|
Osisko Mining Corporation (the "Company" or
"Osisko") (TSX:OSK)(FRANKFURT:EWX) is pleased to report that it has
generated a net profit of $26.2 million ($0.07 per share) during the third
quarter of 2012 versus a net profit of $9.3 million in the third quarter of
2011 ($0.02 per share). The higher profitability is attributable to continued
progress on the ramp up of the Canadian Malartic mine and improved margins.
Q3 Highlights
-- Gold production of 103,753 ounces, a new quarterly record; -- Operating cash flow of $55.4 million; -- Continued progress on plant ramp up and optimization with record tonnage mined and milled being achieved; and -- Cash costs per ounce of C$864.
Q4 Preview
-- Drilling program initiated in Mexico in late October; -- Record daily mill throughput of 58,476 tonnes achieved in the first week of November; and -- Announcement of the friendly acquisition of Queenston Mining Inc. in November.
Mine operating profits during the third quarter totaled
$60.1 million compared to $38.3 million in the corresponding period in 2011.
Record gold production of 103,753 ounces was achieved during the period. Gold
production continues to increase quarter-over-quarter with improvements in
the milling plant following the installation and commissioning of the two
secondary cone crushers, increased availability in the circuit and
optimization measures. The table below outlines the steady progress towards
achieving design mill throughput rates, rising availability and subsequent
increase of gold production.
------------------------------------------------------------ Tonnes per Availability Gold Production Operating Day (%) (oz) ------------------------------------------------ Q3 2012 43,181 94 103,753 Q2 2012 38,074 90 92,003 Q1 2012 35,728 87 91,178 Q4 2011 33,733 90 79,718 Q3 2011 36,742 86 73,814 Q2 2011 29,894 82 46,606 ------------------------------------------------------------
Sean Roosen, President and Chief Executive Officer of
Osisko, commenting on the third quarter results: "We continue to focus
on ramping up our operations at Canadian Malartic to the 55,000 tonnes per
day name plate capacity. We are making very good progress and are increasing
our gold output and improving our profit margins. Our cash unit cost
decreased by 15% during the period and we continue to benefit from robust
gold market".
During the first nine months of 2012, the Canadian Malartic mine generated a
net profit of $171.6 million and Osisko a net profit of $68.8 million ($0.18
per share). In 2011, the year-to-date mine operating profits amounted to
$39.9 million from commencement of commercial production on May 19, 2011, and
the Company incurred a net loss of $19.8 million ($0.05 per share). In
addition to the shorter operation period, the 2011 results were impacted by
exploration project write-offs and special incentive awards following the
completion of the Canadian Malartic Project.
Operating cash flow amounted to $55.4 million for the quarter and $189.8
million for year-to-date, compared to $49.5 million and $46.0 million in the
corresponding periods of 2011. Investments in mining assets totaled $189.5
million to date during 2012.
The mine operating statement for the production period is as follows:
---------------------------------------------------------------------------- Q3 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2011 ------------------------------------------------------------ Gold sales (ounces) 95,424 95,675 92,400 75,100 72,100 Silver sales (ounces) 49,751 48,880 52,800 42,100 49,800 ---------------------------------------------------------------------------- ($000) ($000) ($000) ($000) ($000) ------------------------------------------------------------ Revenues 158,503 157,134 158,658 128,100 122,879 ---------------------------------------------------------------------------- Production Costs (81,841) (98,837) (71,910) (74,841) (74,647) Royalties (1,998) (2,021) (2,359) (1,933) (1,192) Depreciation (14,605) (15,289) (13,877) (11,800) (8,748) ------------------------------------------------------------ Total (98,444) (116,147) (88,146) (88,574) (84,587) ------------------------------------------------------------ Net Mining Profit 60,059 40,987 70,512 39,526 38,292 ----------------------------------------------------------------------------
Improvements in unit cost in the quarter compared to the
second quarter include:
i. Increased throughput and mill efficiencies; ii. Lower contractors' costs; iii.Improved mining conditions (second quarter results were impacted by defective boosters in the blasting cycle); and iv. Elimination of inefficiencies caused by the May 9, 2012 mill fire;
Key operating results
(in thousands of Canadian dollars, unless otherwise noted)
---------------------------------------------------------------------------- Q3 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2011 -------------------------------------------------- Gold Production (oz) 103,753 92,003 91,178 79,718 73,814 Gold Sales (oz) 95,424 95,675 92,400 75,100 72,100 Average Sale Price (US$/oz) 1,659 1,605 1,698 1,655 1,695 Average Market Price (US$/oz) 1,652 1,609 1,691 1,688 1,702 Cash Costs per Ounce (C$/oz) 864 1,015 860 936 918 Cash Costs per Ounce (US$/oz) 867 1,004 858 914 939 Cash Margin per Ounce (US$/oz) 792 601 840 741 756 Revenues 158,503 157,134 158,658 128,100 122,879 Mine Operating Profit 60,059 40,987 70,512 39,526 38,292 Net Earnings 26,156 13,271 29,359 37,802 9,302 Net Earnings per Share 0.07 0.03 0.08 0.10 0.02 Operating Cash Flows 55,353 55,698 78,716 39,660 49,512 ----------------------------------------------------------------------------
The production statistics are as follows:
---------------------------------------------------------------------------- Q3 Q2 Q1 Q4 Q3 2012 2012 2012 2011 2011 ------------------------------------------------------------ Tonnes Mined (000's) - Ore 4,853 3,234 4,037 3,549 3,005 - Waste 9,215 9,545 8,458 10,590 7,899 - Overburden 1,409 1,740 1,954 1,823 1,029 ------------------------------------------------------------ Total 15,477 14,519 14,449 15,962 11,933 Tonnes Milled (000's) 3,757 3,236 2,965 2,935 3,086 Grade (g Au/t) 0.97 0.99 1.05 0.96 0.85 Recovery (%) 88.7 89.2 91.2 88.3 87.0 Gold production (oz) 103,753 92,003 91,178 79,718 73,814 ----------------------------------------------------------------------------
Mining activities in the period were impacted by a delay
in executing a blast of 940,000 tonnes over old underground workings, which
limited access to higher grade ore. The blast was successfully completed on
October 27, 2012.
During October 2012, mill throughput continued to progress with more than
1.53 million tonnes being milled for an average daily throughput rate of
49,361 tonnes per day. Gold production totaled 36,440 ounces. Ore grade was
0.83 g/t, due to constraints in the mining areas as a result of the delayed
blast and processing stockpiled ore. Though throughputs continue to increase
in October, recoveries remain above feasibility expectations at 88.9%.
In the first eight days of November, the mill processed at an average daily
rate of 52,853 tonnes and achieved a record throughput of 58,476 tonnes on
November 4, 2012.
Mill operating statistics continue to show progress in all categories.
---------------------------------------------------------------------------- Total Tonnes per Available Operating Tonnage Tonnes Operating Hours Hours (%) Produced (t) per Hour Day ---------------------------------------------------------------------------- Q2 2011 2,184 1,793 82 2,481,196 1,384 29,894 Q3 2011 2,208 1,890 86 3,086,324 1,633 36,742 Q4 2011 2,208 1,995 90 2,934,803 1,471 33,733 Q1 2012 2,184 1,890 87 2,965,456 1,569 35,728 Q2 2012 2,184 1,960 90 3,236,281 1,651 38,074 Q3 2012 2,208 2,071 94 3,756,768 1,814 43,181 ----------------------------------------------------------------------------
Osisko's operating focus for the balance of 2012 will be:
i. Complete planned mill modifications with the installation of the second pebble crusher; ii. Stabilize the operating circuit to reach steady-state throughput design capacity of 55,000 tonnes per day; iii.Improve productivity of the mine; iv. Focus on optimization of operations and unit cost reduction.
Improved Financial Flexibility
During the second quarter, the Company amended its $150 million credit
facility with CPPIB Credit Investments Inc. ("CPPIB"), a
wholly-owned subsidiary of the CPP Investment Board, with CPPIB making
available to the Company an additional $100 million delayed draw term loan.
The key terms of the amendment are as follows:
-- The initial cash repayment schedule has been extended by one year to June 30, 2013. The reimbursements are based on 50% of free cash flow up to $60 million per annum. -- CPPIB will make available a delayed draw term loan of $100 million for working capital and general corporate purposes. Osisko may draw funds under this facility in $20 million increments, and any funds outstanding are reimbursable by December 31, 2013. No funds were drawn to date on this facility. There are no standby fees related to this tranche.
As part of the agreement, Osisko has agreed to reduce the
strike price of share purchase warrants to $10 for Tranche A (was previously
$10.75) and Tranche B (was previously $19.25). Of the total 12.5 million of
warrants, 5.5 million Tranche B warrants can be accelerated at Osisko's
discretion if the share price trades at a 50% premium to the exercise price for
a period of 15 days. Tranche A warrants expire on September 24, 2014 and
Tranche B warrants are set to expire on December 31, 2015.
A summary of the Company's financial position is as follows:
---------------------------------------------------------------------------- ($ Million) September 30, 2012 December 31, 2011 ---------------------------------------------------------------------------- Cash Position(1) 114.9 142.0 Working Capital 37.8 47.4 Total Assets 2,232.5 2,069.2 Total Debt 327.9 331.6 Shareholders' Equity 1,756.2 1,654.1 ---------------------------------------------------------------------------- (1) Includes Cash and Cash equivalents and Restricted cash.
Osisko made its second installment guarantee payment of
$12.7 million to the Quebec Government on October 1, 2012, to fund future
estimated closure costs which are estimated at $46.4 million. Total funds
deposited with the Government amount to $34.8 million.
Exploration and Development
The Company continues to conduct exploration work on a regional basis around
the Canadian Malartic infrastructure for additional resources and reserves.
At Hammond Reef, the Company has initiated work necessary for the Project Feasibility
Study, which is expected to be completed in late 2012 or early 2013. The
Minister of Environment of Ontario has approved the Terms of Reference for
the Environmental Impact Assessment.
The Company has also acquired a significant land package in an emerging
Mexican gold belt. To date, approximately 1M hectares of ground have been
staked. A systematic greenfield exploration program has been completed, and a
significant target has been identified following a high density stream
sediment survey, detailed mapping, geochemistry and geophysics work. An
initial 10,000 meter drill program was initiated in late October.
Proposed Friendly Acquisition of Queenston Mining Inc.
On November 12, 2012, Osisko announced that it had entered into a definitive
agreement to acquire, on a friendly basis, all of the issued and outstanding
common shares of Queenston Mining Inc. ("Queenston") on the basis
of 0.611 of an Osisko common share for each common share of Queenston.
Queenston is a Canadian mineral exploration and development company with a
primary focus on its holdings in the historic Kirkland Lake gold camp
comprising 230km2 of exploration lands. Osisko has entered into lock-up
agreements with Queenston insiders and certain significant shareholders
representing approximately 30% of the issued and outstanding common shares of
Queenston. At the date of announcement, the transaction valued Queenston's
equity at approximately $550,000,000, and would result in the issuance of
approximately 56,000,000 common shares of Osisko, based on the fully diluted
in-the-money common shares outstanding of Queenston, representing
approximately 12% of Osisko outstanding common shares, post transaction.
The board of directors of Queenston has unanimously approved the transaction
and will recommend that shareholders vote in favor of the transaction.
Completion of the transaction, by way of a plan of arrangement, is subject to
customary conditions, including court approval, a favourable vote of at least
66 2/3 % of the holders of Queenston common shares and the receipt of all
necessary regulatory and stock exchange approvals. Assuming all of the
conditions are fulfilled, it is expected the transaction will be completed in
late 2012 or early 2013.
Non-IFRS Financial Performance Measures
The Company has included certain non-IFRS measures including "cash cost
per ounce" and "cash margin per ounce" to supplement its
consolidated financial statements, which are presented in accordance with
International Financial Reporting Standards ("IFRS"). Refer to the
Company's Management Discussion and Analysis for the three months ended
September 30, 2012.
Q3 Conference Call Information
Osisko will host a conference call on Wednesday November 14th at 8:00am EST,
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) 981-9012 (Toronto local and
international), or 1-800-909-4792 (North American toll free). An operator
will direct participants to the call.
The conference call replay will be available from 10:00 a.m. EST on November
14, 2012 until 11:59 p.m. EST on November 29, 2012 with the following dial in
number: (416) 626-4100 or Toll-free 1-800-558-5253, access code 21607972.
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, Eng., Senior Vice-President and Chief Operating Officer of
Osisko, is the Qualified Person who has reviewed this news release and is
responsible for the technical information reported herein, including
verification of the data disclosed.
Cautionary Notes Concerning Estimates of Mineral Resources
This news release uses the terms measured, indicated and inferred resources
as a relative measure of the level of confidence in the resource estimate.
Readers are cautioned that mineral resources are not economic mineral
reserves and that the economic viability of resources that are not mineral
reserves has not been demonstrated. In addition, inferred resources are
considered too geologically speculative to have any economic considerations
applied to them. It cannot be assumed that all or any part of an inferred
mineral resource will ever be upgraded to a higher category. Under Canadian
rules, estimates of inferred mineral resources may not form the basis of
feasibility or pre-feasibility studies or economic studies except for
Preliminary Assessment as defined under NI 43-101. Readers are cautioned not
to assume that that further work will lead to mineral reserves that can be
mined economically.
For further information in relation to the Hammond Reef project, please refer
to the "Technical Report on the Hammond Reef Gold Property Atikokan
area, Ontario" dated December 20, 2011. For further information in
relation to the Canadian Malartic project, please refer to the
"Feasibility Study - Canadian Malartic Project (Malartic, Quebec)",
dated December 2008. Both of these reports are available under the Osisko
profile at www.sedar.com.
Note Regarding Certain Measures of Performance
This press release contains certain non-IFRS measures, including "cash
cost per ounce" and "cash margin per ounce". The Company
believes that these measures, together with measures determined in accordance
with IFRS, provides 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.
Forward-Looking Statements
Certain statements contained in this press release may be deemed
"forward-looking statements". All statements in this release, other
than statements of historical fact, that address events or developments that
Osisko expects to occur, are forward looking statements. Forward looking
statements are statements that are not historical facts and are generally,
but not always, identified by the words "expects",
"plans", "anticipates", "believes",
"intends", "estimates", "projects",
"potential", "scheduled" and similar expressions, or that
events or conditions "will", "would", "may",
"could" or "should" occur including, without limitation,
timely and successful completion of the planned mill modifications with the
installation of the second pebble crusher, stabilization of the operating
circuit to reach throughput design capacity of 55,000 tonnes per day, improvement
of mine productivity, the optimization of the plant and the reduction of
cost, positive outcome of any exploration work conducted around the Canadian
Malartic infrastructure or at the Hammond Reef project, further development
of its Hammond Reef project including timely completion of various studies
necessary for the project feasibility study, and positive outcome of any
claim to be filed with the Company's explosive contractor. Although Osisko
believes the expectations expressed in such forward-looking statements are
based on reasonable assumptions, including, without limitation, that all
technical, economical and financial conditions will be met in order to
achieve such events qualified by the foregoing cautionary note regarding
forward looking statements, such statements are not guarantees of future
performance and actual results may differ materially from those in forward
looking statements.
Factors that could cause the actual results to differ materially from those
in forward-looking statements include gold prices, access to skilled
consultants, mining development and construction personnel, results of
exploration and development activities, Osisko's limited experience with
production and mining operations, uninsured risks, regulatory framework and
changes, defects in title, availability of personnel, materials and
equipment, timeliness of government approvals, actual performance of
facilities, equipment and processes relative to specifications and
expectations, unanticipated environmental impacts on operations market
prices, continued availability of capital and financing and general economic,
market or business conditions. These factors are discussed in greater detail
in Osisko's most recent Annual Information Form and in the most recent Management
Discussion and Analysis filed on SEDAR, which also provide additional general
assumptions in connection with these statements. Osisko cautions that the
foregoing list of important factors is not exhaustive. Investors and others
who base themselves on forward-looking statements should carefully consider
the above factors as well as the uncertainties they represent and the risk
they entail. Osisko believes that the expectations reflected in those
forward-looking statements are reasonable, but no assurance can be given that
these expectations will prove to be correct and such forward-looking
statements included in this press release should not be unduly relied upon.
These statements speak only as of the date of this press release.
Osisko Mining Corporation Consolidated Balance Sheets (Unaudited) --------------------------------------------------------------------------- (tabular amounts expressed in thousands of Canadian dollars) September 30, December 31, 2012 2011 -------------- -------------- $ $ ASSETS Current assets Cash and cash equivalents 78,260 100,670 Restricted cash 13,006 14,485 Accounts receivable 29,924 39,419 Inventories 82,084 47,552 Prepaid expenses and other assets 8,492 7,174 ------------------------------ 211,766 209,300 Non-current assets Restricted cash 23,608 26,878 Investments in associates 4,871 1,698 Other investments 18,576 16,041 Property, plant and equipment 1,973,716 1,801,325 Deferred income and mining taxes - 14,000 ------------------------------ 2,232,537 2,069,242 ------------------------------ ------------------------------ Liabilities Current liabilities Accounts payable and accrued liabilities 90,489 74,562 Current portion of long-term debt 82,220 86,485 Provisions and other liabilities 1,227 824 ------------------------------ 173,936 161,871 Non-current liabilities Long-term debt 245,696 245,139 Provisions and other liabilities 17,032 6,038 Deferred income and mining taxes 39,714 2,126 ------------------------------ 476,378 415,174 ------------------------------ Equity attributable to Osisko Mining Corporation shareholders Share capital 1,683,185 1,656,034 Warrants 18,261 13,166 Contributed surplus 57,127 55,909 Equity component of convertible debenture 8,005 8,005 Accumulated other comprehensive income (9,556) (9,397) Deficit (863) (69,649) ------------------------------ 1,756,159 1,654,068 ------------------------------ 2,232,537 2,069,242 ------------------------------ ------------------------------ Osisko Mining Corporation Consolidated Statements of Income (Loss) For the three and nine months ended September 30, 2012 and 2011 (Unaudited) ---------------------------------------------------------------------------- (tabular amounts expressed in thousands of Canadian dollars, except per share amounts) Three months ended Nine months ended September 30, September 30, ------------------------------------------------ 2012 2011 2012 2011 ------------------------------------------------ $ $ $ $ Revenues 158,503 122,879 474,295 135,308 Mine operating costs Production costs (81,841) (74,647) (252,588) (84,045) Royalties (1,998) (1,192) (6,378) (1,351) Depreciation (14,605) (8,748) (43,771) (9,986) ------------------------------------------------ Earnings from mine operations 60,059 38,292 171,558 39,926 General and administrative expenses (7,601) (6,577) (20,950) (24,563) Exploration and corporate development expenses (2,852) (7,774) (8,105) (20,934) Other expenses - - - (485) ------------------------------------------------ Earnings (loss) from operations 49,606 23,941 142,503 (6,056) Interest income 233 454 1,145 1,964 Finance costs (7,983) (6,995) (22,825) (10,766) Foreign exchange gain (loss) 3,431 (4,331) 3,160 (2,817) Share of loss of associates (353) (29) (628) (480) Other gains (losses) 82 (1,758) (2,982) 1,326 ------------------------------------------------ Earnings (loss) before income and mining taxes 45,016 11,282 120,373 (16,829) Income and mining tax expense (18,860) (1,980) (51,587) (2,976) ------------------------------------------------ Net earnings (loss) 26,156 9,302 68,786 (19,805) ------------------------------------------------ ------------------------------------------------ Net earnings (loss) per share Basic 0.07 0.02 0.18 (0.05) Diluted 0.07 0.02 0.18 (0.05) Weighted average number of common shares outstanding (in thousands) Basic 388,153 384,307 387,588 382,995 Diluted 390,238 394,528 389,653 382,995 Osisko Mining Corporation Consolidated Statements of Cash Flows For the three and nine months ended September 30, 2012 and 2011 (Unaudited) ---------------------------------------------------------------------------- (tabular amounts expressed in thousands of Canadian dollars) Three months ended Nine months ended September 30, September 30, ------------------------------------------------ 2012 2011 2012 2011 ------------------------------------------------ $ $ $ $ Operating activities Net earnings (loss) 26,156 9,302 68,786 (19,805) Adjustments for: Interest income (233) (454) (1,145) (1,964) Share-based compensation 2,273 2,327 7,612 7,780 Depreciation 14,765 8,730 44,248 10,304 Finance costs 7,983 6,994 22,825 10,765 Write-off of property, plant and equipment 102 4,895 719 16,276 Gain on disposal of property, plant and equipment - - (319) - Unrealized foreign exchange loss (gain) (3,644) 5,404 (3,469) 3,395 Share of loss of associates 353 29 628 480 Gain on sale of available-for-sale financial assets (670) (24) (602) (5,041) Unrealized net loss (gain) on financial assets at fair value through profit and loss (160) 4,044 1,545 8,515 Unrealized loss on available-for-sale financial assets - - 152 - Impairment on available- for-sale financial assets 428 - 1,522 - Deferred gain - premium on flow-through shares - (2,054) - (4,282) Provisions and other liabilities 1,797 260 1,879 395 Income and mining tax expense 18,860 1,980 51,587 2,976 Other non-cash gain - - - (639) ------------------------------------------------ 68,010 41,433 195,968 29,155 Change in non-cash working capital items (12,657) 8,079 (6,201) 16,885 ------------------------------------------------ Net cash flows from operating activities 55,353 49,512 189,767 46,040 ------------------------------------------------ Investing activities Net decrease in short-term investments - 3,045 - 17,068 Net decrease in restricted cash 4,238 954 4,749 1,644 Acquisition of investments (3,404) (989) (10,950) (12,283) Proceeds on disposal of investments 1,364 204 1,838 12,038 Property, plant and equipment, net of government credits (57,876) (60,231) (189,504) (297,254) Interest received 232 555 1,027 2,169 ------------------------------------------------ Net cash flows from investing activities (55,446) (56,462) (192,840) (276,618) ------------------------------------------------ Financing activities Debt issuance costs (6) (617) (116) (635) Finance lease payments (5,736) (3,004) (16,702) (3,823) Long-term debt repayments (1,250) (1,250) (3,750) (2,083) Issuance of common shares, net of expenses 8,409 18,885 17,896 38,776 Interest paid (5,588) (5,281) (16,665) (7,391) ------------------------------------------------ Net cash flows from financing activities (4,171) 8,733 (19,337) 24,844 ------------------------------------------------ Increase (decrease) in cash and cash equivalents (4,264) 1,783 (22,410) (205,734) Cash and cash equivalents - beginning of period 82,524 150,976 100,670 358,493 ------------------------------------------------ Cash and cash equivalents - end of period 78,260 152,759 78,260 152,759 ------------------------------------------------ ------------------------------------------------
|