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Press release from Marketwire

Osisko Releases Second Quarter 2011 Results

Thursday, August 11, 2011

Osisko Releases Second Quarter 2011 Results16:17 EDT Thursday, August 11, 2011MONTREAL, QUEBEC--(Marketwire - Aug. 11, 2011) - Osisko Mining Corporation (the "Company" or "Osisko") (TSX:OSK)(FRANKFURT:EWX) is pleased to report its review of activities and financial results for the quarter ended June 30, 2011.HighlightsCommencement of commercial production at Canadian Malartic on May 19, 2011 Gold production of 46,605 ounces Continued progress in mill and mine ramp up Mine operating earnings of $1.6 million Loss of $23.8 million Withdrawal from Duparquet Project The Canadian Malartic Mine successfully commenced commercial production on May 19, 2011, approximately six years after the first drilling conducted by Osisko at Malartic in March 2005. Commercial production was established on the first day of a 30-day period during which the mill processed 60% or better than the mill design capacity of 55,000 tonnes per day. Since introduction of ore in March, the ramp up has been successful despite the stops and starts that are normally experienced during the initial phase of a mining operation.Sean Roosen, President and Chief Executive Officer commenting on the second quarter activities: "We are extremely proud of our team's efforts in rapidly moving Canadian Malartic from an exploration project to a producer, particularly considering the major challenges of developing a $1 billion project in an urban area."The Canadian Malartic operations are expected to produce between 235,000 and 245,000 ounces of gold during the second semester of 2011 at an estimated cash cost of between $675-$775 per ounce. The progression is anticipated to continue in 2012 with the mine producing approximately 700,000 ounces at an estimated cash cost of $450-$500 per ounce.Sean Roosen commenting on the forecast: "We are aiming to produce one million ounces over the next 18 months in a very favorable gold market. The expected strong margins should result in a payback of the project in slightly less than two years".The Canadian Malartic Mine generated a $1.6 million profit during its initial 43-day operating period from the sale of 8,300 ounces. The remaining ounces produced during commercial production are in the circuit inventory. For the second quarter, Osisko incurred a loss of $23.8 million ($0.06 per share) due mainly to the write-off of Duparquet Project ($10.9 million), higher administrative costs, and expensed finance costs now that the Canadian Malartic Mine is in commercial production. The second quarter loss in 2010 amounted to $10.2 million ($0.03 per share). There were no mining operations prior to May 2011.For the year-to-date, the loss totaled $29.1 million ($0.08 per share) compared to a loss of $10.7 million ($0.03 per share) in the corresponding period in 2010.Canadian Malartic MineThe Canadian Malartic Mine produced 46,605 ounces of gold in the second quarter from the treatment of 1.5 million tonnes of ore. Ore was first introduced late in March. Production statistics for the quarter are as follows:Pre-ProductionProductionTotalOre Tonnes Mined (t)866,947829,4191,696,366Tonnes Milled (t)1,010,4131,470,7832,481,196Grade (g/t Au)0.690.650.67Recovery (%)87.488.087.8Ounces Produced (oz)19,50527,10046,605Cash Cost per Ounce ($)N/A1,094N/AThe higher production costs are attributable to initial low grade material, normal inefficiencies experienced during a ramp up period, and industry-wide inflationary pressures.The mine generated an operating profit of $1.6 million from the sale of 8,300 ounces. The remaining ounces are categorized in inventory. Prior to commercial production, the Company incurred a loss during the commissioning period which was capitalized.The mine operating statement for the production period is as follows:($000)Gold Revenues12,429Operating Costs26,860Stockpile Costs2,406Total29,266Royalties and Refining610Depreciation4,959Total Costs34,835Less Inventory(24,040)Total Production Costs10,795Net Mining Profit1,634The mining activities have been affected by the delays in the construction of the green wall separating the mine and the residential area, the feedstock area for the wall construction, the noise levels of the mining operations and to a lesser extent the accelerated completion of the project, three months ahead of schedule. These factors necessitated earlier access to lower grade material than modeled in the feasibility, and the grade of ore treated is expected to increase throughout the second semester. Lower grade material has a significant negative impact on the unit costs. It is important to note however, that the mining grades are conforming to the reserve block model (+2% average variation), validating the extensive drilling program conducted to establish the mining reserves and plan.The mill continues its ramp up process with scheduled shut downs for verifications, repairs and modifications. The operating statistics are as follows:TotalAvailable HoursOperatingHours%Tonnage(t)Tonnes/HourTonnes/per Calendar DayApril72046865465,90099515,530May74464687892,5531,38228,792June720679941,122,7421,65437,425July*744595801,006,4971,69132,468August (7 days )16815190271,9621,80038,852* Three full days of shut down for SAG mill liner change.A new daily throughput record of 47,485 tonnes processed was established on August 7, 2011.The ramp up period has demonstrated that the rock hardness is as anticipated and the crusher and ball mills are performing better than their design criteria. The ramp up has also shown that the ore's SAG impact breakage index has demonstrated lower SAG grindability. The addition of a pre-crush circuit will allow for throughput expansion to 60,000+ tpd. The units have been ordered and will be available in early 2012, with the project costs estimated at $32 million. A portable crushing unit has been installed to increase the crushing capacity in the meantime.Exploration and DevelopmentThe Company continues to aggressively pursue growth of reserve and resource base through intensive drilling programs around the Canadian Malartic Mine, at its Hammond Reef Project and on various grass-roots projects in Eastern Canada. A total of 88,336 metres (341 holes) were drilled during the second quarter, mostly from the definition drill program at Hammond Reef.Following an evaluation of the results from its $15 million exploration program at Duparquet, the Company decided to serve notice to Clifton Star Resources that it was withdrawing from its joint venture program. As a result, a write-off of $10.9 million was recorded in the second quarter.Second Quarter 2011 Results Conference CallOsisko will host a conference call on Friday, August 12 at 10:00 AM EDT, where senior management will discuss the financial results and provide an update of the Company's activities. Those interested in participating in the conference call should dial in at 416-981-9000 (Toronto local and international), or 1-800-755-1805 (North American toll free). An operator will direct participants to the call. The call will be retransmitted for 14 days with the following dial in number: 416-626-4100 or Toll-free 1-800-558-5253, access code 21534865.Highlights from the Company's financial position are as follows (in millions of dollars):June 30, 2011December 31, 2010(1)Cash Position(2)175.7397.9Working Capital101.5282.9Total Assets1,951.41,958.9Total Debt289.4287.9Shareholders' Equity1,586.61,594.0(1) Revised under IFRS(2) Includes Cash and Cash equivalents, Short-term investments and Restricted cash.The unaudited condensed interim consolidated financial statements and Management Discussion and Analysis for the period ended June 30, 2011 will be filed on SEDAR on August 15, 2011.About Osisko Mining Corporation Osisko Mining Corporation operates the Canadian Malartic Gold Mine in Malartic, Quebec and is pursuing exploration on a number of properties, including the Hammond Reef Gold Project in Northern Ontario.Mr. Luc Lessard, P. Eng., Senior Vice-President and COO of Osisko, is the Qualified Person who has reviewed this news release and is responsible for the technical information reported herein, including verification of the data disclosed. Osisko Mining CorporationConsolidated Statements of Income (Loss)For the three and six months ended June 30, 2011 and 2010(Unaudited)(tabular amounts expressed in thousands of Canadian dollars)Three months ended June 30,Six months ended June 30,2011201020112010$$$$Revenues12,429-12,429-Mine operating costsProduction costs(9,398)-(9,398)-Royalties(159)-(159)-Depreciation and depletion(1,238)-(1,238)-Earnings from mine operations1,634-1,634-General and administrative expenses(12,018)(5,444)(18,194)(9,991)Exploration and corporate development expenses(11,811)(210)(13,160)(571)Other expenses--(485)-Loss from operations(22,195)(5,654)(30,205)(10,562)Interest income6016521,5101,301Finance costs(3,771)-(3,771)-Foreign exchange gain (loss)466(2,803)1,51492Share of loss of associate(345)-(451)(198)Other gains (losses)1,984(2,088)3,292(1,366)Loss before income taxes(23,260)(9,893)(28,111)(10,733)Income tax expense(566)(295)(996)(6)Loss for the period(23,826)(10,188)(29,107)(10,739)Attributable to:Osisko Mining Corporation(23,826)(10,123)(29,107)(10,674)Non-controlling interests-(65)-(65)(23,826)(10,188)(29,107)(10,739)Loss per shareBasic and diluted(0.06)(0.03)(0.08)(0.03)Osisko Mining CorporationConsolidated Balance Sheets(Unaudited)(tabular amounts expressed in thousands of Canadian dollars)June 30, 2011December 31, 2010$$AssetsCurrent assetsCash and cash equivalents150,976358,493Short-term investments3,04517,068Restricted cash7,22011,176Accounts receivable38,24330,731Mining taxes receivable-2,058Inventories42,077-Other current assets8,0117,329249,572426,855Non-current assetsRestricted cash14,46811,202Investment in an associate1,7072,158Other investments34,06440,851Property, plant and equipment1,651,5461,477,8181,951,3571,958,884LiabilitiesCurrent liabilitiesAccounts payable and accrued liabilities70,82173,519Current portion of long-term debt77,20770,405148,028143,924Non-current liabilitiesLong-term debt212,172217,481Provisions4,5723,494364,772364,899Equity attributable to Osisko Mining Corporation shareholdersShare capital1,627,1201,606,051Warrants13,16613,166Contributed surplus50,46543,390Equity component of convertible debenture8,0058,005Accumulated other comprehensive income4,58211,019Deficit(116,753)(87,646)1,586,5851,593,9851,951,3571,958,884Osisko Mining CorporationConsolidated Statements of Cash FlowsFor the six months ended June 30, 2011 and 2010(Unaudited)(tabular amounts expressed in thousands of Canadian dollars)20112010$$Operating activitiesLoss for the period(29,107)(10,739)Adjustments for:Interest income(1,510)(1,301)Share-based compensation5,4532,815Depreciation1,574186Finance costs1,292-Write-off of property, plant and equipment11,381-Unrealized foreign exchange loss (gain)(2,009)10Share of loss of associate451198Loss (gain) on sale of available-for-sale financial assets(5,017)396Unrealized net loss on financial assets at fair value through profit and loss4,4711,919Deferred gain - premium on flow-through shares(2,228)(949)Provisions135-Deferred tax expense9966Other non-cash gain(639)-(14,757)(7,459)Change in non-cash working capital items9,175694Net cash flows used in operating activities(5,582)(6,765)Investing activitiesNet decrease in short-term investments14,02330,329Net decrease in restricted cash6901,575Decrease in cash collateral investments-2,851Acquisition of investments(11,294)(24,447)Proceeds on disposal of investments11,8343,891Property, plant and equipment, net of government credits(237,023)(229,787)Acquisition of assets-39,861Interest income1,6141,281Net cash flows used in investing activities(220,156)(174,446)Financing activitiesDebt issuance costs(18)-Finance lease payments(819)(7,322)Long-term debt repayments(833)-Issuance of common shares, net of issue expenses19,89113,994Net cash flows generated from financing activities18,2216,672Decrease in cash and cash equivalents(207,517)(174,539)Cash and cash equivalents – beginning of period358,493673,777Cash and cash equivalents – end of period150,976499,238Cautionary Notes Concerning Estimates of Mineral Resources This news release uses the terms measured, indicated and inferred resources as a relative measure of the level of confidence in the resource estimate. Readers are cautioned that mineral resources are not economic mineral reserves and that the economic viability of resources that are not mineral reserves has not been demonstrated. In addition, inferred resources are considered too geologically speculative to have any economic considerations applied to them. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies or economic studies except for Preliminary Assessment as defined under NI 43-101. Readers are cautioned not to assume that that further work will lead to mineral reserves that can be mined economically. Forward Looking Statements Certain statements contained in this Press Release, may be deemed "forward-looking statements". All statements in this release, other than statements of historical fact, that address events or developments that the Corporation expects to occur, are forward looking statements. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur. Although the Corporation believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, including, without limitation that all technical, economical and financial conditions will be met in order to put the Canadian Malartic Project into commercial production, such statements are not guarantees of future performance and actual results may differ materially from those in forward looking statements. Factors that could cause the actual results to differ materially from those in forward-looking statements include gold prices, access to skilled mining development and mill production personnel, results of exploration and development activities, the Corporation's limited experience with production and development stage mining operations, uninsured risks, regulatory changes, defects in title, availability of materials and equipment, timeliness of government approvals, actual performance of facilities, equipment and processes relative to specifications and expectations, unanticipated environmental impacts on operations costs, continued availability of capital and financing and general economic, market or business conditions. These factors are discussed in greater detail in the Corporation's most recent Annual Information Form filed on SEDAR, which also provides additional general assumptions in connection with these statements. The Corporation cautions that the foregoing list of important factors is not exhaustive. Investors and others who base themselves on the Corporation's forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. The Corporation believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct.FOR FURTHER INFORMATION PLEASE CONTACT: Vice-President Corporate DevelopmentJohn Burzynski(416) 363-8653www.osisko.comORDirector of Investor RelationsSylvie Prud'homme(514) 735-7131Toll Free: 1-888-674-7563