Osisko Releases Third Quarter 2010 Results
MONTREAL, QUEBEC -- (Marketwire) -- 11/05/10 -- Osisko Mining Corporation (the 'Company' or 'Osisko') (TSX: OSK) (FRANKFURT: EWX) is pleased to report its third quarter financial results for the period ended September 30, 2010.
Highlights
-- Continued progress on the construction of the Canadian Malartic Project
with outlays of $134.0 million;
-- Completion of the acquisition of Brett Resources Inc. and the Hammond
Reef Project;
-- Continuation of aggressive exploration and infill drilling with 107,800
metres drilled in the quarter and 312,800 metres year-to-date;
-- Net loss of $11.2 million for the period and $18.3 million year-to-date;
-- Completion of a $17.2 million flow-through financing.
During the third quarter of 2010, the Company incurred a loss of $11.2 million ($0.03 per share) compared to a loss of $5.7 million ($0.02 per share) in the corresponding period of 2009. The higher loss incurred is mainly due to higher costs from increased activities as the Company transitions to become a leading intermediate gold producer and higher charges from the issuance of stock options in the fourth quarter 2009 and in July 2010. For the year-to-date, the loss amounted to $18.3 million ($0.05 per share) compared to $12.4 million ($0.05 per share) in the first nine months of 2009. The increase is mainly due to additional costs associated with the growth in the Company's activities, and higher stock based compensation offset partially by higher interest income due to higher cash balances on hand. Shareholders are reminded that the Company has no revenue as its flagship Canadian Malartic gold project is not yet in production.
Sean Roosen, President and CEO commenting on the third quarter noted: 'We are continuing our efforts to build shareholder value by developing the Canadian Malartic Project with production expected to commence early in the second quarter of 2011, and by aggressively pursuing the increase of our reserve/resource base through our intensive drill programs. We acknowledge the efforts of our employees and our contractors in pursuing the rapid construction and development of our Canadian Malartic Project'.
Canadian Malartic Project
The Canadian Malartic Project is progressing well, with construction approximately 75% complete at the end of September 2010. Approximately 1,000 contractors and Osisko employees are currently involved in project development activities. Major accomplishments during the quarter include:
-- Advancement of mechanical, electrical and piping installations in the
mill to a 65% completion rate;
-- Completion of the 120kV electrical line and sub-station work;
-- Receipt of all key processing equipment at site;
-- Ongoing construction of the 'green wall' to mitigate the impact of the
mining activities on the community;
-- Commissioning of additional mobile mining equipment, including a second
electrical shovel;
-- Recruitment of workforce for the operational phase.
At quarter end, $753.2 million had been directly spent on the Project, with an additional $126.5 million committed.
The Project is scheduled for completion in mid-April/early May 2011, with capital estimates for the Project under the one billion dollar mark.
As part of ongoing community relations at the Canadian Malartic Project, more than 2,400 individuals from Malartic and the Abitibi-Temiscamingue region visited the construction site during an open house held on September 26, 2010.
Acquisition of Brett Resources
On May 19, 2010 the Company acquired 77% of Brett Resources Inc. ('Brett') following a friendly takeover offer announced on March 22, 2010. Under the terms of the offer Osisko issued 0.34 shares of Osisko and $0.0001 in cash in return for each share of Brett. On August 11, 2010 94% of Brett shareholders approved a Plan of Arrangement to combine with Osisko, thereby allowing Brett to become a wholly-owned subsidiary of Osisko. The subsidiary modified its name to Osisko Hammond Reef Gold Ltd. effective October 6, 2010.
The acquisition of the Hammond Reef deposit enhances Osisko's reserve and resource base and provides the opportunity to see Osisko become a one million ounce per year gold producer by 2015-2016.
The Hammond Reef gold project is located near Atikokan, Ontario. A Preliminary Assessment Study (the 'Study') was completed in November 2009 outlining an initial 14 year mine life operating at 50,000 tonnes per day. Over the first six years, on average, Hammond Reef is expected to produce 463,000 ounces of gold per year at cash costs of US$382 per ounce (including royalties, net of silver credits). Over the life of mine, Hammond Reef is expected to produce a total of 5.13 million ounces of gold at an average rate of 369,000 ounces per year and average cash costs of US$442 per ounce (including royalties, net of silver credits). Using a gold price of US$990 per ounce the Study shows that Hammond Reef has an after-tax net present value of US$811 million (using a 5% discount rate) and an internal rate of return of 22.9%. The study is available on SEDAR.
In addition to the current resource, Hammond Reef offers exciting exploration potential as recent drilling has confirmed continuity of mineralization down-dip from the existing resource.
Other Highlights
The Company has continued to pursue its efforts to build on its current reserve/resource base. Approximately 312,800 metres have been drilled to date in 2010, including 107,800 metres during the third quarter. The focus has been the Hammond Reef Project with some 55,000 metres being completed and the Duparquet Joint Venture with approximately 44,000 metres being completed.
The Company is continuing its dialogue with the municipal and provincial authorities with respect to the deviation of Highway 117 to allow for the mining of the Barnat deposit. As part of its community outreach program, the Company intends to present the proposed new routing to the Malartic residents during a public session in mid-November 2010.
The Company completed flow-through financing by issuing 980,027 shares for gross proceeds of $17.2 million to fund its exploration program.
Highlights from the Company's financial position are as follows (in millions of dollars):
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September 30, 2010 December 31, 2009
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Cash Position(1) 449.2 790.2
Working Capital 385.0 760.4
Total Assets 1,919.5 1,338.8
Shareholders' Equity 1,539.6 1,112.3
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(1) Includes Cash and Cash equivalents, Short-term investments, Restricted cash and Cash collateral.
The financial statements and Management Discussion and Analysis for the period ended September 30, 2010, will be filed on SEDAR prior to November 15, 2010.
Osisko Mining Corporation is currently developing the Canadian Malartic gold deposit, evaluating adjacent areas for a large-scale open pit, bulk-tonnage mining operation and pursuing exploration of the Hammond Reef Project. The Company is well-funded with approximately $450 million on hand.
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.
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 market prices, 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
Contacts:
Osisko Mining Corporation
John Burzynski
Vice-President Corporate Development
416-363-8653
Osisko Mining Corporation
Sylvie Prud'homme
Investor Relations
514-735-7131
Toll Free: 1-888-674-7563
www.osisko.com