’s head office is located at 1100 Avenue
des Canadiens-de Montréal, Suite 300, Montréal, Québec,
H3B 2S2.
For
further information, please contact Osisko Gold Royalties
Ltd: |
|
Joseph de la PlanteVice
President, Corporate DevelopmentTel. (514)
940-0670jdelaplante@osiskogr.com |
|
Notes:
(1) GEOs are calculated on a quarterly basis and include
royalties, streams and offtakes. Silver earned from royalty and
stream agreements was converted to gold equivalent ounces by
multiplying the silver ounces by the average silver price for the
period and dividing by the average gold price for the period.
Diamonds, other metals and cash royalties were converted into gold
equivalent ounces by dividing the associated revenue by the average
gold price for the period. Offtake agreements were converted using
the financial settlement equivalent divided by the average gold
price for the period.
Average Metal Prices and Exchange Rate
|
Three months ended March 31, |
|
2019 |
2018 |
|
|
|
Gold(1) |
$1,304 |
$1,329 |
Silver(2) |
$15.57 |
$16.77 |
|
|
|
Exchange rate
(US$/Can$)(3) |
1.3295 |
1.2647 |
|
|
|
(i)
The London Bullion Market Association’s pm price in U.S.
dollars |
(ii)
The London Bullion Market Association’s price in U.S.
dollars |
(iii)
Bank of Canada daily rate |
(2) “Adjusted earnings” and “Adjusted earnings per basic share”
are not recognized measures under the International Financial
Reporting Standards (“IFRS”). Refer to the non-IFRS measures
provided under the Non-IFRS Financial Performance Measures section
of the Management’s Discussion and Analysis for the three months
ended March 31, 2019.
(3) Cash operating margin, which represents revenues less cost
of sales, is a non-IFRS measure. The Company believes that this
non-IFRS generally accepted industry measure provides a realistic
indication of operating performance and provides a useful
comparison with its peers. The following table reconciles the cash
margin to the revenues and cost of sales presented in the
consolidated statements of income and related notes:
|
|
(In thousands of
dollars) |
Three months ended March
31, |
|
2019 |
2018 |
|
$ |
$ |
|
|
|
Revenues |
100,726 |
125,614 |
Less:
Revenues from offtake interests |
(67,226) |
(93,029) |
Revenues
from royalty and stream interests |
33,500 |
32,585 |
|
|
|
Cost of
sales |
(70,104) |
(93,667) |
Less:
Cost of sales of offtake interests |
66,510 |
90,604 |
Cost of
sales of royalty and stream interests |
(3,594) |
(3,063) |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
from royalty and stream interests |
33,500 |
32,585 |
Less:
Cost of sales of royalty and stream interests |
(3,594) |
(3,063) |
Cash margin from royalty and stream interests |
29,906 |
29,522 |
|
|
|
|
89.3% |
90.6% |
|
|
|
Revenues
from offtake interests |
67,226 |
93,029 |
Less:
Cost of sales of offtake interests |
(66,510) |
(90,604) |
Cash margin from offtake interests |
716 |
2,425 |
|
|
|
|
1.1% |
2.6% |
|
|
|
(4) Represents the estimated fair value based on the quoted
prices of the investments in a recognized stock exchange as at
March 31, 2019. For private investments, an internal or external
evaluation is prepared.
Forward-looking Statements
This news release contains forward-looking
information and forward-looking statements (together,
"forward‑looking statements") within the meaning of applicable
Canadian securities laws and the United States Private Securities
Litigation Reform Act of 1995. All statements in this release,
other than statements of historical fact, that address future
events, developments or performance that Osisko expects to occur
including management’s expectations regarding Osisko’s growth,
results of operations, estimated future revenue, requirements for
additional capital, production estimates, production costs and
revenue, business prospects and opportunities are forward-looking
statements. In addition, statements relating to gold equivalent
ounces ("GEOs") are forward‑looking statements, as they involve
implied assessment, based on certain estimates and assumptions, and
no assurance can be given that the GEOs will be realized.
Forward-looking statements are statements that are not historical
facts and are generally, but not always, identified by the words
"expects", "is expected" "plans", "anticipates", "believes",
"intends", "estimates", "projects", "potential", "scheduled" and
similar expressions or variations (including negative variations of
such words and phrases), or may be identified by statements to the
effect that certain actions, events or conditions "will", "would",
"may", "could" or "should" occur including, without limitation, the
performance of the assets of Osisko, the estimate of GEOs to be
received in 2019, and Osisko’s ability to seize future
opportunities. Although Osisko believes the expectations expressed
in such forward-looking statements are based on reasonable
assumptions, such statements involve known and unknown risks,
uncertainties and other factors and are not guarantees of future
performance and actual results may accordingly differ materially
from those in forward-looking statements. Factors that could cause
the actual results deriving from Osisko’s royalties, streams and
other interests to differ materially from those in forward-looking
statements include, without limitation: influence of political or
economic factors including fluctuations in the prices of the
commodities and in value of the Canadian dollar relative to the
U.S. dollar, continued availability of capital and financing and
general economic, market or business conditions; regulations and
regulatory changes in national and local government, including
permitting and licensing regimes and taxation policies; whether or
not Osisko is determined to have “passive foreign investment
company” (“PFIC”) status as defined in Section 1297 of the United
States Internal Revenue Code of 1986, as amended; potential changes
in Canadian tax treatments of offshore streams or other interests,
litigation, title, permit or license disputes; risks and hazards
associated with the business of exploring, development and mining
on the properties in which Osisko holds a royalty, stream or other
interest including, but not limited to development, permitting,
infrastructure, operating or technical difficulties, unusual or
unexpected geological and metallurgical conditions, slope failures
or cave-ins, flooding and other natural disasters or civil unrest,
rate, grade and timing of production differences from mineral
resource estimates or production forecasts or other uninsured
risks; risk related to business opportunities that become available
to, or are pursued by Osisko and exercise of third party rights
affecting proposed investments. The forward-looking statements
contained in this press release are based upon assumptions
management believes to be reasonable, including, without
limitation: the ongoing operation of the properties in which Osisko
holds a royalty, stream or other interest by the owners or
operators of such properties in a manner consistent with past
practice; the accuracy of public statements and disclosures made by
the owners or operators of such underlying properties; no material
adverse change in the market price of the commodities that underlie
the asset portfolio; Osisko’s ongoing income and assets relating to
the determination of its PFIC status, no material changes to
existing tax treatments; no adverse development in respect of any
significant property in which Osisko holds a royalty, stream or
other interest; the accuracy of publicly disclosed expectations for
the development of underlying properties that are not yet in
production; and the absence of any other factors that could cause
actions, events or results to differ from those anticipated,
estimated or intended. However, there can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Investors are cautioned that
forward-looking statements are not guarantees of future
performance. Osisko cannot assure investors that actual results
will be consistent with these forward-looking statements and
investors should not place undue reliance on forward-looking
statements due to the inherent uncertainty therein.
For additional information with respect to these
and other factors and assumptions underlying the forward-looking
statements made in this press release, see the section entitled
"Risk Factors" in the most recent Annual Information Form of Osisko
which is filed with the Canadian securities commissions and
available electronically under Osisko's issuer profile on SEDAR at
www.sedar.com and with the U.S. Securities and Exchange Commission
on EDGAR at www.sec.gov. The forward-looking information set forth
herein reflects Osisko’s expectations as at the date of this press
release and is subject to change after such date. Osisko disclaims
any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, other than as required by law.
|
Osisko
Gold Royalties Ltd |
Consolidated
Balance Sheets |
(Unaudited) |
(tabular
amounts expressed in thousands of Canadian dollars) |
|
|
March 31, |
December 31, |
|
2019 |
|
2018 |
|
$ |
|
$ |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
Current
assets |
|
|
|
|
|
|
|
Cash |
108,497 |
|
174,265 |
Short-term
investments |
13,119 |
|
10,000 |
Amounts
receivable |
6,871 |
|
12,321 |
Other
assets |
1,013 |
|
1,015 |
|
129,500 |
|
197,601 |
|
|
|
|
Non-current
assets |
|
|
|
|
|
|
|
Investments
in associates |
303,407 |
|
304,911 |
Other
investments |
121,364 |
|
109,603 |
Royalty,
stream and other interests |
1,391,299 |
|
1,414,668 |
Exploration
and evaluation |
92,777 |
|
95,002 |
Goodwill |
111,204 |
|
111,204 |
Other
assets |
11,265 |
|
1,657 |
|
2,160,816 |
|
2,234,646 |
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities |
9,273 |
|
11,732 |
Dividends
payable |
7,757 |
|
7,779 |
Provisions |
4,439 |
|
3,494 |
Lease
liabilities |
703 |
|
- |
|
22,172 |
|
23,005 |
|
|
|
|
Non-current
liabilities |
|
|
|
|
|
|
|
Long-term
debt |
324,355 |
|
352,769 |
Lease
liabilities |
9,077 |
|
- |
Deferred
income taxes |
77,816 |
|
87,277 |
|
433,420 |
|
463,051 |
|
|
|
|
Equity |
|
|
|
|
|
|
|
Share
capital |
1,609,435 |
|
1,609,162 |
Warrants |
18,072 |
|
30,901 |
Contributed
surplus |
33,987 |
|
21,230 |
Equity
component of convertible debentures |
17,601 |
|
17,601 |
Accumulated
other comprehensive income |
21,090 |
|
23,499 |
Retained
earnings |
27,211 |
|
69,202 |
|
1,727,396 |
|
1,771,595 |
|
2,160,816 |
|
2,234,646 |
|
|
|
|
|
Osisko Gold
Royalties Ltd |
Consolidated Statements
of Income (Loss) |
For the three months
ended March 31, 2019 and 2018 |
(Unaudited) |
(tabular amounts
expressed in thousands of Canadian dollars, except per share
amounts) |
|
|
2019 |
|
2018 |
|
$ |
|
$ |
|
|
|
|
|
|
|
|
Revenues |
100,726 |
|
125,614 |
|
|
|
|
Cost of
sales |
(70,104) |
|
(93,667) |
Depletion of
royalty, stream and other interests |
(12,376) |
|
(13,230) |
Gross
profit |
18,246 |
|
18,717 |
|
|
|
|
Other operating
expenses |
|
|
|
General and
administrative |
(5,934) |
|
(4,426) |
Business
development |
(1,738) |
|
(1,192) |
Impairment
of asset |
(38,900) |
|
- |
Operating
income (loss) |
(28,326) |
|
13,099 |
Interest
income |
1,172 |
|
1,492 |
Finance
costs |
(5,747) |
|
(6,634) |
Foreign
exchange gain (loss) |
(1,121) |
|
187 |
Share of
loss of associates |
(1,762) |
|
(1,397) |
Other
losses, net |
(35) |
|
(2,581) |
Earnings (loss)
before income taxes |
(35,819) |
|
4,166 |
Income
tax recovery (expense) |
9,270 |
|
(1,856) |
Net earnings
(loss) |
(26,549) |
|
2,310 |
|
|
|
|
Net earnings
(loss) per share |
|
|
|
Basic |
(0.17) |
|
0.01 |
Diluted |
(0.17) |
|
0.01 |
|
|
|
|
|
|
|
|
|
Osisko Gold
Royalties Ltd |
Consolidated Statements
of Cash Flows |
For the three months
ended March 31, 2019 and 2018 |
(Unaudited) |
(tabular amounts
expressed in thousands of Canadian dollars) |
|
|
2019 |
|
2018 |
|
$ |
|
$ |
|
|
|
|
Operating activities |
|
|
|
Net earnings
(loss) |
(26,549) |
|
2,310 |
Adjustments
for: |
|
|
|
Share-based compensation |
2,701 |
|
673 |
Depletion and amortization |
12,660 |
|
13,272 |
Impairment of asset |
38,900 |
|
- |
Finance costs |
1,683 |
|
1,618 |
Share of loss of associates |
1,762 |
|
1,397 |
Net loss (gain) on acquisition of investments |
175 |
|
(1,908) |
Change in fair value of financial assets at fair value through
profit or loss |
529 |
|
4,489 |
Net gain on disposal of investments |
(669) |
|
- |
Deferred income tax expense (recovery) |
(9,482) |
|
1,667 |
Foreign exchange loss |
1,159 |
|
898 |
Settlement of deferred share units |
(295) |
|
- |
Other |
47 |
|
46 |
Net cash flows
provided by operating activities before changes in non-cash
working capital items |
22,621 |
|
24,462 |
Changes in
non-cash working capital items |
2,129 |
|
(1,159) |
Net cash flows
provided by operating activities |
24,750 |
|
23,303 |
|
|
|
|
Investing activities |
|
|
|
Short-term
investments |
(13,119) |
|
(500) |
Acquisition of
investments |
(5,759) |
|
(13,629) |
Proceeds on
disposal of investments |
422 |
|
25,578 |
Acquisition of
royalty and stream interests |
(27,969) |
|
(9,970) |
Exploration
and evaluation tax credits, net |
186 |
|
1,094 |
Other
assets |
(155) |
|
(18) |
Net cash flows
provided by (used in) investing activities |
(46,394) |
|
2,555 |
|
|
|
|
Financing activities |
|
|
|
Exercise of
share options and shares issued under the employee share purchase
plan |
5,683 |
|
114 |
Issue
expenses |
- |
|
(186) |
Financing
fees |
- |
|
(379) |
Repayment of
long-term debt |
(30,000) |
|
- |
Principal
elements of lease payments |
(174) |
|
- |
Normal course
issuer bid purchase of common shares |
(11,901) |
|
(20,333) |
Dividends
paid |
(6,298) |
|
(7,547) |
Net cash flows
used in financing activities |
(42,690) |
|
(28,331) |
|
|
|
|
Effects of
exchange rate changes on cash and cash equivalents |
(1,434) |
|
1,385 |
Decrease in cash and cash equivalents |
(65,768) |
|
(1,088) |
Cash
and cash equivalents – beginning of period |
174,265 |
|
333,705 |
Cash
and cash equivalents – end of period |
108,497 |
|
332,617 |
|
|
|
|
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