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Osisko Reports Q1 2024 Results

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Osisko Reports Q1 2024 Results

 

 

 

 

 

Strong operating cash flows of $50.4 million, cash margin of 97%, and 8% increase in quarterly dividend

 

Osisko Gold Royalties Ltd (TSX:OR) (NYSE:OR) announced its consolidated financial results for the first quarter of 2024. Amounts presented are in Canadian dollars, except where otherwise noted.

 

Highlights

  • 22,259 gold equivalent ounces1 earned (23,111 GEOs in Q1 2023);
  • Revenues from royalties and streams of $60.8 million ($59.6 million in Q1 2023);
  • Cash flows generated by operating activities of $50.4 million ($45.5 million in Q1 2023);
  • Cost of sales of $1.8 million, resulting in a quarterly cash margin2 of 97% ($58.9 million);
  • Net earnings of $15.1 million, $0.08 per basic share ($20.8 million, $0.11 per basic share in Q1 2023);
  • Adjusted earnings2 of $29.7 million, $0.16 per basic share ($25.2 million, $0.14 per basic share in Q1 2023);
  • Repayment of $43.6 million under the revolving credit facility;
  • Cash balance of $70.6 million and debt position of $151.9 million as at March 31, 2024; and
  • Appointment of Mr. David Smith to the Board of Directors.

 

Subsequent to March 31, 2024

  • Additional repayments of $18.6 million on the revolving credit facility and extension of the maturity date from September 29, 2026 to April 30, 2028;
  • Publication of the fourth edition of the Company’s sustainability report, Growing Responsibly and Osisko’s 2024 Asset Handbook; and
  • Declaration of a quarterly dividend of $0.065 per common share payable on July 15, 2024 to shareholders of record as of the close of business on June 28, 2024, an increase of 8%.

 

Jason Attew, President & CEO of Osisko commented: “Osisko is off to a great start in 2024 after a solid first quarter. Strong revenues and cash flows have allowed Osisko to continue to rapidly pay down the Company’s revolving credit facility. Consequently, Osisko’s balance sheet remains well-positioned for the future deployment of capital towards accretive growth opportunities. In addition, the consistency and predictability of our cash flows underpinned our confidence to raise the base dividend by 8% as we embark on a phase of substantial and meaningful growth over the course of the next few years.

 

Catalysts continued to crystallize for Osisko during the first three months of the year, most notably South32’s final investment decision at Hermosa and Alamos Gold’s proposed acquisition of the Magino mine and mill, located directly adjacent to the Island Gold mine. Recently, and subsequent to quarter-end, Metals Acquisition released an updated Reserves and Resources statement for CSA which saw the mine life increased from 6 to 11 years based on Reserves only.

 

The Company remains on track to meet its 2024 GEO delivery guidance range. The Company also expects stronger GEO deliveries into the second half of 2024, including first GEO deliveries from the CSA Copper Stream starting on June 15th, and then also from G Mining Ventures’ Tocantinzinho and Cardinal Namdini’s Namdini mines relatively soon after that.”

 

Qualified Person

 

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.

 

About Osisko Gold Royalties Ltd

 

Osisko Gold Royalties Ltd is an intermediate precious metal royalty company which holds a North American focused portfolio of over 185 royalties, streams and precious metal offtakes, including 19 producing assets. Osisko’s portfolio is anchored by its cornerstone asset, a 3-5% net smelter return royalty on the Canadian Malartic Complex, home to one of Canada’s largest gold mines.

 

Notes:

 

(1)   Gold Equivalent Ounces

 

GEOs are calculated on a quarterly basis and include royalties and streams. 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.

 

 

Average Metal Prices and Exchange Rate

  Three months ended
March 31,
 
    2024   2023  
       
Gold(i) $2,070 $1,890  
Silver(ii) $23.34 $22.55  
       
Exchange rate (US$/Can$)(iii)   1.3486   1.3525  

 

  (i) The London Bullion Market Association’s PM price in U.S. dollars per ounce.
  (ii) The London Bullion Market Association’s price in U.S. dollars per ounce.
  (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 IFRS Accounting Standards including (i) cash margin (in dollars and in percentage of revenues), (ii) adjusted earnings and (iii) adjusted earnings per basic share. 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 Accounting Standards. These measures are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS Accounting Standards. As Osisko’s operations are primarily focused on precious metals, the Corporation presents cash margins and adjusted earnings as it believes that certain investors use this information, together with measures determined in accordance with IFRS Accounting Standards, 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 and in percentage of revenues)

 

Cash margin (in dollars) represents revenues less cost of sales (excluding depletion). Cash margin (in percentage of revenues) represents the cash margin (in dollars) divided by revenues.

 

    Three months ended
March 31,
   
  (in thousands of dollars) 2024     2023    
    $     $    
           
  Royalty interests        
  Revenues 44,544     39,178    
  Less: cost of sales (excluding depletion) (105 )   (135 )  
  Cash margin (in dollars) 44,439     39,043    
           
  Depletion (5,534 )   (6,848 )  
  Gross profit 38,905     32,195    
           
  Stream interests        
  Revenues 16,207     20,409    
  Less: cost of sales (excluding depletion) (1,728 )   (3,906 )  
  Cash margin (in dollars) 14,479     16,503    
           
  Depletion (5,990 )   (6,647 )  
  Gross profit 8,489     9,856    
           
  Royalty and stream interests
Total cash margin (in dollars)
58,918     55,546    
  Divided by: total revenues 60,751     59,587    
  Cash margin (in percentage of revenues) 97.0%     93.2%    
           
  Total – Gross profit 47,394     42,051    
     

 

Adjusted earnings and adjusted earnings per basic share

 

Adjusted earnings is defined as: net earnings (loss), adjusted for certain items: foreign exchange gains (losses), impairment charges and reversal related to royalty, stream and other interests, changes in allowance for expected credit losses, write-offs and impairment of investments, gains (losses) on disposal of assets, gains (losses) on investments, share of income (loss) of associates, transaction costs and other items such as non-cash gains (losses), as well as the impact of income taxes on these items. Adjusted earnings per basic share is obtained from the adjusted earnings divided by the weighted average number of common shares outstanding for the period.

 

 

  Three months ended 
March 31,
 
  2024   2023  
(in thousands of dollars, except per share amounts) $   $  
     
Net earnings 15,073   20,848  
     
Adjustments:    
Foreign exchange loss (gain) 3,250   (19 )
Share of loss of associates 13,558   6,145  
Changes in allowance for expected credit losses and write-offs (1,895 )  
Impairment of investments   271  
Gain on investments (456 ) (2,097 )
Tax impact of adjustments 184   7  
     
Adjusted earnings 29,714   25,155  
     
Weighted average number of
common shares outstanding (000’s)
185,761   184,429  
     
Adjusted earnings per basic share 0.16   0.14  

 

 

 

 

 
Osisko Gold Royalties Ltd
Consolidated Balance Sheets
As at March 31, 2024 and December 31, 2023
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars)
     
  March 31,     December 31,  
  2024     2023  
  $     $  
       
Assets      
Current assets      
Cash 70,601     67,721  
Short-term investments 9,304     8,200  
Amounts receivable 4,213     6,282  
Other assets 1,485     1,842  
  85,603     84,045  
       
Non-current assets      
Investments in associates 99,385     115,651  
Other investments 94,077     93,025  
Royalty, stream and other interests 1,557,771     1,553,111  
Goodwill 111,204     111,204  
Other assets 8,615     8,951  
  1,956,655     1,965,987  
       
Liabilities      
Current liabilities      
Accounts payable and accrued liabilities 4,973     8,209  
Dividends payable 11,154     11,121  
Lease liabilities 1,150     1,122  
  17,277     20,452  
       
Non-current liabilities      
Lease liabilities 6,576     6,879  
Long-term debt 151,944     191,879  
Deferred income taxes 103,917     96,279  
  279,714     315,489  
       
Equity      
Share capital 2,106,596     2,097,691  
Contributed surplus 76,580     79,446  
Accumulated other comprehensive income 45,631     28,058  
Deficit (551,866 )   (554,697 )
  1,676,941     1,650,498  
  1,956,655     1,965,987  

 

 

 

Osisko Gold Royalties Ltd
Consolidated Statements of Income
For the three months ended March 31, 2024 and 2023
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)
   
  2024     2023  
  $     $  
       
Revenues 60,751     59,587  
       
Cost of sales (1,833 )   (4,041 )
Depletion (11,524 )   (13,495 )
Gross profit 47,394     42,051  
       
Other operating expenses      
General and administrative (6,130 )   (6,209 )
Business development (1,360 )   (1,496 )
Operating income 39,904     34,346  
Interest income 1,259     2,063  
Finance costs (3,731 )   (2,870 )
Foreign exchange (loss) gain (3,250 )   19  
Share of loss of associates (13,558 )   (6,145 )
Other gains, net 2,351     1,826  
Earnings before income taxes 22,975     29,239  
Income tax expense (7,902 )   (8,391 )
Net earnings 15,073     20,848  
 
Net earnings per share
Basic and diluted 0.08     0.11  

 

 

 

Osisko Gold Royalties Ltd
Consolidated Statements of Cash Flows
For the three months ended March 31, 2024 and 2023
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars)
 
  2024     2023  
  $     $  
Operating activities      
Net earnings 15,073     20,848  
Adjustments for:      
Share-based compensation 2,113     2,289  
Depletion and amortization 11,853     13,754  
Impairment of investments in associates     271  
Changes in expected credit loss of other investments (1,895 )    
Share of loss of associates 13,558     6,145  
Change in fair value of financial assets at fair value through profit and loss (456 )   2,745  
Net gain on dilution of investments     (4,842 )
Foreign exchange loss 3,287     16  
Deferred income tax expense 7,368     7,460  
Other 157     36  
Net cash flows provided by operating activities
before changes in non-cash working capital items
51,058     48,722  
Changes in non-cash working capital items (681 )   (3,272 )
Net cash flows provided by operating activities 50,377     45,450  
       
Investing activities      
Acquisitions of short-term investments (900 )   (1,643 )
Acquisitions of investments     (271 )
Proceeds on disposal and repayment of investments 5,177      
Other (4 )    
Net cash flows provided by (used in) investing activities 4,273     (1,914 )
       
Financing activities      
Repayment of long-term debt, net of discount on banker’s acceptances (43,617 )   (13,463 )
Exercise of share options and shares issued under the share purchase plan 4,867     8,900  
Dividends paid (10,357 )   (9,753 )
Withholding taxes on settlement of restricted and deferred share units (2,987 )   (456 )
Other (388 )   (212 )
Net cash flows used in financing activities (52,482 )   (14,984 )
       
Increase in cash before effects of exchange rate changes 2,168     28,552  
Effects of exchange rate changes on cash 712     (16 )
           
Net increase in cash 2,880     28,536  
Cash – beginning of period 67,721     90,548  
Cash – end of period 70,601     119,084  

 

 

Posted May 9, 2024

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