
Osisko Gold Royalties Ltd (TSX:OR) (NYSE:OR) announced its consolidated financial results for the second quarter of 2023. Amounts presented are in Canadian dollars, except where otherwise noted.
Highlights – Second Quarter of 2023
Paul Martin, Interim CEO of Osisko commented: “Despite challenges faced by our operating partners who were temporarily impacted by the wildfires in northern Ontario and Québec, Osisko delivered a solid second quarter. As we head into the second half of the year, we are well positioned to meet our 2023 guidance. Osisko remained very active on the corporate development front in the second quarter, having closed the CSA transaction, including the full copper stream which comes into effect in June 2024, and the announced increase to our silver stream at Taseko’s Gibraltar mine. Following the quarter, the Company announced the acquisition of copper and gold royalties at Hot Chili’s Costa Fuego project”.
Subsequent to June 30, 2023
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 180 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, one of Canada’s largest gold mines.
Notes:
(1) Gold Equivalent Ounces
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.
Average Metal Prices and Exchange Rate
Three months ended June 30, |
Six months ended June 30, |
||||
2023 | 2022 | 2023 | 2022 | ||
Gold(i) | $1,976 | $1,871 | $1,932 | $1,874 | |
Silver(ii) | $24.13 | $22.60 | $23.31 | $23.32 | |
Exchange rate (US$/Can$)(iii) | 1.3428 | 1.2768 | 1.3477 | 1.2715 |
(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) From continuing operations
(3) 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 (i) cash margin (in dollars and in percentage), (ii) adjusted earnings and (iii) adjusted earnings per 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. 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 and adjusted earnings 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 and in percentage of revenues)
Cash margin (in dollars) represents revenues from continuing operations less cost of sales (excluding depletion). Cash margin (in percentage of revenues) represents the cash margin (in dollars) divided by revenues from continuing operations.
Three months ended June 30, |
Six months ended June 30, |
||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||
$ | $ | $ | $ | ||||||||
Royalty interests | |||||||||||
Revenues | 39,323 | 34,583 | 78,501 | 69,572 | |||||||
Less: cost of sales (excluding depletion) | (205 | ) | (188 | ) | (340 | ) | (282 | ) | |||
Cash margin (in dollars) | 39,118 | 34,395 | 78,161 | 69,290 | |||||||
Depletion | (5,610 | ) | (6,202 | ) | (12,458 | ) | (13,057 | ) | |||
Gross profit | 33,508 | 28,193 | 65,703 | 56,233 | |||||||
Stream interests | |||||||||||
Revenues | 21,177 | 16,962 | 41,586 | 32,662 | |||||||
Less: cost of sales (excluding depletion) | (4,055 | ) | (3,568 | ) | (7,961 | ) | (6,655 | ) | |||
Cash margin (in dollars) | 17,122 | 13,394 | 33,625 | 26,007 | |||||||
Depletion | (7,357 | ) | (5,649 | ) | (14,004 | ) | (10,092 | ) | |||
Gross profit | 9,765 | 7,745 | 19,621 | 15,915 | |||||||
Royalty and stream interests | |||||||||||
Total cash margin (in dollars) | 56,240 | 47,789 | 111,786 | 95,297 | |||||||
Divided by: total revenues | 60,500 | 51,545 | 120,087 | 102,234 | |||||||
Cash margin (in percentage of revenues) | 93.0 | % | 92.7 | % | 93.1 | % | 93.2 | % | |||
Total – Gross profit | 43,273 | 35,938 | 85,324 | 72,148 | |||||||
Adjusted earnings and adjusted earnings per basic share
Adjusted earnings is defined as: net earnings (loss) adjusted for certain items: foreign exchange gain (loss), impairment of assets (including impairment on financial assets and investments in associates), gains (losses) on disposal of assets, unrealized gain (loss) on investments, share of income (loss) of associates, deferred income tax expense (recovery), transaction costs and other items such as non-cash gains (losses).
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 June 30, |
Six months ended June 30, |
|||||||
2023 | 2022 | 2023 | 2022 | |||||
(in thousands of dollars, except per share amounts) | $ | $ | $ | $ | ||||
Net earnings from continuing operations | 17,961 | 18,059 | 38,809 | 34,863 | ||||
Adjustments: | ||||||||
Impairment of royalty interests | 6,629 | – | 6,629 | – | ||||
Expected credit loss on other investments | 19,860 | 384 | 20,131 | 904 | ||||
Foreign exchange loss (gain) | 9 | (7,593 | ) | 25 | (8,469 | ) | ||
Unrealized net loss on investments | 4,066 | 5,574 | 1,969 | 11,414 | ||||
Share of (income) loss of associates | (19,167 | ) | 1,078 | (13,022 | ) | (1,526 | ) | |
Deferred income tax expense | 3,270 | 8,214 | 10,730 | 13,373 | ||||
Adjusted earnings | 32,628 | 25,716 | 65,271 | 50,559 | ||||
Weighted average number of common shares outstanding (000’s) | 185,302 | 185,316 | 184,990 | 176,182 | ||||
Adjusted earnings per basic share | 0.18 | 0.14 | 0.35 | 0.29 | ||||
Osisko Gold Royalties Ltd | |||||
Consolidated Balance Sheets | |||||
As at June 30, 2023 and December 31, 2022 | |||||
(Unaudited) | |||||
(tabular amounts expressed in thousands of Canadian dollars) | |||||
June 30, | December 31, | ||||
2023 | 2022 | ||||
$ | $ | ||||
Assets | |||||
Current assets | |||||
Cash | 70,033 | 90,548 | |||
Short-term investments | 3,732 | – | |||
Amounts receivable | 5,505 | 11,700 | |||
Other assets | 4,619 | 2,546 | |||
83,889 | 104,794 | ||||
Non-current assets | |||||
Investments in associates | 324,411 | 319,763 | |||
Other investments | 116,108 | 73,504 | |||
Royalty, stream and other interests | 1,546,181 | 1,378,253 | |||
Goodwill | 111,204 | 111,204 | |||
Other assets | 9,335 | 8,783 | |||
2,191,128 | 1,996,301 | ||||
Liabilities | |||||
Current liabilities | |||||
Accounts payable and accrued liabilities | 6,626 | 6,825 | |||
Dividends payable | 11,103 | 10,121 | |||
Lease liabilities | 1,112 | 921 | |||
18,841 | 17,867 | ||||
Non-current liabilities | |||||
Lease liabilities | 7,420 | 6,701 | |||
Long-term debt | 319,650 | 147,950 | |||
Deferred income taxes | 97,120 | 86,572 | |||
443,031 | 259,090 | ||||
Equity | |||||
Share capital | 2,092,786 | 2,076,070 | |||
Contributed surplus | 76,029 | 77,295 | |||
Accumulated other comprehensive income | 26,963 | 47,435 | |||
Deficit | (447,681 | ) | (463,589 | ) | |
1,748,097 | 1,737,211 | ||||
2,191,128 | 1,996,301 |
Osisko Gold Royalties Ltd |
|||||||||||
Consolidated Statements of Income |
|||||||||||
For the three and six months ended June 30, 2023 and 2022 | |||||||||||
(Unaudited) | |||||||||||
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)
|
|||||||||||
Three months ended June 30, |
Six months ended June 30, |
||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||
$ | $ | $ | $ | ||||||||
Revenues | 60,500 | 51,545 | 120,087 | 102,234 | |||||||
Cost of sales | (4,260 | ) | (3,756 | ) | (8,301 | ) | (6,937 | ) | |||
Depletion | (12,967 | ) | (11,851 | ) | (26,462 | ) | (23,149 | ) | |||
Gross profit | 43,273 | 35,938 | 85,324 | 72,148 | |||||||
Other operating expenses | |||||||||||
General and administrative | (7,308 | ) | (4,940 | ) | (13,517 | ) | (9,776 | ) | |||
Business development | (1,297 | ) | (1,260 | ) | (2,793 | ) | (2,681 | ) | |||
Impairment of royalty interests | (6,629 | ) | – | (6,629 | ) | – | |||||
Operating income | 28,039 | 29,738 | 62,385 | 59,691 | |||||||
Interest income | 2,170 | 1,858 | 4,233 | 2,966 | |||||||
Finance costs | (3,445 | ) | (5,543 | ) | (6,315 | ) | (11,469 | ) | |||
Foreign exchange (loss) gain | (172 | ) | 7,711 | (153 | ) | 8,529 | |||||
Share of income (loss) of associates | 19,167 | (1,078 | ) | 13,022 | 1,526 | ||||||
Other losses, net | (23,926 | ) | (5,958 | ) | (22,100 | ) | (12,318 | ) | |||
Earnings before income taxes | 21,833 | 26,728 | 51,072 | 48,925 | |||||||
Income tax expense | (3,872 | ) | (8,669 | ) | (12,263 | ) | (14,062 | ) | |||
Net earnings from continuing operations | 17,961 | 18,059 | 38,809 | 34,863 | |||||||
Net loss from discontinued operations | – | (1,487 | ) | – | (23,820 | ) | |||||
Net earnings | 17,961 | 16,572 | 38,809 | 11,043 | |||||||
Net earnings (loss) attributable to: | |||||||||||
Osisko Gold Royalties Ltd’s shareholders | 17,961 | 17,159 | 38,809 | 17,485 | |||||||
Non-controlling interests | – | (587 | ) | – | (6,442 | ) |
Osisko Gold Royalties Ltd |
|||||||||||
Consolidated Statements of Cash Flows | |||||||||||
For the three and six months ended June 30, 2023 and 2022 | |||||||||||
(Unaudited) | |||||||||||
(tabular amounts expressed in thousands of Canadian dollars) | |||||||||||
Three months ended June 30, |
Six months ended June 30, |
||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||
$ | $ | $ | $ | ||||||||
Operating activities | |||||||||||
Net earnings from continuing operations | 17,961 | 18,059 | 38,809 | 34,863 | |||||||
Adjustments for: | |||||||||||
Share-based compensation | 2,868 | 1,208 | 5,157 | 2,958 | |||||||
Depletion and amortization | 13,271 | 12,112 | 27,025 | 23,685 | |||||||
Impairment of royalty interests | 6,629 | – | 6,629 | – | |||||||
Expected credit losses of other investments | 19,860 | 384 | 20,131 | 904 | |||||||
Finance costs | 124 | 1,804 | 247 | 3,502 | |||||||
Share of (income) loss of associates | (19,167 | ) | 1,078 | (13,022 | ) | (1,526 | ) | ||||
Net gain on acquisition of investments | – | (48 | ) | – | (48 | ) | |||||
Change in fair value of financial assets at fair value through profit and loss | 1,009 | 7,118 | 3,754 | 15,066 | |||||||
Net gain on dilution of investments | – | (1,544 | ) | (4,842 | ) | (3,604 | ) | ||||
Loss on the deemed disposal of an associate | 3,057 | – | 3,057 | – | |||||||
Foreign exchange loss (gain) | 9 | (7,593 | ) | 25 | (8,469 | ) | |||||
Deferred income tax expense | 3,270 | 8,214 | 10,730 | 13,373 | |||||||
Other | 323 | 78 | 236 | 58 | |||||||
Net cash flows provided by operating activities before changes in non-cash working capital items | 49,214 | 40,870 | 97,936 | 80,762 | |||||||
Changes in non-cash working capital items | (1,822 | ) | (5,905 | ) | (5,094 | ) | (5,290 | ) | |||
Net operating cash flows provided by continuing operations | 47,392 | 34,965 | 92,842 | 75,472 | |||||||
Net operating cash flows used by discontinued operations | – | (35,189 | ) | – | (52,086 | ) | |||||
Net cash flows provided (used) by operating activities | 47,392 | (224 | ) | 92,842 | 23,386 | ||||||
Investing activities | |||||||||||
Acquisitions of short-term investments | (2,154 | ) | – | (3,797 | ) | – | |||||
Acquisitions of investments | (53,008 | ) | (384 | ) | (53,279 | ) | (6,680 | ) | |||
Proceeds on disposal of investments | 6 | 2,960 | 6 | 2,960 | |||||||
Acquisitions of royalty and stream interests | (212,762 | ) | – | (212,762 | ) | (9,290 | ) | ||||
Other | (6 | ) | (3 | ) | (6 | ) | (3 | ) | |||
Net investing cash flows (used) provided by continuing operations | (267,924 | ) | 2,573 | (269,838 | ) | (13,013 | ) | ||||
Net investing cash flows used by discontinued operations | – | (97,759 | ) | – | (94,445 | ) | |||||
Net cash flows used in investing activities | (267,924 | ) | (95,186 | ) | (269,838 | ) | (107,458 | ) | |||
Financing activities | |||||||||||
Bought deal equity financing | – | – | – | 311,962 | |||||||
Share issue costs | – | (1,125 | ) | – | (13,941 | ) | |||||
Increase in long-term debt | 186,909 | – | 186,909 | – | |||||||
Repayment of long-term debt, net of discount on banker’s acceptances | – | (113,120 | ) | (13,463 | ) | (113,120 | ) | ||||
Exercise of share options and shares issued under the share purchase plan | 1,662 | 312 | 10,562 | 934 | |||||||
Normal course issuer bid purchase of common shares | – | – | – | (4,879 | ) | ||||||
Dividends paid | (9,292 | ) | (9,755 | ) | (19,045 | ) | (18,478 | ) | |||
Withholding taxes on settlement of restricted and deferred share units | (3,893 | ) | (1,800 | ) | (4,349 | ) | (2,224 | ) | |||
Other | (234 | ) | (217 | ) | (446 | ) | (431 | ) | |||
Net financing cash flows provided (used) by continuing operations | 175,152 | (125,705 | ) | 160,168 | 159,823 | ||||||
Net financing cash flows provided by discontinued operations | – | 210,225 | – | 247,362 | |||||||
Net cash flows provided by financing activities | 175,152 | 84,520 | 160,168 | 407,185 | |||||||
(Decrease) increase in cash before effects of exchange rate changes on cash | (45,380 | ) | (10,890 | ) | (16,828 | ) | 323,113 | ||||
Effects of exchange rate changes on cash | |||||||||||
Continuing operations | (3,671 | ) | 8,500 | (3,687 | ) | 8,408 | |||||
Discontinued operations | – | 2,223 | – | 2,064 | |||||||
(Decrease) increase in cash | (49,051 | ) | (167 | ) | (20,515 | ) | 333,585 | ||||
Cash – beginning of period | 119,084 | 449,450 | 90,548 | 115,698 | |||||||
Cash – end of period | 70,033 | 449,283 | 70,033 | 449,283 |
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