0001062993-19-001939.txt : 20190501 0001062993-19-001939.hdr.sgml : 20190501 20190501082616 ACCESSION NUMBER: 0001062993-19-001939 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20190501 FILED AS OF DATE: 20190501 DATE AS OF CHANGE: 20190501 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: 19784902 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 May, 2019

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 three months ended March 31, 2019
  99.2 Management's Discussion and Analysis for the three months ended March 31, 2019
  99.3 Form 52-109F1 - CEO Certification of interim filings
  99.4 Form 52-109F1 - CFO Certification of interim filings
  99.5 News Release dated May 1, 2019 - Osisko Declares 19th Consecutive Quarterly Dividend
  99.6 News Release dated May 1, 2019 - Osisko Reports First Quarter Results


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: May 1, 2019 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

 

. . . . . . . . . . . . . . . . . . . . . . ..
Unaudited Condensed Interim

Consolidated Financial Statements

For the three months
ended
March 31, 2019



Osisko Gold Royalties Ltd
Consolidated Balance Sheets
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars)

          March 31,     December 31,  
          2019     2018  
    Notes     $     $  
          (Note 3)        
Assets                  
Current assets                  
       Cash   4     108,497     174,265  
       Short-term investments   17     13,119     10,000  
       Amounts receivable         6,871     12,321  
       Other assets         1,013     1,015  
          129,500     197,601  
Non-current assets                  
       Investments in associates   5     303,407     304,911  
       Other investments   6     121,364     109,603  
       Royalty, stream and other interests   7     1,391,299     1,414,668  
       Exploration and evaluation         92,777     95,002  
       Goodwill         111,204     111,204  
       Other assets   3     11,265     1,657  
          2,160,816     2,234,646  
Liabilities                  
Current liabilities                  
       Accounts payable and accrued liabilities         9,273     11,732  
       Dividends payable         7,757     7,779  
       Provisions   8     4,439     3,494  
       Lease liabilities   3     703     -  
          22,172     23,005  
Non-current liabilities                  
       Long-term debt   9     324,355     352,769  
       Lease liabilities   3     9,077     -  
       Deferred income taxes         77,816     87,277  
          433,420     463,051  
Equity                  
       Share capital         1,609,435     1,609,162  
       Warrants   10     18,072     30,901  
       Contributed surplus         33,987     21,230  
       Equity component of convertible debentures         17,601     17,601  
       Accumulated other comprehensive income         21,090     23,499  
       Retained earnings         27,211     69,202  
          1,727,396     1,771,595  
          2,160,816     2,234,646  

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

2



Osisko Gold Royalties Ltd
Consolidated Statements of Income (Loss)
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

          2019     2018  
    Notes     $     $  
          (Note 3)      
                   
Revenues   12     100,726     125,614  
                   
       Cost of sales   12     (70,104 )   (93,667 )
       Depletion of royalty, stream and other interests         (12,376 )   (13,230 )
Gross profit         18,246     18,717  
                   
Other operating expenses                  
       General and administrative   17     (5,934 )   (4,426 )
       Business development   17     (1,738 )   (1,192 )
       Impairment of asset   7     (38,900 )   -  
Operating income (loss)         (28,326 )   13,099  
       Interest income         1,172     1,492  
       Finance costs         (5,747 )   (6,634 )
       Foreign exchange gain (loss)         (1,121 )   187  
       Share of loss of associates         (1,762 )   (1,397 )
       Other losses, net   12     (35 )   (2,581 )
Earnings (loss) before income taxes         (35,819 )   4,166  
       Income tax recovery (expense)         9,270     (1,856 )
                   
Net earnings (loss)         (26,549 )   2,310  
                   
Net earnings (loss) per share   13              
       Basic         (0.17 )   0.01  
       Diluted         (0.17 )   0.01  

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

3



Osisko Gold Royalties Ltd
Consolidated Statements of Comprehensive Income (Loss)
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars)

    2019     2018  
    $     $  
    (Note 3)        
             
Net earnings (loss)   (26,549 )   2,310  
             
Other comprehensive income (loss)            
             
       Items that will not be reclassified to the consolidated statement of            
         income (loss)            
             
           Change in fair value of financial assets at fair value through comprehensive income   5,247     (13,975 )
           Income tax effect   (662 )   1,941  
             
           Share of other comprehensive loss of associates   (352 )   (498 )
             
       Items that may be reclassified to the consolidated statement of income (loss)            
             
           Currency translation adjustments   (12,571 )   20,096  
             
Other comprehensive income (loss)   (8,338 )   7,564  
             
Comprehensive income (loss)   (34,887 )   9,874  

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

4



Osisko Gold Royalties Ltd
Consolidated Statements of Cash Flows
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars)

    Notes     2019     2018  
          $     $  
          (Note 3)        
                   
Operating activities                  
Net earnings (loss)         (26,549 )   2,310  
Adjustments for:                  
       Share-based compensation         2,701     673  
       Depletion and amortization         12,660     13,272  
       Impairment of asset         38,900     -  
       Finance costs         1,683     1,618  
       Share of loss of associates         1,762     1,397  
       Net loss (gain) on acquisition of investments         175     (1,908 )
       Change in fair value of financial assets at fair value through profit or loss         529     4,489  
       Net gain on disposal of investments         (669 )   -  
       Deferred income tax expense (recovery)         (9,482 )   1,667  
       Foreign exchange loss         1,159     898  
       Settlement of deferred share units         (295 )   -  
       Other         47     46  
Net cash flows provided by operating activities before changes in non-cash working capital items       22,621     24,462  
Changes in non-cash working capital items   14     2,129     (1,159 )
Net cash flows provided by operating activities         24,750     23,303  
                   
Investing activities                  
Short-term investments         (13,119 )   (500 )
Acquisition of investments         (5,759 )   (13,629 )
Proceeds on disposal of investments         422     25,578  
Acquisition of royalty and stream interests         (27,969 )   (9,970 )
Exploration and evaluation tax credits, net         186     1,094  
Other assets         (155 )   (18 )
Net cash flows provided by (used in) investing activities         (46,394 )   2,555  
                   
Financing activities                  
Exercise of share options and shares issued under the employee share purchase plan       5,683     114  
Issue expenses         -     (186 )
Financing fees         -     (379 )
Repayment of long-term debt         (30,000 )   -  
Principal elements of lease payments         (174 )   -  
Normal course issuer bid purchase of common shares         (11,901 )   (20,333 )
Dividends paid         (6,298 )   (7,547 )
Net cash flows used in financing activities         (42,690 )   (28,331 )
                   
Effects of exchange rate changes on cash and cash equivalents         (1,434 )   1,385  
Decrease in cash and cash equivalents         (65,768 )   (1,088 )
Cash and cash equivalents – beginning of period         174,265     333,705  
Cash and cash equivalents – end of period         108,497     332,617  

Additional information related to the consolidated statements of cash flows is presented in Notes 6, 14 and 17.

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

5



Osisko Gold Royalties Ltd
Consolidated Statements of Changes in Equity
For the three months ended March 31, 2019
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars)

          Number of                       Equity     Accumulated              
          common                       component of     other              
          shares     Share           Contributed     convertible     comprehensive     Retained        
    Notes     outstanding     capital     Warrants     surplus     debentures     loss(i)     earnings     Total  
                $     $     $     $     $     $     $  
Balance - January 1, 2019         155,443,351     1,609,162     30,901     21,230     17,601     23,499     69,202     1,771,595  
                                                       
Adoption of IFRS 16   3     -     -     -     -     -     -     (383 )   (383 )
                                                       
Net loss         -     -     -     -     -     -     (26,549 )   (26,549 )
Other comprehensive loss         -     -     -     -     -     (8,338 )   -     (8,338 )
Comprehensive loss         -     -     -     -     -     (8,338 )   (26,549 )   (34,887 )
                                                       
Dividends declared   10     -     -     -     -     -     -     (7,757 )   (7,757 )
Shares issued – Dividends reinvestment plan   10     126,933     1,481     -     -     -     -     -     1,481  
Shares issued – Employee share purchase plan         10,777     126     -     -     -     -     -     126  
Share options:                                                      
 Shared-based compensation         -     -     -     726     -     -     -     726  
 Fair value of options exercised         -     1,194     -     (1,194 )   -     -     -     -  
 Proceeds from exercise of options         302,332     4,349     -     -     -     -     -     4,349  
Replacement share options:                                                      
 Fair value of options exercised         -     694     -     (694 )   -     -     -     -  
 Proceeds from exercise of options         110,851     1,255     -     -     -     -     -     1,255  
Restricted share units to be settled in common shares:                                                      
 Share-based compensation         -     -     -     737     -     -     -     737  
 Income tax impact         -     -     -     353     -     -     -     353  
Normal course issuer bid purchase of common shares   10     (852,500 )   (8,826 )   -     -     -     -     (1,373 )   (10,199 )
Warrants expired   10     -     -     (12,829 )   12,829     -     -     -     -  
Transfer of realized gain on financial assets at fair value through other comprehensive income       -     -     -     -     -     5,929     (5,929 )   -  
                                                       
Balance – March 31, 2019         155,141,744     1,609,435     18,072     33,987     17,601     21,090     27,211     1,727,396  

(i) As at March 31, 2019, accumulated other comprehensive loss comprises items that will not be recycled to the consolidated statement of income (loss) amounting to ($27.5 million) and items that may be recycled to the consolidated statement of income (loss) amounting to $48.6 million.

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

6



Osisko Gold Royalties Ltd
Consolidated Statements of Changes in Equity
For the three months ended March 31, 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars)

          Number of                       Equity     Accumulated              
          common                       component of     other              
          shares     Share           Contributed     convertible     comprehensive     Retained        
    Notes     outstanding     capital     Warrants     surplus     debentures     loss(i)     earnings     Total  
                    $     $     $     $     $     $  
Balance - January 1, 2018         157,797,193     1,633,013     30,901     13,265     17,601     (2,878 )   202,503     1,894,405  
                                                       
Net earnings         -     -     -     -     -     -     2,310     2,310  
Other comprehensive income         -     -     -     -     -     7,564     -     7,564  
Comprehensive income         -     -     -     -     -     7,564     2,310     9,874  
                                                       
Dividends declared   10     -     -     -     -     -     -     (7,811 )   (7,811 )
Shares issued – Dividends reinvestment plan   10     24,513     343     -     -     -     -     -     343  
Shares issued – Employee share purchase plan         8,389     122     -     -     -     -     -     122  
Share options:                                                      
 Shared-based compensation         -     -     -     777     -     -     -     777  
 Fair value of options exercised         -     -     -     -     -     -     -     -  
 Proceeds from exercise of options         -     -     -     -     -     -     -     -  
Replacement share options:                                                      
 Fair value of options exercised         -     13     -     (13 )   -     -     -     -  
 Proceeds from exercise of options         2,710     38     -     -     -     -     -     38  
Restricted share units to be settled in common shares         -     -     -     990     -     -     -     990  
Normal course issuer bid purchase of common shares   10     (1,607,099 )   (11,662 )   -     -     -     -     (8,671 )   (20,333 )
Transfer of realized gain on financial assets at fair value through other comprehensive income       -     -     -     -     -     (13,711 )   13,711     -  
                                                       
Balance – March 31, 2018         156,225,706     1,621,867     30,901     15,019     17,601     (9,025 )   202,042     1,878,405  

(i) As at March 31, 2018, accumulated other comprehensive loss comprises items that will not be recycled to the consolidated statement of income (loss) amounting to ($30.0 million) and items that may be recycled the consolidated statement of income (loss) amounting to $20.9 million.

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

7



Osisko Gold Royalties Ltd
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2019 and 2018
(Unaudited)
(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 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. The cornerstone assets include 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 and a 9.6% diamond stream on the Renard diamond mine, all located in Canada, in addition to a 100% silver stream on the Mantos Blancos copper mine in Chile. In addition, the Company invests in equities of exploration and development companies.

   
2.

Basis of presentation

   

These unaudited condensed interim consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial statements, including International Accounting Standard (“IAS”) 34, Interim Financial Reporting. The condensed interim consolidated financial statements should be read in conjunction with the Company’s annual consolidated financial statements for the year ended December 31, 2018, which have been prepared in accordance with IFRS as issued by the IASB. The accounting policies, methods of computation and presentation applied in these unaudited condensed interim consolidated financial statements are consistent with those of the previous financial year, except for the adoption of a new accounting standard (Note 3).

   

The Board of Directors approved the interim condensed consolidated financial statements on May 1, 2019.

   
3.

New accounting standard

   

IFRS 16, Leases

   

In J anuary 2016, the IASB issued IFRS 16, Leases (“IFRS 16”). IFRS 16 s ets 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 incurring a financing obligation corresponding to the lease payments to be made over time. Accordingly, for lessees, IFRS 16 eliminates the classification of leases as either operating leases or finance leases as was 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)

amortization of lease assets separately from interest on lease liabilities in the statement of income (loss).

Management has reviewed all of the Company’s leasing arrangements in light of the requirements of IFRS 16. The standard affects primarily the accounting for the Company’s operating leases. As at December 31, 2018, the Company had non-cancellable operating lease commitments of $13.0 million. Of these commitments, approximately $0.6 million were related to short-term leases which are not recognized as a right-of-use asset and continue to be recognized on a straight-line basis as general and administrative expense in the consolidated statement of income (loss).

8



Osisko Gold Royalties Ltd
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

3.

New accounting standards (continued)

   

IFRS 16, Leases (continued)

   

The new standard is effective for the Company’s annual periods beginning on January 1, 2019. The Company applied the simplified transition approach and, consequently, did not restate comparative figures for 2018. Right-of-use assets for property leases were measured on transition as if the new standard had been applied since the respective leases’ commencement date but using the Company’s incremental borrowing rate of 4.79% as at January 1, 2019.

   

The Company recognized right-of-use assets of $9.4 million on January 1, 2019 (presented under other assets on the consolidated balance sheet), lease liabilities of $10.0 million and deferred tax assets of $0.1 million. Overall, net assets were approximately $0.4 million lower, and net current assets were $0.7 million lower due to the presentation of a portion of the lease liability as a current liability. The adoption of IFRS 16 will also have the effect of reducing net income after tax by approximately $0.2 million for 2019 based on the leases in place on January 1, 2019. For the same period, operating cash flows will increase and financing cash flows decrease by approximately $0.7 million as repayment of the principal portion of the lease liabilities will be classified as cash flows from financing activities.

   

The Company’s activities as a lessor are not material.

   

Accounting policy - Leases

   

The Company is committed to long-term lease agreements, mainly for office space. Prior to January 1, 2019, payments made under operating lease agreements were recognized in profit or loss on a straight-line basis over the period of the lease.

   

From January 1, 2019, leases are recognized as a right-of-use asset (presented under non-current other assets on the consolidated balance sheet) and a corresponding liability at the date at which the leased asset is available for use by the Company. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight- line basis.

   

Assets and liabilities arising from a lease are initially measured on a present value basis. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.

   

Payments associated with short-term leases (12 months or less) and leases of low-value assets are recognized on a straight- line basis as an expense in profit or loss.

   
4.

Cash

   

As at March 31, 2019 and December 31, 2018, cash held in U.S. dollars amounted respectively to $61.3 million (US$45.9 million) and $71.9 million (US$52.7 million).

9



Osisko Gold Royalties Ltd
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

5.

Investments in associates


      Three months ended     Year ended  
      March 31,     December 31,  
      2019     2018  
      $     $  
               
  Balance – Beginning of period   304,911     257,433  
   Acquisitions   250     87,134  
   Interests receivable paid in shares (Note 17)   1,820     -  
   Exercise of warrants   2,209     -  
   Transfer from other investments   -     7,048  
   Share of loss, net   (1,762 )   (9,013 )
   Share of other comprehensive income (loss), net   (352 )   433  
   Net gain on ownership dilution   -     1,545  
   Gain on deemed disposal   669     6,956  
   Transfer to other investments   (4,338 )   (46,625 )
               
  Balance – End of period   303,407     304,911  

6.

Other investments


      Three months ended     Year ended  
      March 31,     December 31,  
      2019     2018  
      $     $  
  Fair value through profit or loss (warrants)            
         Balance – Beginning of period   3,348     8,092  
               Acquisitions   -     3,093  
               Exercise   (1,055 )   -  
               Change in fair value   (529 )   (7,837 )
           Balance – End of period   1,764     3,348  
               
  Fair value through other comprehensive income (shares)            
         Balance – Beginning of period   104,055     106,841  
             Acquisitions   9,861     14,453  
             Transfer from associates   4,338     46,625  
             Change in fair value   5,247     (29,773 )
             Transfer to associates   -     (7,048 )
             Disposals   (6,101 )   (27,043 )
         Balance – End of period   117,400     104,055  
               
  Amortized cost            
         Balance – Beginning of period   2,200     200  
             Acquisition   -     2,000  
         Balance – End of period   2,200     2,200  
               
  Total   121,364     109,603  

10



Osisko Gold Royalties Ltd
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

6.

Other investments (continued)

   

During the three months ended March 31, 2019, an investment in a company classified as an investment at fair value through other comprehensive income was acquired by way of a share exchange. This non-cash transaction resulted in the disposal of the investment in the acquiree and the acquisition of an investment in the acquirer for an amount of $5.7 million.

   

Other investments comprise common shares, warrants and notes receivable, mostly from Canadian publicly traded companies, in addition to common shares held in a private company.

   
7.

Royalty, stream and other interests


                  Three months ended  
                        March 31, 2019  
      Royalty     Stream     Offtake        
      interests     interests     interests     Total  
      $     $     $     $  
                           
  Balance – Beginning of period   707,723     606,410     100,535     1,414,668  
       Acquisitions   25,257     15,000     -     40,257  
       Transfer   (10,000 )   10,000     -     -  
       Depletion   (5,866 )   (5,828 )   (682 )   (12,376 )
       Impairment   -     (38,900 )   -     (38,900 )
       Translation adjustments   (2,051 )   (8,239 )   (2,060 )   (12,350 )
                           
  Balance – End of period   715,063     578,443     97,793     1,391,299  
                           
  Producing                        
         Cost   510,021     483,899     66,773     1,060,693  
         Accumulated depletion and impairment   (302,942 )   (77,883 )   (11,225 )   (392,050 )
                           
         Net book value – End of period   207,079     406,016     55,548     668,643  
                           
  Development                        
         Cost   284,932     172,427     32,801     490,160  
         Accumulated depletion   -     -     -     -  
                           
         Net book value – End of period   284,932     172,427     32,801     490,160  
                           
  Exploration and evaluation                        
         Cost   223,052     -     9,444     232,496  
         Accumulated depletion   -     -     -     -  
                           
         Net book value – End of period   223,052     -     9,444     232,496  
                           
  Total net book value – End of period   715,063     578,443     97,793     1,391,299  

11



Osisko Gold Royalties Ltd
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

7.

Royalty, stream and other interests (continued)

   

Main acquisitions – 2019

   

Horne 5 property – silver stream (Falco Resources Ltd.)

   

In 2018, Osisko entered into a binding term sheet to provide Falco Resources Ltd. (“Falco”), an associate of the Company, with a senior secured silver stream credit facility (“Falco Silver Stream”) with reference to up to 100% of the future silver produced from the Horne 5 property located in Rouyn-Noranda, Québec. As part of the Falco Silver Stream, Osisko will make staged upfront cash deposits to Falco of up to $180.0 million and will make ongoing payments equal to 20% of the spot price of silver, to a maximum of US$6 per ounce. The Falco Silver Stream is secured by a first priority lien on the project and all assets of Falco.

   

The Falco Silver Stream was closed in February 2019, which triggered the payment of the first installment of $25.0 million to Falco. Two previously outstanding notes receivable amounting to $20.0 million were applied against the first installment ($10.0 million was included under Short-term investment on the consolidated balance sheet and $10.0 million was under Royalty, stream and other interests as the note was convertible into a 1% NSR royalty at the sole discretion of Osisko) and the remaining balance of $5.0 million was paid to Falco.

   

Dublin Gulch property – NSR royalty (Victoria Gold Corp.)

   

In 2018, Osisko acquired from Victoria Gold Corp. (“Victoria”), an associate of the Company, a 5% NSR royalty for $98.0 million on the Dublin Gulch property which hosts the Eagle Gold project located in Yukon, Canada. During the year ended December 31, 2018, payments totaling $78.4 million were made under the royalty agreement. The remaining balance of $19.6 million was paid during the three months ended March 31, 2019.

   

Impairment – 2019

   

Renard mine diamond stream (Stornoway Diamond Corporation)

   

On March 28, 2019, the operator of the Renard diamond mine in Québec, Canada, announced a significant impairment charge of $83.2 million on its Renard diamond mine reflecting an outlook of lower than expected diamond pricing. This was considered an indicator of impairment among other facts and circumstances and, accordingly, management performed an impairment assessment as at March 31, 2019. The Company recorded an impairment charge of $38.9 million ($28.6 million, net of income taxes) on the Renard diamond stream for the three months ended March 31, 2019.

   

On March 31, 2019, the Renard diamond stream was written down to its estimated recoverable amount of $122.4 million, which was determined by the fair value less cost of disposal using a discounted cash-flows approach. The fair value of the Renard diamond stream 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 diamonds from the Renard diamond stream over the estimated life of the Renard diamond mine, based on expected long-term diamond prices per carat and a post-tax real discount rate of 4.7%.

   

A sensitivity analysis was performed by management for the long-term diamond price and the post-tax real discount rate (in isolation). If the long-term diamond price per carat applied to the cash flow projections had been 10% lower than management’s estimates, the Company would have recognized an additional impairment charge of $6.1 million ($4.5 million, net of income taxes). If the post-tax real discount rate applied to the cash flow projections had been 100 basis points higher than management’s estimates, the Company would have recognized an additional impairment charge of $6.0 million ($4.4 million, net of income taxes).

12



Osisko Gold Royalties Ltd
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

7.

Royalty, stream and other interests (continued)


                        Year ended  
                  December 31, 2018  
      Royalty     Stream     Offtake        
      interests     interests     interests     Total  
      $     $     $     $  
                           
  Balance – Beginning of period   770,530     700,078     105,164     1,575,772  
           Acquisitions   109,670     31,431     -     141,101  
           Conversion   -     4,278     (4,278 )   -  
           Disposal   -     (150,289 )   -     (150,289 )
           Depletion   (26,972 )   (21,217 )   (4,423 )   (52,612 )
           Impairment   (153,639 )   -     (4,561 )   (158,200 )
           Translation adjustments   8,134     42,129     8,633     58,896  
                           
  Balance – End of period   707,723     606,410     100,535     1,414,668  
                           
  Producing                        
         Cost   510,738     489,407     68,072     1,068,217  
         Accumulated depletion and impairment   (297,137 )   (33,502 )   (10,665 )   (341,304 )
                           
         Net book value – End of period   213,601     455,905     57,407     726,913  
                           
  Development                        
         Cost   270,066     150,505     33,486     454,057  
         Accumulated depletion   -     -     -     -  
                           
         Net book value – End of period   270,066     150,505     33,486     454,057  
                           
  Exploration and evaluation                        
         Cost   224,056     -     9,642     233,698  
         Accumulated depletion   -     -     -     -  
                           
         Net book value – End of period   224,056     -     9,642     233,698  
                           
  Total net book value – End of period   707,723     606,410     100,535     1,414,668  

13



Osisko Gold Royalties Ltd
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

8.

Provisions


            Three months ended                 Year ended  
            March 31, 2019           December 31, 2018  
      Restricted     Deferred           Restricted     Deferred        
      share units     share units     Total     share units     share units     Total  
      $     $     $     $     $     $  
                                       
  Balance – Beginning of period   32     3,462     3,494     4,343     3,325     7,668  
     New liabilities   4     331     335     1,906     1,323     3,229  
     Settlement of liabilities   -     (295 )   (295 )   (2,618 )   (499 )   (3,117 )
     Transfer – RSU to be settled in equity   -     -     -     (2,426 )   -     (2,426 )
     Revision of estimates   8     897     905     (1,173 )   (687 )   (1,860 )
  Balance – End of period   44     4,395     4,439     32     3,462     3,494  
                                       
  Current portion   44     4,395     4,439     32     3,462     3,494  
  Non-current portion   -     -     -     -     -     -  
      44     4,395     4,439     32     3,462     3,494  

Additional information on the Deferred Share Units (“DSU”) and Restricted Share Units (“RSU”) are presented in Note 11.

   
9.

Long-term debt

   

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


      Three months ended     Year ended  
      March 31,     December 31,  
      2019     2018  
      $     $  
               
  Balance – Beginning of period   352,769     464,308  
   Repayment of debt – revolving credit facility   (30,000 )   (123,475 )
   Amortization of transaction costs   523     2,036  
   Accretion expense   1,063     4,456  
   Foreign exchange revaluation impact   -     5,444  
               
  Balance – End of period   324,355     352,769  

14



Osisko Gold Royalties Ltd
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

9.

Long-term debt (continued)

   

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


      March 31,     December 31,  
      2019     2018  
      $     $  
               
  Convertible debentures(i),(ii)   350,000     350,000  
  Revolving credit facility(iii)   -     30,000  
  Long-term debt   350,000     380,000  
  Unamortized debt issuance costs   (8,344 )   (8,867 )
  Unamortized accretion on convertible debentures   (17,301 )   (18,364 )
  Long-term debt, net of issuance costs   324,355     352,769  
  Current portion   -     -  
  Non-current portion   324,355     352,769  
      324,355     352,769  

  (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.

     
  (ii)

Convertible debentures (2017)

     
 

In November 2017, the Company closed a bought-deal offering of c onvertible 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 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”.

     
  (iii)

Revolving credit facility

     
 

The revolving credit facility (the “Facility”) allows the Company to borrow up to $350.0 million, with an additional uncommitted accordion of up to $100.0 million, for a total availability of up to $450.0 million. The uncommitted 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 royalty, stream 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 maturity date of November 14, 2022, which can be extended by one year on each anniversary date, subject to the approval of the lenders.

15



Osisko Gold Royalties Ltd
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

9.

Long-term debt (continued)

     
(iii)

Revolving credit facility (continued)

     

The Facility is subject to standby fees. Funds drawn 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. 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 March 31, 2019, all such ratios and requirements were met.


10.

Share capital and warrants

   

Normal Course Issuer Bid

   

In December 2018, Osisko renewed its normal course issuer bid (“NCIB”) program. Under the terms of the 2018 NCIB program, Osisko may acquire up to 10,459,829 of its common shares from time to time in accordance with the normal course issuer bid procedures of the TSX. Repurchases under the 2018 NCIB program are authorized until December 11, 2019. Daily purchases will be limited to 71,940 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, 2018, being 287,760 Common Shares.

   

During the three months ended March 31, 2019, the Company purchased for cancellation a total of 852,500 common shares under the 2018 NCIB program for $10.2 million (average acquisition price per share of $11.96). The Company also paid $1.7 million for shares acquired for cancellation in December 2018.

   

Dividends

   

On January 15, 2019, the Company issued 126,933 common shares under the Dividend reinvestment plan (“DRIP”), at a discount rate of 3%.

   

On February 20, 2019, the Board of Directors declared a quarterly dividend of $0.05 per common share payable on April 15, 2019 to shareholders of record as of the close of business on March 29, 2019. As at March 29, 2019, the holders of 5,087,058 common shares had elected to participate in the DRIP, representing dividends payable of $0.3 million. Therefore, 17,324 common shares were issued on April 16, 2019 at a discount rate of 3%.

   

Warrants

   

The following table summarizes the Company’s movements for the warrants outstanding:


            Three months ended                 Year ended  
            March 31, 2019           December 31, 2018  
                  Weighted                 Weighted  
                  average                 average  
      Number of           exercise     Number of           exercise  
      Warrants(i),(ii)     Amount     price     Warrants(i),(ii)     Amount     price  
            $     $           $     $  
                                       
  Balance – Beginning of period   11,195,500     30,901     27.61     11,195,500     30,901     27.61  
     Expired (i)   (5,715,500 )   (12,829 )   19.08     -     -     -  
  Balance – End of period   5,480,000     18,072     36.50     11,195,500     30,901     27.61  

  (i)

5,715,500 warrants entitling the holder to purchase one common share of Osisko at a price of $19.08 expired unexercised on February 26, 2019.

  (ii)

5,480,000 warrants entitling the holder to purchase one common share of Osisko at a price of $36.50 until March 5, 2022.

16



Osisko Gold Royalties Ltd
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

11.

Share-based compensation

   

Share options

   

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


      Three months ended           Year ended  
            March 31, 2019     December 31, 2018  
            Weighted           Weighted  
      Number of     average     Number of     average  
      options     exercise price     options     exercise price  
            $           $  
  Balance – Beginning of period   4,305,980     14.49     3,537,123     14.90  
   Granted(i)   -     -     886,900     12.85  
   Exercised   (302,332 )   14.38     -     -  
   Exercised – Virginia replacement share options(ii)   (110,851 )   11.32     (2,710 )   13.93  
   Expired   -     -     (44,866 )   15.15  
   Forfeited   -     -     (70,467 )   14.43  
                           
  Balance – End of period   3,892,797     14.58     4,305,980     14.49  
                           
  Options exercisable – End of period   2,573,964     14.77     2,720,879     14.72  

  (i)

Options were granted to officers, management, employees and/or consultants.

  (ii)

Share options issued as replacement share options following the acquisition of Virginia Mines Inc. in 2015.

The weighted average share price when share options were exercised during the three months ended March 31, 2019 was $15.50 ($14.71 for the year ended December 31, 2018).

The following table summarizes the Company’s share options outstanding as at March 31, 2019:

                Options outstanding     Options exercisable  
                      Weighted              
                      average              
                Weighted     remaining           Weighted  
    Exercise           average     contractual           average  
    price range     Number     exercise price     life (years)     Number     excercise price  
    $           $                 $  
    9.79 – 12.97     909,408     12.71     4.07     74,942     10.92  
    13.38 – 14.78     834,624     13.49     2.17     814,291     13.47  
    14.90 – 15.80     1,442,265     15.37     0.87     1,442,265     15.37  
    16.66 – 17.84     706,500     16.68     3.11     242,466     16.69  
                                     
          3,892,797     14.58     2.30     2,573,964     14.77  

17



Osisko Gold Royalties Ltd
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

11.

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. No options were granted during the three months ended March 31, 2019.

   

The fair value of the share options is recognized as compensation expense over the vesting period. For the three months ended March 31, 2019, the total share-based compensation related to share options on the consolidated statement of income (loss) amounted to $0.7 million ($0.8 million for the three months ended March 31, 2018).

   

Deferred and restricted share units

   

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


            Three months ended                 Year ended  
            March 31, 2019           December 31, 2018  
      DSU (i)     RSU(ii)     RSU(iii)     DSU(i)     RSU(ii)     RSU(iii)  
      (cash)     (cash)     (equity)     (cash)     (cash)     (equity)  
                                       
  Balance – Beginning of period   317,209     3,046     848,759     266,442     600,627     -  
   Granted   -     -     -     82,600     23,700     429,262  
   Reinvested (dividends on common shares)   1,332     13     3,561     4,696     7,064     6,277  
   Settled   (18,556 )   -     -     (36,529 )   (192,719 )   -  
   Transfer from cash-settled to equity-settled   -     -     -     -     (428,090 )   428,090  
   Forfeited   -     -     -     -     (7,536 )   (14,870 )
                                       
  Balance – End of period   299,985     3,059     852,320     317,209     3,046     848,759  
                                       
  Balance – Vested   216,311     -     69,546     233,883     -     69,257  

  (i)

The DSU granted vest the day prior to the next annual general meeting and are payable in cash to each director when he or she leaves the board or is not re-elected. The value of the payout will be determined by multiplying the number of DSU 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 is recognized over the vesting period.

     
  (ii)

The RSU granted prior to 2018 that have not been converted to equity-settled RSU vest and are payable in cash three years after the grant date, one half of which depends on the achievement of certain performance measures. The value of the payout will be determined by multiplying the number of 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 is based on applicable terms for performance based and fixed components. The fair value is recognized over the vesting period.

     
  (iii)

68,162 RSU were granted to management in 2018 as part of the 2017 short-term incentive plan. These RSU vested on the grant date and will be settled in common shares, cash or a combination of common shares and cash at the sole discretion of the Company on December 31, 2019. On the settlement date, one common share will be issued for each RSU, after deducting any income taxes payable on the benefit earned by the employee that must be remitted by the Company to the tax authorities.

     
 

The RSU granted in 2018 (other than the RSU granted for the 2017 short-term incentives) as well as the RSU granted prior to 2018 and converted to equity-settled RSU vest and are payable in common shares, cash or a combination of common shares and cash, at the sole discretion of the Company, three years after the grant date, one half of which depends on the achievement of certain performance measures. The value of the payout is determined by multiplying the number of RSU expected to be vested at the payout date by the closing price of the Company’s shares on the day prior to the grant date. The fair value is recognized over the vesting period and is adjusted in function of the applicable terms for the performance based components. On the settlement date, one common share will be issued for each RSU, after deducting any income taxes payable on the benefit earned by the employee that must be remitted by the Company to the tax authorities.

18



Osisko Gold Royalties Ltd
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

11.

Share-based compensation (continued)

   

Deferred and restricted share units (continued)

   

The total share-based compensation related to the DSU and RSU plans for the three months ended March 31, 2019 amounted to $2.0 million (recovery of $0.1 million for the three months ended March 31, 2018).

   
12.

Additional information on the consolidated statements of income (loss)


      2019     2018  
      $     $  
  Revenues            
  Royalty interests   23,445     23,944  
  Stream interests   10,055     8,641  
  Offtake interests   67,226     93,029  
               
      100,726     125,614  
  Cost of sales            
  Royalty interests   101     32  
  Stream interests   3,493     3,031  
  Offtake interests   66,510     90,604  
               
      70,104     93,667  
  Other losses, net            
  Change in fair value of financial assets at fair value through profit and loss   (529 )   (4,489 )
  Net gain (loss) on acquisition of investments(i)   (175 )   1,908  
  Net gain on disposal of investments(ii)   669     -  
               
      (35 )   (2,581 )

  (i)

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

  (ii)

In 2019, the net gain on disposal of investments includes the gain realized on the deemed disposal of an associate (Note 5).

19



Osisko Gold Royalties Ltd
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

13.

Net earnings (loss) per share


      2019     2018  
      $     $  
               
  Net earnings (loss)   (26,549 )   2,310  
  Basic weighted average number of common shares outstanding (in thousands)   155,059     157,665  
     Dilutive effect of share options   -     30  
     Dilutive effect of warrants   -     -  
     Dilutive effect of convertible debentures   -     -  
               
     Diluted weighted average number of common shares   155,059     157,695  
               
  Net earnings (loss) per share            
     Basic   (0.17 )   0.01  
     Diluted   (0.17 )   0.01  

As a result of the net loss for the three months ended March 31, 2019, 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. For the three months ended March 31, 2018, 3,488,647 outstanding share options, 11,195,500 outstanding warrants and 15,726,705 common shares underlying the convertible debentures were excluded from the computation of diluted earnings per share as their effect was anti-dilutive.

14.

Additional information on the consolidated statements of cash flows


      2019     2018  
      ($)     ($)  
               
  Interests received measured using the effective rate method   824     1,277  
  Interests paid on the long-term debt   857     1,880  
  Income taxes paid   212     189  
               
  Changes in non-cash working capital items            
         Decrease (increase) in accounts receivable   3,381     (1,591 )
         Increase in inventories   -     (103 )
         Increase in other current assets   (94 )   (18 )
         Increase (decrease) in accounts payable and accrued liabilities   (1,158 )   553  
               
      2,129     (1,159 )
               
  Normal course issuer bid purchase of common shares payable            
         Beginning of period   1,702     -  
         End of period   -     -  

20



Osisko Gold Royalties Ltd
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

15.

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).

                        March 31, 2019  
      Level 1     Level 2     Level 3     Total  
      $     $     $     $  
  Recurring measurements                        
  Financial assets at fair value through profit or loss(i)                        
  Warrants and call options on equity securities                        
       Publicly traded mining exploration and development companies                
               Precious metals   -     -     1,751     1,751  
               Other minerals, oil and gas   -     -     13     13  
  Financial assets at fair value through other comprehensive income(i)                
  Equity securities                        
       Private mining exploration and development companies – precious metals   -     -     57,110     57,110  
       Publicly traded mining exploration and development companies                
               Precious metals   47,638     -     -     47,638  
               Other minerals, oil and gas   12,652     -     -     12,652  
                           
      60,290     -     58,874     119,164  

                  December 31, 2018  
      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   -     -     3,322     3,322  
               Other minerals, oil and gas   -     -     26     26  
  Financial assets at fair value through other comprehensive income (loss)(i)                
  Equity securities                        
       Private mining exploration and development companies – precious metals   -     -     56,252     56,252  
       Publicly traded mining exploration and development companies                
                           
               Precious metals   35,544     -     -     35,544  
                           
               Other minerals, oil and gas   12,259     -     -     12,259  
                           
      47,803     -     59,600     107,403  

  (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.

 21



Osisko Gold Royalties Ltd
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

15.

Fair value of financial instruments (continued)

   

During the three months ended March 31, 2019 and 2018, there were no transfers among Level 1, Level 2 and Level 3.

   

The following table presents the changes in the Level 3 investments (warrants and investments in private companies) for the three months ended March 31, 2019 and 2018:


      2019     2018  
      $     $  
               
  Balance – Beginning of period   59,600     8,092  
   Acquisitions   858     1,375  
   Warrants exercised   (1,055 )   -  
   Change in fair value - warrants exercised(i)   (250 )   -  
   Change in fair value - investments expired(i)   (148 )   (495 )
   Change in fair value - investments held at the end of the period(i)   (131 )   (3,994 )
  Balance – End of period   58,874     4,978  

(i) Recognized in the consolidated statements of income (loss) under other losses, net (warrants) and in the consolidated statements of other comprehensive loss under changes in fair value of financial assets at fair value through comprehensive income (loss) (investments in private companies).

The fair value of the financial instruments classified as Level 3 depends on the nature of the financial instruments.

The fair value of the warrants on equity securities of publicly traded mining exploration and development companies is determined using the Black-Scholes option pricing model. The main non-observable input used in the model is the expected volatility. An increase/decrease in the expected volatility used in the models of 10% would lead to an increase/decrease in the fair value of the warrants of $0.4 million as at March 31, 2019 ($0.5 million as at March 31, 2018).

The fair value of the equity securities of private mining exploration and development companies is determined using different models including discounted cash flows. The main non-observable inputs used in the models are the expected price of metals and the discount rate. An increase/decrease in the long-term gold price of 10% would lead to an increase/decrease in the fair value of the investments in private companies of $6.7 million for the three months ended March 31, 2019 and an increase/decrease of 100 basis points in the discount rate would lead to an increase/decrease in the fair value of the investment of $6.7 million. There were no significant investments in private companies as at March 31, 2018.

Foreign exchange contracts

During the three months ended March 31, 2019, the Company entered into foreign exchange contracts (collar options) to sell US dollars and buy Canadian dollars for a total nominal amount of US$9.0 million. The contracts cover the period from April 2019 to December 2019 for the sale of US$1.0 million to US$2.0 million per month. The contracts were put in place to protect revenues in Canadian dollars from the sale of gold ounces received from royalty interests which are denominated in US dollars. The fair value of the contracts is booked at each reporting period on the consolidated balance sheets. As at March 31, 2019, the fair value (mark-to-market) of these contracts was immaterial. The Company does not apply hedge accounting for these contracts.

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, short-term investments, trade receivables, amounts receivable from associates and other receivables, notes receivable, accounts payable and accrued liabilities and long-term debt. The fair values of cash, short-term investments, 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 assumptions of those financial instruments.

22



Osisko Gold Royalties Ltd
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

15.

Fair value of financial instruments (continued)

   

Financial instruments not measured at fair value on the balance sheet (continued)

   

The following table presents the carrying amount and the fair value of the long-term debt, categorized as Levels 1 and 2, as at March 31, 2019:


            March 31, 2019  
      Carrying     Fair  
      amount     value  
      $       $  
               
  Long-term debt   324,355     357,738  

16.

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

   

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 three months ended March 31, 2019 and 2018, royalty, stream and other interest revenues were mainly earned from the following jurisdictions:


      North     South                          
      America(i)     America     Australia     Africa     Europe     Total  
      $     $     $     $     $     $  
                                       
  2019                                    
  Royalties   22,661     69     11     704     -     23,445  
  Streams   5,450     2,274     474     -     1,857     10,055  
  Offtakes   67,226     -     -     -     -     67,226  
                                       
      95,337     2,343     485     704     1,857     100,726  
                                       
  2018                                    
  Royalties   22,633     91     -     1,220     -     23,944  
  Streams   3,992     2,672     -     -     1,977     8,641  
  Offtakes   72,792     943     19,294     -     -     93,029  
                                       
      99,417     3,706     19,294     1,220     1,977     125,614  

  (i)

92% of revenues from North America were generated from Canada and the United States for the three months ended March 31, 2019 (92% for the three months ended March 31, 2018).

For the three months ended March 31, 2019, one royalty interest generated revenues of $14.4 million ($15.0 million for the three months ended March 31, 2018), which represented 43% of revenues (46% of revenues for the three months ended March 31, 2018) (excluding revenues generated from the offtake interests).

For the three months ended March 31, 2019, revenues generated from precious metals and diamonds represented 95% and 5% of revenues, respectively (84% and 14% excluding offtakes, respectively). For the three months ended March 31, 2018, revenues generated from precious metals and diamonds represented 96% and 3% of revenues, respectively (85% and 11% excluding offtakes, respectively).

23



Osisko Gold Royalties Ltd
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

16.

Segment disclosure (continued)

   

Royalty, stream and other interests, net

   

The following table summarizes the royalty, stream and other interests by country, as at March 31, 2019 and December 31, 2018, which is based on the location of the property related to the royalty, stream or other interests:


      North     South                                
      America(i)     America     Australia     Africa     Asia     Europe     Total  
      $     $     $     $     $     $     $  
                                             
  March 31, 2019                                          
  Royalties   651,110     26,984     9,994     11,760     -     15,215     715,063  
  Streams   251,114     176,355     3,158     -     83,794     64,022     578,443  
  Offtakes   56,270     -     8,722     -     32,801     -     97,793  
                                             
      958,494     203,339     21,874     11,760     116,595     79,237     1,391,299  

  December 31, 2018                                      
                                             
  Royalties   643,193     27,133     10,002     12,180     -     15,215     707,723  
  Streams   269,257     181,681     3,524     -     85,544     66,404     606,410  
  Offtakes   58,145     -     8,904     -     33,486     -     100,535  
                                             
      970,595     208,814     22,430     12,180     119,030     81,619     1,414,668  

  (i)

98% of net interests from North America are located in Canada and the United States as at March 31, 2019 (97% as at December 31, 2018).


17.

Related party transactions

   

During the three months ended March 31, 2019 and 2018, the following amounts were invoiced by Osisko to associates for recoveries of costs related to professional services and rental of offices and are reflected as a reduction of general and administrative expenses and business development expenses in the consolidated statements of income (loss):


      2019     2018  
      $     $  
  Amounts invoiced to associates as a reduction of:            
   General and administrative expenses   197     433  
   Business development expenses   535     847  
  Total amounts invoiced to associates   732     1,280  

An amount of $0.6 million (including sales taxes) is receivable from associates and included in amounts receivable as at March 31, 2019 ($3.2 million as at December 31, 2018).

During the three months ended March 31, 2019 and 2018, interest revenues of $0.2 million were accounted for with regards to notes receivable from associates. As at March 31, 2019, interests receivable from associates of $0.1 million are included in amounts receivable ($1.7 million as at December 31, 2018). During the three months ended March 31, 2019, interests receivable of $1.8 million from two notes issued to Falco were converted into common shares of Falco.

24



Osisko Gold Royalties Ltd
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

17.

Related party transactions (continued)

   

During the three months ended March 31, 2019, two notes receivable from Falco amounting to $20.0 million were applied against the first installment of a secured silver stream credit facility (Note 7). An additional secured senior note of $10.0 million was issued to Falco. The loan bears interest at a rate of 7%, compounded quarterly and the principal amount and accrued interests shall be payable on December 31, 2019.

   

Additional transactions with related parties are described under Note 7.

   
18.

Subsequent event

   

Dividends

   

On May 1, 2019, the Board of Directors declared a quarterly dividend of $0.05 per common share payable on July 15, 2019 to shareholders of record as of the close of business on June 28, 2019.

25


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 three months ended March 31, 2019

The following management discussion and analysis (“MD&A”) of the consolidated operations and financial position of Osisko Gold Royalties Ltd (“Osisko” or the “Company”) and its subsidiaries for the three months ended March 31, 2019 should be read in conjunction with the Company’s unaudited condensed interim consolidated financial statements and related notes for the three months ended March 31, 2019. The unaudited condensed interim 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 May 1, 2019, the date when the Board of Directors has approved the Company's unaudited condensed interim consolidated financial statements for the three months ended March 31, 2019 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 – First Quarter of 2019 2
Highlight – Subsequent to March 31, 2019 2
Portfolio of Royalty, Stream and Other Interests 3
Impairment of asset 13
Equity Investments 14
Sustainability Activities 17
Exploration and Evaluation Activities 17
Quarterly Dividends 18
Normal Course Issuer Bid 18
Gold Market and Currency 19
Selected Financial Information 20
Overview of Financial Results 21
Liquidity and Capital Resources 24
Cash Flows 24
Quarterly Information 26
Outlook 27
Related Party Transactions 27
Contractual Obligations and Commitments 28
Off-balance Sheet Items 29
Outstanding Share Data 30
Subsequent Event to March 31, 2019 30
Risks and Uncertainties 30
Disclosure Controls and Procedures and Internal Control over Financial Reporting 30
Basis of Presentation of Consolidated Financial Statements 31
Critical Accounting Estimates and Judgements 32
Financial Instruments 32
Non-IFRS Financial Performance Measures 33
Forward-looking Statements 34
Cautionary Note to U.S. Investors Regarding the Use of Mineral Reserve and Mineral Resource Estimates 35
Corporate Information 36



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

Description of the Business

Osisko Gold Royalties Ltd 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 Company 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. The Company owns a North American focused portfolio of over 135 royalty, stream and offtake interests, including the following cornerstone assets: a 5% net smelter return (“NSR”) royalty on the Canadian Malartic mine, a sliding scale 2.0% - 3.5% NSR royalty on the Éléonore mine and a 9.6% diamond stream on the Renard diamond mine, all located in Canada, as well as a 100% silver stream on the Mantos Blancos copper mine in Chile. Furthermore, the Company invests in equities of exploration and development companies.

Business Model and Strategy

Osisko is a growth-oriented and Canadian-focused precious metal royalty and streaming company that is focused on maximizing 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 through a quarterly dividend payment and share repurchases. Osisko has a unique growth strategy that consists not only of acquiring and structuring both producing and late-stage development royalty and stream products, but also of investing in longer term assets where the Company feels it is uniquely positioned to create value and realize returns through the development of these assets. The Company has a successful track-record of strong technical capabilities, which it puts to work creating its own pipeline of organic growth opportunities that provide exposure to the upside of commodity prices and to the optionality of mineral reserve and resource growth.

Osisko’s main focus is on high quality, long-life precious metals assets located in favourable jurisdictions and operated by established mining companies, as these assets provide the best risk/return profile. The Company also evaluates and invests in 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.

Highlights – First Quarter of 2019

  • Gold equivalent ounces (“GEOs1”) earned of 19,753 (compared to 20,036 GEOs in Q1 20182);
  • Revenues from royalties and streams of $33.5 million (compared to $32.6 million in Q1 2018);
  • Cash flows provided by operating activities of $24.8 million (compared to $23.3 million in Q1 2018);
  • Net loss of $26.5 million, $0.17 per basic share (compared to net earnings of $2.3 million, $0.01 per basic share in Q1 2018), reflecting an impairment charge of $38.9 million ($28.6 million, net of income taxes) on the Renard diamond stream;
  • Adjusted earnings3 of $5.8 million, $0.04 per basic share (compared to $8.9 million, $0.06 per basic share in Q1 2018);
  • Closed the previously announced senior secured silver stream facility with reference to up to 100% of the future silver produced from the Horne 5 property owned by Falco Resources Ltd.;
  • Repaid in full the revolving credit facility in January 2019 (payment of $30.0 million);
  • Acquired for cancellation 852,500 common shares for $10.2 million (average acquisition cost of $11.96 per share); and
  • Declared a quarterly dividend of $0.05 per common share paid on April 15, 2019 to shareholders of record as of the close of business on March 29, 2019.

Highlight – Subsequent to March 31, 2019

  • Declared a quarterly dividend of $0.05 per common share payable on July 15, 2019 to shareholders of record as of the close of business on June 28, 2019.
___________________________________________
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

Three months ended March 31, 2018 or first quarter of 2018 (“Q1 2018”).

3

“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.

2



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

Portfolio of Royalty, Stream and Other Interests

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

          Three months ended  
          March 31,  
    2019     2018  
             
Gold            
Canadian Malartic royalty   8,155     8,077  
Éléonore royalty   2,151     1,768  
Seabee royalty   877     1,126  
Pan royalty   484     295  
Island Gold royalty   470     327  
Brucejack offtake   310     515  
Matilda stream/offtake   274     244  
Vezza royalty   229     373  
Lamaque royalty   219     -  
Bald Mountain royalty   205     391  
Other   137     782  
    13,511     13,898  
Silver            
Mantos stream   1,333     1,592  
Sasa stream   1,076     1,176  
Gibraltar stream   533     322  
Canadian Malartic royalty   122     125  
Other   83     91  
    3,147     3,306  
Diamonds            
Renard stream   2,610     2,052  
Other   43     54  
    2,653     2,106  
Other metals            
Kwale royalty   435     726  
Other   7     -  
    442     726  
             
Total GEOs   19,753     20,036  

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Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  


The following table details the gold and silver ounces and the diamond carats attributable to Osisko for its main producing royalty, stream and other interests:

          Three months ended  
          March 31,  
    2019     2018  
             
Royalties and streams – Gold            
(in ounces)            
Canadian Malartic royalty   8,155     8,077  
Éléonore royalty   2,151     1,768  
Seabee royalty (1)   877     1,126  
Island Gold royalty   470     327  
Matilda stream (2)   274     -  
Vezza royalty   229     373  
             
Royalties and streams – Silver            
(in ounces)            
Mantos stream   111,653     126,161  
Sasa stream   90,105     93,221  
Gibraltar stream   44,649     25,494  
Canadian Malartic royalty   10,251     9,872  
             
Streams – Diamonds            
(in carats)            
Renard stream (3)   41,233     26,066  

  (1)

The Seabee royalty was paid in cash up to the first quarter of 2018.

  (2)

The Matilda offtake was converted in a stream effective April 1, 2018.

  (3)

Including the incidental carats sold outside of the run of mine sales.

Average Metal Prices and Exchange Rate

          Three months ended  
          March 31,  
    2019     2018  
             
Gold(1)   $1,304     $1,329  
Silver(2)   $15.57     $16.77  
             
Exchange rate (US$/Can$)(3)   1.3295     1.2647  

  (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.

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Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

Royalty, Stream and Other Interests Portfolio Overview

Osisko owns a portfolio of 136 royalties, streams and offtakes assets, as well as 38 royalty options. The portfolio consists of 122 royalties, 9 streams and 5 offtakes. Currently, the Company has 18 producing assets.

Portfolio by asset stage

Asset stage   Royalties     Streams     Offtakes     Total number  
                      of assets  
                         
Producing   11     5     2     18  
                         
Development (construction)   7     4     2     13  
                         
Exploration and evaluation   104     -     1     105  
                         
    122     9     5     136  

Producing assets

Asset Operator Interest Commodity Jurisdiction
         
North America        
Canadian Malartic Agnico Eagle Mines Limited
Yamana Gold Inc.
5% NSR royalty Au Canada
Éléonore Newmont Goldcorp Corporation 2.0-3.5% NSR royalty Au Canada
Renard Stornoway Diamond Corporation 9.6% stream Diamonds Canada
Gibraltar Taseko Mines Limited 75% stream Ag Canada
Seabee SSR Mining Inc. 3% NSR royalty Au Canada
Island Gold Alamos Gold Inc. 1.38-2.55% NSR royalty(1) Au Canada
Brucejack Pretium Resources Inc. 50% offtake Au Canada
Vezza Ressources Nottaway Inc. 5% NSR royalty & 40% NPI Au Canada
Bald Mtn. Alligator Ridge / Duke & Trapper Kinross Gold Corporation 1% / 4% NSR royalty Au USA
Pan Fiore Gold Ltd. 4% NSR royalty Au USA
Parral GoGold Resources Inc. 100% offtake Au, Ag Mexico
Lamaque South Eldorado Gold Corp. 1.7% NSR royalty(1) Au Canada
Holloway Kirkland Lake Gold $8.50/ounce Au Canada
         
Outside of North America        
Mantos Blancos Mantos Copper S.A. 100% stream Ag Chile
Sasa Central Asia Metals plc 100% stream Ag Macedonia
Kwale Base Resources Limited 1.5% GRR(2) Rutile, Ilmenite, Zircon Kenya
Brauna Lipari Mineração Ltda 1% GRR(2) Diamonds Brazil
Matilda (3) Blackham Resources Limited 1.65% stream Au Australia

5



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

Key development / exploration and evaluation assets

Asset Operator Interest Commodities Jurisdiction
Amulsar Lydian International Ltd. 4.22% Au / 62.5% Ag stream Au, Ag Armenia
Amulsar Lydian International Ltd. 81.9% offtake Au Armenia
Eagle Victoria Gold Corp. 5% NSR royalty Au Canada
Back Forty Aquila Resources Inc. 18.5% Au / 75% Ag streams Au, Ag USA
Horne 5(4) Falco Resources Ltd. 90%-100% stream Ag Canada
Malartic – Odyssey South Agnico Eagle Mines Limited
Yamana Gold Inc.
5% NSR royalty Au Canada
Malartic – Odyssey North Agnico Eagle Mines Limited
Yamana Gold Inc.
3% NSR royalty Au Canada
Cariboo Barkerville Gold Mines Ltd. 4% NSR royalty(5), (6) Au Canada
Windfall Lake Osisko Mining Inc. 1.5% NSR royalty Au Canada
Hermosa South 32 Limited 1% NSR royalty Zn, Pb, Ag USA
Spring Valley Waterton Global Resource Management 0.5% NSR royalty Au USA
Upper Beaver Agnico Eagle Mines Limited 2% NSR royalty Au, Cu Canada
Copperwood Highland Copper Company Inc. 3% NSR royalty (7) Ag, Cu USA
Marban Osisko Mining Inc. 0.425% NSR royalty Au Canada
Ollachea Kuri Kullu / Minera IRL 1% NSR royalty Au Peru
Casino Western Copper & Gold Corporation 2.75% NSR royalty Au, Ag, Cu Canada
Altar Sibanye-Stillwater 1% NSR royalty Cu, Au Argentina

(1)

After the sale of a 15% interest in the royalties acquired from Teck Resources Limited to Caisse de dépôt et placement du Québec. Eldorado Gold Corporation has an option to buy back 50% of the Lamaque South NSR royalty for $1.7 million within one year of the commencement of commercial production. Commercial production was declared on March 31, 2019 on Lamaque.

(2)

Gross revenue royalty (“GRR”).

(3)

In March 2018, Osisko and Blackham Resources Limited entered into an agreement to restructure the gold offtake (which was applicable on 55% of the gold production from the Matilda mine) into a 1.65% gold stream, effective April 1, 2018.

(4)

In February 2019, Osisko closed a senior secured silver stream credit facility with Falco with reference to up to 100% of the future silver produced from the Horne 5 property. This transaction is further described in the Portfolio of Investments section of this MD&A.

(5)

Osisko has the option to acquire an additional 1% NSR royalty on the Cariboo property for additional cash consideration of $13.0 million.

(6)

Including the Bonanza Ledge mine that has produced gold in 2018.

(7)

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%.

6



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

7



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

Canadian Malartic Royalty (Agnico Eagle Mines Limited and Yamana Gold Inc.)

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”) formed by Agnico Eagle Mines Limited (“Agnico Eagle”) and Yamana Gold Inc. (“Yamana”) (together the “Partners”). Canadian Malartic is Canada’s largest and the world’s 14th largest producing gold mine.

Osisko also holds a 3% NSR royalty on the Odyssey North zone and a 5% NSR royalty on the Odyssey South zone, which are located adjacent to the Canadian Malartic mine on Osisko’s royalty ground.

On February 14, 2019, Agnico Eagle reported that the Partnership is evaluating the potential for underground mining of the Odyssey deposit and East Malartic deposit, which lies on the Canadian Malartic mine property, from surface to a depth of 600 metres. These deposits could provide higher grade tonnes that could potentially supplement open pit production at Canadian Malartic. The Partners reported that Odyssey contains inferred mineral resources of 809,000 ounces of gold (11.5 million tonnes grading 2.19 g/t Au); and East Malartic has indicated mineral resources of 361,000 ounces gold (5.3 million tonnes grading 2.13 g/t Au) and inferred mineral resources of 1.4 million ounces of gold (22.0 million tonnes grading 1.98 g/t Au). Drilling is ongoing to extend and upgrade the mineral resources in these zones. The permit and Certificate of Authorization was received in December 2018, which allows for the development of an underground ramp at Odyssey.

Update on operations

In February 2019, Agnico Eagle released its increased guidance for gold production at the Canadian Malartic mine to 660,000 ounces in 2019, and 690,000 to 710,000 in 2020 and 2021, as higher grades from the Barnat pit are expected to increase production.

On April 25, 2019, Agnico Eagle reported that gold production in the first quarter of 2019 reached 167,340 ounces, slightly increasing when compared to the prior-year period due to slightly higher throughput levels and higher grades, partially offset by slightly lower gold recoveries.

Work on the Barnat extension project is proceeding on budget and on schedule. Work is primarily focused on the Highway 117 road deviation, overburden stripping and rock excavation. The highway deviation work re-started in April 2019 and is expected to be completed in late 2019. Production activities at Barnat are scheduled to begin in late 2019, following completion of the highway deviation.

Agnico Eagle reported that exploration programs are ongoing to evaluate several deposits to the east of the Canadian Malartic open pit, including the Odyssey, East Malartic, Sladen and Sheehan zones. These opportunities have the potential to provide new sources of ore for the Canadian Malartic mill. Additional exploration will be carried out in 2019 to assess the potential of these zones.

For more information, refer to Agnico Eagle’s press release dated February 14, 2019 entitled “Agnico Eagle Reports Fourth Quarter and Full Year 2018 Results - Three-Year Guidance Outlines Growing Production with Stable to Declining Unit Costs; Meliadine Mill Commissioning Underway with Project Ahead of Schedule and Under Budget; Year-Over-Year Increase in Mineral Reserves and Mineral Resources; Quarterly Dividend Increased”, and Agnico Eagle’s press release entitled “Agnico Eagle Reports First Quarter 2019 Results; Solid Production and Cost Performance; Nunavut Development Projects Advancing as Planned with Meliadine Expected to Achieve Commercial Production in May; Exploration Drilling Continues to Advance Project Pipeline”, both filed on www.sedar.com.

Éléonore Royalty (Newmont Goldcorp Corporation)

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 Newmont Goldcorp Corporation (“Newmont Goldcorp”), following the combination of Newmont Mining Corporation and Goldcorp Inc. (“Goldcorp”) completed in April 2019. Osisko currently receives an NSR royalty of 2.2% on production at Éléonore.

Update on operations

On April 25, 2019, Newmont Goldcorp reported in its conference call presentation for the first quarter of 2019 earnings that the objectives for the Éléonore mine in the second half of 2019 is to optimize development and mining rates and increase mill throughput and recoveries.

On February 13, 2019, Goldcorp had reported that the mine achieved sustainable mining rates of over 6,100 tonnes per day in November and 6,600 tonnes per day in December of 2018, in line with targeted annual gold production of 400,000 ounces.

8



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

On October 24, 2018, Goldcorp had updated its mineral reserve and resource estimates for the Éléonore mine as at June 30, 2018. Proven and probable gold mineral reserves as of June 30, 2018 totaled 3.3 million ounces (17.8 million tonnes grading 5.69 g/t Au). Measured and indicated gold mineral resources as of June 30, 2018 were estimated at 0.5 million ounces (3.2 million tonnes grading 5.03 g/t Au). Inferred gold mineral resources as of June 30, 2018 were estimated at 0.59 million ounces (3.2 million tonnes grading 5.76 g/t Au). Goldcorp stated that mineral resources were negatively impacted as the geologic modelling methodology that has been applied to the mineral reserves has been applied to mineral resources, in addition to economic stope optimization.

For additional information, please refer to Newmont Goldcorp’s presentation for the first quarter of 2019 earnings conference call, Goldcorp’s press release dated October 24, 2018 entitled “Goldcorp Reports 2018 Reserve And Resource Estimates And Provides Exploration Update”, and Goldcorp’s press release dated February 13, 2019 entitled “Goldcorp Reports Fourth Quarter 2018 Results”, all available on Newmont Goldcorp’s website at www.newmontgoldcorp.com.

Renard Stream (Stornoway Diamond Corporation)

Osisko owns a 9.6% diamond stream on the Renard diamond mine operated by Stornoway Diamond Corporation (“Stornoway”) and located approximately 350 kilometres north of Chibougamau in the James Bay region of north-central Québec.

Under the amended stream agreement, upon the completion of a sale of diamonds, Osisko will remit to Stornoway a cash transfer payment which shall be the lesser of 40% of achieved sales price and US$40 per carat. For the purpose of calculating stream remittances, Stornoway shall separately sell any diamonds smaller than the +7 DTC sieve size that are recovered in excess of the maximum agreed-upon proportion within a sale of run of mine (“ROM”) diamonds (the excess small diamonds, or incidentals). In this manner, Stornoway shall restrict the proportion of small diamonds contained in a ROM sale such that the streamers and Stornoway will be fully aligned on upside price exposure with downside protection on price and product mix.

Update on operations

On April 9, 2019, Stornoway reported first quarter mine production of 444,562 carats recovered from the processing of 582,613 tonnes of ore at an attributable grade of 76 carats per hundred tonnes (“cpht”). Carats recoveries decreased by 8% compared to the fourth quarter of 2018, principally due to mechanical issues at the front end of the process plant related to very cold weather in January and February. In March, the process plant surpassed its budgeted daily rate with an average of 7,209 tonnes processed per day. Stornoway mentioned that it has made the decision to suspend open pit mining operations starting in April, as the current stockpile of Renard 65 open pit ore is sufficient to meet planned process plant feed requirements into the second quarter of 2020.

During the first quarter of 2019, Stornoway reported sales of 429,506 carats sold at an average price of US$83 per carat ($110 per carat) from two tender sales. In terms of total carats sold, pricing and gross proceeds, this represents increases of 38%, 8% and 47% over the fourth quarter of 2018, respectively. First quarter diamond sales represent diamonds recovered during the fourth quarter of 2018.

On January 16, 2019, Stornoway reported that it expects to produce between 1.8 and 2.1 million carats in 2019 from the processing of 2.40 to 2.55 million tonnes of ore. 2019 production guidance reflects the steady-state operations at the 290 meter level of Renard 2 underground mine and improvement in grades demonstrated in the fourth quarter of 2018, with further operational flexibility and grade increases expected once Renard 3 underground ore becomes available. Between 1.80 and 2.10 million carats are expected to be sold in 8 tender sales at prices between US$80 and US$105 per carat.

For the three months ended March 31, 2019, Osisko incurred an impairment charge of $38.9 million ($28.6 million, net of income taxes) on its Renard diamond stream (refer to section Impairment of Assets).

For additional information, please refer to Stornoway’s press release dated January 16, 2019 entitled “Stornoway Announces Fourth Quarter and 2018 Production and Sales Results, and 2019 Guidance”, and Stornoway’s press release dated April 9, 2019 entitled “Stornoway Reports First Quarter 2019 Production and Sales Results”, both filed on SEDAR at www.sedar.com.

9



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

Mantos Blancos Stream (Mantos Copper S.A.)

Osisko owns a 100% silver stream on the Mantos Blancos mine, which is owned and operated by Mantos Copper S.A. (“Mantos”), 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.

Under the Mantos stream agreement, Osisko will receive 100% of the payable silver from the Mantos Blancos copper mine until 19.3 million ounces have been delivered, after which the stream percentage will be 30%. The purchase price for the silver under the Mantos stream is 25% of the monthly average silver market price for each ounce of refined silver sold and delivered and/or credited by Mantos to Osisko Bermuda Limited (“OBL”), a subsidiary of Osisko. 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 under the stream agreement in which case Mantos shall make a cash payment of US$70.0 million ($95.5 million) to OBL. As of March 31, 2019, a total of 1.87 million ounces of silver have been delivered under the stream agreement. Osisko expects that Mantos will reach the 1.99 million ounces of silver threshold by the end of the second quarter of 2019, based on expected production. The buy-down payment of US$70.0 million can be exercised in September 2019 or September 2020.

Update on operations

As per Mantos, production of silver at the Mantos Blancos mine and concentrator plant for the first quarter of 2019 was higher than the fourth quarter of 2018 at 140,990 ounces compared to 137,534 ounces due to higher recovery rates (79.5% vs 72.2%), offsetting slightly lower grade (4.60g/t Ag vs 4.68g/t Ag) and less material milled.

Work on the Mantos Blancos Concentrator Debottlenecking Project (“MB-CDP”) is expected to commence during the third quarter of 2019, once financing has been finalized. The MB-CDP project should increase processing capacity at the concentrator by approximately 70%. The key environmental permits are in place.

Brucejack Offtake (Pretium Resources Inc.)

Osisko owns a 50% gold offtake on the Brucejack gold mine. The Brucejack offtake agreement applies to the sales from the first 7,067,000 ounces (of which 3,533,500 ounces are attributable to OBL) of refined gold. 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, subject to the reduction election described below. On December 31, 2019, Pretium has the option 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 April 3, 2019, Pretium reported that its planned ramp-up to 3,800 tonnes per day (“tpd”) production rate at its Brucejack Mine, and its underground exploration drilling program, are both progressing on schedule. The company also re-affirmed its 2019 production guidance of 390,000 ounces to 420,000 ounces and the planned production ramp-up from 2,700 tpd to 3,800 tpd over the course of the year.

On April 4, 2019, Pretium announced an updated mineral reserve and mineral resource for the Brucejack mine as well as an updated life of mine plan. The updated life of mine plan highlights an average annual production of over 520,000 ounces of gold over the first 5 years, an average annual production of over 525,000 ounces of gold over the first 10 years and over 440,000 ounces of gold over the 14-year mine life. As of January 1, 2019, the total proven and probable mineral reserve estimate for the Brucejack mine stands to 6.4 million ounces of gold (16.0 million tonnes grading 12.6 g/t Au).

For more information on Brucejack, refer to Pretium’s press release dated April 3, 2019 entitled “Production Ramp-up and Underground Exploration Drilling Campaign on Track - 2019 Guidance Re-affirmed” and Pretium’s press release dated April 4, 2019 entitled “Continued Robust Economics of Brucejack Mine Confirmed with Updated Mineral Reserve and Resource, 14-Year Mine Plan”, both filed on www.sedar.com.

10



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

Sasa Stream (Central Asia Metals plc)

Osisko owns a 100% silver stream on the Sasa mine, operated by Central Asia Metals plc (“Central Asia”) and located in Macedonia. The Sasa mine 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 the payable silver production in exchange for US$5 per ounce (plus refining costs) of refined silver increased annually from 2017, based on inflation.

Update on operations

On April 10, 2019, Central Asia reported sales of 88,392 ounces of payable silver in the first quarter of 2019.

For more information on the Sasa mine, refer to Central Asia’s press release dated April 10, 2019, entitled “Q1 2019 Operations Update” available on their website at www.centralasiametals.com.

Seabee Royalty (SSR Mining Inc.)

Osisko holds a 3% NSR royalty on the Seabee gold operations operated by SSR Mining Inc. (“SSR Mining”) and located in Saskatchewan, Canada.

Update on operations

On April 10, 2019, SSR Mining reported that the Seabee gold operations achieved a record quarterly gold production at Seabee producing 31,183 ounces of gold due to the higher mill throughput and timing of gold pours at year-end, representing a quarter-on-quarter increase of 52%. The mill achieved an average throughput of 1,008 tpd over the first quarter, a 7% increase compared to the previous quarter, and 1,079 tpd for the month of March, both reflecting a higher mining rate at the Santoy mine. Gold mill feed grade was 8.59 g/t, in line with the mine plan. Gold recovery remained consistent at 97.2% .

At Seabee gold operations, management expects to continue increasing mining and milling rates to deliver another record gold production year in 2019. SSR Mining’s guidance for gold production in 2019 is estimated between 95,000 to 110,000 ounces. Exploration expenditures at Seabee total $6.0 million to continue underground exploration at depth, expansion of Santoy Gap hanging wall and continued testing of surface targets.

For more information, refer to SSR Mining’s press release dated January 15, 2019, entitled “SSR Mining Reports Fourth Quarter and Year-End 2018 Production Results and 2019 Guidance” and SSR Mining’s press release dated April 10, 2019 entitled “SSR Mining reports first quarter 2019 production results”, both filed on www.sedar.com.

Kwale Royalty (Base Resources Limited)

Osisko holds a 1.5% gross return royalty on the rutile, ilmenite and zircon produced from the Kwale mine, operated by Base Resources Limited (“Base Resources”) and located 10 kilometres inland from the Kenyan coast and 50 kilometres south of Mombasa.

Update on operations

On January 17, 2019, Base Resources reported highlights of its fourth quarter operations and noted an increase of 5% in tonnes of ore mined after a 35% increase in the third quarter following the successful implementation of the Kwale Phase 2 mine optimization project. Production in the fourth quarter reached 108,465 tonnes of ilmenite, 24,505 tonnes of rutile and 8,252 tonnes of zircon. Base Resources also noted continued strengthening of rutile and zircon prices with the ilmenite price remaining stable.

Production for the financial year ending June 30, 2019 is estimated at 385,000 to 415,000 tonnes of ilmenite, 88,000 to 94,000 tonnes of rutile and 31,000 to 34,000 tonnes of zircon.

On April 10, 2019, Base Resources reported production guidance for financial year ending June 30, 2020, estimated at 315,000 to 350,000 tonnes of ilmenite, 64,000 to 70,000 tonnes of rutile and 25,000 to 28,000 tonnes of zircon. The 2020 production guidance is lower than that for 2019 as a consequence of the lower heavy mineral grade of the South Dune orebody, depletion of stockpiled heavy mineral concentrates during the transition of mining operations to the South Dune and normal uncertainties associated with mining a new orebody.

For more information on the Kwale mine, refer to Base Resources’ quarterly activities report dated January 17, 2019 and Base Resources’ press release dated April 10, 2019 entitled “Production Guidance for FY20”, both available on their website at www.baseresources.com.au.

11



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

Gibraltar Stream (Taseko Mines Limited)

Osisko owns a 100% silver stream on Taseko Mines Limited’s (“Taseko”) attributable portion of the Gibraltar copper mine (“Gibraltar”), held by Gibraltar Mines Ltd. (“Gibco”) and located in British Columbia, Canada. Under the stream agreement, 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 and 35% of Gibco’s share of silver production thereafter. Osisko will make ongoing payments under the stream of US$2.75 per ounce of silver delivered. Gibraltar is the second largest open pit copper mine in Canada and fourth largest in North America.

Island Gold Royalty (Alamos Gold Inc.)

Osisko owns NSR royalties ranging from 1.38% to 2.55% on the Island Gold mine, operated by Alamos Gold Inc. (“Alamos”) and located in Ontario, Canada.

Alamos announced expected gold production at Island Gold for 2019 to increase 32% to reach 135,000 to 145,000 ounces. Higher grades and higher throughput are expected as a result of the completion of the Phase I expansion in September 2018, which expanded the mill to a design capacity of approximately 1,200 tpd. The current mine infrastructure can support similar mining rates; however, the operation is currently permitted to operate at an average annual rate of 1,100 tpd. With a mine and mill that can support higher throughput rates, the company is in the process of permitting an amendment to 1,200 tpd which is expected to be received by the end of 2019 as part of a Phase II expansion. In parallel, the company has started an evaluation of a potential Phase III expansion of the operations.

For more information, refer to Alamos’ press release dated January 14, 2019, entitled “Alamos Reports Fourth Quarter 2018 Production and Provides 2019 Outlook” filed on www.sedar.com.

Amulsar Stream (Lydian International Ltd.)

Osisko owns a 4.22% gold stream and 62.5% silver stream on the Amulsar project, owned by Lydian International Ltd. (“Lydian”) and located in southern Armenia. The Amulsar project is in the development and construction stage and Amulsar is expected to 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 89,034 ounces of refined gold and 434,093 ounces of refined silver are delivered to OBL. The stream agreement includes ongoing transfer payments by OBL to 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$55.0 million (US$34.4 million attributable to OBL); or

  (ii)

the s tream percentage may be reduced by 50% on the third anniversary of commercial production for US$50.0 million (US$31.3 million attributable to OBL).

Update on development and construction activities

On December 24, 2018, Lydian announced that it has entered into an amended and restated forbearance agreement with its senior lenders, stream financing providers, and equipment financiers (the “A&R Forbearance Agreement”), pursuant to which they have agreed to: (a) continue to temporarily suspend all principal and interest payments due and payable, and (b) continue to forbear from declaring or acting upon, or exercising default-related rights or remedies under such creditor’s financing agreement with respect to certain events of default, in each case, until the earlier of (a) June 30, 2019, (b) the occurrence of an additional event of default under such creditor’s financing agreement, or (c) any breach by the company of the A&R Forbearance Agreement.

Orion CO IV (ED) Limited (“Orion CO IV”), Resource Capital Fund VI L.P. (“RCF”) and OBL have committed to make available up to US$18.6 million (OBL’s commitment is US$5.0 million) to fund Lydian during the forbearance period through an amendment to the company’s existing credit agreement (the “Forbearance Facility”).

The Forbearance Facility will be available to be drawn in multiple advances from January 1, 2019 through June 30, 2019, and has a maturity date of June 30, 2019. The Forbearance Facility will bear interest at a rate of 15% per annum and includes a further 3% fee paid by original issue discount at each drawdown. Osisko Bermuda advanced an amount of US$2.3 million ($3.1 million) in January 2019 under the Forbearance Facility.

12



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

If Orion CO IV and either RCF or OBL reasonably determine that the Lydian’s pursuit of strategic alternatives will not be completed by June 30, 2019, they will be entitled to terminate the A&R Forbearance Agreement at the end of the calendar month in which such determination is made.

The A&R Forbearance Agreement continues to be required as a result of the previously announced illegal blockades that have prevented Lydian and its contractors from entering the Amulsar site since late June 2018. During the period of forbearance, Lydian has continued to petition local and national government officials to enforce the rule of law by removing the illegal blockades.

On March 19, 2019, Lydian announced that the Republic of Armenia Government has commenced its third-party assessment (“Third Audit”) of the Amulsar gold project’s environmental impact on water resources, geology, biodiversity and water quality. In September 2018, an assessment was ordered by the Armenian government to study possible impacts of the Amulsar gold project on water resources. The scope of work will now also include a review of the company’s Environmental and Social Impact Assessment (“ESIA”) and Environmental Impact Assessment (“EIA”). This is despite the fact that the company’s EIA was previously approved by Armenian authorities in accordance with Armenian law before Lydian began constructing the Amulsar gold project. Earth Link and Advanced Resources Development has been selected by the Armenian government as the consulting firm to perform the assessment, which is expected to last approximately 12 to 16 weeks. Lydian does not accept the need or legal basis for the Third Audit, since the Armenian government already confirmed that the Amulsar gold project complied with Armenian environmental requirements when it approved the EIA, and that Lydian relied on this approval when investing hundreds of millions of dollars in Armenia.

On April 12, 2019, Lydian announced that the Administrative Court of the Republic of Armenia ruled in favour of Lydian and instructed the Armenian police to remove trespassers and their property from Lydian’s Amulsar gold project site and assure Lydian free passage to Amulsar.

For more information on the Amulsar project, refer to Lydian’s press release dated December 24, 2018, entitled “Lydian Announces Extension of Forbearance Period and Additional Sources of Liquidity”, Lydian’s press release dated March 19, 2019 entitled “Armenia Government Commences the Third Audit”, and Lydian’s press release dated April 12, 2019 entitled “Court Order Police to Remove Trespassers and Assure Lydian Free Access to Amulsar”, all filed on www.sedar.com.

Back Forty Stream (Aquila Resources Inc.)

Osisko owns an 18.5% gold stream (reduced to 9.25% after the delivery of 105,000 gold ounces) and a 75% silver stream on the Back Forty project, owned by Aquila Resources Inc. (“Aquila”), and located along the mineral-rich Penokean Volcanic Belt in Michigan’s Upper Peninsula, USA. Aquila has completed a preliminary economic assessment in 2014 that demonstrated strong economics and has published results of an open pit feasibility study on August 1, 2018. Aquila has been granted all final permits by the Michigan’s Department of Environmental Quality and has received all State and Federal permissions required for the construction and commencement of operations at the Back Forty project. Gold production is targeted to reach a total of 468,000 ounces over the seven-year mine life, including 135,000 ounces in the first year. The stream agreement includes ongoing transfer payments to Aquila of 30% of the gold spot price (with a maximum of US$600 per ounce) and US$4 per ounce of silver.

For more information on the Back Forty project, refer to Aquila’s web site (aquilaresources.com) and press releases filed on www.sedar.com.

Impairment of asset

Renard mine diamond stream (Stornoway Diamond Corporation)

On March 28, 2019, Stornoway, the operator of the Renard diamond mine in Québec, Canada, announced a significant impairment charge of $83.2 million on its Renard diamond mine reflecting an outlook of lower than expected diamond pricing. This was considered an indicator of impairment among other facts and circumstances and, accordingly, management performed an impairment assessment as at March 31, 2019. The Company recorded an impairment charge of $38.9 million ($28.6 million, net of income taxes) on the Renard diamond stream for the three months ended March 31, 2019.

On March 31, 2019, the Renard diamond stream was written down to its estimated recoverable amount of $122.4 million, which was determined by the fair value less cost of disposal using a discounted cash-flows approach. The fair value of the Renard diamond stream 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 diamonds from the Renard diamond stream over the estimated life of the Renard diamond mine, based on expected long-term diamond prices per carat and a post-tax real discount rate of 4.7% .

13



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

Equity Investments

The Company’s assets include a portfolio of shares, mainly of publicly traded exploration and development mining 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 future royalties, streams or similar interests. 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 Inc. (“Osisko Mining”), Barkerville Gold Mines Ltd. (“Barkerville”), Falco Resources Ltd. (“Falco”) and Victoria Gold Corp. (“Victoria”).

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

During the first quarter of 2019, Osisko acquired investments for $5.8 million and disposed investments for $0.4 million.

Fair value of marketable securities / private placements

The following table presents the carrying value and fair value of the investments in marketable securities and private companies (excluding notes and warrants) as at March 31, 2019 (in thousands of dollars):

Marketable securities   Carrying value(i)   Fair value(ii)
    $   $
         
Associates   303,407   286,352
Other   117,400   117,400
    420,807   403,752

  (i)

The carrying value corresponds to the amount recorded on the consolidated 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 March 31, 2019 for public companies. For private investments, an internal or external evaluation is used to determine the fair value.

Main Strategic Investments

The following table presents the main strategic investments of the Company in marketable securities as at March 31, 2019 (in thousands of dollars):

    Number of       Cash   Fair
Company   shares held(i)   Ownership(i)   cost(iii)   value(i),(ii)
        %   $   $
                 
Osisko Mining Inc.   43,690,269   16.6   92,535   127,576
Barkerville Gold Mines Ltd.   162,864,251   32.2   78,274   61,074
Victoria Gold Corp.   120,427,087   15.3   65,939   51,784
Falco Resources Ltd.   41,385,240   19.9   24,253   13,243

(i)

As at March 31, 2019.

(ii)

See table above for definition of fair value.

(iii)

The cash cost of an investment is a non-IFRS measure representing the cash paid on the acquisition of an investment.

Osisko Mining Inc.

Osisko Mining is a Canadian focused gold exploration and development company. Osisko holds a 1.5% NSR royalty on the Windfall Lake gold project, for which a positive preliminary economic assessment was released in July 2018, and 1% NSR royalty on other properties held by Osisko Mining. As part of a previous investment agreement with Osisko Mining, Osisko obtained the right to purchase Osisko Mining’s buy-back rights on existing royalties on the Windfall Lake property for $5.0 million (of which $2.0 million were paid in 2018), thus allowing it to increase its royalty by an additional 1-2% NSR royalty for a total potential NSR royalty of 2.5 -3.5% .

In May 2018, Osisko Mining released a first mineral resources estimate on Windfall Lake gold deposit. Osisko Mining indicated that mineral resources were estimated at 601,000 ounces of gold in the measured and indicated category (2,382,000 tonnes grading 7.85 grams per tonne (“g/t”) Au) and 2,284,000 ounces of gold in the inferred category (10,605,000 tonnes grading 6.70 g/t Au). In November 2018, Osisko Mining released a mineral resource update including the mineral resource update for the Lynx zone. Estimated measured and indicated resources were increased to 754,000 ounces of gold (2,874,000 tonnes grading 8.17 g/t Au) and inferred mineral resources were increased to 2,366,000 ounces of gold (10,352,000 tonnes grading 7.11 g/t Au).

14



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

For more information, refer to Osisko Mining’s press release dated May 14, 2018 entitled: “Osisko Releases Its First Mineral Resource Estimate For Windfall Gold Deposit” and Osisko Mining’s press release dated November 27, 2018 entitled “Osisko Releases Mineral Resource Update for Lynx”, both filed on www.sedar.com.

In addition, a positive preliminary economic assessment on the Windfall Lake project was released in July 2018 with an after-tax internal rate of return of 33%. Osisko Mining is also pursuing an 800,000 meter drilling program on the Windfall Lake property as well as a metallurgical program. In October 2018, through the construction of an exploration ramp, Osisko Mining achieved access to Zone 27, wireframe 115, which was selected for the initial 5,000 tonne bulk sample to be processed in the fourth quarter of 2018. In December 2018, Osisko Mining released preliminary results from the first 2,078 tonnes mined. The average head grade obtained is 9.7 g/t Au and 5.5 g/t Ag, which is 39% higher than indicated in the resource block model for this area. The balance of 2,922 tonnes will be processed in 2019. For more information, refer to Osisko Mining’s press release dated July 17, 2018 entitled: “Osisko Delivers Positive PEA For Windfall Project” and Osisko Mining’s press release dated December 18, 2018 entitled “Osisko Windfall Initial Bulk Sample Returns 9.7 g/t Au Head Grade”, both filed on www.sedar.com.

In 2016 and 2017, Osisko entered into earn-in agreements with Osisko Mining on properties held by Osisko in the James Bay area. The transactions are detailed in the Exploration and Evaluation Activities section of this MD&A.

The Company converted warrants into common shares of Osisko Mining during the three months ended March 31, 2019 for $1.2 million. As at March 31, 2019, the Company holds 43,690,269 common shares representing 16.6% interest in Osisko Mining (16.7% as at December 31, 2018). 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 and accounts for its investment using the equity method.

Barkerville Gold Mines Ltd.

Osisko holds a 4% NSR royalty on the Cariboo gold project and has the option to acquire an additional 1% NSR royalty on the Cariboo property for additional cash consideration of $13.0 million. Osisko also holds a right of first refusal relating to any gold stream offer received by Barkerville with respect to the Cariboo gold project. 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 has completed a 157,000 meter drilling program.

On May 2, 2018, Barkerville announced the maiden mineral resource estimate for Cow and Island Mountain deposits at its 100% owned Cariboo gold project. The underground mineral resource estimate incorporates the Cow Mountain and Valley Zones on Cow Mountain and Shaft Zone and Mosquito Creek on Island Mountain at a cut-off grade of 3.0 g/t Au. A mineral resource on Bonanza Ledge and BC Vein is also included. The resource is defined over 6 kilometers of Barkerville’s 67-kilometer-long land package. Infill and exploration drilling is ongoing and resource updates will be presented annually. Barkerville indicated that mineral resources at the Cariboo gold project was estimated at 1.60 million ounces of gold in the measured and indicated category (8.1 million tonnes grading 6.1 g/t Au) and 2.16 million ounces of gold in the inferred category (12.7 million tonnes grading 5.2 g/t Au).

For more information, refer to Barkerville’s press release dated May 2, 2018 entitled: “BGM Defines Cow and Island Mountains Maiden Underground Resource and Barkerville Mountain Update” and filed on www.sedar.com.

In September 2018, Barkerville announced positive results from its initial test mining of 80,000 tonnes at Bonanza Ledge. Barkerville’s Bonanza Ledge mine has allowed the company to assess mining methods, understand what ground conditions to expect in different lithological units, train a local workforce, and generate cash flows to offset some exploration expenditures. Test mining at Bonanza Ledge was completed in December 2018 on Barkerville Mountain. A total of 1,400 meters of development took place at the Bonanza Ledge and BC Vein test mine. Approximately 122,000 tonnes were extracted and processed at a grade of 5.98 g/t Au and 21,125 ounces of gold were poured in 2018. The company has also applied for permit amendment to extend the test mining for BC vein ore bodies on Barkerville Mountain.

The 2019 exploration program will include a total of 50,000 meters planned for the initial phase and an additional 40,000 meters will be proposed following results of Phase 1.

15



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

For more information, refer to Barkerville’s press release dated September 11, 2018 entitled: “Barkerville Gold Mines Reports Positive Results From Initial Test Mining Of 80,000 Tonnes At Bonanza Ledge, Better Mine Grades And Solid Mill Performance” and Barkerville’s press release dated January 17, 2019 entitled: “Barkerville Gold Mines Defines Significant Exploration Potential and Provides Corporate Update and 2019 Catalysts”, both filed on www.sedar.com.

As at March 31, 2019, the Company holds 162,864,251 common shares representing a 32.2% interest in Barkerville (32.2% as at December 31, 2018). In April 2019, Osisko acquired 20,761,334 additional common shares of Barkerville for $7.5 million as part of a $20.0 million financing completed by Barkerville. Following this financing, Osisko’s interest in Barkerville represents 32.7% . The Company concluded that it exercises significant influence over Barkerville and accounts for its investment using the equity method.

Victoria Gold Corp.

Osisko holds a 5% NSR royalty on the Dublin Gulch property which hosts the Eagle Gold project located in Yukon, Canada. The 5% NSR royalty applies to all metals and minerals produced from the Dublin Gulch property, until an aggregate of 97,500 ounces of refined gold has been delivered to Osisko, and a 3% NSR royalty thereafter. The last tranches of the purchase price (total acquisition price was $98.0 million) were paid during the three months ended March 31, 2019 for $19.6 million.

The Dublin Gulch property is located approximately 85 kilometres by road north northeast of the village of Mayo, in central Yukon, Canada. The property hosts the Eagle gold deposit, the Wolf tungsten deposit and a 13 kilometres-long belt of gold and silver mineralization known as the Potato Hills Trend.

The Eagle Gold project is the most advanced project in the region and is on track to be the largest gold mine in Yukon history. The proposed Eagle gold mine will produce doré from a conventional open pit operation with a three-stage crushing plant, in-valley heap leach and carbon-in-leach adsorption-desorption gold recovery plant. The mine will employ 350 to 400 people and will be a significant economic contributor to Yukon.

The Eagle Gold project has received all major permits for construction and operations, completed the Environmental Assessment process and has a signed Comprehensive Cooperation and Benefits Agreement with the local Nacho Nyak Dun First Nation, whose traditional territory the project is located within.

In February 2019, Victoria Gold provided an update on construction of the Eagle Gold mine and reported that the project was 75% complete. Victoria Gold expects that the first ore reporting to the heap leach pad will occur in July 2019 with a first gold pour target of September 2019. Over 3 million metric tonnes of ore are expected to be delivered to the heap leach pad by year-end 2019.

For more information, refer to Victoria’s press release dated February 25, 2019 entitled: “Victoria Gold: Eagle Mine Construction Update, Dublin Gulch, Yukon” and filed on www.sedar.com.

As at March 31, 2019, the Company holds 120,427,087 common shares representing a 15.3% interest in Victoria (15.4% as at December 31, 2018). In April 2019, Osisko acquired 34,090,909 additional common shares of Victoria for $15.0 million as part of a $34.4 million financing completed by Victoria, including the over-allotment option. Following this financing, Osisko’s interest in Victoria represents 18.8% . Based on the fact that the chair of the Board of Directors and Chief Executive Officer of Osisko is also a director of Victoria, and because of other facts and circumstances, the Company concluded that it exercises significant influence over Victoria since the second quarter of 2018 and has started to account 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. For more information, refer to Falco’s press release dated October 16, 2017 and entitled: “Falco Announces Positive Feasibility Study Results on Horne 5 Gold Project” and filed on www.sedar.com.

In 2018, Osisko entered into a binding term sheet to provide Falco with a senior secured silver stream credit facility (“Falco Silver Stream”) with reference to up to 100% of the future silver produced from the Horne 5 property (“Horne 5” or the “Project”) located in Rouyn-Noranda, Québec. As part of the Falco Silver Stream, Osisko will make staged upfront cash deposits to Falco of up to $180.0 million and will make ongoing payments equal to 20% of the spot price of silver, to a maximum of US$6 per ounce. The Falco Silver Stream will be secured by a first priority lien on the Project and all assets of Falco.

16



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

The Falco Silver Stream was closed in February 2019, which triggered the payment of the first installment of $25.0 million to Falco. Two previously outstanding notes receivable amounting to $20.0 million were applied against the first installment and the remaining balance of $5.0 million was paid to Falco. Interests receivable amounting of $1.8 million related to these loans were settled in exchange for 5,353,791 additional common shares of Falco.

On February 22, 2019, Osisko entered into an agreement to provide Falco with a secured senior loan of $10.0 million. The loan bears interests at a rate of 7%, compounded quarterly. The principal amount and accrued interests shall be payable on December 31, 2019. The loan will be used for the advancement of the Horne 5 Project and for general corporate purposes.

As at March 31, 2019, the Company holds 41,385,240 common shares representing a 19.9% interest in Falco (17.8% as at December 31, 2018). 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 and accounts for its investment using the equity method.

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 the Federal government and the Provincial, Municipal and First Nations governments in Québec;
  • Supporting the economic development of 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; and
  • 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 of the investee companies in the sustainability areas on projects where Osisko has a direct or indirect interest.

Exploration and Evaluation Activities

In 2016, Osisko entered into earn-in agreements with Osisko Mining.

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) 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. 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 26 properties. During the first three months of 2019, Osisko Mining invested approximately $0.1 million on these properties for a total to date of $4.6 million (excluding the Kan property).

Under the second earn-in agreement, Osisko Mining had the option to 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. The Company received notice from Osisko Mining in the first quarter of 2019 that the threshold had been reached. Therefore, a 100% interest in the Kan property will be transferred to Osisko Mining and Osisko will hold 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 Kan property.

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.

As at March 31, 2019, the net book value of the properties under the earn-in agreements amounted to $31.7 million.

17



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

As a result of the earn-in agreements with Osisko Mining, the exploration and evaluation activities have been significantly reduced. During the three months ended March 31, 2019, investments amounted to $0.1 million and the Company received previously claimed tax credits of $0.2 million. As at March 31, 2019, the carrying value of the Coulon project was $59.9 million ($59.9 million as at December 31, 2018) and the carrying value of other properties, including those under the earn-in agreements with Osisko Mining, was $32.9 million ($35.1 million as at December 31, 2018).

Quarterly Dividends

The Board of Directors has approved the initiation of the Company’s quarterly dividend program on November 17, 2014.

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

    Dividend           Dividends paid or
Declaration date   per share   Record date(i)   Payment date(i)   payable
    $           $
                 
Year 2014   0.03   n/a   n/a   1,551,000
Year 2015   0.13   n/a   n/a   12,229,000
Year 2016   0.16   n/a   n/a   17,037,000
Year 2017   0.18   n/a   n/a   24,275,000
Year 2018   0.20   n/a   n/a   31,213,000
                 
February 20, 2019   0.05   March 29, 2019   April 15, 2019   7,757,000
May 1, 2019   0.05   June 28, 2019   July 15, 2019   tbd(ii)
Year-to-date 2019   0.10            

(i)

Not applicable (“n/a”) for annual summaries.

(ii)

To be determined (“tbd”) on June 28, 2019 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

The Company has a dividend reinvestment plan (“DRIP”) that allows Canadian shareholders and U.S. shareholders 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. No commissions, service charges or brokerage fees are payable by shareholders who elect to participate in the DRIP.

As at March 29, 2019, the holders of 5,087,058 common shares had elected to participate in the DRIP, representing dividends payable of $0.3 million. Therefore, 17,324 common shares were issued on April 16, 2019 at a discount rate of 3%.

Normal Course Issuer Bid

In December 2018, Osisko renewed its normal course issuer bid (“NCIB”) program. Under the terms of the 2018 NCIB program, Osisko could acquire up to 10,459,829 of its common shares from time to time in accordance with the normal course issuer bid procedures of the TSX. Repurchases under the 2018 NCIB program are authorized until December 11, 2019. Daily purchases will be limited to 71,940 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, 2018, being 287,760 common shares.

During the three months ended March 31, 2019, the Company purchased for cancellation a total of 852,500 common shares under the 2018 NCIB program for $10.2 million (average acquisition price per share of $11.96) . The Company also paid $1.7 million for common shares acquired for cancellation in December 2018.

The Company expects to maintain active NCIB programs in the next few years.

18



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

Gold Market and Currency

Gold Market

Commodity prices increased in early 2019 and the gold price extended its gains from December 2018 reaching over US$1,300 per ounce for the first time since June 2018, before retreating slightly and closing the quarter at US$1,295 per ounce. Sentiment towards gold has turned more favorable over the last six months. Recent gains were driven by the U.S. Federal Reserve’s patient stance on monetary policy returning to a neutral position on rates, and escalating worries over a global economic slowdown. Uncertainty linked to the Brexit, a potential commercial trade war between the U.S. and China, and a strong stock market with a strong U.S. dollar were among other factors affecting the gold price in the first quarter of 2019.

During the first quarter of 2019, the gold price gained 1.3% in U.S. dollars, or US$16 per ounce on the London fix, to close at US$1,295 per ounce. The average price amounted to US$1,304 per ounce, up from the previous quarter by US$78 per ounce, but US$25 lower on a year-over-year basis. The price was volatile during the period with a trading range of US$64 per ounce.

The historical price is as follows:

(US$/ounce of gold)  High  Low Average Close
         
2019-Q1 $1,344 $1,280 $1,304 $1,295
2018 1,355 1,178 1,268 1,279
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

In Canadian dollar terms, the average price per ounce of gold averaged $1,733 in the first quarter of 2019 compared to $1,619 in the fourth quarter of 2018 and $1,681 in the first quarter of 2018. The gold price closed at $1,731 per ounce on March 31, 2019 compared to $1,745 as at December 31, 2018.

Currency

After ending the year on a weaker tone, the Canadian dollar rebounded in January 2019 following a recovery in oil prices and other commodities. The Canadian dollar lost its momentum later in February and March as domestic demand has been weaker than expected. The Bank of Canada adopted a more prudent tone keeping the currency lower.

The Canadian dollar traded between a range of 1.3600 and 1.3095 in the first quarter of 2019 to close at 1.3363. The Canadian dollar averaged 1.3295 in the first quarter of 2019 compared to 1.3204 in the fourth quarter of 2018 and 1.2647 in the first quarter of 2018.

As expected, the Bank of Canada kept the overnight rate unchanged to a target of 1.75% at its January and March meetings.

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

  High Low Average Close
2019-Q1 1.3600 1.3095 1.3295 1.3363
2018 1.3642 1.2288 1.2957 1.3642
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

19



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

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

    Three months ended  
          March 31,  
             
    2019     2018  
    $     $  
             
Revenues   100,726     125,614  
Cash margin(2)   30,622     31,947  
Gross profit   18,246     18,717  
Impairment of asset   (38,900 )   -  
Operating income (loss)   (28,326 )   13,099  
Net earnings (loss)   (26,549 )   2,310  
Basic net earnings (loss) per share   (0.17 )   0.01  
Diluted net earnings (loss) per share   (0.17 )   0.01  
             
Total assets   2,160,816     2,502,233  
Total long-term debt   324,355     467,483  
             
Average selling price of gold (per ounce sold)            
     In C$(3)   1,731     1,688  
     In US$   1,302     1,333  
             
Operating cash flows   24,750     23,303  
             
Weighted average shares outstanding (in thousands)            
     Basic   155,059     157,665  
     Diluted(5)   155,059     157,695  

(1)

Unless otherwise noted, financial information is in Canadian dollars and prepared in accordance with IFRS.

(2)

Cash margin is a non-IFRS financial performance measure which has no standard definition under IFRS. It is calculated by deducting the cost of sales from the revenues. Please refer to the Overview of Financial Results section of this MD&A for a reconciliation of the cash margin per interest.

(3)

Using actual exchange rates at the date of the transactions.

(4)

As a result of the net loss for the three months ended March 31, 2019, 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.

20



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

Overview of Financial Results

Financial Summary – First quarter of 2019

  • Revenues from royalties and streams of $33.5 million ($100.7 million including offtakes) compared to $32.6 million ($125.6 million including offtakes) in Q1 2018;
  • Gross profit of $18.2 million compared to $18.7 million in Q1 2018;
  • Impairment charge of $38.9 million ($28.6 million, net of income taxes) on the Renard diamond stream;
  • Operating loss of $28.3 million compared to operating income of $13.1 million in Q1 2018;
  • Net loss of $26.5 million or $0.17 per basic and diluted share, compared to net earnings of $2.3 million or $0.01 per basic and diluted share in Q1 2018;
  • Adjusted earnings1 of $5.8 million or $0.04 per basic share1 compared to $8.9 million or $0.06 per basic share in Q1 2018; and
  • Cash flows provided by operating activities of $24.8 million compared to $23.3 million in Q1 2018.

Revenues from royalties and streams increased in the first quarter of 2019 and total revenues, including offtakes, decreased, mainly as a result of the conversion of the Matilda gold offtake to a stream on April 1, 2018.

Gross profit amounted to $18.2 million in the first quarter of 2019 compared to $18.7 million in the first quarter of 2018. The slight decrease is mainly due to a lower gross profit on offtake agreements. 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. The profit margin is highly impacted by the volatility of the commodity prices during the quotational period.

During the first quarter of 2019, the Company incurred an operating loss as a result of an impairment charge of $38.9 million on the Renard diamond stream interest. Excluding the impairment charge, operating income would have been $10.6 million compared to $13.1 million in the first quarter of 2018. The decrease in operating income in the first quarter of 2019 of $2.5 million (excluding the impairment charge) is mainly the result of higher general and administrative (“G&A”) expenses and business development expenses. The increase in G&A expenses and business development expenses is mainly due to a higher share-based compensation expense, mainly related to the deferred share units, resulting from the increase in the share price in the first quarter of 2019 partially offset by a decrease in professional fees and other fees. Lower cost recoveries in the first quarter of 2019 also affected negatively the operating loss.

The net loss for the first quarter of 2019 is the result of the impairment charge of $28.6 million, net of income taxes. Excluding the impact of the impairment charge (net of income taxes), net earnings in the first quarter of 2019 would have been $2.1 million compared to $2.3 million in the first quarter of 2018. The slight decrease is mainly the result of lower operating income (excluding the impairment charge) and a loss on foreign exchange of $1.1 million, partially offset by lower finance costs ($5.7 million in the first quarter of 2019 compared to $6.6 million in the first quarter of 2018), due to the repayment of the revolving credit facility in January 2019, and a loss on investments of $2.6 million in the first quarter of 2018 compared to nil in the first quarter of 2019.

Adjusted earnings were $5.8 million in the first quarter of 2019 compared to $8.9 million in the first quarter of 2018. The decrease was mainly the result of higher G&A expenses and business development expenses resulting from a higher share-based compensation expense.

Net cash flows provided by operating activities in the first quarter of 2019 amounted to $24.8 million compared to $23.3 million in the first quarter of 2018, mainly as a result of a positive impact in non-cash working capital items, partially offset by a lower gross profit before depletion of royalty, stream and other interests (cash margin, see reconciliation below).

_______________________________________________________
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.

21



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

Consolidated Statements of Income (Loss)

The following table presents summarized consolidated statements of income (loss) for the three months ended March 31, 2019 and 2018 (in thousands of dollars, except amounts per share):

          2019     2018  
          $     $  
                   
Revenues   (a)     100,726     125,614  
                   
Cost of sales   (b)     (70,104 )   (93,667 )
Depletion of royalty, stream and offtake interests   (c)     (12,376 )   (13,230 )
                   
Gross profit   (d)     18,246     18,717  
                   
Other operating expenses                  
General and administrative   (e)     (5,934 )   (4,426 )
Business development   (f)     (1,738 )   (1,192 )
Impairment of asset   (g)     (38,900 )   -  
                   
Operating income (loss)         (28,326 )   13,099  
                   
Other expenses, net   (h)     (7,493 )   (8,933 )
                   
Earnings (loss) before income taxes         (35,819 )   4,166  
                   
Income tax recovery (expense)   (i)     9,270     (1,856 )
                   
Net earnings (loss)         (26,549 )   2,310  
                   
Net earnings (loss) per share                  

Basic

        (0.17 )   0.01  

Diluted

        (0.17 )   0.01  

  (a)

Revenues are comprised of the following:


      Three months ended March 31,  
      2019     2018  
      Average                 Average              
      selling price     Ounces /     Total     selling price     Ounces /     Total  
      per ounce /     carats sold     revenues     per ounce /     Carats sold     revenues  
      carat ($)           ($000’s )   carat ($)           ($000’s )
                                       
                                       
  Gold sold   1,731     48,235     83,497     1,688     63,375     106,953  
  Silver sold   21     496,110     10,174     21     499,362     10,564  
  Diamonds sold(i)   110     41,233     4,524     132     26,066     3,450  
  Other (paid in cash)   -     -     2,351     -     -     4,647  
                  100,726                 125,614  

(i)      The diamonds were sold by an agent for Osisko for a blended selling price of $110 (US$83) per carat in the first quarter of 2019. 
          The average selling price includes 6,538 incidental carats sold outside of the run of mine sales at an average price of $20 (US$15) per carat. No incidental carats were sold in the first quarter of 2018. Excluding the incidental carats, 34,695 carats were sold at an average price of $127 (US$95) per carat in the first quarter of 2019.

 

The decrease in gold ounces sold in 2019 is mainly the result of the conversion of the Matilda offtake into a stream on April 1, 2018 and lower ounces delivered under the Brucejack offtake. The increase in diamonds sold in 2019 is the result of higher diamonds acquired and sold under the Renard stream.

     
  (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 decrease in 2019 is mainly the result of the conversion of the Matilda offtake into a stream on April 1, 2018 and lower ounces delivered under the Brucejack offtake.

     
  (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 decrease is due to the mix of sales in the first quarter of 2019 compared to the corresponding period in 2018.

22



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

  (d)

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


            Three months ended  
            March 31,  
      2019     2018  
      $     $  
               
  Royalty interests            
  Revenues   23,445     23,944  
  Cost of sales   (101 )   (32 )
  Cash margin   23,344     23,912  
               
  Depletion   (5,866 )   (6,637 )
  Gross profit   17,478     17,275  
               
  Stream interests            
  Revenues   10,055     8,641  
  Cost of sales   (3,493 )   (3,031 )
  Cash margin   6,562     5,610  
               
  Depletion   (5,828 )   (4,806 )
  Gross profit   734     804  
               
  Royalty and stream interests            
  Cash margin   29,906     29,522  
      89.3%     90.6%  
               
  Offtake interests            
  Revenues   67,226     93,029  
  Cost of sales   (66,510 )   (90,604 )
  Cash margin   716     2,425  
      1.1 %     2.6%  
  Depletion   (682 )   (1,787 )
  Gross profit   34     638  
               
  Total – Gross profit   18,246     18,717  

  (e)

G&A expenses increased to $5.9 million in the first quarter of 2019 compared to $4.4 million in the first quarter of 2018. The increase is mainly due to higher share-based compensation expense of $1.8 million mainly related to the deferred share units resulting from the increase in share price in the first quarter of 2019 compared to a decrease in the first quarter of 2018.

     
  (f)

Business development expenses increased to $1.7 million in the first quarter of 2019 compared to $1.2 million in the first quarter of 2018. The increase is mainly due to lower costs recoveries from associates and higher share-based compensation.

     
  (g)

In the first quarter of 2019, the Company recorded an impairment charge of $38.9 million ($28.6 million, net of income taxes) on its Renard diamond stream, which is explained in detail in the Impairment of assets section of this MD&A.

     
  (h)

Other expenses, net, of $7.5 million in the first quarter of 2019 include finance costs of $5.7 million, a share of loss of associates of $1.8 million and a foreign exchange loss of $1.1 million, partially offset by interest income of $1.2 million.

     
 

Other expenses, net, of $8.9 million in the first quarter of 2018 include finance costs of $6.6 million, a net loss on investments of $2.6 million and a share of loss of associates of $1.4 million, partially offset by interest income of $1.5 million.

     
  (i)

The effective income tax rate for the first quarter of 2019 is 25.9% compared to 44.6% in the first quarter of 2018. The statutory rate is 26.6% in 2019 and 26.7% in 2018. The elements that impacted the effective income taxes are the non-taxable (or deductible) part of capital gains (or losses) (50%) and non-deductible expenses. Cash taxes of $0.2 million were paid in the first quarter of 2019 and 2018 and were related to taxes on royalties earned in foreign jurisdictions.

23



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

Liquidity and Capital Resources

As at March 31, 2019, the Company’s cash position amounted to $108.5 million compared to $174.3 million as at December 31, 2018. Significant variations in the liquidity and capital resources for the first quarter of 2019 are explained below under the Cash Flows section.

The Company has a credit facility of $350.0 million (with an additional uncommitted accordion of up to $100.0 million, for a total availability of up to $450.0 million), which was not drawn at March 31, 2019 following the reimbursement of the outstanding balance of $30.0 million in January 2019. The credit 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 March 31, 2019, all such ratios and requirements were met.

Cash Flows

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

          Three months ended  
          March 31,  
    2019     2018  
    $     $  
Cash flows            
       Operations   22,621     24,462  
       Working capital items   2,129     (1,159 )
       Operating activities   24,750     23,303  
       Investing activities   (46,394 )   2,555  
       Financing activities   (42,690 )   (28,331 )
Effects of exchange rate changes on cash and cash equivalents   (1,434 )   1,385  
Decrease in cash and cash equivalents   (65,768 )   (1,088 )
Cash and cash equivalents – beginning of period   174,265     333,705  
Cash and cash equivalents – end of period   108,497     332,617  

Operating Activities

Cash flows provided by operating activities during the first quarter of 2019 amounted to $24.8 million compared to $23.3 million in the corresponding period of 2018.

Net cash flows provided by operating activities increased in the first quarter of 2019 as a result of a positive impact of non-cash working capital items, partially offset by a lower gross profit before depletion of royalty, stream and other interest (cash margin).

Investing Activities

Cash flows used in investing activities amounted to $46.4 million in the first quarter of 2019 compared to cash provided by investing activities of $2.6 million in the first quarter of 2018.

In the first quarter of 2019, Osisko invested $28.0 million in acquisitions of royalty and stream interests, including the last payments totalling $19.6 million on the Dublin Gulch property NSR royalty (hosting the Eagle Gold project which is in construction) and a net payment of $5.0 million on the Falco Silver Stream. The Company also disbursed $13.1 million in short-term investments, including a $10.0 million loan to Falco, and $5.8 million in investments. Proceeds on disposal of investments generated $0.4 million during the first quarter of 2019.

During the first quarter of 2018, Osisko invested $13.6 million in investments, $10.0 million in royalty interests and $0.5 million in short-term investments. Proceeds on the sale of investments generated $25.6 million, mainly from the disposal of the AuRico Metals Inc. shares to Centerra Gold Inc. for proceeds of $25.5 million. Exploration and evaluation activities generated $1.1 million as the Company received payments of previously claimed governmental tax credits.

Financing Activities

During the first quarter of 2019, cash flows used in financing activities amounted to $42.7 million compared to $28.3 million in the corresponding period of 2018.

24



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

During the first quarter of 2019, Osisko repaid the remaining balance of $30.0 million on its revolving credit facility, paid $11.9 million under the 2018 NCIB program and $6.3 million in dividends to its shareholders. The exercise of share options generated $5.6 million and the employee share purchase plan generated $0.1 million.

During the first quarter of 2018, the Company paid $20.3 million under the 2017 NCIB program and $7.5 million in dividends to its shareholders.

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)
                         
                         
2019                        
Exercise of share options   302,332     14.38     4,349     4,349  
Exercise of replacement share options(vi)   110,851     11.32     1,255     1,255  
Employee share purchase plan   6,734     11.70     79     79  
                                                                                     Total   419,917           5,683     5,683  
                         
2018                        
Exercise of replacement share options(vi)   2,710     13.93     38     38  
Employee share purchase plan   26,709     12.00     320     320  
                                                                                     Total   29,419           358     358  
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               1,206,211     1,158,218  

  (i)

On November 3, 2017, Osisko closed a bought deal offering of convertible senior unsecured debentures for net proceeds of $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 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 Caisse de dépôt et placement du Québec and Fonds de solidarité FTQ to fund a portion of the acquisition price of Orion’s portfolio of assets. 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$118.0 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 de dépôt et placement du Québec and Fonds de solidarité FTQ at a price of $15.03 per common share for total gross proceeds of $42.0 million.

25



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter 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)

    2019                 2018                 2017        
    Q1     Q4     Q3     Q2     Q1     Q4     Q3     Q2  
                                                 
GEOs   19,753     20,005     20,006     20,506     20,036     20,990     16,664     10,863  
Cash and cash equivalents   108,497     174,265     137,188     188,631     332,617     333,705     108,902     348,642  
Short-term investments   13,119     10,000     10,000     1,000     500     -     1,447     1,547  
Working capital   107,328     174,596     281,858     180,605     325,206     324,101     113,689     329,927  
Total assets   2,160,816     2,234,646     2,441,668     2,458,641     2,502,233     2,516,343     2,320,930     1,438,511  
Total long-term debt   324,355     352,769     419,680     419,228     467,483     464,308     193,738     46,236  
Equity   1,727,396     1,771,595     1,868,196     1,884,101     1,878,405     1,894,405     1,931,759     1,218,302  
Revenues   100,726     115,337     111,702     137,819     125,614     109,552     68,179     18,359  
Net cash flows from operating activities   24,750     18,559     20,636     19,660     23,303     21,523     1,094     14,082  
Impairment of assets, net of income taxes   (28,600 )   (123,655 )   -     -     -     (65,415 )   -     -  
Net earnings (loss)   (26,549 )   (113,882 )   5,474     511     2,310     (64,348 )   6,728     11,043  
Basic and diluted net earnings (loss) per share   (0.17 )   (0.73 )   0.04     -     0.01     (0.41 )   0.05     0.10  
Weighted average shares outstanding (000’s)                                
   - Basic   155,059     156,336     156,252     156,232     157,665     157,256     140,605     106,656  
   - Diluted   155,059     156,336     156,263     156,257     157,695     157,256     140,837     106,771  
Share price – TSX – closing   15.01     11.97     9.80     12.45     12.44     14.52     16.10     16.85  
Share price – NYSE – closing   11.24     8.78     7.59     9.47     9.67     11.56     12.91     12.22  
Warrant price – TSX – closing                                                
   OR.WT   0.80     0.37     0.70     1.06     1.50     2.40     2.80     2.75  
   OR.WT.A(2)   n/a     0.01     0.10     0.39     0.61     1.41     2.45     2.65  
Debenture price – TSX – closing(3)                                                
   OR.DB   103     98.99     99.00     100.25     100.00     104.50     -     -  
Price of gold (average US$)   1,304     1,226     1,213     1,306     1,329     1,275     1,278     1,257  
Closing exchange rate(4)
(US$/Can$)
  1.3363     1.3642     1.2945     1.3168     1.2894     1.2713     1.2480     1.3449  

(1)

Unless otherwise noted, financial information in Canadian dollars and prepared in accordance with IFRS.

(2)

The warrants expired unexercised on February 26, 2019.

(3)

Osisko 4% convertible debentures began trading on November 3, 2017 by tranche of nominal value of $100.00.

(4)

Bank of Canada Daily Rate.

During the first quarter of 2019, the Company recorded an impairment charge of $38.9 million ($28.6 million, net of income taxes) on the Renard diamond stream and fully reimbursed the outstanding amount of $30.0 million under its revolving credit facility.

During the fourth quarter of 2018, Osisko received the payment of US$118.5 million ($159.4 million) from Pretium in regards to its election to exercise its option to fully repurchase by December 31, 2018 OBL’s interest in the Brucejack gold and silver stream. The Company recorded impairment charges of $166.3 million ($123.7 million, net of income taxes) including $148.5 million on the Éléonore NSR royalty ($109.1 million, net of income taxes) and reimbursed $71.7 million on its credit facility.

During the second quarter of 2018, Osisko acquired from Victoria a 5% NSR royalty for $98.0 million on the Dublin Gulch property, of which a first $48.0 million was paid in the second quarter and $14.7 million in the third quarter, and acquired common shares of Victoria for $50.0 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.

26



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

Outlook

Osisko’s 2019 outlook on royalty, stream and 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 Newmont Goldcorp, and for the Renard mine published by Stornoway. When publicly available forecasts on properties are not available, Osisko obtains internal forecasts from the producers, which is the case for the Mantos Blancos mine, or uses management’s best estimate.

Attributable GEOs for 2019 remains unchanged from previous guidance. GEOs and cash margin by interest are estimated as follows:

  Low   High   Cash margin
  (GEOs)   (GEOs)   (%)
           
Royalty interests 54,700   61,100   99.9
Stream interests 28,000   31,300   65.5
Offtake interests 2,300   2,600   1.2
  85,000   95,000    

For the 2019 guidance, silver, diamonds and cash royalties have been converted to GEOs using commodity prices of US$1,300 per ounce of gold, US$15.50 per ounce of silver and US$95 per carat for diamonds from the Renard mine (blended sales price) and an exchange rate (US$/C$) of 1.30.

Related Party Transactions

During the three months ended March 31, 2019 and 2018, the following amounts were invoiced by Osisko to associates for recoveries of costs related to professional services and rental of offices and are reflected as a reduction of general and administrative expenses and business development expenses in the consolidated statements of income (loss) (in thousands of dollars):

    2019     2018  
    $     $  
Amounts invoiced to associates as a reduction of:            
 General and administrative expenses   197     433  
 Business development expenses   535     847  
             
Total amounts invoiced to associates   732     1,280  

An amount of $0.6 million (including sales taxes) is receivable from associates and included in amounts receivable as at March 31, 2019 ($3.2 million as at December 31, 2018).

During the three months ended March 31, 2019 and 2018, interest revenues of $0.2 million were accounted for with regards to notes receivable from associates. As at March 31, 2019, interests receivable from associates of $0.1 million are included in amounts receivable ($1.7 million as at December 31, 2018). During the three months ended March 31, 2019, interests receivable of $1.8 million from two notes issued to Falco were converted into common shares of Falco.

During the three months ended March 31, 2019, two notes receivable from Falco amounting to $20.0 million were applied against the first installment of the Falco Silver Stream. An additional secured senior note of $10.0 million was issued to Falco. The loan bears interests at a rate of 7%, compounded quarterly and the principal amount and accrued interests shall be payable on December 31, 2019.

Additional transactions with related parties are described under the sections Portfolio of Royalty, Stream and Other Interests and Portfolio of investments.

27



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

Contractual Obligations and Commitments

Offtake and stream purchase agreements

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 cash payment (US$) Term of Date of contract
Interest Gold Silver Diamond Gold    Silver Diamond      agreement  
                 
                 
Amulsar stream(1) 4.22% 62.5%   $400 $4   40 years Nov. 30, 2015
                 
        Based on            Until delivery of  
Amulsar offtake(2) 81.91%     quotational period     2,110,425 ounces Au Nov. 30, 2015
        30% spot price        
Back Forty stream 18.5%(3) 75%   (max $600) $4   Life of mine Mar. 31, 2015
        Based on     Until delivery of 3,533,500  
Brucejack offtake 50%     quotational period     ounces Au(4) Sep. 21, 2015
                 
Mantos stream(5)   100%     25% spot   Life of mine Sep. 11, 2015
            Higher of 40%    
            of sales price    
Renard stream(6)      9.6%     or $40 40 years Jul. 8, 2014
                 
Sasa stream(7)   100%     $5   40 years Nov. 3, 2015
                 
Gibraltar stream(8)   75%     $2.75   Life of mine Mar. 3, 2017

(1)

Stream capped at 89,034 ounces of gold and 434,093 ounces of silver delivered. Subject to multiple buy-down options: 50% for $34.4 million and $31.3 million on 2nd and 3rd anniversary of commercial production, respectively.

(2)

Offtake percentage will increase to 84.87% if Lydian elects to reduce the gold stream as outlined above. The Amulsar offtake applies to the sales from the first 2,110,425 ounces of refined gold, of which 1,853,751 ounces are attributable to OBL (less any ounces delivered pursuant to the Amulsar stream).

(3)

The gold stream will be reduced to 9.25% after the delivery of 105,000 gold ounces.

(4)

The Brucejack offtake applies to the sales from the first 7,067,000 ounces of refined gold, of which 3,533,500 ounces are attributable to OBL.

(5)

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%.

(6)

The stream term shall be automatically extended beyond the initial term for successive 10-year periods. The Renard stream was amended in October 2018.

(7)

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.

(8)

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, which represents 75% of Gibraltar mine’s production, until reaching the delivery to Osisko of 5.9 million ounces of silver, and 35% of Gibco’s share of silver production thereafter.

28



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

Investments in royalty and stream interests

As at March 31, 2019, the Company had commitments related to the acquisition of royalties and streams as detailed in the following table:

Company Project (asset) Installments Triggering events
       
       
Aquila Resources Inc.
Back Forty project
(gold stream)
US$10.0 million
US$30.0 million
Positive construction decision.
First drawdown on debt finance facility.
       
Falco Resources Ltd.
Horne 5 project
(silver stream)
$20.0 million Receipt of all necessary material third-party approvals, licenses, rights of way and surface rights on the property.
$35.0 million Receipt of all material construction permits, positive construction decision, and raising a minimum of $100.0 million in non-debt financing.
$60.0 million Upon total projected c apital expenditure having been demonstrated to be financed.
$40.0 million
(optional)
Payable with fourth installment, at sole election of Osisko, to increase the silver stream to 100% of payable silver (from 90%).
       
Barkerville Gold Mines Ltd.
Cariboo Gold project
(NSR royalty)
$13.0 million Osisko has the option to acquire an additional 1% NSR royalty for $13.0 million.

Long-term lease agreements

The Company is committed to minimum amounts under long-term lease agreements for office space, which expire at the latest in 2029. As at March 31, 2019, minimum commitments remaining under these leases were approximately $12.7 million over the following years ending March 31:

    $  
    (‘000 )
       
2019   1,518  
2020   1,216  
2021   1,120  
2022   1,120  
2023   1,131  
2024-2029   6,589  
    12,694  

Foreign exchange contracts

During the three months ended March 31, 2019, the Company entered into foreign exchange contracts (collar options) to sell US dollars and buy Canadian dollars for a total amount of US$9.0 million. The contracts cover the period from April 2019 to December 2019 for the sale of US$1.0 million to US$2.0 million per month. The contracts were put in place to protect revenues in Canadian dollars from the sale of gold ounces received from royalty interests which are denominated in US dollars. The fair value of the contracts is booked at each reporting period on the consolidated balance sheets. As at March 31, 2019, the fair value (mark-to-market) of these contracts was immaterial. The Company does not apply hedge accounting for these contracts.

Off-balance Sheet Items

There are no significant off-balance sheet arrangements, other than the foreign exchange contracts discussed under the Contractual Obligations and Commitments section.

29



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

Outstanding Share Data

As of May 1, 2019, 155,179,020 common shares were issued and outstanding. A total of 3,877,764 share options and 5,480,000 warrants were outstanding to purchase common shares. A convertible debenture of $50.0 million with Ressources Québec 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. Convertible senior unsecured debentures of $300.0 million are outstanding and 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.

Subsequent Event to March 31, 2019

Dividends

On May 1, 2019, the Board of Directors declared a quarterly dividend of $0.05 per common share payable on July 15, 2019 to shareholders of record as of the close of business on June 28, 2019.

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 securities 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 U.S Securities and Exchange Commission (“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.

The CEO and CFO have evaluated whether there were changes to the DCP during the three months ended March 31, 2019 that have materially affected, or are reasonably likely to materially affect, the DCP. No such changes were identified through their evaluation.

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.

30



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

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.

The CEO and CFO have evaluated whether there were changes to the ICFR during the three months ended March 31, 2019 that have materially affected, or are reasonably likely to materially affect, the ICFR. No such changes were identified through their evaluation.

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.

Basis of Presentation of Consolidated Financial Statements

The unaudited condensed interim consolidated financial statements for the three months ended March 31, 2019 have been prepared in accordance with the IFRS as issued by the IASB applicable to the preparation of interim financial statements, including International Accounting Standard (“IAS”) 34, Interim Financial Reporting. The unaudited condensed interim consolidated financial statements should be read in conjunction with the Company’s annual consolidated financial statements for the year ended December 31, 2018, which have been prepared in accordance with IFRS as issued by the IASB. The accounting policies, methods of computation and presentation applied in the unaudited condensed interim consolidated financial statements are consistent with those of the previous financial year, except for the adoption of a new accounting standard (IFRS 16, Leases), which is described below.

The significant accounting policies of Osisko are detailed in the notes to the audited consolidated financial statements for the year ended December 31, 2018, filed on SEDAR at www.sedar.com, EDGAR at www.sec.gov and on Osisko’s website at www.osiskogr.com, except for the new accounting policy related to the adoption of IFRS 16, Leases, which is described below.

IFRS 16, Leases

In January 2016, the IASB issued IFRS 16, Leases (“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 incurring a financing obligation corresponding to the lease payments to be made over time. Accordingly, for lessees, IFRS 16 eliminates the classification of leases as either operating leases or finance leases as was 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)

amortization of lease assets separately from interest on lease liabilities in the statement of income (loss).

Management has reviewed all of the Company’s leasing arrangements in light of the requirements of IFRS 16. The standard affects primarily the accounting for the Company’s operating leases. As at December 31, 2018, the Company had non-cancellable operating lease commitments of $13.0 million. Of these commitments, approximately $0.6 million were related to short-term leases which are not recognized as a right-of-use asset and continued to be recognized on a straight-line basis as expense in the consolidated statement of income (loss).

31



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter Report  

IFRS 16, Leases (continued)

The new standard is effective for the Company’s annual periods beginning on January 1, 2019. The Company applied the simplified transition approach and, consequently, did not restate comparative figures for 2018. Right-of-use assets for property leases were measured on transition as if the new standard had been applied since the respective leases’ commencement date but using the Company’s incremental borrowing rate of 4.79% as at January 1, 2019.

The Company recognized right-of-use assets of $9.4 million on January 1, 2019 (presented under other assets on the consolidated balance sheet), lease liabilities of $10.0 million and deferred tax assets of $0.1 million. Overall, net assets were approximately $0.4 million lower, and net current assets were $0.7 million lower due to the presentation of a portion of the lease liability as a current liability. The Company expects that the adoption of IFRS 16 will have the effect of reducing net income after tax by approximately $0.2 million for 2019 based on the leases in place on January 1, 2019. For the same period, operating cash flows will increase and financing cash flows decrease by approximately $0.7 million as repayment of the principal portion of the lease liabilities will be classified as cash flows from financing activities.

The Company’s activities as a lessor are not material.

Accounting policy - Leases

The Company is committed to long-term lease agreements, mainly for office space. Prior to January 1, 2019, payments made under operating lease agreements were recognized in profit or loss on a straight-line basis over the period of the lease.

From January 1, 2019, leases are recognized as a right-of-use asset (presented under non-current other assets on the consolidated balance sheet) and a corresponding liability at the date at which the leased asset is available for use by the Company. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.

Assets and liabilities arising from a lease are initially measured on a present value basis. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.

Payments associated with short-term leases (12 months or less) and leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss.

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 accounting estimates and assumptions as well as critical judgements in applying the Company’s accounting policies are detailed in the audited consolidated financial statements for the year ended December 31, 2018, filed on SEDAR at www.sedar.com, EDGAR at www.sec.gov and on Osisko’s website at www.osiskogr.com.

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 discounted cash flows, 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, 2018 and in the unaudited condensed interim consolidated financial statements for the three months ended March 31, 2019, both filed on SEDAR at www.sedar.com, EDGAR at www.sec.gov and on Osisko’s website at www.osiskogr.com.

32



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter 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.

Adjusted Earnings and Adjusted Earnings per Basic Share

“Adjusted earnings” is defined as “Net earnings (loss)” less certain items: “Foreign exchange gain (loss)”, “Impairment charges”, “Gains (losses) on disposal of exploration and evaluation assets”, “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  
          March 31,  
    2019     2018  
(in thousands of dollars, except per share amounts)   $     $  
             
Net earnings (loss)   (26,549 )   2,310  
             
Adjustments:            
   Impairment of asset   38,900     -  
   Foreign exchange loss   1,159     898  
   Unrealized loss on investments   35     2,581  
   Share of loss of associates   1,762     1,397  
   Deferred income tax expense (recovery)   (9,482 )   1,667  
             
Adjusted earnings   5,825     8,853  
             
Weighted average number of common shares outstanding (000’s)   155,059     157,665  
             
Adjusted earnings per basic share   0.04     0.06  

33



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter 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, silver, diamonds, other commodities 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 s imilar 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 estimate of gold equivalent ounces to be received in 2019, the realization of the anticipated benefits deriving from Osisko’s investments and transactions, and Osisko’s ability to seize future opportunities. 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 diff er from those anticipated, estimated or intended. For additional information on risks, uncertainties and assumptions, please 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.

34



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter 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 currently 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 Guide 7. 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 Guide 7 and, generally, U.S. companies reporting pursuant to Guide 7 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 pursuant to Guide 7. 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
   
May 1, 2019  

35



Osisko Gold Royalties Ltd Management’s Discussion and Analysis
2019 – First Quarter 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
John Burzynski Elif Lévesque, Vice President, Finance and Chief
Pierre D. Chenard(1)    Financial Officer
Christopher C. Curfman Joseph de la Plante, Vice President, Corporate Development
André Gaumond(1) André Le Bel, Vice President, Legal Affairs and
Pierre Labbé    Corporate Secretary
Oskar Lewnowski Frédéric Ruel, Vice President and Corporate Controller
Charles E. Page François Vézina, Vice President, Technical Services

(1)

Mr. Pierre D. Chenard and André Gaumond are not standing for
re-election at the 2019 Annual Meeting of Shareholders.

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)
                   - 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.

36


EX-99.3 4 exhibit99-3.htm EXHIBIT 99.3 Osisko Gold Royalties Ltd.: Exhibit 99.3 - Filed by newsfilecorp.com

FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE

I, Sean Roosen, Chair of the Board of Directors and Chief Executive Officer of Osisko Gold Royalties Ltd, certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Osisko Gold Royalties Ltd (the “issuer”) for the interim period ended March 31, 2019.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim 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, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim 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 interim 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, 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 end of the period covered by the interim filings

     (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 interim 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. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1st, 2019 and ended on March 31, 2019 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 1st, 2019

(s) Sean Roosen  
Sean Roosen  
Chair of the Board of Directors 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 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE

I, Elif Lévesque, Vice President, Finance and Chief Financial Officer of Osisko Gold Royalties Ltd, certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Osisko Gold Royalties Ltd (the “issuer”) for the interim period ended March 31, 2019.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim 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, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim 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 interim 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, 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 end of the period covered by the interim filings

     (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 interim 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. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1st, 2019 and ended on March 31, 2019 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 1st, 2019

(s) Elif Lévesque  
Elif Lévesque  
Vice President, Finance and Chief Financial Officer  


EX-99.5 6 exhibit99-5.htm EXHIBIT 99.5 Osisko Gold Royalties Ltd.: Exhibit 99.1 - Filed by newsfilecorp.com

OSISKO DECLARES 19TH CONSECUTIVE QUARTERLY DIVIDEND

(Montreal, May 1, 2019) Osisko Gold Royalties Ltd ("Osisko" or the "Company") (TSX:OR) (NYSE:OR) is pleased to announce a second quarter 2019 dividend of C$0.05 per common share. The dividend will be paid on July 15, 2019 to shareholders of record as of the close of business on June 28, 2019.

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 June 28, 2019. 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 July 15, 2019 to shareholders on record as of June 28, 2019. 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.

1


About Osisko Gold Royalties Ltd

Osisko Gold Royalties Ltd is an intermediate precious metal royalty company that holds a North American focused portfolio of over 135 royalties, streams and precious metal offtakes. Osisko’s portfolio is anchored by its 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 32.7% interest in Barkerville Gold Mines Ltd., a 16.6% interest in Osisko Mining Inc., an 18.8% interest in Victoria Gold Corp. and a 19.9% 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:
 
Joseph de la Plante
Vice President, Corporate Development
Tel. (514) 940-0670
jdelaplante@osiskogr.com

2


EX-99.6 7 exhibit99-6.htm EXHIBIT 99.6 Osisko Gold Royalties Ltd.: Exhibit 99.2 - Filed by newsfilecorp.com

OSISKO REPORTS FIRST QUARTER 2019 RESULTS

CASH FLOWS FROM OPERATING ACTIVITIES OF $24.8 MILLION

Montréal, May 1, 2019 – Osisko Gold Royalties Ltd (the “Company” or “Osisko”) (OR: TSX & NYSE) today announced its consolidated financial results for the first quarter of 2019.

Highlights

  • Earned 19,753 gold equivalent ounces1 (“GEOs”) compared to 20,036 in Q1 2018;

  • Revenues from royalties and streams of $33.5 million compared to $32.6 million in Q1 2018;

  • Generated cash flows from operating activities of $24.8 million compared to $23.3 million in Q1 2018;

  • Adjusted earnings2 of $5.8 million, $0.04 per basic share2 compared to $8.9 million, $0.06 per basic share in Q1 2018;

  • Recorded cash operating margins3 of 89% from royalty and stream interests, generating $29.9 million in operating cash flow in the first quarter, in addition to a quarterly cash operating margin of $0.7 million from offtake interests;

  • Closed the previously announced senior secured silver stream facility with reference to up to 100% of the future silver produced from the Horne 5 property owned by Falco Resources Ltd.;

  • Repaid in full the revolving credit facility in January 2019 (payment of $30.0 million);

  • Incurred an impairment charge of $38.9 million ($28.6 million, net of income taxes) on the Renard diamond stream. This impairment is mainly due to a significant impairment charge of $83.2 million announced on March 28, 2019 by the operator of the Renard diamond mine in Québec, Canada, reflecting a lower diamond pricing outlook than expected;

  • Acquired for cancellation 852,500 of our common shares for $10.2 million (average acquisition cost of $11.96 per share);

  • Held $108.5 million in cash and $403.8 million in equity investments4 as at March 31, 2019;

  • Declared a quarterly dividend of $0.05 per common share paid on April 15, 2019 to shareholders of record as of the close of business on March 29, 2019.

For more details, please refer to the Management’s Discussion and Analysis for the three months ended March 31, 2019.

1


Recent Performance

Sean Roosen, Chair and Chief Executive Officer commented on the first quarter of 2019 activities: “Our Q1 results were in-line with our expectation and we anticipate to meet our guidance with stronger GEO deliveries from our asset base during the remainder of the year. With stronger deliveries from the Renard and Gibraltar streams as well as growth expected this year from the Lamaque and Eagle Gold royalties, Osisko looks forward to enhanced financial flexibility and to potentially increase its dividend towards the end of the year, and continues to be in a great position to deploy capital as opportunities present themselves in the current depressed market environment. We congratulate the Eldorado Gold Corporation team for achieving commercial production at its Lamaque mine in Québec”.

Outlook

Osisko’s 2019 outlook on royalty, stream and 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 Newmont Goldcorp Corporation, and for the Renard mine published by Stornoway Diamond Corporation. When publicly available forecasts on properties are not available, Osisko obtains internal forecasts from the producers, which is the case for the Mantos Blancos mine, or uses management’s best estimate.

Attributable GEOs for 2019 remains unchanged from previous guidance. GEOs and cash margin by interest are estimated as follows:

    Low     High     Cash margin  
    (GEOs)     (GEOs)     (%)  
                   
Royalty interests   54,700     61,100     99.9  
Stream interests   28,000     31,300     65.5  
Offtake interests   2,300     2,600     1.2  
    85,000     95,000        

For the 2019 guidance, silver, diamonds and cash royalties have been converted to GEOs using commodity prices of US$1,300 per ounce of gold, US$15.50 per ounce of silver and US$95 per carat for diamonds from the Renard mine (blended sales price) and an exchange rate (US$/C$) of 1.30.

Q1 2019 Results Conference Call

Osisko will host a conference call on Thursday, May 2, 2019 at 10:00 am EDT to review and discuss its Q1 2019 results.

Those interested in participating in the conference call should dial in at 1 (877) 223-4471 (North American toll free), or 1 (647) 788-4922 (international). An operator will direct participants to the call.

The conference call replay will be available from 1:00 pm EDT on May 2, 2019 until 11:59 pm EDT on May 9, 2019 with the following dial in numbers: 1-(800) 585-8367 (North American toll free) or 1 (416) 621-4642, access code 2691455.

2


About Osisko Gold Royalties Ltd

Osisko Gold Royalties Ltd is an intermediate precious metal royalty company that holds a North American focused portfolio of over 135 royalties, streams and precious metal offtakes. Osisko’s portfolio is anchored by its 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 32.7% interest in Barkerville Gold Mines Ltd., a 16.6% interest in Osisko Mining Inc., an 18.8% interest in Victoria Gold Corp. and a 19.9% 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 Osisko Gold Royalties Ltd:

Joseph de la Plante
Vice President, Corporate Development
Tel. (514) 940-0670
jdelaplante@osiskogr.com

3


Notes:

  (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.

Average Metal Prices and Exchange Rate

    Three months ended  
          March 31,  
    2019     2018  
             
Gold(1) $ 1,304   $ 1,329  
Silver(2) $ 15.57   $ 16.77  
             
Exchange rate   1.3295     1.2647  
(US$/Can$)(3)            

  (i)

The London Bullion Market Association’s pm price in U.S. dollars

  (ii)

The London Bullion Market Association’s price in U.S. dollars

  (iii)

Bank of Canada daily rate


  (2)

“Adjusted earnings” and “Adjusted earnings per basic share” are not recognized measures under the International Financial Reporting Standards (“IFRS”). Refer to the non-IFRS measures provided under the Non-IFRS Financial Performance Measures section of the Management’s Discussion and Analysis for the three months ended March 31, 2019.

4



  (3)

Cash operating margin, which represents revenues less cost of sales, is a non-IFRS measure. The Company believes that this non-IFRS generally accepted industry measure provides a realistic indication of operating performance and provides a useful comparison with its peers. The following table reconciles the cash margin to the revenues and cost of sales presented in the consolidated statements of income and related notes:


    Three months ended  
(In thousands of dollars)         March 31,  
    2019     2018  
    $     $  
             
 Revenues   100,726     125,614  
 Less: Revenues from offtake interests   (67,226 )   (93,029 )
 Revenues from royalty and stream interests   33,500     32,585  
             
 Cost of sales   (70,104 )   (93,667 )
 Less: Cost of sales of offtake interests   66,510     90,604  
 Cost of sales of royalty and stream interests   (3,594 )   (3,063 )
             
             
 Revenues from royalty and stream interests   33,500     32,585  
 Less: Cost of sales of royalty and stream interests   (3,594 )   (3,063 )
 Cash margin from royalty and stream interests   29,906     29,522  
    89.3%     90.6%  
             
 Revenues from offtake interests   67,226     93,029  
 Less: Cost of sales of offtake interests   (66,510 )   (90,604 )
 Cash margin from offtake interests   716     2,425  
    1.1%     2.6%  

  (4)

Represents the estimated fair value based on the quoted prices of the investments in a recognized stock exchange as at March 31, 2019. For private investments, an internal or external evaluation is prepared.

5


Forward-looking Statements

This news release contains forward-looking information and forward-looking statements (together, "forward-looking statements") within the meaning of applicable Canadian securities laws and the United States Private Securities Litigation Reform Act of 1995. 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 revenue, requirements for additional capital, production estimates, production costs and revenue, business prospects and opportunities are forward-looking statements. In addition, statements relating to gold equivalent ounces ("GEOs") are forward-looking statements, as they involve implied assessment, based on certain estimates and assumptions, and no assurance can be given that the GEOs will be realized. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "is expected" "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential", "scheduled" and similar expressions or variations (including negative variations of such words and phrases), or may be identified by statements to the effect that certain actions, events or conditions "will", "would", "may", "could" or "should" occur including, without limitation, the performance of the assets of Osisko, the estimate of GEOs to be received in 2019, and Osisko’s ability to seize future opportunities. 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 deriving from Osisko’s royalties, streams and other interests to differ materially from those in forward-looking statements include, without limitation: influence of political or economic factors including fluctuations in the prices of the commodities and in value of the Canadian dollar relative to the U.S. dollar, continued availability of capital and financing and general economic, market or business conditions; regulations and regulatory changes in national and local government, including permitting and licensing regimes and taxation policies; 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, litigation, title, permit or license disputes; risks and hazards associated with the business of exploring, development and mining on the properties in which Osisko holds a royalty, stream or other interest including, but not limited to development, permitting, infrastructure, operating or technical difficulties, unusual or unexpected geological and metallurgical conditions, slope failures or cave-ins, flooding and other natural disasters or civil unrest, rate, grade and timing of production differences from mineral resource estimates or production forecasts or other uninsured risks; risk related to business opportunities that become available to, or are pursued by Osisko and exercise of third party rights affecting proposed investments. 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 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; 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 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. However, there can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Investors are cautioned that forward-looking statements are not guarantees of future performance. Osisko cannot assu re investors that actual results will be consistent with these forward-looking statements and investors should not place undue reliance on forward-looking statements due to the inherent uncertainty therein.

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 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.

6



Osisko Gold Royalties Ltd
Consolidated Balance Sheets
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars)

    March 31,     December 31,  
    2019     2018  
    $     $  
             
Assets            
             
Current assets            
             
       Cash   108,497     174,265  
       Short-term investments   13,119     10,000  
       Amounts receivable   6,871     12,321  
       Other assets   1,013     1,015  
    129,500     197,601  
Non-current assets            
             
       Investments in associates   303,407     304,911  
       Other investments   121,364     109,603  
       Royalty, stream and other interests   1,391,299     1,414,668  
       Exploration and evaluation   92,777     95,002  
       Goodwill   111,204     111,204  
       Other assets   11,265     1,657  
    2,160,816     2,234,646  
             
Liabilities            
             
Current liabilities            
             
       Accounts payable and accrued liabilities   9,273     11,732  
       Dividends payable   7,757     7,779  
       Provisions   4,439     3,494  
       Lease liabilities   703     -  
    22,172     23,005  
Non-current liabilities            
             
       Long-term debt   324,355     352,769  
       Lease liabilities   9,077     -  
       Deferred income taxes   77,816     87,277  
    433,420     463,051  
Equity            
             
       Share capital   1,609,435     1,609,162  
       Warrants   18,072     30,901  
       Contributed surplus   33,987     21,230  
       Equity component of convertible debentures   17,601     17,601  
       Accumulated other comprehensive income   21,090     23,499  
       Retained earnings   27,211     69,202  
    1,727,396     1,771,595  
    2,160,816     2,234,646  

7



Osisko Gold Royalties Ltd
Consolidated Statements of Income (Loss)
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

    2019     2018  
    $     $  
             
             
Revenues   100,726     125,614  
             
       Cost of sales   (70,104 )   (93,667 )
       Depletion of royalty, stream and other interests   (12,376 )   (13,230 )
             
Gross profit   18,246     18,717  
             
Other operating expenses            
             
       General and administrative   (5,934 )   (4,426 )
       Business development   (1,738 )   (1,192 )
       Impairment of asset   (38,900 )   -  
             
Operating income (loss)   (28,326 )   13,099  
             
       Interest income   1,172     1,492  
       Finance costs   (5,747 )   (6,634 )
       Foreign exchange gain (loss)   (1,121 )   187  
       Share of loss of associates   (1,762 )   (1,397 )
       Other losses, net   (35 )   (2,581 )
             
Earnings (loss) before income taxes   (35,819 )   4,166  
             
       Income tax recovery (expense)   9,270     (1,856 )
             
Net earnings (loss)   (26,549 )   2,310  
             
             
Net earnings (loss) per share            
       Basic   (0.17 )   0.01  
       Diluted   (0.17 )   0.01  

8



Osisko Gold Royalties Ltd
Consolidated Statements of Cash Flows
For the three months ended March 31, 2019 and 2018
(Unaudited)
(tabular amounts expressed in thousands of Canadian dollars)

    2019     2018  
    $     $  
             
             
Operating activities            
Net earnings (loss)   (26,549 )   2,310  
Adjustments for:            
       Share-based compensation   2,701     673  
       Depletion and amortization   12,660     13,272  
       Impairment of asset   38,900     -  
       Finance costs   1,683     1,618  
       Share of loss of associates   1,762     1,397  
       Net loss (gain) on acquisition of investments   175     (1,908 )
       Change in fair value of financial assets at fair value through profit or loss   529     4,489  
       Net gain on disposal of investments   (669 )   -  
       Deferred income tax expense (recovery)   (9,482 )   1,667  
       Foreign exchange loss   1,159     898  
       Settlement of deferred share units   (295 )   -  
       Other   47     46  
Net cash flows provided by operating activities before changes in non-cash working capital items   22,621     24,462  
Changes in non-cash working capital items   2,129     (1,159 )
Net cash flows provided by operating activities   24,750     23,303  
             
Investing activities            
Short-term investments   (13,119 )   (500 )
Acquisition of investments   (5,759 )   (13,629 )
Proceeds on disposal of investments   422     25,578  
Acquisition of royalty and stream interests   (27,969 )   (9,970 )
Exploration and evaluation tax credits, net   186     1,094  
Other assets   (155 )   (18 )
Net cash flows provided by (used in) investing activities   (46,394 )   2,555  
             
Financing activities            
Exercise of share options and shares issued under the employee share purchase plan   5,683     114  
Issue expenses   -     (186 )
Financing fees   -     (379 )
Repayment of long-term debt   (30,000 )   -  
Principal elements of lease payments   (174 )   -  
Normal course issuer bid purchase of common shares   (11,901 )   (20,333 )
Dividends paid   (6,298 )   (7,547 )
Net cash flows used in financing activities   (42,690 )   (28,331 )
             
Effects of exchange rate changes on cash and cash equivalents   (1,434 )   1,385  
Decrease in cash and cash equivalents   (65,768 )   (1,088 )
Cash and cash equivalents – beginning of period   174,265     333,705  
Cash and cash equivalents – end of period   108,497     332,617  

9


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