Osisko Gold Royalties Ltd. - Form 6-K - Filed by newsfilecorp.com

0001062993-18-000916.txt : 20180220 0001062993-18-000916.hdr.sgml : 20180220 20180220080316 ACCESSION NUMBER: 0001062993-18-000916 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 20171231 FILED AS OF DATE: 20180220 DATE AS OF CHANGE: 20180220 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Osisko Gold Royalties LTD CENTRAL INDEX KEY: 0001627272 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 000000000 STATE OF INCORPORATION: A8 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-37814 FILM NUMBER: 18623115 BUSINESS ADDRESS: STREET 1: 1100 AVENUE DES CANADIENS-DE-MONTREAL STREET 2: SUITE 300 CITY: MONTREAL STATE: A8 ZIP: H3B 2S2 BUSINESS PHONE: 514-940-0670 MAIL ADDRESS: STREET 1: 1100 AVENUE DES CANADIENS-DE-MONTREAL STREET 2: SUITE 300 CITY: MONTREAL STATE: A8 ZIP: H3B 2S2 6-K 1 form6k.htm FORM 6-K Osisko Gold Royalties Ltd. - Form 6-K - Filed by newsfilecorp.com

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of February 2018

Commission File Number: 001-37814

OSISKO GOLD ROYALTIES LTD
(Translation of registrant's name into English)

1100 Avenue des Canadiens-de-Montréal, Suite 300, Montréal, Qc H3B 2S2
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

[ ] Form 20-F [X] Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]

SUBMITTED HEREWITH

Exhibits

	99.1	Consolidated Financial Statements for the years ended December 31, 2017 and 2016
	99.2	Management's Discussion and Analysis for the year ended December 31, 2017
	99.3	Form 52-109F1 - CEO Certification of annual filings
	99.4	Form 52-109F1 - CFO Certification of annual filings
	99.5	Osisko Gold Royalties Reports Fourth Quarter 2017 Results
	99.6	Osisko Declares 14th Quarterly Dividend

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	OSISKO GOLD ROYALTIES LTD
	(Registrant)

Date: February 20, 2018	By:	/s/ Joseph de la Plante
		Joseph de la Plante
	Title:	Vice-President, Corporate Development

EX-99.1 2 exhibit99-1.htm EXHIBIT 99.1 Osisko Gold Royalties Ltd.: Exhibit 99.1 - Filed by newsfilecorp.com

OSISKO GOLD ROYALTIES LTD

..........................................

Consolidated Financial Statements

For the years

ended

December 31, 2017 and 2016

Osisko Gold Royalties Ltd

Consolidated Financial Statements

Management’s Report on Internal Control over Financial Reporting

Osisko Gold Royalties Ltd’s (the “Company’s”) management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in rules 13a-15(f) and 15d-15(f) under the United States Securities Exchange Act of 1934, as amended.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as at December 31, 2017. The Company’s management conducted an evaluation of the Company’s internal control over financial reporting based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the Company’s management’s assessment, the Company’s internal control over financial reporting is effective as at December 31, 2017.

The effectiveness of the Company’s internal control over financial reporting as at December 31, 2017 has been audited by PricewaterhouseCoopers LLP, Independent Auditors, as stated in their report which is located on pages 3 and 4 of these consolidated financial statements.

(signed) Sean Roosen, Chief Executive Officer	(signed) Elif Lévesque, Chief Financial Officer


February 19, 2018

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Osisko Gold Royalties Ltd

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of Osisko Gold Royalties Ltd and its subsidiaries, (together, the Company) as of December 31, 2017 and the related consolidated statements of income (loss), comprehensive income (loss), cash flows and changes in equity for the year then ended, including the related notes (collectively referred to as the consolidated financial statements). We also have audited the Company's internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and their financial performance and their cash flows for the year then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS). Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework (2013) issued by the COSO.

The accompanying consolidated balance sheet of the Company as of December 31, 2016, and the related consolidated statements of income (loss), comprehensive income (loss), cash flows and changes in equity for the year then ended were previously audited in accordance with Canadian Generally Accepted Auditing Standards as stated in the attached report; pursuant to the exemption provided by Instructions to paragraphs (b), (c), (d) and (e) of General Instruction B.(6) of Form 40-F, the 2016 consolidated financial statements were not required to be audited under the standards of the Public Company Accounting Oversight Board (United States) (PCAOB) and they are therefore not covered by this report.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l.

1250 René-Lévesque Boulevard West, Suite 2500, Montréal, Quebec, Canada H3B 4Y1

T: +1 514 205 5000, F: +1 514 876 1502, www.pwc.com/ca

“PwC” refers to PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l., an Ontario limited liability partnership.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP ⁽¹⁾

Montreal, Canada

February 19, 2018

We have served as the Company’s auditor since 2006.

(1)	CPA auditor, CA, public accountancy permit No. A122718

Independent Auditor’s Report

To the Shareholders of
Osisko Gold Royalties Ltd

We have audited the accompanying consolidated financial statements of Osisko Gold Royalties Ltd and its subsidiaries, which comprise the consolidated balance sheet as at December 31, 2016 and the consolidated statements of income (loss), comprehensive income (loss), cash flows and changes in equity for the year then ended, and the related notes, which comprise a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standardsas issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l.

1250 René-Lévesque Boulevard West, Suite 2500, Montréal, Quebec, Canada H3B 4Y1

T: +1 514 205 5000, F: +1 514 876 1502, www.pwc.com/ca

“PwC” refers to PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l., an Ontario limited liability partnership.

Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Osisko Gold Royalties Ltd and its subsidiaries as at December 31, 2016 and their financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

/s/ PricewaterhouseCoopers LLP ⁽¹⁾

Montreal, Canada

February 19, 2018

(1)	CPA auditor, CA, public accountancy permit No. A122718

Osisko Gold Royalties Ltd

Consolidated Balance Sheets

As at December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars)

		December 31,		December 31,
		2017		2016
	Notes	$		$
Assets
Current assets
Cash and cash equivalents	8	333,705		499,249
Short-term investments	9	-		2,100
Accounts receivable	10	8,385		8,416
Inventories	11	9,859		-
Other assets		984		974
		352,933		510,739
Non-current assets
Investments in associates	12	257,433		82,902
Other investments	13	115,133		108,409
Royalty, stream and other interests	14	1,575,772		494,768
Exploration and evaluation	15	102,182		100,038
Goodwill	16	111,204		111,204
Deferred income taxes	25	-		7,978
Other assets		1,686		266
		2,516,343		1,416,304
Liabilities
Current liabilities
Accounts payable and accrued liabilities	17	15,310		7,438
Dividends payable	20	7,890		4,266
Provisions and other liabilities	18	5,632		4,153
		28,832		15,857
Non-current liabilities
Long-term debt	19	464,308		45,780
Provisions and other liabilities	18	2,036		12,433
Deferred income taxes	25	126,762		127,930
		621,938		202,000
Equity
Share capital	20	1,633,013		908,890
Warrants	21	30,901		30,901
Contributed surplus		13,265		11,411
Equity component of convertible debentures	19	17,601		3,091
Accumulated other comprehensive income (loss)		(2,878	)	7,838
Retained earnings		202,503		250,306
Equity attributable to Osisko Gold Royalties Ltd shareholders		1,894,405		1,212,437
Non-controlling interests		-		1,867
Total equity		1,894,405		1,214,304
		2,516,343		1,416,304

*APPROVED ON BEHALF OF THE BOARD*

(signed) Sean Roosen, Director	(signed) Joanne Ferstman, Director

The notes are an integral part of these consolidated financial statements.

Osisko Gold Royalties Ltd

Consolidated Statements of Income (Loss)

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

		2017		2016
	Notes	$		$

Revenues	23	213,216		62,677

Cost of sales	24	(125,645	)	(143	)
Depletion of royalty, stream and other interests	26	(28,065	)	(11,291	)
Gross profit		59,506		51,243

Other operating expenses
General and administrative	26	(26,176	)	(16,715	)
Business development	26	(18,706	)	(8,282	)
Impairment of royalty, stream and other interests	14	(89,000	)	-
Exploration and evaluation, net of tax credits	26	(204	)	1,240
Other gains (expenses), net	26	20		(1,436	)
Cost recoveries from associates	26	4,125		3,039
Operating income (loss)		(70,435	)	29,089
Interest income		4,255		3,260
Dividend income		-		4,931
Finance costs		(8,384	)	(3,435	)
Foreign exchange loss		(16,086	)	(5,846	)
Share of loss of associates	12	(6,114	)	(6,623	)
Other gains, net	26	30,829		30,202
Earnings (loss) before income taxes		(65,935	)	51,578
Income tax recovery (expense)	25	23,147		(9,724	)
Net earnings (loss)		(42,788	)	41,854

Net earnings (loss) attributable to:
Osisko Gold Royalties Ltd’s shareholders		(42,501	)	42,113
Non-controlling interests		(287	)	(259	)

Net earnings (loss) per share attributable to Osisko Gold Royalties Ltd’s shareholders	28
Basic		(0.33	)	0.40
Diluted		(0.33	)	0.40

The notes are an integral part of these consolidated financial statements.

Osisko Gold Royalties Ltd

Consolidated Statements of Comprehensive Income (Loss)

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars)

	2017		2016
	$		$

Net earnings (loss)	(42,788	)	41,854

Other comprehensive income (loss)
Items that will not be reclassified to the consolidated statement of income (loss)
Changes in fair value of financial assets at fair value through comprehensive income	6,139		74,914
Income tax effect	(762	)	(4,859	)
Changes in fair value of derivative financial instruments – cash flow hedges	(21,072	)	-
Income tax effect	2,824		-
Share of other comprehensive income (loss) of associates	(78	)	1,645
Items that may be reclassified to the consolidated statement of income (loss)
Currency translation adjustments	1,532		-
Share of other comprehensive loss of associates	(459	)	(382	)
Other comprehensive loss	(11,876	)	71,318

Comprehensive income (loss)	(54,664	)	113,172

Comprehensive income (loss) attributable to:
Osisko Gold Royalties Ltd’s shareholders	(54,377	)	113,431
Non-controlling interests	(287	)	(259	)

The notes are an integral part of these consolidated financial statements.

Osisko Gold Royalties Ltd

Consolidated Statements of Cash Flows

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars)

		2017		2016
	Notes	$		$
Operating activities
Net earnings (loss)		(42,788	)	41,854
Adjustments for:
Share-based compensation		10,524		7,380
Depletion and amortization		28,210		11,509
Impairment of royalty, stream and other interests	14	89,000		-
Share of loss of associates		6,114		6,623
Net loss (gain) on acquisition of investments		2,099		(8,379	)
Net gain on dilution of investments in associates		(30,560	)	(12,023	)
Net gain on disposal of investments		(703	)	(3,410	)
Change in fair value of financial assets at fair value through profit and loss		(1,665	)	(6,390	)
Deferred income tax expense (recovery)		(24,150	)	8,372
Settlement of restricted share units		(5,539	)	-
Foreign exchange loss		16,211		5,851
Other		2,403		2,832
Net cash flows provided by operating activities before changes in non-cash working capital items		49,156		54,219
Changes in non-cash working capital items	29	(440	)	(775	)
Net cash flows provided by operating activities		48,716		53,444

Investing activities
Net decrease (increase) in short-term investments		2,047		(1,800	)
Business combination, net of cash acquired	7	(621,430	)	-
Settlement of derivative financial instruments	7	(21,072	)	-
Acquisition of investments		(226,766	)	(82,384	)
Proceeds on disposal of investments		71,090		129,183
Acquisition of royalty and stream interests		(80,119	)	(55,250	)
Proceeds on sale of royalty interests		-		3,630
Property and equipment		(137	)	(105	)
Exploration and evaluation, net of tax credits		(1,128	)	(8,327	)
Net cash flows used in investing activities		(877,515	)	(15,053	)

Financing activities
Issuance of long-term debt	19	447,323		50,000
Issuance of common shares and warrants	20	264,278		177,934
Issue expenses		(190	)	(8,066	)
Financing fees		(12,619	)	(850	)
Investment from non-controlling interests		1,292		4,499
Normal course issuer bid purchase of common shares		(1,822	)	-
Dividends paid		(19,325	)	(15,317	)
Net cash flows provided by financing activities		678,937		208,200
Increase (decrease) in cash and cash equivalents before effects of exchange rate changes on cash and cash equivalents		(149,862	)	246,591
Effects of exchange rate changes on cash and cash equivalents		(15,682	)	(5,851	)

Increase (decrease) in cash and cash equivalents		(165,544	)	240,740
Cash and cash equivalents – January 1		499,249		258,509
Cash and cash equivalents – December 31	8	333,705		499,249

Additional information related to the consolidated statements of cash flows is presented in Note 29.

The notes are an integral part of these consolidated financial statements.

Osisko Gold Royalties Ltd

Consolidated Statements of Changes in Equity

For the year ended December 31, 2017

(tabular amounts expressed in thousands of Canadian dollars)

			Equity attributed to Osisko Gold Royalties Ltd shareholders
		Number of						Equity	Accumulated
		common						component of	other						Non-
		shares	Share			Contributed		convertible	comprehensive		Retained				controlling
	Notes	outstanding	capital		Warrants	surplus		debentures	income (loss)⁽ⁱ⁾		earnings		Total		interest		Total
			$		$	$		$	$		$		$		$		$
Balance - January 1, 2017		106,497,315	908,890		30,901	11,411		3,091	7,838		250,306		1,212,437		1,867		1,214,304

Net loss		-	-		-	-		-	-		(42,501	)	(42,501	)	(287	)	(42,788	)
Other comprehensive loss		-	-		-	-		-	(11,876	)	-		(11,876	)	-		(11,876	)
Comprehensive loss		-	-		-	-		-	(11,876	)	(42,501	)	(54,377	)	(287	)	(54,664	)
Business combination	7	30,906,594	445,334		-	-		-	-		-		445,334		-		445,334
Private placements	20	19,272,820	261,250		-	-		-	-		-		261,250		-		261,250
Exercise of share exchange rights	18, 20	772,810	11,979		-	-		-	-		1,589		13,568		(1,589	)	11,979
Dividends declared	20	-	-		-	-		-	-		(24,274	)	(24,274	)	-		(24,274	)
Shares issued – Dividends reinvestment plan	20	88,536	1,327		-	-		-	-		-		1,327		-		1,327
Shares issued – Employee share purchase plan		24,677	371		-	-		-	-		-		371		-		371
Share options:
Shared-based compensation		-	-		-	3,218		-	-		-		3,218		-		3,218
Fair value of options exercised		-	162		-	(162	)	-	-		-		-		-		-
Proceeds from exercise of options		43,970	625		-	-		-	-		-		625		-		625
Replacement share options:
Fair value of options exercised		-	1,202		-	(1,202	)	-	-		-		-		-		-
Proceeds from exercise of options		190,471	2,148		-	-		-	-		-		2,148		-		2,148
Equity component of convertible debentures, net of transaction costs of $789 and taxes of $5,232	19	-	-		-	-		14,510	-		-		14,510		-		14,510
Investments from non-controlling interests		-	-		-	-		-	-		295		295		9		304
Issue costs, net of taxes of $101		-	(275	)	-	-		-	-		-		(275	)	-		(275	)
Transfer of realized gain on financial assets at fair value through other comprehensive income		-	-		-	-		-	(17,088	)	17,088		-		-		-
Settlement of derivative financial instruments, net of tax of $2,824	7	-	-		-	-		-	18,248		-		18,248		-		18,248
Balance – December 31, 2017		157,797,193	1,633,013		30,901	13,265		17,601	(2,878	)	202,503		1,894,405		-		1,894,405

(i) As at December 31, 2017, accumulated other comprehensive loss comprises items that will not be recycled to the consolidated statement of income (loss) amounting to ($2,182,000) and items that may be recycled to the consolidated statement of income (loss) amounting to ($695,000) .

The notes are an integral part of these consolidated financial statements.

Osisko Gold Royalties Ltd

Consolidated Statements of Changes in Equity

For the year ended December 31, 2016

(tabular amounts expressed in thousands of Canadian dollars)

				Equity attributed to Osisko Gold Royalties Ltd shareholders
		Number of								Equity	Accumulated
		common								component of	other						Non-
		shares		Share				Contributed		convertible	comprehensive		Retained				controlling
	Notes	outstanding		capital		Warrants		surplus		debenture	income (loss)⁽ⁱ⁾		earnings		Total		interest		Total
				$		$		$		$	$		$		$		$		$
Balance - January 1, 2016		94,578,280		745,007		18,072		10,164		-	(41,203	)	203,800		935,840		1,399		937,239
Adoption of IFRS 9	3	-		-		-		-		-	(7,610	)	7,610		-		-		-

Net earnings (loss)		-		-		-		-		-	-		42,113		42,113		(259	)	41,854
Other comprehensive income		-		-		-		-		-	71,318		-		71,318		-		71,318
Comprehensive income (loss)		-		-		-		-		-	71,318		42,113		113,431		(259	)	113,172
Issuance of shares and warrants	20	11,431,000		159,325		13,283		-		-	-		-		172,608		-		172,608
Dividends declared		-		-		-		-		-	-		(17,037	)	(17,037	)	-		(17,037	)
Shares issued – Dividends reinvestment plan	20	83,533		1,236		-		-		-	-		-		1,236		-		1,236
Shares issued – Employee share purchase plan		36,411		532		-		-		-	-		-		532		-		532
Share options:
Shared-based compensation		-		-		-		5,077		-	-		-		5,077		-		5,077
Fair value of options exercised		-		42		-		(42	)	-	-		-		-		-		-
Proceeds from exercise of options		12,335		188		-		-		-	-		-		188		-		188
Replacement share options:
Fair value of options exercised		-		3,788		-		(3,788	)	-	-		-		-		-		-
Proceeds from exercise of options		505,756		4,806		-		-		-	-		-		4,806		-		4,806
Equity component of convertible debenture, net of transaction costs of $66 and taxes of $1,137	19	-		-		-		-		3,091	-		-		3,091		-		3,091
Investments from non-controlling interests		-		-		-		-		-	-		384		384		727		1,111
Issue costs, net of taxes of $2,003 and $167		-		(5,442	)	(454	)	-		-	-		-		(5,896	)	-		(5,896	)
Normal course issuer bid purchase of common chares	20	(150,000	)	(592	)	-		-		-	-		(1,231	)	(1,823	)	-		(1,823	)
Transfer of realized gain on financial assets at fair value through other comprehensive income		-		-		-		-		-	(14,667	)	14,667		-		-		-
Balance – December 31, 2016		106,497,315		908,890		30,901		11,411		3,091	7,838		250,306		1,212,437		1,867		1,214,304

(i) As at December 31, 2016, accumulated other comprehensive loss comprises items that will not be recycled to the consolidated statement of income (loss) amounting to $8,074,000 and items that may be recycled to the consolidated statement of income (loss) amounting to ($236,000) .

The notes are an integral part of these consolidated financial statements.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

1.	Nature of activities

	Osisko Gold Royalties Ltd and its subsidiaries (together “Osisko” or the “Company”) are engaged in the business of acquiring and managing precious metal and other high-quality royalties, streams and similar interests in Canada and worldwide. Osisko is a public company traded on the Toronto Stock Exchange and the New York Stock Exchange constituted under the Business Corporations Act (Québec) and is domiciled in the Province of Québec, Canada. The address of its registered office is 1100, avenue des Canadiens-de-Montréal, Suite 300, Montréal, Québec.

	The Company owns a 5% net smelter return (“NSR”) royalty on the Canadian Malartic mine, a sliding scale 2.0% to 3.5% NSR royalty on the Éléonore mine, a 9.6% diamond stream on the Renard diamond mine, a 4% gold and silver stream on the Brucejack gold and silver mine and a silver stream on the Gibraltar mine, all of which are in Canada, in addition to a 100% silver stream on the Mantos Blancos copper mine in Chile. The Company also owns a portfolio of royalties, streams, offtakes, options on royalty/stream financings and exclusive rights to participate in future royalty/stream financings on various projects mainly in Canada. In addition, the Company invests in equities of exploration, development and royalty companies.

2.	Basis of presentation

	The accompanying consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The accounting policies, methods of computation and presentation applied in these consolidated financial statements are consistent with those of the previous financial year, except for the presentation of depletion of royalty, stream and other interests which is now presented before Gross profit instead of under Other operating expenses in the consolidated statements of income (loss), and except for the adoption of a new accounting standard presented in Note 3. Certain comparative figures have been reclassified to conform to the presentation adopted in the current year for the depletion of royalty, stream and other interests.

	The Board of Directors approved the audited consolidated financial statements for issue on February 19, 2018.

3.	New accounting standard

	IAS 7, Statement of Cash Flows (“IAS 7”)

	In January 2016, the IASB issued amendments to IAS 7. The amendments are intended to clarify IAS 7 to improve information provided to users of financial statements about an entity’s financing activities. The application of the amendments to IAS 7 resulted in additional information on financing activities presented in Note 29.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

4.	Significant accounting policies

	The significant accounting policies applied in the preparation of the consolidated financial statements are described below.

	a)	Basis of measurement

		The consolidated financial statements are prepared under the historical cost convention, except for the revaluation of certain financial assets at fair value.

	b)	Business combinations

		On the acquisition of a business, the acquisition method of accounting is used whereby the purchase consideration is allocated to the identifiable assets, liabilities and contingent liabilities (identifiable net assets) of the business on the basis of the fair value at the date of acquisition. Provisional fair values allocated at a reporting date are finalized as soon as the relevant information is available, which period shall not exceed twelve months from the acquisition date and are adjusted to reflect the transaction as of the acquisition date. The Company recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognized amounts of acquiree’s identifiable net assets.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

4.	Significant accounting policies *(continued)*

	b)	Business combinations (continued)

		The results of businesses acquired during the period are consolidated into the consolidated financial statements from the date on which control commences (generally at the closing date when the acquirer legally transfers the consideration).

		When a business is acquired in a number of stages, the cost of each stage is compared with the fair value of the identifiable net assets at the date of that purchase. Any excess is treated as goodwill, and any discount is immediately recognized in the consolidated statement of income (loss) and comprehensive income (loss). If control is obtained or lost as a result of a transaction, the identifiable net assets are recognized on the balance sheet at fair value and the difference between the fair value recognized and the carrying value as at the date of the transaction is recognized in the consolidated statement of income (loss). Acquisition costs are expensed as incurred.

	c)	Consolidation

		The Company’s financial statements consolidate the accounts of Osisko Gold Royalties Ltd and its subsidiaries. All intercompany transactions, balances and unrealized gains or losses from intercompany transactions are eliminated on consolidation. Subsidiaries are all entities over which the Company has the ability to exercise control. The Company controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to Osisko and are de-consolidated from the date that control ceases. Accounting policies of subsidiaries are consistent with the policies adopted by Osisko.

		The principal subsidiaries of the Company and their geographic locations at December 31, 2017 were as follows:

Entity	Jurisdiction	Economic Interest

Osisko Bermuda Limited	Bermuda	100%
Coulon Mines Inc.	Canada	100%⁽ⁱ⁾
General Partnership Osisko James Bay	Québec	100%
Osisko Mining (USA) Inc.	Delaware	100%

		(i) 76% as at December 31, 2016.

	d)	Non-controlling interests

		Non-controlling interests represent an equity interest in a subsidiary owned by an outside party. The share of net assets of the subsidiary attributable to the non-controlling interests is presented as a component of equity. Their share of net income or loss and comprehensive income or loss is recognized directly in equity. Changes in the Company’s ownership interest in the subsidiary that do not result in a loss of control are accounted for as equity transactions.

	e)	Foreign currency translation

	(i)	Functional and presentation currency

		Items included in the financial statements of each consolidated entity and associate of the Company are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in Canadian dollars, which is the functional currency of the parent Company and some of its subsidiaries.

		Assets and liabilities of the subsidiaries that have a functional currency other than the Canadian dollar are translated into Canadian dollars at the exchange rate in effect on the consolidated balance sheet date and revenues and expenses are translated at the average exchange rate over the reporting period. Gains and losses from these translations are recognized as currency translation adjustment in other comprehensive income (loss).

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

4.	Significant accounting policies *(continued)*

Foreign currency translation (continued)

	(ii)	Transactions and balances

		Foreign currency transactions, including revenues and expenses, are translated into the functional currency at the rate of exchange prevailing on the date of each transaction or valuation when items are re-measured. Monetary assets and liabilities denominated in currencies other than the operation’s functional currencies are translated into the functional currency at exchange rates in effect at the balance sheet date. Foreign exchange gains and losses resulting from the settlement of those transactions and from period-end translations are recognized in the consolidated statement of income (loss).

		Non-monetary assets and liabilities are translated at historical rates, unless such assets and liabilities are carried at market value, in which case, they are translated at the exchange rate in effect at the date of the balance sheet. Changes in fair value attributable to currency fluctuations of non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognized in the consolidated statement of income (loss) as part of the fair value gain or loss. Such changes in fair value of non-monetary financial assets, such as equities classified at fair value through other comprehensive income, are included in other comprehensive income (loss).

	f)	Financial instruments

		Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.

		Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.

		All financial instruments are required to be measured at fair value on initial recognition. The fair value is based on quoted market prices, unless the financial instruments are not traded in an active market. In this case, the fair value is determined by using valuation techniques like the Black-Scholes option pricing model or other valuation techniques.

		Measurement after initial recognition depends on the classification of the financial instrument. The Company has classified its financial instruments in the following categories depending on the purpose for which the instruments were acquired and their characteristics.

	(i)	Financial assets

		Debt instruments

		Investments in debt instruments are subsequently measured at amortized cost when the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows and when the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

		Investments in debt instruments are subsequently measured at fair value when they do not qualify for measurement at amortized cost. Financial instruments subsequently measured at fair value can be carried at fair value with changes in fair value recorded in net income or loss unless they are held within a business model whose objective is to hold assets in order to collect contractual cash flows or sell the assets and when the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, in which case unrealized gains and losses are initially recognized in other comprehensive income (loss) for subsequent reclassification to net income or loss through amortization of premiums and discounts, impairment or derecognition.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

4.	Significant accounting policies *(continued)*

Financial instruments (continued)

	(i)	Financial assets (continued)

		Equity instruments

		Investments in equity instruments are subsequently measured at fair value with changes recorded in net income or loss. Equity instruments that are not held for trading can be irrevocably designated at fair value through other comprehensive income (loss) on initial recognition without subsequent reclassification to net income. Cumulative gains and losses are transferred from accumulated other comprehensive income (loss) to retained earnings upon derecognition of the investment.

		Dividend income on equity instruments measured at fair value through other comprehensive income is recognized in the statement of income (loss) on the ex-dividend date.

	(ii)	Financial Liabilities

		Financial liabilities are subsequently measured at amortized cost using the effective interest method, except for financial liabilities at fair value through profit or loss. Such liabilities, including derivatives that are liabilities, shall be subsequently measured at fair value.

		Put and call options over non-controlling interests

		The terms of a put and/or a call over a non-controlling interest is analyzed to assess whether it gives the controlling interest in substance, the risks and rewards associated with ownership of the shares covered by the instruments. A put and call with a fair value exercise price is less likely to convey the risks and rewards of ownership to the controlling interest (i.e. the non-controlling shareholders still have present access to the associated benefits). In such cases, the Company uses the present access method in which the non-controlling interest continues to be recognized as such as it still has present access to the economic benefits associated with the underlying ownership interests. A financial liability is initially recognized against the parent’s equity for the repurchase obligation. The transaction is not treated as an anticipated acquisition.

The Company has classified its financial instruments as follows:

	Category	Financial instrument

	Financial assets at amortized cost	Bank balances and cash on hand
		Guaranteed investment certificates
		Short-term debt securities
		Bonds
		Notes receivable
		Trade receivables
		Interest and dividend income receivable
		Amounts receivable from associates and other receivables

	Financial assets at fair value through profit or loss	Investments in derivatives

	Financial assets at fair value through other comprehensive income	Investments in shares and equity instruments, other than in derivatives

	Financial liabilities at amortized cost	Accounts payable and accrued liabilities
		Liability related to share exchange rights
		Liability component of convertible debentures
		Borrowings under revolving credit facilities

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

4.	Significant accounting policies *(continued)*

	f)	Financial instruments (continued)

		Derivatives

		Derivatives, other than warrants held in mining exploration, development and royalty companies, are only used for economic hedging purposes and not as speculative investments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently measured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

		Cash flow hedges

		The Company applies the hedge accounting requirements of IFRS 9, Financial Instruments and to designate certain derivatives as cash flow hedges thereunder. The Company documents at the inception of the hedging transaction, the economic relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking the hedge transactions. The Company also documents its assessment, both at the inception of a hedge relationship and on an ongoing basis, of whether the derivatives that are used as hedging instruments are expected to offset changes in the cash flows of hedged items.

		The fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months and it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months.

		The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income (loss) and accumulated in equity under accumulated other comprehensive income (loss). The gain or loss relating to the ineffective portion is recognised immediately in the consolidated statement of income (loss) within other gains, net.

		Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset, the gains and losses previously deferred in equity are reclassified from equity and included in the initial measurement of the cost of the asset.

		When a hedging instrument expires, is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss deferred in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately reclassified to profit or loss.

	g)	Impairment of financial assets

		At each reporting date, the Company assesses, on a forward-looking basis, the expected credit losses associated with its financial assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in the credit risk or if a simplified approach has been selected.

		The Company has two principal types of financial assets subject to the expected credit loss model:

	•	Trade receivables; and
	•	Investments in debt instruments measured at amortized cost.

Accounts receivables

The Company applies the simplified approach permitted by IFRS 9 for trade receivables (including amounts receivable from associates and other receivables), which requires lifetime expected credit losses to be recognized from initial recognition of the receivables.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

4.	Significant accounting policies *(continued)*

	g)	Impairment of financial assets (continued)

		Investments in debt instruments

		To the extent that a debt instrument at amortized cost is considered to have low credit risk, which corresponds to a credit rating within the investment grade category and the credit risk has not increased significantly, the loss allowance is determined on the basis of 12-month expected credit losses. If the credit risk has increased significantly, the lifetime expected credit losses are recognized.

	h)	Cash and cash equivalents

		Cash and cash equivalents include cash on hand, deposits held with banks and other highly liquid short-term investments with original maturities of three months or less or that can be redeemed at any time without penalties.

	i)	Refundable tax credits for mining exploration expenses

		The Company is entitled to a refundable tax credit on qualified mining exploration and evaluation expenses incurred in the province of Québec. The credit is accounted for against the exploration and evaluation expenses incurred.

	j)	Inventories

		Inventories are mainly comprised of gold and silver bullions and diamonds in saleable form that have not yet been sold. Inventories are valued at the lower of cost and net realizable value. Cost is determined on a weighted average basis.

	k)	Investments in associates

		Associates are entities over which the Company has significant influence, but not control. The financial results of the Company’s investments in its associates are included in the Company’s results according to the equity method. Under the equity method, the investment is initially recognized at cost, and the carrying amount is increased or decreased to recognize the Company’s share of profits or losses of associates after the date of acquisition. The Company’s share of profits or losses is recognized in the consolidated statement of income (loss) and its share of other comprehensive income or loss of associates is included in other comprehensive income (loss).

		Unrealized gains on transactions between the Company and an associate are eliminated to the extent of the Company’s interest in the associate. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Dilution gains and losses arising from changes in interests in investments in associates are recognized in the consolidated statement of income (loss).

		The Company assesses at each period-end whether there is any objective evidence that its investments in associates are impaired. If impaired, the carrying value of the Company’s share of the underlying assets of associates is written down to its estimated recoverable amount (being the higher of fair value less costs of disposal and value in use) and charged to the consolidated statement of income (loss).

	l)	Royalty, stream and other interests

		Royalty, stream and other interests consist of acquired royalty, stream and other interests in producing, development and exploration and evaluation stage properties. Royalty, stream and other interests are recorded at cost and capitalized as tangible assets. They are subsequently measured at cost less accumulated depletion and depreciation and accumulated impairment losses. The major categories of the Company’s interests are producing, development and exploration and evaluation. Producing assets are those that have generated revenue from steady-state operations for the Company. Development assets are interests in projects that are under development, in permitting or feasibility stage and that in management’s view, can be reasonably expected to generate steady-state revenue for the Company in the near future. Exploration and evaluation assets represent properties that are not yet in development, permitting or feasibility stage or that are speculative in nature and are expected to require several years to generate revenue, if ever, or are currently not active.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

4.	Significant accounting policies *(continued)*

	l)	Royalty, stream and other interests (continued)

		Producing and development royalty, stream and other interests are recorded at cost and capitalized in accordance with IAS 16, Property, Plant and Equipment. Producing royalty, stream and other interests are depleted using the units-of-production method over the life of the property to which the interest relates, which is estimated using available estimates of proven and probable mineral reserves specifically associated with the properties and may include a portion of resources expected to be converted into mineral reserves. Management relies on information available to it under contracts with the operators and / or public disclosures for information on proven and probable mineral reserves and resources from the operators of the producing royalty, stream and other interests.

		On acquisition of a producing or a development royalty, stream and other interest, an allocation of the acquisition cost is made for the exploration potential based on its fair value. The estimated fair value of this acquired exploration potential is recorded as an asset (non-depreciable interest) on the acquisition date. Updated mineral reserve and resource information obtained from the operators of the properties is used to determine the amount to be converted from non-depreciable interest to depreciable interest.

		Royalty, stream and other interests for exploration and evaluation assets are recorded at cost and capitalized in accordance with IFRS 6, Exploration for and Evaluation of Mineral Resources (“IFRS 6”). Acquisition costs of exploration and evaluation royalty, stream and other interests are capitalized and are not depleted until such time as revenue-generating activities begin.

		Producing and development royalty, stream and other interests are reviewed for impairment if there is any indication that the carrying amount may not be recoverable. Impairment is assessed at the level of Cash-Generating Units (‘‘CGU’’) which, in accordance with IAS 36, Impairment of Assets, are identified as the smallest identifiable group of assets that generates cash inflows, which are largely independent of the cash inflows from other assets. This is usually at the individual royalty, stream and other interest level for each property from which cash inflows are generated.

		Royalty, stream and other interests for exploration and evaluation assets are assessed for impairment whenever indicators of impairment exist in accordance with IFRS 6. An impairment loss is recognized for the amount by which the asset’s carrying value exceeds its recoverable amount, which is the higher of fair value less costs of disposal and value-in-use. An interest that has previously been classified as exploration and evaluation is also assessed for impairment before reclassification to development or producing, and the impairment loss, if any, is recognized in net income.

	m)	Property and equipment

		Property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of an asset. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefit associated with the item will flow to the Company and the cost can be measured reliably. The carrying amount of a replaced asset is derecognized when replaced.

		Depreciation is calculated to amortize the cost of the property and equipment less their residual values over their estimated useful lives using the straight-line method and following periods by major categories:

	Leasehold improvements	Lease term
	Furniture and office equipment	3-5 years

Residual values, method of depreciation and useful lives of the assets are reviewed annually and adjusted if appropriate.

Gains and losses on disposals of property and equipment are determined by comparing the proceeds with the carrying amount of the asset and are included as part of other gains (losses) in the consolidated statement of income (loss).

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

4.	Significant accounting policies *(continued)*

	n)	Exploration and evaluation expenditures

		Exploration and evaluation assets are comprised of exploration and evaluation expenditures and mining properties acquisition costs. Expenditures incurred on activities that precede exploration and evaluation, being all expenditures incurred prior to securing the legal rights to explore an area, are expensed immediately. Exploration and evaluation assets include rights in mining properties, paid or acquired through a business combination or an acquisition of assets, and costs related to the initial search for mineral deposits with economic potential or to obtain more information about existing mineral deposits. Mining rights are recorded at acquisition cost less accumulated impairment losses. Mining rights and options to acquire undivided interests in mining rights are depreciated only as these properties are put into commercial production.

		Exploration and evaluation expenditures for each separate area of interest are capitalized and include costs associated with prospecting, sampling, trenching, drilling and other work involved in searching for ore like topographical, geological, geochemical and geophysical studies. They also reflect costs related to establishing the technical and commercial viability of extracting a mineral resource identified through exploration and evaluation or acquired through a business combination or asset acquisition.

		Exploration and evaluation expenditures include the cost of:

	(i)	establishing the volume and grade of deposits through drilling of core samples, trenching and sampling activities;
	(ii)	determining the optimal methods of extraction and metallurgical and treatment processes;
	(iii)	studies related to surveying, transportation and infrastructure requirements;
	(iv)	permitting activities; and
	(v)	economic evaluations to determine whether development of the mineralized material is commercially justified, including scoping, prefeasibility and final feasibility studies.

Exploration and evaluation expenditures include overhead expenses directly attributable to the related activities.

Cash flows attributable to capitalized exploration and evaluation costs are classified as investing activities in the consolidated statement of cash flows under the heading exploration and evaluation.

Exploration and evaluation assets under a farm-out arrangement (where a farmee incurs certain expenditures in a property to earn an interest in that property) are accounted as follows:

	(i)	the Company uses the carrying value of the interest before the farm-out arrangement as the carrying value for the portion of the interest retained;
	(ii)	the Company credits any cash consideration received against the carrying amount of the portion of the interest retained, with an excess included as a gain in profit or loss;
	(iii)	in the situation where a royalty interest is retained by the Company as a result of an interest earned by the farmee, the Company records the royalty interest received at an amount corresponding to the carrying value of the exploration and evaluation property at the time of the transfer in ownership; and
	(iv)	the Company does not record exploration expenditures made by the farmee on the property.

	o)	Goodwill

		Goodwill is recognized in a business combination if the cost of the acquisition exceeds the fair values of the identifiable net assets acquired. Goodwill is then allocated to the CGU or group of CGUs that are expected to benefit from the synergies of the combination. The Company performs goodwill impairment tests on an annual basis as at December 31 of each year. In addition, the Company assesses for indicators of impairment at each reporting period end and, if an indicator of impairment is identified, goodwill is tested for impairment at that time. If the carrying value of the CGU or group of CGUs to which goodwill is assigned exceeds its recoverable amount, an impairment loss is recognized. Goodwill impairment losses are not reversed.

		The recoverable amount of a CGU or group of CGUs is measured as the higher of value in use and fair value less costs of disposal.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

4.	Significant accounting policies *(continued)*

	p)	Current and deferred income tax

		The tax expense for the period comprises current and deferred tax. Tax is recognized in the consolidated statement of income (loss), except to the extent that it relates to items recognized in other comprehensive income (loss) or directly in equity. In this case, the tax is also recognized in other comprehensive income (loss) or directly in equity, respectively.

		Current income taxes

		The current income tax charge is the expected tax payable on the taxable income for the year, using the tax laws enacted or substantively enacted at the balance sheet date in the jurisdictions where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

		Deferred income taxes

		The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax assets and liabilities are measured using enacted or substantively enacted tax rates (and laws) that apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

		Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

		Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future.

		Deferred income tax assets and liabilities are presented as non-current and are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

	q)	Convertible debentures

		The liability and equity components of convertible debentures are presented separately on the consolidated balance sheet starting from initial recognition.

		The liability component is recognized initially at the fair value, by discounting the stream of future payments of interest and principal at the prevailing market rate for a similar liability of comparable credit status and providing substantially the same cash flows that do not have an associated conversion option. Subsequent to initial recognition, the liability component is measured at amortized cost using the effective interest method; the liability component is increased by accretion of the discounted amounts to reach the nominal value of the debentures at maturity.

		The carrying amount of the equity component is calculated by deducting the carrying amount of the financial liability from the amount of the debentures and is presented in shareholders’ equity as equity component of convertible debenture. The equity component is not re-measured subsequent to initial recognition except on conversion or expiry. A deferred tax liability is recognized with respect to any temporary difference that arises from the initial recognition of the equity component separately from the liability component. The deferred tax is charged directly to the carrying amount of the equity component. Subsequent changes in the deferred tax liability are recognized through the consolidated statement of income (loss).

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

Transaction costs are distributed between liability and equity on a pro-rata basis of their carrying amounts.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

4.	Significant accounting policies *(continued)*

	r)	Share capital

		Common shares are classified as equity. Incremental costs directly attributable to the issuance of shares are recognized as a deduction from the proceeds in equity in the period where the transaction occurs.

	s)	Warrants

		Warrants are classified as equity. Incremental costs directly attributable to the issuance of warrants are recognized as a deduction from the proceeds in equity in the period where the transaction occurs.

	t)	Revenue recognition

		Revenue comprises revenues from the sale of commodities received under royalty, stream and other interest agreements and revenues earned directly from royalty, stream and other interest agreements. For royalty agreements paid in-kind and for stream and other interest agreements (including offtake agreements), revenue recognition occurs when the relevant commodity received from the operator is physically delivered and sold by the Company to its third party customers. Significant risks and rewards of ownership are passed to the buyer at the time of delivery, which also corresponds to the transfer of the title of the property. For royalty and stream agreements paid in cash, revenue recognition will depend on the related agreement.

		Revenue is measured at fair value of the consideration received or receivable when management can reliably estimate the amount, pursuant to the terms of the royalty, stream and other interest agreements. In some instances, the Company will not have access to sufficient information to make a reasonable estimate of revenue and, accordingly, revenue recognition is deferred until management can make a reasonable estimate. Differences between estimates and actual amounts are adjusted and recorded in the period that the actual amounts are known.

	u)	Operating leases

		Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the consolidated income statement on a straight-line basis over the period of the lease.

	v)	Share-based compensation

		Share option plan

		The Company offers a share option plan for its directors, officers, employees and consultants. Each tranche in an award is considered a separate award with its own vesting period and grant date fair value. Fair value of each tranche is measured at the date of grant using the Black-Scholes option pricing model. Compensation expense is recognized over the tranche’s vesting period by increasing contributed surplus based on the number of awards expected to vest. The number of awards expected to vest is reviewed at least annually, with any impact being recognized immediately.

		Any consideration paid on exercise of share options is credited to share capital. The contributed surplus resulting from share-based compensation is transferred to share capital when the options are exercised.

		Deferred and restricted share units

		Deferred share units (“DSU”) and restricted share units (“RSU”) may be granted to employees, directors and officers as part of their long-term compensation package entitling them to receive payout in cash based on the Company’s share price at the relevant time. A liability for DSU and RSU is measured at fair value on the grant date and is subsequently adjusted at each balance sheet date for changes in fair value according to the estimation made by management of the number of DSU and RSU that will eventually vest. The liability is recognized over the vesting period, with a corresponding charge to share-based compensation.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

4.	Significant accounting policies *(continued)*

	w)	Earnings per share

		The calculation of earnings per share (“EPS”) is based on the weighted average number of shares outstanding for each period. The basic EPS is calculated by dividing the profit or loss attributable to the equity owners of Osisko by the weighted average number of common shares outstanding during the period.

		The computation of diluted EPS assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on the income per share. It also includes shares issued and held in escrow. The treasury stock method is used to determine the dilutive effect of the warrants, share options and the if-converted method is used for convertible debentures. When the Company reports a loss, the diluted net loss per common share is equal to the basic net loss per common share due to the anti-dilutive effect of the shares held in escrow, the outstanding warrants, share options and convertible debentures.

	x)	Segment reporting

		The operating segments are reported in a manner consistent with the internal reporting provided to the Chief Executive Officer (“CEO”) who fulfills the role of the chief operating decision-maker. The CEO is responsible for allocating resources and assessing performance of the Company’s operating segments. The Company manages its business under a single operating segment, consisting of acquiring and managing precious metal and other high- quality royalties, streams and similar interests.

5.	Accounting standards issued but not yet effective

	The Company has not yet adopted certain standards, interpretations to existing standards and amendments which have been issued but have an effective date of later than January 1, 2017. Many of these updates are not relevant to the Company and are therefore not discussed herein.

	IFRS 15, Revenue from contracts with customers (“IFRS 15”)

	In May 2014, the IASB issued IFRS 15. IFRS 15 replaces all previous revenue recognition standards, including IAS 18, Revenue, and related interpretations. The standard sets out the requirements for recognizing revenue. Specifically, the new standard introduces a comprehensive framework with the general principle being that an entity recognizes revenue to depict the transfer of promised goods and services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard introduces more prescriptive guidance than was included in previous standards and may result in changes to the timing of revenue for certain types of revenues. The new Standard will also result in enhanced disclosures about revenue that would result in an entity providing comprehensive information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers.

	The new standard is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. Management has evaluated the impact that this standard will have on its consolidated financial statements and has concluded that, based on its current operations, the adoption of IFRS 15 as of January 1, 2018 will have no significant impact on the Company’s consolidated financial statements.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

5.	Accounting standards issued but not yet effective *(continued)*

	IFRS 16, Leases (“IFRS 16”)

	In January 2016, the IASB issued IFRS 16. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, which is the customer (“lessee”) and the supplier (“lessor”). IFRS 16 replaces IAS 17, Leases (“IAS 17”), and related interpretations. All leases result in the lessee obtaining the right to use an asset at the start of the lease and, if lease payments are made over time, also obtaining financing. Accordingly, IFRS 16 eliminates the classification of leases as either operating leases or finance leases as is required by IAS 17 and, instead, introduces a single lessee accounting model. Applying that model, a lessee is required to recognize:

	i)	assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value; and
	ii)	depreciation of lease assets separately from interest on lease liabilities in the statement of income (loss).

	The new standard is effective for annual periods beginning on or after January 1, 2019. Management has not yet evaluated the impact that this standard will have on its consolidated financial statements. However, the impact is currently not expected to be significant given the limited extent of the Company’s current lease commitments, as disclosed in Note 34.

	IFRIC 22, Foreign currency translation and advance consideration (“IFRIC 22”)

	In December 2016, the IASB issued IFRIC 22 that addresses foreign currency transactions or parts of transactions where there is consideration that is denominated or priced in a foreign currency; the entity recognizes a prepayment asset or a deferred income liability in respect of that consideration, in advance of the recognition of the related asset, expense or income; and the prepayment asset or deferred income liability is non-monetary. The Interpretations Committee came to the conclusion that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt. IFRIC 22 is effective for annual reporting periods beginning on or after January 1, 2018. Management has evaluated the impact that this standard will have on its consolidated financial statements and has concluded that, based on its current operations, the adoption of IFRIC 22 as of January 1, 2018 will have no significant impact on the Company’s consolidated financial statements.

6.	Critical accounting estimates and judgements

	The preparation of financial statements in conformity with IFRS requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company also makes estimates and assumptions concerning the future. The determination of estimates requires the exercise of judgement based on various assumptions and other factors such as historical experience and current and expected economic conditions. Actual results could differ from those estimates.

	Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

	Critical accounting estimates and assumptions

	Mineral reserves and resources

	Royalty, stream and other interests comprise a large component of the Company’s assets and as such, the mineral reserves and resources of the properties to which the interests relate have a significant effect on the Company’s consolidated financial statements. These estimates are applied in determining the depletion of the Company’s royalty, stream and other interests and assessing the recoverability of the carrying value of royalty, stream and other interests. For royalty, stream and other interests, the public disclosures of mineral reserves and resources that are released by the operators of the properties involve assessments of geological and geophysical studies and economic data and the reliance on a number of assumptions, including commodity prices and production costs. These assumptions are, by their very nature, subject to interpretation and uncertainty. The estimates of mineral reserves and resources may change based on additional knowledge gained subsequent to the initial assessment. Changes in the estimates of mineral reserves and resources may materially affect the recorded amounts of depletion and the assessed recoverability of the carrying value of royalty, stream and other interests.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

6.	Critical accounting estimates and judgements *(continued)*

	Impairment of royalty, stream and other interests

	The assessment of the fair values of royalty, stream and other interests requires the use of estimates and assumptions for recoverable production, long-term commodity prices, discount rates, mineral reserve/resource conversion, foreign exchange rates, future capital expansion plans and the associated production implications. In addition, the Company may use other approaches in determining fair value which may include estimates related to (i) dollar value per ounce of mineral reserve/resource; (ii) cash-flow multiples; and (iii) market capitalization of comparable assets. Changes in any of the estimates used in determining the fair value of the royalty, stream and other interests could impact the impairment analysis.

	Impairment of goodwill

	The Company performs goodwill impairment tests on an annual basis as at December 31 of each year. In addition, the Company assesses for indicators of impairment at each reporting period end and, if an indicator of impairment is identified, goodwill is tested for impairment at that time. For the purpose of impairment testing, goodwill is allocated to each CGU or group of CGUs expected to benefit from the synergies of the combination. When completing an impairment test, the Company calculates the estimated recoverable amount of CGU or group of CGUs, which requires management to make estimates and assumptions with respect to items such as future production levels, long-term commodity prices, foreign exchange rates, discount rates and exploration potential.

	These estimates and assumptions are subject to risk and uncertainty. Therefore, there is a possibility that changes in circumstances will have an impact on these projections, which may impact the recoverable amount of the CGU or group of CGUs. Accordingly, it is possible that some or the entire carrying amount of goodwill may be further impaired with the impact recognized in the consolidated statement of income (loss).

	The Company performs annual impairment tests using the fair value less cost of disposal of the group of CGUs supporting the goodwill and using discounted cash flows with the most recent budgets and forecasts available, including information from external sources. The periods to be used for the projections are based on the expected production from the mines, the proven and probable mineral reserves and a portion of the resources. The discount rate to be used takes into consideration the different risk factors of the Company.

	Critical judgements in applying the Company’s accounting policies

	Business combinations

	The assessment of whether an acquisition meets the definition of a business, or whether assets are acquired is an area of key judgment. The assumptions and estimates with respect to determining the fair value of assets acquired and liabilities assumed, and of royalty, stream and other interests and exploration and evaluation properties in particular, generally requires a high degree of judgment. Changes in the judgements made could impact the amounts assigned to assets and liabilities.

	Investee – significant influence

	The assessment of whether the Company has a significant influence over an investee requires the use of judgements when assessing factors that could give rise to a significant influence. Factors which could lead to the conclusion of having a significant influence over an investee include, but are not limited to, ownership percentage; representation on the board of directors; participation in the policy-making process; material transactions between the investor and the investee; interchange of managerial personnel; provision of essential technical information; and potential voting rights.

	Changes in the judgements used in determining if the Company has a significant influence over an investee would impact the accounting treatment of the investment in the investee.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

6.	Critical accounting estimates and judgements *(continued)*

	Critical judgements in applying the Company’s accounting policies (continued)

	Impairment of exploration and evaluation assets and royalty, stream and other interests on exploration and evaluation properties

	Assessment of impairment of exploration and evaluation assets (including exploration and evaluation assets under a farm- out agreement) and royalty, stream and other interests on exploration and evaluation properties requires the use of judgements when assessing whether there are any indicators that could give rise to the requirement to conduct a formal impairment test on the Company’s exploration and evaluation assets and royalty, stream and other interests on exploration and evaluation properties. Factors which could trigger an impairment review include, but are not limited to, an expiry of the right to explore in the specific area during the period or on expiry in the near future, with no expectation to renew; substantive exploration and evaluation expenditures in a specific area, taking into consideration such expenditures to be incurred by a farmee, is neither budgeted nor planned; exploration for and evaluation of mineral resources in a specific area have not led to the discovery of commercially viable quantities of mineral resources and the Company has decided to discontinue such activities in the specific area; sufficient data exists to indicate that, although a development in a specific area is likely to proceed, the carrying amount of the assets is unlikely to be recovered in full from successful development or by sale; significant negative industry or economic trends; interruptions in exploration and evaluation activities by the Company or its farmee; and a significant drop in current or forecast commodity prices.

	Changes in the judgements used in determining the fair value of the exploration and evaluation assets and royalty, stream and other interests on exploration and evaluation properties could impact the impairment analysis.

	Impairment of development and producing royalty, stream and other interests and goodwill

	Assessment of impairment of development and producing royalty, stream and other interests and goodwill requires the use of judgment when assessing whether there are any indicators that could give rise to the requirement to conduct a formal impairment test on the Company’s development and producing royalty, stream and other interests or goodwill. Factors which could trigger an impairment review include, but are not limited to, a significant market value decline; net assets higher than the market capitalization; a significant reduction in mineral reserve and resources; significant negative industry or economic trends; interruptions in production activities; significantly lower production than expected; and a significant drop in current or forecast commodity prices.

	Changes in the judgements used in determining the fair value of the producing royalty, stream and other interests or goodwill could impact the impairment analysis.

	Deferred income tax assets

	Management continually evaluates the likelihood that it is probable that its deferred tax assets will be realized. This requires management to assess whether it is probable that sufficient taxable income will exist in the future to utilize these losses within the carry-forward period. By its nature, this assessment requires significant judgment.

7.	Business combination

	On July 31, 2017, Osisko acquired a precious metals portfolio of assets from Orion Mine Finance Group (“Orion”) consisting of 61 royalties, 6 streams and 7 precious metal offtakes for $1.1 billion. The final acquisition price was comprised of US$504.8 million ($630.1 million) in cash consideration, representing the agreed upon purchase price of US$500.6 million ($625.0 million) plus US$4.2 million ($5.1 million) for the working capital acquired, and 30,906,594 common shares of Osisko issued to Orion (the “Purchase Price”) (the “Transaction”). Any sale of the shares issued to Orion is subject to certain restrictions, including a 12-month hold period and a broad distribution requirement.

	The combination of Osisko and Orion’s Portfolio resulted in Osisko holding a total of 131 royalties, streams and offtakes, including 16 revenue-generating assets on July 31, 2017. Through the Transaction, the Company acquired a 9.6% diamond stream on the Renard diamond mine and a 4% gold and silver stream on the Brucejack gold and silver mine, both of which are new mines in Canada, in addition to a 100% silver stream on the Mantos Blancos copper mine in Chile.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

7.	Business combination *(continued)*

	As part of the Transaction, CDP Investissements Inc., an affiliate of Caisse de dépôt et placement du Québec (“Caisse”) and the Fonds de solidarité des travailleurs du Québec (F.T.Q.) (“Fonds F.T.Q.”) subscribed for $200 million and $75 million in common shares of Osisko, respectively, as part of a concurrent private placement (“Private Placement”) to fund a portion of the cash consideration and support the Transaction. A total of 18,887,363 common shares were issued at a price of $14.56 per share under the Private Placement. The Private Placement was subject to a 7% capital commitment payment payable partially in shares (2% representing 385,457 common shares) and in cash (5% representing $13.8 million). Additional fees of $376,000 ($275,000 net of income taxes) were incurred for the financing.

	Additionally, Osisko drew US$118.0 million ($147.3 million) under its revolving credit facility with the National Bank of Canada and Bank of Montreal, settled the foreign exchange forward contracts (Note 30) by disbursing $275 million to receive US$204.0 million and paid US$182.8 million ($228.9 million) from Osisko’s current cash and cash equivalents balance.

	The acquisition of Orion’s Portfolio meets the definition of a business combination. Consequently, the transaction has been recorded as a business combination with Osisko as the acquirer.

	The assets acquired and the liabilities assumed were recorded at their estimated fair market values at the time of the closing of the acquisition, being July 31, 2017. The transaction costs related to the acquisition were expensed under business development expenses and amounted to $8.9 million.

	As of the reporting date, the Company has completed the purchase price allocation over the identifiable net assets of Orion’s Portfolio. Adjustments between the preliminary and final purchase price allocation are related to adjustments to the working capital acquired (decrease in the consideration paid in cash of $1.0 million) and the final fair values of royalty, stream and other interests acquired (decrease of $1.0 million).

	The table below presents the purchase price allocation:

	Consideration paid		$
	Cash⁽¹⁾		648,385
	Issuance of 30,906,594 common shares⁽²⁾		445,333
			1,093,718

Net assets acquired	$
Cash and cash equivalents	8,707
Other current assets	1,217
Royalty, stream and other interests	1,116,115
Current liabilities	(435	)
Deferred income tax liability	(31,886	)
	1,093,718

	(1)	Including the loss on settlement of derivative financial instruments (cash flow hedges) of $18.2 million, net of income taxes of $2.8 million.
	(2)	The fair value of the consideration paid in common shares represents the fair value of the shares on July 31, 2017 minus an illiquidity discount to take into account the twelve-month restrictions on their sales.

For the year ended December 31, 2017, the revenues and net earnings of the acquiree included in the statement of income (loss) amounted to $139,509,000 and $232,000, respectively.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

8.	Cash and cash equivalents

	December 31,	December 31,
	2017	2016
	$	$

Cash	266,785	404,347
Cash equivalents	66,920	94,902
	333,705	499,249

	Cash equivalents are comprised of banker’s acceptances bearing a weighted average interest rate of 1.25% and having maturity dates in January 2018. As at December 31, 2017 and 2016, cash held in U.S. dollars amounted respectively to $69.5 million (US$55.4 million) and $243.0 million (US$181.0 million).

9.	Short-term investments

	As at December 31, 2016, short-term investments included two notes receivable (interest rate of 7%) from a gold producer for which the Company holds royalty interests. The two notes receivable were repaid in 2017. In 2016, short-term investments also included a guaranteed investment certificate of $100,000 issued by a Canadian financial institution having an interest rate of 2.75% and a maturity date in July 2017.

10.	Accounts receivable

	December 31,	December 31,
	2017	2016
	$	$

Tax credits	4,091	6,034
Interest and dividend income receivable	1,508	852
Amounts receivable from associates⁽ⁱ⁾	1,245	720
Revenues receivable from royalty, stream and other interests	924	-
Sales taxes and other receivables	617	810
	8,385	8,416

(i)

Amounts receivable from associates for cost recoveries are mainly related to professional services and office rent.

11.	Inventories

	As at December 31, 2017, inventories are mainly comprised of unsold ounces of gold bullion acquired from offtake agreements, which were sold in January 2018.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

12.

Investments in associates

	2017		2016
	$		$

Balance – January 1	82,902		44,011
Acquisitions	136,529		14,974
Exercise of warrants	14,519		775
Transfer from other investments	-		13,068
Share of loss, net	(6,114	)	(6,623	)
Share of other comprehensive income (loss), net	(537	)	1,264
Net gain on ownership dilution	30,560		12,023
Disposals	(426	)	-
Gain on disposal ⁽ⁱ⁾	-		3,410
Balance – December 31	257,433		82,902

(i)

In March 2016, Osisko Mining Inc. (“Osisko Mining”), an associate, acquired NioGold Mining Corp. (“NioGold”), another associate. This transaction generated a gain on the disposal of the shares of NioGold.

Material investments

Osisko Mining Inc.

Osisko Mining is a Canadian focused gold exploration and development company. In 2016, Osisko acquired a 1% NSR royalty on properties held by Osisko Mining for $5.0 million, which includes a 1% NSR royalty on the Windfall Lake gold project (bringing the total NSR royalty on the Windfall Lake gold project to 1.5%, including the 0.5% NSR royalty acquired in 2015), where Osisko Mining is currently pursuing significant drilling activities. In March 2016, Osisko Mining acquired all of the outstanding shares of NioGold. The Company invested $6.8 million in Osisko Mining in 2016 and an additional $40.1 million in 2017. As at December 31, 2017, the Company holds 32,302,034 common shares representing 15.5% interest in Osisko Mining (13.5% as at December 31, 2016). Based on the fact that some officers and directors of Osisko are also officers and directors of Osisko Mining, and because of other facts and circumstances, the Company concluded that it exercises significant influence over Osisko Mining since 2014 and accounts for its investment using the equity method.

Barkerville Gold Mines Ltd.

Barkerville Gold Mines Ltd. (“Barkerville”) is focused on the development of its extensive land package located in the historical Cariboo Mining District of central British Columbia, Canada. In November, 2015, Osisko and Barkerville entered into an agreement for Osisko to acquire a 1.5% NSR royalty on the Cariboo Gold project for cash consideration of $25.0 million. In April, 2017, Osisko acquired an additional 0.75% NSR royalty on the Cariboo gold project for cash consideration of $12.5 million, increasing the total NSR royalty held by Osisko to 2.25% . In 2016 and 2017, Osisko acquired common shares of Barkerville for $8.2 million and $52.1 million, respectively. As at December 31, 2017, the Company holds 142,309,310 common shares representing a 32.7% interest in Barkerville (17.3% as at December 31, 2016). Based on the fact that the chair of the Board of Directors and chief executive officer of Osisko is also the chair of the Board of Directors of Barkerville, and because of other facts and circumstances, the Company concluded that it exercises significant influence over Barkerville since 2016 and accounts for its investment using the equity method.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

12.	Investments in associates *(continued)*

	Material investments (continued)

	Dalradian Resources Inc.

	Dalradian Resources Inc. (“Dalradian”) is a mineral exploration and development company focused on advancing its high- grade Curraghinalt Gold Project located in Northern Ireland, United Kingdom. On October 10, 2017, Osisko entered into a subscription agreement with Dalradian pursuant to which Osisko made an investment of $28.3 million into Dalradian by way of a non-brokered private placement to acquire 19,217,687 common shares. In 2017, Osisko also exercised warrants for $6.5 million in exchange for 6,250,000 common shares of Dalradian. As at December 31, 2017, the Company holds 31,717,687 common shares representing an 8.9% interest in Dalradian (2.6% as at December 31, 2016). Based on the fact that the chair of the Board of Directors and chief executive officer of Osisko is also a director of Dalradian, and because of other facts and circumstances, the Company concluded that it exercises significant influence over Dalradian since 2012 and accounts for its investment using the equity method.

	Falco Resources Ltd.

	Falco Resources Ltd.’s (“Falco”) main asset is the Horne 5 gold project, for which a positive feasibility study was released in October 2017. In 2016, Osisko entered into a financing agreement of $10.0 million with Falco, bearing an interest rate of 7%, which will be applied against a stream deposit to be negotiated by May 31, 2018 (the original maturity date was October 31, 2017, which was subsequently extended by six months) or converted into a 1% NSR royalty on the Horne 5 project if no stream agreement is concluded. In 2016 and 2017, Osisko acquired common shares in Falco for $3.3 million and $4.0 million, respectively. As at December 31, 2017, the Company holds 23,927,005 common shares representing a 12.7% interest in Falco (14.2% as at December 31, 2016). Based on the fact that some officers and directors of Osisko are also officers and directors of Falco, and because of other facts and circumstances, the Company concluded that it exercises significant influence over Falco since 2014 and accounts for its investment using the equity method.

	The financial information of the individually material associates is as follows and includes adjustments to the accounting policies of the associates to conform to those of Osisko (in thousands of dollars):

	Osisko Mining				Barkerville				Dalradian				Falco
	2017⁽ⁱ⁾		2016⁽ⁱⁱ⁾		2017⁽ⁱ⁾		2016⁽ⁱⁱ⁾		2017⁽ⁱ⁾		2016⁽ⁱⁱ⁾		2017⁽ⁱⁱⁱ⁾		2016^(iv)
	$		$		$		$		$		$		$		$

Current assets	108,439		100,963		67,162		34,698		50,088		44,095		34,703		34,242
Non-current assets	290,332		173,334		31,659		16,000		164,310		117,894		87,300		35,657
Current liabilities	23,657		4,972		15,709		10,211		6,437		4,116		25,567		16,516
Non-current liabilities	15,941		5,882		15,634		5,229		685		1,058		8,424		5,315
Revenues	-		-		-		-		-		-		-		-
Net loss from continuing operations	(19,741	)	(10,051	)	(6,733	)	(9,744	)	(8,884	)	(7,609	)	(6,677	)	(8,972	)
Net loss from discontinued operations, net of taxes	-		(5	)	-		-		-		-		-		-
Other comprehensive income (loss)	(954	)	9,695		175		(19	)	-		-		-		-
Comprehensive loss	(20,695	)	(361	)	(6,558	)	(9,763	)	(8,884	)	(7,609	)	(6,677	)	(8,972	)

Carrying value of investment^(v)	73,635		36,680		89,556		16,909		40,122		3,924		15,652		12,330
Fair value of investment^(v)	109,504		53,491		106,732		24,253		42,026		7,313		20,817		18,535

	(i)	Information is for the reconstructed twelve months ended September 30, 2017 and as at September 30, 2017.
	(ii)	Information is for the reconstructed twelve months ended September 30, 2016 and as at September 30, 2016.
	(iii)	Information is for the reconstructed twelve months ended December 31, 2017 and as at December 31, 2017.
	(iv)	Information is for the reconstructed twelve months ended December 31, 2016 and as at December 31, 2016.
	(v)	As at December 31, 2017 and 2016.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

12.	Investments in associates *(continued)*

	Investments in immaterial associates

	The Company has interests in a number of individually immaterial associates that are accounted for using the equity method. The aggregate financial information on these associates is as follows:

	2017		2016
	$		$

Aggregate amount of the Company’s share of net loss	(2,725	)	(1,645	)
Aggregate amount of the Company’s share of other comprehensive income (loss)	459		(382	)
Aggregate carrying value of investments	38,468		16,983
Aggregate fair value of investments	53,061		28,176

13.

Other investments

	2017		2016
	$		$
Fair value through profit or loss (warrants)
Balance – January 1	10,935		1,578
Acquisitions	9,662		3,278
Exercise	(14,170	)	(311	)
Change in fair value	1,665		6,390
Balance – December 31	8,092		10,935

Fair value through other comprehensive income (shares)
Balance – January 1	97,274		93,607
Acquisitions	72,719		71,137
Exercise of warrants	500		-
Interests on financial assets at amortized cost paid in shares	12		26
Change in fair value	6,139		74,914
Disposals	(69,803	)	(129,342	)
Transfer to investments in associates	-		(13,068	)
Balance – December 31	106,841		97,274

Amortized cost
Balance – January 1	200		10,300
Transfer to short-term investments	-		(100	)
Conversion to royalty interests ⁽ⁱ⁾	-		(10,000	)
Balance – December 31	200		200

Total	115,133		108,409

(i)

Conversion of a secured note receivable of $10.0 million with Highland Copper Company Inc. (“Highland Copper”) into a 3.0% NSR royalty on all metals produced from the mineral rights and leases associated with the Copperwood project. Upon closing of the acquisition of the White Pine project, Highland Copper will grant Osisko a 1.5% NSR royalty on all metals produced from the White Pine project, and Osisko's NSR royalty on the Copperwood project will be reduced to 1.5%.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

	The investments are comprised of common shares, warrants and notes receivable, almost exclusively from Canadian publicly traded companies.

14.	Royalty, stream and other interests

	2017								2016
	Royalty		Stream		Offtake
	interests		interests		interests		Total		Royalty interests
	$		$		$		$		$

Balance – Beginning of period	494,768		-		-		494,768		449,439
Acquisitions^(i),(ii),	26,681		53,438		-		80,119		50,250
Business combination⁽ⁱⁱⁱ⁾(Note 7)	353,314		656,602		106,199		1,116,115		-
Conversion of a note receivable	-		-		-		-		10,000
Sale	-		-		-		-		(3,630	)
Depletion	(15,475	)	(11,283	)	(1,307	)	(28,065	)	(11,291	)
Impairment	(89,000	)	-		-		(89,000	)	-
Translation adjustments	242		1,321		272		1,835		-

Balance – End of period	770,530		700,078		105,164		1,575,772		494,768

Producing
Cost	503,340		582,466		66,812		1,152,618		431,455
Accumulated depletion	(27,352	)	(11,242	)	(1,307	)	(39,901	)	(11,879	)
Accumulated impairment	(89,000	)	-		-		(89,000	)	-
Net book value – End of period	386,988		571,224		65,505		1,023,717		419,576

Development
Cost	194,535		118,094		30,793		343,422		-
Accumulated depletion	-		-		-		-		-
Net book value – End of period	194,535		118,094		30,793		343,422		-

Exploration and evaluation
Cost	189,007		10,760		8,866		208,633		75,192
Accumulated depletion	-		-		-		-		-
Net book value – End of period	189,007		10,760		8,866		208,633		75,192

Total net book value – End of period	770,530		700,078		105,164		1,575,772		494,768

	(i)	On April 19, 2017, Osisko acquired an additional 0.75% NSR royalty on the Cariboo gold project from Barkerville for cash consideration of $12.5 million, increasing the total NSR royalty held by Osisko on the Cariboo gold project to 2.25%. The grant of the additional royalty cancelled Osisko’s royalty acquisition right which was granted pursuant to an investment agreement between Osisko and Barkerville dated February 5, 2016. However, Osisko retains a right of first refusal relating to any gold stream offer received by Barkerville with respect to the Cariboo gold project.

	(ii)	On March 3, 2017, Osisko acquired from Gibraltar Mines Ltd. (“Gibco”), a wholly-owned subsidiary of Taseko Mines Limited (“Taseko”) having a 75% interest in the Gibraltar copper mine (“Gibraltar”), a silver stream with reference to silver produced at Gibraltar, located in British Columbia, Canada. Osisko paid Taseko cash consideration of US$33.0 million ($44.3 million) to purchase a silver stream and 3.0 million warrants of Taseko. Each warrant allows Osisko to acquire one common share of Taseko at a price of $2.74 until April 1, 2020. The fair value of the warrants was evaluated at $1,780,000 using the Black-Scholes option pricing model and the residual value of $42,678,000 was attributed to the silver stream (including $175,000 of transaction fees).

	(iii)	On July 31, 2017, Osisko acquired a precious metals portfolio of assets from Orion consisting of 61 royalties, 7 precious metal offtakes and 6 streams. Through the Transaction, the Company acquired a 9.6% diamond stream on the Renard diamond mine and a 4% gold and silver stream on the Brucejack gold and silver mine, both of which are new mines in Canada, in addition to a 100% silver stream on the Mantos Blancos copper mine in Chile.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

14.	Royalty, stream and other interests *(continued)*

	Buy-back and buy-down rights

	Some royalty, stream and offtake interests are subject to buy-back and/or buy-down rights held by the operators. The significant buy-back and buy-down rights are described below.

	Brucejack stream

	The buy-back and buy-down rights held by Pretium Resources Inc. on the Brucejack stream are as follows:

Right	Description	Election date	Total

Buy-back (2018)	Right to repurchase the entire stream	December 31, 2018	US$119.0 million ($149.3 million)
Buy-down (2018)	Right to reduce the stream percentage from 4% to 1.5%	December 31, 2018	US$75.0 million ($94.1 million)
Buy-back (2019)	Right to repurchase the entire stream	December 31, 2019	US$136 million ($170.6 million)
Buy-down (2019)	Right to reduce the stream percentage from 4% to 2%	December 31, 2019	US$75.0 million ($94.1 million)

Impairment of royalty, stream and other interests

The operator of the Éléonore gold mine in Québec, Canada reviewed its guidance on long-term annual gold production to 400,000 ounces, which is significantly lower compared to the design capacity of 600,000 ounces. This was considered an indicator of impairment among other facts and circumstances and, accordingly, management performed an impairment assessment as at December 31, 2017. The Company recorded an impairment charge of $89.0 million ($65.4 million net of income taxes) on the Éléonore NSR royalty for the year ended December 31, 2017.

The Éléonore NSR royalty was written down to its estimated recoverable amount of $300.0 million, which was determined by the fair value less cost of disposal using a discounted cash-flows approach. The fair value of the Éléonore NSR royalty is classified as level 3 of the fair value hierarchy because the main valuation inputs used are significant unobservable inputs. The main valuation inputs used were the cash flows expected to be generated by the sale of gold received from the Éléonore NSR royalty based on the long-term annual gold production of 400,000 ounces over the estimated life of the Éléonore mine, the long-term gold price of US$1,300 per ounce and a post-tax real discount rate of 4.2% .

A sensitivity analysis was performed by management for the long-term gold price and the post-tax real discount rate (in isolation). If the long-term gold price applied to the cash flow projections had been 10% lower than management’s estimates (US$1,170 per ounce instead of US$1,300 per ounce), the Company would have recognized an additional impairment charge of $30.0 million. If the post-tax real discount rate applied to the cash flow projections had been 1% higher than management’s estimates (5.2% instead of 4.2%), the Company would have recognized an additional impairment charge of $35.0 million.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

15.

Exploration and evaluation

	2017		2016⁽ⁱ⁾
	$		$

Net book value - January 1	100,038		96,220
Additions	2,745		8,245
Disposals	-		(812	)
Investments tax credits	(601	)	(3,430	)
Share-based compensation capitalized	-		483
Impairment	-		(668	)
Net book value - December 31	102,182		100,038

Balance – December 31
Cost	103,042		100,898
Accumulated impairment	(860	)	(860	)

Net book value - December 31	102,182		100,038

(i)

Effective October 4, 2016, Osisko entered into an earn-in agreement with Osisko Mining, which was subsequently amended to create two separate earn-in agreements. Under the first earn-in agreement, Osisko Mining may earn a 100% interest in 26 of Osisko’s exploration properties located in the James Bay area and Labrador Trough (excluding the Coulon copper-zinc project and four other exploration properties) upon completing expenditures of $26.0 million over a 7-year period; Osisko Mining may earn a 50% interest upon completing expenditures totaling $15.6 million over a 4-year period. Under the second earn-in agreement, Osisko Mining may earn a 100% interest in the Kan property upon completing expenditures totaling $6.0 million over a 7-year period, which represents the guaranteed expenditures to be incurred by Barrick Gold Corporation (“Barrick”), following an earn-in agreement signed between Osisko Mining and Barrick where Barrick committed to spend $15.0 million on the Kan property; Osisko Mining may earn a 50% interest upon completing expenditures totaling $3.6 million over a 4-year period. Osisko will retain an escalating NSR royalty ranging from 1.5% to 3.5% on precious metals and a 2.0% NSR royalty on other metals and minerals produced from the 27 properties. New properties acquired by Osisko Mining in a designated area during the 7-year term will be subject to a royalty agreement in favour of Osisko with similar terms.

16.	Goodwill

	The Company’s goodwill is allocated to a group of cash generating units, the Éléonore NSR royalty and the Canadian Malartic NSR royalty (“CGUs”).

	The Company tests whether goodwill has suffered any impairment on an annual basis. The recoverable amount of the CGUs is determined based on fair value less cost of disposal calculations using a discounted cash-flows approach, which require the use of assumptions and unobservable inputs, and therefore is classified as level 3 of the fair value hierarchy. The calculations use cash flow projections expected to be generated by the sale of gold and silver received from the CGUs based on annual gold and silver production over their estimated life from publicly released technical information by the operators to predict future performance.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

16.	Goodwill *(continued)*

	The following table sets out the key assumptions for the CGUs in addition to annual gold and silver production over the estimated life of the Éléonore and Canadian Malartic mines:

	2017	2016

Long-term gold price (per ounce)	US$1,300	US$1,280
Long-term silver price (per ounce)	US$18	US$17
Post-tax real discount rate	4.2%	5.0%

Management has determined the values assigned to each of the above key assumptions as follows:

	Assumption	Approach used to determining values

	Long-term gold price	Based on current gold market trends consistent with external sources of information, such as long-term gold price consensus.

	Long-term silver price	Based on current silver market trends consistent with external sources of information, such as long-term silver price consensus.

	Post-tax real discount rate	Reflects specific risks relating to gold mines operating in Québec, Canada.

	The Company’s management has considered and assessed reasonably possible changes for key assumptions and has not identified any instances that could cause the carrying amount of the CGUs to exceed their recoverable amounts.

17.	Accounts payable and accrued liabilities

	December 31,	December 31,
	2017	2016
	$	$

Trade payables	411	1,394
Payables on metals received from offtakes	3,710	-
Accrued interests on long-term debt	2,081	38
Other accrued liabilities	2,070	628
Sale taxes and other payables	7,038	5,378
	15,310	7,438

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

18.

Provisions and other liabilities

	2017						2016
	Share exchange		DSU and				Share exchange	DSU and
	rights⁽ⁱ⁾		RSU⁽ⁱⁱ⁾		Total		rights⁽ⁱ⁾	RSU⁽ⁱⁱ⁾		Total
	$		$		$		$	$		$

Balance – January 1	10,692		5,894		16,586		7,067	3,109		10,176
Accretion expense	299		-		299		236	-		236
New liabilities	988		7,053		8,041		3,389	3,787		7,176
Settlement of liabilities	(11,979	)	(5,539	)	(17,518	)	-	-		-
Extinguished liabilities	-		(59	)	(59	)	-	(268	)	(268	)
Revision of estimates	-		319		319		-	(734	)	(734	)
Balance – December 31	-		7,668		7,668		10,692	5,894		16,586

Current portion	-		5,632		5,632		-	4,153		4,153
Non-current portion	-		2,036		2,036		10,692	1,741		12,433
	-		7,668		7,668		10,692	5,894		16,586

	(i)	The liability related to share exchange rights represented a put option held by the non-controlling shareholders in Mines Coulon Inc., a subsidiary of the Company. On October 20, 2017 (or before under certain conditions), the non-controlling shareholders had the option to convert their shares of Mines Coulon Inc. for an amount corresponding to 75% of the cost of their investment, such amount to be settled by the issuance of a variable number of common shares of the Company based on the fair market value of the Company’s shares at the time of conversion. In October 2017, the exercise date of the option was postponed by one month to November 20, 2017. In November 2017, the share exchange rights were exercised by the non-controlling interests and 772,810 common shares were issued. The put option was initially measured at the present value of the redemption amount of the option. The financial liability was subsequently measured at amortized cost using the effective interest method with any differences recognized as finance costs in the consolidated statement of income (loss). In 2017, prior to the exercise of the share exchange rights, the non-controlling interests had invested $1.3 million in Mines Coulon Inc. ($4.5 million in 2016).

	(ii)	The Deferred Share Units and Restricted Share Units Plans are described in Note 22.

19.	Long-term debt

	The movements in the long-term debt are as follows:

	2017		2016
	$		$

Balance - January 1	45,780		-
New debt – convertible debentures^(i),(ii)	279,469		45,706
Transaction costs – convertible debentures^(i),(ii)	(10,735	)	(709	)
New debt – revolving credit facility⁽ⁱⁱⁱ⁾	147,323		-
Amortization of transaction costs	427		114
Accretion expense	1,336		669
Foreign exchange revaluation impact	708		-
Balance - December 31	464,308		45,780

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

19.	Long-term debt *(continued)*

	The summary of the long-term debt is as follows:

	December 31,		December 31,
	2017		2016
	$		$

Convertible debentures^(i),(ii)	350,000		50,000
Revolving credit facility⁽ⁱⁱⁱ⁾	148,031		-
Long-term debt	498,031		50,000
Unamortized debt issuance costs	(10,903	)	(594	)
Unamortized accretion on convertible debentures	(22,820	)	(3,626	)
Long-term debt, net of issuance costs	464,308		45,780
Current portion	-		-
Non-current portion	464,308		45,780
	464,308		45,780

	(i)	Convertible debenture (2016)

		In February 2016, the Company issued a senior non-guaranteed convertible debenture of $50.0 million to Ressources Québec, a wholly-owned subsidiary of Investissement Québec. The convertible debenture bears interest at a rate of 4.0% per annum payable on a quarterly basis and has a five-year term maturing on February 12, 2021. Ressources Québec will be entitled, at its option, to convert the debenture into common shares of the Company at a price of $19.08 at any time during the term of the debenture. Osisko has paid a 1% financing fee to Ressources Québec and has reimbursed its costs incurred in connection with the financing.

		At initial recognition, net proceeds after transaction costs of $775,000 amounted to $49,225,000. Of this amount, the liability and equity components represented respectively $44,997,000 (net of transaction costs of $709,000) and $3,091,000 (net of transaction costs of $66,000 and income taxes of $1,137,000). The effective interest rate used is 6% representing the estimated market rate at closing that the Company would obtain for similar financing without the conversion option.

	(ii)	Convertible debentures (2017)

		In November 2017, the Company closed a bought-deal offering of convertible senior unsecured debentures (the “Debentures”) in an aggregate principal of $300.0 million (the “Offering”). The Offering was comprised of a public offering, by way of a short form prospectus, of $184.0 million aggregate principal amount of Debentures and a private placement offering of $116.0 million aggregate principal amount of Debentures. The underwriters have received a commission of 3.55% related to the Offering. Osisko plans to use the net proceeds from the Offering to fund the acquisition of precious metal royalties and streams, working capital and general corporate purposes.

		The Debentures bear interest at a rate of 4.0% per annum, payable semi-annually on June 30 and December 31 of each year, commencing on June 30, 2018. The Debentures will be convertible at the holder’s option into common shares of the Company at a conversion price equal to $22.89 per common share. The Debentures will mature on December 31, 2022 and may be redeemed by Osisko, in certain circumstances, on or after December 31, 2020. The Debentures are listed for trading on the TSX under the symbol “OR.DB”.

		At initial recognition, net proceeds after transaction costs of $11.5 million amounted to $288.5 million. Of this amount, the liability and equity components represented respectively $268.7 million (net of transaction costs of $10.7 million) and $14.5 million (net of transaction costs of $0.8 million and income taxes of $5.3 million). The effective interest rate used is 5.5% representing the estimated market rate at closing that the Company would obtain for similar financing without the conversion option.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

19.

Long-term debt (continued)

	(iii)	Revolving credit facility

		In November 2017, the Company amended its revolving credit facility (the “Facility”) increasing the amount from $150 million to $350 million, with an additional uncommitted accordion of up to $100 million, for a total availability of up to $450 million. The increase is subject to standard due diligence procedures and acceptance of the lenders. The Facility is to be used for general corporate purposes and investments in the mineral industry, including the acquisition of royalties, streams and other interests. The Facility is secured by the Company’s assets, present and future (including the royalty, stream and other interests), and has a four-year term (November 14, 2021), which can be extended by one year on each of the first two anniversary dates. The deferred financing costs amounting to $1,474,000 are being amortized over the term of the facility. Amortization of the deferred financing costs related to the Facility on the consolidated statement of income (loss) amounted to $224,000 in 2017 ($175,000 in 2016).

		The Facility is subject to standby fees. Funds drawn will bear interest based on the base rate, prime rate or London Inter-Bank Offer Rate (“LIBOR”) plus an applicable margin depending on the Company’s leverage ratio. As at December 31, 2017, the Facility was drawn for US118.0 million ($148.0 million) and the interest rate was 2.96%, including the applicable margin. The Facility includes covenants that require the Company to maintain certain financial ratios, including the Company’s leverage ratios and meet certain non-financial requirements. As at December 31, 2017, all such ratios and requirements were met.

20.	Share capital

	Shares

Authorized

Unlimited number of common shares, without par value
Unlimited number of preferred shares, issuable in series

Issued and fully paid

157,797,193 common shares

Employee Share Purchase Plan

In October 2015, the Company established an employee share purchase plan. Under the terms of the plan, the Company contributes an amount equal to 60% of the eligible employee’s contribution towards the acquisition of common shares from treasury on a quarterly basis. A maximum of 1.0% of the issued and outstanding common shares are reserved for issuance under the current plan.

Issuances

Year ended December 31, 2017

On July 31, 2017, Osisko issued 30,906,594 common shares to Orion as part of the Transaction (Note 7). The shares were valued at $445.3 million, which represents the fair value of the shares on July 31, 2017 minus an illiquidity discount to take into account certain restrictions on the sales of the common shares by Orion, including a 12-month hold period and a broad distribution requirement.

Caisse and Fonds F.T.Q. also subscribed for $200.0 million and $75.0 million in common shares of Osisko, respectively, as part of a concurrent Private Placement to fund a portion of the cash consideration and support the Transaction (Note 7). A total of 18,887,363 common shares were issued at a price of $14.56 per share under the Private Placement. The Private Placement was subject to a 7% capital commitment payment payable partially in shares (2% representing 385,457 common shares) and in cash (5% representing $13.8 million). Additional fees of $190,000 ($139,000 net of income taxes) were incurred for the financing.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

20.	Share capital *(continued)*

	Shares *(continued)*

	Issuances (continued)

	Year ended December 31, 2017 (continued)

	In November 2017, the non-controlling interests in Mines Coulon (Note 18) exercised their share exchange rights and converted their non-controlling interests into 772,810 common shares of Osisko. The number of common shares to be issued was based on 75% of the cost of their investment, being $12.0 million, and the fair market value of the Company’s common shares at the time of conversion.

	Year ended December 31, 2016

	On February 26, 2016, the Company closed a bought deal public offering (the “Shares Offering”) of 11,431,000 units of Osisko (“Units”), including the full exercise of the over-allotment option by the underwriters of the Shares Offering, at a price of $15.10 per Unit for aggregate gross proceeds of $172,608,000 (net proceeds of $164,543,000).

	Each Unit was comprised of one common share of the Company and one-half of one common share purchase warrant (each whole common share purchase warrant being a “Warrant”) of the Company. Each whole Warrant entitles the holder thereof to purchase one common share of the Company at a price of $19.08 per common share, for a period of 36 months following the closing date.

	The relative fair value of the common shares issued under the Shares Offering was evaluated at $159,325,000 and the relative fair value of the Warrants was evaluated at $13,283,000 using the Black-Scholes option pricing model and the following assumptions: dividend per share of 1.2%; expected life of 3 years, expected volatility of 42% and risk free interest rate of 0.50%. Transaction costs amounted to $8,066,000 ($5,896,000 net of income taxes) and were allocated to the common shares and Warrants based on their pro rata value. As a result, transaction costs of $7,445,000 ($5,442,000 net of income taxes) were allocated to the common shares and $621,000 ($454,000 net of income taxes) to the Warrants.

	Normal Course Issuer Bid

	In October 2016, the TSX approved the Company’s notice of intention to make a normal course issuer bid (the “2016 NCIB Program”). Under the terms of the 2016 NCIB Program, Osisko could acquire up to 5,330,217 of its common shares from time to time in accordance with the normal course issuer bid procedures of the TSX. Repurchases under the 2016 NCIB Program were authorized until October 23, 2017. During the year ended December 31, 2016, the Company purchased for cancellation a total of 150,000 common shares under the NCIB Program for $1,823,000, which were paid in 2017.

	In December 2017, Osisko renewed its normal course issuer bid (the “2017 NCIB Program”). Under the terms of the 2017 NCIB Program, Osisko may acquire up to 10,567,441 of its common shares from time to time in accordance with the normal course issuer bid procedures of the TSX.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

20.	Share capital *(continued)*

	Shares *(continued)*

	Normal Course Issuer Bid (continued)

	Repurchases under the 2017 NCIB Program will terminate on December 10, 2018 or on such earlier date as the 2017 NCIB Program is complete. Daily purchases will be limited to 95,695 common shares, other than block purchase exemptions, representing 25% of the average daily trading volume of the common shares on the TSX for the six month period ending November 30, 2017, being 382,781 common shares. As at December 31, 2017, no common shares were purchased for cancellation under the 2017 NCIB Program.

	Dividends

	The following table provides details on the dividends declared for the years ended December 31, 2016 and 2017:

					Dividend
	Dividend			Dividend	reinvestment
Declaration date	per share	Record date	Payment date	payable	plan⁽ⁱ⁾
	$			$

February 16, 2016	0.04	March 31, 2016	April 15, 2016	4,248,000	7,144,004
May 4, 2016	0.04	June 30, 2016	July 15, 2016	4,259,000	11,594,125
August 4, 2016	0.04	September 30, 2016	October 14, 2016	4,264,000	4,460,148
November 9, 2016	0.04	December 31, 2016	January 16, 2017	4,266,000	4,591,999

	0.16			17,037,000

March 15, 2017	0.04	March 31, 2017	April 17, 2017	4,264,000	8,024,301
May 4, 2017	0.04	June 30, 2017	July 17, 2017	4,270,000	13,498,789
August 3, 2017	0.05	September 30, 2017	October 16, 2017	7,850,000	5,683,585
November 7, 2017	0.05	December 29, 2017	January 15, 2018	7,890,000	6,863,864

	0.18			24,274,000

(i)

Number of common shares held by shareholders participating to the dividend reinvestment plan described below.

Dividend reinvestment plan

In 2015, the Company implemented a dividend reinvestment plan (“DRIP”). The DRIP allows Canadian shareholders and U.S. shareholders (commencing with the dividend paid on October 16, 2017) to reinvest their cash dividends into additional common shares either purchased on the open market through the facilities of the TSX or the NYSE, or issued directly from treasury by the Company, or acquired by a combination thereof. In the case of a treasury issuance, the price will be the weighted average price of the common shares on the TSX or the NYSE during the five (5) trading days immediately preceding the dividend payment date, less a discount, if any, of up to 5%, at the Company’s sole election.

As at December 31, 2017, the holders of 6,863,864 common shares had elected to participate in the DRIP, representing dividends payable of $343,000. During the year ended December 31, 2017, the Company issued 88,536 common shares under the DRIP, at a discount rate of 3% (83,533 common shares in 2016 at a discount rate of 3%). On January 15, 2018, 24,513 common shares were issued under the DRIP at a discount rate of 3%.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

20.	Share capital *(continued)*

	Capital management

	The Company’s primary objective when managing capital is to maximize returns for its shareholders by growing its asset base, both organically through strategic investments in exploration, evaluation and development companies and through accretive acquisitions of high-quality royalties, streams and other similar interests, while ensuring capital protection. The Company defines capital as long-term debt and total equity, including the undrawn portion of the revolving credit facility. Capital is managed by the Company’s management and governed by the Board of Directors.

	December 31,	December 31,
	2017	2016
	$	$

Long-term debt	464,308	45,780
Total equity	1,894,405	1,214,304
Undrawn revolving credit facility⁽ⁱ⁾	201,969	150,000
	2,560,682	1,410,084

(i)

Excluding the potential additional available credit (accordion) of $100.0 million as at December 31, 2017 and $50.0 million as at December 31, 2016.

There were no changes in the Company’s approach to capital management during the year ended December 31, 2017, compared to the prior year. The Company is not subject to material externally imposed capital requirements and is in compliance with all its covenants under its revolving credit facility (Note 19) as at December 31, 2017.

21.

Warrants

			2017				2016
			Weighted				Weighted
			average				average
	Number of		exercise	Number of			exercise
	Warrants	Amount	price	warrants		Amount	price
		$	$			$	$

Balance – January 1	11,195,500	30,901	27.61	5,480,000	⁽ⁱ⁾	18,072	36.50
Issued	-	-	-	5,715,500	⁽ⁱⁱ⁾	12,829	19.08
Balance – December 31	11,195,500	30,901	27.61	11,195,500		30,901	27.61

	(i)	Each warrant entitles the holder to purchase one common share of Osisko at a price of $36.50 until March 5, 2022.
	(ii)	Each warrant entitles the holder to purchase one common share of Osisko at a price of $19.08 until February 26, 2019 (Note 20).

22.	Share-based compensation

	Share options

	In May 2014, the Company adopted a share option plan (the “Plan”) offered to its directors, officers, management, employees and consultants. Options may be granted at an exercise price determined by the Board of Directors but shall not be less than the closing market price of the common shares of the Company on the TSX on the day prior to their grant. No participant shall be granted an option which exceeds 5% of the issued and outstanding shares of the Company at the time of granting of the option. The number of common shares issued to insiders of the Company within one year and issuable to the insiders of the Company at any time under the Plan or combined with all other share compensation arrangements, cannot exceed 8% of the issued and outstanding common shares. The duration and the vesting period are determined by the Board of Directors. However, the expiry date may not exceed 7 years after the date of granting.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

22.	Share-based compensation *(continued)*

	Share options (continued)

	The following table summarizes information about the movement of the share options outstanding:

	2017			2016
			Weighted			Weighted
	Number of		average	Number of		average
	options		exercise price	options		exercise price
			$			$
Balance – January 1	3,063,130		14.25	2,823,333		13.71
Granted⁽ⁱ⁾	763,400		16.57	1,084,700		13.43
Exercised	(43,970	)	14.22	(12,335	)	15.22
Exercised – Virginia replacement share options⁽ⁱⁱ⁾	(190,471	)	11.28	(505,756	)	9.50
Expired	(4,333	)	15.80	(30,712	)	13.77
Forfeited	(50,633	)	14.57	(296,100	)	14.17
Balance – December 31	3,537,123		14.90	3,063,130		14.25
Options exercisable – December 31	2,051,323		14.57	1,322,729		14.04

	(i)	Options were granted to officers, management, employees and consultants.
	(ii)	Share options issued as Virginia replacement share options following the acquisition of Virginia Mines Inc. in 2015.

The weighted average share price when share options were exercised during the year ended December 31, 2017 was $15.83 ($15.51 for the year ended December 31, 2016).

The following table summarizes the Company’s share options outstanding as at December 31, 2017:

	Options outstanding			Options exercisable
			Weighted
			average
		Weighted	remaining		Weighted
Exercise		average	contractual		average
price range	Number	exercise price	life (years)	Number	exercise price
$		$			$

8.35 – 9.98	57,391	9.77	4.1	57,391	9.77
10.58 – 10.73	72,075	10.66	5.3	72,075	10.66
13.38 – 14.78	994,860	13.49	3.5	444,860	13.49
14.90 – 15.80	1,680,997	15.33	2.1	1,473,664	15.26
16.66 – 17.84	731,800	16.68	4.4	3,333	17.84
	3,537,123	14.90	3.1	2,051,323	14.57

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

22.	Share-based compensation *(continued)*

	Share options – Fair value

	The options, when granted, are accounted for at their fair value determined by the Black-Scholes option pricing model based on the vesting period and on the following weighted average assumptions:

	2017	2016

Dividend per share	1%	1%
Expected volatility	38%	41%
Risk-free interest rate	1%	1%
Expected life	45 months	45 months
Share price	$16.57	$13.43
Fair value of options granted	$4.58	$3.88

The expected volatility was estimated using Osisko’s historical data from the date of grant and for a period corresponding to the expected life of the options.

Share options issued in 2016 and 2017 are exercisable at the closing market price of the common shares of the Company on the day prior to their grant.

The fair value of the share options is amortized over the vesting period. In 2017, the total share-based compensation related to share options on the statement of income (loss) amounted to $3,211,000 ($4,594,000 in 2016) and share-based compensation capitalized to exploration and evaluation assets amounted to $6,000 ($483,000 in 2016).

Deferred and restricted share units

In April 2014, Osisko adopted a Deferred Share Unit Plan and a Restricted Share Unit Plan. Under the plans, DSU and RSU can be granted to directors, officers and employees as part of their long-term compensation package, entitling them to receive payout in cash. The value of the payout would be determined by multiplying the number of DSU and RSU vested at the payout date by the closing price of the Company’s shares on the day prior to the payout date. The value to be recognized at each reporting date is determined based on the closing price of the Company’s shares and based on applicable terms for performance based and fixed components. The fair value is recognized over the vesting period.

The following table summarizes information about the DSU and RSU movements:

	2017			2016
	DSU	RSU		DSU	RSU

Balance – January 1	175,446	595,076		106,408	440,166
Granted	88,600	231,300		67,602	211,300
Reinvested (dividends on common shares)	2,396	7,260		1,436	5,674
Settled	-	(225,429	)	-	-
Forfeited	-	(7,580	)	-	(62,064	)
Balance – December 31	266,442	600,627		175,446	595,076
Balance – Vested	177,405	-		107,573	-

The DSU granted vest the day prior to the next annual general meeting and are payable at the end of the employment period of each director. The RSU granted vest and are payable three years after the grant date, one half of which depends on the achievement of certain performance measures.

The total share-based compensation expense related to the DSU and RSU plans in 2017 amounted to $7,313,000 ($2,786,000 in 2016).

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

22.	Share-based compensation *(continued)*

	Deferred and restricted share units – Fair value

	The following table summarizes the carrying value of the outstanding DSU and RSU and the fair value of the vested DSU and RSU as at December 31, 2017 and 2016:

	December 31, 2017		December 31, 2016
	Carrying	Intrinsic value	Carrying	Intrinsic value
	value	of vested units	value	of vested units
	$	$	$	$
Current portion	5,632	2,576	4,153	1,408
Non-current portion	2,036	-	1,741	-
	7,668	2,576	5,894	1,408

The carrying value of the DSU and RSU is included in provisions and other liabilities on the consolidated balance sheets (Note 18).

23.

Revenues

	2017	2016
	$	$

Royalty interests	74,041	62,677
Stream interests	19,751	-
Offtake interests	119,424	-
	213,216	62,677

24.

Cost of sales

	2017	2016
	$	$

Royalty interests	286	143
Stream interests	7,385	-
Offtake interests	117,974	-
	125,645	143

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

25.

Income taxes

(a)

Income tax expense

	2017		2016
	$		$

Current income taxes	1,003		1,352
Deferred income taxes (Note 25 (b)):
Origination and reversal of temporary differences	(28,128	)	6,647
Impact of changes in tax rates	3,978		1,725
Deferred income taxes	(24,150	)	8,372
Income taxes	(23,147	)	9,724

The components that give rise to deferred income tax assets and liabilities are as follows:

	December 31,		December 31,
	2017		2016
	$		$
Deferred tax assets:
Stream interests	7,793		-
Share and debt issue expenses	2,286		3,824
Deferred and restricted share units	2,032		1,562
Non-capital losses	1,015		-
Other assets	223		25
Royalty interests and exploration and evaluation assets	-		2,567
	13,349		7,978
Deferred tax liabilities:
Royalty interests and exploration and evaluation assets	(123,772	)	(118,306	)
Investments	(10,054	)	(8,051	)
Convertible debentures	(6,047	)	(975	)
Other liabilities	(238	)	(598	)
	(140,111	)	(127,930	)
	(126,762	)	(119,952	)

Deferred tax assets and liabilities have been offset in the balance sheet where they relate to income taxes levied by the same taxation authority and the Company has the legal right and intent to offset.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

25.

Income taxes (continued)

(b)

The provision for income taxes presented in the consolidated financial statements differs from the amount that would arise using the statutory weighted average tax rate applicable to income of the consolidated entities, as a result of the following:

	2017		2016
	$		$

Earnings (loss) before income taxes	(65,935	)	51,578
Income tax provision calculated using the combined Canadian federal and provincial statutory income tax rate	(17,671	)	13,874
Increase (decrease) in income taxes resulting from:
Dividends received from a taxable Canadian corporation	-		(1,326	)
Non-deductible expenses, net	1,606		1,265
Non-taxable portion of capital gains, net	(3,312	)	(2,341	)
Change in tax rates	(3,978	)	(1,725	)
Differences in foreign statutory tax rates	(134	)	-
Other, net	342		(23	)
Total income tax expense	(23,147	)	9,724

		The 2017 effective tax rate reflects a net income tax recovery of $3,978,000, including $4,245,000 related to the reduction of the U.S. Federal income tax rate from 35% to 21% for fiscal year 2018 (enacted on December 22, 2017), and $267,000 of income tax loss related to the reduction of the Québec income tax rate from 11.8% to 11.5% in 2020. The 2016 effective tax rate reflects an income tax recovery of $1,725,000 relating to the reduction of the Québec tax rate from 11.8% to 11.5% in 2020.

	(c)	The 2017 movement for deferred tax assets and deferred tax liabilities may be summarized as follows:

					Benefit				Other		Business		Transla-
			Statement		from flow-				compre-		combi-		tion
	Dec. 31,		of income		through				hensive		naison		adjust-		Dec. 31,
	2016		(loss)		shares		Equity		income		(Note 7	)	ments		2017
	$		$		$		$		$						$

Deferred tax assets:

Stream interests	-		294		-		-		-		7,499		-		7,793
Share and debt issue expenses	3,824		(1,639	)	-		101		-		-		-		2,286
Deferred and restricted share units	1,562		470		-		-		-		-		-		2,032
Non-capital losses	-		-		-		-		-		1,015		-		1,015
Royalty interests and exploration and evaluation assets	2,567		(2,567	)	-		-		-		-		-		-
Other assets	25		198		-		-		-		-		-		223

Deferred tax liabilities:

Royalty interests and exploration and evaluation assets	(118,306	)	29,041		6,416		-		(3,241	)	(37,576	)	(106	)	(123,772	)
Investments	(8,051	)	(2,167	)	(2,315	)	-		2,479		-		-		(10,054	)
Convertible debentures	(975	)	160		-		(5,232	)	-		-		-		(6,047	)

Other liabilities	(598	)	360		-		-		-		-		-		(238	)
	(119,952	)	24,150		4,101		(5,131	)	(762	)	(29,062	)	(106	)	(126,762	)

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

25.

Income taxes (continued)

(c)

The 2016 movement for deferred tax assets and deferred tax liabilities may be summarized as follows: (continued)

					Benefit				Other
			Statement		from flow-				compre-
	December 31,		of income		through				hensive		December 31,
	2015		(loss)		shares		Equity		income		2016
	$		$		$		$		$		$
Deferred tax assets:
Other assets	904		683		-		-		-		1,587
Non-capital losses	8,475		(8,475	)	-		-		-		-
Royalty interests and exploration and evaluation assets	5,618		(3,051	)	-		-		-		2,567
Share and debt issue expenses	2,829		(1,192	)	-		2,187		-		3,824

Deferred tax liabilities:
Investments at fair value through other comprehensive income	-		(1,462	)	(1,730	)	-		(4,859	)	(8,051	)
Royalty interests and exploration and evaluation assets	(127,814	)	5,543		3,965		-		-		(118,306	)
Other liabilities	-		(418	)	-		(1,155	)	-		(1,573	)
	(109,988	)	(8,372	)	2,235		1,032		(4,859	)	(119,952	)

26.	Detail of expenses

	Operating expenses by nature

	2017		2016
	$		$

Professional fees	13,183		2,960
Employee benefit expenses (see below)	22,432		15,295
Depletion and depreciation	28,210		11,509
Travel expenses	1,637		1,174
Rent and office expenses	1,180		1,536
Communication and promotional expenses	1,194		755
Public company expenses	920		680
Cost recoveries from associates	(532	)	(463	)
Recovery of tax credits	-		(2,223	)
Other expenses	782		2,365
	69,006		33,588

Employee benefit expenses

	2017		2016
	$		$

Salaries and wages	15,501		10,491
Share-based compensation	10,524		7,380
Cost recoveries from associates	(3,593	)	(2,576	)
	22,432		15,295

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

26.	Detail of expenses *(continued)*

	Other gains, net

	2017		2016
	$		$

Change in fair value of financial assets at fair value through profit and loss	1,665		6,390
Net gain on disposal of investments	703		3,410
Net gain on dilution of investments in associates	30,560		12,023
Gain (loss) on acquisition of investments⁽ⁱ⁾	(2,099	)	8,379
Other	-		-
	30,829		30,202

(i)	Represents changes in the fair value of the underlying investments between the respective subscription dates and the closing dates.

27.	Key management

	Key management includes directors (executive and non-executive) and the executive management team. The compensation paid or payable to key management for employee services is presented below:

	2017		2016
	$		$

Salaries and short-term employee benefits	6,921		4,247
Share-based compensation	7,731		4,522
Cost recoveries from associates	(449	)	(180	)
	14,203		8,589

Key management employees are subject to employment agreements which provide for payments on termination of employment without cause or following a change of control providing for payments of between once to twice base salary and bonus and certain vesting acceleration clauses on restricted and deferred share units and share options.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

28.

Net earnings (loss) per share

	2017		2016
	$		$

Net earnings (loss) attributable to Osisko Gold Royalties Ltd’s shareholders	(42,501	)	42,113

Basic weighted average number of common shares outstanding (in thousands)⁽ⁱ⁾	127,939		104,671
Dilutive effect of share options⁽ⁱⁱ⁾	-		153
Dilutive effect of warrants⁽ⁱⁱ⁾	-		-
Dilutive effect of convertible debentures⁽ⁱⁱ⁾	-		-
Diluted weighted average number of common shares	127,939		104,824

Net earnings (loss) per share attributable to Osisko Gold Royalties Ltd’s shareholders
Basic	(0.33	)	0.40
Diluted	(0.33	)	0.40

	(i)	As a result of the net loss for the year ended December 31, 2017, all potentially dilutive common shares are deemed to be antidilutive and thus diluted net loss per share is equal to the basic net loss per share.

	(ii)	For the year ended December 31, 2016, 2,646,665 outstanding share options, 11,195,500 outstanding warrants and 2,620,545 common shares underlying the convertible debenture were excluded from the computation of diluted earnings per share as their effect was anti-dilutive.

29.

Additional information on the consolidated statements of cash flows

	2017		2016
	$		$

Interests received	3,384		2,699
Interests paid on long-term debt	4,005		2,221
Dividends received	215		6,276
Income taxes paid	132		-

Changes in non-cash working capital items
Decrease (increase) in accounts receivable	(1,248	)	1,037
Increase in inventory	(8,737	)	-
Increase in other current assets	(221	)	(565	)
Increase (decrease) in accounts payable and accrued liabilities	9,766		(1,247	)
	(440	)	(775	)

Accounts receivable on disposal of investments
Beginning of year	159		-
End of year	-		159

Accounts payable on acquisition of investments
Beginning of year	819		-
End of year	-		819

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

29.

Additional information on the consolidated statements of cash flows (continued)

	2017	2016
	$	$

Tax credits receivable related to exploration and evaluation assets
Beginning of year	6,238	2,083
End of year	4,091	6,238

Accounts payable and accrued liabilities related to exploration and evaluation assets
Beginning of year	276	704
End of year	22	276

Accounts payable and accrued liabilities related to financing fees
Beginning of year	-	-
End of year	379	-

Accounts payable and accrued liabilities related to share issue expenses
Beginning of year	-	-
End of year	186	-

The Company paid $5,000,000 in January and March 2016 for the acquisition of royalty interests that were included in accounts payable and accrued liabilities as at December 31, 2015.

30.	Financial risks

	The Company’s activities expose it to a variety of financial risks: market risks (including interest rate risk, foreign currency risk and other price risk), credit risk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s performance.

	Risk management is carried out under policies approved by the Board of Directors. The Board of Directors provides principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, the use of derivative financial instruments and non-derivative financial instruments, and investment in excess liquidities.

(a)

Market risks

	(i)	Interest rate risk

		Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate as a result of changes in market interest rates.

		The Company’s interest rate risk on financial assets is primarily related to cash and cash equivalents and short-term investments, which bear interest at fixed rates. However, as these investments come to maturity within a short period of time, the impact would likely be not significant. Other financial assets are not exposed to interest rate risk because they are non-interest bearing, except for derivative financial instruments (warrants) for which a 0.5% increase (decrease) in interest rates would have resulted in a variation of net earnings of approximately $54,000 in 2017 ($26,000 in 2016).

		Financial liabilities are not exposed to interest rate risk because they are non-interest bearing or bear a fixed interest rate, except for the revolving credit facility which bears a variable interest rate. An increase (decrease) of 0.5% in the interest rates would have resulted in a variation of net earnings of approximately $312,000 ($312,000) in 2017 (nil in 2016). The Company does not use derivatives to mitigate its exposure to interest rate risk.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

30.

Financial risks (continued)

(a)

Market risks (continued)

	(ii)	Foreign exchange risk

		The Company is exposed to foreign exchange risk arising from currency volatility, primarily with respect to the US dollar.

		The Company holds balances in cash and cash equivalents denominated in U.S. dollars and is therefore exposed to gains or losses on foreign exchange. In addition, the Company, in connection with the business combination (Note 7), has entered in June 2017 into foreign exchange forward contracts to mitigate its exposure to foreign currency risks as the Company agreed to pay the cash portion of the acquisition in U.S. dollars for a fixed pre-determined amount of US$500.6 million. The Company entered into foreign exchange forward contracts to buy US$204.0 million at a weighted average rate of 1.3480 US$/CA$ and designated these contracts as cash flow hedges. These contracts were settled on July 31, 2017 (acquisition date of the business combination). The amount of ineffectiveness recorded in the consolidated statement of income (loss) is insignificant.

		The balance of the cash portion of the acquisition price to be paid in U.S. dollars (approximately US$296.6 million) was paid from current cash and cash equivalent balances denominated in U.S. dollars and the available revolving credit facility. The current cash and cash equivalents balances denominated in U.S. dollars held by entities having the Canadian dollar as their functional currency (US$43.5 million as at December 31, 2017) are not part of any hedging relationship and, therefore, foreign exchange gains and losses on these balances continue to be presented in the consolidated statement of income (loss).

		As at December 31, 2017 and 2016, the balances in US dollars held by entities having the Canadian dollar as their functional currency were as follows:

			December 31,
	2017		2016
	$		$

Cash and cash equivalents	43,495		180,963
Account receivable	493		-
Other assets	412		-
Accounts payable and accrued liabilities	(105	)	-
Revolving credit facility	(118,000	)	-

Net exposure, in US dollars	(73,705	)	180,963

Equivalent in Canadian dollars	(92,463	)	242,979

		Based on the balances as at December 31, 2017, a 5% fluctuation in the exchange rates on that date (with all other variables being constant) would have resulted in a variation of net earnings of approximately $5,354,000 in 2017 ($8,881,000 in 2016).

	(iii)	Other price risk

		The Company is exposed to equity price risk as a result of holding long-term investments in other mining and royalty companies. The equity prices of long-term investments are impacted by various underlying factors including commodity prices. Based on the Company's long-term investments held as at December 31, 2017, a 10% increase (decrease) in the equity prices of these investments would increase (decrease) net earnings by $1,297,000 ($1,218,000) and other comprehensive income by $9,252,000 ($9,252,000) for the year ended December 31, 2017. Based on the Company's long-term investments held as at December 31, 2016, a 10% increase (decrease) in the equity prices of these investments would increase (decrease) net earnings by $1,944,000 ($1,825,000) and other comprehensive income by $9,727,000 ($9,727,000) for the year ended December 31, 2016.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

30.

Financial risks (continued)

	(b)	Credit risk

		Credit risk is the risk that one party to a financial instrument will fail to discharge its obligation and cause the other party to incur a financial loss. Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, short-term investments, accounts receivable and notes receivable. The Company reduces its credit risk by investing its cash and cash equivalents and short-term investments (other than notes receivable) in high interest savings accounts, banker’s acceptances and guaranteed investments certificates issued by Canadian chartered banks. In the case of accounts receivable and notes receivable, the Company performs either a credit analysis or ensures that is has sufficient guaranties in case of a non-payment by the third party to cover the net book value of the note.

		The maximum credit exposure of the Company corresponds to the respective instrument’s carrying amount.

	(c)	Liquidity risk

		Liquidity risk is the risk that the Company will not be able to meet the obligations associated with its financial liabilities. The Company manages the liquidity risk by continuously monitoring actual and projected cash flows, taking into account the requirements related to its investment commitments and mining properties and matching the maturity profile of financial assets and liabilities. The Board of Directors reviews and approves any material transaction out of the ordinary course of business, including proposals on mergers, acquisitions or other major investment or divestitures. The Company also manages liquidity risk through the management of its capital structure and financial leverage as outlined in Note 20. As at December 31, 2017, cash and cash equivalents and short-term investments (other than notes receivable) are invested in high interest savings accounts, banker’s acceptances and guaranteed investment certificates issued by Canadian financial institutions. As a result, the Company estimates that with the projected cash flows from operations and the current liquidity position, it has enough funds available to meet its financial liabilities for the next year.

		As at December 31, 2017, all financial liabilities to be settled in cash or by the transfer of other financial assets mature within 90 days, except for the convertible debentures and the revolving credit facility, which are described below:

	As at December 31, 2017
	Amount
	payable		Estimated annual interest payable
	at maturity	Maturity	2018	2019	2020	2021	2022
	$		$	$	$	$	$

Conv. debenture (2016)	50,000	February 12, 2021	2,000	2,000	2,000	236	-
Conv. debentures (2017)	300,000	December 31, 2022	13,900	12,000	12,000	12,000	12,000
Revolving credit facility⁽ⁱ⁾	148,031	November 14, 2021	4,380	4,380	4,380	3,830	-

	498,031		20,280	18,380	18,380	16,066	12,000

(i)

The maturity date can be extended by one year on each of the first two anniversary dates. The interest payable is based on the actual interest rate and exchange rate as at December 31, 2017.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

31.	Fair value of financial instruments

	The following table provides information about financial assets and liabilities measured at fair value in the consolidated balance sheets and categorized by level according to the significance of the inputs used in making the measurements.

Level 1– Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2– Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and
Level 3– Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

	December 31, 2017
	Level 1	Level 2	Level 3	Total
	$	$	$	$
Recurring measurements

Financial assets at fair value through profit or loss⁽ⁱ⁾
Warrants on equity securities
Publicly traded mining exploration and development companies
Precious metals	-	-	3,375	3,375
Other minerals, oil and gas	-	-	4,717	4,717
Financial assets at fair value through other comprehensive income⁽ⁱ⁾
Equity securities
Publicly traded royalty companies	29,360	-	-	29,360
Publicly traded mining exploration and development companies
Precious metals	60,286	-	-	60,286
Other minerals, oil and gas	17,195	-	-	17,195
	106,841	-	8,092	114,933

	December 31, 2016
	Level 1	Level 2	Level 3	Total
	$	$	$	$
Recurring measurements

Financial assets at fair value through profit or loss⁽ⁱ⁾
Warrants on equity securities
Publicly traded mining exploration and development companies
Precious metals	-	-	3,227	3,227
Other minerals, oil and gas	-	-	7,708	7,708
Financial assets at fair value through other comprehensive income⁽ⁱ⁾
Equity securities
Publicly traded royalty companies	30,338	-	-	30,338
Publicly traded mining exploration and development companies
Precious metals	41,627	-	-	41,627
Other minerals, oil and gas	25,309	-	-	25,309
	97,274	-	10,935	108,209

(i)

On the basis of its analysis of the nature, characteristics and risks of equity securities, the Company has determined that presenting them by industry and type of investment is appropriate.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

31.	Fair value of financial instruments *(continued)*

	During the years ended December 31, 2017 and 2016, there were no transfers among Level 1, Level 2 and Level 3.

	Financial instruments in Level 1

	The fair value of financial instruments traded in active markets is based on quoted market prices on a recognized securities exchange at the balance sheet dates. The quoted market price used for financial assets held by the Company is the last transaction price. Instruments included in Level 1 consist primarily of common shares trading on the TSX or the TSX Venture.

	Financial instruments in Level 2

	The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on the Company’s specific estimates. If all significant inputs required to measure the fair value of an instrument are observable, the instrument is included in Level 2. Instruments included in Level 2 consist of notes receivable and the liability related to share exchange rights. If one or more of the significant inputs are not based on observable market data, the instrument is included in Level 3.

	Financial instruments in Level 3

	The warrants held by the Company are not traded on a recognized securities exchange. At each balance sheet date, the fair value of the investments in warrants is determined using the Black-Scholes option pricing model which includes significant inputs not based on observable market data. Therefore, investments in warrants are included in Level 3.

	The following table presents the changes in the Level 3 investments (warrants) for the years ended December 31, 2017 and 2016:

	2017		2016
	$		$

Balance – January 1	10,935		1,578
Acquisitions	9,662		3,278
Exercised	(14,170	)	(311	)
Change in fair value - investments exercised⁽ⁱ⁾	3,148		271
Change in fair value - investments expired⁽ⁱ⁾	(30	)	(88	)
Change in fair value - investments held at the end of the period⁽ⁱ⁾	(1,453	)	6,207
Balance – December 31	8,092		10,935

(i)

Recognized in the consolidated statement of income (loss) under other gains, net.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

31.	Fair value of financial instruments *(continued)*

	The following table presents the valuation technique and data used to evaluate the fair value of the significant financial instruments classified as Level 3:

December 31, 2017

Inputs

Fair

Valuation

Non-

Weighted

value

technique

observable

Range

average

Other investments

Warrants and call options on equity

Black-Scholes

securities of publicly traded mining

option

Expected

exploration and development companies

8,092

pricing model

volatility

48% to 100%

73%

December 31, 2016

Inputs

Fair

Valuation

Non-

Weighted

value

technique

observable

Range

average

Other investments

Warrants and call options on equity

Black-Scholes

securities of publicly traded mining

option

Expected

exploration and development companies

10,935

pricing model

volatility

36% to 100%

73%

An increase (decrease) in the expected volatility of 10% would lead to an increase (decrease) in the fair value of $676,000 ($685,000) in 2017 and $170,000 ($163,000) in 2016.

Financial instruments not measured at fair value on the balance sheet

Financial instruments that are not measured at fair value on the consolidated balance sheets are represented by cash and cash equivalents, guaranteed investment certificates, trade receivables, amounts receivable from associates and other receivables, notes receivable, accounts payable and accrued liabilities and the long-term debt. The fair values of cash and cash equivalents, guaranteed investment certificates, trade receivables, amounts receivable from associates and other receivables and accounts payable and accrued liabilities approximate their carrying values due to their short-term nature. The fair value of the non-current notes receivable approximate their carrying value as there were no significant changes in economic and risks parameters since the issuance/acquisition or assumption of those financial instruments.

The following table presents the carrying amount and the fair value of long-term debt, categorized under Levels 1 and 2, as at December 31, 2017:

	December 31, 2017
	Fair	Carrying
	value	amount
	$	$

Long-term debt	509,229	464,308

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

32.	Segment disclosure

	The chief operating decision-maker organizes and manages the business under a single operating segment, consisting of acquiring and managing precious metal and other high-quality royalties, streams and similar interests. All of the Company’s assets and revenues are attributable to this single operating segment.

	Geographic revenues from the sale of metals and diamonds received or acquired from in-kind royalties, streams and other interests are determined by the location of the mining operations giving rise to the royalty, stream or other interest. For the years ended December 31, 2017 and 2016, royalty, stream and other interest revenues were mainly earned from the following jurisdictions:

	2017	2016
	$	$
Royalties
Canada	72,057	62,677
	1,984
Rest of the World		-
	74,041	62,677
Streams
Canada	11,321	-
	8,430
Rest of the World		-
	19,751	-
Offtakes
Canada	86,303	-
Australia	22,475	-
	10,646
Rest of the World		-
	119,424	-
Total revenues	213,216	62,677

For the year ended December 31, 2017, one royalty interest generated revenues of $53.8 million ($48.1 million in 2016), which represented 57% of revenues (77% of revenues in 2016) (excluding revenues generated from the offtakes).

For the year ended December 31, 2017 revenues generated from precious metals and diamonds represented 96% and 4% of revenues, respectively (90% and 8% excluding offtakes, respectively). For the year ended December 31, 2016 revenues were exclusively generated from precious metals.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

32.	Segment disclosure *(continued)*

	The following table summarizes the royalty, stream and other interests by country, which is based on the location of the property related to the royalty, stream or other interest:

	December 31,	December 31,
	2017	2016
	$	$
Royalty interests, net
Canada	577,875	471,077
United States	120,611	22,941
South America	27,047	-
Africa	12,040	-
Rest of the World	32,957	750
	770,530	494,768
Stream interests, net
Canada	332,497	-
South America	173,591	-
Asia	78,665	-
United States	50,189	-
Rest of the World	65,136	-
	700,078	-
Offtake interests, net
Canada	48,919	-
Asia	26,147	-
Australia	12,606	-
South America	5,109	-
Rest of the World	12,383	-
	105,164	-

Royalty, stream and other interests, net	1,575,772	494,768

33.	Related party transactions

	In addition to the transactions with the associates described in Notes 12, 13 and 14, an amount of $4,125,000 ($4,750,000 in 2016, including $1,711,000 for professional services related to capitalized exploration and evaluation activities) was invoiced by Osisko to associates for recoveries of costs related to professional services and rental of offices. An amount of $1,245,000 (including sales taxes) is receivable from associates and included in accounts receivable as at December 31, 2017 ($720,000 as at December 31, 2016).

	In 2017, an amount of $395,000 ($231,000 in 2016) was invoiced to Osisko by an associate for professional services and rental of offices, including $355,000 ($227,000 in 2016) related to capitalized exploration and evaluation activities.

	In 2017, interest revenues of $748,000 ($418,000 in 2016) were accounted for with regards to a $10.0 million financing completed in May 2016 with Falco, an associate of Osisko. As at December 31, 2017, interests of $1,166,000 ($418,000 as at December 31, 2016) are receivable from Falco.

	During the years ended December 31, 2017 and 2016, certain directors and officers of Osisko have participated in financings completed by certain associates.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

34.	Commitments

	The Company is committed to minimum amounts under long-term lease agreements for office space, which expire at the latest in 2020. As at December 31, 2017, minimum commitments remaining under these leases were approximately $2,322,000 over the following years:

			$

	2018		1,154
	2019		1,033
	2020		135
			2,322

Streams and offtakes

The following table summarizes the significant commitments to pay for gold, silver and diamonds to which Osisko has the contractual right pursuant to the associated precious metals and diamond purchase agreements:

	Attributable Payable Production			Per Ounce/Carat
	to be Purchased (ounces or %)			Cash Payment (US$)			Term of	Date of Contract
Interest	Gold	Silver	Diamond	Gold	Silver	Diamond	Agreement

Amulsar stream ^(1),(7)	142,454	694,000		$400	$4		40 years	Nov 25, 2015

Back Forty stream⁽⁷⁾	(7) 18.5%	75%		30% spot price (max $600)	$4		Life of mine	Mar 31, 2015

Brucejack offtake⁽⁷⁾	50%			Based on quotational period			Until delivery of 7,067,000 ounces Au	Sept. 21, 2015

Brucejack stream^(2),⁽⁷⁾	4%	4%		$400	$4		Until delivery of 7,067,000 ounces Au	Sept. 21, 2015

Matilda offtake⁽⁷⁾	55%			Based on quotational period			Until delivery of 300,000 ounces Au	May 18, 2015

Mantos stream^{(3), (7)}		100%			25% spot		Life of mine	Sept 11, 2015

Renard stream^(4),⁽⁷⁾			9.6%			$50	40 years	Jul 8, 2014

Sasa stream^{(5), (7)}		100%			$5		40 years	Nov 3, 2015

Gibraltar stream⁽⁶⁾		100%			$2.75		Life of mine	March 3, 2017

	(1)	Stream of 4.22% of gold and 62.5% of silver production up to the production maximum. Subject to multiple buyback options: 50% for US$31.3 million and US$34.4 million on 2^ndand 3^rdanniversary of production start date, respectively, which is currently expected to be in the second half of 2018. 1% inflation price escalation after 2^ndanniversary.
	(2)	Stream subject to multiple buyback/buydown options: December 31, 2018 buyback for US$119 million or buydown for US$75 million + 1.5% ongoing stream; December 31, 2019 buyback for US$136 million or buydown for US$75 million + 2% ongoing stream. If buyback/buydown not exercised by December 31, 2019, US$10 million make-whole payment + 4% ongoing stream.
	(3)	The stream percentage shall be payable on 100% of silver until 19,300,000 ounces have been delivered, after which the stream percentage will be 30%.
	(4)	The stream term shall be automatically extended beyond the initial term for successive 10-year periods.
	(5)	The stream term shall be automatically extended beyond initial term for successive 10-year periods. 3% or consumer price index (CPI) per ounce price escalation after 2016.
	(6)	Under the silver stream, Osisko will make ongoing payments of US$2.75 per ounce of silver delivered. Osisko will receive from Taseko an amount equal to 100% of Gibco’s share of silver production until reaching the delivery to Osisko of 5.9 million ounces of silver, and 35% of Gibco’s share of silver production thereafter. Silver in respect of which a delivery is made after January 1, 2017, is subject to the stream.
	(7)	The silver stream was acquired through the acquisition of Orion’s Portfolio (Note 7). The gold stream will be reduced to 9.25% after the delivery of 105,000 gold ounces.

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

34.	Commitments *(continued)*

	Back Forty Gold Stream (Aquila Resources Inc.)

	In November 2017, Osisko acquired an additional gold stream on the Back Forty project, through its wholly-owned subsidiary, Osisko Bermuda Limted (“OBL”). OBL will make staged upfront cash deposits to Aquila of up to US$55 million for the gold stream, and will make ongoing payments equal to 30% of the spot price of gold, to a maximum of US$600 per ounce. The gold stream applies to 18.5% of the refined gold from the project until 105,000 ounces of gold have been delivered, and to 9.25% of the refined gold for the remaining life-of-mine.

	The deposit will be paid in four installments, as follows:

	(i)	US$7.5 million was paid on closing of the gold stream transaction;
	(ii)	US$7.5 million payable upon receipt by Aquila Resources Inc. (“Aquila”) of all material permits required for the development and operation of the project, and receipt of a positive feasibility study;
	(iii)	US$10 million payable following a positive construction decision for the property; and
	(iv)	US$30 million payable upon the first drawdown of an appropriate project debt finance facility, subject to the change of control provision. In the event of a change of control of Aquila prior to the advancement of the fourth deposit, the person or entity acquiring control over the project may elect to forego the fourth deposit, in which case the stream will be reduced to 9.5% of the refined gold from the project until 105,000 ounces of gold have been delivered and to 4.75% of the refined gold for the remaining life-of-mine. All other terms and conditions will remain unchanged.

35.	Subsequent event

	Dividends

	On February 16, 2018, the Board of Directors declared a quarterly dividend of $0.05 per common share payable on April 16, 2018 to shareholders of record as of the close of business on March 30, 2018.

EX-99.2 3 exhibit99-2.htm EXHIBIT 99.2 Osisko Gold Royalties Ltd.: Exhibit 99.2 - Filed by newsfilecorp.com

Management's Discussion and Analysis

For the year ended December 31, 2017

The following management discussion and analysis (“MD&A”) of the consolidated operations and financial position of Osisko Gold Royalties Ltd (“Osisko”, “Osisko Gold Royalties” or the “Company”) and its subsidiaries for the year ended December 31, 2017 should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the year ended December 31, 2017. The audited consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Management is responsible for the preparation of the consolidated financial statements and other financial information relating to the Company included in this report. The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting. In furtherance of the foregoing, the Board of Directors has appointed an Audit Committee composed of independent directors. The Audit Committee meets with management and the auditors in order to discuss results of operations and the financial condition of the Company prior to making recommendations and submitting the consolidated financial statements to the Board of Directors for its consideration and approval for issuance to shareholders. The information included in this MD&A is as of February 19, 2018, the date when the Board of Directors has approved the Company's audited consolidated financial statements for the year ended December 31, 2017 following the recommendation of the Audit Committee. All monetary amounts included in this report are expressed in Canadian dollars, the Company’s reporting and functional currency, unless otherwise noted. Assets and liabilities of the subsidiaries that have a functional currency other than the Canadian dollar are translated into Canadian dollars at the exchange rate in effect on the consolidated balance sheet date and revenues and expenses are translated at the average exchange rate over the reporting period. This MD&A contains forward-looking statements and should be read in conjunction with the risk factors described in the “Forward-Looking Statements” section.

Table of Contents

Description of the Business	2
Business Model and Strategy	2
Highlights – 2017	2
Highlights – Subsequent to December 31, 2017	3
Business Combination	3
Impairment of Éléonore NSR Royalty Interest	4
Portfolio of Royalty, Stream and Offtake Interests	5
Portfolio of Investments	15
Sustainability Activities	18
Exploration and Evaluation Activities	18
Revolving Credit Facility	18
Bought Deal of Convertible Senior Unsecured Debentures	18
Quarterly Dividends	19
Gold Market and Currency	20
Selected Financial Information	21
Overview of Financial Results	21
Liquidity and Capital Resources	24
Cash Flows	25
Quarterly Information	28
Fourth Quarter Results	29
Outlook	32
Related Party Transactions	32
Contractual Obligations and Commitments	32
Off-balance Sheet Items	34
Outstanding Share Data	34
Normal Course Issuer Bid	34
Annual General Meeting	34
Board of Directors	34
Subsequent Events to December 31, 2017	35
Risks and Uncertainties	35
Disclosure Controls and Procedures and Internal Control over Financial Reporting	35
Basis of Presentation of Consolidated Financial Statements	36
Critical Accounting Estimates and Judgements	36
Financial Instruments	36
Non-IFRS Financial Performance Measures	37
Forward-looking Statements	38
Cautionary Note to U.S. Investors Regarding the Use of Mineral Reserve and Mineral Resource Estimates	39
Corporate Information	40

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Description of the Business

Osisko Gold Royalties Ltd was formed following the friendly acquisition of Osisko Mining Corporation (“OMC”) by Yamana Gold Inc. (“Yamana”) and Agnico Eagle Mines Limited (“Agnico Eagle”) and commenced active operations on June 16, 2014. The Company is incorporated under the Business Corporations Act (Québec) and is focused on acquiring and managing precious metal and other high-quality royalties, streams and similar interests in Canada and worldwide. The cornerstone assets include the 5% net smelter return (“NSR”) royalty on the Canadian Malartic mine, the sliding scale 2.0% -3.5% NSR royalty on the Éléonore mine, a 9.6% diamond stream on the Renard diamond mine, a 4% gold and silver stream on the Brucejack gold and silver mine and a silver stream on the Gibraltar mine, all located in Canada, in addition to a 100% silver stream on the Mantos Blancos copper mine in Chile. The Company also owns a portfolio of royalties, streams, offtakes, options on royalty/stream financings and exclusive rights to participate in future royalty/stream financings on various projects mainly in Canada. In addition, the Company invests in equities of exploration, development and royalty companies.

Business Model and Strategy

The Company’s objective is to maximize returns for its shareholders by growing its asset base, both organically and through accretive acquisitions of precious metal and other high-quality royalties, streams and similar interests, and by returning capital to its shareholders by dividend payments. The Company believes it can achieve this by putting its team’s strong technical expertise to work seeking out high margin growth opportunities that provide exposure to the upside of commodity prices and optionality of mineral reserve growth and new discoveries. Osisko’s main focus is on high quality gold assets located in favourable jurisdictions and operated by established mining companies, as these assets are expected to support a premium valuation in the marketplace. The Company will also evaluate opportunities in other commodities and jurisdictions. Given that a core aspect of the Company’s business is the ability to compete for investment opportunities, Osisko plans to maintain a strong balance sheet and ability to deploy capital. The Company may also invest or maintain investments in gold bullion as part of its overall treasury management, through the acquisition of gold bullion on the market or through holding in-kind royalties received.

Highlights – 2017

	•	Record gold equivalent ounces (“GEOs”) earned of 58,933¹(54% increase compared to 2016);
	•	Record revenues from royalties and streams of $93.8 million ($213.2 million including offtakes) (50% increase compared to 2016; 240% increase including offtakes);
	•	Net cash flows provided by operating activities of $48.7 million (compared to $53.4 million in 2016);
	•	Net loss attributable to Osisko’s shareholders of $42.5 million, $0.33 per basic share (compared to net earnings of $42.1 million, $0.40 per basic share in 2016), reflecting the impairment charge of $89.0 million on the Éléonore royalty interest ($65.4 million, net of income taxes);
	•	Adjusted earnings²of $22.7 million, $0.18 per basic share²(compared to $34.2 million, $0.33 per basic share in 2016);
	•	Proceeds of $71.1 million on sale of investments, generating a gain³ of $35.8 million, based on the cash cost³of the investments;
	•	Acquisition of a precious metals portfolio of assets from Orion Mine Finance Group (“Orion”) for $1.1 billion consisting of 74 royalties, streams and precious metal offtakes, including a 9.6% diamond stream on the Renard diamond mine and a 4% gold and silver stream on the Brucejack gold and silver mine, both of which are new mines in Canada, in addition to a 100% silver stream on the Mantos Blancos copper mine in Chile;
	•	Acquisition of a US$33.0 million ($44.3 million) silver stream from Taseko Mines Limited (“Taseko”);
	•	Acquisition of a US$55.0 million ($69.8 million) gold stream from Aquila Resources Inc. (“Aquila”) by Osisko’s wholly-owned subsidiary Osisko Bermuda Limited (“OBL”);
	•	Acquisition of an additional 0.75% NSR royalty on the Cariboo gold project from Barkerville Gold Mines Ltd. (“Barkerville”) for cash consideration of $12.5 million, which increased the NSR royalty held by Osisko on the Cariboo gold project to a total of 2.25% NSR;
	•	Completed a bought deal offering of convertible senior unsecured debentures of $300.0 million;
	•	Increased the revolving credit facility to $350.0 million (with a potential accordion of up to $100.0 million); and
	•	Declaration of quarterly dividends totalling $0.18 per common share for 2017.

________________________________

1	GEOs are calculated on a quarterly basis and include royalties, streams and offtakes. Silver earned from royalty and stream agreements was converted to gold equivalent ounces by multiplying the silver ounces by the average silver price for the period and dividing by the average gold price for the period. Diamonds, other metals and cash royalties were converted into gold equivalent ounces by dividing the associated revenue by the average gold price for the period. Offtake agreements were converted using the financial settlement equivalent divided by the average gold price for the period. Refer to the portfolio of royalty, stream and other interests section for average metal prices used.
2	“Adjusted earnings” and “Adjusted earnings per basic share” are non-IFRS financial performance measures which have no standard definition under IFRS. Refer to the non-IFRS measures provided under the Non-IFRS Financial Performance Measures section of this Management’s Discussion and Analysis.
3	The cash cost of an investment is a non-IFRS measure representing the cash paid on the acquisition of an investment. The gain or the loss is calculated by subtracting the cash acquisition cost from the cash proceeds on the sale of an investment.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Highlights – Subsequent to December 31, 2017

	•	Delivered the shares of AuRico Metals Inc. to Centerra Gold Inc. for a $1.80 cash consideration per share and for proceeds of $25.5 million, generating a gain¹ of $15.5 million, based on the cash cost¹of the shares.
	•	Declared a quarterly dividend of $0.05 per common share payable on April 16, 2018 to shareholders of record as of the close of business on March 30, 2018.

Business Combination

On July 31, 2017, Osisko acquired a precious metals portfolio of assets from Orion consisting of 61 royalties, 6 streams and 7 precious metal offtakes for $1.1 billion. The final acquisition price was comprised of US$504.8 million ($630.1 million) in cash consideration, which includes a US$4.2 million ($5.1 million) adjustment for the acquired working capital, and 30,906,594 common shares of Osisko issued to Orion (the “Purchase Price”) (the “Transaction”). Any sale of the shares issued to Orion is subject to certain restrictions, including a 12-month hold period and a broad distribution requirement.

The combination of Osisko and Orion’s portfolios resulted in Osisko holding a total of 131 royalties, streams and offtakes, including 16 revenue-generating assets on July 31, 2017. Through the Transaction, the Company acquired a 9.6% diamond stream on the Renard diamond mine and a 4% gold and silver stream on the Brucejack gold and silver mine, both of which are new mines in Canada, in addition to a 100% silver stream on the Mantos Blancos copper mine in Chile. Certain assets are held through an international wholly-owned subsidiary which was renamed to Osisko Bermuda Limited (“OBL”). On September 1, 2017, Mr. Michael Spencer was hired as Managing Director of OBL. Mr. Spencer was previously Vice President, Investment and Merchant Banking at Maxit Capital where he worked from 2014 to 2017.

As part of the Transaction, CDP Investissements Inc., an affiliate of Caisse de dépôt et placement du Québec (“Caisse”) and the Fonds de solidarité des travailleurs du Québec (F.T.Q.) (“Fonds F.T.Q.”) subscribed for $200 million and $75 million in common shares of Osisko, respectively, as part of a concurrent private placement (“Private Placement”) to fund a portion of the cash consideration and support the Transaction. A total of 18,887,363 common shares were issued at a price of $14.56 per share under the Private Placement. The Private Placement was subject to a 7% capital commitment payment payable partially in shares (2% representing 385,457 common shares) and in cash (5% representing $13.8 million). Additional fees of $190,000 ($139,000 net of income taxes) were incurred for the financing.

Following the Transaction, Orion, Caisse and its affiliates and Fonds F.T.Q. held respectively approximately 19.7%, 12.1% and 5.5% of Osisko’s issued and outstanding common shares, based on the number of common shares of Osisko outstanding at the closing of the Transaction on July 31, 2017.

Osisko also drew US$118 million ($147.3 million) under its revolving credit facility with the National Bank of Canada and Bank of Montreal, settled the foreign exchange forward contracts by disbursing $275 million to acquire US$204.0 million and paid US$182.8 million ($228.9 million) from Osisko’s current cash and cash equivalents balance.

The transaction has been recorded as a business combination with Osisko as the acquirer. The assets acquired and the liabilities assumed were recorded at their estimated fair market values at the time of the closing of the acquisition, being July 31, 2017. The transaction costs related to the acquisition were expensed under business development expenses and amounted to $8.9 million.

As of the reporting date, the Company has completed the purchase price allocation over the identifiable net assets of Orion’s Portfolio. Adjustments between the preliminary and final purchase price allocation are related to adjustments to the working capital acquired (decrease in the consideration paid in cash of $1.0 million) and the final fair values of royalty, stream and other interests acquired (decrease of $1.0 million).

________________________________

1	The cash cost of an investment is a non-IFRS measure representing the cash paid on the acquisition of an investment. The gain or the loss is calculated by subtracting the cash acquisition cost from the cash proceeds on the sale of an investment.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

The table below presents the purchase price allocation:

Consideration paid	$
Cash⁽¹⁾	648,385
Issuance of 30,906,594 common shares⁽²⁾	445,333
	1,093,718
Net assets acquired	$
Cash and cash equivalents	8,707
Other current assets	1,217
Royalty, stream and other interests	1,116,115
Current liabilities	(435	)
Deferred income tax liability	(31,886	)
	1,093,718

(1)	Including the net loss on settlement of derivative financial instruments (cash flow hedges) of $18.2 million.
(2)	The fair value of the consideration paid in common shares represents the fair value of the shares on July 31, 2017 minus an illiquidity discount to take into account the twelve-month restrictions on their sales.

Impairment of Éléonore NSR Royalty Interest

In February 2015, Osisko acquired all of the outstanding common shares of Virginia. The assets acquired included a 2.0‑3.5% NSR royalty on the Eléonore mine discovered by Virginia and owned by Goldcorp Inc. Through the combination of the two companies, Osisko achieved its objective of creating a new intermediate royalty company with two world-class gold royalty assets in Québec. Operations started at the Eléonore mine in October 2014 and commercial production was declared in April 2015.

Gold production for the year ended December 31, 2017 was higher than the prior years at 305,000 ounces compared to 274,000 ounces in 2016 and 268,000 ounces in 2015 due to increase in grade and mined tonnes as Éléonore continued its ramp up to optimized production levels. For 2018, the operator’s guidance is at 360,000 ounces.

Gold ounces earned from the Éléonore NSR royalty:

2015⁽¹⁾		2016		2017		2018 Guidance		2019+ Guidance⁽²⁾
402		6,568		6,390		7,920		8,800

(1)	Osisko started receiving royalties in December 2015 only due to the royalty advance payment to Virginia.
(2)	Based on operator’s guidance of 400,000 sustainable annual gold production. As per the sliding scale schedule of up to 3.5%, Osisko could potentially receive up to 14,000 ounces annually once 8 million ounces have been produced.

The operator reviewed its guidance on long-term annual gold production to 400,000 ounces, which is significantly lower compared to the design capacity of 600,000 ounces. This was considered an indicator of impairment among other facts and circumstances and, accordingly, management performed an impairment assessment as at December 31, 2017.

As a result, the Company recorded an impairment charge of $89.0 million ($65.4 million net of income taxes) on the Éléonore NSR royalty for the year ended December 31, 2017.

The Éléonore NSR royalty was written down to its estimated recoverable value, which was determined by the fair value less cost of disposal using a discounted cash-flows approach. The main valuation inputs used were the cash flows expected to be generated by the sale of gold received from the Éléonore NSR royalty based on the long-term annual gold production of 400,000 ounces over the estimated life of the Éléonore mine, the long-term gold price of US$1,300 per ounce and a post-tax real discount rate of 4.2%.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Portfolio of Royalty, Stream and Offtake Interests

The following table details the GEOs earned from Osisko’s producing royalty, stream and other interests:

	Three months ended		Years ended
	December 31,		December 31,
	2017	2016	2017	2016

Gold
Canadian Malartic royalty	10,177	6,749	33,136	28,748
Éléonore royalty	1,532	1,343	6,390	6,568
Seabee royalty⁽¹⁾	619	-	1,310	-
Island Gold royalty	379	292	1,706	1,373
Brucejack offtake⁽¹⁾	321	-	536	-
Vezza royalty	274	342	1,253	830
Other⁽¹⁾	330	124	869	294
	13,632	8,850	45,200	37,813
Silver
Mantos stream⁽¹⁾	1,910	-	3,060	-
Sasa stream⁽¹⁾	1,229	-	2,074	-
Gibraltar stream (3 and 11 months)	665	-	2,303	-
Canadian Malartic royalty	138	114	479	456
Other⁽¹⁾	78	-	129	1
	4,020	114	8,045	457
Diamonds
Renard stream⁽¹⁾	2,839	-	4,686	-
Other⁽¹⁾	88	-	201	-
	2,927	-	4,887	-
Other metals
Kwale royalty⁽¹⁾	411	-	801	-

Total GEOs	20,990	8,964	58,933	38,270

(1) The effective date of the acquisition of Orion’s Portfolio was June 1, 2017. However, revenues of royalties, streams and offtakes acquired from Orion are only included in revenues from July 31, 2017 onward, the acquisition date for accounting purposes.

GEOs by Product

Average Metal Prices and Exchange Rate

		Three months ended				Years ended
		December 31,				December 31,
		2017		2016		2017		2016

Gold⁽¹⁾	$	1,275	$	1,222	$	1,257	$	1,251
Silver⁽²⁾	$	17	$	17	$	17	$	17

Exchange rate (US$/Can$)⁽³⁾		1.2713		1.3341		1.2986		1.3248

	(1)	The London Bullion Market Association’s pm price in U.S. dollars
	(2)	The London Bullion Market Association’s price in U.S. dollars
	(3)	Bank of Canada daily rate

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Summary of Main Royalty, Stream and Other Interests

Asset	Operator	Interest	Commodities	Jurisdiction	Stage

Royalties

Canadian Malartic⁽²⁾	Agnico/Yamana	5.0% NSR	Au	Canada	Production

Éléonore	Goldcorp Inc.	2.0-3.5% NSR	Au	Canada	Production

Island Gold⁽¹⁾	Alamos Gold Inc.	1.38-2.55% NSR	Au	Canada	Production

Hewfran Block ⁽¹⁾	Metanor Resources Inc.	1.7% NSR	Au	Canada	Production

Vezza	Ressources Nottaway Inc.	5% NSR & 40% NPI	Au	Canada	Production

Seabee*	SSR Mining Inc.	3% NSR	Au	Canada	Production

Bald Mtn. Alligator Ridge / Duke & Trapper*	Kinross Gold Corporation	1% / 4% NSR	Au	USA	Production

Brauna*	Lipari Mineração	1% GRR⁽⁷⁾	Dia	Brazil	Production

Kwale*	Base Resources Limited	1.5% GRR	Rutile, Ilmenite, zircon	Kenya	Production

Pan*	Fiore Gold Ltd.	4% NSR	Au	USA	Production

Casino*	Western Copper & Gold Corporation	2.75% NSR	Au, Ag, Cu	Canada	Development

Ollachea*	Kuri Kullu / Minera IRL	1% NSR	Au	Peru	Development

King Island*	King Island Scheelite Limited	1.5%GRR	Tungsten	Australia	Development

Ambler*	NovaCopper US Inc.	1% NSR	Cu, Zn	USA	Development

Rakkuri*	Hannans Reward Ltd.	1.5% NSR	Fe, Cu, Ag	Sweden	Development

Lamaque⁽¹⁾	Eldorado Gold Corp.	1.7%⁽⁶⁾NSR	Au	Canada	Development

Cariboo	Barkerville	2.25% NSR	Au	Canada	Exploration

Windfall Lake	Osisko Mining	1.5% NSR	Au	Canada	Exploration

Hermosa	Arizona Mining	1% NSR	Zn, Pb, Ag	USA	Exploration

Pandora	Agnico/Yamana⁽²⁾	2% NSR	Au	Canada	Exploration

Malartic – Odyssey North	Agnico/Yamana	3% NSR	Au	Canada	Exploration

Malartic – Odyssey South	Agnico/Yamana	5% NSR	Au	Canada	Exploration

Copperwood	Highland Copper Company Inc.	3% NSR⁽³⁾	Ag, Cu	USA	Exploration

James Bay properties	Osisko Mining	1.5-3.5% NSR ⁽⁴⁾	Au, Ag	Canada	Exploration

James Bay properties	Osisko Mining	2.0% NSR ⁽⁴⁾	Other than Au, Ag	Canada	Exploration

Bathurst Mining Camp properties	Osisko Metals	1% NSR	Zn and other metals	Canada	Exploration

Québec Genex projects	Osisko Metals	1% NSR	Zn and other metals	Canada	Exploration

Spring Valley*	Waterton Global Resource Management	0.5% NSR	Au	USA	Exploration

Neita	Unigold Inc.	Option – 2% NSR ($2.0 million to exercise)	Au	Dominican Republic	Exploration

La Fortuna	Minera Alamos Inc.	Option – 4% NSR ($9.0 million to exercise)	Au	Mexico	Exploration

Yellowknife City Gold	TerraX Minerals Inc.	Option – 3% NSR ($4.0 million to exercise)	Au	Canada	Exploration

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Summary of Main Royalty, Stream and Other Interests (continued)

Asset	Operator	Interest	Commodities	Jurisdiction	Stage


Streams

Renard*	Stornoway Diamond Corporation	9.6%	Dia	Canada	Production

Gibraltar	Taseko Mines	100%	Ag	Canada	Production

Mantos Blancos*	Mantos Copper S.A.	100%	Ag	Chile	Production

Brucejack*	Pretium Resources Inc.	4%	Au, Ag	Canada	Production

Sasa*	Central Asia Metals plc	100%	Ag	Macedonia	Production

Amulsar*	Lydian International Ltd.	4.22% Au / 62.5% Ag	Au, Ag	Armenia	Development

Back Forty*	Aquila Resources Inc.	18.5% Au / 75% Ag	Au, Ag	USA	Development

Horne 5 ⁽⁵⁾	Falco	Stream or 1% NSR royalty	Au, Ag, Cu	Canada	Development

White Pine North, Copperwood and Keweenaw	Highland Copper	Option on stream (US$26.0 million to exercise)	Ag	USA	Exploration


Offtakes

Brucejack*	Pretium Resources Inc.	Offtake	Au, Ag	Canada	Production

Matilda*	Blackham Resources Limited	Offtake	Au	Australia	Production

Parral*	GoGold Resources Inc.	Offtake	Au	Mexico	Production

San Ramon*	Red Eagle Mining Corp.	Offtake	Au	Colombia	Production

Amulsar*	Lydian International Ltd.	Offtake	Au, Ag	Armenia	Development

Yenipazar*	Aldridge Minerals Inc.	Offtake	Au	Turkey	Development

* Acquired through the acquisition of Orion’s Portfolio

	(1)	After the sale of a 15% interest in the royalties acquired from Teck Resources Limited to Caisse de dépôt et placement du Québec.
	(2)	In December 2017, Yamana announced that Agnico Eagle will be acquiring its 50% interest in the jointly owned exploration properties of the Canadian Malartic Corporation except properties related to the Canadian Malartic mine. The transaction is expected to close in the beginning of 2018, after which Agnico Eagle will become the sole owner of such exploration properties.
	(3)	3.0% NSR royalty on the Copperwood project. Upon closing of the acquisition of the White Pine project, Highland Copper Company will grant Osisko a 1.5% NSR royalty on all metals produced from the White Pine project, and Osisko's royalty on Copperwood will be reduced to 1.5%.
	(4)	Effective October 4, 2016, Osisko entered into an earn-in agreement with Osisko Mining, which was amended in 2017 to create two earn-in agreements. The amendment was necessitated by the optioning, by Osisko Mining, of the Kan Project to Barrick Gold Corporation (“Barrick”). Under the first earn-in agreement, Osisko Mining may earn a 100% interest in 26 of Osisko’s exploration properties located in the James Bay area and Labrador Trough (excluding the Coulon copper-zinc project and four other exploration properties) upon completing expenditures of $26.0 million over a 7-year period; Osisko Mining may earn a first 50% interest upon completing expenditures totaling $15.6 million over a 4-year period. Under the second earn-in agreement, Osisko Mining may earn a 100% interest in the Kan property (comprised of the Kan and Fosse Au properties) upon completing expenditures totaling $6.0 million over a 7-year period, which represents the guaranteed expenditures to be incurred by Barrick, following an earn-in agreement signed between Osisko Mining and Barrick where Barrick committed to spend $15.0 million on the Kan property; Osisko Mining may earn a first 50% interest upon completing expenditures totaling $3.6 million over a 4-year period. Osisko will retain an escalating NSR royalty ranging from 1.5% to 3.5% on precious metals and a 2.0% NSR royalty on other metals and minerals produced from the 27 properties. New properties acquired by Osisko Mining in a designated area during the 7-year term will be subject to a royalty agreement in favour of Osisko with similar terms.
	(5)	In May 2016, Osisko entered into a financing agreement of $10.0 million with Falco, which will be applied against a stream deposit to be negotiated by October 31, 2017 or converted into a 1% NSR royalty on the Horne 5 project if no stream agreement is concluded. On November 29, 2017, the maturity date of the loan was extended to May 31, 2018.
	(6)	Eldorado Gold Corp. has an option to buy-back 1% of the NSR royalty for $2.0 million.
	(7)	Gross revenue royalty (“GRR”).

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Significant Producing Royalty and Stream Assets

Geographical Distribution of Royalty and Stream Assets

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Canadian Malartic Royalty (Agnico Eagle and Yamana)

One of the Company’s cornerstone assets is a 5% NSR royalty on the Canadian Malartic property which is located in Malartic, Québec, and operated by the Canadian Malartic General Partnership (the “Partnership”) created by Agnico Eagle and Yamana (the “Partners”). The Canadian Malartic property includes the Canadian Malartic mine, which was constructed and developed by Osisko Mining Corporation and commenced production in April 2011. Canadian Malartic is Canada’s largest producing gold mine.

In February 2018, initial inferred mineral resources have been declared on the East Malartic deposit, which lies on the Canadian Malartic mine property close to the Odyssey Zone, has inferred mineral resources of 2.4 million ounces of gold (38.0 million tonnes grading 2.02 g/t gold) at underground depths above the 1,000 metre elevation.

Osisko also holds a 3% NSR royalty on the Odyssey North zone and a 5% NSR royalty on the Odyssey South zone. In February 2017, the Partners have declared initial inferred mineral resources at Odyssey, estimated at 1.4 million ounces of gold (20.7 million tonnes grading 2.15 grams per tonne gold).

Update on operations

On February 14, 2018, Agnico Eagle announced that Canadian Malartic exceeded its targets for 2017 and produced 633,462 ounces of gold.

The Barnat extension project continues to progress on schedule and on budget. Since the beginning of the fourth quarter of 2017, the following activities were completed: an acoustic screen (noise barrier) for the road deviation was put in place, a temporary bridge was constructed and the new road bed foundation is being prepared. Tree cutting has been completed over the Barnat deposit and overburden stripping is ongoing. Production activities at Barnat are scheduled to begin in late 2019.

At the Canadian Malartic mine, exploration programs will be focused in 2018 on the Odyssey and East Malartic deposits, drilling 140,000 metres, to evaluate a number of near pit/underground targets.

Agnico Eagle also released its guidance for gold production at the Canadian Malartic mine: 650,000 ounces in 2018 and 2019 and 690,000 ounces in 2020.

For more information, refer to Agnico Eagle’s press release dated February 14, 2018 entitled “Agnico Eagles reports fourth quarter and full year 2017 results” available on www.sedar.com.

Éléonore Royalty (Goldcorp Inc.)

Through the acquisition of Virginia Mines Inc. (“Virginia”) in 2015, Osisko owns a sliding scale 2.0% to 3.5% NSR royalty on the Éléonore gold property located in the Province of Québec and operated by Goldcorp Inc. (“Goldcorp”). Commercial production for the Éléonore mine was declared on April 1, 2015. Current NSR royalty is at 2.2%.

Update on operations

On February 14, 2018, Goldcorp announced that the Éléonore mine had produced 305,000 ounces of gold in 2017. A total of 460,000 tonnes of ore were milled, at a an average mill head grade of 6.32 grams per tonne (recovery rate of 92%), compared to 399,000 tonnes of ore milled in 2016 at a mill head grade of 5.50 grams per tonne.

On January 16, 2018, as part of their Investor Day update, Goldcorp Inc. presented its outlook activities of the Éléonore mine. The new plan outlined a long-term production profile of the property to approximately 360,000 ounces of gold in 2018 and 400,000 ounces of gold thereafter.

On October 25, 2017, Goldcorp indicated that proven and probable gold mineral reserves as of September 30, 2017 totaled 3.8 million gold ounces, compared to 4.6 million gold ounces as of June 30, 2016. Mine depletion and resource model variance accounted for a decrease of 0.3 million ounces and 0.2 million ounces, respectively, while engineering changes resulted in the reclassification of 0.3 million ounces into the measured and indicated mineral resource category. Details of the mineral inventory can be found in the press release dated October 25, 2017 entitled “Goldcorp reports 2017 reserve and resource estimates and provides exploration update available on SEDAR at www.sedar.com.

For additional information, please refer to Goldcorp’s press release dated October 25, 2017 entitled Goldcorp reports 2017 reserve and resource estimates and provides exploration update and Goldcorp’s Management’s Discussion and Analysis for the year ended December 31, 2017, both filed on SEDAR at www.sedar.com, as well as the Investor Day 2018 presentation available on www.goldcorp.com.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Renard Stream (Stornoway Diamond Corporation)

The Renard diamond mine is operated by Stornoway Diamond Corporation (“Stornoway”) and is Québec's first and Canada's sixth producing diamond mine. It is located approximately 250 kilometres north of the Cree community of Mistissini and 350 kilometres north of Chibougamau in the James Bay region of north-central Québec. Construction on the mine commenced on July 10, 2014, and commercial production was declared on January 1, 2017. The term of the Renard streaming for the forward sale of diamonds is until July 8, 2054, with automatic renewals for additional terms of 10 years each, subject to the Renard buyers' right to terminate. Under the terms of the Renard streaming agreement, Osisko is entitled to 9.6% of the Renard diamond mine production in exchange for payments of US$50 per carat, subject to an increase of 1% annually after January 1, 2020.

Update on operations

On January 11, 2018, Stornoway announced that during the fourth quarter, 518,817 tonnes of ore were processed compared to a plan of 540,000 tonnes resulting in diamond production of 398,267 carats compared to a plan of 415,940 carats (96% and 96% of plan respectively). Recovered grade was 77 carats per hundred tonnes (“cpht”), in line with the plan. Carat production was lower than planned due to the unscheduled batch processing of lower grade Renard 65 ore in November for the purpose of obtaining a valuation sample of Renard 65 diamonds. For the full year 2017, 1.96 million tonnes were processed with diamond production of 1.64 million carats at an attributable grade of 84 cpht. This compares to 2017 guidance of 2.00 million tonnes for 1.69 million carats at 85 cpht (97%, 98% and 99% of plan respectively).

The average processing rate of the plant during the fourth quarter, the second quarter of full production following completion of the project ramp-up, was 6,014 tonnes per day compared to the nameplate capacity of the plant of 6,000 tonnes per day.

Diamond recoveries at the Renard mine through 2017 were impacted by high levels of diamond breakage, and a higher than expected recovery of smaller diamonds than planned. In early August, the Stornoway board of directors approved an extraordinary capital budget of $22.0 million for a program of plant improvements aimed at improving the quality profile of the Renard production. At the center of this plan is the introduction of an ore-waste sorting circuit, rated at 7,000 tonnes per day and expandable, designed to extract waste rock in the +30mm - 200mm size range immediately prior to its introduction to the secondary cone crusher.

In 2018, Stornoway expects to produce 1.6 million carats from the processing of 2.5 million tonnes of ore at an average grade 65 cpht.

For additional information, please refer to Stornoway’s press release dated January 11, 2018 entitled Stornoway Announces Fourth Quarter and 2017 Production and Sales Results, and 2018 Production and Sales Guidance and filed on SEDAR at www.sedar.com.

Mantos Blancos Stream (Mantos Copper S.A.)

Mantos Copper S.A. (“Mantos”) is a private mining company focused on the extraction and sale of copper. The company owns and operates the Mantos Blancos mine and Mantoverde project, located in the Antofagasta and Atacama regions in northern Chile. The Mantos stream agreement is for the life of mine and is based on 100% of the payable silver from the Mantos Blancos copper mine until 19,300,000 ounces have been delivered, after which the stream percentage will be 30%. The purchase price for silver under the Mantos stream is 25% of the average silver market price for each ounce of refined silver sold and delivered and/or credited by Mantos to OBL. Mantos may elect to reduce the amount of refined silver to be delivered and sold to OBL by 50% in 2018, 2019 or 2020, provided that Mantos has delivered no less than 1.99 million ounces of silver to OBL under the stream agreement in which case Mantos shall make a cash payment of US$70 million to OBL.

OBL has a right of first refusal in respect of a financing by Mantos of any royalty, stream, participation or production interest in gold at the Mantos Blancos copper mine or the Mantoverde mine prior to June 30, 2018.

Update on operations

Production of silver at the Mantos Blancos mine and concentrator plant was better than expected at 148,436 ounces of payable silver for the fourth quarter of 2017 and 557,126 ounces of payable silver for year ended December 31, 2017. This was the result of changes in the mine plan that have resulted in phases being mined that have a higher silver grade.

Work on the Mantos Blancos concentrator debottlenecking project (“MB-CDP”) is progressing according to the plan and the feasibility study being developed by Hatch is targeted to be completed in March 2018. The MB-CDP project is expected to increase processing capacity at the concentrator by approximately 70%. The key environmental permits have all been received.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Seabee Royalty (SSR Mining Inc.)

Osisko holds a 3% NSR royalty on the Seabee mine operated by SSR Mining Inc. (“SSR Mining”).

Update on operations

On September 7, 2017, SSR Mining reported the results of a preliminary economic assessment (“PEA”) for the Seabee gold operation in Saskatchewan, Canada, to evaluate the expansion of the Seabee Gold Operation to a sustained mining and milling rate of 1,050 tonnes per day for a seven-year period. As per the PEA, estimated gold production would average 100,000 ounces per year over the period from 2018 to 2023, a 29% increase from 2016 production, with a peak production of 120,000 ounces in 2020, 55% higher than 2016 output.

On January 15, 2018, SSR Mining reported that, in the fourth quarter of 2017, the Seabee gold operation achieved record mill throughput of 89,237 tonnes or 970 tonnes per day, which combined with higher milled grades and improved recovery resulted in record quarterly gold production of 24,227 ounces, a 34% increase compared to the previous quarter. The Seabee gold operation produced 83,998 ounces of gold in 2017, marking record annual production in its 27-year history, resulting from an improved milling rate and higher gold grades.

Gold production at Seabee is estimated between 85,000 to 92,000 ounces for 2018.

For more information, refer to SSR Mining’s press release dated January 15, 2018, titled: “SSR Mining Reports Fourth Quarter and Year-End 2017 Production Results and 2018 Guidance” filed on www.sedar.com.

Brucejack Stream (Pretium Resources Inc.)

Pretium Resources Inc.’s (“Pretium”) Brucejack gold mine (“Brucejack”) is located in northwestern British Columbia, approximately 65 kilometres north of Stewart, British Columbia and consists of 122,133 hectares (301,798 acres). Pretium declared commercial production at Brucejack on July 3, 2017. The Brucejack stream agreement has a delivery start date of January 1, 2020 and provides for an 8% gold and silver stream payable to OBL and BTO Midas L.P. (together referred to as the “Brucejack Stream Partners”) (4% attributable to OBL). The term of the Brucejack stream is the date on which Pretium has sold to the Brucejack Stream Partners 7,067,000 ounces of gold and 26,297,000 ounces of silver, including deliveries under the offtake agreement.

The buy-back and buy-down rights held by Pretium are as follows:

Right	Description	Election date	Total

Buy-back (2018)	Right to repurchase the entire stream	December 31, 2018	US$119.0 million ($149.3 million)

Buy-down (2018)	Right to reduce the stream percentage from 4% to 1.5%	December 31, 2018	US$75.0 million ($94.1 million)

Buy-back (2019)	Right to repurchase the entire stream	December 31, 2019	US$136 million ($170.6 million)

Buy-down (2019)	Right to reduce the stream percentage from 4% to 2%	December 31, 2019	US$75.0 million ($94.1 million)

The Brucejack stream agreement is subject to certain change of control provisions.

If Pretium does not exercise the right to reduce or repurchase the refined precious metals under the stream by December 31, 2019, US$20 million will be payable by Pretium (US$10 million attributable to OBL) and an 8% stream (4% attributable to OBL) will apply beginning January 1, 2020, with ongoing transfer payments of US$400 per ounce of gold and US$4.00 per ounce of silver.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Brucejack Offtake (Pretium Resources Inc.)

The Brucejack Offtake agreement applies to sales from the first 7,067,000 ounces of refined gold (less any delivered ounces pursuant to the Brucejack Stream Agreement described above). OBL is required to pay for refined gold based on a market referenced gold price in U.S. dollars per ounce during a defined pricing period before and after the date of each sale. The offtake obligation applies to 100% (50% attributable to OBL) of refined gold produced at the Brucejack project less the percentage of refined gold to be delivered pursuant to the Brucejack stream agreement (being between 0% and 4% attributable to OBL), subject to the reduction election described above. Pretium has the option to reduce the offtake obligation by one of the following options:

	(i)	On December 31, 2018, Pretium can elect to reduce the offtake obligation to either (i) 50% (25% attributable to OBL) by paying US$11 per ounce multiplied by 0.50, on the remaining undelivered gold ounces, or (ii) 25% (12.5% attributable to OBL) by paying US$11 per ounce multiplied by 0.75, on the remaining undelivered gold ounces; or
	(ii)	On December 31, 2019 Pretium can elect to reduce the offtake obligation to either (i) 50% (25% attributable to OBL) by paying US$13 per ounce multiplied by 0.50, on the remaining undelivered gold ounces, or (ii) 25% (12.5% attributable to OBL) by paying US$13 per ounce multiplied by 0.75, on the remaining undelivered gold ounces.

Update on operations

On January 23, 2018, Pretium reported fourth quarter 2017 production for the Brucejack mine. During the fourth quarter of 2017, the Brucejack mine produced 70,281 ounces of gold for a total of 152,484 ounces for the first six months of production ramp-up. Gold recovery rate averaged 95.8% for the quarter and 96.2% for the first six months of production ramp-up respectively. The mill processed a total of 271,501 tonnes of ore for the fourth quarter for an average of 2,951 tonnes per day and a total of 532,763 tonnes of ore for an average of 2,895 tonnes per day for the first six months of production ramp-up.

As the ramp-up of mining into areas of higher definition drilling continues, steady state gold production is expected to be achieved in mid-to-late 2018. Gold production at Brucejack for the first half of 2018 is expected in the range of 150,000 ounces to 200,000 ounces, for total first year ramp-up gold production of 302,000 ounces to 352,000 ounces (July 1, 2017 to June 30, 2018). Grade reconciliation to the reserve model for the period from August 1, 2017 to December 31, 2017 was approximately 75% to 80%. The achievement of steady state mining in areas with higher drill density and the grade control program in full operation will enable Pretium to provide further production guidance later in 2018.

For more information on Brucejack, refer to Pretium’s press release dated January 23, 2018, titled: “Brucejack Mine Production Update; 2018 Guidance” filed on www.sedar.com.

Sasa Stream (Central Asia Metlas plc)

The Sasa mine is located in Macedonia and is one of the largest zinc, lead and silver mines in Europe, producing approximately 30,000 tonnes of lead, 22,000 tonnes of zinc and 400,000 ounces of silver in concentrates per annum. OBL’s entitlement under the Sasa stream applies to 100% of payable silver production in exchange for US$5 per ounce of refined silver increased annually from 2017 based on inflation. On November 6, 2017, Central Asia Metals plc completed the acquisition of Lynx Resources.

Amulsar Stream (Lydian International Ltd.)

The Amulsar project is a gold-bearing quartzite deposit located in southern Armenia. The Amulsar project is in the development and construction stage and production is expected to begin in 2018. Amulsar will be Armenia's largest gold mine, with estimated mineral resources containing 3.5 million measured and indicated gold ounces and 1.3 million inferred gold ounces. The details of the mineral inventory can be found under Lydian International Ltd.’s profile on SEDAR at www.sedar.com. Gold production is targeted to average approximately 225,000 ounces annually over an initial 10-year mine life. OBL’s entitlement under the Amulsar stream applies to 4.22% of refined gold production and 62.5% of refined silver until 142,454 ounces of refined gold and 695,549 ounces of refined silver are delivered. The stream agreement includes ongoing transfer payments by OBL to Lydian International Ltd. (“Lydian”) of US$400 per ounce of refined gold and US$4.00 per ounce of refined silver delivered under the stream subject to a 1% annual increase starting on the third anniversary of commercial production. Lydian has the option to buy back a portion of the stream by one of the following options:

	(i)	the stream percentage may be reduced by 50% on the second anniversary of commercial production for US$55M (US$34.38M attributable to OBL); or
	(ii)	the stream percentage may be reduced by 50% on the third anniversary of commercial production for US$50M (US$31.25M attributable to OBL)

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Back Forty Streams (Aquila Resources Inc.)

The Back Forty project is a zinc and gold volcanogenic massive sulfide deposit located in Michigan, United States. The Back Forty project is in the development stage and advancing toward a feasibility study expected in 2018. Back Forty is expected to produce 532,000 ounces of gold, 721 million pounds of zinc, 74 million pounds of copper, 4.6 million ounces of silver, and 21 million pounds of lead. The details of the mineral inventory can be found under Aquila’s profile on SEDAR at www.sedar.com. The Back Forty silver stream applies to 75% of payable silver production over the mine’s operating life and includes ongoing transfer payments by OBL to Aquila of US$4.00 per ounce of refined silver delivered under the stream.

In November 2017, OBL acquired an additional gold stream on the Back Forty project. OBL will make staged upfront cash deposits to Aquila of up to US$55 million for the gold stream, and will make ongoing payments equal to 30% of the spot price of gold, to a maximum of US$600 per ounce. The gold stream applies to 18.5% of the refined gold from the project until 105,000 ounces of gold have been delivered, and to 9.25% of the refined gold for the remaining life-of-mine.

The deposit will be paid in four installments, as follows:

	1.	US$7.5 million was paid on closing of the gold stream transaction;
	2.	US$7.5 million payable upon receipt by Aquila of all material permits required for the development and operation of the project, and receipt of a positive feasibility study;
	3.	US$10 million payable following a positive construction decision for the property; and
	4.	US$30 million payable upon the first drawdown of an appropriate project debt finance facility, subject to the change of control provision. In the event of a change of control of Aquila prior to the advancement of the fourth deposit, the person or entity acquiring control over the project may elect to forego the fourth deposit, in which case the stream will be reduced to 9.5% of the refined gold from the project until 105,000 ounces of gold have been delivered and to 4.75% of the refined gold for the remaining life-of-mine. All other terms and conditions will remain unchanged.

Gibraltar Stream (Taseko Mines Limited)

On March 3, 2017, Osisko closed the acquisition of a silver stream with reference to silver produced at the Gibraltar copper mine (“Gibraltar”), located in British Columbia, Canada from Gibraltar Mines Ltd. (“Gibco”), a wholly-owned subsidiary of Taseko having a 75% interest in Gibraltar. Osisko paid Taseko cash consideration of US$33.0 million ($44.3 million) to purchase a silver stream and 3.0 million warrants of Taseko. Each warrant allows Osisko to acquire one common share of Taseko at a price of $2.74 until April 1, 2020. The fair value of the warrants was evaluated at $1,780,000 using the Black-Scholes option pricing model and the residual value of $42,678,000 was attributed to the silver stream (including $175,000 of transaction fees). With regards to the silver stream, Osisko will make ongoing payments of US$2.75 per ounce of silver delivered.

Under the stream, Osisko will receive from Taseko an amount equal to 100% of Gibco’s share of silver production until the delivery to Osisko of 5.9 million ounces of silver to Osisko and 35% of Gibco’s share of silver production thereafter. Gibraltar is the second largest open pit copper mine in Canada and fourth largest in North America. The life of mine yearly average production from Gibraltar is approximately 140 million pounds (“lbs”) of copper and 2.6 million lbs of molybdenum. With a large mineral reserve of 3.2 billion lbs of recoverable copper and 58 million lbs of molybdenum, the estimated mine life of the project is 23 years (proven and probable mineral reserves as of January 1, 2016). The details of the mineral inventory can be found under Taseko’s profile on SEDAR at www.sedar.com.The acquisition is expected to increase Osisko’s production by approximately 200,000 ounces of silver for the next 14 years, increasing to an average of 350,000 ounces of silver for the remainder of the 23-year mineral reserve life of Gibraltar. Any silver in respect of which a delivery was made after January 1, 2017, was subject to the stream.

Update on operations

In July 2017, the production at the Gibraltar mine was affected by the wild forest fires in the region that forced the mining and milling operations to be idled or reduced for several days. However, Gibraltar has maintained a stable level of operations and management continues to focus on further improvements to operating practices to reduce unit costs.

Island Gold Royalty (Alamos Gold Inc.)

The Company is receiving in-kind royalties from its Island Gold NSR royalty (ranging from 1.38% to 2.55%) since the first quarter of 2016, currently operated by Alamos Gold Inc. (“Alamos”). Alamos acquired Richmont Mines Inc. (“Richmont”) in November 2017.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Update on operations

In the fourth quarter of 2017, Alamos reported production at Island Gold mine of 22,100 ounces of gold for the quarter and 98,600 ounces for the year. The mine achieved record production level in the third quarter of 2017 and beat annual production guidance previously provided by Richmont.

For more information, refer to Alamos’ press release dated January 11, 2018, titled “Alamos Reports Fourth Quarter 2017 Production and Provides 2018 Outlook” filed on www.sedar.com.

Horne 5 Project (Falco Resources Ltd.)

In May, 2016, Osisko closed a financing agreement with Falco Resources Ltd. (“Falco”), an associate of Osisko, whereby Osisko provided a $10.0 million loan to be used for the advancement of the Horne 5 Project (Rouyn-Noranda, Québec) and for general corporate purposes. The loan had an original 18 month maturity, which was extended to 24 months, and bears an interest of 7%. Under the terms of the financing, Falco and Osisko shall negotiate, by the end of May 2018, the terms, conditions and form of a silver and/or gold stream agreement ("Stream Agreement"), which shall be substantially in the form typical for such transaction in the industry, whereby Osisko may provide Falco with a portion of the development capital required to build the Horne 5 Project. In this case, the principal amount of the loan and any accrued interest will be applied against the stream deposit. At the maturity date, if Falco and Osisko have not concluded a Stream Agreement, the principal amount of the loan will be converted into a 1% NSR royalty on the Horne 5 Project and accrued interests will be paid in cash. Under certain events of default, Osisko may, at its option, require the repayment of the principal amount and the accrued interest in cash.

In October 2017, Falco released a positive feasibility on the Horne 5 Project. The feasibility study indicated that, at a gold price of US$1,300/oz and using an exchange rate of C$1.00 = US$0.78, the Horne 5 Project would generate an after-tax net present value, at a 5% discount rate, of US$602 million and an after-tax internal rate of return of 15.3%. As per Falco, in this scenario, the mine could become the next significant gold producer in Québec, with a production profile averaging 219,000 payable ounces annually over the life of mine, with an all-in sustaining cash cost of US$399 per ounce net of by-product credits and all-in cost, capital expenditures plus operating expenditures, estimated at US$643 per ounce. The Environmental Impact Assessment study was filed with the authorities in December 2017.

For more information, refer to Falco’s press release dated October 16, 2017, titled: “Falco Announces Positive Feasibility Study Results on Horne 5 Gold Project” and filed on www.sedar.com

Cariboo Gold Project (Barkerville Gold Mines Ltd.)

The Company holds a 2.25% NSR royalty on the Cariboo Gold Project located in British Columbia, Canada, and owned by Barkerville, an associate of Osisko, including a 0.75% NSR royalty acquired in April 2017 for $12.5 million. The grant of the additional royalty cancelled Osisko’s royalty acquisition right which was granted pursuant to an investment agreement between Osisko and Barkerville dated February 5, 2016. However, Osisko retains a right of first refusal relating to any gold stream offer received by Barkerville with respect to the Cariboo gold project.

Windfall Lake (Osisko Mining Inc.)

On October 4, 2016, Osisko exercised its option to acquire a 1% NSR royalty on Osisko Mining Inc.’s (“Osisko Mining”) Windfall Lake property for $5.0 million. Osisko was already the holder of a 0.5% NSR royalty on Windfall Lake. Therefore, the royalty on the Windfall Lake property has increased to a total of 1.5%. Osisko Mining is an associate of Osisko.

Osisko Mining is currently undergoing an 800,000 meter drill program at Windfall Lake, where the 400,000 meter milestone was reached in October 2017. A metallurgical program is ongoing and the construction of the exploration ramp is progressing. Osisko Mining is planning a resource update in the first half of 2018.

Hermosa Project (Arizona Mining Inc.)

In April 2016, Osisko acquired for $10.0 million a 1% NSR royalty on any lead/zinc/silver sulfide ores mined from the Hermosa Project owned by Arizona Mining Inc. (“Arizona Mining”) and located in Santa Cruz County, Arizona.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Portfolio of Investments

The Company’s assets include a portfolio of shares of publicly traded companies. Osisko invests, and intends to continue to invest, from time to time in companies where it holds a royalty, stream or similar interest and in various companies within the mining industry for investment purposes and with the objective of improving its ability to acquire interests in exploration assets, future royalties or revenue streams. In addition to investment objectives, in some cases, the Company may decide to take a more active role, including providing management personnel, technical and/or administrative support, as well as nominating individuals to the investee’s board of directors. These investments are reflected in investments in associates in the consolidated financial statements and include mainly Osisko Mining, Barkerville, Dalradian and Falco.

Osisko may, from time to time and without further notice except as required by law, increase or decrease its investments at its discretion.

During the year ended December 31, 2017, Osisko acquired investments for $226.8 million and sold investments for $71.1 million.

The following table presents the carrying value and fair value of the investments in marketable securities as at December 31, 2017 (in thousands of dollars):

Marketable securities	Carrying value⁽ⁱ⁾	Fair value⁽ⁱⁱ⁾
	$	$

Associates	257,433	332,140
Other	106,841	106,841
	364,274	438,981

	(i)	The carrying value corresponds to the amount recorded on the balance sheet, which is the equity method for the investments in marketable securities of associates and the fair value for the other investments in marketable securities, as per IFRS 9,
		Financial Instruments.
	(ii)	The fair value corresponds to the quoted price of the investments in a recognized stock exchange as at December 31, 2017.

Main Strategic Investments

The following table presents the main strategic investments of the Company (in thousands of dollars):

	Number of			Carrying		Fair
Company	shares held⁽ⁱ⁾	Ownership⁽ⁱ⁾		value^(i),(ii)		value^(i),(ii)
		%	$		$

Osisko Mining Inc.	32,302,034	15.5		73,635		109,504
Barkerville Gold Mines Ltd.	142,309,310	32.7		89,556		106,732
Dalradian Resources Inc.	31,717,687	8.9		40,122		42,026
Falco Resources Ltd.	23,927,005	12.7		15,652		20,817

	(i)	As at December 31, 2017.
	(ii)	See table above for definition of carrying value and fair value.

Osisko Mining Inc.

In August 2015, Osisko Mining acquired Eagle Hill Exploration Corporation, Ryan Gold Corp. and Corona Gold Corporation to combine leadership, treasuries and assets to form a new Canadian focused gold exploration and development company. In 2015, Osisko invested $17.8 million in shares of Osisko Mining and was granted a right to acquire a 1% NSR royalty on all properties held by Osisko Mining at the date of the financing. The right was exercised in October 2016 for $5.0 million and includes a 1% NSR royalty on the Windfall Lake gold project (bringing the total NSR royalty on the Windfall Lake gold project to 1.5%), where Osisko Mining is currently pursuing a 800,000 meter drilling program. In March 2016, Osisko Mining acquired all of the outstanding shares of NioGold Mining Corporation. In 2016, Osisko entered into an earn-in agreement with Osisko Mining, which was amended in 2017 to create two earn-in agreements, on properties held by Osisko in the James Bay area. The amendment was necessitated by the optioning of the Kan Project to Barrick. The transaction is detailed in the Summary of Royalty, Stream and Offtake Interests table of this MD&A. In 2016, the Company invested $6.8 million in Osisko Mining and in 2017, invested an additional $40.1 million. As at December 31, 2017, the Company holds 32,302,034 common shares representing a 15.5% interest in Osisko Mining (13.5% as at December 31, 2016). As some officers and directors of Osisko are also officers and directors of Osisko Mining, the Company concluded that it exercises significant influence over Osisko Mining since 2014 and accounts for its investment using the equity method.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Barkerville Gold Mines Ltd.

Barkerville is focused on the development of its extensive land package located in the historical Cariboo Mining District of central British Columbia, Canada, where it is executing a 160,000 meter drilling program. In November, 2015, Osisko and Barkerville entered into an agreement for Osisko to acquire a 1.5% NSR royalty on the Cariboo Gold project for cash consideration of $25.0 million. In April, 2017, Osisko acquired an additional 0.75% NSR royalty on the Cariboo gold project for cash consideration of $12.5 million, increasing the total NSR royalty held by Osisko to 2.25%. The grant of the additional royalty cancelled Osisko’s royalty acquisition right which was granted pursuant to an investment agreement between Osisko and Barkerville dated February 5, 2016. However, Osisko will retain a right of first refusal relating to any gold stream offer received by Barkerville with respect to the Cariboo gold project. In 2015 and 2016, Osisko acquired common shares of Barkerville for $11.0 million and $8.2 million, respectively. In 2017, Osisko invested an additional $52.1 million. As at December 31, 2017, the Company holds 142,309,310 common shares representing a 32.7% interest in Barkerville (17.3% as at December 31, 2016). As some officers and directors of Osisko are also officers and directors of Barkerville, the Company concluded that it exercises significant influence over Barkerville since 2016 and accounts for its investment using the equity method.

Dalradian Resources Inc.

On October 10, 2017, Osisko entered into a subscription agreement with Dalradian pursuant to which Osisko made an investment of $28.3 million in Dalradian by way of a non-brokered private placement. As at December 31, 2017, Osisko holds 31,717,687 common shares representing an 8.9% interest in Dalradian (2.6% as at December 31, 2016). The subscription agreement entered into with Dalradian contains various covenants and rights, including among other things, a standstill, participation rights to maintain Osisko’s pro rata interest in Dalradian and rights to match other offers for project financing. As the Chief Executive Officer of Osisko is also a member of the board of directors of Dalradian, the Company concluded that it exercises significant influence over Dalradian and accounts for its investment using the equity method.

Falco Resources Ltd.

Falco’s main asset is the Horne 5 gold project, for which a positive feasibility study was released in October 2017. In 2015 and 2016, Osisko acquired additional common shares in Falco for $2.4 million and $3.3 million, respectively. In addition, Osisko entered into a financing agreement of $10.0 million with Falco in 2016, which will be applied against a stream deposit to be negotiated by May 31, 2018 (the original maturity date was November 30, 2017, which was subsequently extended to May 31, 2018) or converted into a 1% NSR royalty on the Horne 5 project if no stream agreement is concluded. In 2017, Osisko acquired additional shares of Falco for $4.0 million. As at December 31, 2017, the Company holds 23,927,005 common shares representing a 12.7% interest in Falco (14.2% as at December 31, 2016). As some officers and directors of Osisko are also officers and directors of Falco, the Company concluded that it exercises significant influence over Falco since 2014 and accounts for its investment using the equity method.

Other Significant Investment

Labrador Iron Ore Royalty Corporation

Over the course of the fourth quarter of 2016 and January 2017, Osisko sold its 9.8% equity interest in Labrador Iron Ore Royalty Corporation (“LIORC”). The Company received $113.4 million in proceeds (including $98.2 million in 2016 and $15.2 million in 2017). Since the initial investment in LIORC, the Company received $10.7 million in dividends (including $6.3 million in 2016 and $0.2 million in 2017). As Osisko’s interest has been completely liquidated, the Company will not be receiving non-taxable dividend income going forward.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Arizona Mining Inc.

Over the second half of 2017, Osisko sold its equity interest in Arizona Mining for proceeds of $47.1 million, including from the sale of shares following the exercise of warrants in October 2017. Osisko realized a pre-tax accounting gain of $30.2 million (including the change in fair value of the warrants) on the transaction and a gain of $34.1 million based on the cash cost¹ of the shares. Osisko still holds a 1% NSR royalty purchased for $10.0 million in April 2016 on all sulfide ores of lead and zinc (and any copper, silver or gold recovered from the concentrate from such ores) mined from Arizona Mining’s Hermosa Project located in Santa Cruz County, Arizona.

________________________________

1	The cash cost of an investment is a non-IFRS measure representing the cash paid on the acquisition of an investment. The gain or the loss is calculated by subtracting the cash acquisition cost from the cash proceeds on the sale of an investment.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Sustainability Activities

Osisko views sustainability as a key part of its strategy to create value for its shareholders and other stakeholders.

The Company focuses on the following key areas:

	•	Promoting the mining industry and its benefits to society;
	•	Maintaining strong relationships with Federal, Provincial, Municipal and First Nations Governments;
	•	Supporting the economic development with regions where Osisko operates (directly or indirectly through its interests);
	•	Supporting university education in mining fields and employee development;
	•	Promoting diversity throughout the organization and the mining industry;
	•	Encouraging investee companies to adhere to the same areas of focus in sustainability.

As part of its investment analysis process, the Company evaluates the risk and performance in the sustainability areas.

Exploration and Evaluation Activities

As a result of earn-in agreement with Osisko Mining, which is described under the Summary of Royalty, Stream and Offtake Interests table of this MD&A, the exploration and evaluation activities have been significantly reduced and were concentrated on the Coulon project (James Bay area). During the year ended December 31, 2017, the investments amounted to $2.0 million, net of tax credits. As at December 31, 2017, the carrying value of the Coulon project was $59.9 million ($57.8 million as at December 31, 2016) and the carrying value of the other properties, including those under the earn-in agreements with Osisko Mining, was $42.3 million ($42.2 million as at December 31, 2016). A 10,000 meter drilling program was completed on the Coulon Project in 2017. The Company is finalizing its preliminary economic assessment which was initiated in 2017.

In November, 2017 the non-controlling shareholders of Mines Coulon Inc., the subsidiary holding the Coulon project, exercised the option to convert their shares of Mines Coulon Inc. for an amount corresponding to 75% of the cost of their investment, representing $12.0 million. The amount was settled by the issuance of 772,810 common shares of the Company. As such, Osisko is now the sole owner of the Coulon project.

Revolving Credit Facility

In November 2017, the Company amended its revolving credit facility (the “Facility”) increasing the amount from $150 million to $350 million, with an additional uncommitted accordion of up to $100 million, for a total availability of up to $450 million. The increase is subject to standard due diligence procedures and acceptance of the lenders. The Facility is to be used for general corporate purposes and investments in the mineral industry, including the acquisition of royalties, streams and other interests. The Facility is secured by the Company’s assets (including the royalty, stream and other interests) and has a four-year term (November 14, 2021), which can be extended by one year on each of the first two anniversary dates.

The Facility is subject to standby fees. Funds drawn will bear interest based on the base rate, prime rate or London Inter-Bank Offer Rate (“LIBOR”) plus an applicable margin depending on the Company’s leverage ratio. On July 31, 2017, the Facility was drawn for US$118.0 million (representing $148.0 million as at December 31, 2017) to fund the acquisition of Orion’s Portfolio. As at December 31, 2017, the interest rate was 2.96%, including the applicable margin. The Facility includes covenants that require the Company to maintain certain financial ratios and meet certain non-financial requirements. As at December 31, 2017, all such ratios and requirements were met.

Bought Deal of Convertible Senior Unsecured Debentures

On November 3, 2017, Osisko closed a bought deal offering of convertible senior unsecured debentures (the “Debentures”) of $300 million (the “Offering”) with a syndicate of underwriters co-led by National Bank Financial Inc., BMO Capital Markets and Desjardins Capital Markets (the “Underwriters“). The Offering was comprised of a $184.0 million public offering of Debentures (the “Public Offering“) and a $116.0 million private placement of Debentures (the “Private Offering“). In connection with the Offering, the Public Sector Pension Investment Board and Ressources Québec inc., a wholly-owned subsidiary of Investissement Québec, purchased respectively $100.0 million and $16.0 million of Debentures through the Private Offering on the same terms and conditions as the Public Offering. The Underwriters have received a commission of 3.55% related to the Offering. Net proceeds amounted to $288.5 million.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

The Debentures bear interest at a rate of 4.0% per annum, payable semi-annually on June 30 and December 31 of each year, commencing on June 30, 2018. The Debentures are convertible at the holder’s option into Osisko common shares at a conversion price of $22.89 per common share. The Debentures will mature on December 31, 2022 and may be redeemed by Osisko, in certain circumstances, on or after December 31, 2020. The Debentures are listed for trading on the Toronto Stock Exchange (“TSX”) under the symbol “OR.DB”. The net proceeds from the Offering will be used to fund the acquisition of precious metal royalties and streams, working capital, and general corporate purposes.

Quarterly Dividends

The Board of Directors has approved the initiation of the Company’s quarterly dividend program on November 16, 2014.

The following table provides details on the dividends declared and paid or payable:

Dividend

Dividends paid

Declaration date

per share

Record date⁽ⁱ⁾

Payment date⁽ⁱ⁾

or payable

Year 2014

0.03

n/a

1,551,000

Year 2015

0.13

n/a

12,229,000

Year 2016

0.16

n/a

17,037,000

March 15, 2017

0.04

March 31, 2017

April 17, 2017

4,265,000

May 4, 2017

0.04

June 30, 2017

July 17, 2017

4,270,000

August 3, 2017

0.05

September 30, 2017

October 16, 2017

7,850,000

November 7, 2017

0.05

December 29, 2017

January 15, 2018

7,890,000

Year 2017

0.18

24,275,000

February 16, 2018

0.05

March 30, 2018

April 16, 2018

tbd⁽ⁱⁱ⁾

Year 2018

0.05

	(i)	Not applicable (“n/a”) for annual summaries.
	(ii)	To be determined (“tbd”) on March 30, 2018 based on the number of shares outstanding and the number of shares participating in the dividend reinvestment plan on the record date.

Dividend Reinvestment Plan

As at December 31, 2017, the holders of 6,863,864 common shares had elected to participate in the DRIP, representing dividends payable of $343,000. During the year ended December 31, 2017, the Company issued 88,536 common shares under the DRIP, at a discount rate of 3%. On January 17, 2018, 24,513 common shares were issued under the DRIP at a discount rate of 3%.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Gold Market and Currency

Gold Market

The price of gold gained more than 12% since January 2017 after its initial rebound in 2016, and recorded its best-performing year since 2011 after several consecutive years of declines. It has been driven by a weaker U.S. dollar, extremely loose monetary policy pursued by nearly all key central banks and safe-haven buying prompted by global political uncertainties. Despite a rally in global stock markets and rising U.S. interest rates, gold had a good performance in 2017.

Gold prices came under pressure during the fourth quarter of 2017 falling from a high of US$1,357 per ounce to a low of US$1,236 per ounce in mid-December. Anticipation that Federal Reserve would raise rates at its December meeting, liquidation by speculators and easing of political tensions with North Korea have accelerated the bearish sentiment. Overall, gold prices were almost unchanged in the fourth quarter of 2017 and gained US$8 per ounce quarter over quarter on the London fix to close at US$1,291 per ounce. The average price was slightly lower from the third quarter of 2017 at US$1,275 per ounce and US$53 per ounce higher on a year over year basis. The prices were volatile during the fourth quarter with a trading range of US$62 per ounce and closed at US$1,291 per ounce as at December 31, 2017. The average gold price gained US$6 per ounce in 2017 to US$1,257 compared to US$1,251 in 2016.

Following the Federal Reserve’s decision to raise interest rates by 25 basis point in December 2017 and leaving the rates unchanged in January 2018, U.S. dollar has weakened and gold prices have recovered strongly to US$1,340 in January 2018. Oil and base metal prices were rallying also into the year-end and demand has started to increase for the commodity sector.

The historical price is as follows:

(US$/ounce of gold)		High		Low		Average		Close

2017	$	1,346	$	1,151	$	1,257	$	1,291
2016		1,366		1,077		1,251		1,146
2015		1,296		1,049		1,160		1,060
2014		1,385		1,142		1,266		1,206
2013		1,694		1,192		1,411		1,205

In Canadian dollar terms, the average price per ounce of gold for the fourth quarter of 2017 averaged $1,621 per ounce compared to $1,601 per ounce in the third quarter of 2017. The average price in 2017 was $1,632 per ounce compared to $1,657 per ounce in 2016.

Currency

The Company is subject to currency fluctuations as its revenues are mainly in U.S. dollars and its expenses (other than those related to streams and offtakes agreements) are mainly denominated in Canadian dollars. The Company can hold cash balances in U.S. dollars to diversify its resources, which can create volatility in gains and losses on foreign exchange on the consolidated statement of income (loss) for subsidiaries having the Canadian dollar as their functional currency. A weaker Canadian dollar increases the revenues presented in Canadian dollars on the consolidated statement of income (loss) as the sales of gold and silver are traded in U.S. dollars. To compensate for the risk that a weaker Canadian dollar would have on the Company’s purchasing power of U.S. dollar denominated investments, the Company holds a certain percentage of its cash in U.S. dollars.

After recovering from its December 2016 decline, the Canadian dollar performed relatively well against the U.S. dollar in the first months of 2017, before falling again in April and early May to a low of 1.3743 against the U.S. dollar. From May to the end of September, the Canadian currency recovered strongly against the U.S. dollar and reached a two-year high of 1.2128 against the U.S. dollar, supported by the beginning of monetary tightening in Canada and stronger than expected economic data for the first half of the year. The dollar traded between a range of 1.2128 and 1.3743 and closed at 1.2545 for an average of 1.2986 in 2017 compared to 1.3248 in 2016.

In July and September, 2017, the Bank of Canada increased the overnight rate target by 0.25% to 1.00%. The Federal Reserve raised the rate by 0.25% in March, June and December to 1.50%.

The exchange rate for the U.S./Canadian dollar is outlined below:

	High	Low	Average	Close
2017	1.3743	1.2128	1.2986	1.2545
2016	1.4589	1.2544	1.3248	1.3427
2015	1.3990	1.1728	1.2787	1.3840
2014	1.1643	1.0614	1.1045	1.1601
2013	1.0697	0.9839	1.0299	1.0636

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Selected Financial Information⁽¹⁾
(in thousands of dollars, except figures for ounces and amounts per ounce and per share)

	2017		2016	2015
	$		$	$

Revenues	213,216		62,677	45,415
Gross profit	59,506		51,243	44,827
Impairment charge on royalty, stream and other interests	(89,000	)	-	-
Operating income (loss)	(70,435	)	29,089	18,224
Net earnings (loss)⁽²⁾	(42,501	)	42,113	28,749
Basic net earnings (loss) per share⁽²⁾	(0.33	)	0.40	0.33
Diluted net earnings (loss) per share⁽²⁾	(0.33	)	0.40	0.32

Total assets	2,516,343		1,416,304	1,081,433
Total long-term debt	464,308		45,780	-

Average selling price of gold (per ounce sold)
In C$⁽³⁾	1,627		1,643	1,486
In US$	1,277		1,245	1,153

Operating cash flows	48,761		53,444	28,904

Weighted average shares outstanding (in thousands)
Basic	127,939		104,671	87,856
Diluted⁽⁴⁾	127,939		104,824	88,938

	(1)	Unless otherwise noted, financial information is in Canadian dollars and prepared in accordance with IFRS.
	(2)	Attributable to Osisko’s shareholders.
	(3)	Using actual exchange rates at the date of the transactions.
	(4)	As a result of the net loss for the year ended December 31, 2017, all potentially dilutive common shares are deemed to be antidilutive and thus diluted net loss per share is equal to the basic net loss per share.

Overview of Financial Results

Financial Summary – 2017

	•	Record revenues from royalties and streams of $93.8 million ($213.2 million including offtakes) compared to $62.7 million in 2016;

	•	Gross profit of $59.5 million compared to $51.2 million in 2016;

	•	Impairment charge of $89.0 million on the Éléonore NSR royalty interest ($65.4 million, net of income taxes);

	•	Operating loss of $70.4 million compared to an operating income of $29.1 million in 2016;

	•	Net loss attributable to Osisko’s shareholders of $42.5 million or $0.33 per basic and diluted share, compared to net earnings of $42.1 million or $0.40 per basic and diluted share in 2016;

	•	Adjusted earnings¹of $22.7 million or $0.18 per basic share¹compared to $34.2 million or $0.33 per basic share in 2016;

	•	Net cash flows provided by operating activities of $48.7 million compared to $53.4 million in 2016.

Revenues increased in 2017 mainly as a result of the acquisition of Orion’s Portfolio.

Gross profit reached $59.5 million in 2017 compared to $51.2 million in 2016 as a result of higher revenues. Cost of sales increased from $0.1 million in 2016 to $125.6 million mainly as a result of the offtake agreements acquired through the acquisition of Orion’s Portfolio. Under the offtake agreements, the metal is acquired from the producers at the lowest market price over a certain period of time (quotational period), and is subsequently sold by Osisko, resulting in a net profit that will usually vary between 0% and 5% of the sales proceeds.

________________________________

1	“Adjusted earnings” and “Adjusted earnings per basic share” are non-IFRS financial performance measures which have no standard definition under IFRS. Refer to the non-IFRS measures provided under the Non-IFRS Financial Performance Measures section of this Management and Discussion Analysis.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

In 2017, the Company incurred an operating loss as a result of an impairment charge of $89.0 million on the Éléonore royalty interest. Excluding the impairment charge, operating income would have amounted to $18.6 million compared to $29.1 million in 2016. The decrease in operating income in 2017, in addition to the impairment charge, is mainly the result of the transaction costs related to the acquisition of Orion’s Portfolio, which amounted to $8.9 million and higher general and administrative expenses (“G&A”), partially offset by higher gross profit. The increase in G&A expenses is mainly due to higher salary expenses as a result of higher bonuses payable to management following the acquisition of Orion’s Portfolio, higher share-based compensation expenses related to the deferred and restricted share units (higher number of units outstanding and increase in the objectives achievements related to 2014 RSUs which vested and were paid in September 2017) and higher general costs due to the increased activities of the Company in 2017. The year 2017 is the first year where 3 years of stock options, RSUs and DSUs are outstanding. Stock options and RSUs vest over a three-year period. Business development expenses increased by $10.4 million mainly as a result of the transaction costs related to the acquisition of Orion’s Portfolio, higher bonuses payable to management, higher share-based compensation expenses related to the deferred and restricted share units and higher general costs due to increased activities in 2017.

The net loss attributable to Osisko’s shareholders in 2017 is mainly the result of the impairment charge of $89.0 million, a lower operating income, a higher foreign exchange loss, higher finance costs, the absence of dividend income following the sale of the shares of LIORC in 2016 and early 2017, partially offset by higher interest income.

Adjusted earnings decreased to $22.7 million compared to $34.2 million in 2016 as a result of higher G&A, lower dividend income and higher finance costs, partially offset by higher gross profit.

Net cash flows provided by operating activities decreased in 2017 as a result of the fees related to the acquisition of Orion’s Portfolio and the settlement of restricted share units for $5.5 million, partially offset by higher gross profit.

Consolidated Statements of Income (Loss)

The following table presents summarized consolidated statements of income (loss) for the years ended December 31, 2017 and 2016 (in thousands of dollars, except amounts per share):

		2017		2016
		$		$

Revenues	(a)	213,216		62,677

Cost of sales	(b)	(125,645	)	(143	)
Depletion of royalty, stream and offtake interests	(c)	(28,065	)	(11,291	)
Gross profit	(d)	59,506		51,243

Other operating expenses
General and administrative	(e)	(26,176	)	(16,715	)
Business development	(f)	(18,706	)	(8,282	)
Impairment of royalty, stream and other interests	(g)	(89,000	)	-
Exploration and evaluation, net of tax credits	(h)	(204	)	1,240
Other gains (expenses), net	(i)	20		(1,436	)
Cost recoveries from associates	(j)	4,125		3,039

Operating income (loss)		(70,435	)	29,089

Other revenues, net	(k)	4,500		22,489

Earnings (loss) before income taxes		(65,935	)	51,578

Income tax recovery (expense)	(l)	23,147		(9,724	)

Net earnings (loss)		(42,788	)	41,854

Net earnings (loss) attributable to:
Osisko’s shareholders		(42,501	)	42,113
Non-controlling interests		(287	)	(259	)

Net earnings (loss) per share attributable to Osisko’s shareholders
Basic		(0.33	)	0.40
Diluted		(0.33	)	0.40

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

(a)

Revenues are comprised of the following:

	Years ended December 31,
	2017				2016
	Average				Average
	selling price	Ounces	Total		selling price	Ounces	Total
	per ounce /	/ Carats	revenues		per ounce	/ Carats	revenues
	carats ($)	sold	($000’s	)	($)	sold	($000’s	)

Gold sold	1,627	111,501	181,390		1,643	37,402	61,444
Silver sold	22	887,760	19,216		23	32,836	747
Diamonds sold	106	71,150	7,560		-	-	-
Other (paid in cash)	-	-	5,050		-	-	486
			213,216				62,677

		The effective date of the acquisition of Orion’s Portfolio was June 1, 2017. However, revenues of royalties, streams and offtakes acquired from Orion are only included in revenues from July 31, 2017 onward, the acquisition date for accounting purposes.

	(b)	Cost of sales represents mainly the acquisition price of the metals and diamonds under the offtake and stream agreements, as well as minimal refining, insurance and transportation costs related to the metals received under royalty agreements. The significant increase in 2017 is mainly the result of the offtakes and streams acquired from Orion on July 31, 2017.

	(c)	The royalty, stream and other interests are depleted using the units-of-production method over the estimated life of the properties or the life of the agreement. The significant increase in 2017 is mainly the result of the offtakes and streams acquired from Orion on July 31, 2017.

	(d)	The breakdown of gross profit per nature of interest is as follows (in $000’s):

	Years ended December 31,
	2017		2016
	$		$
Royalty interests
Revenues	74,041		62,677
Cost of sales	(286	)	(143	)
Depletion	(15,475	)	(11,291	)
	58,280		51,243

Stream interests
Revenues	19,751		-
Cost of sales	(7,385	)	-
Depletion	(11,283	)	-
	1,083		-

Offtake interests
Revenues	119,424		-
Cost of sales	(117,974	)	-
Depletion	(1,307	)	-
	143		-

Total – Gross profit	59,506		51,243

	(e)	In 2017, G&A expenses were $26.2 million compared to $16.7 million in 2016. The increase is mainly due to higher salary expenses as a result of higher bonuses payable to management following the acquisition of Orion’s Portfolio, higher share- based compensation expenses related to the deferred and restricted share units (higher number of units outstanding and increase in the objectives achievements related to the 2014 RSUs which vested and were paid in September 2017) and higher general costs due to increased activities in 2017.

		The increase in G&A expenses was partly offset by an increase in cost recoveries from associates.

	(f)	Business development expenses increased to $18.7 million in 2017 compared to $8.3 million in 2016. The increase is mainly the result of the transaction costs related to the acquisition of Orion’s Portfolio, which amounted to $8.9 million, higher salary expenses as a result of higher bonuses payable to management following the acquisition of Orion’s Portfolio, higher share- based compensation expenses related to the deferred and restricted share units (higher number of units outstanding and increase in the objectives achievements related to the 2014 RSUs which vested and were paid in September 2017) and higher general costs due to increased activities in 2017.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

	(g)	The operator of the Éléonore gold mine in Québec, Canada reviewed its guidance on long-term annual gold production to 400,000 ounces, which is significantly lower compared to the design capacity of 600,000 ounces. This was considered an indicator of impairment among other facts and circumstances and, accordingly, management performed an impairment assessment as at December 31, 2017. As a result, the Company recorded an impairment charge of $89.0 million ($65.4 million net of income taxes) on the Éléonore NSR royalty for the year ended December 31, 2017.

		The Éléonore NSR royalty was written down to its estimated recoverable amount of $300.0 million, which was determined by the fair value less cost of disposal using a discounted cash-flows approach. The main valuation inputs used were the cash flows expected to be generated by the sale of gold received from the Éléonore NSR royalty based on the long-term annual gold production of 400,000 ounces over the estimated life of the Éléonore mine, the long-term gold price of US$1,300 per ounce and a post-tax real discount rate of 4.2%.

	(h)	In 2016, the use of exploration tax credits of $2.2 million resulted in a net recovery of $1.2 million in exploration and evaluation. Excluding these exploration tax credits, expenses in exploration and evaluation amounted to $1.0 million in 2016 compared to $0.2 million in 2017. Through the farm-out agreement concluded with Osisko Mining in October 2016 and reduction of activities in Mexico, the Company’s exploration and evaluation expenses have been significantly reduced.

	(i)	In 2016, other expenses are comprised of a loss on disposal of an exploration and evaluation asset of $0.3 million (the Company disposed of an exploration property having a carrying value of $0.8 million in exchange for shares in a new associate having a fair value of $0.5 million), a write-off of property and equipment of $0.5 million and an impairment charge on exploration and evaluation assets of $0.7 million (the Company wrote-off a grassroots project in the James Bay area where it does not expect substantial expenses to be incurred in the future).

	(j)	Cost recoveries from associates represent costs incurred by Osisko for professional services rendered to associates as well as renting of office space. The number of service agreements and the level of services with associates have increased during 2016 and 2017, explaining the increase in cost recoveries in 2017.

	(k)	Other revenues, net, amounted to $4.5 million in 2017 and include a net gain on investments of $30.8 million (comprised of a net gain on dilution of investments in associates of $30.6 million) and interest revenues of $4.3 million, partially offset by a loss on foreign exchange of $16.1 million, a share of loss of associates of $6.1 million and finance costs of $8.4 million.

		Other revenues, net, of $22.5 million in 2016 includes a net gain on investments of $30.2 million (including a gain of $3.4 million on the disposal of NioGold Mining Corporation, an associate, acquired by Osisko Mining, another associate, a gain on dilution of investments of $12.0 million and a gain on acquisition of investments of $8.4 million), dividend income of $4.9 million and interest revenues of $3.3 million, partially offset by a loss on foreign exchange of $5.8 million, a share of loss of associates of $6.6 million and finance costs of $3.4 million.

	(l)	The effective income tax rate for the year 2017 is 35.1% compared to 19% in 2016. The statutory rate is 26.8% in 2017 and 26.9% in 2016. The elements that impacted the effective income taxes are the non-taxable (or deductible) part of capital gains (or losses) (50%), non-taxable dividend income, and non-deductible expenses. In 2017, an amount of $132,000 is related to cash taxes on royalties earned in foreign jurisdictions. In 2016, the income tax expense is only related to deferred income taxes.

Liquidity and Capital Resources

As at December 31, 2017, the Company’s cash and cash equivalents amounted to $333.7 million compared to $499.2 million as at December 31, 2016. Significant variations in the liquidity and capital resources in 2017 are explained below under the Cash Flows section.

The Company has a Facility of $350.0 million as at December 31, 2017, of which US$118.0 million ($148.0 million based on the the Bank of Canada daily exchange rate of December 31, 2017) was drawn on July 31, 2017 to fund the acquisition of Orion’s Portfolio. Refer to the Revolving Credit Facility section of this MD&A for further detail.

The Company also used US$182.8 million ($228.9 million based on the Bank of Canada daily exchange rate of July 31, 2017) from its cash and cash equivalents balance and the cash received from the private placement to Caisse and Fonds F.T.Q. to fund the balance of the cash portion of Orion’s Portfolio acquisition.

As previously discussed in this MD&A, Osisko closed a bought deal offering of convertible senior unsecured debentures for net proceeds of $288.5 million. Refer to the Bought Deal of Convertible Senior Unsecured Debentures section of this MD&A for further detail.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Cash Flows

The following table summarizes the cash flows (in thousands of dollars):

	Years ended December 31,
	2017		2016
	$		$
Cash flows
Operations	49,156		54,219
Working capital items	(440	)	(775	)
Operating activities	48,716		53,444
Investing activities	(877,515	)	(15,053	)
Financing activities	678,937		208,200
Effects of exchange rate changes on cash and cash equivalents	(15,682	)	(5,851	)
Increase (decrease) in cash and cash equivalents	(165,544	)	240,740
Cash and cash equivalents – beginning of year	499,249		258,509
Cash and cash equivalents – end of year	333,705		499,249

Operating Activities

Cash flows provided by operating activities in 2017 amounted respectively to $48.7 million compared to $53.4 million in 2016.

Net cash flows provided by operating activities decreased in 2017 as a result of the transaction costs related to the acquisition of Orion’s Portfolio ($8.9 million) and the settlement of restricted share units for $5.5 million, partially offset by higher gross profit.

Investing Activities

Cash flows used in investing activities amounted to $877.5 million in 2017 compared to $15.1 million in 2016. In 2017, Osisko paid $621.4 million, net of cash acquired of $8.7 million, for the acquisition of Orion’s Portfolio, settled foreign exchange forward contracts which generated a cash loss of $21.1 million, invested $226.8 million in marketable securities, including $52.1 million for additional shares of Barkerville (an associate), $40.1 million for additional shares of Osisko Mining (an associate), $34.7 million for additional shares of Dalradian (an associate) and $4.0 million for additional shares of Falco (an associate). Osisko also invested $80.1 million in royalty and stream interests, including $42.7 million to acquire a silver stream on the Gibraltar mine (including transaction costs and net of the fair value of the warrants received as part of the transaction) and $12.5 million to acquire a 0.75% NSR royalty on the Cariboo project held by Barkerville, and $1.1 million on exploration and evaluation assets, net of tax credits. Proceeds on the sale of investments generated $71.1 million and short-term investments were reduced by $2.0 million.

The Company had entered into foreign exchange forward contracts to buy US$204.0 million at a weighted average rate of $1.3480 US$/CA$ and had designated these contracts as cash flow hedges related to the acquisition of Orion’s Portfolio, as the cash portion of the purchase price was fixed at a rate of 1.3485 US$/CA$. These contracts were settled on July 31, 2017 (acquisition date of Orion’s Portfolio) and generated a cash loss of $21.1 million.

In 2016, the Company invested $82.4 million in marketable securities, $55.3 million in royalty interests, including $23.0 million for a royalty on the Cariboo gold project held by Barkerville (an associate), $10.0 million for a royalty on the Hermosa project held by Arizona Mining and $10.0 million for a royalty or stream financing (to be negotiated) on the Horne 5 project held by Falco (an associate) and $8.3 million in exploration and evaluation assets (net of investment tax credits), mainly on the Coulon project and other projects in the James Bay territory. Osisko received proceeds of $129.2 million from the sale of investments, including $98.2 million from the sale of shares of LIORC, and $3.6 million from the sale of royalty interests in 2016.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Financing Activities

In 2017, cash flows provided by financing activities amounted to $678.9 million compared to $208.2 million in 2016. During the year 2017, Osisko completed an equity financing with Caisse and Fonds F.T.Q. for $200 million and $75 million in common shares of Osisko, respectively, as part of a concurrent private placement to fund a portion of the cash consideration and support the acquisition of Orion’s Portfolio. A total of 18,887,363 common shares were issued at a price of $14.56 per share. The financing was subject to a 7% capital commitment payment payable partially in shares (2% representing 385,457 common shares) and in cash (5% representing $13.8 million). Additional fees of $376,000 were incurred for the financing, of which $190,000 were paid in 2017.

On November 3, 2017, Osisko closed a bought deal offering of convertible senior unsecured debentures for net proceeds of $288.5 million. Refer to the Bought Deal of Convertible Senior Unsecured Debentures section of this MD&A for further detail.

Osisko also drew US$118 million ($147.3 million based on the Bank of Canada daily exchange rate of July 31, 2017) under its revolving credit facility, also to fund a portion of the acquisition price of Orion’s Portfolio. The Company paid $19.3 million in dividends to its shareholders and $1.8 million under the Normal Course Issuer Bid.

Investments of non-controlling interests in Mines Coulon Inc. increased liquidities by $1.3 million and the exercise of share options and the employee share purchase plan that generated $3.0 million.

In 2016, cash flows provided by financing activities reached $208.2 million and included a financing with Ressources Québec for a $50.0 million convertible debenture and a bought deal public offering of 11,431,000 units of Osisko for gross proceeds of $172.6 million, both completed during the first quarter. Investments of non-controlling interests also increased liquidities by $4.5 million and the exercise of share options and the shares purchase plan generated $5.3 million. The Company paid $8.9 million in share issue costs and financing fees and $15.3 million in dividends to its shareholders during the same period.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

The following table summarizes the financings completed since the creation of Osisko Gold Royalties Ltd:

	No of Shares/	Price	Gross		Net Cash
	Units	($)	Proceeds		Proceeds
			($000’s	)	($000’s	)


2017
Bought deal – convertible debentures⁽ⁱ⁾	n/a	n/a	300,000		288,476
Private placement⁽ⁱⁱ⁾	19,272,820	14.27	275,000		261,060
Revolving credit facility⁽ⁱⁱ⁾	n/a	n/a	147,323		147,323
Exercise of share options	43,970	14.21	625		625
Exercise of replacement share options^(vi)	190,471	11.28	2,148		2,148
Employee share purchase plan	15,426	15.04	233		233
Total	19,522,687		725,329		699,865
2016
Convertible debenture⁽ⁱⁱⁱ⁾	n/a	n/a	50,000		49,225
Issuance of Units (bought-deal financing)^(iv)	11,431,000	15.10	172,608		164,543
Exercise of share options	12,335	15.22	188		188
Exercise of replacement share options^(vi)	505,756	9.50	4,806		4,806
Employee share purchase plan	21,762	15.27	332		332
Total	11,970,853		227,934		219,094

2015
Issuance of special warrants^(v)	10,960,000	18.25	200,020		189,158
Exercise of replacement share options^(vi)	750,837	6.51	4,887		4,887
Total	11,710,837		204,907		194,045

2014 – from June 16
Private placements^(vii)	2,794,411	15.03	42,000		39,173
Total	2,794,411		42,000		39,173

Cumulative cash proceeds			1,200,170		1,152,177

	(i)	On November 3, 2017, Osisko closed a bought deal offering of convertible senior unsecured debentures for net proceeds of $288.4 million. The debentures bear interest at a rate of 4.0% per annum, payable semi-annually on June 30 and December 31 of each year, commencing on June 30, 2018. The Debentures are convertible at the holder’s option into Osisko common shares at a conversion price of $22.89 per share. The Debentures will mature on December 31, 2022 and may be redeemed by Osisko, in certain circumstances, on or after December 31, 2020.

	(ii)	On July 31, 2017, Osisko closed a private placement with CDP and Fonds F.T.Q. to fund a portion of the acquisition price of Orion’s Portfolio. A total of 18,887,363 common shares were issued at a price of $14.56 per common share plus a 7% capital commitment payment payable partially in shares (2% representing 385,457 common shares) and in cash (5% representing $13.8 million). Additionally, Osisko drew US$118 million ($147.3 million based on the Bank of Canada daily exchange rate of July 31, 2017) under its revolving credit facility with the National Bank of Canada and Bank of Montreal.

	(iii)	On February 12, 2016, Osisko closed a convertible debenture with Investissement Québec, maturing in February 2021 and bearing interest at an annual rate of 4% payable quarterly. The debenture is convertible at the holder option into common shares of the Company at a price of $19.08 at any time during the term.

	(iv)	On February 26, 2016, Osisko closed a bought deal public offering of 11,431,000 Units, including the full exercise of the over- allotment option by the underwriters, at a price of $15.10 per Unit for aggregate gross proceeds of $172.6 million (net proceeds of $164.5 million).

	(v)	On March 5, 2015, the special warrants were converted into 10,960,000 common shares and 5,480,000 warrants exercisable at a price of $36.50 for a period of 7 years.

	(vi)	On the date of acquisition of Virginia, the Virginia share options were converted into Osisko replacement share options using the same exchange rate than for the common shares (0.92 replacement share option for each Virginia share option).

	(vii)	On November 17, 2014, Osisko closed two private placements whereby Osisko issued a total of 2,794,411 common shares to Caisse and Fonds F.T.Q. at a price of $15.03 per common share for total gross proceeds of $42.0 million.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Quarterly Information

The selected quarterly financial information⁽¹⁾ for the past eight financial quarters is outlined below: (in thousands of dollars, except for amounts per share)

	2017					2016
	Q4		Q3	Q2	Q1	Q4	Q3	Q2	Q1

Cash and cash equivalents	333,705		108,902	348,642	423,567	499,249	392,717	424,491	439,009
Short-term investments	-		1,447	1,547	2,547	2,100	100	100	100
Working capital	324,101		113,689	329,927	419,325	494,882	389,074	421,443	438,074
Total assets	2,516,343		2,320,930	1,438,511	1,421,569	1,416,304	1,399,012	1,354,799	1,312,929
Total long-term debt	464,308		193,738	46,236	46,005	45,780	45,552	45,328	45,110
Equity	1,894,405		1,931,759	1,218,302	1,218,717	1,214,304	1,200,734	1,162,225	1,127,542
Revenues	109,552		68,179	18,359	17,126	13,709	17,570	15,792	15,606
Net cash flows from operating activities	21,523		1,094	14,082	12,013	12,782	14,978	15,864	9,820
Impairment of Éléonore royalty, net of income taxes	(65,415	)	-	-	-	-	-	-	-
Net earnings (loss) attributable to Osisko’s shareholders	(64,348	)	6,728	11,043	4,076	8,679	17,757	15,737	(60	)
Basic net earnings (loss) per share	(0.41	)	0.05	0.10	0.04	0.08	0.17	0.15	-
Weighted average shares outstanding (000’s)
- Basic	157,256		140,605	106,656	106,543	106,612	106,564	106,374	99,093
- Diluted	157,256		140,837	106,771	106,628	106,675	106,757	106,570	99,093
Share price – TSX - closing⁽²⁾	14.52		16.10	16.85	14.78	13.09	14.36	16.89	13.87
Share price – NYSE – closing⁽³⁾	11.56		12.91	12.22	11.10	9.72	10.94	n/a	n/a
Warrant price – TSX - closing⁽⁴⁾
OR.WT	2.40		2.80	2.75	2.80	2.75	3.42	3.08	1.95
OR.WT.A	1.41		2.45	2.65	2.20	2.25	2.70	3.75	2.00
Price of gold (average US$)	1,275		1,278	1,257	1,219	1,222	1,335	1,260	1,183
Closing exchange rate⁽⁵⁾ (US$/Can$)	1.2713		1.2480	1.3449	1.3322	1.3427	1.3117	1.3009	1.2971

(1)	Unless otherwise noted, financial information in Canadian dollars and prepared in accordance with IFRS.
(2)	Osisko common shares began officially trading on the TSX on June 16, 2014.
(3)	In US$. Osisko common shares began officially trading on the NYSE on July 6, 2016. US$13.35 was the opening price on July 6, 2016.
(4)	Osisko warrants began trading on March 5, 2015 and February 26, 2016.
(5)	Bank of Canada Daily Rate in 2017 (Bank of Canada Noon Rate in 2016 and 2015).

During the first quarter of 2016, the Company closed a $172.6 million equity financing and issued a $50.0 million convertible debenture. During the third quarter of 2017, Osisko acquired Orion’s Portfolio for a total acquisition price of $1.1 billion, including $621.4 million paid in cash, net of cash acquired, of which $228.9 million was paid from Osisko’s current cash and cash equivalents. The balance of the cash portion was paid through an equity financing and the credit facility. In the fourth quarter of 2017, the Company issued convertible senior unsecured debentures for net proceeds of $288.5 million.

During the fourth quarter of 2017, the Company recorded an impairment charge of $89.0 million ($65.4 million, net of income taxes) on the Éléonore NSR royalty.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Fourth Quarter Results

	•	Revenues from royalties and streams of $32.1 million ($109.6 million including offtakes) compared to $13.7 million in the fourth quarter of 2016;

	•	Gross profit of $15.7 million compared to $10.9 million in the fourth quarter of 2016;

	•	Impairment charge of $89.0 million on the Éléonore NSR royalty interest ($65.4 million, net of income taxes);

	•	Operating loss of $83.5 million compared to operating income of $6.8 million in the fourth quarter of 2016

	•	Net loss attributable to Osisko’s shareholders of $64.3 million or $0.41 per basic and diluted share, compared to net earnings of $8.7 million or $0.08 per basic and diluted share in the fourth quarter of 2016;

	•	Adjusted earnings¹of $1.0 million or $0.01 per basic share¹compared to $6.9 million or $0.07 per basic share in the fourth quarter of 2016;

	•	Net cash flows provided by operating activities of $21.5 million compared to $12.8 million in the fourth quarter of 2016.

Revenues increased in the fourth quarter of 2017 mainly as a result of the acquisition of Orion’s Portfolio.

Gross profit reached $15.7 million in the fourth quarter of 2017 compared to $10.9 million in the fourth quarter of 2016 as a result of higher revenues. Cost of sales increased from $22,000 in the fourth quarter of 2016 to $81.1 million in the fourth quarter of 2017 mainly as a result of the offtake agreements acquired through the acquisition of Orion’s Portfolio. Under the offtake agreements, the metal is acquired from the producers at the lowest market price over a certain period of time (quotational period), and is subsequently sold by Osisko, resulting in a net profit that will usually vary between 0% and 5% of the sales proceeds.

During the fourth quarter of 2017, the Company incurred an operating loss of $83.5 million as a result of an impairment charge of $89.0 million on the Éléonore NSR royalty interest, compared to $6.8 million in the corresponding period of 2016. Excluding the impairment charge, the operating income would have amounted to $5.5 million. The decrease in operating income in 2017, in addition to the impairment charge, is mainly the result of higher G&A and business development expenses, partially offset by higher gross profit. The increases in G&A expenses and business development expense are mainly due to higher salary expenses as a result of higher bonuses payable to management following the acquisition of Orion’s Portfolio, higher share-based compensation expenses related to the deferred and restricted share units (higher number of units outstanding) and higher general costs due to the increased activities of the Company in 2017. The year 2017 is the first year where 3 years of stock options, RSUs and DSUs are outstanding. Stock options and RSUs vest over a three-year period.

The decrease in net earnings attributable to Osisko’s shareholders in 2017 is mainly the result of the impairment charge of $65.4 million, net of income taxes, a lower operating income, a foreign exchange loss (compared to a gain in the fourth quarter of 2016) and higher finance costs.

Adjusted earnings decreased to $1.0 million compared to $6.9 million in the fourth quarter of 2016 as a result of higher G&A and business development expenses, higher finance costs and a $2.2 million tax credit on exploration and evaluation expenses in the fourth quarter of 2016, partially offset by higher gross profit.

Net cash flows provided by operating activities increased in 2017 as a result of increased gross profit and a positive impact in the fourth quarter of 2017 from the non-cash working capital items.

________________________________

1	“Adjusted earnings” and “Adjusted earnings per basic share” are non-IFRS financial performance measures which have no standard definition under IFRS. Refer to the non-IFRS measures provided under the Non-IFRS Financial Performance Measures section of this Management and Discussion Analysis.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

The financial results for the fourth quarter are as follows (in thousands of dollars, except amounts per share):

		Three months ended December 31,
		2017		2016
		$		$

Revenues	(a)	109,552		13,709

Cost of sales	(b)	(81,058	)	(22	)
Depletion of royalty and offtake interests	(c)	(12,747	)	(2,828	)
Gross profit	(d)	15,747		10,859

Other operating expenses
General and administrative	(e)	(7,342	)	(4,105	)
Business development	(f)	(4,009	)	(1,863	)
Impairment of royalty, stream and other interests	(g)	(89,000	)	-
Exploration and evaluation	(h)	(63	)	2,176
Other expenses, net	(i)	-		(1,124	)
Cost recoveries from associates	(j)	1,215		873

Operating income (loss)		(83,452	)	6,816

Other revenues (expenses), net	(k)	(8,351	)	3,405

Earnings (loss) before income taxes		(91,803	)	10,221

Income tax recovery (expense)	(l)	27,450		(1,568	)

Net earnings (loss)		(64,353	)	8,653

Net earnings (loss) attributable to:
Osisko’s shareholders		(64,348	)	8,679
Non-controlling interests		(5	)	(26	)

Net earnings (loss) per share attributable to Osisko’s shareholders
Basic		(0.41	)	0.08
Diluted		(0.41	)	0.08

(a)

Revenues are comprised of the following:

	Three months ended December 31,
	2017				2016
	Average				Average
	selling price	Ounces	Total		selling price	Ounces	Total
	per ounce /	/ Carats	revenues		per ounce	/ Carats	revenues
	carats ($)	sold	($000’s	)	($)	sold	($000’s	)

Gold sold	1,623	56,708	92,043		1,549	8,605	13,328
Silver sold	21	483,192	10,411		21	8,353	179
Diamonds sold	106	43,550	4,603		-	-	-
Other (paid in cash)	-	-	2,495		-	-	202
			109,552				13,709

	(b)	Cost of sales represents mainly the acquisition price of the metals and diamonds under the offtake and stream agreements, as well as minimal refining, insurance and transportation costs related to the metals received under royalty agreements. The significant increase in 2017 is mainly the result of the offtakes and streams acquired from Orion on July 31, 2017.

	(c)	The royalty, stream and other interests are depleted using the units-of-production method over the estimated life of the properties or the life of the agreement. The significant increase in 2017 is mainly the result of the offtakes and streams acquired from Orion on July 31, 2017.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

(d)

The breakdown of gross profit per nature of interest is as follows (in $000’s):

	Three months ended
			December 31,
	2017		2016
	$		$
Royalty interests
Revenues	21,359		13,709
Cost of sales	(130	)	(22	)
Depletion	(4,305	)	(2,828	)
	16,924		10,859

Stream interests
Revenues	10,855		-
Cost of sales	(4,378	)	-
Depletion	(7,452	)	-
	(975	)	-

Offtake interests
Revenues	77,338		-
Cost of sales	(76,550	)	-
Depletion	(990	)	-
	(202	)	-

Total – Gross profit	15,747		10,859

	(e)	During the fourth quarter of 2017, G&A expenses were $7.3 million compared to $4.1 million in the fourth quarter of 2016. The increase is mainly due to higher salary expenses as a result of higher bonuses payable to management following the acquisition of Orion’s Portfolio, higher share-based compensation expenses related to the deferred and restricted share units and higher general costs due to increased activities in 2017.

		The increase in G&A expenses was partly offset by an increase in cost recoveries from associates.

	(f)	Business development expenses increased to $4.0 million in the fourth quarter of 2017 compared to $1.9 million in the fourth quarter of 2016. The increase is mainly due to higher salary expenses as a result of higher bonuses payable to management following the acquisition of Orion’s Portfolio, higher share-based compensation expenses related to the deferred and restricted share units and higher general costs due to increased activities in 2017.

	(g)	The operator of the Éléonore gold mine in Québec, Canada reviewed its guidance on long-term annual gold production to 400,000 ounces, which is significantly lower compared to the design capacity of 600,000 ounces. This was considered an indicator of impairment among other facts and circumstances and, accordingly, management performed an impairment assessment as at December 31, 2017. As a result, the Company recorded an impairment charge of $89.0 million ($65.4 million net of income taxes) on the Éléonore NSR royalty for the three months ended December 31, 2017.

		The Éléonore NSR royalty was written down to its estimated recoverable amount of $300.0 million, which was determined by the fair value less cost of disposal using a discounted cash-flows approach. The main valuation inputs used were the cash flows expected to be generated by the sale of gold received from the Éléonore NSR royalty based on the long-term annual gold production of 400,000 ounces over the estimated life of the Éléonore mine, the long-term gold price of US$1,300 per ounce and a post-tax real discount rate of 4.2%.

	(h)	In the fourth quarter of 2016, the use of exploration tax credits of $2.2 million resulted in a net recovery of $2.2 million in exploration and evaluation. Excluding these exploration tax credits, expenses in exploration and evaluation amounted to $47,000 in the fourth quarter of 2016 compared to $63,000 in the fourth quarter of 2017.

	(i)	In the fourth quarter of 2016, other expenses are comprised of a write-off of property and equipment of $0.5 million and an impairment charge on exploration and evaluation assets of $0.7 million (the Company wrote-off a grassroots project in the James Bay area where it does not expect substantial expenses to be incurred in the future).

	(j)	Cost recoveries from associates represent costs incurred by Osisko for professional services rendered to associates as well as renting of office space. The number of service agreements and the level of services with associates have increased during 2016 and 2017, explaining the increase in cost recoveries in 2017.

	(k)	Other expenses, net, amounted to $8.4 million in the fourth quarter of 2017 and include finance costs of $4.8 million, a share of loss of associates of $3.5 million and a loss on foreign exchange of $0.6 million, partially offset by interest income of $1.1 million and finance costs of $1.6 million.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

		Other revenues, net, of $3.4 million in the fourth quarter of 2016 includes a net gain on investments of $0.7 million, dividend income of $0.2 million, interest revenues of $1.0 million and a foreign exchange gain of $5.3 million, partially offset by a share of loss of associates of $2.9 million and finance costs of $0.9 million.

	(l)	The effective income tax rate for the fourth quarter of 2017 is 29.9% compared to 15% in the fourth quarter of 2016. The elements that impacted the effective income taxes are the non-taxable (or deductible) part of capital gains (or losses) (50%), non-taxable dividend income, and non-deductible expenses. In the fourth quarter of 2017, an amount of $132,000 is related to cash taxes on royalties earned in foreign jurisdictions. In the fourth quarter of 2016, the income tax expense is only related to deferred income taxes.

Outlook

Osisko’s 2018 outlook on royalty, stream and precious metal offtake interests is based on publicly available forecasts, in particular the forecasts for the Canadian Malartic mine published by Yamana and Agnico Eagle, for the Éléonore mine published by Goldcorp, for the Renard mine published by Stornoway, for the Brucejack mine published by Pretium, and for the Island Gold mine published by Alamos. When publicly available forecasts on properties are not available, Osisko obtains internal forecasts from the producers, which is the case for the Sasa mine and the Mantos Blancos mine, or uses management’s best estimate.

Attributable gold equivalent ounces for 2018 are estimated between 77,500 and 82,500. For the 2018 guidance, silver and cash royalties have been converted to GEOs using commodity prices of US$1,300 per ounce of gold, US$18 per ounce of silver and US$110 per carat for diamonds from the Renard mine and an exchange rate (US$/C$) of 1.25.

Related Party Transactions

In 2017, an amount of $4,125,000 ($4,750,000 in 2016, including $1,711,000 for professional services related to capitalized exploration and evaluation activities) was invoiced by Osisko to associates for recoveries of costs related to professional services and rental of offices. An amount of $1,245,000 (including sales taxes) is receivable from associates and included in accounts receivable as at December 31, 2017 ($720,000 as at December 31, 2016).

In 2017, an amount of $395,000 ($231,000 in 2016) was invoiced to Osisko by an associate for professional services and rental of offices, including $355,000 ($227,000 in 2016) related to capitalized exploration and evaluation activities.

In 2017, interest revenues of $748,000 ($418,000 in 2016) were accounted for with regards to a $10.0 million financing completed in May 2016 with Falco, an associate of Osisko. As at December 31, 2017, interests of $1,166,000 ($418,000 as at December 31, 2016) are receivable from Falco.

During the years ended December 31, 2017 and 2016, certain directors and officers of Osisko have participated in financings completed by certain associates. Each of these transactions were concluded under the same terms and conditions offered to the other participants.

Please refer to the sections Portfolio of Investments of this MD&A for other material related party transactions with associates.

Contractual Obligations and Commitments

The Company is committed to minimum amounts under long-term lease agreements for office space, which expire at the latest in 2020. As at December 31, 2017, minimum commitments remaining under these leases were approximately $2,322,000 over the following years:

		$
		(in thousands of dollars)

2018		1,154
2019		1,033
2020		135
		2,322

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

As at December 31, 2017, the payments related to the debt agreements are described below:

		As at December 31, 2017
		Amount
		payable			Estimated annual interest payable
		at maturity	Maturity		2018		2019		2020		2021		2022
	$			$		$		$		$		$

Conv. debenture (2016)		50,000	February 12, 2021		2,000		2,000		2,000		236		-
Conv. debentures (2017)		300,000	December 31, 2022		13,900		12,000		12,000		12,000		12,000
Revolving credit facility⁽ⁱ⁾		148,031	November 14, 2021		4,380		4,380		4,380		3,830		-

		498,031			20,280		18,380		18,380		16,066		12,000

(i)

US$118.0 million. The maturity date can be extended by one year on each of the first two anniversary dates. The interest payable is based on the actual interest rate and exchange rate as at December 31, 2017.

	Attributable Payable Production			Per Ounce/Carat
	to be Purchased (ounces or %)			Cash Payment (US$)			Term of	Date of Contract
Interest	Gold	Silver	Diamond	Gold	Silver	Diamond	Agreement

Amulsar stream ^(1),(7)	142,454	694,000		$400	$4		40 years	Nov 25, 2015

Back Forty stream⁽⁷⁾	18.5% ⁽⁷⁾	75%		30% spot price (max $600)	$4		Life of mine	Mar 31, 2015

Brucejack offtake⁽⁷⁾	50%			Based on quotational period			Until delivery of 7,067,000 ounces Au	Sept. 21, 2015

Brucejack stream^(2), ⁽⁷⁾	4%	4%		$400	$4		Until delivery of 7,067,000 ounces Au	Sept. 21, 2015

Matilda offtake ⁽⁷⁾	55%			Based on quotational period			Until delivery of 300,000 ounces Au	May 18, 2015

Mantos stream^(3), ⁽⁷⁾		100%			25% spot		Life of mine	Sept 11, 2015

Renard stream^(4), ⁽⁷⁾			9.6%			$50	40 years	Jul 8, 2014

Sasa stream^(5),⁽⁷⁾		100%			$5		40 years	Nov 3, 2015

Gibraltar stream⁽⁶⁾		100%			$2.75		Life of mine	March 3, 2017

	(1)	Stream of 4.22% of gold and 62.5% of silver production up to the production maximum. Subject to multiple buyback options: 50% for US$31.3 million and US$34.4 million on 2^ndand 3^rdanniversary of production start date, respectively, which is currently expected to be in the second half of 2018. 1% inflation price escalation after 2^ndanniversary.
	(2)	Stream subject to multiple buyback/buydown options: December 31, 2018 buyback for US$119 million or buydown for US$75 million + 1.5% ongoing stream; December 31, 2019 buyback for US$136 million or buydown for US$75 million + 2% ongoing stream. If buyback/buydown not exercised by December 31, 2019, US$10 million make-whole payment + 4% ongoing stream.
	(3)	The stream percentage shall be payable on 100% of silver until 19,300,000 ounces have been delivered, after which the stream percentage will be 30%.
	(4)	The stream term shall be automatically extended beyond the initial term for successive 10-year periods.
	(5)	The stream term shall be automatically extended beyond initial term for successive 10-year periods. 3% or consumer price index (CPI) per ounce price escalation after 2016.
	(6)	Under the silver stream, Osisko will make ongoing payments of US$2.75 per ounce of silver delivered. Osisko will receive from Taseko an amount equal to 100% of Gibco’s share of silver production until reaching the delivery to Osisko of 5.9 million ounces of silver, and 35% of Gibco’s share of silver production thereafter. Silver in respect of which a delivery is made after January 1, 2017, is subject to the stream.
	(7)	The silver stream was acquired through the acquisition of Orion’s Portfolio. The gold stream will be reduced to 9.25% after the delivery of 105,000 gold ounces.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Back Forty Gold Stream (Aquila Resources Inc.)

In November 2017, OBL acquired an additional gold stream on the Back Forty project where OBL will make staged upfront cash deposits to Aquila of up to US$55 million for the gold stream, and will make ongoing payments equal to 30% of the spot price of gold, to a maximum of US$600 per ounce. The gold stream applies to 18.5% of the refined gold from the project until 105,000 ounces of gold have been delivered, and to 9.25% of the refined gold for the remaining life-of-mine. The deposit will be paid in four installments, of which the first was made in November 2017 for US$7.5 million, as described in the Portfolio of Royalty, Stream and Offtake Interests section of this MD&A.

Off-balance Sheet Items

There are no off-balance sheet arrangements.

Outstanding Share Data

As of February 19, 2018, 157,832,805 common shares were issued and outstanding. A total of 3,534,413 share options and 11,195,500 warrants were outstanding to purchase common shares. A convertible debenture of $50.0 million with Ressources Québec is also outstanding, which entitles the holder to convert the debenture, at its option, into 2,620,545 common shares of the Company (conversion price of $19.08) at any time during the term of the debenture.

On November 3, 2017, Osisko closed a bought deal offering of convertible senior unsecured debentures of $300 million. The Debentures are convertible at the holder’s option into Osisko common shares at a conversion price of $22.89 per common share, representing a total of 13,106,160 common shares if all the debentures were converted.

Normal Course Issuer Bid

In October 2016, the TSX approved the Company’s notice of intention to make a normal course issuer bid (the “2016 NCIB Program”). Under the terms of the 2016 NCIB Program, Osisko could acquire up to 5,330,217 of its common shares from time to time in accordance with the normal course issuer bid procedures of the TSX. Repurchases under the 2016 NCIB Program were authorized until October 23, 2017. During the year ended December 31, 2016, the Company purchased for cancellation a total of 150,000 common shares under the NCIB Program for $1,823,000, which were paid in 2017.

In December 2017, Osisko renewed its normal course issuer bid (the “2017 NCIB Program”). Under the terms of the 2017 NCIB Program, Osisko may acquire up to 10,567,441 of its common shares from time to time in accordance with the normal course issuer bid procedures of the TSX.

Annual General Meeting

On May 4, 2017, Osisko held its Annual General Meeting where each of the 10 nominees listed in the Management Information Circular filed on April 10, 2017 with regulatory authorities were elected as directors of the Company. All other resolutions provided for in the Management Information Circular were duly passed, including the Amended and Restated Shareholder Rights Plan approved at 93.7% and the advisory resolution on executive compensation approved at 94.2%.

Board of Directors

On July 31, 2017, Mr. Oskar Lewnowski, Orion’s Chief Investment Officer, was nominated to Osisko’s board of directors. Mr. Lewnowski is the founder of Orion and has more than 20 years of experience in mine financing, metals trading, and mergers and acquisitions.

As part of the investment agreement between la Caisse and Osisko, la Caisse has the right to nominate a director to Osisko’s board of directors. On September 18, 2017, Mr. Pierre D. Chenard was appointed to the Board of Directors of Osisko. Since 2011, Mr. Chenard is the Vice President, Business Development and General Counsel, Aluminium at Rio Tinto Aluminum.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Subsequent Events to December 31, 2017

Dividends

On February 16, 2018, the Board of Directors declared a quarterly dividend of $0.05 per common share payable on April 16, 2018 to shareholders of record as of the close of business on March 30, 2018.

Risks and Uncertainties

The Company is a royalty, stream, and offtake interests holder and investor that operates in an industry that is dependent on a number of factors that include environmental, legal and political risks, the discovery of economically recoverable resources and the conversion of these mineral resources to mineral reserves and the ability of third-party partners to maintain an economic production. An investment in the Company’s common shares is subject to a number of risks and uncertainties. An investor should carefully consider the risks described in Osisko’s most recent Annual Information Form and the other information filed with the Canadian securities regulators and the SEC before investing in the Company's securities. If any of such described risks occur, or if others occur, the Company's business, operating results and financial condition could be seriously harmed and investors may lose a significant proportion of their investment.

There are important risks which management believes could impact the Company’s business. For information on risks and uncertainties, please also refer to the “Risk Factors” section of Osisko’s most recent Annual Information Form filed on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

Disclosure Controls and Procedures and Internal Control over Financial Reporting

Disclosure Controls and Procedures

The Chief Executive Officer (the “CEO”) and the Chief Financial Officer (the “CFO”) of the Company are responsible for establishing and maintaining the Company’s disclosure controls and procedures (“DCP”) including adherence to the Disclosure Policy adopted by the Company. The Disclosure Policy requires all staff to keep senior management fully apprised of all material information affecting the Company so that they may evaluate and discuss this information and determine the appropriateness and timing for public disclosure.

The Company maintains DCP designed to ensure that information required to be disclosed in reports filed under applicable Canadian securities laws and the U.S. Securities Exchange Act of 1934, as amended, (the “Exchange Act”), is recorded, processed, summarized and reported within the appropriate time periods and that such information is accumulated and communicated to the Company’s management, including the CEO and CFO, to allow for timely decisions regarding required disclosure.

As required by applicable Canadian securities laws and Rule 13a-15(b) under the Exchange Act, the Company conducted an evaluation, under the supervision and with the participation of the management, including the CEO and CFO, of the effectiveness of the design and operation of the Company’s DCP as of December 31, 2017. Based on that evaluation, the CEO and CFO concluded that, as of December 31, 2017, the design and operation of the Company’s DCP provide reasonable assurance that they are effective.

In designing and evaluating DCP, the Company recognizes that any disclosure controls and procedures, no matter how well conceived or operated, can only provide reasonable, not absolute, assurance that the objectives of the control system are met, and management is required to exercise its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Internal Control over Financial Reporting

The Company’s management, including the CEO and the CFO, are responsible for establishing and maintaining adequate internal control over financial reporting (“ICFR”) for the Company to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. The fundamental issue is ensuring all transactions are properly authorized and identified and entered into a well-designed, robust and clearly understood accounting system on a timely basis to minimize risk of inaccuracy, failure to fairly reflect transactions, failure to fairly record transactions necessary to present financial statements in accordance with IFRS, unauthorized receipts and expenditures, or the inability to provide assurance that unauthorized acquisitions or dispositions of assets can be detected.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

The CEO and CFO have evaluated whether there were changes to the ICFR during the three months and the year ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, the ICFR. No such changes were identified through their evaluation.

The CEO and CFO have also evaluated the effectiveness of the Company’s ICFR as required by National Instrument 52-109 issued by the Canadian Securities Administrators and rules 13a-15 and 15d-15 under the Exchange Act based on the framework and criteria established in Internal Control – Integrated Framework (2013) as issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on this evaluation, the CEO and CFO concluded that the Company’s ICFR was effective as of December 31, 2017.

The Company’s ICFR may not prevent or detect all misstatements because of inherent limitations. Additionally, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because changes in conditions or deterioration in the degree of compliance with the Company’s policies and procedures.

The Company's independent registered public accounting firm, PricewaterhouseCoopers LLP, have audited the Company’s consolidated financial statements for the year ended December 31, 2017 and have issued an attestation report dated February 19, 2018 on the Company's ICFR based on the framework and criteria established in Internal Control – Integrated Framework (2013) as issued by COSO of the Treadway Commission.

Basis of Presentation of Consolidated Financial Statements

The consolidated financial statements have been prepared in accordance with the IFRS as issued by the IASB. The accounting policies, methods of computation and presentation applied in the consolidated financial statements are consistent with those of the previous financial year, except for the presentation of depletion of royalty, stream and other interests which is now presented before Gross profit instead of under Other operating expenses in the consolidated statements of income (loss). Certain comparative figures have been reclassified to conform to the presentation adopted in the current year for the depletion of royalty, stream and other interests.

The accounting policies, methods of computation and presentation applied to each of the 2017 quarterly unaudited condensed interim consolidated financial statements are consistent with those applied by the Company to the audited consolidated financial statements for the year ended December 31, 2017.

The significant accounting policies of Osisko are detailed in the notes to the audited consolidated financial statements for the year ended December 31, 2017 filed on SEDAR at www.sedar.com and EDGAR at www.sec.gov.

Critical Accounting Estimates and Judgements

Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The determination of estimates requires the exercise of judgement based on various assumptions and other factors such as historical experience and current and expected economic conditions. Actual results could differ from those estimates.

Critical judgements in applying the Company’s accounting policies are detailed in the audited consolidated financial statements for the year ended December 31, 2017 filed on SEDAR at www.sedar.com and EDGAR at www.sec.gov.

Financial Instruments

All financial instruments are required to be measured at fair value on initial recognition. The fair value is based on quoted market prices, unless the financial instruments are not traded in an active market. In this case, the fair value is determined by using valuation techniques like the Black-Scholes option pricing model or other valuation techniques. Measurement in subsequent periods depends on the classification of the financial instrument. A description of financial instruments and their fair value is included in the audited consolidated financial statements for the year ended December 31, 2017 filed on SEDAR at www.sedar.com and EDGAR at www.sec.gov.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Non-IFRS Financial Performance Measures

The Company has included certain non-IFRS measures including “Adjusted Earnings” and “Adjusted Earnings per basic 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.

To determine its method of calculation, the Company has reviewed, during the first quarter of 2016, similar adjusted earnings calculations by its peers. Following this review, the Company has decided to exclude the gains and losses on foreign exchange from its adjusted earnings and adjusted earnings per basic share as they do not reflect the operating performance of the Company.

Adjusted Earnings and Adjusted Earnings per Basic Share

“Adjusted earnings” is defined as “Net earnings (loss) attributable to Osisko’s shareholders” less certain items: “Foreign exchange gain (loss)”, “Impairment charges”, “Gains (losses) on disposal of evaluation and evaluation assets”, “Write-off of property and equipment”, “Unrealized gain (loss) on investments”, “Impairment on financial assets and investments in associates”, “Share of income (loss) of associates”, “Deferred income tax expense” and other unusual items such as transaction costs.

Adjusted earnings per basic share is obtained from the “adjusted earnings” divided by the “Weighted average number of common shares outstanding” for the period.

	Three months ended						Years ended
			December 31,				December 31,
	2017		2016		2017		2016

(in thousands of dollars, except per share amounts)	$		$		$		$

Net earnings (loss) attributable to Osisko’s shareholders	(64,348	)	8,679		(42,501	)	42,113

Adjustments:
Foreign exchange loss (gain)	763		(5,319	)	16,211		5,851
Unrealized loss (gain) on investments	507		(660	)	(30,829	)	(30,202	)
Share of loss of associates	3,482		2,893		6,114		6,623
Impairment of royalty, stream and other interests	89,000		-		89,000		-
Impairment of exploration and evaluation assets	-		668		-		668
Loss (gain) on disposal of exploration and evaluation assets	-		-		(20	)	312
Write-off of property and equipment	-		456		-		456
Deferred income tax expense	(28,453	)	216		(24,150	)	8,372
Transaction costs – acquisition of Orion’s Portfolio	-		-		8,870		-

Adjusted earnings	951		6,934		22,695		34,194

Weighted average number of common shares outstanding (000’s)	157,256		106,612		127,939		104,671

Adjusted earnings per basic share	0.01		0.07		0.18		0.33

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Forward-looking Statements

Certain statements contained in this MD&A may be deemed "forward-looking statements" within the meaning of applicable Canadian and U.S. securities laws. All statements in this MD&A, other than statements of historical fact, that address future events, developments or performance that Osisko expects to occur including management’s expectations regarding Osisko’s growth, results of operations, estimated future revenues, requirements for additional capital, mineral reserve and mineral resource estimates, production estimates, production costs and revenue estimates, future demand for and prices of commodities, business prospects and opportunities and outlook on gold and currency markets are forward-looking statements. In addition, statements (including data in tables) relating to mineral reserves and resources and gold equivalent ounces are forward-looking statements, as they involve implied assessment, based on certain estimates and assumptions, and no assurance can be given that the estimates will be realized. 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 variations (including negative variations), or that events or conditions "will", "would", "may", "could" or "should" occur including, without limitation, the performance of the assets of Osisko, the realization of the anticipated benefits deriving from Osisko’s investments and transactions and the estimate of gold equivalent ounces to be received in 2018. Although Osisko believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements involve known and unknown risks, uncertainties and other factors, most of which are beyond the control of Osisko, and are not guarantees of future performance and actual results may accordingly 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, without limitation: fluctuations in the prices of the commodities that drive royalties, streams, offtakes and investments held by Osisko; fluctuations in the value of the Canadian dollar relative to the U.S. dollar; regulatory changes by national and local governments, including permitting and licensing regimes and taxation policies; regulations and political or economic developments in any of the countries where properties in which Osisko holds a royalty, stream or other interest are located or through which they are held; risks related to the operators of the properties in which Osisko holds a royalty, stream or other interests; the unfavorable outcome of litigation relating to any of the properties in which Osisko holds a royalty, stream or other interests; business opportunities that become available to, or are pursued by Osisko; continued availability of capital and financing and general economic, market or business conditions; litigation; title, permit or license disputes related to interests on any of the properties in which Osisko holds a royalty, stream or other interest; development, permitting, infrastructure, operating or technical difficulties on any of the properties in which Osisko holds a royalty, stream or other interest; rate and timing of production differences from resource estimates or production forecasts by operators of properties in which Osisko holds a royalty, stream or other interest; risks and hazards associated with the business of exploring, development and mining on any of the properties in which Osisko holds a royalty, stream or other interest, including, but not limited to unusual or unexpected geological and metallurgical conditions, slope failures or cave-ins, flooding and other natural disasters or civil unrest or other uninsured risks. The forward-looking statements contained in this MD&A are based upon assumptions management believes to be reasonable, including, without limitation: the ongoing operation of the properties in which Osisko holds a royalty, stream or other interest by the owners or operators of such properties in a manner consistent with past practice; the accuracy of public statements and disclosures made by the owners or operators of such underlying properties; no material adverse change in the market price of the commodities that underlie the asset portfolio; no adverse development in respect of any significant property in which Osisko holds a royalty, stream or other interest; the accuracy of publicly disclosed expectations for the development of underlying properties that are not yet in production; and the absence of any other factors that could cause actions, events or results to differ from those anticipated, estimated or intended. For additional information on risks, uncertainties and assumptions, pleas e refer to the Annual Information Form of Osisko filed on SEDAR at www.sedar.com and EDGAR at www.sec.gov which also provides additional general assumptions in connection with these statements. Osisko cautions that the foregoing list of risk and uncertainties is not exhaustive. Investors and others should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. Osisko believes that the assumptions 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 MD&A should not be unduly relied upon. These statements speak only as of the date of this MD&A. Osisko undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by applicable law.

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Cautionary Note to U.S. Investors Regarding the Use of Mineral Reserve and Mineral Resource Estimates

Osisko is subject to the reporting requirements of the applicable Canadian securities laws, and as a result reports its mineral reserves according to Canadian standards. Canadian reporting requirements for disclosure of mineral properties are governed by National Instrument 43-101, Standards of Disclosure for Mineral Properties (“NI 43-101"). The definitions of NI 43-101 are adopted from those given by the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”). U.S. reporting requirements are governed by the SEC’s Industry Guide 7 (“Guide 7”). This MD&A includes estimates of mineral reserves and mineral resources reported in accordance with NI 43-101. These reporting standards have similar goals in terms of conveying an appropriate level of confidence in the disclosures being reported, but embody different approaches and definitions. For example, under Guide 7, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Consequently, the definitions of “Proven Mineral Reserves” and “Probable Mineral Reserves” under CIM standards differ in certain respects from the standards of the SEC. Osisko also reports estimates of “mineral resources” in accordance with NI 43-101. While the terms “Mineral Resource,” “Measured Mineral Resource,” “Indicated Mineral Resource” and “Inferred Mineral Resource” are recognized by NI 43-101, they are not defined terms under standards of the SEC and, generally, U.S. companies are not permitted to report estimates of mineral resources of any category in documents filed with the SEC. As such, certain information contained in this MD&A concerning descriptions of mineralization and estimates of mineral reserves and mineral resources under Canadian standards is not comparable to similar information made public by United States companies subject to the reporting and disclosure requirements of the SEC. Readers are cautioned not to assume that all or any part of Measured Mineral Resources or Indicated Mineral Resources will ever be converted into Mineral Reserves. Readers are also cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable. Further, an “Inferred Mineral Resource” has a great amount of uncertainty as to its existence and as to its economic and legal feasibility, and a reader cannot assume 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 other economic studies.

*(Signed) Sean Roosen*	*(Signed) Elif Lévesque*
Sean Roosen	Elif Lévesque
Chair and Chief Executive Officer	Vice President, Finance and Chief Financial Officer

February 19, 2018

Osisko Gold Royalties	Management’s Discussion and Analysis
2017 – Annual Report

Corporate Information

Corporate Office		Osisko Bermuda Limited
1100 av. des Canadiens-de-Montréal		Cumberland House
Suite 300		1 Victoria Street
Montréal, Québec, Canada H3B 2S2		Hamilton HM11
Tel.:	(514) 940-0670	Bermuda
Fax:	(514) 940-0669	Tel.:	(441) 824-7474
Email: info@osiskogr.com		Fax:	(441) 292-6140
Web site: www.osiskogr.com
		Michael Spencer, Managing Director

Directors	Officers
Sean Roosen, Chair and Chief Executive Officer	Sean Roosen, Chair and Chief Executive Officer
Joanne Ferstman, Lead Director	Bryan A. Coates, President
Françoise Bertrand	Luc Lessard, Senior Vice President, Technical Services
Victor H. Bradley	Elif Lévesque, Vice President, Finance and Chief
John Burzynski	Financial Officer
Pierre D. Chenard	Joseph de la Plante, Vice President, Corporate Development
Christopher C. Curfman	André Le Bel, Vice President, Legal Affairs and
André Gaumond	Corporate Secretary
Pierre Labbé	Vincent Metcalfe, Vice President, Investor Relations
Oskar Lewnowski	Frédéric Ruel, Vice President and Corporate Controller
Charles E. Page
Jacques Perron

Qualified Person (as defined by NI 43-101)

Guy Desharnais, Director of Mineral Resources Evaluation

Exchange listings

Toronto Stock Exchange

	- Common shares:	OR
	- Warrants:	OR.WT (Exercise price: $36.50 / Expiry date: March 5, 2022)
		OR.WT.A (Exercise price: $19.08 / Expiry date: February 25, 2019)
	- Convertible debentures:	OR.DB (Conversion price: $22.89 / Maturity date: December 31, 2022)

New York Stock Exchange

- Common shares: OR

Dividend Reinvestment Plan

Information available at http://osiskogr.com/en/dividends/drip/

Transfer Agents

Canada: AST Trust Company (Canada)

United States of America: American Stock Transfer & Trust Company, LLC

Auditors

PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l.

Legal Counsels

Bennett Jones LLP

Lavery, de Billy LLP

Paul, Weiss, Rifkind, Wharton & Garrison LLP

EX-99.3 4 exhibit99-3.htm EXHIBIT 99.3 Osisko Gold Royalties Ltd. : Exhibit 99.3 - Filed by newsfilecorp.com

FORM 52-109F1 CERTIFICATION OF ANNUAL FILINGS FULL
CERTIFICATE

I, Sean Roosen, Chair and Chief Executive Officer of Osisko Gold Royalties Ltd, certify the following:

1. Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the "annual filings") of Osisko Gold Royalties Ltd (the "issuer") for the financial year ended December 31, 2017.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in Regulation 52-109 respecting Certification of Disclosure in Issuers’ Annual and Interim Filings (c. V-1.1, r. 27), for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the financial year end

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control-Integrated Framework (2013) (COSO Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2 ICFR – material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

6. Evaluation: The issuer’s other certifying officer(s) and I have

(a) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and

(b) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s ICFR at the financial year end and the issuer has disclosed in its annual MD&A

(i) our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

(ii) N/A

7. Reporting changes in ICFR: The issuer has disclosed in its annual MD&A any change in the issuer’s ICFR that occurred during the period beginning on October 1^st, 2017 and ended on December 31, 2017 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

8. Reporting to the issuer’s auditors and board of directors or audit committee: The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer’s auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer’s ICFR.

Date: February 20, 2018

/s/ Sean Roosen
Sean Roosen
Chair and Chief Executive Officer

EX-99.4 5 exhibit99-4.htm EXHIBIT 99.4 Osisko Gold Royalties Ltd.: Exhibit 99.4 - Filed by newsfilecorp.com

FORM 52-109F1 CERTIFICATION OF ANNUAL FILINGS FULL CERTIFICATE

I, Elif Lévesque, Chief Financial Officer and Vice President, Finance of Osisko Gold Royalties Ltd, certify the following:

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the financial year end

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

5.2 ICFR – material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

6. Evaluation: The issuer’s other certifying officer(s) and I have

(b) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s ICFR at the financial year end and the issuer has disclosed in its annual MD&A

(i) our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

(ii) N/A

Date: February 20, 2018

/s/ Elif Lévesque
Elif Lévesque
Chief Financial Officer and Vice President, Finance

EX-99.5 6 exhibit99-5.htm EXHIBIT 99.5 Osisko Gold Royalties Ltd.: Exhibit 99.5 - Filed by newsfilecorp.com

OSISKO GOLD ROYALTIES REPORTS
FOURTH QUARTER AND FULL YEAR 2017 RESULTS

(Montreal, February 20, 2018) Osisko Gold Royalties Ltd (the “Company” or “Osisko”) (OR: TSX & NYSE) is pleased to report its results for the fourth quarter and full year 2017 and provide 2018 guidance. Amounts are in Canadian dollars unless otherwise noted.

Sean Roosen, Chair of the Board and Chief Executive Officer, commenting on the 2017 performance: “2017 has been a transformational year for Osisko with the acquisition of the Orion portfolio, which was a significant step forward for our company in terms of building a dominant, Canada-focused, precious metals royalty and streaming platform. At the same time, we have continued to mature our accelerator business and to create value for our shareholders by helping to create great Canadian gold projects. Today, not only does Osisko have the greatest growth profile amongst its peers, it has uniquely positioned itself with a quality pipeline of growth projects that will derive benefits for Osisko’s shareholders for years to come.”

Highlights – Q4 2017

Record quarterly gold equivalent ounces (“GEOs”)¹earned of 20,990 (134% increase compared to Q4 2016);
Record quarterly revenues from royalties and streams of $32.2 million ($109.6 million including offtakes) (135% increase compared to Q4 2016; 699% increase including offtakes);
Net cash flows provided by operating activities of $21.5 million (compared to $12.8 million in Q4 2016);
Net loss attributable to Osisko’s shareholders of $64.3 million, $0.41 per basic share reflecting an impairment charge of $89.0 million on the Éléonore royalty interest ($65.4 million, net of income taxes) (compared to net earnings of $8.7 million, $0.08 per basic share in Q4 2016); and
Adjusted earnings²of $1.0 million, $0.01 per basic share²(compared to $6.9 million, $0.07 per basic share in Q4 2016).

Highlights – 2017

Record GEOs earned of 58,933 (54% increase compared to 2016);
Record revenues from royalties and streams of $93.8 million ($213.2 million including offtakes) (50% increase compared to 2016; 240% increase including offtakes);
Net cash flows provided by operating activities of $48.7 million (compared to $53.4 million in 2016);
Net loss attributable to Osisko’s shareholders of $42.5 million, $0.33 per basic share (compared to net earnings of $42.1 million, $0.40 per basic share in 2016);
Adjusted earnings²of $22.7 million, $0.18 per basic share²(compared to $34.2 million, $0.33 per basic share in 2016);
Proceeds of $71.1 million on sale of investments, generating a gain³of $35.8 million, based on the cash cost³of the investments. Subsequent to December 31, 2017, Osisko made a gain of $15.5 million from the delivery of the AuRico Metals Inc. shares to Centerra Gold Inc. bringing the total gain³from monetizing investments since 2015 to $70.1 million, based on the cash cost³of the investments;
Acquisition of a precious metals portfolio of assets from Orion Mine Finance Group (“Orion”) for $1.1 billion consisting of 74 royalties, streams and precious metal offtakes, including a 9.6% diamond stream on the Renard diamond mine and a 4% gold and silver stream on the Brucejack gold and silver mine, both of which are new mines in Canada, in addition to a 100% silver stream on the Mantos Blancos copper mine in Chile;
Acquisition of royalty and stream interests for $127.6 million ($80.1 million paid in 2017);
Completed a bought deal offering of convertible senior unsecured debentures of $300.0 million;
Increased the revolving credit facility to $350.0 million (with a potential accordion of up to $100.0 million); and
Declaration of quarterly dividends totalling $0.18 per common share for 2017.

__________________________

1	GEOs are calculated on a quarterly basis and include royalties, streams and offtakes. Silver earned from royalty and stream agreements was converted to gold equivalent ounces by multiplying the silver ounces by the average silver price for the period and dividing by the average gold price for the period. Diamonds, other metals and cash royalties were converted into gold equivalent ounces by dividing the associated revenue by the average gold price for the period. Offtake agreements were converted using the financial settlement equivalent divided by the average gold price for the period. Refer to the portfolio of royalty, stream and other interests section for average metal prices used.
2	“Adjusted earnings” and “Adjusted earnings per basic share” are non-IFRS financial performance measures which have no standard definition under IFRS. Refer to the non-IFRS performance measures section of this press release.
3	The cash cost of an investment is a non-IFRS measure representing the cash paid on the acquisition of an investment. The gain or the loss is calculated by subtracting the cash acquisition cost from the cash proceeds on the sale of an investment.

Acquisition of Orion’s Portfolio

The combination of Osisko and Orion’s portfolios resulted in Osisko holding a total of 131 royalties, streams and offtakes, including 16 revenue-generating assets on July 31, 2017. Through the Transaction, the Company acquired a 9.6% diamond stream on the Renard diamond mine and a 4% gold and silver stream on the Brucejack gold and silver mine, both of which are new mines in Canada, in addition to a 100% silver stream on the Mantos Blancos copper mine in Chile. Certain assets are held through an international wholly-owned subsidiary which was renamed Osisko Bermuda Limited (“OBL”). The Brucejack stream is subject to certain buyback rights held by Pretium Resources Inc. which could result in the stream being repurchased on December 31, 2018 and other specific dates.

The table below presents the purchase price allocation (in thousands of dollars):

Consideration paid	$

Cash⁽¹⁾	648,385
Issuance of 30,906,594 common shares⁽²⁾	445,333
	1,093,718
Net assets acquired	$

Cash and cash equivalents	8,707
Other current assets	1,217
Royalty, stream and other interests	1,116,115
Current liabilities	(435)
Deferred income tax liability	(31,886)
	1,093,718

(1)	Including the net loss on settlement of derivative financial instruments (cash flow hedges) of $18.2 million.
(2)	The fair value of the consideration paid in common shares represents the fair value of the shares on July 31, 2017 minus an illiquidity discount to take into account the twelve-month restrictions on their sales.

Summary of Main Royalty, Stream and Other Interests Acquired

Asset	Operator	Interest	Commodities	Jurisdiction	Stage
Renard	Stornoway Diamonds Corporation	9.6% Stream	Diamond	Canada	Production
Mantos Blancos	Mantos Copper S.A.	100% Stream	Ag	Chile	Production
Brucejack	Pretium Resources Inc.	4% Stream / Offtake	Au, Ag	Canada	Production
Sasa	Central Asia Metals plc	100% Stream	Ag	Macedonia	Production
Matilda	Blackham Resources Limited	Offtake	Au	Australia	Production
Parral	GoGold Resources Inc.	Offtake	Au	Mexico	Production
San Ramon	Red Eagle Mining Corp.	Offtake	Au	Colombia	Production
Seabee	SSR Mining Inc.	3% NSR⁽¹⁾Royalty	Au	Canada	Production
Bald Mtn. Alligator Ridge	Kinross Gold Corporation	1% NSR Royalty	Au	USA	Production
Bald Mtn. Duke/ Trapper	Kinross Gold Corporation	4% NSR Royalty	Au	USA	Production
Brauna	Lipari Mineração	1% GRR⁽²⁾Royalty	Diamond	Brazil	Production
Kwale	Base Resources Limited	1.5% GRR Royalty	Rutile, Ilmenite, zircon	Kenya	Production
Pan	Fiore Gold Ltd.	4% NSR Royalty	Au	USA	Production
Amulsar	Lydian International Ltd.	4.22% Au Stream, 62.5% Ag Stream / Offtake	Au, Ag	Armenia	Development
Back Forty	Aquila Resources Inc.	75% Stream	Ag	USA	Development
Casino	Western Copper & Gold Corporation	2.75% NSR Royalty	Au, Ag, Cu	Canada	Exploration
Spring Valley	Waterton Global Resource Management	0.5% NSR Royalty	Au	USA	Exploration
Yenipazar	Aldridge Minerals Inc.	Offtake	Au	Turkey	Exploration

(1)	Net Smelter Return (“NSR”)
(2)	Gross Revenue Royalty (“GRR”)

Acquisition of Back-Forty Gold Stream

The Back Forty project is a zinc and gold volcanogenic massive sulfide deposit located in Michigan, United States, owned by Aquila Resources Inc. (“Aquila”). The Back Forty project is in the development stage and advancing toward a feasibility study expected in 2018. Back Forty is expected to produce 532,000 ounces of gold, 721 million pounds (“lbs”) of zinc, 74 million lbs of copper, 4.6 million ounces of silver, and 21 million lbs of lead. The details of the mineral inventory can be found under Aquila’s profile on SEDAR at www.sedar.com. Through the acquisition of Orion’s Portfolio, Osisko acquired the Back Forty silver stream, which applies to 75% of payable silver production over the mine’s operating life and includes ongoing transfer payments by OBL to Aquila of US$4.00 per ounce of refined silver delivered under the stream.

The deposit will be paid in four installments, as follows:

	1.	US$7.5 million was paid on closing of the gold stream transaction;
	2.	US$7.5 million payable upon receipt by Aquila of all material permits required for the development and operation of the project, and receipt of a positive feasibility study;
	3.	US$10 million payable following a positive construction decision for the property; and
	4.	US$30 million payable upon the first drawdown of an appropriate project debt finance facility, subject to the change of control provision. In the event of a change of control of Aquila prior to the advancement of the fourth deposit, the person or entity acquiring control over the project may elect to forego the fourth deposit, in which case the stream will be reduced to 9.5% of the refined gold from the project until 105,000 ounces of gold have been delivered and to 4.75% of the refined gold for the remaining life-of-mine. All other terms and conditions will remain unchanged.

Gibraltar Stream (Taseko Mines Limited)

Under the stream, Osisko will receive from Taseko an amount equal to 100% of Gibco’s share of silver production until the delivery to Osisko of 5.9 million ounces of silver to Osisko and 35% of Gibco’s share of silver production thereafter. Gibraltar is the second largest open pit copper mine in Canada and fourth largest in North America. The life of mine yearly average production from Gibraltar is approximately 140 million lbs of copper and 2.6 million lbs of molybdenum. With a large mineral reserve of 3.2 billion lbs of recoverable copper and 58 million lbs of molybdenum, the estimated mine life of the project is 23 years (proven and probable mineral reserves as of January 1, 2016). The acquisition is expected to increase Osisko’s production by approximately 200,000 ounces of silver for the next 14 years, increasing to an average of 350,000 ounces of silver for the remainder of the 23-year mineral reserve life of Gibraltar. Any silver in respect of which a delivery was made after January 1, 2017, was subject to the stream.

Revolving Credit Facility

In November 2017, the Company amended its revolving credit facility (the “Facility”) increasing the amount from $150 million to $350 million, with an additional uncommitted accordion of up to $100 million, for a total availability of up to $450 million. The accordion is subject to standard due diligence procedures and acceptance of the lenders. The Facility is to be used for general corporate purposes and investments in the mineral industry, including the acquisition of royalties, streams and other interests. The Facility is secured by the Company’s assets (including the royalty, stream and other interests) and has a four-year term (November 14, 2021), which can be extended by one year on each of the first two anniversary dates.

Bought Deal of Convertible Senior Unsecured Debentures

On November 3, 2017, Osisko closed a bought deal offering of convertible senior unsecured debentures (the “Debentures”) for $300 million (the “Offering”) with a syndicate of underwriters co-led by National Bank Financial Inc., BMO Capital Markets and Desjardins Capital Markets (the “Underwriters“). The Offering was comprised of a $184.0 million public offering of Debentures (the “Public Offering“) and a $116.0 million private placement of Debentures (the “Private Offering“). In connection with the Offering, the Public Sector Pension Investment Board and Ressources Québec inc., a wholly-owned subsidiary of Investissement Québec, purchased respectively $100.0 million and $16.0 million of Debentures through the Private Offering on the same terms and conditions as the Public Offering. The Underwriters have received a commission of 3.55% in relation to the Offering. Net proceeds amounted to $288.5 million.

The Debentures bear interest at a rate of 4.0% per annum, payable semi-annually on June 30 and December 31 of each year, commencing on June 30, 2018. The Debentures are convertible at the holder’s option into Osisko common shares at a conversion price of $22.89 per common share. The Debentures will mature on December 31, 2022 and may be redeemed by Osisko, in certain circumstances, on or after December 31, 2020. The Debentures are listed for trading on the Toronto Stock Exchange under the symbol “OR.DB”. The net proceeds from the Offering will be used to fund the acquisition of precious metal royalties, streams, working capital, and general corporate purposes.

Record Gold Equivalent Ounces Earned

The Company’s portfolio of producing royalty, stream and offtake interests delivered a record 20,990 GEOs in the fourth quarter of 2017 for a total record of 58,933 GEOs for the full year 2017. The assets acquired from Orion were the major contributors to the record quarterly GEOs earned by the Company, while Canadian Malartic continued to generate strong results.

Royalties Earned (in GEOs)

	Three months ended		Years ended
	December 31,		December 31,
	2017	2016	2017	2016

Gold
Canadian Malartic royalty	10,177	6,749	33,136	28,748
Éléonore royalty	1,532	1,343	6,390	6,568
Seabee royalty⁽¹⁾	619	-	1,310	-
Island Gold royalty	379	292	1,706	1,373
Brucejack offtake⁽¹⁾	321	-	536	-
Vezza royalty	274	342	1,253	830
Other⁽¹⁾	330	124	869	294
	13,632	8,850	45,200	37,813
Silver
Mantos stream⁽¹⁾	1,910	-	3,060	-
Sasa stream⁽¹⁾	1,229	-	2,074	-
Gibraltar stream (3 and 11 months)	665	-	2,303	-
Canadian Malartic royalty	138	114	479	456
Other⁽¹⁾	78	-	129	1
	4,020	114	8,045	457
Diamonds
Renard stream⁽¹⁾	2,839	-	4,686	-
Other⁽¹⁾	88	-	201	-
	2,927	-	4,887	-
Other metals
Kwale royalty⁽¹⁾	411	-	801	-

Total GEOs	20,990	8,964	58,933	38,270

(1)	The effective date of the acquisition of Orion’s Portfolio was June 1, 2017. However, revenues of royalties, streams and offtakes acquired from Orion are only included in revenues from July 31, 2017 onward, the acquisition date for accounting purposes.

GEOs by Product

Revenues

		Three months ended December 31,
		2017			2016

	Average			Average
	selling price	Ounces	Total	selling price	Ounces	Total
	per ounce /	/ Carats	revenues	per ounce	/ Carats	revenues
	carats ($)	sold	($000’s)	($)	sold	($000’s)

Gold sold	1,623	56,708	92,043	1,549	8,605	13,328
Silver sold	21	483,192	10,411	21	8,353	179
Diamonds sold	106	43,550	4,603	-	-	-
Other (paid in cash)	-	-	2,495	-	-	202
			109,552			13,709


			Years ended December 31,
		2017			2016

	Average			Average
	selling price	Ounces	Total	selling price	Ounces	Total
	per ounce /	/ Carats	revenues	per ounce	/ Carats	revenues
	carats ($)	sold	($000’s)	($)	sold	($000’s)

Gold sold	1,627	111,501	181,390	1,643	37,402	61,444
Silver sold	22	887,760	19,216	23	32,836	747
Diamonds sold	106	71,150	7,560	-	-	-
Other (paid in cash)	-	-	5,050	-	-	486
			213,216			62,677

Gross Profit ($000)

	Three months ended				Years ended
			December 31,		December 31,
	2017		2016		2017		2016
	$		$		$		$
Royalties
Revenues	21,359		13,709		74,041		62,677
Cost of sales	(130	)	(22	)	(286	)	(143	)
Depletion	(4,305	)	(2,828	)	(15,475	)	(11,291	)
	16,924		10,859		58,280		51,243

Streams
Revenues	10,855		-		19,751		-
Cost of sales	(4,378	)	-		(7,385	)	-
Depletion	(7,452	)	-		(11,283	)	-
	(975	)	-		1,083		-

Offtakes
Revenues	77,338		-		119,424		-
Cost of sales	(76,550	)	-		(117,974	)	-
Depletion	(990	)	-		(1,307	)	-
	(202	)	-		143		-

Total – Gross profit	15,747		10,859		59,506		51,243

Overview of 2017 Financial Results

Record revenues from royalties and streams of $93.8 million ($213.2 million including offtakes) compared to $62.7 million in 2016;
Gross profit of $59.5 million compared to $51.2 million in 2016;
Impairment charge of $89.0 million on the Éléonore NSR royalty interest ($65.4 million, net of income taxes);
Operating loss of $70.4 million compared to an operating income of $29.1 million in 2016;
Net loss attributable to Osisko’s shareholders of $42.5 million or $0.33 per basic and diluted share, compared to net earnings of $42.1 million or $0.40 per basic and diluted share in 2016;
Adjusted earnings⁴of $22.7 million or $0.18 per basic share⁴compared to $34.2 million or $0.33 per basic share in 2016;
Net cash flows provided by operating activities of $48.7 million compared to $53.4 million in 2016.

Revenues increased in 2017 mainly as a result of the acquisition of Orion’s Portfolio.

The net loss attributable to Osisko’s shareholders in 2017 is mainly the result of the impairment charge of $89.0 million, a lower operating income, a higher foreign exchange loss, higher finance costs, the absence of dividend income following the sale of the shares of Labrador Iron Ore Royalty Corporation in 2016 and early 2017, partially offset by higher interest income.

Adjusted earnings decreased to $22.7 million compared to $34.2 million in 2016 as a result of higher G&A, lower dividend income and higher finance costs, partially offset by higher gross profit.

________________________

⁴	“Adjusted earnings” and “Adjusted earnings per basic share” are non-IFRS financial performance measures which have no standard definition under IFRS. Refer to the non-IFRS performance measures section of this press release.

Investment Portfolio Update

During the year ended December 31, 2017, Osisko acquired investments for $226.8 million and sold investments for $71.1 million.

The following table presents the carrying value and fair value of the investments in marketable securities as at December 31, 2017 (in thousands of dollars):

Marketable securities	Carrying value⁽ⁱ⁾	Fair value⁽ⁱⁱ⁾
	$	$

Associates	257,433	332,140
Other	106,841	106,841
	364,274	438,981

(i)	The carrying value corresponds to the amount recorded on the balance sheet, which is the equity method for the investments in marketable securities of associates and the fair value for the other investments in marketable securities, as per IFRS 9, Financial Instruments.
(ii)	The fair value corresponds to the quoted price of the investments in a recognized stock exchange as at December 31, 2017.

Main Strategic Investments

The following table presents the main strategic investments of the Company (in thousands of dollars):

	Number of			Carrying		Fair
Company	shares held⁽ⁱ⁾	Ownership⁽ⁱ⁾		value^(i),(ii)		value^(i),(ii)
		%	$		$

Osisko Mining Inc.	32,302,034	15.5		73,635		109,504
Barkerville Gold Mines Ltd.	142,309,310	32.7		89,556		106,732
Dalradian Resources Inc.	31,717,687	8.9		40,122		42,026
Falco Resources Ltd.	23,927,005	12.7		15,652		20,817

(i)	As at December 31, 2017.
(ii)	See table above for definition of carrying value and fair value.

Osisko Mining Inc.

The Company owns a 1.5% NSR royalty on the Windfall Lake gold project (“Windfall Lake”). Osisko Mining Inc. (“Osisko Mining”) is currently undergoing an 800,000 meter drill program at Windfall Lake, where the 400,000 meter milestone was reached in October 2017. A metallurgical program is ongoing and the construction of the exploration ramp is progressing. Osisko Mining is planning a resource update in the first half of 2018.

Barkerville Gold Mines Ltd.⁵

Barkerville Gold Mines Ltd. (“Barkerville”) is currently carrying out a 160,000 meter exploration drilling program in the Cariboo Mining District of central British Columbia and reported that it has received all permits to initiate production from its Bonanza Ledge underground project at an initial rate of 150,000 tonnes per year. In April 2017, Barkerville announced a new discovery from its ongoing 160,000 metres Phase II Island Mountain and Valley Zone exploration drilling program at its Cariboo Gold Project.

Osisko holds a 2.25% NSR royalty on the Cariboo gold project and has a right of first refusal relating to any gold stream offer received by Barkerville with respect to the Cariboo gold project.

____________________

5	Refer to Barkerville’s press release dated April 17, 2017, titled “BGM intersects 19.20 g/t AU over 54.40 meters and 11.42 g/t AU over 28.55 meters at shaft zone” and Barkerville’s website at www.barkervillegold.com and on SEDAR for additional information.

Falco Resources Ltd.

In October 2017, Falco Resources Ltd. (“Falco”) released⁶ a positive feasibility on the Horne 5 project. The feasibility study indicated that, at a gold price of US$1,300/oz and using an exchange rate of C$1.00 = US$0.78, the Horne 5 Project would generate an after-tax net present value, at a 5% discount rate, of US$602 million and an after-tax internal rate of return of 15.3% . As per Falco, in this scenario, the mine could become the next significant gold producer in Québec, with a production profile averaging 219,000 payable ounces annually over the life of mine, with an all-in sustaining cash cost of US$399 per ounce net of by-product credits and all-in cost, capital expenditures plus operating expenditures, estimated at US$643 per ounce. The Environmental Impact Assessment study was filed with the authorities in December 2017.

Dalradian Resources Inc.

On October 10, 2017, Osisko entered into a subscription agreement with Dalradian Resources Inc (“Dalradian”) pursuant to which Osisko made an investment of $28.3 million in Dalradian by way of a non-brokered private placement. The subscription agreement entered into with Dalradian contains various covenants and rights, including among other things, a standstill, participation rights to maintain Osisko’s pro rata interest in Dalradian and rights to match other offers for project financing.

Other Significant Investments

Arizona Mining Inc.

Over the second half of 2017, Osisko sold its equity interest in Arizona Mining Inc, (“Arizona Mining”) for proceeds of $47.1 million, including from the sale of shares following the exercise of warrants in October 2017. Osisko realized a pre-tax accounting gain of $30.2 million (including the change in fair value of the warrants) on the transaction and a gain of $34.1 million based on the cash cost⁷ of the shares. Osisko still holds a 1% NSR royalty purchased for $10.0 million in April 2016 on all sulfide ores of lead and zinc (and any copper, silver or gold recovered from the concentrate from such ores) mined from Arizona Mining’s Hermosa project located in Santa Cruz County, Arizona.

Dividends

Osisko has declared dividends for the last 14 consecutive quarters for a total of $55.1 million.

On November 7, 2017, Osisko declared a quarterly dividend of $0.05 per common share paid on January 15, 2018 to shareholders of record as of the close of business on December 29, 2017.

On February 16, 2018, the Board of Directors declared a quarterly dividend of $0.05 per common share payable on April 16, 2018 to shareholders of record as of the close of business on March 30, 2018.

2018 Guidance

Osisko’s 2018 outlook on royalty, stream and precious metal offtake interests is based on publicly available forecasts, in particular the forecasts for the Canadian Malartic mine published by Yamana Gold Inc. and Agnico Eagle Mines Limited, for the Éléonore mine published by Goldcorp Inc., for the Renard mine published by Stornoway Diamonds Corporation, for the Brucejack mine published by Pretium Resources Inc., and for the Island Gold mine published by Alamos Gold Inc. When publicly available forecasts on properties are not available, Osisko obtains internal forecasts from the operators, which is the case for the Sasa and Mantos Blancos mines, or uses management’s best estimate.

_______________________

⁶	Refer to Falco’s press release dated October 16, 2017, titled: “Falco Announces Positive Feasibility Study Results on Horne 5 Gold Project”.
⁷	The cash cost of an investment is a non-IFRS measure representing the cash paid on the acquisition of an investment. The gain or the loss is calculated by subtracting the cash acquisition cost from the cash proceeds on the sale of an investment.

Éléonore NSR Royalty Interest

In February 2015, Osisko acquired all of the outstanding common shares of Virginia Mines Inc. (“Virginia”). The assets acquired included a 2.0 -3.5% NSR royalty on the Eléonore mine discovered by Virginia and owned by Goldcorp Inc. Through the combination of the two companies, Osisko achieved its objective of creating a new intermediate royalty company with two world-class gold royalty assets in Québec. Operations started at the Eléonore mine in October 2014 and commercial production was declared in April 2015.

Gold ounces earned from the Éléonore NSR royalty:

2015⁽¹⁾		2016			2017			2018 Guidance			2019+ Guidance⁽²⁾
402		6,568			6,390			7,920			8,800

(1)	Osisko started receiving royalties in December 2015 only due to the royalty advance payment to Virginia.
(2)	Based on operator’s guidance of 400,000 sustainable annual gold production. As per the sliding scale schedule of up to 3.5%, Osisko could potentially receive up to 14,000 ounces annually once 8 million ounces have been produced.

For accounting purposes, Osisko is required to monitor indicators of impairment, which can trigger an impairment review of its assets. The operator of the Éléonore gold mine announced a sustainable annual gold production level at 400,000 ounces of gold compared to its design capacity of 600,000 ounces annually. This announcement was considered as an indicator of impairment and, accordingly, management performed an impairment assessment as at December 31, 2017. The Company recorded an impairment charge of $89.0 million ($65.4 million net of income taxes) on the Éléonore NSR royalty during the fourth quarter of 2017. This impairment charge may be reversed subsequently if there is a sustainable increase in annual production levels.

2017 Year-End Results Conference Call

Osisko will host a conference call on Tuesday, February 20, 2018 at 11:00 EST to review and discuss its 2017 results.

Those interested in participating in the conference call should dial in at 1-(647) 788-4922 (international), or 1-(877) 223-4471 (North American toll free). An operator will direct participants to the call.

The conference call replay will be available from 2:00pm EST on February 20, 2018 until 11:59 pm EST on February 27, 2018 with the following dial in numbers: 1-(800) 585-8367 (North American toll free) or 1-(416) 621-4642, access code 2868047.

Non-IFRS Financial Performance Measures

Adjusted Earnings and Adjusted Earnings per Basic Share

Adjusted earnings per basic share is obtained from the “adjusted earnings” divided by the “Weighted average number of common shares outstanding” for the period.

	Three months ended				Years ended
			December 31,		December 31,
	2017		2016		2017		2016

(in thousands of dollars, except per share amounts)	$		$		$		$

Net earnings (loss) attributable to
Osisko’s shareholders	(64,348	)	8,679		(42,501	)	42,113

Adjustments:
Foreign exchange loss (gain)	763		(5,319	)	16,211		5,851
Unrealized loss (gain) on investments	507		(660	)	(30,829	)	(30,202	)
Share of loss of associates	3,482		2,893		6,114		6,623
Impairment of royalty, stream and other interests	89,000		-		89,000		-
Impairment of exploration and evaluation assets	-		668		-		668
Loss (gain) on disposal of exploration and evaluation assets	-		-		(20	)	312
Write-off of property and equipment	-		456		-		456
Deferred income tax expense	(28,453	)	216		(24,150	)	8,372
Transaction costs – acquisition of Orion’s Portfolio	-		-		8,870		-

Adjusted earnings	951		6,934		22,695		34,194

Weighted average number of common shares outstanding (000’s)	157,256		106,612		127,939		104,671

Adjusted earnings per basic share	0.01		0.07		0.18		0.33

About Osisko Gold Royalties Ltd

Osisko Gold Royalties Ltd is an intermediate precious metal royalty company focused on the Americas that commenced activities in June 2014. Following the acquisition of the Orion portfolio, it now holds a North American focused portfolio of over 130 royalties, streams and precious metal offtakes. Osisko’s portfolio is anchored by five cornerstone assets, including a 5% NSR royalty on the Canadian Malartic Mine, which is the largest gold mine in Canada. Osisko also owns a portfolio of investments in publicly held resource companies, including a 15.5% interest in Osisko Mining Inc., a 32.7% in Barkerville Gold Mines Ltd. and a 12.7% interest in Falco Resources Ltd.

Osisko’s head office is located at 1100 Avenue des Canadiens-de-Montréal, Suite 300, Montréal, Québec, H3B 2S2.

For further information please contact, please contact Osisko Gold Royalties:

Vincent Metcalfe	Joseph de la Plante
Vice President, Investor Relations	Vice President, Corporate Development
Tel. (514) 940-0670	Tel. (514) 940-0670
vmetcalfe@osiskogr.com	jdelaplante@osiskogr.com

Forward-looking Statements

Certain statements contained in this press release may be deemed “forward-looking information” and "forward-looking statements" within the meaning of applicable Canadian Securities Laws and the United States Private Securities Litigation Reform Act of 1995 (collectively, the “forward-looking statements”). All statements in this release, other than statements of historical fact, that address future events, developments or performance that Osisko expects to occur including management’s expectations regarding Osisko’s growth, results of operations, estimated future revenues, requirements for additional capital, mineral reserve and mineral resource estimates, production estimates, production costs and revenue, future demand for and prices of commodities, business prospects and opportunities are forward-looking statements. In addition, statements (including data in tables) relating to mineral reserves and mineral resources and gold equivalent ounces are forward-looking statements, as they involve implied assessment, based on certain estimates and assumptions, and no assurance can be given that the estimates will be realized. 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 variations (including negative variations), or that events or conditions "will", "would", "may", "could" or "should" occur including, without limitation, the performance of the assets of Osisko, the realization of the anticipated benefits deriving from Osisko’s investments and transactions and the estimate of gold equivalent ounces to be received in 2018. Although Osisko believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements involve known and unknown risks, uncertainties and other factors and are not guarantees of future performance and actual results may accordingly 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, without limitation: fluctuations in the prices of the commodities that drive royalties, streams and other interests (the “Interests”) held by Osisko (gold, silver and diamonds); fluctuations in the value of the Canadian dollar, and any other currency in which revenue is generated, relative to the U.S. dollar; regulatory changes in national and local government, including permitting and licensing regimes and taxation policies; regulations and political or economic developments in any of the countries where properties in which Osisko holds an Interest are located or through which they are held; risks related to the operators of the properties in which Osisko holds an Interest, influence of macroeconomic developments; business opportunities that become available to, or are pursued by Osisko; continued availability of capital and financing and general economic, market or business conditions; litigation; title, permit or license disputes related to interests on any of the properties in which Osisko holds an Interest; whether or not Osisko is determined to have “passive foreign investment company” (“PFIC”) status as defined in Section 1297 of the United States Internal Revenue Code of 1986, as amended; potential changes in Canadian tax treatments of offshore streams or other interests; development, permitting, infrastructure, operating or technical difficulties on any of the properties in which Osisko holds an Interest; rate and timing of production differences from mineral resource estimates or production forecasts by operators of properties in which Osisko holds an Interest; risks and hazards associated with the business of exploring, development and mining on any of the properties in which Osisko holds an Interest, including, but not limited to unusual or unexpected geological and metallurgical conditions, slope failures or cave-ins, flooding and other natural disasters, terrorism, or civil unrest or other uninsured risks and the integration of acquired assets. The forward-looking statements contained in this press release are based upon assumptions management believes to be reasonable, including, without limitation: the ongoing operation of the properties in which Osisko holds an Interest by the owners or operators of such properties in a manner consistent with past practice; the accuracy of public statements and disclosures made by the owners or operators of such underlying properties; no material adverse change in the market price of the commodities that underlie the asset portfolio; Osisko’s ongoing income and assets relating to the determination of its PFIC status, no material changes to existing tax treatments, no adverse development in respe ct of any significant property in which Osisko holds an Interest; the accuracy of publicly disclosed expectations for the development of underlying properties that are not yet in production; and the absence of any other factors that could cause actions, events or results to differ from those anticipated, estimated or intended.

For additional information with respect to these and other factors and assumptions underlying the forward-looking statements made in this press release, see the section entitled "Risk Factors" in the most recent Annual Information Form of Osisko which is filed with the Canadian securities commissions and available electronically under Osisko's issuer profile on SEDAR at www.sedar.com and with the U.S. Securities and Exchange Commission on EDGAR at www.sec.gov. The forward-looking statements set forth herein reflects Osisko’s expectations as at the date of this press release and is subject to change after such date. Osisko disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by law.

Osisko Gold Royalties Ltd

Consolidated Balance Sheets

As at December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars)

	December 31,		December 31,
	2017		2016
	$		$
Assets
Current assets
Cash and cash equivalents	333,705		499,249
Short-term investments	-		2,100
Accounts receivable	8,385		8,416
Inventories	9,859		-
Other assets	984		974
	352,933		510,739
Non-current assets
Investments in associates	257,433		82,902
Other investments	115,133		108,409
Royalty, stream and other interests	1,575,772		494,768
Exploration and evaluation	102,182		100,038
Goodwill	111,204		111,204
Deferred income taxes	-		7,978
Other assets	1,686		266
	2,516,343		1,416,304
Liabilities
Current liabilities
Accounts payable and accrued liabilities	15,310		7,438
Dividends payable	7,890		4,266
Provisions and other liabilities	5,632		4,153
	28,832		15,857
Non-current liabilities
Long-term debt	464,308		45,780
Provisions and other liabilities	2,036		12,433
Deferred income taxes	126,762		127,930
	621,938		202,000
Equity
Share capital	1,633,013		908,890
Warrants	30,901		30,901
Contributed surplus	13,265		11,411
Equity component of convertible debentures	17,601		3,091
Accumulated other comprehensive income (loss)	(2,878	)	7,838
Retained earnings	202,503		250,306
Equity attributable to Osisko Gold Royalties Ltd shareholders	1,894,405		1,212,437
Non-controlling interests	-		1,867
Total equity	1,894,405		1,214,304
	2,516,343		1,416,304

Osisko Gold Royalties Ltd

Consolidated Statements of Income (Loss)

For the three months and the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

	Three months ended				Years ended
	December 31,				December 31,
			(unaudited)
	2017		2016		2017		2016
	$		$		$		$


Revenues	109,552		13,709		213,216		62,677

Cost of sales	(81,058	)	(22	)	(125,645	)	(143	)
Depletion of royalty, stream and other interests	(12,747	)	(2,828	)	(28,065	)	(11,291	)
Gross profit	15,747		10,859		59,506		51,243

Other operating expenses
General and administrative	(7,342	)	(4,105	)	(26,176	)	(16,715	)
Business development	(4,009	)	(1,863	)	(18,706	)	(8,282	)
Impairment of royalty, stream and other interests	(89,000	)	-		(89,000	)	-
Exploration and evaluation, net of tax credits	(63	)	2,176		(204	)	1,240
Other gains (expenses), net	-		(1,124	)	20		(1,436	)
Cost recoveries from associates	1,215		873		4,125		3,039
Operating income (loss)	(83,452	)	6,816		(70,435	)	29,089
Interest income	1,098		1,011		4,255		3,260
Dividend income	-		215		-		4,931
Finance costs	(4,825	)	(919	)	(8,384	)	(3,435	)
Foreign exchange gain (loss)	(635	)	5,331		(16,086	)	(5,846	)
Share of loss of associates	(3,482	)	(2,893	)	(6,114	)	(6,623	)
Other gains (losses), net	(507	)	660		30,829		30,202
Earnings (loss) before income taxes	(91,803	)	10,221		(65,935	)	51,578
Income tax recovery (expense)	27,450		(1,568	)	23,147		(9,724	)
Net earnings (loss)	(64,353	)	8,653		(42,788	)	41,854

Net earnings (loss) attributable to:
Osisko Gold Royalties Ltd’s shareholders	(64,348	)	8,679		(42,501	)	42,113
Non-controlling interests	(5	)	(26	)	(287	)	(259	)

Net earnings (loss) per share attributable to Osisko Gold Royalties Ltd’s shareholders
Basic	(0.41	)	0.08		(0.33	)	0.40
Diluted	(0.41	)	0.08		(0.33	)	0.40

Osisko Gold Royalties Ltd

Consolidated Statements of Cash Flows

For the three months and the years ended December 31, 2017 and 2016

(tabular amounts expressed in thousands of Canadian dollars)

	Three months ended				Years ended
	December 31,				December 31,
			(unaudited)
	2017		2016		2017		2016
	$		$		$		$
Operating activities
Net earnings (loss)	(64,353	)	8,653		(42,788	)	41,854
Adjustments for:
Share-based compensation	1,267		1,659		10,524		7,380
Depletion and amortization	12,787		2,862		28,210		11,509
Impairment of royalty, stream and other interests	89,000		-		89,000		-
Share of loss of associates	3,482		2,893		6,114		6,623
Net loss (gain) on acquisition of investments	(36	)	536		2,099		(8,379	)
Net gain on dilution of investments in associates	(241	)	(5,114	)	(30,560	)	(12,023	)
Net gain on disposal of investments	-		-		(703	)	(3,410	)
Change in fair value of financial assets at fair value through profit and loss	784		3,919		(1,665	)	(6,390	)
Deferred income tax expense (recovery)	(28,453	)	216		(24,150	)	8,372
Settlement of restricted share units	-		-		(5,539	)	-
Foreign exchange loss (gain)	763		(5,319	)	16,211		5,851
Other	1,225		1,455		2,403		2,832
Net cash flows provided by operating activities before changes in non-cash working capital items	16,225		11,760		49,156		54,219
Changes in non-cash working capital items	5,298		1,022		(440	)	(775	)
Net cash flows provided by operating activities	21,523		12,782		48,716		53,444

Investing activities
Net increase (decrease) in short-term investments	1,447		(1,000	)	2,047		(1,800	)
Business combination, net of cash acquired	990		-		(621,430	)	-
Settlement of derivative financial instruments	-		-		(21,072	)	-
Acquisition of investments	(76,678	)	(18,922	)	(226,766	)	(82,384	)
Proceeds on disposal of investments	21,613		116,979		71,090		129,183
Acquisition of royalty and stream interests	(23,455	)	(5,000	)	(80,119	)	(55,250	)
Proceeds on sale of royalty interests	-		-		-		3,630
Property and equipment	(48	)	(12	)	(137	)	(105	)
Exploration and evaluation, net of tax credits	(247	)	(710	)	(1,128	)	(8,327	)
Net cash flows provided by (used in) investing activities	(76,378	)	91,335		(877,515	)	(15,053	)

Financing activities
Issuance of long-term debt	300,000		-		447,323		50,000
Issuance of common shares and warrants	77		326		264,278		177,934
Issue expenses	-		-		(190	)	(8,066	)
Financing fees	(12,619	)	(6	)	(12,619	)	(850	)
Investment from non-controlling interests	-		862		1,292		4,499
Normal course issuer bid purchase of common shares	-		-		(1,822	)	-
Dividends paid	(7,566	)	(4,086	)	(19,325	)	(15,317	)
Net cash flows provided by (used in) financing activities	279,892		(2,904	)	678,937		208,200
Increase (decrease) in cash and cash
equivalents before effects of exchange rate
changes on cash and cash equivalents	225,037		101,213		(149,862	)	246,591
Effects of exchange rate changes on cash and
cash equivalents	(234	)	5,319		(15,682	)	(5,851	)

Increase (decrease) in cash and cash equivalents	224,803		106,532		(165,544	)	240,740
Cash and cash equivalents – beginning of period	108,902		392,717		499,249		258,509
Cash and cash equivalents – end of period	333,705		499,249		333,705		499,249

EX-99.6 7 exhibit99-6.htm EXHIBIT 99.6 Osisko Gold Royalties Ltd.: Exhibit 99.6 - Filed by newsfilecorp.com

OSISKO DECLARES 14^TH QUARTERLY DIVIDEND

(Montreal, February 20, 2018) Osisko Gold Royalties Ltd ("Osisko" or the "Company") (TSX:OR) (NYSE:OR) is pleased to announce a first quarter 2018 dividend of C$0.05 per common share. The dividend will be paid on April 16, 2018 to shareholders of record as of the close of business on March 30, 2018.

For shareholders residing in the United States, the U.S. dollar equivalent will be determined based on the daily rate published by the Bank of Canada on March 30, 2018. This dividend is an "eligible dividend" as defined in the Income Tax Act (Canada).

The Company also wishes to remind its shareholders that it has implemented a dividend reinvestment plan (the “Plan”). Shareholders who are residents of Canada and the United States may elect to participate in the Plan in connection with the dividend to be paid on April 16, 2018 to shareholders on record as of March 30, 2018. If a shareholder elects to participate in the Plan, the Company will issue to the shareholder, in lieu of a cash dividend, common shares from treasury at a 3% discount to the weighted average price of the common shares during the five (5) trading days immediately preceding the dividend payment date. Participation in the Plan is optional and will not affect a shareholders’ cash dividends if the shareholder elects not to participate in the Plan. Quarterly dividends are only payable as and when declared by Osisko’s Board of Directors.

A complete copy of the Plan and the enrolment form are available on Osisko’s website at http://osiskogr.com/en/dividends/drip/. Shareholders should carefully read the complete text of the Plan before making any decisions regarding their participation in the Plan.

Non-registered beneficial shareholders who wish to participate in the Plan should contact their financial advisor, broker, investment dealer, bank or other financial institution that holds their common shares to inquire about the applicable enrolment deadline and to request enrolment in the Plan. For more information on how to enroll or any other inquiries, contact the Agent at 1-800-387-0825 (toll-free in Canada) or inquiries@canstockta.com.

Participation in the Plan does not relieve shareholders of any liability for taxes that may be payable in respect of dividends that are reinvested in common shares under the Plan. Shareholders should consult their tax advisors concerning the tax implications of their participation in the Plan having regard to their particular circumstances.

This press release is not an offer or a solicitation of an offer of securities.

About Osisko Gold Royalties Ltd

Osisko Gold Royalties Ltd is an intermediate precious metal royalty company focused on the Americas that commenced activities in June 2014. Following the acquisition of the Orion portfolio, it now holds a North American focused portfolio of over 130 royalties, streams and precious metal offtakes. Osisko’s portfolio is anchored by five cornerstone assets, including a 5% NSR royalty on the Canadian Malartic Mine, which is the largest gold mine in Canada. Osisko also owns a portfolio of publicly held resource companies, including a 15.5% interest in Osisko Mining Inc., a 32.7% in Barkerville Gold Mines Ltd. and a 12.7% interest in Falco Resources Ltd.

Osisko’s head office is located at 1100 Avenue des Canadiens-de-Montréal, Suite 300, Montréal, Québec, H3B 2S2.

Forward-looking statements

Certain statements contained in this press release may be deemed "forward-looking statements" within the meaning of applicable Canadian and U.S. securities laws. These forward-looking statements, by their nature, require the Company to make certain assumptions and necessarily involve known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward-looking statements. Forward-looking statements are not guarantees of performance. In this news release, these forward-looking statements may involve, but are not limited to, comments with respect to the directors and officers of the Company, information pertaining to the fact that all conditions for payment of the dividend will be met and that such dividend will continue to be an “eligible dividend” as defined in the Income Tax Act (Canada). Words such as "may", "will", "would", "could", "expect", "believe", "plan", "anticipate", "intend", "estimate", "continue", or the negative or comparable terminology, as well as terms usually used in the future and the conditional, are intended to identify forward-looking statements. Information contained in forward-looking statements is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including that the financial situation of the Company will remain favourable. The Company considers its assumptions to be reasonable based on information currently available, but cautions the reader that its assumptions regarding future events, many of which are beyond the control of the Company, may ultimately prove to be incorrect since they are subject to risks and uncertainties that affect the Company and its business.

For additional information with respect to these and other factors and assumptions underlying the forward-looking statements made in this press release, see the section entitled “Risk Factors” in the most recent Annual Information Form of Osisko which is filed with the Canadian securities commissions and available electronically under Osisko’s issuer profile on SEDAR at www.sedar.com and with the U.S. Securities and Exchange Commission and available electronically under Osisko’s issuer profile on EDGAR at www.sec.gov. The forward-looking information set forth herein reflects Osisko’s expectations as at the date of this press release and is subject to change after such date. Osisko disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by law.


For further information, please contact Osisko Gold Royalties Ltd:

Vincent Metcalfe	Joseph de la Plante
Vice President, Investor Relations	Vice President, Corporate Development
Tel. (514) 940-0670	Tel. (514) 940-0670
vmetcalfe@osiskogr.com	jdelaplante@osiskogr.com

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