Mining Stocks News- Osisko Mining (TSX: OSK.TO) Releases Third Quarter 2009 Results
MONTREAL, QUEBEC-- - Nov. 6, 2009 - Osisko Mining Corporation (TSX: OSK.TO) (FRANKFURT: EWX.F) is pleased to report its third quarter financial results for the period ended September 30, 2009.
Highlights
- Receipt of Quebec Government authorizations to proceed with the Canadian Malartic Project (the "Project");
- Commencement of construction of the Canadian Malartic Mine on August 27, 2009;
- Approaching completion of the Malartic relocation program;
- Completion of a $149.5 million equity financing; and
- Successful negotiation of two major debt financing agreements totalling $225 million.
During the third quarter of 2009, the Company incurred a loss of $5.7 million ($0.02 per share) compared to a loss of $0.1 million ($0.00 per share) in the corresponding period of 2008. For the first nine months of 2009, the Company has incurred a loss of $12.4 million ($0.05 per share) compared to a net income of $3.5 million ($0.02 per share) generated in the corresponding period of 2008.
Higher costs were incurred both in the quarter and the nine-month period as a result of a significant increase in pre-mining construction activities as the Company moves from an exploration company towards becoming an intermediate gold development and operating company. The 2008 nine-month period results included an income tax recovery of $4.5 million following renunciation of the tax attributes to the subscribers of the $25 million flow-through financing of July 2007. The recovery in 2009 was lower at $2.0 million as a result of a lower flow-through financing of $12.25 million in 2008.
Following the receipt of the Conseil des ministres du Quebec order in council authorizing the completion of the Canadian Malartic gold mine project and the necessary permits, Osisko commenced construction of the Project on August 27, 2009.
The Company mobilized several contractors to complement its own workforce to initiate work at site. The successful mobilization has resulted in a very good start to the Project with the following milestones having been achieved:
1. Initiation of the foundation work on the mill and ancillary buildings. Some 14,000 m3 of concrete were poured, highlighted by a continuous 2,760 m3 pour for the three ball mill foundations on September 29, 2009;
2. Initiation of the excavation work for the crusher;
3. Commencement of the construction of the polishing pond dams necessary to allow for the dewatering of the existing East Malartic tailings area;
4. Start of the steel erection at the truck shop/administration building.
Some 200 contractors were on site by the end of the third quarter.
Significant progress has been achieved in the relocation program, including the following milestones:
- Completion of the home relocation program with some 135 single/multi-unit residences being relocated to the new subdivision;
- Completion of the primary school, adult learning centre and day care facility. Exchange of ownerships of new and old facilities have been completed;
- Significant advancement on the three additional institutions with expected completion of the subsidized housing unit and the community centre in the fourth quarter of 2009, and the health facility in second quarter of 2010;
- Transfer of ownership of the new town subdivision to the Town of Malartic. Financial guarantees have been placed to secure completion of work obligation to be done in the spring of 2010;
- Initiation of closure activities of the southern neighbourhood.
The Company also entered into several financing agreements during the period to complete the funding requirements for the development of the Project, including:
i. $149.5 million equity financing with a syndicate of underwriters through the sale of 21.4 million shares at $7.00 per share completed on September 1, 2009;
ii. An agreement with Societe generale de financement du Quebec ("SGF") for a $75 million senior non-guaranteed debenture, convertible at the discretion of the SGF into Osisko shares at a price of $9.18 per share, carrying an interest rate of 7.5%. The initial capital is to be reimbursed five years after the drawdown.
iii. A $150 million financing agreement with CPPIB Credit Investment Inc. ("CPPIB"), a wholly-owned subsidiary of the CPP Investment Board. Under the terms of the agreement, the Company will have the ability to draw the loan in two tranches:
1)Tranche A - An initial amount of $75 million to be drawn in November 2009. The Company has issued 7 million warrants exercisable before September 24, 2014 at a price of $10.75 per share, representing a 30% premium to the 15-day volume weighted average price ("VWAP") prior to issuance. Proceeds are to be used for the development of the Project.
2)Tranche B - An amount of $75 million may be drawn at the discretion of Osisko on March 31, 2010, for general corporate purposes. If the amount is drawn, the Company will issue 5.5 million five-year warrants to purchase common shares at a price of average 15-day VWAP prior to drawdown, plus a 30% premium.
The CPPIB loan carries a 7.5% interest rate, is secured by assets of the Company and is repayable from 50% of net cash flows (operating cash flows less approved capital) from the Canadian Malartic Project. The SGF and CPPIB transactions are expected to be completed in November 2009.
Mr. Sean Roosen, President and CEO, commented: "We have again achieved significant milestones during this past quarter, on our road towards building Osisko into what we believe will soon become the next premier intermediate gold producer. Our focus now is on executing the construction phase of this $1 billion dollar project on time and on budget. Exploration on the other known zones on the main property is continuing at full pace, and our experienced team is also working diligently to identify new opportunities for the future growth of our company."
Highlights from the Company's financial position are as follows (in millions of dollars):
--------------------------------------------------------------------- September 30, 2009 December 31, 2008---------------------------------------------------------------------Cash Position(1) 454.1 95.7
Working Capital 427.5 92.7
Total Assets 878.8 318.2
Shareholders' Equity 809.7 267.3---------------------------------------------------------------------
(1) Includes Cash and cash equivalents, Short-term investments, Restricted cash and Cash collateral investments.
The financial statements and Management Discussion and Analysis for the period ended September 30, 2009, will be filed on SEDAR by November 13, 2009.
Osisko Mining Corporation is currently developing the Canadian Malartic gold deposit and evaluating adjacent areas for a large-scale open pit, bulk-tonnage mining operation.
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
www.osisko.com
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