Mr. Sean Roosen reports
OSISKO REPORTS FIRST QUARTER 2018 RESULTS
Osisko Gold Royalties Ltd. has released its consolidated financial results for the first quarter ended March 31, 2018, and an update on matters following quarter-end.
Highlights:
Earned 20,036 gold equivalent ounces (1) (GEOs), in line with the 2018 annual guidance of 77,500 GEOs to 82,500 GEOs;Generated cash flow from operating activities of $23.3-million, a record which represents a 94-per-cent increase compared with the first quarter of 2017;Recorded cash operating margins (2) of 91 per cent from royalty and stream interests, maintaining the highest margin in the metals and mining sector, generating $29.5-million in addition to a cash operating margin of $2.4-million from offtake interests;Invested $148-million in Victoria Gold Corp.'s near-term Eagle gold project located in Yukon, Canada, of which $98-million was for a 5-per-cent net smelter return royalty on the project ($49-million will be financed pro rata to other debt facilities). The project is permitted, fully financed and in construction. Osisko expects to receive an average of 10,000 GEOs annually from the project once it is in production, expected by 2020;Converted the Matilda gold offtake into a 1.65-per-cent gold stream;Sold investments for gross proceeds of $25.6-million, generating a cash gain (3) of $15.5-million;Repaid $32-million on the revolving credit facility in April;Held $205-million in cash and cash equivalents and $382-million in equity investments (4) as at April 30, 2018;Distributed $7.8-million in dividends to shareholders through its 14th consecutive dividend payment, bringing the total to $62.9-million since inception in 2014;Repurchased 1,607,099 shares during the first quarter of 2018 at a total cost of $20.3-million, or at an average price of $12.65.
For more details, please refer to the management's discussion and analysis for the three months ended March 31, 2018.
Recent performance
"While the current environment remains challenging in the global metals and mining sector, Osisko has had a very good start to the year being able to announce and close the Eagle gold royalty acquisition, which further strengthens our Canadian-focused portfolio. Our value creation approach to investing in both near-term and long-term opportunities keeps us focused on finding the right opportunities for Osisko and its shareholders.
"Osisko is in an excellent position to continue to invest in the opportunities that present themselves in the current market environment. We have nearly $1-billion of available financial capacity to deploy into new investments and are actively reviewing new opportunities.
"In addition to our financial capacity, we are continuously discussing with other capital providers within the global metals and mining sector to develop strategic relationships and alliances to further increase our capacity, enhance our suites of financial products and offer complete financing solutions to our mining partners," said Sean Roosen, chair and chief executive officer.
Q1 2018 results conference call
Osisko will host a conference call on Friday, May 4, 2018, at 10 a.m. EDT to review and discuss its Q1 2018 results.
Those interested in participating in the conference call should dial in at 1-647-788-4922 (international), or 1-877-223-4471 (North America toll-free). An operator will direct participants to the call.
The conference call replay will be available from 1 p.m. EDT on May 4, 2018, until 11:59 p.m. EST on May 11, 2018, with the following dial-in numbers: 1-800-585-8367 (North America toll-free) or 1-416-621-4642, with the access code 6387003.
(1) GEOs are calculated on a quarterly basis and include royalties, streams and offtakes. Silver earned from royalty and stream agreements was converted to gold equivalent ounces by multiplying the silver ounces by the average silver price for the period and dividing by the average gold price for the period. Diamonds, other metals and cash royalties were converted into gold equivalent ounces by dividing the associated revenue by the average gold price for the period. Offtake agreements were converted using the financial settlement equivalent divided by the average gold price for the period.
AVERAGE METAL PRICES AND EXCHANGE RATE For the three months ended March 31,2018 2017Gold (1)$1,329 $1,219Silver (2) $17$17Exchange rate (U.S./Canadian) (3) 1.2647 1.3238(1) The London Bullion Market Association's p.m. price in U.S. dollars.(2) The London Bullion Market Association's price in U.S. dollars.(3) Bank of Canada daily rate.
(2) Cash operating margin, which represents revenues less cost of sales, is not a recognized measure under international financial reporting standards. The company believes that this non-IFRS, generally accepted industry measure provides a realistic indication of operating performance and provides a useful comparison with its peers.
The associated table reconciles the cash margin to the revenues and cost of sales presented in the consolidated statements of income and related notes.
Three months ended March 31,2018 2017 Revenues$125,614$17,126Less: revenues from offtake interests(93,029) -Revenues from royalty and stream interests32,585 17,126Cost of sales(93,667)(102)Less: cost of sales of offtake interests (90,604) - Cost of sales of royalty and stream interests (3,063)(102)Revenues from royalty and stream interests32,585 17,126 Less: cost of sales of royalty and stream interests (3,063)(102)Cash margin from royalty and stream interests 29,522 17,02491%99%Revenues from offtake interests 93,029-Less: cost of sales of offtake interests (90,604) -Cash margin from offtake interests 2,425- 3% -
(3) The cash gain or loss is calculated by subtracting the cash cost from the cash proceeds on the sale of an investment. The cash cost of an investment is a non-IFRS measure representing the cash paid of an investment on the acquisition date.
(4) Represents the estimated fair value based on the quoted prices of the investments in a recognized stock exchange as at April 30, 2018.
CONSOLIDATED STATEMENTS OF INCOME (unaudited, in thousands of dollars, except per share amounts)Three months ended March 31, 20182017Revenues $125,614 $17,126Cost of sales (93,667) (102)Depletion of royalty, stream and other interests(13,230) (3,319)Gross profit 18,71713,705Other operating expenses General and administrative (4,382) (5,651)Business development (1,192) (1,779)Exploration and evaluation, net of tax credits(44)(42)Operating income 13,099 6,233 Interest income 1,492 1,278 Finance costs(6,634) (949)Foreign exchange gain/(loss)187(1,420)Share of (loss) of associates(1,397) (1,445)Other gains (losses), net(2,581)2,024 Earnings before income taxes4,166 5,721 Income tax expense (1,856) (1,721)Net earnings2,310 4,000
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