Osisko Gold Royalties Ltd (the “Company” or “Osisko”) (OR: TSX
& NYSE) today announced its consolidated financial results for
the first quarter of 2020.
Highlights
- Cash flows from operating
activities of $23.8 million (Q1 2019 – $24.8 million);
$27.9 million before changes in non-cash working capital items
(Q1 2019 – $22.6 million), an increase of 23%;
- Revenues from royalties and streams
of $37.8 million (Q1 2019 – $33.5 million), an increase of
13%;
- Earned 18,159 gold equivalent
ounces1 (“GEOs”) (Q1 2019 – 19,753 GEOs);
- Cash on hand of $158.3 million and
up to $400.0 million further available under the credit facility as
at March 31, 2020, excluding the $85.0 million equity financing
completed on April 1, 2020;
- Closed a non-brokered private
placement of $85.0 million with Investissement Québec on
April 1, 2020;
- Drew down US$50.0 million on our
revolving credit facility as a cautionary measure given the current
uncertainty to ensure adequate financial capacity during our asset
shutdowns;
- Incurred a non-cash impairment
charge on the Renard diamond stream of $26.3 million
($19.3 million, net of income taxes);
- Net loss of $13.3 million, $0.09
per basic share (Q1 2019 – net loss of $26.5 million, $0.17 per
basic share), as a result of the non-cash impairment charge;
- Adjusted earnings2 of $7.5 million
or $0.05 per basic share (Q1 2019 – $5.8 million, $0.04 per basic
share);
- Cash operating margin3 of 91% from
royalty and stream interests, generating $34.5 million in
operating cash flow, in addition to a cash operating margin of
$0.8 million from offtake interests;
- Withdrew the 2020 production
guidance as a result of the uncertainties related to the COVID-19
pandemic impact;
- Mining activities were affected by
the COVID-19 pandemic, including our cornerstone asset, the
Canadian Malartic mine, which was placed on care and maintenance
from March 25 to April 15;
- Acquired for cancellation 429,722
common shares for $3.9 million (average acquisition cost of $9.15
per share);
- Declared a quarterly dividend of
$0.05 per common share paid on April 15, 2020 to shareholders of
record as of the close of business on March 31, 2020; and
- Improved the silver stream on the
Gibraltar mine by investing $8.5 million to reduce the transfer
price from US$2.75 per ounce of silver to nil in April 2020.
Recent Performance
Sean Roosen, Chair and Chief Executive Officer,
commented on the activities of the first quarter of 2020: “We are
living through an unprecedented period and we continue to strongly
support the initiatives and efforts of the mine operators to put
the health and safety of their workforce and communities
first. Even though our business has been impacted by the
measures taken to contain the spread of COVID-19, the revenue
deferral is manageable given our efficient business model. We
further believe that our opportunity set will grow in the coming
quarters, and we are well positioned to deploy capital toward
royalty and streaming transactions and create value for our
stakeholders.”
Impairment of Assets
In March 2020, the selling price of diamonds
decreased significantly as a result of the impact of the COVID-19
pandemic on the diamond market. On March 24, 2020, activities at
the Renard diamond mine were suspended following the announcement
of the Government of Québec to shutdown all non essential services,
and on April 14, 2020, despite the announcement by the Government
of Québec to include mining activities as an essential service, the
operator of the Renard diamond mine announced the extension of the
care and maintenance period of its operations due to depressed
diamond market conditions as well as major structural impediments
to sell finished products. These were considered indicators of
impairment among other facts and circumstances and, accordingly,
management performed an impairment assessment as at March 31, 2020.
The Company recorded an impairment charge of $26.3 million ($19.3
million, net of income taxes) on the Renard diamond stream.
Outlook
On March 23, 2020, given the uncertainties with
respect to future developments related to the COVID-19 pandemic,
including the duration, severity and scope of the outbreak, the
actions taken to contain or treat the COVID‑19 outbreak, and
impacts on mining operations, Osisko announced the withdrawal of
its 2020 production guidance and expects to provide new guidance
once operations in the mining industry stabilize. The Company will
continue to monitor the situation closely and expects its results
for the second quarter of 2020 to be affected by the impacts of the
COVID-19 pandemic on several mining activities on which it holds a
royalty, stream or other interest.
Q1 2020 Results Conference
Call
Osisko will host a conference call on Wednesday,
May 13, 2020 at 10:00 am EDT to review and discuss its first
quarter 2020 results.
Those interested in participating in the
conference call should dial in at 1-(833) 979-2701 (North American
toll free) or 1-(236) 714-2175 (international). An automated voice
system will ask you to record your name and to enter the conference
identification number 1793021.
The conference call replay will be available from 1:00 pm EDT on
May 13, 2020 until 11:59 pm EDT on May 20, 2020 with the
following dial in numbers: 1-(800) 585-8367 (North American toll
free) or 1-(416) 621-4642, access code 1793021. The replay will
also be available on our website at www.osiskogr.com.
About Osisko Gold Royalties
Ltd
Osisko Gold Royalties Ltd is an intermediate
precious metal royalty company focused on the Americas that
commenced activities in June 2014. Osisko holds a North American
focused portfolio of over 135 royalties, streams and precious metal
offtakes. Osisko’s portfolio is anchored by its cornerstone asset,
a 5% net smelter return royalty on the Canadian Malartic mine,
which is the largest gold mine in Canada. Osisko also owns the
Cariboo gold project in Canada as well as a portfolio of publicly
held resource companies, including a 15.8% interest in Osisko
Mining Inc., 17.9% interest in Osisko Metals Incorporated and an
18.3% 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:
Sandeep SinghPresidentTel. (514)
940-0670ssingh@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, |
|
2020 |
2019 |
|
|
|
Gold(i) |
$1,583 |
$1,304 |
Silver(ii) |
$16.90 |
$15.57 |
|
|
|
Exchange
rate(US$/Can$)(iii) |
1.3449 |
1.3295 |
(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) |
The Company has included certain non-IFRS measures including
“Adjusted Earnings” and “Adjusted Earnings per basic 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. “Adjusted earnings” is defined as “Net loss” adjusted
for certain items: “Foreign exchange gain (loss)”, “Impairment of
assets”, “Gains (losses) on disposal of exploration and evaluation
assets”, “Unrealized gain (loss) on investments”, “Impairment on
financial assets and investments in associates”, “Share of loss of
associates”, “Deferred income tax expense (recovery)” and other
unusual items such as transaction costs.Adjusted earnings per basic
share is obtained from the “adjusted earnings” divided by the
“Weighted average number of common shares outstanding” for the
period. |
|
|
|
Three months ended March
31, |
|
2020 |
|
2019 |
|
(in thousands of dollars, except per share amounts) |
$ |
$ |
|
|
|
Net loss |
(13,318 |
) |
(26,549 |
) |
|
|
|
Adjustments: |
|
|
Impairment of assets |
26,300 |
|
38,900 |
|
Foreign exchange loss (gain) |
(2,101 |
) |
1,159 |
|
Unrealized loss (gain) on investments |
(1,535 |
) |
35 |
|
Share of loss of associates |
1,716 |
|
1,762 |
|
Deferred income
tax recovery |
(3,515 |
) |
(9,482 |
) |
|
|
|
Adjusted earnings |
7,547 |
|
5,825 |
|
|
|
|
Weighted average number
of common shares outstanding (000’s) |
155,374 |
|
155,059 |
|
|
|
|
Adjusted earnings per basic
share |
0.05 |
|
0.04 |
|
(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 endedMarch 31, |
|
2020 |
|
2019 |
|
|
$ |
$ |
|
|
|
Revenues |
52,605 |
|
100,726 |
|
Less: Revenues from offtake
interests |
(14,771 |
) |
(67,226 |
) |
Revenues from royalty and
stream interests |
37,834 |
|
33,500 |
|
|
|
|
Cost of sales |
(17,283 |
) |
(70,104 |
) |
Less: Cost of sales of offtake
interests |
13,922 |
|
66,510 |
|
Cost of sales of royalty and
stream interests |
(3,361 |
) |
(3,594 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from royalty and
stream interests |
37,834 |
|
33,500 |
|
Less: Cost of sales of royalty
and stream interests |
(3,361 |
) |
(3,594 |
) |
Cash margin from
royalty and stream interests |
34,473 |
|
29,906 |
|
|
91.1 |
% |
89.3 |
% |
|
|
|
Revenues from offtake
interests |
14,771 |
|
67,226 |
|
Less: Cost of sales of offtake
interests |
(13,922 |
) |
(66,510 |
) |
Cash margin from
offtake interests |
849 |
|
716 |
|
|
5.7 |
% |
1.1 |
% |
|
|
|
|
|
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, that sufficient funding will
be available to fund work at the Cariboo Project, that significant
value will be created within the accelerator group of companies 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: the uncertainties related to the COVID-19
impacts, the 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, |
|
|
2020 |
|
|
2019 |
|
|
$ |
|
$ |
Assets |
|
|
|
|
|
|
|
Current
assets |
|
|
|
|
|
|
|
Cash |
158,325 |
|
|
108,223 |
|
Short-term investments |
21,228 |
|
|
20,704 |
|
Amounts receivable |
8,797 |
|
|
6,330 |
|
Other assets |
4,444 |
|
|
5,172 |
|
|
192,794 |
|
|
140,429 |
|
|
|
|
|
Non-current
assets |
|
|
|
|
|
|
|
Investments in associates |
102,684 |
|
|
103,640 |
|
Other investments |
61,176 |
|
|
67,886 |
|
Royalty, stream and other interests |
1,140,113 |
|
|
1,130,512 |
|
Mining interests and plant and equipment |
358,115 |
|
|
343,693 |
|
Exploration and evaluation |
43,065 |
|
|
42,949 |
|
Goodwill |
111,204 |
|
|
111,204 |
|
Other assets |
7,038 |
|
|
6,940 |
|
|
2,016,189 |
|
|
1,947,253 |
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
17,498 |
|
|
18,772 |
|
Dividends payable |
7,879 |
|
|
7,874 |
|
Current portion of long-term debt |
49,024 |
|
|
- |
|
Provisions and other liabilities |
1,303 |
|
|
1,289 |
|
|
75,704 |
|
|
27,935 |
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
|
|
|
Provisions and other liabilities |
29,953 |
|
|
29,365 |
|
Long-term debt |
374,475 |
|
|
349,042 |
|
Deferred income taxes |
43,711 |
|
|
47,465 |
|
|
523,843 |
|
|
453,807 |
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
Share capital |
1,654,146 |
|
|
1,656,350 |
|
Warrants |
18,072 |
|
|
18,072 |
|
Contributed surplus |
37,840 |
|
|
37,642 |
|
Equity component of convertible debentures |
17,601 |
|
|
17,601 |
|
Accumulated other comprehensive income |
36,195 |
|
|
13,469 |
|
Deficit |
(271,508 |
) |
|
(249,688 |
) |
|
1,492,346 |
|
|
1,493,446 |
|
|
2,016,189 |
|
|
1,947,253 |
|
|
|
|
|
|
|
Osisko Gold Royalties Ltd
|
|
|
Consolidated
Statements of Loss |
|
|
For the three
months ended March 31, 2020 and 2019 |
|
|
(Unaudited) |
|
|
(tabular amounts
expressed in thousands of Canadian dollars, except per share
amounts) |
|
|
|
|
|
|
|
|
|
2020 |
|
|
2019 |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
Revenues |
52,605 |
|
|
100,726 |
|
|
|
|
|
|
|
Cost of sales |
(17,283 |
) |
|
(70,104 |
) |
Depletion of royalty, stream and other interests |
(13,700 |
) |
|
(12,376 |
) |
Gross
profit |
21,622 |
|
|
18,246 |
|
|
|
|
|
|
|
Other operating
expenses |
|
|
|
|
|
General and administrative |
(6,284 |
) |
|
(5,901 |
) |
Business development |
(1,138 |
) |
|
(1,738 |
) |
Exploration and evaluation |
(42 |
) |
|
(33 |
) |
Impairment of assets |
(26,300 |
) |
|
(38,900 |
) |
Operating
loss |
(12,142 |
) |
|
(28,326 |
) |
Interest and dividend income |
1,121 |
|
|
1,172 |
|
Finance costs |
(6,862 |
) |
|
(5,747 |
) |
Foreign exchange gain (loss) |
2,326 |
|
|
(1,121 |
) |
Share of loss of associates |
(1,716 |
) |
|
(1,762 |
) |
Other gains (losses), net |
629 |
|
|
(35 |
) |
Loss before income
taxes |
(16,644 |
) |
|
(35,819 |
) |
Income tax recovery |
3,326 |
|
|
9,270 |
|
Net loss |
(13,318 |
) |
|
(26,549 |
) |
|
|
|
|
|
|
Net loss per
share |
|
|
|
|
|
Basic and diluted |
(0.09 |
) |
|
(0.17 |
) |
|
|
|
|
|
|
Osisko Gold Royalties Ltd |
|
|
|
|
|
Consolidated Statements of
Cash Flows |
|
|
|
|
|
For the three months ended
March 31, 2020 and 2019 |
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
(tabular amounts expressed in
thousands of Canadian dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
|
2019 |
|
|
$ |
|
|
$ |
|
Operating
activities |
|
|
|
Net loss |
(13,318 |
) |
|
(26,549 |
) |
Adjustments for: |
|
|
|
Share-based compensation |
2,683 |
|
|
2,701 |
|
Depletion and amortization |
14,132 |
|
|
12,660 |
|
Impairment of assets |
26,300 |
|
|
38,900 |
|
Finance costs |
2,624 |
|
|
1,683 |
|
Share of loss of associates |
1,716 |
|
|
1,762 |
|
Net (gain) loss on acquisition of investments |
(2,845 |
) |
|
175 |
|
Change in fair value of financial assets at fair value through
profit or loss |
1,310 |
|
|
529 |
|
Net gain on disposal of investments |
- |
|
|
(669 |
) |
Foreign exchange (gain) loss |
(2,101 |
) |
|
1,159 |
|
Deferred income tax recovery |
(3,515 |
) |
|
(9,482 |
) |
Other |
948 |
|
|
(248 |
) |
Net cash flows provided by
operating activities before changes in non-cash working
capital items |
27,934 |
|
|
22,621 |
|
Changes in non-cash working
capital items |
(4,134 |
) |
|
2,129 |
|
Net cash flows provided by
operating activities |
23,800 |
|
|
24,750 |
|
|
|
|
|
Investing
activities |
|
|
|
Short-term investments |
(1,069 |
) |
|
(13,119 |
) |
Acquisition of
investments |
(15,587 |
) |
|
(5,759 |
) |
Proceeds on disposal of
investments |
322 |
|
|
422 |
|
Acquisition of royalty and
stream interests |
(7,500 |
) |
|
(27,969 |
) |
Exploration and evaluation
expenses, net of tax credits |
(116 |
) |
|
186 |
|
Mining assets and plant and
equipment |
(14,854 |
) |
|
- |
|
Other |
156 |
|
|
(155 |
) |
Net cash flows used in
investing activities |
(38,648 |
) |
|
(46,394 |
) |
|
|
|
|
Financing
activities |
|
|
|
Exercise of share options and
shares issued under the employee share purchase plan |
360 |
|
|
5,683 |
|
Increase in long-term
debt |
71,660 |
|
|
- |
|
Repayment of long-term
debt |
- |
|
|
(30,000 |
) |
Normal course issuer bid
purchase of common shares |
(2,956 |
) |
|
(11,901 |
) |
Dividends paid |
(7,542 |
) |
|
(6,298 |
) |
Other |
(1,155 |
) |
|
(174 |
) |
Net cash flows provided by
(used in) financing activities |
60,367 |
|
|
(42,690 |
) |
|
|
|
|
Increase (decrease) in cash
before effects of exchange rate changes on cash |
45,519 |
|
|
(64,334 |
) |
Effects of exchange rate
changes on cash |
4,583 |
|
|
(1,434 |
) |
Increase (decrease) in
cash |
50,102 |
|
|
(65,768 |
) |
Cash – beginning of
period |
108,223 |
|
|
174,265 |
|
Cash – end of
period |
158,325 |
|
|
108,497 |
|
Osisko Gold Royalties (NYSE:OR)
Historical Stock Chart
From Aug 2024 to Sep 2024
Osisko Gold Royalties (NYSE:OR)
Historical Stock Chart
From Sep 2023 to Sep 2024