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Osisko Mining
Corporation (the "Company" or "Osisko")
(TSX:OSK)(FRANKFURT:EWX) is pleased to report its review of activities and
financial results for the quarter ended September 30, 2011.
Third Quarter Highlights
-- Gold production of 73,814 ounces (YTD 120,419 ounces including pre- production period) -- Earnings from mine operations of $38.3 million (YTD $39.9 million) -- Net profit of $9.3 million -- Cash flow generated from operating activities of $49.5 million -- Commencement of construction of $32 million pre-crush circuit (currently 30 percent complete) -- Grade reconciliation to the resource block model is currently plus 3 percent.
Sean Roosen,
President and Chief Executive Officer, commenting on the third quarter
results: "We are pleased with our financial results as we continue
through the ramp up process at the Canadian Malartic
Mine. We realized an average price of US$1,695 per ounce of gold sold in the
past quarter, a cash margin of US$756 per ounce over our Q3 cash cost per
ounce. Our operating performance continues to improve and with the completion
of the pre-crushing circuit in the first quarter of 2012, we will be able to
capture increasingly significant cash margins and generate solid cash flows
in this strong gold market. Our flagship Canadian Malartic
Mine will provide us with a strong financial base for our future growth as we
seek opportunities to enhance shareholder value."
Since commencement of commercial production on May 19, 2011 the mine has
generated a cumulative profit of $39.9 million. The monthly financial
performance continues to improve reflecting the normal modifications made
during a ramp up period.
The quarterly profit amounted to $9.3 million ($0.02 per share) compared to a
loss of $10.2 million ($0.03 per share) in the corresponding period in 2010.
The third quarter results include $13.2 million of non-cash items, including
a write-off of $4.9 million on the Goldboro project
and three other grassroots projects, stock option expense of $2.3 million,
non-cash foreign exchange loss of $4.3 million and unrealized loss on
investments of $4.0 million, partially offset by a gain on premium of
flow-through shares in the amount of $2.3 million. The exclusion of these
non-cash charges would result in an adjusted profit of $22.5 million ($0.06
per share) for the quarter. There were no mining operations prior to May
2011.
For the year-to-date, the loss totaled $19.8 million ($0.05 per share)
compared to a loss of $20.9 million ($0.06 per share) in the corresponding
period in 2010. The exclusion of non-cash items of $31.1 million (write-off
of property, plant and equipment of $16.3 million, stock option expense of
$7.8 million, non-cash foreign exchange loss of $2.8 million and unrealized
loss on investments of $8.5 million, partially offset by a gain on premium of
flow-through shares in the amount of $4.3 million) would result in an
adjusted profit of $11.3 million ($0.03 per share) for the year-to-date.
Canadian Malartic Mine
The Canadian Malartic Mine produced 73,814 ounces
of gold in the third quarter from the treatment of 3.0 million tonnes of ore. Production statistics since commercial
production are as follows:
--------------------------------------------------------------------------- Q2 2011 (43 Q3 2011 days) Total --------------------------------------------- Ore Tonnes Mined (t) 3,004,468 829,419 3,833,887 Tonnes Milled (t) 3,086,324 1,470,783 4,557,107 Grade (g/t Au) 0.85 0.65 0.79 Recovery Au (%) 87.0 88.0 87.3 Gold Ounces Produced (oz) 73,814 27,100 100,914 Grade (g/t Ag) 0.73 0.58 0.68 Recovery Ag (%) 56.7 60.3 57.7 Silver Ounces Produced (oz) 40,751 16,432 57,183 Cash Cost per Ounce ($) 918 1,094 965 Cash Cost per Ounce (US$) 939 1,120 987 ---------------------------------------------------------------------------
While costs have decreased $176
per ounce from the previous quarter, the presently high production costs are
attributable to normal inefficiencies experienced in the ramp up of a new
mine as well as the current lower than design throughput. The previously
announced construction of a pre-crushing plant is expected to resolve this
operating condition and operating costs are anticipated to be significantly
reduced as throughput increases by approximately 50% to reach the design
capacity of 55,000 tonnes per day. To date, $11.1
million has been spent on the total direct project cost of $32.0 million.
The mine generated an operating profit of $38.3 million from the sale of
72,100 ounces of gold at a realized price of US$1,695 per ounce ($1,681 per
ounce) compared to an average market price of US$1,702; and 49,800 ounces of
silver at a realized price of US$34 per ounce ($34 per ounce) compared to an
average market price of US$39 per ounce. The remaining ounces are categorized
in inventory.
The mine operating statement for the production period is as follows:
--------------------------------------------------------------------------- Q3 2011 YTD 2011(1) ($000) ($000) ------------------------------ Gold sales (ounces) 72,100 80,400 Silver sales (ounces) 49,800 49,800 ------------------------------ Revenues 122,879 135,308 Operating Costs 66,913 93,773 Stockpile Costs 997 3,403 ------------------------------ Total 67,910 97,176 Royalties and Refining 1,927 2,537 Depreciation 12,488 17,448 ------------------------------ Total Production Costs 82,325 117,161 Inventory variation 2,262 (21,779) ------------------------------ Total Costs 84,587 95,382 Net Mining Profit 38,292 39,926 --------------------------------------------------------------------------- --------------------------------------------------------------------------- YTD 2011 represents the period since commercial production (starting May 1.19, 2011)
Mining activities were affected by
the noise levels of mining operations due to the necessity of having
additional smaller mobile mining units working on the pre-strip (which is
approaching completion) and availability of loading units (since rectified).
Open pit operations mined on average 130,000 tonnes
per day during the third quarter (stripping, ore and waste) and throughput to
the mill averaged 36,742 tonnes per operating day,
67% of design capacity on a per operating day basis. Daily mill throughput in
the quarter was affected by two planned shut-downs for liner
changes/modifications in the SAG mill.
Tonnes milled during the quarter were 3,086,324 at
an average grade of 0.85 g/t, with recovery of 87 percent for a gold output
of 73,814 ounces. Grade reconciliation to the resource block model is
currently plus 3 percent.
The operating statistics are as follows:
---------------------------------------------------------------------------- Tonnes/ Total per Available Operating Tonnage Tonnes/ Operating Hours Hours % (t) Hour Day ---------------------------------------------------------- Q2 2,184 1,793 82 2,481,196 1,384 29,894 Q3 2,208 1,890 86 3,086,324 1,633 36,742 ---------------------------------------------------------------------------- (i) In Q3 8 days of shutdown were required for SAG mill liner change and maintenance and in Q2 8 days of shutdown were required for ramp-up testing and adjustments.
A new daily throughput record of
50,159 tonnes processed was established on August
15, 2011.
Mining in higher grade areas will continue to progress in the fourth quarter
of 2011 and the first quarter of 2012 as pre-strip operations open up these
areas to pit development. Crushing and grinding optimisation
work continues. Osisko has completed engineering
work and is in the process of construction of the pre-crush circuit in
preparation for the anticipated ramp up from 55,000 to 60,000 tonnes per day.
The Company has re-purchased a 1% royalty interest from Geoconseils
Jack Stoch Limitee in
consideration for the issuance of 460,000 common shares of Osisko. This royalty was encumbering a portion of the
Canadian Malartic and Barnat
deposits and is part of a 2.5% Gross Metal Royalty interest that was granted
as a result of the acquisition of certain claims of the Canadian Malartic property in March 2006. Following this purchase,
only 60% of the recoverable gold ounces at the entire Canadian Malartic Mine are subject to a 1.5% Net Smelter or Gross
Metal Royalty, based on the most recently published reserve estimates.
Exploration and Development
A new resource estimate for Hammond Reef was released on November 7, 2011.
New drilling by Osisko and Brett Resources from
January 2010 to July 2011 (approximately 300,000 meters) has significantly
increased the size of the deposit. Global inferred resource now stands at
10.52 million ounces of gold (based on 0.30 g/t Au lower cut-off), and in-pit
inferred resource reaches 6.86 million ounces at a diluted grade of 0.63
grams per tonne gold, based on a Whittle-optimized
pit shell using a gold price of US$1,200 per ounce, a corresponding lower
cut-off grade of 0.28 grams per tonne gold and a
waste/ore strip ratio of 1.25.
Additional drilling subsequent to July 2011 is anticipated to allow for the
upgrade of the entire in-pit deposit to indicated category by the end of the
first quarter of 2012 and measured and indicated category by the end of the
second quarter 2012.
The Company continues to aggressively pursue growth of reserve and resource
base through intensive drilling programs around the Canadian Malartic Mine, at its Hammond Reef Project and on various
grassroots projects in Eastern Canada. A total of 86,141 metres
(318 holes) were drilled during the third quarter, mostly from the definition
drilling program at Hammond Reef.
During the third quarter, Osisko entered into a
binding agreement with Energia y Minerales Sociedad Del Estado,
the La Rioja state mining corporation in Argentina, regarding the development
of the Famatina gold project.
The Company decided during the third quarter to terminate its option to
acquire an interest in the Goldboro Gold Property
of Orex Exploration. As a result, a write-off of
$3.3 million was recorded in the third quarter. The Company also abandoned
other grassroots projects for a total of $1.6 million.
Summary from the Company's financial position and results are as follows:
(in millions of dollars)
--------------------------------------------------------------------------- September 30, December 31, 2011 2010(1) --------------------------------------------------------------------------- Cash Position((2)) 173.5 397.9 Working Capital 103.3 282.9 Total Assets 2,000.8 1,958.9 Total Debt 306.8 287.9 Shareholders' Equity 1,610.7 1,594.0 --------------------------------------------------------------------------- --------------------------------------------------------------------------- Q3 2011 Q3 2010 --------------------------------------------------------------------------- Net earnings (loss) 9.3 (19.8) Cash flow from operations 49.5 (18.5) --------------------------------------------------------------------------- ((1))Revised under IFRS ((2))Includes Cash and Cash equivalents, Short-term investments and Restricted cash.
The unaudited condensed interim
consolidated financial statements and Management Discussion and Analysis for
the period ended September 30, 2011 will be filed on SEDAR on November 14,
2011.
Non-IFRS Financial Performance Measures
The Company has included certain non-IFRS measures including "cash cost
per ounce", "adjusted profit" and "cash margin per
ounce" to supplement its financial statements, which are presented in
accordance with International Financial Reporting Standards ("IFRS").
Refer to the Company's third quarter 2011 Management Discussion and Analysis.
Third Quarter 2011 Results Conference Call
Osisko will host a conference call on Monday,
November 14 at 11:00 AM ET, where senior management will discuss the
financial results and provide an update of the Company's activities. Those
interested in participating in the conference call should dial in at
416-981-9000 (Toronto local and international), or 1-800-773-0519 (North
American toll free). An operator will direct participants to the call. The
call will be retransmitted for 14 days with the following dial in number:
416-626-4100 or Toll-free 1-800-558-5253, access code 21545826.
About Osisko Mining Corporation
Osisko Mining Corporation operates the Canadian Malartic Gold Mine in Malartic,
Quebec and is pursuing exploration on a number of properties, including the
Hammond Reef Gold Project in Northern Ontario.
Mr. Luc Lessard, P. Eng., Senior Vice-President and
COO 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.
Osisko Mining Corporation Consolidated Balance Sheets (Unaudited) (tabular amounts expressed in thousands of Canadian dollars) September 30, December 31, 2011 2010 ------------------------------ $ $ Assets Current assets Cash and cash equivalents 152,759 358,493 Short-term investments - 17,068 Restricted cash 17,159 11,176 Accounts receivable 41,235 30,731 Mining taxes receivable - 2,058 Inventories 42,270 - Other current assets 7,572 7,329 ------------------------------ 260,995 426,855 Non-current assets Restricted cash 3,575 11,202 Investment in an associate 1,678 2,158 Other investments 19,259 40,851 Property, plant and equipment 1,715,269 1,477,818 ------------------------------ 2,000,776 1,958,884 ------------------------------ ------------------------------ Liabilities Current liabilities Accounts payable and accrued liabilities 76,592 73,519 Current portion of long-term debt 81,094 70,405 ------------------------------ 157,686 143,924 Non-current liabilities Long-term debt 225,690 217,481 Provisions 5,407 3,494 Deferred mining taxes 1,275 - ------------------------------ 390,058 364,899 ------------------------------ Equity attributable to Osisko Mining Corporation shareholders Share capital 1,650,751 1,606,051 Warrants 13,166 13,166 Contributed surplus 52,530 43,390 Equity component of convertible debenture 8,005 8,005 Accumulated other comprehensive income (loss) (6,283) 11,019 Deficit (107,451) (87,646) ------------------------------ 1,610,718 1,593,985 ------------------------------ 2,000,776 1,958,884 ------------------------------ ------------------------------ Osisko Mining Corporation Consolidated Statements of Income (Loss) For the three and nine months ended September 30, 2011 and 2010 (Unaudited) (tabular amounts expressed in thousands of Canadian dollars) Three months ended Nine months ended September 30, September 30, ---------------------------------------- 2011 2010 2011 2010 ---------------------------------------- $ $ $ $ Revenues 122,879 - 135,308 - Mine operating costs Production costs (74,647) - (84,045) - Royalties (1,192) - (1,351) - Depreciation and depletion (8,748) - (9,986) - ---------------------------------------- Earnings from mine operations 38,292 - 39,926 - General and administrative expenses (6,577) (10,464) (24,563) (20,455) Exploration and corporate development expenses (7,774) (972) (20,934) (1,543) Other gains (losses) - - (485) - ---------------------------------------- Earnings (loss) from operations 23,941 (11,436) (6,056) (21,998) Interest income 454 981 1,964 2,282 Finance costs (6,995) - (10,766) - Foreign exchange loss (4,331) (191) (2,817) (99) Share of loss of associate (29) (412) (480) (610) Other gains (losses) (1,758) 898 1,326 (468) ---------------------------------------- Earnings (loss) before income and mining taxes 11,282 (10,160) (16,829) (20,893) Income and mining tax expense (1,980) (5) (2,976) (11) ---------------------------------------- Earnings (loss) for the period 9,302 (10,165) (19,805) (20,904) ---------------------------------------- ---------------------------------------- Attributable to: Osisko Mining Corporation 9,302 (10,230) (19,805) (20,904) Non-controlling interests - 65 - - ---------------------------------------- 9,302 (10,165) (19,805) (20,904) ---------------------------------------- ---------------------------------------- Earnings (loss) per share Basic 0.02 (0.03) (0.05) (0.06) Diluted 0.02 (0.03) (0.05) (0.06) Osisko Mining Corporation Consolidated Statements of Cash Flows For the nine months ended September 30, 2011 and 2010 (Unaudited) (tabular amounts expressed in thousands of Canadian dollars) 2011 2010 ------------------------------ $ $ Operating activities Loss for the period (19,805) (20,904) Adjustments for: Interest income (1,964) (2,282) Share-based compensation 7,780 9,607 Depreciation 10,304 320 Finance costs 10,765 - Write-off of property, plant and equipment 16,276 - Unrealized foreign exchange loss (gain) 3,395 (1,084) Share of loss of associate 480 610 Gain on sale of available-for-sale financial assets (5,041) - Unrealized net loss on financial assets at fair value through profit and loss 8,515 468 Deferred gain - premium on flow-through shares (4,282) - Provisions 395 - Deferred income and mining tax expense 2,976 - Other non-cash gain (639) - ------------------------------ 29,155 (13,265) Change in non-cash working capital items 16,885 (11,988) ------------------------------ Net cash flows used in operating activities 46,040 (25,253) ------------------------------ Investing activities Net decrease in short-term investments 17,068 52,558 Net decrease in restricted cash 1,644 7,151 Decrease in cash collateral investments - 3,450 Acquisition of investments (12,283) (24,447) Proceeds on disposal of investments 12,038 3,891 Property, plant and equipment, net of government credits (297,254) (341,279) Acquisition of assets - 33,885 Interest received 2,169 2,139 ------------------------------ Net cash flows used in investing activities (276,618) (262,652) ------------------------------ Financing activities Debt issuance costs (635) - Finance lease payments (3,823) (9,641) Long-term debt repayments (2,083) - Issuance of common shares, net of issue expenses 38,776 19,733 Interest paid (7,391) ------------------------------ Net cash flows generated from financing activities 24,844 10,092 ------------------------------ Decrease in cash and cash equivalents (205,734) (277,813) Cash and cash equivalents - beginning of period 358,493 673,777 ------------------------------ Cash and cash equivalents - end of period 152,759 395,964 ------------------------------ ------------------------------
Cautionary
Notes Concerning Estimates of Mineral Resources
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