OSK getting a bounce on earnings ....
Osisko earns $26.15-million in Q3
Ticker Symbol: C:OSK Osisko earns $26.15-million in Q3 Osisko Mining Corp (C:OSK)
Shares Issued 389,511,845
Last Close 11/12/2012 $9.02
Tuesday November 13 2012 - News Release
Mr. Sean Roosen reports
OSISKO REPORTS THIRD QUARTER 2012 RESULTS; MINE OPERATING PROFITS OF $60.1 MILLION, NET PROFIT OF $26.2 MILLION
Osisko Mining Corp. has generated a net profit of $26.2-million (seven cents per share) during the third quarter of 2012 versus a net profit of $9.3-million in the third quarter of 2011 (two cents per share). The higher profitability is attributable to continued progress on the ramp up of the Canadian Malartic mine and improved margins.
Q3 Highlights
-- Gold production of 103,753 ounces, a new quarterly record; -- Operating cash flow of $55.4 million; -- Continued progress on plant ramp up and optimization with record tonnage mined and milled being achieved; and -- Cash costs per ounce of C$864. Q4 Preview
-- Drilling program initiated in Mexico in late October; -- Record daily mill throughput of 58,476 tonnes achieved in the first week of November; and -- Announcement of the friendly acquisition of Queenston Mining Inc. in November.
Mine operating profits during the third quarter totaled $60.1 million compared to $38.3 million in the corresponding period in 2011. Record gold production of 103,753 ounces was achieved during the period. Gold production continues to increase quarter-over-quarter with improvements in the milling plant following the installation and commissioning of the two secondary cone crushers, increased availability in the circuit and optimization measures. The table below outlines the steady progress towards achieving design mill throughput rates, rising availability and subsequent increase of gold production.
------------------------------------------------------------ Tonnes per Availability Gold Production Operating Day (%) (oz) ------------------------------------------------ Q3 2012 43,181 94 103,753 Q2 2012 38,074 90 92,003 Q1 2012 35,728 87 91,178 Q4 2011 33,733 90 79,718 Q3 2011 36,742 86 73,814 Q2 2011 29,894 82 46,606 ------------------------------------------------------------
Sean Roosen, President and Chief Executive Officer of Osisko, commenting on the third quarter results: "We continue to focus on ramping up our operations at Canadian Malartic to the 55,000 tonnes per day name plate capacity. We are making very good progress and are increasing our gold output and improving our profit margins. Our cash unit cost decreased by 15% during the period and we continue to benefit from robust gold market".
During the first nine months of 2012, the Canadian Malartic mine generated a net profit of $171.6 million and Osisko a net profit of $68.8 million ($0.18 per share). In 2011, the year-to-date mine operating profits amounted to $39.9 million from commencement of commercial production on May 19, 2011, and the Company incurred a net loss of $19.8 million ($0.05 per share). In addition to the shorter operation period, the 2011 results were impacted by exploration project write-offs and special incentive awards following the completion of the Canadian Malartic Project.
Operating cash flow amounted to $55.4 million for the quarter and $189.8 million for year-to-date, compared to $49.5 million and $46.0 million in the corresponding periods of 2011. Investments in mining assets totaled $189.5 million to date during 2012.
The mine operating statement for the production period is as follows:
---------------------------------------------------------------------------- Q3 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2011 ------------------------------------------------------------ Gold sales (ounces) 95,424 95,675 92,400 75,100 72,100 Silver sales (ounces) 49,751 48,880 52,800 42,100 49,800 ---------------------------------------------------------------------------- ($000) ($000) ($000) ($000) ($000) ------------------------------------------------------------ Revenues 158,503 157,134 158,658 128,100 122,879 ---------------------------------------------------------------------------- Production Costs (81,841) (98,837) (71,910) (74,841) (74,647) Royalties (1,998) (2,021) (2,359) (1,933) (1,192) Depreciation (14,605) (15,289) (13,877) (11,800) (8,748) ------------------------------------------------------------ Total (98,444) (116,147) (88,146) (88,574) (84,587) ------------------------------------------------------------ Net Mining Profit 60,059 40,987 70,512 39,526 38,292 ----------------------------------------------------------------------------
Improvements in unit cost in the quarter compared to the second quarter include:
i. Increased throughput and mill efficiencies; ii. Lower contractors' costs; iii.Improved mining conditions (second quarter results were impacted by defective boosters in the blasting cycle); and iv. Elimination of inefficiencies caused by the May 9, 2012 mill fire;
Key operating results
(in thousands of Canadian dollars, unless otherwise noted)
---------------------------------------------------------------------------- Q3 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2011 -------------------------------------------------- Gold Production (oz) 103,753 92,003 91,178 79,718 73,814 Gold Sales (oz) 95,424 95,675 92,400 75,100 72,100 Average Sale Price (US$/oz) 1,659 1,605 1,698 1,655 1,695 Average Market Price (US$/oz) 1,652 1,609 1,691 1,688 1,702 Cash Costs per Ounce (C$/oz) 864 1,015 860 936 918 Cash Costs per Ounce (US$/oz) 867 1,004 858 914 939 Cash Margin per Ounce (US$/oz) 792 601 840 741 756 Revenues 158,503 157,134 158,658 128,100 122,879 Mine Operating Profit 60,059 40,987 70,512 39,526 38,292 Net Earnings 26,156 13,271 29,359 37,802 9,302 Net Earnings per Share 0.07 0.03 0.08 0.10 0.02 Operating Cash Flows 55,353 55,698 78,716 39,660 49,512 ----------------------------------------------------------------------------
The production statistics are as follows:
---------------------------------------------------------------------------- Q3 Q2 Q1 Q4 Q3 2012 2012 2012 2011 2011 ------------------------------------------------------------ Tonnes Mined (000's) - Ore 4,853 3,234 4,037 3,549 3,005 - Waste 9,215 9,545 8,458 10,590 7,899 - Overburden 1,409 1,740 1,954 1,823 1,029 ------------------------------------------------------------ Total 15,477 14,519 14,449 15,962 11,933 Tonnes Milled (000's) 3,757 3,236 2,965 2,935 3,086 Grade (g Au/t) 0.97 0.99 1.05 0.96 0.85 Recovery (%) 88.7 89.2 91.2 88.3 87.0 Gold production (oz) 103,753 92,003 91,178 79,718 73,814 ----------------------------------------------------------------------------
Mining activities in the period were impacted by a delay in executing a blast of 940,000 tonnes over old underground workings, which limited access to higher grade ore. The blast was successfully completed on October 27, 2012.
During October 2012, mill throughput continued to progress with more than 1.53 million tonnes being milled for an average daily throughput rate of 49,361 tonnes per day. Gold production totaled 36,440 ounces. Ore grade was 0.83 g/t, due to constraints in the mining areas as a result of the delayed blast and processing stockpiled ore. Though throughputs continue to increase in October, recoveries remain above feasibility expectations at 88.9%.
In the first eight days of November, the mill processed at an average daily rate of 52,853 tonnes and achieved a record throughput of 58,476 tonnes on November 4, 2012.
Mill operating statistics continue to show progress in all categories.
---------------------------------------------------------------------------- Total Tonnes per Available Operating Tonnage Tonnes Operating Hours Hours (%) Produced (t) per Hour Day ---------------------------------------------------------------------------- Q2 2011 2,184 1,793 82 2,481,196 1,384 29,894 Q3 2011 2,208 1,890 86 3,086,324 1,633 36,742 Q4 2011 2,208 1,995 90 2,934,803 1,471 33,733 Q1 2012 2,184 1,890 87 2,965,456 1,569 35,728 Q2 2012 2,184 1,960 90 3,236,281 1,651 38,074 Q3 2012 2,208 2,071 94 3,756,768 1,814 43,181 ----------------------------------------------------------------------------
Osisko's operating focus for the balance of 2012 will be:
i. Complete planned mill modifications with the installation of the second pebble crusher; ii. Stabilize the operating circuit to reach steady-state throughput design capacity of 55,000 tonnes per day; iii.Improve productivity of the mine; iv. Focus on optimization of operations and unit cost reduction. Improved Financial Flexibility
During the second quarter, the Company amended its $150 million credit facility with CPPIB Credit Investments Inc. ("CPPIB"), a wholly-owned subsidiary of the CPP Investment Board, with CPPIB making available to the Company an additional $100 million delayed draw term loan. The key terms of the amendment are as follows:
-- The initial cash repayment schedule has been extended by one year to June 30, 2013. The reimbursements are based on 50% of free cash flow up to $60 million per annum. -- CPPIB will make available a delayed draw term loan of $100 million for working capital and general corporate purposes. Osisko may draw funds under this facility in $20 million increments, and any funds outstanding are reimbursable by December 31, 2013. No funds were drawn to date on this facility. There are no standby fees related to this tranche.
As part of the agreement, Osisko has agreed to reduce the strike price of share purchase warrants to $10 for Tranche A (was previously $10.75) and Tranche B (was previously $19.25). Of the total 12.5 million of warrants, 5.5 million Tranche B warrants can be accelerated at Osisko's discretion if the share price trades at a 50% premium to the exercise price for a period of 15 days. Tranche A warrants expire on September 24, 2014 and Tranche B warrants are set to expire on December 31, 2015.
Osisko made its second installment guarantee payment of $12.7 million to the Quebec Government on October 1, 2012, to fund future estimated closure costs which are estimated at $46.4 million. Total funds deposited with the Government amount to $34.8 million.
Exploration and Development
The Company continues to conduct exploration work on a regional basis around the Canadian Malartic infrastructure for additional resources and reserves. At Hammond Reef, the Company has initiated work necessary for the Project Feasibility Study, which is expected to be completed in late 2012 or early 2013. The Minister of Environment of Ontario has approved the Terms of Reference for the Environmental Impact Assessment.
The Company has also acquired a significant land package in an emerging Mexican gold belt. To date, approximately 1M hectares of ground have been staked. A systematic greenfield exploration program has been completed, and a significant target has been identified following a high density stream sediment survey, detailed mapping, geochemistry and geophysics work. An initial 10,000 meter drill program was initiated in late October.
Proposed Friendly Acquisition of Queenston Mining Inc.
On November 12, 2012, Osisko announced that it had entered into a definitive agreement to acquire, on a friendly basis, all of the issued and outstanding common shares of Queenston Mining Inc. ("Queenston") on the basis of 0.611 of an Osisko common share for each common share of Queenston. Queenston is a Canadian mineral exploration and development company with a primary focus on its holdings in the historic Kirkland Lake gold camp comprising 230km2 of exploration lands. Osisko has entered into lock-up agreements with Queenston insiders and certain significant shareholders representing approximately 30% of the issued and outstanding common shares of Queenston. At the date of announcement, the transaction valued Queenston's equity at approximately $550,000,000, and would result in the issuance of approximately 56,000,000 common shares of Osisko, based on the fully diluted in-the-money common shares outstanding of Queenston, representing approximately 12% of Osisko outstanding common shares, post transaction.
The board of directors of Queenston has unanimously approved the transaction and will recommend that shareholders vote in favor of the transaction. Completion of the transaction, by way of a plan of arrangement, is subject to customary conditions, including court approval, a favourable vote of at least 66 2/3 % of the holders of Queenston common shares and the receipt of all necessary regulatory and stock exchange approvals. Assuming all of the conditions are fulfilled, it is expected the transaction will be completed in late 2012 or early 2013.
Non-IFRS Financial Performance Measures
The Company has included certain non-IFRS measures including "cash cost per ounce" and "cash margin per ounce" to supplement its consolidated financial statements, which are presented in accordance with International Financial Reporting Standards ("IFRS"). Refer to the Company's Management Discussion and Analysis for the three months ended September 30, 2012.
Q3 Conference Call Information
Osisko will host a conference call on Wednesday November 14th at 8:00am EST, 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) 981-9012 (Toronto local and international), or 1-800-909-4792 (North American toll free). An operator will direct participants to the call.
The conference call replay will be available from 10:00 a.m. EST on November 14, 2012 until 11:59 p.m. EST on November 29, 2012 with the following dial in number: (416) 626-4100 or Toll-free 1-800-558-5253, access code 21607972.
Mr. Luc Lessard, Eng., Senior Vice-President and Chief Operating Officer 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.
Consolidated Statements of Income (Loss) For the three and nine months ended September 30, 2012 and 2011 (Unaudited) ---------------------------------------------------------------------------- (tabular amounts expressed in thousands of Canadian dollars, except per share amounts) Three months ended Nine months ended September 30, September 30, ------------------------------------------------ 2012 2011 2012 2011 ------------------------------------------------ $ $ $ $ Revenues 158,503 122,879 474,295 135,308 Mine operating costs Production costs (81,841) (74,647) (252,588) (84,045) Royalties (1,998) (1,192) (6,378) (1,351) Depreciation (14,605) (8,748) (43,771) (9,986) ------------------------------------------------ Earnings from mine operations 60,059 38,292 171,558 39,926 General and administrative expenses (7,601) (6,577) (20,950) (24,563) Exploration and corporate development expenses (2,852) (7,774) (8,105) (20,934) Other expenses - - - (485) ------------------------------------------------ Earnings (loss) from operations 49,606 23,941 142,503 (6,056) Interest income 233 454 1,145 1,964 Finance costs (7,983) (6,995) (22,825) (10,766) Foreign exchange gain (loss) 3,431 (4,331) 3,160 (2,817) Share of loss of associates (353) (29) (628) (480) Other gains (losses) 82 (1,758) (2,982) 1,326 ------------------------------------------------ Earnings (loss) before income and mining taxes 45,016 11,282 120,373 (16,829) Income and mining tax expense (18,860) (1,980) (51,587) (2,976) ------------------------------------------------ Net earnings (loss) 26,156 9,302 68,786 (19,805) ------------------------------------------------ ------------------------------------------------ Net earnings (loss) per share Basic 0.07 0.02 0.18 (0.05) Diluted 0.07 0.02 0.18 (0.05)
We seek Safe Harbor.
© 2012 Canjex Publishing Ltd. |
