Osisko Gold Royalties Ltd (TSX:OR) (NYSE:OR) is pleased to provide an update on its second quarter 2022 deliveries, revenues, cash margins and recent asset advancements for its royalty and stream segment.
PRELIMINARY Q2 2022 RESULTS
Osisko earned approximately 22,240 attributable gold equivalent ounces1 (“GEOs”) in the second quarter of 2022, record deliveries for the Corporation since inception in 2014.
Osisko had record preliminary revenues from royalties and streams of C$51.5 million during the second quarter and preliminary cost of sales (excluding depletion) of C$3.7 million, resulting in a record quarterly cash margin2 of approximately C$47.8 million or approximately 93%.
Osisko will provide full production and financial details with the release of its second quarter 2022 results after market close on Tuesday, August 9th, 2022.
Sandeep Singh, President and CEO of Osisko commented: “Our royalty and streaming portfolio delivered records on a number of fronts in Q2 including GEO deliveries and absolute cash margins. We continue to expect further increases in deliveries in the second half of the year as ramp-ups at Mantos and Eagle progress towards nameplate capacity. In a period of heightened volatility in the mining sector, and rising costs across all facets of the economy, our inflation protected business model continues to thrive.”
CSA Transaction Update
On June 1st, Metals Acquisition Corp. published a technical study for the CSA mine in New South Wales, Australia. This follows MAC’s announcement in March that it had entered into a definitive agreement with a subsidiary of Glencore plc for the acquisition of CSA. The study suggests the potential for a mine life in excess of 15 years, as well as the significant exploration potential on the large land package.
MAC is in the process of completing the necessary regulatory reporting requirements and associated financing arrangements to conclude the Acquisition Transaction. Closing of the Acquisition Transaction is subject to, among other things, the approval of MAC’s shareholders, and is expected to be completed in Q4 2022.
Osisko Bermuda Limited, a wholly-owned subsidiary of the Corporation, has entered into an agreement with MAC with respect to a US$90 million silver stream to facilitate MAC’s acquisition of the CSA mine. Closing of the silver stream is subject to, among other things, closing of the Acquisition Transaction.
OBL has also provided MAC with a mutual option to draw up to an additional US$100 million in upfront proceeds through the sale of a copper stream, subject to the parties finalizing definitive terms and conditions. MAC has granted OBL a right of first refusal to purchase any royalties or streams on any asset owned by MAC for three years following the closing of the Acquisition Transaction.
Canadian Malartic Update
On July 7th, Yamana Gold Inc. reported that Canadian Malartic produced 174,372 ounces of gold during the second quarter, ahead of plan. Permitting at the Odyssey project remains on schedule while construction is on track and on budget with first production from Odyssey South expected in the first quarter of 2023. Fifteen drills are active on the property, with three underground drills completing infill drilling on the Odyssey South deposit and 12 surface drills focused on infilling and expanding the East Gouldie mineralization. Shaft sinking is expected to begin in the fourth quarter of 2022.
On April 28th, Yamana indicated that it firmly believes that in its 10-year outlook period, exploration efforts will lead to more mining areas that will allow it to take advantage of available plant capacity, resulting in ore processing that will exceed 20,000 tonnes per day, and sustainable production will then significantly exceed the initial production plan of 500,000 to 600,000 gold ounces per year.
Agnico Eagle: Kirkland Lake Updates
On April 28th, Agnico Eagle Mines Limited confirmed it is evaluating the potential integration of the AK deposit and the Upper Beaver project with the existing regional infrastructure in Kirkland Lake. In the first quarter of 2022, Agnico Eagle progressed the development of an exploration decline from the existing Macassa infrastructure towards the AK deposit. The decline is associated with an exploration campaign planned to be completed in 2022 to better delineate the deposit and understand how the AK mineral resources could complement the feed at the Macassa mill, potentially starting in 2024.
Infill drilling of the AK deposit from surface was initiated in the first quarter of 2022, targeting one of the higher grade mineral resource areas where historical hole KLAKC15-87 intercepted 8.8 grams per tonne gold over 14.0 meters (core length) at a depth of 104 meters. Exploration drilling is also underway at Upper Beaver to investigate new mineralized zones at depth along strike laterally. Recent drilling appears to have encountered a new zone of mineralization 500 meters southeast of the main mineralized zone.
Osisko Development Corp. Updates
On May 24th, Osisko Development Corp. announced the results of a preliminary economic assessment for the Cariboo Gold Project in central British Columbia. The PEA illustrates the potential for a low cost, large scale, underground gold mine, with average annual gold production of approximately 236,000 ounces at an all-in sustaining cost per ounce of US$962 over an initial 12 year mine life.
On May 30th, Osisko Development closed its previously announced acquisition of Tintic Consolidated Mines LLC. TCM owns the producing Trixie test mine, as well as mineral claims covering more than 17,000 acres (including 14,200 acres of which are patented) in Central Utah’s historic Tintic Mining District. Osisko Development is currently expanding underground development and utilizing one underground diamond drill rig and one surface reverse circulation rig to aid in the delineation of an initial mineral resource estimate. Concurrently, Osisko Development intends to complete advanced technical studies to generate additional surface and underground targets, conduct metallurgical testing, geotechnical work and environmental studies to justify further development as well as increase production at Trixie through a low-capital expenditure expansion.
Concurrently with the closing of the TCM acquisition, Osisko Development announced that TCM had entered into a binding term sheet with OBL for a stream on the metals produced from the Tintic Project. Under the stream, OBL will make an upfront cash payment to TCM totaling US$20 million in return for 2.5% of all metals produced from the Tintic Project at a purchase price of 25% of the relevant spot metal price. Once 27,150 ounces of refined gold have been delivered, the stream rate will decrease to 2.0% of all metals produced. Closing of the stream is expected to take place in Q3.
On June 30th, Osisko Development reported an updated resource estimate on the San Antonio project. Indicated Resources include 14.9 Mt grading 1.2 g/t gold for 576,000 oz and Inferred Resources include 16.6 Mt grading 1.02 g/t gold for 544,000 oz. The resources are limited to a 2.8km long segment of the prospective 10km long trend. Osisko Development has completed construction of a leach pad and carbon in column plant to process 1.1 Mt of stockpiled material with an average grade of 0.57 g/t gold. Osisko expects first gold deliveries from San Antonio in early Q3.
During the second quarter, Osisko Development closed its two previously announced private placements of subscription receipts for aggregate proceeds of US$167.7 million and announced that its common shares commenced trading on the New York Stock Exchange under the symbol “ODV”. As of June 30th, Osisko owns approximately 44.1% of Osisko Development.
Island Gold Phase 3+ Expansion Study
On June 29th, Alamos Gold Inc. reported the results of the P3+ Expansion Study for the Island Gold mine, outlining an increase in production to 2,400 tonnes per day from the current 1,200 tonnes per day. This is an increase over the 2021 study which had planned a 2,000 tonne per day mill throughput, and will be enabled by a new shaft with an initial depth of 1,373 meters. This new PEA estimates average gold production of 287,240 ounces per year for 13 years starting in 2026. The mineral inventory considered in the study includes Probable Reserves of 4.1 Mt grading 10.1 g/t gold for 1.1 Moz and Inferred Resources of 8.3 Mt grading 11.3 g/t gold for 3.0 Moz. Earthworks and shaft surface infrastructure construction have started, with shaft sinking scheduled to commence in the second half of 2023. Alamos plans to continue to aggressively explore at depth and along strike to expand the resources, including 57.5km of drilling planned for 2022. Osisko will see its average royalty rate increase to a blended 2.25% NSR royalty on Alamos’ Island Gold Phase 3+ mine plan.
A graph accompanying this announcement is available at
Capstone Evaluating Mantos Blancos Expansion
During the quarter, Capstone Copper Corp. continued the ramp up of the Mantos Blancos expansion from 4.2 Mt per year to 7.3 Mt per year. The focus remains on optimization and achieving targets for sustained throughput and recoveries in Q3 2022.
On May 12th, Capstone confirmed the ongoing analysis of a potential further increase of throughput at the Mantos Blancos sulphide concentrator plant from 7.3 Mt per year to 10.0 Mt per year using the existing (currently unused/underutilized) ball mills and process equipment. A feasibility study on the Mantos Blancos Phase II Project is expected to be completed in 2022.
Victoria Gold Update
On July 12th, Victoria Gold Corp. announced second quarter gold production from the Eagle mine of 32,055 ounces. Ore mined and stacked, as well as gold production, was in line with Q2 2021. Crushing and stacking operations were affected for approximately 5 days due to the disruption to the main Yukon power grid from wildfires in the region. Once power service was restored, operations and production rates returned to normal. Similar to previous years, Victoria continues to expect significant growth in gold production in the second half of this year. Guidance of between 165,000 to 190,000 ounces was reiterated.
Victoria continued detailed engineering and procurement of equipment to enable construction of ‘Project 250’ to start in the second half of 2022. ‘Project 250’ is aimed at increasing the average annual gold production of Eagle toward 250,000 ounces of gold during 2023. Victoria’s May corporate presentation also outlines ‘Project 2040’ that illustrates potential Eagle Mine expansions at depth and along strike. Recent drill highlights include 1.22g/t gold over 175 meters.
Record Gold Production at Seabee Mine
On May 3rd, SSR Mining Inc. announced that the Seabee mine produced a record of 52,582 ounces of gold in the first quarter of 2022. The increase in gold production was the result of a mill feed grade of 17.8 g/t during the quarter, a 110% increase compared to the same period in 2021, as mining accessed a continuation of a very high grade zone outside of the Mineral Reserve that was first mined in the second quarter of 2021. Seabee also benefited from continued operational excellence initiatives that drove improved mine performance in the first quarter, including a quarterly record of 102,528 tonnes mined (approximately 1,150 tonnes per day). Grades are expected to return closer to plan (approximately 9.2 g/t) through the remainder of 2022. Following the record quarterly performance, Seabee is tracking to the top end of the mine’s 115,000 to 125,000 gold production guidance.
Renard Stream Restart
Osisko has been receiving regularly-scheduled payments from its Renard diamond stream following the stream’s reactivation on April 30th of this year. Over the course of the second quarter, Renard sold 459,848 carats at an average price of US$124 per carat. Osisko’s attributable GEOs from Renard totaled 2,934 ounces for the quarter.
Ermitaño Production Ramps Up
On April 18th, First Majestic Silver Corp. reported 114,190 tonnes of ore at 4.98 g/t gold and 45 g/t silver processed from the Ermitaño mine at the Santa Elena processing plant, representing a 10% increase compared to the prior quarter. The higher volumes were the result of strong underground development rates as the mine continues its planned ramp up in 2022. First Majestic anticipates higher production rates as new production stopes are prepared and brought into production by year end. First Majestic continued to advance the dual-circuit construction at the Santa Elena processing plant which is designed to increase leaching performance and metallurgical recoveries of ore from Ermitaño. A total of five drill rigs were active during the quarter.
Santana Production Ramps Up
On May 31st, Minera Alamos Inc. announced the ongoing development of the Nicho Main Zone with haulage and access roads largely completed along with the removal of limited vegetation and surface cover. Following the initiation of mining activities and as the pit working areas opens up, the much larger scale of the Nicho Main Zone compared to the current starter pit at Nicho Norte will help drive project mining rates to planned levels for the overall commercial operation. First mineralized material from the Nicho Main Zone should be stacked on the Santana leach pad as operations move into the second half of the year and will help drive gold production rates higher. Gold mined and stacked on the leach pad to date totals approximately 18,000 oz with roughly 7,000 oz of gold recovered in concentrate. Operations in May have been seasonally impacted from the severe and ongoing drought that has affected Sonora for much of the last two years. The upcoming rainy season (late June-September) is expected to recharge water reservoirs and allow for an acceleration of the recovery of gold stacked on the leach pads in Q3.
Western Copper and Gold Reports Casino Feasibility Study
Western Copper and Gold reported the results of a feasibility study on the Casino project in the Yukon. The project has an estimated mine life of 27 years, and will be developed by conventional open pit mining with both heap leaching and flotation components. The feasibility study outlines average annual revenues of C$951M in the first four years and C$517M per year thereafter. Western Copper continues to collaborate with their strategic investor, Rio Tinto, and its First Nations partners to advance the project towards Environmental and Socio-Economic Statement submission in mid-2023.
Windfall Drill Results
Throughout the second quarter, Osisko Mining Inc. released drill results for the Windfall project in Québec, including 293 g/t gold over 11.0 meters, 26.3 g/t gold over 15.8 meters, and 243 g/t gold over 2.8 meters. These intervals help refine the continuity of known mineralization and expand the resources. On June 23rd, Osisko Mining announced that it had closed its Windfall Project drillhole database in preparation of an updated mineral resource estimate (“MRE”) scheduled for Q4 2022. The updated MRE will form the basis of the planned Windfall Project Feasibility Study, scheduled for delivery by the end of 2022.
Lithium Pegmatite Discovery at FCI
On April 28th, Patriot Battery Metals Inc. confirmed wide zones of lithium pegmatite over a 1.4km strike length on the Corvette Project. The pegmatite body remains open to the southwest, the northeast, and at depth, with drilling to date showing continuity between several outcropping pegmatites. The majority of the drill holes completed by Patriot on the Corvette project are within the FCI property, and results are highlighted by 1.25% Li2O and 194ppm Ta2O5 over 58 meters and 1.25% Li2O and 117ppm Ta2O5 over 155 meters. The mineralization is located in the James Bay region of Québec and within 15km of all season roads and power lines. Osisko holds a 2% NSR royalty (3.5% for gold) on Patriot’s FCI property.
The figures presented in this press release, including revenues and costs of sales, have not been audited and are subject to change. As the Corporation has not yet finished its quarter-end procedures, the anticipated financial information presented in this press release is preliminary, subject to quarter-end adjustments, and may change materially.
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
|Exchange rate (US$/Can$)(iii)||1.2768||1.2282|
(i) The London Bullion Market Association’s pm price in U.S. dollars.
(ii) The London Bullion Market Association’s price in U.S. dollars.
(iii) Bank of Canada daily rate.
(2) Non-IFRS Measures
The Corporation has included certain performance measures in this press release that do not have any standardized meaning prescribed by International Financial Reporting Standards (IFRS) including cash margin in dollars and in percentage. The presentation of these non-IFRS measures is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These measures are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. As Osisko’s operations are primarily focused on precious metals, the Corporation presents cash margins as it believes that certain investors use this information, together with measures determined in accordance with IFRS, to evaluate the Corporation’s performance in comparison to other companies in the precious metals mining industry who present results on a similar basis. However, other companies may calculate these non-IFRS measures differently.
Cash margin (in dollars) represents revenues less cost of sales (excluding depletion). Cash margin (in percentage) represents the cash margin (in dollars) divided by revenues.
|Three months ended
June 30, 2022
|Less: Cost of sales||$||(3,756||)|
|Cash margin (in dollars)||$||47,789|
|Cash margin (in percentage of revenues)||93||%|
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.
In this press release, Osisko relies on information publicly disclosed by other issuers and third parties pertaining to its assets and, therefore, assumes no liability for such third party public disclosure.
About Osisko Gold Royalties Ltd
Osisko is an intermediate precious metal royalty company focused on the Americas that commenced activities in June 2014. Osisko 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.
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