Osisko Mining Corporation Reports Second Quarter 2012 Results
Mine Operating Profits of $41.0 Million, Net Profit of $13.3 MillionMONTREAL, QUEBEC -- (Marketwire) -- 08/09/12 -- Osisko Mining Corporation (the "Company" or "Osisko") (TSX: OSK)(FRANKFURT: EWX) is pleased to report that it has generated a net profit of $13.3 million ($0.03 per share) during the second quarter of 2012 versus a loss of $23.8 million in the second quarter of 2011 ($0.06 per share).
Q2 Highlights
- Gold production of 92,003 ounces, a new quarterly record;
- Operating cash flow of $55.7 million;
- Record mill throughput and mined tonnage.
Mine operating profits during the second quarter totaled $41.0 million compared to $1.6 million in the corresponding period in 2011. The Canadian Malartic mine commenced commercial production on May 19, 2011 and prior to that date results were capitalized. Record gold production of 92,003 ounces was achieved despite a fire at the mill processing facility, which affected mill throughput during a 10-day period in May 2012.
During the first half of 2012, the Canadian Malartic mine generated a profit of $111.5 million and Osisko generated a net profit of $42.6 million ($0.11 per share). In the corresponding period of 2011, the mine generated a profit of $1.6 million in its first 43 days of commercial production while the Company incurred a loss of $29.1 million ($0.08 per share).
Sean Roosen, President and Chief Executive Officer of Osisko, commenting on the second quarter performance: "We made good progress on the various ramp up issues during the quarter, including the improved performance of our first FLSmidth XL2000 cone crusher. Mine productivity was affected by inefficiencies in blasting cycles, which led to lower excavation rates and an increase in wear on equipment. The issue was due to faulty boosters, which resulted in a number of misfired blast holes. The problem has since been mitigated, however the company is in discussion with the explosive contractor and Osisko has indicated the intent to file a claim to be reimbursed for the increased costs incurred and production losses. With the completion of the secondary crusher installation, we expect to see a significant increase in throughput and gold production in Q3, coupled with a significant decrease in costs."
Operating cash flow amounted to $55.7 million for the quarter and $134.4 million for the first half, compared to $15.0 million in the second quarter of 2011 and a shortfall of $5.6 million in the first six months of 2011. Investments in mining assets totaled $131.6 million for the first half.
The mine operating statement for the production period is as follows:
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Q2 2012 Q1 2012 Q4 2011 Q3 2011 Q2 2011
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Gold sales
(ounces) 95,675 92,400 75,100 72,100 8,300
Silver sales
(ounces) 48,880 52,800 42,100 49,800 -
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($000) ($000) ($000) ($000) ($000)
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Revenues 157,134 158,658 128,100 122,879 12,429
Production Costs (98,837) (71,910) (74,841) (74,647) (9,398)
Royalties (2,021) (2,359) (1,933) (1,192) (159)
Depreciation (15,289) (13,877) (11,800) (8,748) (1,238)
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Total (116,147) (88,146) (88,574) (84,587) (10,795)
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Net Mining
Profit 40,987 70,512 39,526 38,292 1,634
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The increased costs in the second quarter are attributable to:
i. Higher tonnage milled (9.1% compared to Quarter 1, 2012);
ii. Continued ramp-up costs with respect to the first unit of the secondary
cone crusher;
iii.Inefficiencies in the blasting cycle which impacted mining productivity;
and
iv. Higher than anticipated utilization of contractors.
Key operating results
(in thousands of Canadian dollars, unless otherwise noted)
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Q2 2012 Q1 2012 Q4 2011 Q3 2011 Q2 2011(i)
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Gold Production
(oz) 92,003 91,178 79,718 73,814 27,101
Gold Sales (oz) 95,675 92,400 75,100 72,100 8,300
Average Sale
Price (US$/oz) 1,605 1,698 1,655 1,695 1,535
Average Market
Price (US$/oz) 1,609 1,691 1,688 1,702 1,526
Cash Costs per
Ounce (C$/oz) 1,015 860 936 918 1,094
Cash Costs per
Ounce (US$/oz) 1,004 858 914 939 1,120
Cash Margin per
Ounce (US$/oz) 601 840 741 756 415
Revenues 157,134 158,658 128,100 122,879 12,429
Mine Operating
Profit 40,987 70,512 39,526 38,292 1,634
Net Earnings
(loss) 13,271 29,359 37,802 9,302 (23,826)
Net Earnings
(loss) per
Share 0.03 0.08 0.10 0.02 (0.06)
Operating Cash
Flows 55,698 78,716 39,660 49,512 14,972
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(i) Commercial production only
The production statistics since commencement of commercial production on May 19, 2011 are as follows:
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Q2 Q1 Q4 Q3 Q2
2012 2012 2011 2011 2011
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Tonnes Mined
(000's)
- Ore 3,234 4,037 3,549 3,005 829
- Waste 9,545 8,458 10,590 7,899 2,073
- Overburden 1,740 1,954 1,823 1,029 415
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Total 14,519 14,449 15,962 11,933 3,317
Tonnes Milled
(000's) 3,236 2,965 2,935 3,086 1,471
Grade (g Au/t) 0.99 1.05 0.96 0.85 0.65
Recovery (%) 89.2 91.2 88.3 87.0 88.0
Gold production
(oz) 92,003 91,178 79,718 73,814 27,101
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Mill operating statistics continue to show progress.
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Total Tonnage Tonnes per
Available Operating Produced Tonnes per Operating
Hours Hours (%) (t) Hour Day
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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
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Osisko's 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 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.
Net earnings for the quarter amounted to $13.3 million compared to a loss of $23.8 million in 2011. The variance is attributable to higher gold sales as the mine is continuing its ramp up process since commencing operations on May 19, 2011, lower general and administration costs which were offset by higher financing costs as in 2011 the interest costs were capitalized and higher tax charges due to earnings. The 2011 results also included a write-down of $10.9 million following the abandonment of the Duparquet project.
The higher year-to-date profit of $42.6 million compared to a loss of $29.1 million in 2011 is mainly attributable to a full six months of operations at Canadian Malartic in 2012 and improved gold price.
Improved Financial Flexibility
During the 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. 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 $19.25). Of the total 12.5 million of warrants, 5.5 million Tranche B warrants can be accelerated at Osisko's discretion if the share price trades at a 50% premium to the exercise price for a period of 15 days. Tranche A warrants expire on September 24, 2014 and Tranche B warrants are set to expire on December 31, 2015.
A summary of the Company's financial position is as follows:
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($ Million) June 30, 2012 December 31, 2011
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Cash Position(1) 123.4 142.0
Working Capital 76.5 47.4
Total Assets 2,168.1 2,069.2
Total Debt 330.2 331.6
Shareholders' Equity 1,715.6 1,654.1
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(1) Includes Cash and Cash equivalents and Restricted cash.
Exploration and Development
The Company continues to conduct exploration work on a regional basis around the Canadian Malartic infrastructure for additional resources and reserves, and is pursuing definition drilling at its Hammond Reef development project. At Hammond Reef, the Company has initiated various studies necessary for the Project Feasibility Study, which is expected to be completed in late 2012. The Minister of Environment of Ontario has approved the Terms of Reference for the Environmental Impact Assessment.
Osisko continues to aggressively pursue growth in its reserve and resource base, with some 81,000 meters drilled on its various projects during the quarter.
Osisko also entered into various agreements in 2012 to add to its project base:
-- An option agreement with Global Geoscience Ltd. whereby Osisko can
acquire an initial 45% interest in five Nevada gold properties by
expending US$8 million in exploration over a four year period and
subscribing for 14.2 million shares at an issue price of $0.06 per share
for a total of $912,000. Osisko can acquire an additional interest of
25% in any property (for a total interest of 70%) by completing a
bankable feasibility study on such property.
-- An option agreement with Tri Origin Exploration Ltd. whereby Osisko can
acquire an initial 51% interest in the Red Lake Extension property
located in NW Ontario, by expending $5 million in exploration over a
four year period, by paying Tri Origin a total of $800,000 in cash
during the period and by subscribing for 5 million ordinary shares in
Tri Origin at an issue price of $0.07 per share for a total of $350,000.
Osisko can acquire an additional interest of 14% in any property (for a
total interest of 65%) by completing a bankable feasibility study.
The Company has opened a regional exploration office in Denver, Colorado in order to enhance its activities in the USA.
The Company is also pursuing various initiatives to build its project base in Latin America.
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 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 June 30, 2012.
Q2 Conference Call Information
Osisko will host a conference call on Friday, August 10th at 8:00am EDT, 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. EDT on August 10, 2012 until 11:59 p.m. EDT on August 25, 2012 with the following dial in number: (416) 626-4100 or Toll-free 1-800-558-5253, access code 21599128.
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)
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(tabular amounts expressed in thousands of Canadian dollars)
June 30, December 31,
2012 2011
----------------------------------
$ $
Assets
Current assets
Cash and cash equivalents 82,524 100,670
Restricted cash 14,485 14,485
Accounts receivable 25,917 39,419
Inventories 61,611 47,552
Prepaid expenses and other assets 6,897 7,174
----------------------------------
191,434 209,300
Non-current assets
Restricted cash 26,367 26,878
Investment in associates 4,423 1,698
Other investments 14,056 16,041
Property, plant and equipment 1,931,826 1,801,325
Deferred income and mining taxes - 14,000
----------------------------------
2,168,106 2,069,242
----------------------------------
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Liabilities
Current liabilities
Accounts payable and accrued liabilities 85,448 74,562
Current portion of long-term debt 28,886 86,485
Provisions and other liabilities 598 824
----------------------------------
114,932 161,871
Non-current liabilities
Long-term debt 301,292 245,139
Provisions and other liabilities 15,463 6,038
Deferred income and mining taxes 20,853 2,126
----------------------------------
452,540 415,174
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Equity attributable to Osisko Mining
Corporation shareholders
Share capital 1,670,999 1,656,034
Warrants 18,261 13,166
Contributed surplus 57,755 55,909
Equity component of convertible
debentures 8,005 8,005
Accumulated other comprehensive income (12,435) (9,397)
Deficit (27,019) (69,649)
----------------------------------
1,715,566 1,654,068
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2,168,106 2,069,242
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Osisko Mining Corporation
Consolidated Statements of Income (Loss)
For the three and six months ended June 30, 2012 and 2011
(Unaudited)
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(tabular amounts expressed in thousands of Canadian dollars)
Three months ended Six months ended
June 30, June 30,
------------------------------------------------
2012 2011 2012 2011
------------------------------------------------
$ $ $ $
Revenues 157,134 12,429 315,792 12,429
Mine operating costs
Production costs (98,837) (9,398) (170,747) (9,398)
Royalties (2,021) (159) (4,380) (159)
Depreciation and depletion (15,289) (1,238) (29,166) (1,238)
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Earnings from mine
operations 40,987 1,634 111,499 1,634
General and administrative
expenses (5,943) (12,018) (13,349) (18,194)
Exploration and corporate
development expenses (1,963) (11,811) (5,253) (13,160)
Other expenses - - - (485)
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Earnings (loss) from
operations 33,081 (22,195) 92,897 (30,205)
Interest income 379 601 912 1,510
Finance costs (7,444) (3,771) (14,842) (3,771)
Foreign exchange gain
(loss) (1,858) 466 (271) 1,514
Share of loss of
associates (141) (345) (275) (451)
Other gains (losses) (1,246) 1,984 (3,064) 3,292
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Earnings (loss) before
income and mining taxes 22,771 (23,260) 75,357 (28,111)
Income and mining tax
expense (9,500) (566) (32,727) (996)
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Net earnings (loss) 13,271 (23,826) 42,630 (29,107)
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Net earnings (loss) per
share
Basic 0.03 (0.06) 0.11 (0.08)
Diluted 0.03 (0.06) 0.11 (0.08)
Weighted average number of
common shares outstanding
(in thousands)
Basic 387,279 382,748 386,528 382,328
Diluted 389,024 382,748 389,312 382,328
Osisko Mining Corporation
Consolidated Statements of Cash Flows
For the three and six months ended June 30, 2012 and 2011
(Unaudited)
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(tabular amounts expressed in thousands of Canadian dollars)
Three months ended Six months ended
June 30, June 30,
2012 2011 2012 2011
------------------------------------------------
$ $ $ $
Operating activities
Net earnings (loss) 13,271 (23,826) 42,630 (29,107)
Adjustments for:
Interest income (379) (601) (912) (1,510)
Share-based compensation 2,708 2,775 5,339 5,453
Depreciation 15,448 1,454 29,483 1,574
Finance costs 7,444 1,292 14,842 1,292
Write-off of property,
plant and equipment - 10,896 617 11,381
Gain on disposal of
property, plant and
equipment (319) - (319) -
Unrealized foreign
exchange loss (gain) 1,952 (495) 175 (2,009)
Share of loss of
associates 141 345 275 451
Loss (gain) on sale of
available-for-sale
financial assets 155 (761) 68 (5,017)
Unrealized net loss on
financial assets at fair
value through profit and
loss 1,158 796 1,705 4,471
Unrealized loss on
available-for-sale
financial assets - - 152 -
Impairment on available-
for-sale financial assets - - 1,094 -
Deferred gain - premium on
flow-through shares - (2,228) - (2,228)
Provisions and other
liabilities (558) - 82 135
Income and mining tax
expense 9,500 566 32,727 996
Other non-cash gain - (119) - (639)
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50,521 (9,906) 127,958 (14,757)
Change in non-cash working
capital items 5,177 24,878 6,456 9,175
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Net cash flows from
operating activities 55,698 14,972 134,414 (5,582)
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Investing activities
Net decrease in short-term
investments - 6,074 - 14,023
Net decrease in restricted
cash 453 639 511 690
Acquisition of investments (1,100) (10,395) (7,546) (11,294)
Proceeds on disposal of
investments 21 2,223 474 11,834
Property, plant and
equipment, net of
government credits (63,926) (103,253) (131,628) (237,023)
Interest received 387 641 795 1,614
------------------------------------------------
Net cash flows from
investing activities (64,165) (104,071) (137,394) (220,156)
------------------------------------------------
Financing activities
Debt issuance costs (105) - (110) (18)
Finance lease payments (5,608) (273) (10,966) (819)
Long-term debt repayments (1,250) (833) (2,500) (833)
Issuance of common shares,
net of expenses 1,095 18,185 9,487 19,891
Interest paid (5,602) - (11,077) -
------------------------------------------------
Net cash flows from
financing activities (11,470) 17,079 (15,166) 18,221
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Increase (decrease) in cash
and cash equivalents (19,937) (72,020) (18,146) (207,517)
Cash and cash equivalents -
beginning of period 102,461 222,996 100,670 358,493
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Cash and cash equivalents -
end of period 82,524 150,976 82,524 150,976
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Contacts:
John Burzynski
Vice-President Corporate Development
(416) 363-8653
Sylvie Prud'homme
Director of Investor Relations
(514) 735-7131
Toll Free: 1-888-674-7563
www.osisko.com