Record cash margin of $187.2 million

Record operating cash flows from the royalties and streams segment of $153.2 million

Osisko Gold Royalties Ltd (TSX:OR)  (NYSE:OR) announced its consolidated financial results for the fourth quarter and full year 2021, and provides guidance for 2022 as well as an inaugural 5-year growth outlook. Amounts presented are in Canadian dollars, except where otherwise noted.

2021 Financial Highlights

• 80,000 GEOs¹ earned in 2021, in-line with guidance (2020 – 66,113 GEOs);
• Record revenues from royalties and streams of $199.6 million (2020 – $156.6 million);
• Consolidated cash flows from operating activities of $106.1 million (2020 – $108.0 million);
  • Record operating cash flows from the royalties and streams segment² of $153.2 million (2020 – $114.0 million);
  • Operating cash flows from the mining exploration and development segment³ (i.e. Osisko Development Corp. – TSX-V:ODV) of ($47.1) million (2020 – ($6.0) million);
• Cash margin⁴ of 93% from royalties and streams or 97% excluding the Renard diamond stream (2020 – 94% or 96% excluding the Renard diamond stream);
• Consolidated net loss attributable to Osisko’s shareholders of $23.6 million, or $0.14 per share, as a result of impairment and mining operating charges from Osisko Development Corp. (“Osisko Development”);
• Consolidated adjusted earnings⁴ of $59.3 million, or $0.35 per basic share (2020 – $48.4 million, $0.30 per basic share);
• Repurchase of 2.1 million common share for $30.8 million under the normal course issuer bid (average acquisition price of $14.64 per share); and
• Increased the quarterly dividend by 10% for an annualized dividend of $0.22 per share.

Q4 2021 Financial Highlights

• 19,830 GEOs earned (Q4 2020 – 18,829 GEOs);
• Record revenues from royalties and streams of $50.7 million (Q4 2020 – $48.8 million);
• Cash margin of 93% from royalty and stream interests or 97% excluding the Renard diamond stream (Q4 2020 – 94% or 97% excluding the Renard diamond stream);
• Consolidated cash flows from operating activities of $12.8 million (Q4 2020 – $32.6 million);
  • Operating cash flows from the royalties and streams segment of $35.1 million (Q4 2020 – $34.1 million);
  • Operating cash flows from the mining exploration and development segment of ($22.3) million (Q4 2020 – ($1.5) million);
• Consolidated net loss attributable to Osisko’s shareholders of $21.2 million, or $0.13 per basic share (Q4 2020 – net earnings of $4.6 million, or $0.03 per basic share), as a result of impairment and mining operating charges from Osisko Development; and
• Consolidated adjusted earnings of $3.3 million, or $0.02 per basic share (Q4 2020 – $15.5 million, or $0.09 per basic share);
  • Adjusted earnings from the royalties and streams segment of $23.8 million, or $0.14 per basic share (Q4 2020 – $19.6 million or $0.12 per basic share);
  • Adjusted loss from the mining exploration and development segment of $20.5 million, or $0.12 per basic share (Q4 2020 – $4.1 million or $0.02 per basic share).

Sandeep Singh, President and CEO of Osisko commented: “We had a strong end to a record year on many fronts in 2021. Our key assets continued to deliver, expand and ramp up, while many of our development assets took meaningful strides forward towards commencing production.

We expect further catalysts on many of our key assets in 2022, including the Malartic underground, Mantos, Eagle and Renard mines, as our operating partners continue to unlock value on large prospective land packages in good jurisdictions. Those catalysts, amongst others, have led to a 10,000 to 15,000 GEO increase in guidance in 2022 versus our 2021 actual deliveries.

To better outline the significant longer-term organic growth in the Company, we have announced an inaugural 5-year growth outlook of between 130,000 and 140,000 GEOs in 2026. The ability to grow by 10-12% compounded annually, on assets that were acquired in the last market downturn, is expected to lead to greater cash flows and diversification for the Company. Importantly, we benefit from other significant assets which we believe will also contribute to growth in this decade, but which we have not included in the outlook given uncertainties on timing.”

Financial Highlights by Operating Segment
(in thousands of dollars, except per share amounts)

As a result of its 75% ownership in Osisko Development, the assets, liabilities, results of operations and cash flows of the Company consolidate the activities of Osisko Development and its subsidiaries. The table below provides some financial highlights per operating segment. More information per operating segment can be found in the consolidated financial statements and management’s discussion and analysis for the three months ended December 31, 2021.

Other Highlights

• Announcement by Agnico Eagle Mines Limited and Yamana Gold Inc. of a positive construction decision for the Odyssey underground mine project. The preliminary economic study outlines a total of 7.29 million gold ounces to be mined, commencing in 2023 and extending the mine life to at least 2039 based on approximately half of the current resources;
• Mantos Copper S.A. announced a merger with Capstone, increasing visibility on Mantos Blancos. Construction has been completed and ramp up is underway for the Concentrator Debottlenecking Project, transitioning the asset to a 20,000 tonne per day sulphide operation. Studies are underway for a further expansion to 27,000 tonnes per day;
• Gold production ramped up at Victoria Gold Corp.’s Eagle mine during the course of 2021 with 105,324 ounces produced in the second half of 2021. Victoria heightened the pace of exploration, targeting several areas to expand the resource base on the Dublin Gulch property. Importantly, Victoria announced the initiation of “Project 250” aimed at increasing the average annual gold production to 250,000 ounces of gold during 2023;
• Took several positive steps towards ongoing commitments to ESG, including the publication of the inaugural ESG report, an investment and partnership with Carbon Streaming Corporation and commitment to the United Nations Global Compact;
• Amendment of the revolving credit facility (the “Facility”) and increase of the amount available by $150.0 million to $550.0 million, with an additional uncommitted accordion of up to $100.0 million (for a total availability of up to $650.0 million);
• In January 2022, Osisko Development entered into definitive agreements to acquire 100% of Tintic Consolidated Metals LLC (“Tintic”). Osisko Bermuda Limited (“Osisko Bermuda”) entered into a non-binding metals stream term sheet, with a wholly-owned subsidiary of Osisko Development, for between US$20 million and US$40 million. In the event that the full amount of US$40 million is drawn, Osisko Development will deliver to Osisko Bermuda 5% of all metals produced from the Tintic property until 53,400 ounces of refined gold have been delivered and 4.0% thereafter;
• In February 2022, Osisko Development announced a bought-deal private placement of $90.0 million and a non-brokered private placement of US$110.3 million. After closing of the Tintic acquisition and the financings announced by Osisko Development, the ownership of the Company in Osisko Development is expected to decrease to approximately 45%; and

• Declared a quarterly dividend of $0.055 per common share payable on April 14, 2022 to shareholders of record as of the close of business on March 31, 2022.

2022 Guidance

Osisko’s 2022 guidance on royalty and stream interests is largely based on publicly available forecasts from our operating partners. When publicly available forecasts on properties are not available, Osisko obtains internal forecasts from the producers or uses management’s best estimate.

GEOs⁽ⁱ⁾ earned and cash margin by interest are estimated as follows for 2022:

For the 2022 guidance, deliveries of silver and cash royalties have been converted to GEOs using commodity prices of US$1,800 per ounce of gold, US$23.50 per ounce of silver and an exchange rate (US$/C$) of 1.26. GEOs from the Renard diamond stream were converted to GEOs using a price of US$110 per carat for the period commencing on May 1, 2022 because, prior to such date, Osisko has committed to reinvest the net proceeds from the stream through a bridge loan facility provided to the operator.

5-Year Outlook

Osisko expects its portfolio to generate between 130,000 and 140,000 GEOs in 2026. The outlook assumes the commencement of production at the San Antonio, Cariboo, Windfall and Back Forty projects amongst others. It also assumes that Mantos will have reached its nameplate capacity following the recent expansion of its activities, as well as increased production from certain other operators that have announced planned expansions.

Beyond this substantial growth profile, Osisko owns several other growth assets, including Hermosa, Pine Point, Spring Valley, Horne 5, Casino, Copperwood/White Pine, Amulsar and others, which have not been factored in the current 5-year outlook, as their timelines are either later, or less clear. As the operators provide further clarity on these assets, we will seek to include them in our long-term outlook.

This 5-year outlook is based on publicly available forecasts from our operating partners. When publicly available forecasts on properties are not available, Osisko obtains internal forecasts from the producers or uses management’s best estimate. The commodity price assumptions that were used in the 5-year outlook are based on current long-term consensus and a gold/silver price ratio of 75:1.

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 160 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.

Notes:

Average Metal Prices and Exchange Rate

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.

Adjusted earnings (loss) and adjusted earnings (loss) per basic share

Adjusted earnings (loss) 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 exploration and evaluation assets, unrealized gain (loss) on investments, share of loss of associates, deferred premium income on flow-through shares, deferred income tax expense (recovery), transaction costs and other items such as non-cash gains (losses).

Adjusted earnings (loss) per basic share is obtained from the adjusted earnings (loss) divided by the weighted average number of common shares outstanding for the period.