Osisko Reports Second Quarter 2013 Results

August 1, 2013

MONTREAL, QUEBEC--(Marketwired - Aug 1, 2013) - Osisko Mining Corporation (the "Company" or "Osisko") (OSK.TO)(EWX.F) today reported adjusted net earnings1 of $25.1 million ($0.06 per share) for the second quarter of 2013 compared to 35.6 million ($0.09 per share) for the second quarter of 2012. The net loss for the quarter amounted to $492.8 million ($1.13 per share) mainly as a result of an after-tax impairment charge on the Hammond Reef gold project of $487.8 million, compared to net earnings of $19.0 million in the second quarter of 2012 ($0.05 per share).

Q2 Highlights

  • Gold production of 111,701 ounces;
  • Earnings from Canadian Malartic of $42.6 million;
  • Operating cash flows of $55.9 million;
  • Free cash flows2 of $15.1 million;
  • Impairment charge of $487.8 million on the Hammond Reef gold project, net of tax;
  • Net loss of $492.8 million or $1.13 per share;
  • Adjusted net earnings1 of $25.1 million;
  • Investment of $59.9 million in mining assets and projects;
  • Reduction of over $80.0 million in capital budget for 2013;
  • Record tonnage processed at 4.4 million tonnes;
  • Record monthly gold production of 45,062 ounces in June 2013;
  • Record one-month average daily throughput of 53,138 tonnes in May 2013;
  • Collection of the $30.0 million note receivable from Kirkland Lake Gold Inc.;
  • Final deposit of $11.6 million to cover the future rehabilitation costs of the Canadian Malartic mine, for a total deposit to date of $46.4 million, representing 100% of the required guarantee;
  • Company is maintaining annual gold production estimate of 485,000-510,000 ounces;
  • Agreements to reschedule payments of $225.0 million on the long-term debt.

Sean Roosen, President and Chief Executive Officer commenting on the second quarter results: "We continue our progress at Canadian Malartic with improved mill throughput and strong gold production. Despite challenging gold markets, we were able to generate operating cash flows of $55.9 million and free cash flows2 of $15.1 million during the period. Our team is focused on further improving these results."

1 Reconciliation of non-IFRS measures is provided under Non-IFRS Measures of Performance of this press release.

2 Free cash flows represent the increase (decrease) in cash and cash equivalents in the Consolidated Statements of Cash Flows.

The mine operating statement for the production period is as follows:

2013 2012 (Restated)3
Q2 Q1 Q4 Q3 Q2 Q1
Gold sales (ounces) 109,503 95,511 111,104 95,424 95,675 92,400
Silver sales (ounces) 95,205 73,683 74,100 49,751 48,880 52,800
($000 ) ($000 ) ($000 ) ($000 ) ($000 ) ($000 )
Revenues 159,195 159,381 191,080 158,503 157,134 158,658
Production costs (90,619 ) (81,422 ) (95,307 ) (77,684 ) (89,494 ) (69,932 )
Royalties (2,274 ) (1,992 ) (2,546 ) (1,998 ) (2,021 ) (2,359 )
Depreciation (23,683 ) (20,982 ) (20,058 ) (15,318 ) (15,635 ) (13,909 )
Total (116,576 ) (104,396 ) (117,911 ) (95,000 ) (107,150 ) (86,200 )
Earnings from mine operations 42,619 54,985 73,169 63,503 49,984 72,458

Key operating results

(in thousands of Canadian dollars, unless otherwise noted)

Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012 Q1 2012
Gold production (oz) 111,701 106,047 101,544 103,753 92,003 91,178
Gold sales (oz) 109,503 95,511 111,104 95,424 95,675 92,400
Average sale price (US$/oz) 1,396 1,627 1,709 1,659 1,605 1,698
Average market price (US$/oz) 1,415 1,632 1,722 1,652 1,609 1,691
Cash costs per ounce3,4 (C$/oz) 781 804 833 851 892 821
Cash costs per ounce3,4,5(US$/oz) 765 798 840 855 883 820
Cash margin per ounce (US$/oz)3,4 631 829 869 804 722 878
Revenues 159,195 159,381 191,080 158,503 157,134 158,658
Earnings from mine operations3 42,619 54,985 73,169 63,503 49,984 72,458
Net earnings (loss)3 (492,762 ) 17,416 12,866 28,343 18,984 30,595
Net earnings (loss) per share3 (1.13 ) 0.04 0.03 0.07 0.05 0.08
Operating cash flows3 55,947 62,478 64,608 55,806 68,212 82,879

3 Balances related to 2012 have been restated to reflect the impact of the adoption of IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine

4 Reconciliation of non-IFRS measures is provided under Non-IFRS Measures of Performance of this press release.

5 Using the average exchange rate.

Following continued improvement in mill availability and throughput rates, the mine established a quarterly gold production record of 111,701 ounces. Average daily throughput reached 48,836 tonnes, a 4% increase over the first quarter of 2013 and a 37% increase over the corresponding period in 2012. Throughput rate continues to progress favorably with the past quarter being the sixth consecutive quarterly increase. Cash cost per ounce6 for the period amounted to $781. The mine generated second quarter operating earnings of $42.6 million, compared to $50.0 million in the second quarter of 2012. The decrease in profit from mine operations is mainly due to a 12% decline in price realized on the sale of gold and higher depreciation charges.

During the quarter, approximately 4,470 equipment hours (5.9% of available hours) were lost due to noise and weather constraints, compared to 1,510 equipment hours (1.7% of available hours) in the first quarter of 2013 and 4,510 (5.2% of available hours) equipment hours in the second quarter of 2012.

The production statistics are as follows:

Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012 Q1 2012
Tonnes Mined (000's)
- Ore 3,604 4,091 3,553 4,853 3,234 4,037
- Waste7 10,010 10,158 7,847 9,215 9,545 8,458
Total Mined 13,614 14,249 11,400 14,068 12,779 12,495
Overburden 871 1,783 627 1,409 1,740 1,954
Tonnes Milled (000's) 4,444 4,234 4,088 3,757 3,236 2,965
Grade (g Au/t) 0.87 0.88 0.87 0.97 0.99 1.05
Recovery (%) 89.7 88.0 88.8 88.7 89.2 91.2
Gold production (oz) 111,701 106,047 101,544 103,753 92,003 91,178

Production in the second quarter of 2013 improved to an average 52,592 tonnes per operating day compared to 48,667 tonnes per operating day in the previous quarter and 38,074 tonnes per operating day in the second quarter of 2012. Continued optimization of operations at the mill, the two cone crushers and the additional pebble crusher installed in 2012 allowed the mill to reach new records in the second quarter. In coordination with the technical advisors, the Canadian Malartic team continues to work on improving the mill throughput and enhancing operating efficiencies.

6 Reconciliation of non-IFRS measures is provided under Non-IFRS Measures of Performance of this press release.

7 Including topographic drilling of 3.4 million tonnes in 2013 and 2.5 million tonnes for the year 2012.

Mill operating statistics continue to show progress in all categories.

Total Available Hours Operating Hours (%) Tonnage Produced (t) Tonnes per Operating Hour Tonnes per Operating Day
Q2 2013 2,184 2,014 92 4,444,042 2,207 52,592
Q1 2013 2,160 2,082 96 4,234,001 2,033 48,667
Q4 2012 2,208 2,052 93 4,088,021 1,992 47,535
Q3 2012 2,208 2,071 94 3,756,768 1,814 43,181
Q2 2012 2,184 1,960 90 3,236,281 1,651 38,074
Q1 2012 2,184 1,890 87 2,965,456 1,569 35,728

Operating Costs

Cash costs per ounce8 for the second quarter and the first six months of 2013 stood at $781 and $792 respectively, compared to $8929 and $8579 in the corresponding periods of 2012. The improvement over the comparative periods in 2012 is mainly the result of increased throughput and gold production, improved efficiencies and reduction in contractors' costs.

It is anticipated that as the operations at Canadian Malartic stabilize and the operations are further optimized, the operating costs will continue their downward trend. In June 2013, a month with no maintenance shut down and record gold production, cash costs per ounce8 fell to $602.

8 Reconciliation of non-IFRS measures is provided under Note Regarding Certain Non-IFRS Measures of Performance of this press release.

9 Restated to reflect the adoption of IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine.

Adjusted Net Earnings10

Excluding specific non-cash items, adjusted net earnings10 amounted to $25.1 million ($0.06 per share) during the second quarter of 2013 compared to $35.6 million ($0.09 per share) in the second quarter of 2012.


(In thousands of dollars, except for amounts per share)
Three Months Ended Six Months Ended
June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Net earnings (loss) (492,762 ) 18,984 (475,346 ) 49,579
Impairment of Hammond Reef gold project 530,878 - 530,878 -
Write-off of grassroots exploration projects 13,050 - 15,074 617
Share-based compensation 2,225 2,708 4,021 5,339
Unrealized loss on investments 314 1,158 2,239 1,705
Impairment on available-for-sale assets 3,284 - 3,284 1,094
Deferred income and mining tax expense (recovery) (31,899 ) 12,784 (18,634 ) 36,721
Adjusted net earnings10 25,090 35,634 61,516 95,055
Adjusted net earnings per share10 0.06 0.09 0.14 0.25

The decrease in adjusted net earnings10 is mainly the result of lower average selling prices of gold during the second quarter of 2013 and higher depreciation charges.

10 Reconciliation of non-IFRS measures is provided under Non-IFRS Measures of Performance of this press release.

Investments

The Company invested $59.9 million in property, plant and equipment during the second quarter. These investments were mainly focused on the Canadian Malartic mine (stripping costs, geotechnical work, sustaining capital and expansion) and the Kirkland Lake and Upper Beaver exploration projects.

Recent volatility in the gold price and financial markets has led Osisko to review in April its rate of discretionary spending in exploration and advancing new projects. As previously announced, the Company is decreasing discretionary spending for 2013 by over $80 million.

Upper Beaver Project and Kirkland Lake - Larder Camp

On December 28, 2012, Osisko completed the acquisition of Queenston Mining Inc. As part of the transaction, the Company acquired the Upper Beaver Project and a package of lands covering 230 km2 in the rich Kirkland Lake Gold Camp, which has produced over 40 million ounces in past years. Queenston Mining Inc. changed its name to Osisko Mining Ltd. on January 16, 2013.

The Queenston transaction also provides the Company with a major foothold in a prolific gold camp that has produced in excess of 40 million ounces. Queenston had consolidated the land package over the past 20 years. To date, there have been several satellite deposits identified that could feed a regional mill.

The work at Upper Beaver is focused on drilling deep holes to test extensions of known zones. The Company has completed approximately 34,795 meters of drilling since January 1, 2013. Work is currently limited to completion of current holes and compiling information generated during the drilling phase to date.

The shaft collar work was completed. Construction of the head frame and surface facilities has been delayed, as well as the shaft sinking. The pause in the project execution plan allows for the review of the construction and development approach with the aim of reducing the capital outlays. This reassessment period will result in a deferral of approximately $50 million of the planned Upper Beaver outlays of $70 million for 2013.

The Company has completed 68,076 meters on various regional targets in the Kirkland Lake - Larder camp, including 15,912 meters in the second quarter of 2013. Drilling activities have been reduced to focus on compilation and assessment of the results. The exploration expenditures at Kirkland Lake for 2013 are estimated at the original budget of $20 million.

Hammond Reef Gold Project

Osisko acquired the Hammond Reef gold project located near Atikokan in Northwestern Ontario, through the acquisition of publicly traded Brett Resources Inc. in mid 2010 for $375.0 million. Hammond Reef is a large and growing development project with potential to become a substantial open-pit mine. During the second quarter of 2013, Osisko invested $2.2 million (including working capital) for a total of $155.9 million since its acquisition in 2010. In the second quarter of 2013, efforts were focused on the preparation of the feasibility study and the publication of the environmental assessment report.

A new resource estimate for Hammond Reef was released on January 28, 2013. As per the estimate, global measured and indicated resources currently stand at 5.43 million ounces gold at an average grade of 0.86 g/t Au and the global inferred resource stands at 1.75 million ounces gold at an average grade of 0.72 g/t (based on 0.50 g/t Au lower cut-off).

Hammond Reef Global Resource Estimates

Category Grade (g/t) Tonnes (M) Cut-off (g/t) Oz (M)
Measured 0.90 123.5 0.5 3.59
Indicated 0.78 72.9 0.5 1.83
M+I 0.86 196.4 0.5 5.43
Inferred 0.72 75.7 0.5 1.75

Further, a whittle pit optimized undiluted resource was calculated (US$1,400 whittle pit shell), totaling 5.31 million ounces of gold at an average grade of 0.72 g/t in the measured and indicated category, and 0.28 million ounces of gold at an average grade of 0.65 g/t in the remaining inferred category.

Hammond Reef Undiluted Resource Estimates within US$1,400 Whittle pit shell

Category Grade (g/t) Tonnes (M) Cut-off (g/t) Oz (M)
Measured 0.75 175.3 0.32 4.25
Indicated 0.61 54.1 0.32 1.06
M+I 0.72 229.5 0.32 5.31
Inferred 0.65 13.3 0.32 0.28

Osisko's technical team is progressing on the feasibility study of the project. Due to significant inflation in the mineral industry over the past few years, the preliminary estimate of capital cost for a 60,000 tonnes per day operation ranges between $1.5 and $1.8 billion. Gold output is estimated to average 400,000 ounces per annum at a production cost of $800 to $850 per ounce. The group is continuing to review alternatives to optimize capital costs and improve the returns. Under the current scenario, the Hammond Reef gold project requires higher gold prices to justify the investment.

Based on preliminary feasibility results and current market conditions in the gold sector, the Company undertook a review of its project. The Company conducted impairment testing of Hammond Reef in conformity with IFRS practices and determined that an impairment charge of $487.8 million, net of a deferred tax recovery of $43.1 million, was necessary. Accordingly, the project value recorded on the Company's books was reduced to nil.

The Company will continue to pursue low-cost permitting activities in the near-term and will continue to monitor market conditions.

Exploration

Prior to mid 2009, the Company's efforts were focused solely on the development of its flagship asset, the Canadian Malartic mine. Following the securing of the financing, the necessary authorizations and the construction release, the Company began to seek other opportunities to complement the Canadian Malartic mine. The overall objective is for Osisko to achieve the status of a leading intermediate gold producer with annual production of 1 million ounces. The principle strategy is to create value through the identification and development of gold reserves and resources.

To build on its gold mining asset base, the Company has acquired advanced exploration projects, has entered into exploration agreements, has staked ground, and has invested in various public and private exploration companies with promising gold projects. Osisko continues to focus its efforts on its new Kirkland Lake area properties and in Mexico.

Osisko enjoys flexibility on its major projects, a benefit of being the sole owner, and thus can select the rate of execution of its investment programs without concern for compromising ownership rights.

Liquidity and Capital Resources

As at June 30, 2013, the Company's cash and cash equivalents, short-term investments and restricted cash amounted to $153.7 million compared to $155.5 million as at December 31, 2012, as summarized below:

(In thousands of dollars) June 30, 2013 December 31, 2012
Cash and cash equivalents 115,486 93,229
Short-term investments - 19,357
Restricted cash
Current 558 4,563
Non-current 37,651 38,362
153,695 155,511

Short-term investments were acquired following the acquisition of Queenston as at December 28, 2012 and were converted into cash and cash equivalents during the first quarter of 2013 to increase the flexibility of available liquidities. The Company has also collected in June the $30.0 million note receivable from Kirkland Lake Gold Inc. related to the sale of properties by Queenston prior to its acquisition by Osisko.

On July 5, 2013, Osisko deposited a Government of Québec bond of $11.6 million with the Québec Government, representing the balance of the total guarantee required to cover the entire future costs of rehabilitating the Canadian Malartic mine site. The aggregate deposits with the Government of Québec amount to $46.4 million.

Modifications to long-term debt terms

On July 30, 2013, the Company entered into agreements with CPPIB Credit Investments Inc. ("CPPIB"), the Caisse de dépôt et placement du Québec ("CDPQ") and Ressources Québec ("RQ") to modify certain terms of its long-term debt facilities.

  • CPPIB loan ($150.0 million)

    • The loan repayments that were previously based on cash flow availability will now be based on pre-determined fixed amounts. The first repayment is postponed to 2014.
    • The fixed interest rate will be revised to 6.875% (from 7.5% previously).
    • The maturity date of the 12.5 million warrants held by CPPIB will be extended to September 30, 2017 and the exercise price will be modified to $6.25 per warrant. The exercise of the warrants may be accelerated at the Company's option if the Osisko shares trade at a price above $8.15 for 20 consecutive days.
    • The delayed drawdown facility ($100.0 million) established in May 2012 will be cancelled.
  • The loan repayments that were previously based on cash flow availability will now be based on pre-determined fixed amounts. The first repayment is postponed to 2014.
  • The fixed interest rate will be revised to 6.875% (from 7.5% previously).
  • The maturity date of the 12.5 million warrants held by CPPIB will be extended to September 30, 2017 and the exercise price will be modified to $6.25 per warrant. The exercise of the warrants may be accelerated at the Company's option if the Osisko shares trade at a price above $8.15 for 20 consecutive days.
  • The delayed drawdown facility ($100.0 million) established in May 2012 will be cancelled.
  • Convertible debentures ($75.0 million)

    • The maturity date of the convertible debentures will be postponed to November 2017.
    • The fixed interest rate will be revised to 6.875% (from 7.5% previously).
    • The convertible debentures will be convertible into Osisko shares at any time prior to the due date at the price of $6.25 per share (previously $9.18 per share).
  • The maturity date of the convertible debentures will be postponed to November 2017.
  • The fixed interest rate will be revised to 6.875% (from 7.5% previously).
  • The convertible debentures will be convertible into Osisko shares at any time prior to the due date at the price of $6.25 per share (previously $9.18 per share).

The following table presents the new repayment schedules of the CPPIB loan and the convertible debentures per calendar year (in millions of dollars):

CPPIB CDPQ RQ Total
2014 30.0 - - 30.0
2015 40.0 - - 40.0
2016 40.0 - - 40.0
2017 40.0 37.5 37.5 115.0
150.0 37.5 37.5 225.0

The agreements are conditional on finalization of documentation to the satisfaction of all parties, obtaining the necessary regulatory authorizations and on payment of transaction fees, which are expected to be all completed by the end of the month of August 2013. On the closing date, the Company will assess the financial impact of these amendments on its consolidated financial statements.

Outlook for 2013

Following the modifications and commissioning of the pre-crushing circuit and the second pebble crushing unit, it is anticipated that mill throughput should be stabilized in 2013. Gold production is estimated between 485,000 - 510,000 ounces for the year. As a result of gaining access to higher grade material in the second half of the year, it is anticipated that gold output will be higher in the second semester. Cash costs per ounce11 are estimated between $780 and $825 per ounce, a 9% to 14% reduction in costs from 2012.

Following the issuance of a new IFRS accounting pronouncement with respect to stripping costs in the production phase of a surface mine, the Company expects to capitalize stripping costs in 2013. Capitalized stripping costs are not reflected in the table below. The change in policy has no impact on cash and cash equivalents, however, cash costs per ounce11 are expected to decrease by approximately $50 and capital expenditures are expected to increase by the same amount.

11 Reconciliation of non-IFRS measures is provided under Non-IFRS Measures of Performance of this press release.

Recent volatility in the gold price and financial markets has led Osisko to review its rate of discretionary spending in exploration and advancing new projects. As a result, the Company is decreasing discretionary spending for 2013 by over $80 million.

Capital expenditures for 2013 are now estimated at $138 million as follows:

(in millions of dollars) Revised budget(b) Original
budget
Reduction
Canadian Malartic mine 80.8 98.0 17.2
Upper Beaver project 18.5 70.0 51.5
Hammond Reef 7.0 10.0 3.0
Exploration - capitalized 31.6 42.0 10.4
Capital expenditures 137.9 220.0 82.1
Exploration - expensed through income statement(a)(c) 9.3
8.0
(1.3 )
Total 147.2 228.0 80.8
(a) Excludes write-off of projects.
(b) Excluding variation in accounts payable related to the Canadian Malartic expansion, Hammond Reef, Upper Beaver and Kirkland Lake projects.
(c) Exploration - expensed through income statement is higher in revised budget compared to original budget, due to some investments in Mexico being expensed whereas for budget purposes the total investments were capitalized.

Outstanding Share Data

As of August 1, 2013, 437,068,524 common shares were issued and outstanding. A total of 24,016,096 common share options were outstanding to purchase common shares under the Company's share option plan and 14,517,453 common share purchase warrants were outstanding.

New Nomination

Mr. Ruben Wallin has joined Osisko as Vice President Environment and Sustainable Development effective August 1, 2013 as a replacement of Ms. Hélène Cartier who left the Company in late June 2013.

Q2 Conference Call Information

Osisko will host a conference call on Friday, August 2, 2013 at 10:00am 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 1 416 981 9000 (Toronto local and international), or 800 757 9216 (North American toll free). An operator will direct participants to the call.

The conference call replay will be available from 12:00 p.m. EDT on August 2, 2013 until 11:59 p.m. EDT on August 16, 2013 with the following dial in number: 1 416 626 4100 or Toll-free 800 558 5253, access code 21668329.

Non-IFRS Measures of Performance

The Company has included certain non-IFRS measures including "cash costs per ounce", "cash margin per once", "adjusted net earnings" and "adjusted net earnings per share" to supplement its consolidated financial statements, which are presented in accordance with IFRS.

The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. Non-IFRS measures do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies. The data 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.

Cash costs per ounce

"Cash costs per ounce" is defined as the production costs of one ounce of gold excluding non-cash costs for a certain period. "Cash costs per ounce" is obtained from "Production costs" and "Royalties" less non-cash "Share-based compensation" and "By-product credits (silver sales)", adjusted for "Production inventory variation" for the period, divided by the "Number of ounces of gold produced" for the period.

Three months ended June 30, Six months ended June 30,
2013 2012 2013 2012
Gold ounces produced 111,701 92,003 217,748 183,181
(in thousands of dollars,except per ounce)
Production costs 90,619 89,494 172,041 159,426
Royalties 2,274 2,021 4,266 4,380
Share-based compensation (662 ) (790 ) (1,261 ) (1,534 )
By-product credit (silver sales) (2,219 ) (1,442 ) (4,446 ) (3,155 )
Inventory variation (2,730 ) (7,187 ) 1,956 (2,129 )
Total cash costs for the period 87,282 82,096 172,556 156,988
Cash costs per ounce 781 892 792 857

Cash margin per ounce

"Cash margin per ounce" is defined as the "Average selling price of gold per ounce sold" less "Cash costs per ounce produced" for the period.

Three months ended
June 30,
Six months ended
June 30,
2013 2012 2013 2012
Average selling price of gold (per ounce sold) 1,434 1,627 1,532 1,662
Cash costs (per ounce produced) 781 892 792 857
Cash margin per ounce 653 735 740 805

Adjusted net earnings and adjusted net earnings per share

"Adjusted net earnings" is defined as "Net earnings" less certain non-cash items: "Write-off of property, plant and equipment", "Share-based compensation", "Unrealized gain (loss) on investments", "Impairment on available-for-sale assets", and "Deferred income and mining tax expense (recovery)".

"Adjusted net earnings per share" is obtained from the "Adjusted net earnings" divided by the "Weighted average number of common shares outstanding" for the period.

Three months ended
June 30,
Six months ended
June 30,
2013 2012 2013 2012
(in thousands of dollars, except per share amounts)
Net earnings (loss) for the period (492,762 ) 18,984 (475,346 ) 49,579
Adjustments:
Impairment of property, plant and equipment 530,878 - 530,878 -
Write-off of property, plant and equipment 13,050 - 15,074 617
Share-based compensation 2,225 2,708 4,021 5,339
Unrealized loss on investments 314 1,158 2,239 1,705
Impairment on available-for-sale assets 3,284 - 3,284 1,094
Deferred income and mining tax expense (recovery)
Related to the impairment of property, plant and equipment (43,100 ) - (43,100 ) -
Other 11,201 12,784 24,466 36,721
Adjusted net earnings 25,090 35,634 61,516 95,055
Weighted average number of common shares outstanding (000's) 436,695 387,279 436,599 386,528
Adjusted net earnings per share 0.06 0.09 0.14 0.25

About Osisko Mining Corporation

Osisko Mining Corporation operates the Canadian Malartic Gold mine in Malartic, Quebec and is carrying out exploration and project development elsewhere in Canada and Latin America.

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.

Cautionary 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.

For further information in relation to the Hammond Reef project, please refer to the "Technical Report on the Hammond Reef Gold Property Atikokan area, Ontario" dated December 20, 2011. For further information in relation to the Canadian Malartic project, please refer to the "Feasibility Study - Canadian Malartic Project (Malartic, Quebec)", dated December 2008. Both of these reports are available under the Osisko profile at www.sedar.com.

For further information in relation to the Upper Beaver project, please refer to the "Technical Report on the Upper-Beaver Gold-Copper Project, Ontario, Canada" dated November 9, 2012, which is available under the Queenston profile at www.sedar.com.

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 Osisko 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", "scheduled" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur including, without limitation, further improvement of operating cash flows and free cash flows(2), continued improvement of the mill throughput and enhancement of operating efficiencies, further reduction of the operating costs as the operations at Canadian Malartic stabilize and are further optimized, that exploration work would lead to commercial production of several satellite deposits identified in the Kirkland Lake gold camp which could feed a regional mill, further development of its Hammond Reef project including timely completion of the project's feasibility study and permitting activities, positive outcome of any exploration work conducted on Osisko's Kirkland Lake area properties and in Mexico, that all conditions will be met to finalize the amendment to the CPPIB loan and to the convertible debentures with CDPQ and RQ, that higher grade material will be accessible in the second half of the year which would increase the gold output in the second semester, and the impact of the new IFRS accounting pronouncement with respect to stripping costs in the production phase of a surface mine on the Company's cash costs per ounce(11) and capital expenditures. Although Osisko 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 achieve such events qualified by the foregoing cautionary note regarding forward looking statements, 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 consultants, mining development and construction personnel, results of exploration and development activities, Osisko's limited experience with production and mining operations, uninsured risks, regulatory framework and changes, defects in title, availability of personnel, materials and equipment, timeliness of government approvals, actual performance of facilities, equipment and processes relative to specifications and expectations, unanticipated environmental impacts on operations market prices, continued availability of capital and financing and general economic, market or business conditions. These factors are discussed in greater detail in Osisko's most recent Annual Information Form and in the most recent Management Discussion and Analysis filed on SEDAR, which also provide additional general assumptions in connection with these statements. Osisko cautions that the foregoing list of important factors is not exhaustive. Investors and others who base themselves on forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. Osisko 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 and such forward-looking statements included in this press release should not be unduly relied upon. These statements speak only as of the date of this press release.

Osisko Mining Corporation
Consolidated Balance Sheets
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars)
June 30, December 31,
2013 2012
(restated -
see note)
($) ($)
Assets
Current assets
Cash and cash equivalents 115,486 93,229
Short-term investments - 19,357
Restricted cash 558 4,563
Accounts receivable 29,255 32,266
Note receivable - 30,000
Inventories 79,851 70,481
Prepaid expenses and other assets 25,303 21,274
250,453 271,170
Non-current assets
Restricted cash 37,651 38,362
Investments in associates 8,190 8,933
Other investments 7,403 16,894
Property, plant and equipment 1,865,159 2,352,546
2,168,856 2,687,905
Liabilities
Current liabilities
Accounts payable and accrued liabilities 80,069 100,931
Current portion of long-term debt 85,497 76,883
Provisions and other liabilities 1,292 1,405
166,858 179,219
Non-current liabilities
Long-term debt 245,962 260,529
Provisions and other liabilities 17,011 18,618
Deferred income and mining taxes 48,887 67,521
478,718 525,887
Equity attributable to Osisko Mining Corporation shareholders
Share capital 2,051,069 2,048,843
Warrants 19,311 19,311
Contributed surplus 70,673 65,868
Equity component of convertible debentures 8,005 8,005
Accumulated other comprehensive loss (4,713 ) (1,148 )
Retained earnings (deficit) (454,207 ) 21,139
1,690,138 2,162,018
2,168,856 2,687,905
Osisko Mining Corporation
Consolidated Statements of Income (Loss)
For the three and six months ended June 30, 2013 and 2012
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars)
Three months ended Six months ended
June 30, June 30,
2013 2012 2013 2012
(restated -
see note)
(restated -
see note)
($) ($) ($) ($)
Revenues 159,195 157,134 318,576 315,792
Mine operating costs
Production costs (90,619 ) (89,494 ) (172,041 ) (159,426 )
Royalties (2,274 ) (2,021 ) (4,266 ) (4,380 )
Depreciation (23,683 ) (15,635 ) (44,665 ) (29,544 )
Earnings from mine operations 42,619 49,984 97,604 122,442
General and administrative expenses (5,787 ) (5,943 ) (13,174 ) (13,349 )
Exploration and evaluation expenses (15,935 ) (1,963 ) (21,038 ) (5,253 )
Impairment of property, plant and equipment (530,878 ) - (530,878 ) -
Earnings (loss) from operations (509,981 ) 42,078 (467,486 ) 103,840
Interest income 425 379 883 912
Finance costs (8,398 ) (7,444 ) (16,289 ) (14,842 )
Foreign exchange loss (3,095 ) (1,858 ) (5,376 ) (271 )
Share of loss of associates (623 ) (141 ) (744 ) (275 )
Other losses (2,989 ) (1,246 ) (4,968 ) (3,064 )
Earnings (loss) before income and mining taxes (524,661 ) 31,768 (493,980 ) 86,300
Income and mining tax recovery (expense) 31,899 (12,784 ) 18,634 (36,721 )
Net earnings (loss) (492,762 ) 18,984 (475,346 ) 49,579
Net earnings (loss) per share
Basic (1.13 ) 0.05 (1.09 ) 0.13
Diluted (1.13 ) 0.05 (1.09 ) 0.13
Weighted average number of common shares outstanding (in thousands)
Basic 436,695 387,279 436,599 386,528
Diluted 436,695 389,024 436,599 389,312
Osisko Mining Corporation
Consolidated Statements of Cash Flows
For the three and six months ended June 30, 2013 and 2012
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars)
Three months ended Six months ended
June 30, June 30,
2013 2012 2013 2012
(restated -
see note)
(restated -
see note)
($) ($) ($) ($)
Operating activities
Net earnings (loss) (492,762 ) 18,984 (475,346 ) 49,579
Adjustments for:
Interest income (425 ) (379 ) (883 ) (912 )
Share-based compensation 2,225 2,708 4,021 5,339
Depreciation 23,903 15,794 45,102 29,861
Finance costs 8,398 7,444 16,289 14,842
Write-off of property, plant and equipment 13,050 - 15,074 617
Impairment of property, plant and equipment 530,878 - 530,878 -
Gain on disposal of property, plant and equipment (218 ) (319 ) (173 ) (319 )
Unrealized foreign exchange loss 3,193 1,952 5,155 175
Share of loss of associates 623 141 744 275
Net loss (gain) on available-for-sale financial assets (140 ) 155 851 68
Net loss on financial assets at
fair value through profit and loss 32 1,158 1,105 1,857
Impairment on available-for-sale financial assets 3,284 - 3,284 1,094
Provisions and other liabilities (796 ) (558 ) (910 ) 82
Income and mining tax expense (recovery) (31,899 ) 12,784 (18,634 ) 36,721
Other non-cash gain - - (139 ) -
59,346 59,864 126,418 139,279
Change in non-cash working capital items (3,399 ) 8,348 (7,993 ) 11,812
Net cash flows provided by operating activities 55,947 68,212 118,425 151,091
Investing activities
Net decrease in short-term investments - - 19,357 -
Net decrease in restricted cash 711 453 4,716 511
Proceeds from note receivable 30,000 - 30,000 -
Acquisition of investments - (1,100 ) - (7,546 )
Proceeds on disposal of investments 1,045 21 1,045 474
Property, plant and equipment, net of government credits (59,906 ) (76,440 ) (125,604 ) (148,305 )
Proceeds on disposal of property, plant and equipment 353 - 368 -
Interest received 1,205 387 1,593 795
Net cash flows used in investing activities (26,592 ) (76,679 ) (68,525 ) (154,071 )
Financing activities
Long-term debt transaction costs - (105 ) - (110 )
Long-term debt repayments (3,081 ) (1,250 ) (5,552 ) (2,500 )
Finance lease payments (6,550 ) (5,608 ) (12,692 ) (10,966 )
Issuance of common shares, net of expenses 775 1,095 1,383 9,487
Interest paid (5,371 ) (5,602 ) (10,782 ) (11,077 )
Net cash flows used in financing activities (14,227 ) (11,470 ) (27,643 ) (15,166 )
Increase (decrease) in cash and cash equivalents 15,128 (19,937 ) 22,257 (18,146 )
Cash and cash equivalents - beginning of period 100,358 102,461 93,229 100,670
Cash and cash equivalents - end of period 115,486 82,524 115,486 82,524

Note on restatement of 2012 balances

Balances related to 2012 have been restated to reflect the impact of the adoption of IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine. IFRIC 20 provides guidance on the accounting for the costs of stripping activities during the production phase of surface mining when two benefits accrue to the entity as a result of the stripping: useable ore that can be used to produce inventory and improved access to further quantities of material that will be mined in the future periods . The Company adopted IFRIC 20 effective January 1, 2013. Upon adoption of IFRIC 20, the Company assessed the stripping asset on the balance sheet as at January 1, 2012 and determined that there are identifiable components of the ore body with which this stripping asset can be associated, and therefore no balance sheet adjustment was recorded at that date. The adoption of IFRIC 20 has resulted in increased capitalization of waste stripping costs and a reduction in mine operating costs in 2012. If the Company had not adopted IFRIC 20, the net loss for the current periods would have increased, the net earnings for the comparative periods would have decreased and capitalized waste stripping costs for the current and comparative periods would have decreased.

The impact of adopting IFRIC 20 in the prior year consolidated financial statements is presented below:

(a) Adjustments to the consolidated balance sheets:

As at December 31, Impact of As at December 31,
2012 IFRIC 20 2012
(previously stated) (restated)
$ $ $
Inventories 73,795 (3,314 ) 70,481
Property, plant and equipment 2,329,773 22,773 2,352,546
Deferred income and mining taxes (60,426 ) (7,095 ) (67,521 )
Increase in retained earnings 12,364

(b) Adjustments to the consolidated statements of income:

Three months ended Impact of Three months ended
June 30, 2012 IFRIC 20 June 30, 2012
(previously stated) (restated)
$ $ $
Mine operating costs
Production costs (98,837 ) 9,343 (89,494 )
Depreciation (15,289 ) (346 ) (15,635 )
Income and mining tax expense (9,500 ) (3,284 ) (12,784 )
Increase in net earnings 5,713
Increase in net earnings per share and diluted net earnings per share 0.02
Six months ended Impact of Six months ended
June 30, 2012 IFRIC 20 June 30, 2012
(previously stated) (restated)
$ $ $
Mine operating costs
Production costs (170,747 ) 11,321 (159,426 )
Depreciation (29,166 ) (378 ) (29,544 )
Income and mining tax expense (32,727 ) (3,994 ) (36,721 )
Increase in net earnings 6,949
Increase in net earnings per share and diluted net earnings per share 0.02

(c) Adjustments to the consolidated statements of cash flows:

Three months ended Impact of Three months ended
June 30, 2012 IFRIC 20 June 30, 2012
(previously stated) (restated)
$ $ $
Net earnings 13,271 5,713 18,984
Adjusted for the following items:
Depreciation 15,448 346 15,794
Income and mining tax expense 9,500 3,284 12,784
Change in non-cash working capital items:
Decrease in inventories 1,693 3,171 4,864
Net cash flows provided by operating activities 12,514
Property, plant and equipment (63,926 ) (12,514 ) (76,440 )
Net cash flows used in investing activities (12,514 )
Net change in cash and cash equivalents -
Six months ended Impact of Six months ended
June 30, 2012 IFRIC 20 June 30, 2012
(previously stated) (restated)
$ $ $
Net earnings 42,630 6,949 49,579
Adjusted for the following items:
Depreciation 29,483 378 29,861
Income and mining tax expense 32,727 3,994 36,721
Change in non-cash working capital items:
Increase in inventories (13,715 ) 5,356 (8,359 )
Net cash flows provided by operating activities 16,677
Property, plant and equipment (131,628 ) (16,677 ) (148,305 )
Net cash flows used in investing activities (16,677 )
Net change in cash and cash equivalents -