OR Royalties Inc 6-K, filed Aug 9, 2022
OR Royalties Inc. (OR)
About this 6-K
OR Royalties Inc filed this 6-K on August 9, 2022.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2022
Commission File Number: 001-37814
Osisko Gold Royalties Ltd
(Translation of registrant's name into English)
1100 Avenue des Canadiens-de-Montréal, Suite 300, Montréal, Qc H3B 2S2
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [ ] Form 40-F [ X ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
EXHIBIT INDEX
| Exhibits | ||
| 99.1 | Press Release dated August 9, 2022 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Osisko Gold Royalties Ltd | ||
| (Registrant) | ||
| Date: August 9, 2022 | By: | /s/ Sandeep Singh |
| Sandeep Singh | ||
| Title: | President | |
EXHIBIT 99.1
Osisko Reports Q2 2022 Results
Record cash margin of $47.8 million from royalties and streams
Operating cash flows from the royalties and streams segment of $35.0 million
MONTRÉAL, Aug. 09, 2022 (GLOBE NEWSWIRE) -- Osisko Gold Royalties Ltd (the “Corporation” or “Osisko”) (OR: TSX & NYSE) today announced its consolidated financial results for the second quarter of 2022. Amounts presented are in Canadian dollars, except where otherwise noted.
Q2 2022 Financial Highlights
- 22,243 GEOs1 earned (Q2 2021 – 20,178 GEOs);
- Consolidated revenues of $64.0 million (Q2 2021 – $57.9 million);
- Revenues from the royalties and streams segment2 of $51.5 million (Q2 2021 – $57.2 million, including $7.3 million from offtakes);
- Revenues from the mining exploration and development segment3 (i.e. Osisko Development Corp.) of $12.4 million (Q2 2021 – $0.7 million);
- Consolidated cash flows from operating activities of ($0.2 million) (Q2 2021 – $30.9 million);
- Operating cash flows from the royalties and streams segment of $35.0 million (Q2 2021 – $37.3 million);
- Operating cash flows from the mining exploration and development segment of ($35.2) million (Q2 2021 – ($6.4) million);
- Operating cash flows from the royalties and streams segment of $35.0 million (Q2 2021 – $37.3 million);
- Cash margin4 of 93% from royalties and streams (Q2 2021 – 94%);
- Consolidated net earnings attributable to Osisko’s shareholders of $17.2 million, or $0.09 per share (Q2 2021 – net loss of $14.8 million or $0.09 per basic share);
- Consolidated adjusted loss4 of $4.7 million, or $0.03 per basic share (Q2 2021 – net earnings $20.2 million, $0.12 per basic share);
- Adjusted earnings from the royalty and stream segment of $25.7 million, or $0.14 per basic share (Q2 2021 – $23.9 million, or $0.14 per basic share); and
- Adjusted loss from the mining exploration and development segment of $30.4 million, or $0.16 per basic share (Q2 2021 – $3.7 million, or $0.02 per basic share).
Sandeep Singh, President and CEO of Osisko commented: “We benefited from record GEO deliveries and cash margins in Q2 despite two core assets not being at their full run rates, and we expect deliveries to continue to climb steadily in the second half of the year. The markets have become increasingly volatile, but we believe the investment thesis for Osisko has never been stronger with growing cash flows, meaningful diversification, exposure to tier-1 jurisdictions, and countless catalysts in the portfolio. And as evident with our Q2 results, our royalty and streaming business affords protection from a highly inflationary mining environment.”
Financial Highlights by Operating Segment
(in thousands of dollars, except per share amounts)
As a result of the interest held (44.1% as of June 30, 2022) and based on other facts and circumstances, the Corporation consolidates the assets, liabilities, results of operations and cash flows of the activities of Osisko Development Corp. (“Osisko Development”) and its subsidiaries. The table below provides some financial highlights per operating segment. More information per operating segment can be found in the consolidated financial statements and management’s discussion and analysis for the three and six months ended June 30, 2022.
| For the three and six months ended June 30, | ||||||||||||||
| Osisko Gold Royalties (i) | Osisko Development (ii) | Consolidated (v) | ||||||||||||
| 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||||
| $ | $ | $ | $ | $ | $ | |||||||||
| Cash (June 30, 2022 and Dec. 31, 2021) | 312,981 | 82,291 | 136,302 | 33,407 | 449,283 | 115,698 | ||||||||
| Three months ended June 30, | ||||||||||||||
| Revenues | 51,545 | 57,246 | 12,862 | 775 | 63,959 | 57,941 | ||||||||
| Cash margin (iii) | 47,789 | 47,150 | n/a | n/a | 47,789 | 47,150 | ||||||||
| Gross profit | 35,938 | 35,713 | 653 | - | 36,591 | 35,713 | ||||||||
| Operating expenses | ||||||||||||||
| (G&A, bus. dev and exploration) | (6,200 | ) | (6,483 | ) | (10,079 | ) | (4,649 | ) | (16,279 | ) | (11,132 | ) | ||
| Mining operating expenses | - | - | (20,602 | ) | - | (20,602 | ) | - | ||||||
| Net earnings (loss) | 18,059 | 16,341 | (1,487 | ) | (41,404 | ) | 16,572 | (25,063 | ) | |||||
| Net earnings (loss) attributable to Osisko’s shareholders | 18,059 | 16,341 | (899 | ) | (31,100 | ) | 17,160 | (14,759 | ) | |||||
| Net earnings (loss) per share attributable to Osisko’s shareholders | 0.10 | 0.10 | (0.01 | ) | (0.19 | ) | 0.09 | (0.09 | ) | |||||
| Adjusted net earnings (loss) (iv) | 25,716 | 23,877 | (30,375 | ) | (3,727 | ) | (4,659 | ) | 20,150 | |||||
| Adjusted net earnings (loss) per basic share (iv) | 0.14 | 0.14 | (0.16 | ) | (0.02 | ) | (0.03 | ) | 0.12 | |||||
| Cash flows from operating activities | ||||||||||||||
| Before working capital items | 40,870 | 39,026 | (24,913 | ) | (3,708 | ) | 15,957 | 35,318 | ||||||
| Working capital items | (5,905 | ) | (1,685 | ) | (10,276 | ) | (2,716 | ) | (16,181 | ) | (4,401 | ) | ||
| After working capital items | 34,965 | 37,341 | (35,189 | ) | (6,424 | ) | (224 | ) | 30,917 | |||||
| Cash flows from investing activities | 2,573 | (42,377 | ) | (97,759 | ) | (47,464 | ) | (95,186 | ) | (89,841 | ) | |||
| Cash flows from financing activities | (125,705 | ) | (3,542 | ) | 210,225 | (1,718 | ) | 84,520 | (5,260 | ) | ||||
| Six months ended June 30, | ||||||||||||||
| Revenues | 102,234 | 124,169 | 22,029 | 775 | 123,357 | 124,864 | ||||||||
| Cash margin (iii) | 95,297 | 93,676 | n/a | n/a | 95,297 | 93,676 | ||||||||
| Gross profit | 72,148 | 70,312 | 653 | - | 72,801 | 70,312 | ||||||||
| Operating expenses | ||||||||||||||
| (G&A, bus. dev and exploration) | (12,457 | ) | (12,511 | ) | (18,007 | ) | (9,851 | ) | (30,464 | ) | (22,362 | ) | ||
| Mining operating expenses | - | (35,848 | ) | - | ||||||||||
| Net earnings (loss) | 34,863 | 29,805 | (23,820 | ) | (45,105 | ) | 11,043 | (15,300 | ) | |||||
| Net earnings (loss) attributable to Osisko’s shareholders | 34,863 | 29,805 | (17,377 | ) | (33,970 | ) | 17,486 | (4,165 | ) | |||||
| Net earnings (loss) per share attributable to Osisko’s shareholders | 0.20 | 0.18 | (0.10 | ) | (0.20 | ) | 0.10 | (0.02 | ) | |||||
| Adjusted net earnings (loss) (iv) | 50,559 | 47,316 | (50,982 | ) | (9,238 | ) | (423 | ) | 38,078 | |||||
| Adjusted net earnings (loss) per basic share (iv) | 0.29 | 0.28 | (0.29 | ) | (0.06 | ) | (0.00 | ) | 0.23 | |||||
| Cash flows from operating activities | ||||||||||||||
| Before working capital items | 80,762 | 78,565 | (42,182 | ) | (1,285 | ) | 38,580 | 71,570 | ||||||
| Working capital items | (5,290 | ) | (4,487 | ) | (9,904 | ) | (14,842 | ) | (15,194 | ) | (19,329 | ) | ||
| After working capital items | 75,472 | 74,078 | (52,086 | ) | (16,127 | ) | 23,386 | 52,241 | ||||||
| Cash flows from investing activities | (13,013 | ) | (56,158 | ) | (94,445 | ) | (69,172 | ) | (107,458 | ) | (119,620 | ) | ||
| Cash flows from financing activities | 159,823 | (11,053 | ) | 247,362 | 33,895 | 407,185 | 22,842 | |||||||
| (i) | Osisko Gold Royalties Ltd and its subsidiaries, excluding Osisko Development Corp. and its subsidiaries. Represents the royalty, stream and other interests segment. |
| (ii) | Osisko Development Corp. and its subsidiaries. Represents the exploration, evaluation and development of mining projects segment. |
| (iii) | Cash margin is a non-IFRS financial performance measure for the royalties and streams segment which has no standard definition under IFRS. It is calculated by deducting the cost of sales (excluding depletion) from the revenues. Please refer to the Non-IFRS Financial Performance Measures section of the MD&A for the three and six months ended June 30, 2022 or the Notes section at the end of this press release. |
| (iv) | Adjusted earnings (loss) and adjusted earnings (loss) per basic share are non-IFRS financial performance measures which have no standard definition under IFRS. Refer to the non-IFRS measures provided under the Non-IFRS Financial Performance Measures section of the Corporation’s MD&A for the three and six months ended June 30, 2022 or the Notes section at the end of this press release. |
| (v) | Consolidated results are net of the intersegment transactions. Refer to the Segment Disclosure section of the Corporation’s MD&A for the three and six months ended June 30, 2022. |
Other Highlights
- Publication of the inaugural Asset Handbook and the second edition of the environmental, social and governance (“ESG”) report, Growing Responsibly;
- Repayment in full of the outstanding revolving credit facility for $113.1 million;
- Osisko Development completed the acquisition of Tintic Consolidated Metals LLC (“TCM”) and related financings, which resulted in the Corporation’s equity ownership in Osisko Development reducing from 70.1% to 44.1%;
- Osisko Bermuda Limited (“OBL”) entered into a binding agreement with TCM with respect to the previously announced metals stream (the “Tintic Stream”) on the Trixie test mine (the “Trixie Mine”), as well as mineral claims covering more than 17,000 acres in Central Utah’s historic Tintic Mining District (the “Tintic Property”), for US$20.0 million in exchange for 2.5% of all metals produced and a transfer price of 25% of the spot prices;
- Quarterly dividend of $0.055 per common share paid on July 15, 2022 to shareholders of record as of the close of business on June 30, 2022;
- In July 2022, the Corporation purchased for cancellation a total of 659,520 common shares for $8.3 million (average acquisition price per share of $12.65) under its 2022 NCIB program; and
- Declaration of a quarterly dividend of $0.055 per common share payable on October 14, 2022 to shareholders of record as of the close of business on September 30, 2022.
Q2 2022 Results Conference Call Details
| Conference Call: | Wednesday, August 10th, 2022 at 10:00 am ET |
| Dial-in Numbers: | North American Toll-Free: 1 (888) 396 8049 Local and International: 1 (416) 764 8646 Conference ID: 28077702 |
| Replay (available until August 17th at 11:59 pm ET): | North American Toll-Free: 1 (877) 674 7070 Local and International: 1 (416) 764 8692 Playback passcode: 077702# |
| Replay also available on our website at www.osiskogr.com |
Qualified Person
The scientific and technical content of this news release has been reviewed and approved by Guy Desharnais, Ph.D., P.Geo., Vice President, Project Evaluation at Osisko Gold Royalties Ltd, who is a “qualified person” as defined by National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”).
About Osisko Gold Royalties Ltd
Osisko Gold Royalties Ltd is an intermediate precious metal royalty company which holds a North American focused portfolio of over 165 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’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:
Heather Taylor
Vice President, Investor Relations
Tel. (514) 940-0670 x105
htaylor@osiskogr.com
Notes:
(1) Gold Equivalent Ounces
GEOs are calculated on a quarterly basis and include royalties, streams and offtakes. Silver earned from royalty and stream agreements are converted to gold equivalent ounces by multiplying the silver ounces earned by the average silver price for the period and dividing by the average gold price for the period. Diamonds, other metals and cash royalties are converted into gold equivalent ounces by dividing the associated revenue earned by the average gold price for the period. Offtake agreements are converted using the financial settlement equivalent divided by the average gold price for the period.
Average Metal Prices and Exchange Rate
| Three months ended June 30, | Six months ended June 30, | ||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||
| Gold(i) | $ | 1,871 | $ | 1,816 | $ | 1,874 | $ | 1,805 | |
| Silver(ii) | $ | 23 | $ | 27 | $ | 23 | $ | 26 | |
| Exchange rate (US$/Can$)(iii) | 1.2768 | 1.2282 | 1.2715 | 1.2471 | |||||
| (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 royalties and streams segment refers to the royalty, stream and other interests segment, which corresponds to the activities of Osisko Gold Royalties Ltd and its subsidiaries, excluding Osisko Development Corp. and its subsidiaries.
(3) The mining exploration and development segment refers to the mining exploration, evaluation and development segment, which corresponds to the activities of Osisko Development Corp. and its subsidiaries.
(4) Non-IFRS Measures
The Corporation has included certain performance measures in this press release that do not have any standardized meaning prescribed by International Financial Reporting Standards (IFRS) including (i) cash margin (in dollars and in percentage) for the royalties and streams segment, (ii) adjusted earnings (loss) and (iii) adjusted earnings (loss) per share. The presentation of these non-IFRS measures 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. These measures are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. As Osisko’s operations are primarily focused on precious metals, the Corporation presents cash margins and adjusted earnings as it believes that certain investors use this information, together with measures determined in accordance with IFRS, to evaluate the Corporation’s performance in comparison to other companies in the precious metals mining industry who present results on a similar basis. However, other companies may calculate these non-IFRS measures differently.
Cash Margin (in dollars and in percentage of revenues)
Cash margin (in dollars) represents revenues from the royalties and streams segment less cost of sales (excluding depletion). Cash margin (in percentage of revenues) represents the cash margin (in dollars) divided by revenues from the royalties and streams segment.
| Three months ended June 30, | Six months ended June, | ||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||
| $ | $ | $ | $ | ||||||||
| Royalty and stream interests | |||||||||||
| Total Revenues | 63,959 | 57,941 | 123,357 | 124,864 | |||||||
| Less: Revenues from mining activities (Osisko Development) | (12,414 | ) | (695 | ) | (21,123 | ) | (695 | ) | |||
| Less: Revenues from offtake interests | - | (7,339 | ) | - | (25,265 | ) | |||||
| Revenues from royalty and stream interests | 51,545 | 49,907 | 102,234 | 98,904 | |||||||
| Total Cost of sales | (15,318 | ) | (10,791 | ) | (26,480 | ) | (31,188 | ) | |||
| Less: Cost of sales from mining activities (Osisko Development) | 11,562 | 695 | 19,543 | 695 | |||||||
| Less: Cost of sales from offtake interests | - | 7,104 | - | 24,343 | |||||||
| Cost of sales of royalty and stream interests | (3,756 | ) | (2,992 | ) | (6,937 | ) | (6,150 | ) | |||
| Revenues from royalty and stream interests | 51,545 | 49,907 | 102,234 | 98,904 | |||||||
| Less: Cost of sales of royalty and stream interests | (3,756 | ) | (2,992 | ) | (6,937 | ) | (6,150 | ) | |||
| Cash margin (in dollars) - royalty and stream interests | 47,789 | 46,915 | 95,297 | 92,754 | |||||||
| Cash margin (in percentage of revenues) - royalty and stream interests | 93 | % | 94 | % | 93 | % | 94 | % | |||
| Offtake interests | |||||||||||
| Revenues from offtake interests | - | 7,339 | - | 25,265 | |||||||
| Less: Cost of sales of offtake interests | - | (7,104 | ) | - | (24,343 | ) | |||||
| Cash margin (in dollars) | - | 235 | - | 922 | |||||||
| Cash margin (in percentage of revenues) | - | 3 | % | - | 4 | % | |||||
Adjusted earnings (loss) and adjusted earnings (loss) per basic share
Adjusted earnings (loss) is defined as: net earnings (loss) adjusted for certain items: foreign exchange gain (loss), impairment of assets (including impairment on financial assets and investments in associates), gains (losses) on disposal of exploration and evaluation assets, unrealized gain (loss) on investments, share of loss of associates, deferred premium income on flow-through shares, deferred income tax expense (recovery), transaction costs and other items such as non-cash gains (losses).
Adjusted earnings (loss) per basic share is obtained from the adjusted earnings (loss) divided by the weighted average number of common shares outstanding for the period.
| For the three months ended June 30, | ||||||||||||||
| 2022 | 2021 | |||||||||||||
| Osisko Gold Royalties (i) | Osisko Development (ii) | Consolidated | Osisko Gold Royalties (i) | Osisko Development (ii) | Consolidated | |||||||||
| (in thousands of dollars, except per share amounts) | $ | $ | $ | $ | $ | $ | ||||||||
| Net earnings (loss) | 18,059 | (1,487 | ) | 16,572 | 16,341 | (41,404 | ) | (25,063 | ) | |||||
| Adjustments: | ||||||||||||||
| Impairment of assets | 384 | - | 384 | - | 40,479 | 40,479 | ||||||||
| Foreign exchange (gain) loss | (7,593 | ) | (1,563 | ) | (9,156 | ) | (169 | ) | 791 | 622 | ||||
| Unrealized loss (gain) on investments | 5,574 | (11,697 | ) | (6,123 | ) | 1,553 | 13 | 1,566 | ||||||
| Variation of fair value of derivative instruments | - | (19,381 | ) | (19,381 | ) | - | - | - | ||||||
| Share of loss of associates | 1,078 | 141 | 1,219 | 1,111 | 750 | 1,861 | ||||||||
| Deferred premium income on flow-through shares | - | (573 | ) | (573 | ) | - | (2,798 | ) | (2,798 | ) | ||||
| Transaction cost – Tintic | - | 2,664 | 2,664 | |||||||||||
| Deferred income tax expense (recovery) | 8,214 | 1,521 | 9,735 | 5,041 | (1,558 | ) | 3,483 | |||||||
| Adjusted earnings (loss) | 25,716 | (30,375 | ) | (4,659 | ) | 23,877 | (3,727 | ) | 20,150 | |||||
| Weighted average number of common shares outstanding (000’s) | 185,316 | 185,316 | 185,316 | 167,895 | 167,895 | 167,895 | ||||||||
| Adjusted earnings (loss) per basic share | 0.14 | (0.16 | ) | (0.03 | ) | 0.14 | (0.02 | ) | 0.12 | |||||
| For the six months ended June 30, | ||||||||||||||
| 2022 | 2021 | |||||||||||||
| Osisko Gold Royalties (i) | Osisko Development (ii) | Consolidated | Osisko Gold Royalties (i) | Osisko Development (ii) | Consolidated | |||||||||
| (in thousands of dollars, except per share amounts) | $ | $ | $ | $ | $ | $ | ||||||||
| Net earnings (loss) | 34,863 | (23,820 | ) | 11,043 | 29,805 | (45,105 | ) | (15,300 | ) | |||||
| Adjustments: | ||||||||||||||
| Impairment of assets | 904 | - | 904 | 4,400 | 40,479 | 44,879 | ||||||||
| Foreign exchange loss (gain) | (8,469 | ) | (2,087 | ) | (10,556 | ) | (140 | ) | 1,535 | 1,395 | ||||
| Unrealized (gain) loss on investments | 11,414 | (11,469 | ) | (55 | ) | 2,942 | (1,297 | ) | 1,645 | |||||
| Variation of fair value of derivative instruments | - | (19,381 | ) | (19,381 | ) | - | - | - | ||||||
| Share of (earnings) loss of associates | (1,526 | ) | 472 | (1,054 | ) | 736 | 1,157 | 1,893 | ||||||
| Deferred premium income on flow-through shares | - | (914 | ) | (914 | ) | - | (3,267 | ) | (3,267 | ) | ||||
| Transaction cost – Tintic | - | 4,727 | 4,727 | |||||||||||
| Deferred income tax expense (recovery) | 13,373 | 1,490 | 14,863 | 9,573 | (2,740 | ) | 6,833 | |||||||
| Adjusted earnings (loss) | 50,559 | (50,982 | ) | (423 | ) | 47,316 | (9,238 | ) | 38,078 | |||||
| Weighted average number of common shares outstanding (000’s) | 176,182 | 176,182 | 176,182 | 167,696 | 167,696 | 167,696 | ||||||||
| Adjusted earnings (loss) per basic share | 0.29 | (0.29 | ) | 0.00 | 0.28 | (0.06 | ) | 0.23 | ||||||
(i) Osisko Gold Royalties Ltd and its subsidiaries, excluding Osisko Development Corp. and its subsidiaries. Represents the royalty, stream and other interests segment.
(ii) Osisko Development Corp. and its subsidiaries. Represents the mining exploration, evaluation and development segment.
Forward-looking Statements
Certain statements contained in this press release may be deemed "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and “forward-looking information” within the meaning of applicable Canadian securities legislation. All statements in this press release, forward-looking statements are statements other than statements of historical fact, that address, without limitation, future events, production estimates of Osisko’s assets (including increase of production), timely developments of mining properties over which Osisko has royalties, streams, offtakes and investments, management’s expectations regarding Osisko’s growth, results of operations, estimated future revenues, production costs, carrying value of assets, ability to continue to pay dividend, requirements for additional capital, business prospects and opportunities future demand for and fluctuation of prices of commodities (including outlook on gold, silver, diamonds, other commodities) currency markets and general market conditions. In addition, statements and estimates (including data in tables) relating to mineral reserves and resources and gold equivalent ounces are forward-looking statements, as they involve implied assessment, based on certain estimates and assumptions, and no assurance can be given that the estimates will be realized. 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 variations (including negative variations), or that events or conditions "will", "would", "may", "could" or "should" occur. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors, most of which are beyond the control of Osisko, and actual results may accordingly differ materially from those in forward-looking statements. Such risk factors include, without limitation: fluctuations in the prices of the commodities that drive royalties, streams, offtakes and investments held by Osisko; fluctuations in the value of the Canadian dollar relative to the U.S. dollar; regulatory changes by national and local governments, including permitting and licensing regimes and taxation policies; regulations and political or economic developments in any of the countries where properties in which Osisko holds a royalty, stream or other interest are located or through which they are held; risks related to the operators of the properties in which Osisko holds a royalty, stream or other interests; timely development, permitting, construction, commencement of production, ramp-up (including operating and technical challenges) on any of the properties in which Osisko holds a royalty, stream or other interest; rate and timing of production differences from resource estimates or production forecasts by operators of properties in which Osisko holds a royalty, stream or other interest; the unfavorable outcome of any challenges or litigation relating title, permit or license with respect to any of the properties in which Osisko holds a royalty, stream or other interests or to Osisko’s right thereon; differences in rate and timing of production from resource estimates or production forecasts by operators of properties in which Osisko holds a royalty, stream or other interest, including conversion from resources to reserves and ability to replace resources; business opportunities that become available to, or are pursued by Osisko; continued availability of capital and financing and general economic, market or business conditions; risks and hazards associated with the business of exploring, development and mining on any of the properties in which Osisko holds a royalty, stream or other interest, including, but not limited to unusual or unexpected geological and metallurgical conditions, slope failures or cave-ins, flooding and other natural disasters or civil unrest or other uninsured risks, the integration of acquired assets and the responses of relevant governments to the COVID-19 outbreak and the effectiveness of such response and the potential impact of COVID-19 on Osisko’s business, operations and financial condition. 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 and with public disclosure (including forecast of production); the accuracy of public statements and disclosures made by the owners or operators of such underlying properties (including expectations for the development of underlying properties that are not yet in production); no adverse development in respect of any significant property in which Osisko holds a royalty, stream or other interest; that statements and estimates relating to mineral reserves and resources by owners and operators of the properties in which Osisko holds a royalty, stream or other interest are accurate; the Corporation’s ongoing income and assets relating to determination of its PFIC status; integration of acquired assets; and the absence of any other factors that could cause actions, events or results to differ from those anticipated, estimated or intended.
For additional information on risks, uncertainties and assumptions, please refer to the most recent Annual Information Form of Osisko filed on SEDAR at www.sedar.com and EDGAR at www.sec.gov which also provides additional general assumptions in connection with these statements. Osisko cautions that the foregoing list of risk and uncertainties is not exhaustive. Investors and others should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. Osisko believes that the assumptions reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be accurate as actual results and prospective events could materially differ from those anticipated such the forward looking statements and such forward-looking statements included in this press release are not guarantee of future performance and should not be unduly relied upon. These statements speak only as of the date of this press release. Osisko undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by applicable law.
Osisko Gold Royalties Ltd
Consolidated Balance Sheets
(tabular amounts expressed in thousands of Canadian dollars)
| June 30, | December 31, | ||||
| 2022 | 2021 | ||||
| $ | $ | ||||
| Assets | |||||
| Current assets | |||||
| Cash | 449,283 | 115,698 | |||
| Amounts receivable | 27,736 | 14,691 | |||
| Inventories | 26,361 | 18,596 | |||
| Other assets | 6,698 | 3,941 | |||
| 510,078 | 152,926 | ||||
| Non-current assets | |||||
| Investments in associates | 126,523 | 125,354 | |||
| Other investments | 113,302 | 169,010 | |||
| Royalty, stream and other interests | 1,148,482 | 1,154,801 | |||
| Mining interests and plant and equipment | 836,706 | 635,655 | |||
| Exploration and evaluation | 42,758 | 3,635 | |||
| Goodwill | 111,204 | 111,204 | |||
| Other assets | 34,381 | 18,037 | |||
| 2,923,434 | 2,370,622 | ||||
| Liabilities | |||||
| Current liabilities | |||||
| Accounts payable and accrued liabilities | 33,341 | 30,049 | |||
| Dividends payable | 10,177 | 9,157 | |||
| Provisions and other liabilities | 12,663 | 12,179 | |||
| Current portion of long-term debt | 300,600 | 294,891 | |||
| 356,781 | 346,276 | ||||
| Non-current liabilities | |||||
| Provisions and other liabilities | 89,855 | 60,334 | |||
| Long-term debt | 4,636 | 115,544 | |||
| Deferred income taxes | 96,417 | 68,407 | |||
| 547,689 | 590,561 | ||||
| Equity | |||||
| Share capital | 2,085,642 | 1,783,689 | |||
| Warrants | - | 18,072 | |||
| Contributed surplus | 59,383 | 42,525 | |||
| Equity component of convertible debentures | 14,510 | 14,510 | |||
| Accumulated other comprehensive income | 28,010 | 58,851 | |||
| Deficit | (305,499 | ) | (283,042 | ) | |
| Equity attributable to Osisko Gold Royalties Ltd’s shareholders | 1,882,046 | 1,634,605 | |||
| Non-controlling interests | 493,699 | 145,456 | |||
| Total equity | 2,375,745 | 1,780,061 | |||
| 2,923,434 | 2,370,622 | ||||
Osisko Gold Royalties Ltd
Consolidated Statements of Income (Loss)
For the three and six months June 30, 2022 and 2021
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)
| Three months ended June 30, | Six months ended June 30, | ||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||
| $ | $ | $ | $ | ||||||||
| Revenues | 63,959 | 57,941 | 123,357 | 124,864 | |||||||
| Cost of sales | (15,318 | ) | (10,791 | ) | (26,480 | ) | (31,188 | ) | |||
| Depletion and amortization | (12,050 | ) | (11,437 | ) | (24,076 | ) | (23,364 | ) | |||
| Gross profit | 36,591 | 35,713 | 72,801 | 70,312 | |||||||
| Other operating expenses | |||||||||||
| General and administrative | (14,875 | ) | (9,171 | ) | (27,519 | ) | (19,077 | ) | |||
| Business development | (1,260 | ) | (1,118 | ) | (2,681 | ) | (2,105 | ) | |||
| Exploration and evaluation | (144 | ) | (843 | ) | (264 | ) | (1,180 | ) | |||
| Mining operating expenses | (20,602 | ) | - | (35,848 | ) | - | |||||
| Impairments - royalty, stream and other interests | - | - | - | (2,288 | ) | ||||||
| Impairments - mining exploration, evaluation and development | - | (40,479 | ) | - | (40,479 | ) | |||||
| Operating (loss) income | (290 | ) | (15,898 | ) | 6,489 | 5,183 | |||||
| Interest income | 2,292 | 1,348 | 3,483 | 2,658 | |||||||
| Finance costs | (7,310 | ) | (5,884 | ) | (13,683 | ) | (12,027 | ) | |||
| Foreign exchange gain (loss) | 9,405 | (406 | ) | 10,592 | (1,535 | ) | |||||
| Share of (loss) income of associates | (1,219 | ) | (1,861 | ) | 1,054 | (1,893 | ) | ||||
| Other gains (losses), net | 23,884 | 1,629 | 18,660 | (281 | ) | ||||||
| Earnings (loss) before income taxes | 26,762 | (21,072 | ) | 26,595 | (7,895 | ) | |||||
| Income tax expense | (10,190 | ) | (3,991 | ) | (15,552 | ) | (7,405 | ) | |||
| Net earnings (loss) | 16,572 | (25,063 | ) | 11,043 | (15,300 | ) | |||||
| Net earnings (loss) attributable to: | |||||||||||
| Osisko Gold Royalties Ltd’s shareholders | 17,159 | (14,759 | ) | 17,485 | (4,165 | ) | |||||
| Non-controlling interests | (587 | ) | (10,304 | ) | (6,442 | ) | (11,135 | ) | |||
| Net earnings (loss) per share | |||||||||||
| Basic and diluted | 0.09 | (0.09 | ) | 0.10 | (0.02 | ) | |||||
Osisko Gold Royalties Ltd
Consolidated Statements of Cash Flows
For the three and six months ended June 30, 2022 and 2021
(tabular amounts expressed in thousands of Canadian dollars)
| Three months ended June 30, | Six months ended June 30, | ||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||
| $ | $ | $ | $ | ||||||||
| Operating activities | |||||||||||
| Net earnings (loss) | 16,572 | (25,063 | ) | 11,043 | (15,300 | ) | |||||
| Adjustments for: | |||||||||||
| Share-based compensation | 2,525 | 2,090 | 6,156 | 5,390 | |||||||
| Depletion and amortization | 15,983 | 11,794 | 31,000 | 24,055 | |||||||
| Impairment of assets | 384 | 40,479 | 904 | 44,879 | |||||||
| Finance costs | 2,570 | 1,716 | 4,715 | 3,555 | |||||||
| Share of loss of associates | 1,219 | 1,861 | (1,054 | ) | 1,893 | ||||||
| Net gain on acquisition of investments | - | (211 | ) | (48 | ) | (649 | ) | ||||
| Change in fair value of financial assets and liabilities at fair value through profit and loss | (12,106 | ) | 1,777 | (3,930 | ) | 3,685 | |||||
| Net gain on dilution of investments | (1,544 | ) | - | (3,604 | ) | (1,391 | ) | ||||
| Gain in deemed disposal of associate | (11,854 | ) | - | (11,854 | ) | - | |||||
| Foreign exchange (gain) loss | (9,156 | ) | 622 | (10,556 | ) | 1,395 | |||||
| Flow-through shares premium income | (573 | ) | (2,798 | ) | (914 | ) | (3,268 | ) | |||
| Deferred income tax expense | 9,735 | 3,483 | 14,863 | 6,833 | |||||||
| Other | 2,202 | (432 | ) | 1,859 | 493 | ||||||
| Net cash flows provided by operating activities before changes in non-cash working capital items | 15,957 | 35,318 | 38,580 | 71,570 | |||||||
| Changes in non-cash working capital items | (16,181 | ) | (4,401 | ) | (15,194 | ) | (19,329 | ) | |||
| Net cash flows (used in) provided by operating activities | (224 | ) | 30,917 | 23,386 | 52,241 | ||||||
| Investing activities | |||||||||||
| Acquisition of Tintic, net of cash acquired | (62,189 | ) | - | (62,189 | ) | - | |||||
| Acquisition of investments | (384 | ) | (4,026 | ) | (11,118 | ) | (13,837 | ) | |||
| Proceeds on disposal of investments | 3,186 | 8,338 | 24,241 | 28,109 | |||||||
| Acquisition of royalty and stream interests | - | (39,085 | ) | (9,290 | ) | (42,877 | ) | ||||
| Mining assets and plant and equipment | (20,973 | ) | (53,839 | ) | (34,007 | ) | (89,651 | ) | |||
| Exploration and evaluation expenses, net | (681 | ) | (1,028 | ) | (686 | ) | (1,163 | ) | |||
| Reclamation deposits, net | (13,371 | ) | - | (13,371 | ) | - | |||||
| Other | (774 | ) | (201 | ) | (1,038 | ) | (201 | ) | |||
| Net cash flows used in investing activities | (95,186 | ) | (89,841 | ) | (107,458 | ) | (119,620 | ) | |||
| Financing activities | |||||||||||
| Bought deal equity financing | - | - | 311,962 | - | |||||||
| Share issue costs | (1,125 | ) | - | (13,941 | ) | - | |||||
| Increase in long-term debt | 3,666 | - | 7,536 | 50,000 | |||||||
| Repayment of long-term debt | (115,095 | ) | - | (115,700 | ) | (50,000 | ) | ||||
| Investments from minority shareholders | 213,153 | - | 255,543 | 38,841 | |||||||
| Share issue expenses from investments from minority shareholders | (5,108 | ) | - | (7,238 | ) | (2,581 | ) | ||||
| Exercise of share options and shares issued under the share purchase plan | 312 | 8,129 | 934 | 13,107 | |||||||
| Normal course issuer bid purchase of common shares | - | - | (4,879 | ) | (4,464 | ) | |||||
| Dividends paid | (9,755 | ) | (7,914 | ) | (18,478 | ) | (15,696 | ) | |||
| Capital payments on lease liabilities | (1,060 | ) | (1,928 | ) | (6,332 | ) | (2,780 | ) | |||
| Withholding taxes on settlement of restricted and deferred share units | (1,800 | ) | (3,544 | ) | (2,224 | ) | (3,582 | ) | |||
| Other | 1,332 | (3 | ) | 2 | (3 | ) | |||||
| Net cash flows provided by (used in) financing activities | 84,520 | (5,260 | ) | 407,185 | 22,842 | ||||||
| (Decrease) increase in cash before effects of exchange rate changes on cash | (10,890 | ) | (64,184 | ) | 323,113 | (44,537 | ) | ||||
| Effects of exchange rate changes on cash | 10,723 | (1,483 | ) | 10,472 | (3,024 | ) | |||||
| (Decrease) increase in cash | (167 | ) | (65,667 | ) | 333,585 | (47,561 | ) | ||||
| Cash – beginning of period | 449,450 | 320,630 | 115,698 | 302,524 | |||||||
| Cash – end of period | 449,283 | 254,963 | 449,283 | 254,963 | |||||||