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As filed with the Securities and Exchange Commission on March 17, 2022
Registration No. 333-     ​
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​
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
​
FORM F-10
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
​
OSISKO GOLD ROYALTIES LTD
(Exact name of registrant as specified in its charter)​
Québec, Canada​
(Province or other jurisdiction of incorporation or organization)​
1040​
(Primary Standard Industrial Classification Code Number, if applicable)​
Not applicable​
(I.R.S. Employer Identification No., if applicable)​
1100 avenue des Canadiens-de-Montréal
Suite 300, Montreal, Québec
H3B 2S2
Tel: (514) 940-0670
(Address and telephone number of Registrant’s principal executive offices)​
C T Corporation System
28 Liberty Street
New York, New York 10005
Tel: (212) 894-8940​
(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)​
​
Copies to:
​
André Le Bel
Osisko Gold Royalties Ltd
1100 avenue des Canadiens-de-Montréal, Suite 300
Montreal, Québec
Canada, H3B 2S2
Tel: (514) 940-0670
​ ​
Christopher J. Cummings
Adam M. Givertz
Paul, Weiss, Rifkind, Wharton & Garrison LLP
Toronto-Dominion Centre
77 King Street West, Suite 3100
Toronto, Ontario
Canada, M5K 1J3
Tel: (416) 504-0520
​ ​
Sander A.J.R. Grieve
Linda E. Misetich Dann
Bennett Jones LLP
3400 One First Canadian Place
P.O. Box 130
Toronto, Ontario
Canada, M5X 1A4
(416) 777-4826
​ ​
Ryan J. Dzierniejko
Michael J. Hong
Skadden, Arps, Slate, Meagher & Flom LLP
One Manhattan West
New York, New York, United States 10001-8602
(212) 735-3712
​ ​
James R. Brown
Jason Comerford
Osler, Hoskin & Harcourt LLP
100 King Street West
1 First Canadian Place, Suite 6200, P.O. Box 50
Toronto, Ontario M5X 1B8
(416) 362-2111
​
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.
Province of Québec, Canada
(Principal jurisdiction regulating this offering)​
It is proposed that this filing shall become effective (check appropriate box below):
A.
☐    upon filing with the Commission pursuant to Rule 467(a) (if in connection with an offering being made contemporaneously in the United States and Canada).
​
B.
☒    at some future date (check the appropriate box below):
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1.
☐    pursuant to Rule 467(b) on (           ) at (           ) (designate a time not sooner than 7 calendar days after filing).
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2.
☐    pursuant to Rule 467(b) on (           ) at (           ) (designate a time 7 calendar days or sooner after filing) because the securities regulatory authority in the review jurisdiction has issued a receipt or notification of clearance on (           ).
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3.
☐    pursuant to Rule 467(b) as soon as practicable after notification of the Commission by the Registrant or the Canadian securities regulatory authority of the review jurisdiction that a receipt or notification of clearance has been issued with respect hereto.
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4.
☒    after the filing of the next amendment to this Form (if preliminary material is being filed).
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If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to the home jurisdiction’s shelf prospectus offering procedures, check the following box. ☐
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registration Statement shall become effective as provided in Rule 467 under the Securities Act or on such date as the Commission, acting pursuant to Section 8(a) of the Securities Act, may determine.
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PART I
INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS
 
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Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED MARCH 17, 2022
PRELIMINARY SHORT FORM PROSPECTUS
​
New Issue
​ ​
March 17, 2022
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[MISSING IMAGE: lg_osiskogold-4clr.jpg]
OSISKO GOLD ROYALTIES LTD
US$•
• Common Shares
This short form prospectus qualifies the distribution (the “Offering”) of • common shares (the “Offered Shares”) of Osisko Gold Royalties Ltd (“Osisko” or the “Corporation”) at a price of US$• per Offered Share (the “Offering Price”). See “Description of the Securities Being Distributed”. The Offered Shares are being issued and sold pursuant to an underwriting agreement dated March •, 2022 (the “Underwriting Agreement”) among the Corporation, Eight Capital and RBC Dominion Securities Inc. (together, the “Lead Underwriters”) together with • (collectively, together with the Lead Underwriters, the “Underwriters”). The Offering Price was determined based on arm’s length negotiations between the Corporation and the Lead Underwriters, on behalf of the Underwriters, with reference to the prevailing market prices of the issued and outstanding common shares of the Corporation (the “Common Shares”). See “Plan of Distribution”.
The Common Shares are listed and posted for trading on the Toronto Stock Exchange (the “TSX”) and the New York Stock Exchange (the “NYSE”) under the trading symbol “OR”. On March 16, 2022, the last trading day prior to the date of this short form prospectus, the closing price of the Common Shares on the TSX and the NYSE was $17.72 and US$13.97, respectively. Completion of the Offering is conditional upon the listing of the Offered Shares on the TSX and NYSE. Such listing will be subject to the Corporation fulfilling all of the listing requirements of the TSX and NYSE.
This Offering is made by a Canadian issuer that is permitted, under the multi-jurisdictional disclosure system adopted by the United States and Canada, to prepare this short form prospectus in accordance with Canadian disclosure requirements. Purchasers of the Offered Shares should be aware that such requirements are different from those of the United States. Financial statements incorporated herein by reference have been prepared in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board (“IFRS”), and may be subject to foreign auditing and auditor independence standards, and thus may not be comparable to financial statements of United States companies.
Purchasers of the Offered Shares should be aware that the acquisition of the Offered Shares may have tax consequences both in the United States and in Canada. Such consequences for purchasers who are resident in, or citizens of, the United States or who are resident in Canada may not be described fully herein. Purchasers of the Offered Shares should read the tax discussion contained in this short form prospectus with respect to the Offered Shares and consult their own tax advisors. See “Certain Canadian Federal Income Tax Considerations” and “Certain U.S. Federal Income Tax Considerations”.
The enforcement by investors of civil liabilities under U.S. federal securities laws may be affected adversely by the fact that the Corporation is incorporated under the laws of a province of Canada, that most of its officers and directors are not residents of the United States, that some or all of the underwriters or experts named herein are not residents of the United States, and that a substantial portion of the assets of the Corporation and said persons are located outside the United States. See “Enforceability of Civil Liabilities”.
NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE OFFERED SHARES NOR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS SHORT FORM PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
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Price: US$• per Offered Share
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​ ​ ​
Price to the Public
​ ​
Underwriters’
Fee(1)(2)
​ ​
Net Proceeds to
Osisko(2)(3)
​
Per Offered Share
​ ​ ​ US$ • ​ ​ ​ ​ US$ • ​ ​ ​ ​ US$ • ​ ​
Total Offering
​ ​ ​ US$ • ​ ​ ​ ​ US$ • ​ ​ ​ ​ US$ • ​ ​
​
Notes:
(1)
In consideration for the services rendered by the Underwriters in connection with the Offering, the Corporation has agreed to pay the Underwriters a cash commission equal to •% (the “Underwriters’ Fee”) of the gross proceeds of the Offering (including, for greater certainty, on any exercise of the Over-Allotment Option (as defined herein)).
​
(2)
The Corporation has granted the Underwriters an over-allotment option (the “Over-Allotment Option”), exercisable in whole or in part in the sole discretion of the Underwriters at any time up to 30 days from and including the Closing Date, to purchase up to an additional • Offered Shares (the “Over-Allotment Shares”), at the Offering Price, to cover over-allocations, if any, and for market stabilization purposes. The grant of the Over-Allotment Option is qualified by this short form prospectus. A person who acquires securities forming part of the Underwriters’ over-allocation position acquires those securities under this short form prospectus regardless of whether the Underwriters’ over-allocation position is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases. If the Over-Allotment Option is exercised in full for •Over-Allotment Shares, the total price to the public, Underwriters’ Fee and net proceeds to the Corporation (before payment of the expenses of the Offering) will be US$•, US$• and US$•, respectively. See “Plan of Distribution” and the table below.
​
(3)
After deducting the Underwriters’ Fee, but before deducting other expenses of the Offering, estimated to be US$•, which will be paid by the Corporation out of the gross proceeds of the Offering. See “Plan of Distribution”.
​
The following table sets out the number of Over-Allotment Shares that may be issued by the Corporation pursuant to the Over-Allotment Option:
​
Underwriters’
Position
​ ​
Maximum Number of
Securities Available
​ ​
Exercise Period
​ ​
Price
​
​ Over-Allotment Option ​ ​
• Over-Allotment Shares
​ ​
Up to 30 days after the closing date
​ ​ US$• per Over-Allotment Share ​
Unless the context otherwise requires, all references to the “Offering” and the “Offered Shares” in this short form prospectus shall include the Over-Allotment Option and the Over-Allotment Shares.
The Underwriters propose to offer the Offered Shares initially at the Offering Price. After the Underwriters have made commercially reasonable efforts to sell all of the Offered Shares qualified by this short form prospectus at the Offering Price, the Offering Price may be decreased, and further changed from time to time, to an amount not greater than the Offering Price, and the compensation realized by the Underwriters will be decreased by the amount that the aggregate price paid by the purchasers of Offered Shares is less than the gross proceeds to be paid by the Underwriters to the Corporation. However, in no event will the Corporation receive less than net proceeds of US$•per Offered Share (before expenses of the Offering). Subject to applicable laws and in connection with the Offering, the Underwriters may over-allot or effect transactions which stabilize or maintain the market price of the Common Shares at levels other than those which might otherwise prevail on the open market. Such transactions, if commenced, may be discontinued at any time. See “Plan of Distribution”.
An investment in the Offered Shares is highly speculative and involves a high degree of risk and should only be made by persons who can afford the total loss of their investment. The risk factors included or incorporated by reference in this short form prospectus should be carefully reviewed and considered by purchasers in connection with an investment in the Offered Shares. See “Notice to Investors — Forward-Looking Information” and “Risk Factors” in this short form prospectus and in the AIF (as defined herein), which is available electronically on SEDAR (as defined herein) at www.sedar.com and on EDGAR (as defined herein) at www.sec.gov.
The Underwriters, as principals, conditionally offer the Offered Shares, subject to prior sale, if, as and when issued by the Corporation and accepted by the Underwriters in accordance with the conditions contained in the Underwriting Agreement referred to under “Plan of Distribution” and subject to the approval of certain legal matters on behalf of the Corporation by Bennett Jones LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP, and on behalf of the Underwriters by Osler Hoskin & Harcourt LLP and Skadden, Arps, Slate, Meagher & Flom LLP.
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Subscriptions for the Offered Shares will be received subject to rejection or allotment in whole or in part and the right is reserved to close the subscription books at any time without notice. It is anticipated that the Offered Shares will be delivered under the book based system through CDS Clearing and Depository Services Inc. (“CDS”) or its nominee and deposited in registered or electronic form with CDS on the closing of the Offering, which is expected to be on March •, 2022, or such other date as may be agreed upon by the Corporation and the Underwriters, but in any event not later than 42 days following the date of the receipt for the short form prospectus (the “Closing Date”). A purchaser of Offered Shares will receive only a customer confirmation from the registered dealer through which the Offered Shares are purchased.
Christopher C. Curfman, a director of the Corporation, resides outside of Canada. Mr. Curfman has appointed the following agent for service of process:
Name of Person
​ ​
Name and Address of Agent
​
Christopher C. Curfman ​ ​ Osisko Gold Royalties Ltd, 1100 avenue des Canadiens-de-Montréal, Suite 300, P.O. Box 211, Montréal, Québec, Canada, H3B 2S2 ​
Purchasers are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person or company that is incorporated, continued or otherwise organized under the laws of a foreign jurisdiction or resides outside of Canada, even if the party has appointed an agent for service of process.
• and • are wholly-owned subsidiaries of Canadian chartered banks which have extended a credit facility to the Corporation. Accordingly, under certain circumstances, the Corporation may be considered to be a “connected issuer” of • and • under applicable Canadian securities legislation. Because affiliates of certain of the underwriters may receive a portion of the net offering proceeds, this Offering is being conducted in compliance with FINRA Rule 5121. See “Plan of Distribution”.
The Corporation’s head and registered office is located at 1100 avenue des Canadiens-de-Montréal, Suite 300, Montréal, Québec, Canada, H3B 2S2.
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NOTICE TO INVESTORS
About this Short Form Prospectus
Readers should rely only on the information contained in this short form prospectus (including the documents incorporated by reference) and should not rely on some parts of the short form prospectus to the exclusion of others. The Corporation and the Underwriters have not authorized any other person to provide investors with additional or different information. If anyone provides you with additional, different or inconsistent information, including information or statements in media articles about the Corporation, readers should not rely on it. The Corporation and the Underwriters are not offering the securities in any jurisdiction in which the Offering is not permitted. Investors should assume that the information contained in this short form prospectus is accurate only as of the date on the front of this short form prospectus and that information contained in any document incorporated by reference is accurate only as of the date of that document, regardless of the time of delivery of this short form prospectus or of any sale of the securities pursuant thereto. The Corporation’s business, financial condition, results of operations and prospects may have changed since the date on the front cover of this short form prospectus.
Information contained in this short form prospectus should not be construed as legal, tax or financial advice and readers are urged to consult their own professional advisors in connection therewith.
 
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Technical Information
Guy Desharnais, Ph.D., P.Geo, who is a “qualified person” for the purpose of National Instrument 43‑101 — Standards of Disclosure for Mineral Projects (“NI 43-101”), has reviewed and approved the scientific and technical information set out herein, and is named in the AIF (as defined herein) as having reviewed and approved certain scientific and technical information as set out under the heading “Material Mineral Projects — The Canadian Malartic Royalty” with respect to the 5% net smelter return royalty on the producing Canadian Malartic mine (the “Canadian Malartic Royalty”).
The disclosure in this prospectus or incorporated by reference in this prospectus relating to the Canadian Malartic mine is generally based on information publicly disclosed by the owner or operator of the Canadian Malartic mine, and information/data available in the public domain as at March 16, 2022, and none of this information has been independently verified by Osisko. Specifically, as a royalty, stream or other interest holder, Osisko has limited, if any, access to properties underlying its asset portfolio. Additionally, Osisko may from time to time receive operating information from the owners and operators of the properties, which it is not permitted to disclose to the public. Osisko is dependent on the operators of the properties and their qualified persons to provide information to Osisko or on publicly available information to prepare required disclosure pertaining to properties and operations on the properties on which Osisko holds royalty, stream or other interests and generally has limited or no ability to independently verify such information. Although Osisko does not have any knowledge that such information is not accurate, there can be no assurance that such third party information is complete or accurate. Some information publicly reported by operators may relate to a larger property than the area covered by Osisko’s royalty, stream or other interests. Osisko’s royalty, stream or other interests generally cover less than 100%, and sometimes only a small portion of, the publicly reported mineral reserves, mineral resources and production of the property.
Forward-Looking Information
This short form prospectus contains certain statements which contain “forward-looking information” and “forward-looking statements” within the meaning of applicable securities legislation (each a “forward-looking statement”). No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this short form prospectus should not be unduly relied upon. Forward-looking information is by its nature prospective and requires the Corporation to make certain assumptions and is subject to inherent risks and uncertainties. All statements other than statements of historical fact are forward-looking statements. The use of any of the words “anticipate”, “plan”, “contemplate”, “continue”, “estimate”, “expect”, “intend”, “propose”, “might”, “may”, “will”, “shall”, “project”, “should”, “could”, “would”, “believe”, “predict”, “forecast”, “pursue”, “potential”, “capable”, “budget”, “pro forma” and similar expressions are intended to identify forward-looking statements. Forward-looking statements include, among others, statements pertaining to:
•
the Corporation’s future operating and financial results;
​
•
schedules and timing of certain projects with respect to which the Corporation receives (or is entitled to receive) royalty, stream or other revenues and the Corporation’s strategy for growth, including the acquisition of future royalties, streams or other interests;
​
•
projected royalty, stream or other revenues and the life of mines with respect to which the Corporation receives (or is entitled to receive) royalty, stream or other revenues;
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•
production, capital and operating cash flow estimates for royalties, streams or other interests;
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•
anticipated cash needs and needs for additional financing;
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•
the Corporation’s competitive position and its expectations regarding competition;
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•
treatment under governmental and other regulatory regimes and tax, environmental and other laws; and
​
•
completion of the Offering.
​
The forward-looking statements within this document are based on information currently available and what management believes are reasonable assumptions. Forward-looking statements speak only as of the
 
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date of this short form prospectus. In addition, this short form prospectus may contain forward-looking statements attributed to third party industry sources, the accuracy of which has not been verified by the Corporation.
Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Corporation to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. A number of factors could cause actual results to differ materially from a conclusion, forecast or projection contained in the forward-looking statements in this short form prospectus, including, but not limited to, the following material factors:
•
the speculative nature of mining operations;
​
•
the Corporation having no control over mining operations and having limited access to data regarding the operation of mines in which it only holds a royalty, stream or other interest, making the Corporation dependent on the owners and operators of certain properties;
​
•
a failure of operators of properties in which the Corporation holds royalties, streams or other interests to abide by their contractual obligations with respect to royalty, stream or other payments;
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•
in respect of mines in which the Corporation only holds royalties, streams or other interests, the Corporation having no contractual rights relating to the operation or development of such mines and, therefore, not having control over the operators or their decisions and activities relating to properties in which the Corporation holds royalties, streams or other interests, and more particularly, the Corporation not being entitled to any material compensation, control or input in decision-making if these mining operations do not commence production within the time frames that are anticipated or meet their forecasted production targets in any specified period or if the operators, or any other person or entity having such authority, decide to shut down the mine or discontinue operations on a temporary or permanent basis;
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•
the ability of the Corporation to attract and retain qualified management to grow its business;
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•
fluctuations in currencies;
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•
whether or not Osisko is determined to have “passive foreign investment company” status (“PFIC”) as defined in Section 1297 of the United States Internal Revenue Code of 1986, as amended;
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•
changes in gold and other metal or commodity prices on which the Corporation’s royalty, stream or other interests are paid or prices associated with the primary metals mined at properties in which the Corporation holds royalties, streams or other interests;
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•
the availability of royalties, streams and other interests for acquisition or other acquisition opportunities and the availability of debt or equity financing necessary to complete such acquisitions;
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•
the performance of the companies in the investment portfolio of the Corporation;
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•
potential failure to complete future acquisitions;
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•
economic and market conditions;
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•
future financial needs and availability of adequate financing;
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•
application of or changes to laws governing the Corporation or the operators of properties where the Corporation holds royalties, streams or other interests;
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•
the Corporation’s ability to make accurate assumptions regarding the valuation, timing and amount of payments in respect of its royalties, streams or other interests;
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•
the production at or performance of properties where the Corporation holds royalties, streams or other interests;
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•
changes in estimates of mineral reserves and mineral resources of properties where the Corporation holds royalties, streams or other interests;
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•
the acquisition and maintenance of permits and authorizations, completion of construction and commencement and continuation of production at the properties where the Corporation holds royalties, streams or other interests;
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•
ramp-up risks relating to operations at the properties where the Corporation holds royalties, streams or other interests;
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•
risks relating to environmental or social factors or incidents which may adversely impact operations at the properties where the Corporation holds royalties, streams or other interests;
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•
mine operating and ore processing facility problems (including, but not limited to, labour disputes resulting in work stoppages and/or delays), pit wall or tailings dam failures, natural catastrophes such as floods or earthquakes and access to raw materials, water and power on the properties in which the Corporation holds royalties, streams or other interests;
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•
royalty interests are subject to title and other defects and disputes by operators of mining projects and holders of mining rights, and these risks may be difficult to identify;
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•
publication of inaccurate or unfavourable research by securities analysts or other third parties;
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the ongoing COVID-19 pandemic, including the resulting global economic uncertainty and measures taken in response to the pandemic; and
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•
uncertainty or adverse changes relating to foreign policy matters, turmoil and conflict in certain geopolitical regions, military conflicts and other world events which have the potential to adversely affect the performance of and outlook for the Canadian and global economies.
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Such factors are discussed in more detail under the heading “Risk Factors” in this short form prospectus and in the AIF (as defined herein). New factors emerge from time to time, and it is not possible for management to predict all of those factors or to assess in advance the impact of each such factor on the Corporation’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.
The forward-looking statements contained in this short form prospectus are expressly qualified by the foregoing cautionary statements and are made as of the date of this short form prospectus. Except as may be required by applicable securities laws, the Corporation does not undertake any obligation to publicly update or revise any forward-looking statement to reflect events or circumstances after the date of this short form prospectus or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise. Readers should read this entire short form prospectus and consult their own professional advisors to ascertain and assess the income tax and legal risks and other aspects of their investment in the Offered Shares.
CAUTIONARY NOTE TO U.S. INVESTORS REGARDING PREPARATION OF FINANCIAL INFORMATION
As a Canadian company, Osisko prepares its financial statements in accordance with IFRS. Consequently, all of the financial statements and financial information of Osisko included or incorporated herein is prepared in accordance with IFRS, which is materially different than financial statements and financial information prepared in accordance with U.S. generally accepted accounting principles.
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 information regarding mineral properties, mineralization and estimates of mineral reserves and mineral resources in accordance with Canadian reporting requirements, which are governed by NI 43-101. As such, the information included or incorporated herein concerning mineral properties, mineralization and estimates of mineral reserves and mineral resources is not comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements of the SEC.
 
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NON-IFRS FINANCIAL PERFORMANCE MEASURES
Osisko has included certain performance measures that do not have any standardized meaning prescribed by IFRS including “cash margin (in dollars and in percentage)”, “adjusted earnings (loss)” and “adjusted earnings (loss) per basic share” to supplement its consolidated financial statements, which are incorporated by reference herein and presented in accordance with IFRS.
The presentation of these non-IFRS measures 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. These measures are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. As Osisko’s operations are primarily focused on precious metals, the Corporation presents cash margins and adjusted earnings (loss) as it believes that certain investors use this information, together with measures determined in accordance with IFRS, to evaluate the Corporation’s performance in comparison to other companies in the precious metals mining industry who present results on a similar basis. However, other companies may calculate these non-IFRS measures differently. For further information regarding the non-IFRS financial measures used by Osisko, see “Non-IFRS Financial Performance Measures” in the Annual MD&A (as defined herein). The Annual MD&A is incorporated by reference herein. The Annual MD&A is available on SEDAR at www.sedar.com and at EDGAR at www.sec.gov.
ENFORCEABILITY OF CIVIL LIABILITIES
The Corporation is incorporated under and governed by the Business Corporations Act (Québec). Most of the Corporation’s directors and officers, and some or all of the underwriters or experts named in this short form prospectus, are residents of Canada or otherwise reside outside of the United States, and a substantial portion of their assets, and a substantial portion of the Corporation’s assets, are located outside the United States. The Corporation has appointed an agent for service of process in the United States, but it may be difficult for holders of Offered Shares who reside in the United States to effect service within the United States upon those directors, officers and experts who are not residents of the United States. It may also be difficult for holders of Offered Shares who reside in the United States to realize in the United States upon judgments of courts of the United States predicated upon the Corporation’s civil liability and the civil liability of the Corporation’s directors and officers and experts under the United States federal securities laws. The Corporation has been advised by its Canadian counsel, Bennett Jones LLP, that a judgment of a United States court predicated solely upon civil liability under United States federal securities laws would probably be enforceable in Canada if the United States court in which the judgment was obtained has a basis for jurisdiction in the matter that would be recognized by a Canadian court for the same purposes. The Corporation has also been advised by Bennett Jones LLP, however, that there is substantial doubt whether an action could be brought in Canada in the first instance on the basis of liability predicated solely upon United States federal securities laws.
The Corporation filed with the SEC, concurrently with the Corporation’s registration statement on Form F-10 of which this short form prospectus forms a part, an appointment of agent for service of process on Form F-X. Under the Form F-X, the Corporation appointed C T Corporation System as its agent for service of process in the United States in connection with any investigation or administrative proceeding conducted by the SEC and any civil suit or action brought against or involving the Corporation in a United States court arising out of or related to or concerning the Offering.
CURRENCY PRESENTATION AND FINANCIAL INFORMATION
Unless otherwise indicated, all references to monetary amounts in this short form prospectus are denominated in Canadian dollars. The financial statements of the Corporation incorporated herein by reference are reported in Canadian dollars and are prepared in accordance with IFRS. Unless otherwise indicated, all references to “$”,”C$” and “dollars” in this short form prospectus refer to Canadian dollars. References to “US$” in this short form prospectus refer to United States dollars.
 
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The following table sets forth, for each period indicated, the low and high exchange rates for United States dollars expressed in Canadian dollars, the exchange rate at the end of such period and the average of such exchange rates for each day during such period, based on the rate of exchange as reported by the Bank of Canada for the conversion of one United States dollar into Canadian dollars:
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Year Ended December 31,
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​ ​ ​
2021
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2020
​ ​
2019
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($)
​ ​
($)
​ ​
($)
​
Low
​ ​ ​ ​ 1.2040 ​ ​ ​ ​ ​ 1.2718 ​ ​ ​ ​ ​ 1.2988 ​ ​
High
​ ​ ​ ​ 1.2942 ​ ​ ​ ​ ​ 1.4496 ​ ​ ​ ​ ​ 1.3600 ​ ​
Period End
​ ​ ​ ​ 1.2678 ​ ​ ​ ​ ​ 1.2732 ​ ​ ​ ​ ​ 1.2988 ​ ​
Average
​ ​ ​ ​ 1.2535 ​ ​ ​ ​ ​ 1.3415 ​ ​ ​ ​ ​ 1.3269 ​ ​
On March 16, 2022, the rate of exchange for one United States dollar, expressed in Canadian dollars, based on the Bank of Canada, was US$1.00=C$1.2721 (or C$1.00=US$0.7861).
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Corporation with securities commissions or similar authorities in Canada are specifically incorporated into this short form prospectus:
(a)
the annual information form of the Corporation for the financial year ended December 31, 2021, dated March 17, 2022 (other than the section titled “2022 Guidance and 5-Year Outlook”) (the “AIF”);
​
(b)
the audited consolidated financial statements of the Corporation as at and for the years ended December 31, 2021 and December 31, 2020, together with the notes thereto (the “Annual Financial Statements”) and the auditors’ report thereon, dated February 24, 2022, except that the footnote to the auditors' report included in such audited consolidated financial statements, and any future audited financial statements that are incorporated by reference herein, including in each case any amendment thereto, is hereby expressly excluded from incorporation by reference into the registration statement on Form F-10 of which this short form prospectus forms a part;
​
(c)
the management’s discussion and analysis of the Corporation relating to the Annual Financial Statements, dated February 24, 2022 (other than the section titled “2022 Guidance and 5-Year Outlook”) (the “Annual MD&A”);
​
(d)
the management information circular of the Corporation dated March 29, 2021 and filed on SEDAR on April 8, 2021, distributed in connection with the annual meeting of shareholders of the Corporation held on May 12, 2021; and
​
(e)
the “template version” ​(as such term is defined in National Instrument 41-101 General Prospectus Requirements of the term sheet for the Offering dated March 17, 2022, available electronically on SEDAR at www.SEDAR.com (the “Marketing Materials”).
​
Any documents of the type required by National Instrument 44-101 — Short Form Prospectus Distributions to be incorporated by reference in a short form prospectus, including those types of documents referred to above and press releases issued by the Corporation specifically referencing incorporation by reference into this short form prospectus, if filed by the Corporation with the provincial securities commissions or similar authorities in Canada after the date of this short form prospectus and before the termination of the distribution of the securities being qualified hereunder, are deemed to be incorporated by reference in this short form prospectus. In addition, any similar documents filed or furnished by the Corporation with the SEC in its periodic reports on Form 6-K or annual reports on Form 40-F and any other documents filed with or furnished to the SEC pursuant to Section 13(a), 13(c) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in each case after the date of this short form prospectus and before the termination of the distribution of the securities being qualified by this prospectus, shall be deemed to be incorporated by reference into this short form prospectus and the registration statement of which this short form prospectus forms a part if and to the extent expressly provided in such reports. To the extent
 
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that any document or information incorporated by reference into this short form prospectus is included in a report that is filed with or furnished to the SEC on Form 40-F, 20-F, 10-K, 10-Q, 8-K or 6-K (or any respective successor form), such document or information shall also be deemed to be incorporated by reference as an exhibit to the registration statement of which this short form prospectus forms a part.
Documents referenced in any of the documents incorporated by reference in this short form prospectus but not expressly incorporated by reference therein or herein and not otherwise required to be incorporated by reference therein or in this short form prospectus are not incorporated by reference in this short form prospectus.
Any statement contained in this short form prospectus or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this short form prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is, or is deemed to be, incorporated by reference herein, modifies or supersedes such statement. Any statement so modified or superseded shall not constitute a part of this short form prospectus, except as so modified or superseded. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of such a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it is made.
MARKETING MATERIALS
The Marketing Materials do not form part of this short form prospectus to the extent that the contents of the Marketing Materials have been modified or superseded by a statement contained in the final short form prospectus.
Any “template version” of any “marketing materials” ​(each as defined in National Instrument 41-101 — General Prospectus Requirements) filed after the date of this short form prospectus and before the termination of the distribution under the Offering (including any amendments to, or an amended version of, the Marketing Materials) are deemed to be incorporated by reference into the final short form prospectus.
WHERE YOU CAN FIND MORE INFORMATION
The Corporation has filed with the SEC, under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), a registration statement on Form F-10 relating to the Offered Shares. This short form prospectus does not contain all of the information contained in the registration statement, certain items of which are contained in the exhibits to the registration statement as permitted by the rules and regulations of the SEC. Statements included in this short form prospectus or the documents incorporated by reference herein about the contents of any contract, agreement or other document referred to are not necessarily complete, and in each instance, prospective investors should refer to the exhibits for a complete description of the matter involved. Each such statement is qualified in its entirety by such reference.
The Corporation will provide to each person to whom this short form prospectus is delivered, without charge, upon request to the Corporate Secretary of the Corporation at 1100 avenue des Canadiens-de-Montréal, Suite 300, P.O. Box 211, Montréal, Québec, Canada, H3B 2S2, Telephone: (514) 940-0670, copies of the documents incorporated by reference in this short form prospectus. The Corporation does not incorporate by reference in this short form prospectus any of the information on, or accessible through, its website.
The Corporation files certain reports with, and furnishes other information to, each of the SEC and certain securities commissions or similar regulatory authorities of Canada. Under a multi-jurisdictional disclosure system adopted by the United States and Canada, such reports and other information may be prepared in accordance with the disclosure requirements of the securities regulatory authorities in the applicable provinces of Canada, which requirements are different from those of the United States. As a foreign private issuer, the Corporation is exempt from the rules under the Exchange Act prescribing the
 
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furnishing and content of proxy statements, and the Corporation’s officers and directors are exempt from the reporting and short swing profit recovery provisions contained in Section 16 of the Exchange Act. The Corporation’s reports and other information filed or furnished with or to the SEC are available from the SEC’s Electronic Document Gathering and Retrieval System (“EDGAR”) at www.sec.gov, as well as from commercial document retrieval services. The Corporation’s Canadian filings are available on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com. Unless specifically incorporated by reference herein, documents filed or furnished by the Corporation on SEDAR or EDGAR are neither incorporated in nor form part of this short form prospectus.
THE CORPORATION
The Corporation was incorporated on April 29, 2014 under the name “Osisko Gold Royalties Ltd” pursuant to the Business Corporations Act (Québec), as a wholly-owned subsidiary of Osisko Mining Corporation, prior to its name change to “Canadian Malartic Corporation” (“CMC”). Following the completion on June 16, 2014 of a plan of arrangement pursuant to the Canada Business Corporations Act involving, among others, CMC, Agnico Eagle Mines Limited and Yamana Gold Inc., the Corporation became a reporting issuer in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Québec, and the Common Shares were listed on the TSX under the symbol “OR”. On July 6, 2016, the Common Shares began trading on the NYSE under the symbol “OR”. Convertible debentures of the Corporation are listed on the TSX under the symbol “OR:DB” ​(4% interest; convertible at 43.6872 Common Shares per $1,000 principal amount of Debenture; expiry date: December 31, 2022).
As of the date of this short form prospectus, the Corporation is a reporting issuer in each of the provinces of Canada and in the United States.
The Corporation’s head and registered office is located at 1100 avenue des Canadiens-de-Montréal, Suite 300, Montréal, Québec, Canada, H3B 2S2.
SUMMARY DESCRIPTION OF THE BUSINESS
Osisko is engaged in the business of acquiring and managing precious metals and other high-quality royalties, streams and other interests in Canada and worldwide and is focused on maximizing returns for its shareholders by growing its asset base, both organically and through accretive acquisitions. Osisko 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. The Corporation’s cornerstone asset is a 5% net smelter return (“NSR”) royalty on the Canadian Malartic mine, located in Canada.
The Corporation was formed on April 29, 2014 in conjunction with the acquisition of CMC, which held the Canadian Malartic mine and other assets in development, by a partnership formed by Agnico Eagle Mines Limited and Yamana Gold Inc. Between 2014 and 2020, the Corporation completed the acquisition of Virginia Mines Inc. in February 2015, and acquired a portfolio of 74 assets from Orion Mine Finance (and related funds) in July 2017 to increase its total number of assets at that time to 135 royalties, streams and precious metal offtakes. In November 2020, Osisko completed the spin out transaction of its mining assets and certain equity investments to Osisko Development Corp. (“Osisko Development”), which is now engaged in the exploration, evaluation and development of mining projects. The common shares of Osisko Development began trading on the TSX Venture Exchange on December 2, 2020, and its main asset is the Cariboo Gold Project located in British Columbia, Canada. Osisko expects the advancement of the assets held by Osisko Development to be funded through the public markets such that Osisko’s ownership in Osisko Development will be diluted as Osisko Development’s assets are advanced.
Osisko’s main focus is on high quality, long-life precious metals assets located in favourable jurisdictions and operated by established mining companies, as Osisko believes these assets provide the best risk/return profile. The Corporation also evaluates and invests in opportunities in other commodities and jurisdictions. Given that a core aspect of the Corporation’s business is the ability to compete for investment opportunities, Osisko plans to maintain a strong balance sheet and ability to deploy capital.
As at December 31, 2021, Osisko owned a portfolio of 149 royalties, 10 streams and 3 offtakes, as well as 6 royalty options. Currently, the Corporation has 19 producing assets.
 
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MATERIAL MINERAL PROJECTS
Osisko considers the Canadian Malartic Royalty to currently be its only material mineral project for the purposes of NI 43-101.
RECENT DEVELOPMENTS
2022 Developments
On March 17, 2022 the Corporation announced that its wholly-owned subsidiary, Osisko Bermuda Limited (“OBL”), had entered into a binding agreement with Metals Acquisition Corp. (“MAC”) with respect to a US$90 million silver stream (the “Silver Stream”) to facilitate MAC’s acquisition of the producing CSA mine in New South Wales, Australia (“CSA” or the “Mine”) and concurrently with the above announcement, MAC announced the entering into of an agreement to acquire 100% of the shares of the owner of CSA from a subsidiary of Glencore plc. Osisko has also provided MAC with an option to draw up to an additional US$100 million in upfront proceeds through the sale of a copper stream, subject to the parties finalizing definitive terms and conditions. Transaction details with respect to the Silver Stream include that (a) OBL will purchase 100% of payable silver produced from CSA for the life of the Mine, (b) OBL will make ongoing payments for refined silver delivered equal to 4% of the spot silver price at the time of delivery, (c) OBL with be provided with corporate guarantees and other security by MAC over their assets for its obligations under the Silver Stream, (d) OBL has agreed to subscribe for US$15 million in equity of MAC as part of its concurrent equity financing and (e) MAC has granted OBL a right of first refusal in respect of the sale, transfer or buy-back of any royalty, stream or similar interest in the products mined or otherwise extracted from any property owned or acquired by MAC or an affiliate between the closing date and the 3rd anniversary of the closing date. Closing of the Silver Stream and equity subscription is expected in the second half of 2022, and is subject to certain conditions precedent, including, among others, closing of the transaction between MAC and Glencore.
On January 25, 2022, Osisko announced that OBL had signed a non-binding term sheet with Osisko Utah LLC, a wholly-owned subsidiary of Osisko Development, with respect to a US$20 to US$40 million metals stream to facilitate Osisko Development’s acquisition of the high-grade Trixie Mine, as well as mineral claims covering more than 17,000 acres in Central Utah’s historic Tintic Mining District. OBL will make an upfront cash payment to Osisko Development totaling at least US$20 million and up to US$40 million. Osisko Development may elect to draw the deposit in full or in part upon closing of the transaction, with the proceeds to be used to fund the upfront consideration for the transaction. If Osisko Development elects to draw the full deposit amount, OBL will purchase 5.0% of all metals produced from the project until 53,400 ounces of refined gold have been delivered, thereafter, OBL will purchase 4.0% of all metals produced from the project for the remaining life of mine. The stream will be a senior secured, first ranking obligation of Osisko Development, inclusive of guarantees.
2021 Developments
On September 7, 2021, Osisko announced that during the period January 1, 2021 to August 31, 2021, Osisko repurchased 1,267,666 Common Shares pursuant to its normal course issuer bid program, at a cost of $18.5 million. In the month of August alone, Osisko repurchased 920,266 Common Shares at a cost of $14.1 million. Under the terms of its normal course issuer bid program, Osisko may acquire, from time to time, up to 14,610,718 of its Common Shares in accordance with the normal course issuer bid procedures of the TSX until December 11, 2021. In the aggregate, during the year ended December 31, 2021, Osisko purchased for cancellation a total of 2,103,366 Common Shares at a cost of $30.8 million (average acquisition price per share of $14.64) under its 2021 normal course issuer bid program.
On August 9, 2021, Osisko announced a third quarter 2021 dividend of $0.055 per common share, a 10% increase over the second quarter 2021, for an annualized dividend of $0.22 per share. As a result of Osisko’s strong first half 2021 results, the decision was made to prioritize returns to shareholders by increasing the quarterly dividend by 10%.
 
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CONSOLIDATED CAPITALIZATION
The following table sets out the capitalization of Osisko as at December 31, 2021, the date of Osisko’s most recently filed annual audited consolidated financial statements, and as at December 31, 2021 after giving effect to the Offering, and as at December 31, 2021 after giving effect to the Offering and Over-Allotment Option, in both cases as though the Offering had occurred on December 31, 2021. The table should be read in conjunction with the Annual Financial Statements and Annual MD&A which are incorporated by reference in this short form prospectus as well as the other disclosure contained in this short form prospectus, including the risk factors described under the heading “Risk Factors” in this short form prospectus and in the AIF. All U.S. dollar amounts have been translated into Canadian dollars based on the daily average exchange rate as reported by the Bank of Canada on December 31, 2021 (U.S. $1.00 = $1.2678).
​ ​ ​
As at
December 31, 2021
(expressed in thousands of
dollars)
​ ​
As at
December 31, 2021
after giving effect
to the Offering(3)
(unaudited and expressed in
thousands of dollars)
​ ​
As at
December 31, 2021
after giving effect
to the Offering and
the Over-Allotment
Option(4)
(unaudited and expressed
in thousands of dollars)
​
Long-term debt
​ ​ ​ $ 410,435 ​ ​ ​ ​ ​ • ​ ​ ​ ​ ​ • ​ ​
Share capital(1)(2)
​ ​ ​ $ 1,783,689 ​ ​ ​ ​ ​ • ​ ​ ​ ​ ​ • ​ ​
Warrants
​ ​ ​ $ 18,072 ​ ​ ​ ​ ​ • ​ ​ ​ ​ ​ • ​ ​
Contributed surplus
​ ​ ​ $ 42,525 ​ ​ ​ ​ ​ • ​ ​ ​ ​ ​ • ​ ​
Equity component of convertible debentures
​ ​ ​ $ 14,510 ​ ​ ​ ​ ​ • ​ ​ ​ ​ ​ • ​ ​
Accumulated other comprehensive income
​ ​ ​ $ 58,851 ​ ​ ​ ​ ​ • ​ ​ ​ ​ ​ • ​ ​
Retained earnings (deficit)
​ ​ ​ $ 283,042 ​ ​ ​ ​ ​ • ​ ​ ​ ​ ​ • ​ ​
Equity attributable to Osisko’s shareholders
​ ​ ​ $ 1,634,605 ​ ​ ​ ​ ​ • ​ ​ ​ ​ ​ • ​ ​
Non-controlling interests
​ ​ ​ $ 145,456 ​ ​ ​ ​ ​ • ​ ​ ​ ​ ​ • ​ ​
Total Equity
​ ​ ​
$
1,780,061
 ​ ​ ​ ​ ​ • ​ ​ ​ ​ ​ • ​ ​
​
Notes:
(1)
166,439,597 Common Shares issued and outstanding as of December 31, 2021, • Common Shares issued and outstanding as of December 31, 2021 after giving effect to the Offering (excluding the Over-Allotment Shares issuable pursuant to the Over-Allotment Option) and • Common Shares issued and outstanding as of December 31, 2021 after giving effect to the Offering (including the exercise in full of Over-Allotment Shares issuable pursuant to the Over-Allotment Option).
​
(2)
After deducting the Underwriters’ Fee of US$ • (US$• if the Over-Allotment Option is exercised in full) and expenses of the Offering, estimated to be US$• (similar if the Over-Allotment Option is exercised in full).
​
(3)
Assumes the Over-Allotment Option is not exercised, in whole or in part, by the Underwriters.
​
(4)
Assumes the Over-Allotment Option is exercised in full for Over-Allotment Shares.
​
USE OF PROCEEDS
Proceeds
The gross proceeds paid to the Corporation from the Offering will be US$• (US$• if the Over-Allotment Option is exercised in full). The estimated net proceeds the Corporation expects to receive from the Offering after deducting the Underwriters’ Fee and the estimated expenses of the Offering are US$• (US$• if the Over-Allotment Option is exercised in full).
 
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The net proceeds from the Offering will be used for general corporate purposes, including funding resource royalty and stream acquisitions, the potential repayment, from time to time, of amounts drawn under the Revolving Credit Facility (as defined below) and other corporate development opportunities.
Principal Purposes
Until such time as they are used to fund additional resource royalty and stream acquisitions, equity investments, repayment of amounts drawn under the Revolving Credit Facility (as defined herein) or for general corporate purposes, the Corporation currently intends to invest the funds from the Offering in certain short-term investments or in the Corporation’s existing bank savings accounts to ensure the safety and preservation of capital and maintain adequate liquidity for the Corporation’s cash flow requirements.
The timing for the Corporation to use the proceeds to meet its objectives is uncertain. There are a number of factors that the Corporation will consider before investing proceeds to acquire resource royalties, streams, or other investments that remain out of the control of the Corporation, including commodity prices and the willingness of an appropriate counterparty to sell a resource royalty or enter into a metal stream, among others. See “Risk Factors”.
The Corporation is actively pursuing future growth opportunities. At any given time, discussions and activities can be in process on a number of initiatives or transactions in respect of the objectives described above, each at different stages of development. Except as otherwise disclosed in this short form prospectus, the Corporation currently does not have any binding agreements to enter into any such transaction and there is no assurance that any potential transaction will be successfully completed. Although the Corporation currently intends to spend the funds available as stated in this short form prospectus, depending on whether any such future growth opportunities are successfully completed, and depending on a number of other factors, including future commodity prices, results of operations at the mines in respect of which the Corporation will acquire a royalty interest, metal stream or other interest and other circumstances that may arise (the material risks of which are identified under the heading “Risk Factors”), a reallocation of the proceeds of the Offering may be deemed prudent or necessary.
Business Objectives and Milestones
The Corporation has a solid foundation of assets to create wealth for shareholders through its portfolio of royalties and streams, including the Canadian Malartic NSR from Canada’s largest gold mines. The Corporation also intends to pursue the acquisition of additional investments in the resource sector through the purchase of royalties, streams, and other interests.
The Corporation intends to spend the funds available to it as stated above. However, there may be circumstances where, for sound business reasons, a reallocation of the net proceeds may be necessary. The actual amount that the Corporation spends in connection with each of the intended uses of proceeds will depend on a number of factors, including those referred to under “Risk Factors” in this short form prospectus and in the AIF.
PLAN OF DISTRIBUTION (CONFLICTS OF INTEREST)
Pursuant to the Underwriting Agreement dated March •, 2022 among the Corporation and the Underwriters, the Corporation has agreed to sell and the Underwriters have agreed severally, and not jointly or jointly and severally, to purchase on the Closing Date, an aggregate of • Offered Shares at the Offering Price for gross proceeds of US$ • payable in cash to the Corporation against delivery of the Offered Shares, subject to the terms and conditions of the Underwriting Agreement. The obligations of the Underwriters under the Underwriting Agreement may be terminated at their discretion on the basis of “disaster out”, “regulatory out”, “material change out” and “breach out” provisions in the Underwriting Agreement and may also be terminated upon the occurrence of certain other stated events. The Underwriters are, however, obligated to take up and pay for all of the Offered Shares if any of the Offered Shares are purchased under the Underwriting Agreement.
The Offering Price was determined by arm’s length negotiation between the Corporation and the Lead Underwriters, on behalf of the Underwriters, with reference to the prevailing market price of the Common Shares.
 
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The Corporation has also granted the Underwriters the Over-Allotment Option, exercisable in whole or in part in the sole discretion of the Underwriters for a period of 30 days from and including the Closing Date, to purchase up to • Over-Allotment Shares to cover over-allotments, if any, and for market stabilization purposes. The Over-Allotment Option may be exercisable by the Underwriters to acquire Over-Allotment Shares at the Offering Price. If the Over-Allotment Option is exercised in full the total price to the public will be US$ •, the total Underwriters’ Fee will be US$ •, and the net proceeds to the Corporation, before payment of the expenses of the Offering, will be US$ •. This short form prospectus also qualifies the grant of the Over-Allotment Option and the distribution of the Over-Allotment Shares to be issued upon exercise of the Over-Allotment Option. A purchaser who acquires securities forming part of the Underwriters’ over-allocation position acquires those securities under this short form prospectus, regardless of whether the over-allocation position is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases.
In consideration for the services provided by the Underwriters in connection with the Offering and pursuant to the terms of the Underwriting Agreement, the Corporation has agreed to pay the Underwriters the Underwriters’ Fee, equal to •% of the aggregate gross proceeds of the Offering (including in respect of any exercise of the Over-Allotment Option). Pursuant to the terms of the Underwriting Agreement, the Corporation has agreed to indemnify the Underwriters, their affiliates and their respective partners, directors, officers and employees against certain liabilities and expenses and to contribute to payments that the Underwriters may be required to make in respect thereof.
The Underwriters propose to offer the Offered Shares to the public initially at the Offering Price. Without affecting the firm obligation of the Underwriters to purchase the Offered Shares in accordance with the Underwriting Agreement, the Underwriters may decrease the Offering Price of the Offered Shares which they sell under this short form prospectus after they have made a reasonable effort to sell all such Offered Shares at the Offering Price. The sale by the Underwriters of Offered Shares at a price of less than the Offering Price will have the effect of reducing the compensation realized by the Underwriters by the amount that the aggregate price paid by the purchasers for the Offered Shares is less than the gross proceeds paid by the Underwriters for the Offered Shares.
The Offered Shares will be offered concurrently in the United States and in all the provinces of Canada pursuant to the multi-jurisdictional disclosure system adopted by the SEC and the securities regulatory authorities in Canada. The Offered Shares will be offered in the United States and Canada through the Underwriters either directly or through their respective U.S. or Canadian broker-dealer affiliates who are registered to offer the Offered Shares for sale in the United States and such provinces of Canada, as applicable, and such other registered dealers as may be designated by the Underwriters. No Offered Shares will be offered or sold in any jurisdiction except by or through brokers or dealers duly registered under the applicable securities laws of that jurisdiction, or in circumstances where an exemption from such registered dealer requirements is available.
Pursuant to the Underwriting Agreement, the Corporation has agreed not to issue or sell or agree to issue or sell, any Common Shares or any securities convertible into or exchangeable for or exercisable to acquire Common Shares for a period of 60 days from the Closing Date without the prior written consent of the Lead Underwriters, on behalf of the Underwriters, such consent not to be unreasonably withheld or delayed, except in conjunction with (i) the Offering, (ii) securities issued to a vendor or in connection with a corporate transaction, including in connection with the acquisition of royalties, offtakes, and/or streaming arrangements, (iii) rights or obligations under currently outstanding securities or instruments, including the exercise of currently outstanding options, restricted share units or deferred share units, (iv) the grant of options, restricted share units and deferred share units pursuant to the Corporation’s existing incentive plans, (v) outstanding convertible securities, including warrants and convertible debentures, (vi) the Corporation's dividend reinvestment plan; and (vi) the Corporation’s employee stock purchase plan.
Pursuant to the rules and policy statements of certain Canadian securities regulators, the Underwriters may not, throughout the period of distribution under this short form prospectus, bid for or purchase Common Shares for their own account or for accounts over which they exercise control or direction. The foregoing restriction is subject to certain exceptions, on the condition that the bid or purchase not be engaged in for the purpose of creating actual or apparent active trading in or raising the price of the Common Shares. These exceptions include a bid or purchase permitted under the Universal Market Integrity Rules
 
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for Canadian marketplaces administered by the Investment Industry Regulatory Organization of Canada relating to market stabilization and passive market-making activities and a bid or purchase made for or on behalf of a client where the client’s order was not solicited during the period of distribution. Subject to applicable laws and in connection with the Offering, the Underwriters may over-allot or effect transactions in connection with the Offering intended to stabilize or maintain the market price of the Common Shares at levels other than those which otherwise might prevail on the open market. Such transactions, if commenced, may be discontinued at any time.
The Underwriters may engage in market stabilization or market balancing activities on the TSX and NYSE where the bid for or purchase of the Common Shares is for the purpose of maintaining a fair and orderly market in the Common Shares, subject to price limitations applicable to such bids or purchases. Such transactions, if commenced, may be discontinued at any time. In particular, the Underwriters may over-allocate or effect transactions which stabilize or maintain the market price of the Common Shares at levels other than those which might otherwise prevail on the open market, including: stabilizing transactions; short sales; purchases to cover positions created by short sales; imposition of penalty bids; and syndicate covering transactions. Stabilizing transactions consist of bids or purchases made for the purpose of preventing or slowing a decline in the market price of the Common Shares while the offering is in progress. These transactions may also include over-allocating or making short sales of the Common Shares. Short sales may be “covered short sales”, which are short positions in an amount not greater than the Over-Allotment Option, or may be “naked short sales”, which are short positions in excess of that amount. The Underwriters may close out any covered short position either by exercising the Over-Allotment Option, in whole or in part, or by purchasing Common Shares in the open market. In making this determination, the Underwriters will consider, among other things, the price of Common Shares available for purchase in the open market compared to the price at which they may purchase Offered Shares through the Over-Allotment Option. The Underwriters must close out any naked short position by purchasing Common Shares in the open market. A naked short position is more likely to be created if the Underwriters are concerned that there may be downward pressure on the price of the Common Shares in the open market that could adversely affect investors who purchase the Offered Shares. Any naked short position would form part of the Underwriters’ over-allocation position. A purchaser who acquires Offered Shares forming part of the Underwriters’ over-allocation position resulting from any short sales will, in each case, acquire such Offered Shares under this short form prospectus, regardless of the fact that the over-allocation position is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases.
Subscriptions for the Offered Shares will be received subject to rejection or allotment in whole or in part and the right is reserved to close the subscription books at any time without notice. It is anticipated that the Offered Shares will be delivered under the book based system through CDS or its nominee and deposited in registered or electronic form with CDS on the Closing Date. A purchaser of Offered Shares will receive only a customer confirmation from the registered dealer through which the Offered Shares are purchased.
It is expected that delivery of the Offered Shares will be made against payment therefor on or about the Closing Date specified on the cover page of this short form prospectus, which will not be two business days following the date of the final short form prospectus (this settlement cycle being referred to as “T+2”). Under Rule 15c6-1 of the Exchange Act, trades in the secondary market are generally required to settle in two business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade their Offered Shares prior to the Closing Date will be required, by virtue of the fact that the Offered Shares will not settle in T+2, to specify an alternate settlement cycle at the time of any such trade to prevent a failed settlement. Purchasers of Offered Shares who wish to trade their Offered Shares prior to the Closing Date should consult their own advisors.
 
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The Corporation may be considered to be a “connected issuer” of each of • and • under applicable Canadian securities legislation. • and • are wholly-owned subsidiaries of Canadian chartered banks which have extended a credit facility (being the “Revolving Credit Facility”) to the Corporation. As of the date hereof, the Corporation has drawn $50 million and US$50 million under the Revolving Credit Facility. The Revolving Credit Facility is secured by all of the Corporation’s assets (including the Canadian Malartic Royalty) and the Corporation is, and has been since the establishment of such facility, in compliance with the terms of the Revolving Credit Facility. As of the date hereof, the Corporation has not been required to obtain a waiver in respect of any breach under such facility. The decisions of • and •, respectively, to participate in this Offering were made independently of its bank parent. Other than payment of its portion of the Underwriters’ Fee, none of the proceeds of the sale of the Offered Shares will be applied, directly or indirectly, for the benefit of • or •.
As described in “Use of Proceeds”, a portion of the net proceeds of the Offering may be used for the repayment of amounts drawn under the Revolving Credit Facility. As a result, affiliates of one or more of the Underwriters may receive 5% or more of the net proceeds from the Offering in the form of the repayment of such indebtedness. Accordingly, the Offering is being conducted in compliance with FINRA Rule 5121, as administered by the Financial Industry Regulatory Authority (“FINRA”). Pursuant to that rule, the appointment of a qualified independent underwriter is not necessary in connection with the Offering, as the Offering is of a class of equity securities for which there is a “bona fide public market,” as defined by FINRA rules. Any underwriter with a conflict of interest under Rule 5121 will not confirm sales of the Offered Shares to any account over which it exercises discretionary authority without the prior written approval of the account holder.
The Common Shares are listed and posted for trading on the TSX and the NYSE under the trading symbol “OR”. On March 16, 2022, the last trading day prior to the date of this preliminary short form prospectus, the closing price of the Common Shares on the TSX and the NYSE was $17.72 and US$13.97, respectively. Completion of the Offering is conditional upon the listing of the Offered Shares on the TSX and NYSE. Such listing will be subject to the Corporation fulfilling all of the listing requirements of the TSX and NYSE.
DESCRIPTION OF SECURITIES BEING DISTRIBUTED
Offered Shares
The Corporation is authorized to issue an unlimited number of common shares without nominal or par value, of which, as at March 16, 2022, there were 166,246,261 Common Shares issued and outstanding.
The rights, privileges, conditions and restrictions attaching to the Offered Shares, as a class, are equal in all respects and include the following rights:
Dividends
Subject to the rights and restrictions attaching to any series of preferred shares, the holders of the Offered Shares shall have the right to receive, if, as and when declared by the Board of Directors of the Corporation, any dividend on such dates and for such amounts as the Board of Directors of Osisko may from time to time determine.
Participation in case of Dissolution or Liquidation
Subject to the rights and restrictions attaching to any series of preferred shares, the holders of the Offered Shares shall have the right, upon the liquidation, dissolution or winding-up of the Corporation, to receive the remaining property of the Corporation.
Right to Vote
The holders of the Offered Shares shall have the right to one (1) vote per Offered Share held at any meeting of the shareholders of the Corporation, except meetings at which only holders of any series of preferred shares are entitled to vote.
 
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CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
The following is, as at the date of this short form prospectus, a summary of the principal Canadian federal income tax considerations under the Tax Act generally applicable to an investor who acquires Offered Shares as beneficial owner pursuant to the Offering and who, for the purposes of the Tax Act and at all relevant times, deals at arm’s length with the Corporation and the Underwriters, is not affiliated with the Corporation or the Underwriters, and who acquires and holds the Offered Shares as capital property (a “Holder”). Generally, the Offered Shares will be considered to be capital property to a Holder thereof provided that the Holder does not use the Offered Shares in the course of carrying on a business of trading or dealing in securities and such Holder has not acquired them in one or more transactions considered to be an adventure or concern in the nature of trade.
This summary does not apply to a Holder (i) that is a “financial institution” for the purposes of the mark-to-market rules contained in the Tax Act; (ii) that is a “specified financial institution” as defined in the Tax Act; (iii), an interest in which would be a “tax shelter investment” as defined in the Tax Act; (iv) that has made a functional currency reporting election under section 261 of the Tax Act; (v) that has entered into or will enter into a “derivative forward agreement” or “synthetic disposition arrangement”, as those terms are defined in the Tax Act, with respect to the Offered Shares; or (vi) that receives dividends on the Offered Shares under or as part of a “dividend rental arrangement”, as defined in the Tax Act. Such Holders should consult their own tax advisors with respect to an investment in Offered Shares.
Additional considerations, not discussed herein, may be applicable to a Holder that is a corporation resident in Canada, and is, or becomes, or does not deal at arm’s length for purposes of the Tax Act with a corporation resident in Canada that is or becomes, as part of a transaction or event or series of transactions or events that includes the acquisition of Offered Shares, controlled by a non-resident person, or group of non-resident persons not dealing with each other at arm’s length, for purposes of the foreign affiliate dumping rules in section 212.3 of the Tax Act. Such Holders should consult their own tax advisors.
This summary is based upon the current provisions of the Tax Act and the regulations thereunder in force as of the date hereof and counsel’s understanding of the current published administrative policies and assessing practices of the Canada Revenue Agency (the “CRA”). This summary takes into account all specific proposals to amend the Tax Act and the regulations thereunder publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the “Tax Proposals”) and assumes that the Tax Proposals will be enacted in the form proposed, although no assurance can be given that the Tax Proposals will be enacted in their current form or at all. This summary does not otherwise take into account any changes in law or in the administrative policies or assessing practices of the CRA, whether by legislative, governmental or judicial decision or action, nor does it take into account or consider any provincial, territorial or foreign income tax considerations, which considerations may differ significantly from the Canadian federal income tax considerations discussed in this summary.
This summary is not exhaustive of all possible Canadian federal income tax considerations applicable to a Holder in respect of the transactions described herein. The income or other tax consequences will vary depending on the particular circumstances of the Holder, including the province or provinces in which the Holder resides or carries on business. Accordingly, this summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice or representations to any particular Holder. Moreover, no advance income tax ruling has been applied for or obtained from the CRA to confirm the tax consequences of any of the transactions described herein. Holders should consult their own legal and tax advisors for advice with respect to the tax consequences of an investment in the Offered Shares based on their particular circumstances.
Currency Conversion
Subject to certain exceptions that are not discussed herein, for the purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of Offered Shares (including dividends, adjusted cost base and proceeds of disposition) must be expressed in Canadian dollars. Amounts denominated in U.S. dollars must generally be converted into Canadian dollars based on the single daily exchange rate as quoted by the Bank of Canada on the date such amounts arise or such other rate of exchange as is acceptable to the CRA.
 
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Holders Resident in Canada
The following portion of this summary is generally applicable to a Holder who at all relevant times, for purposes of the Tax Act, is or is deemed to be resident in Canada (a “Resident Holder”).
Certain Resident Holders whose Offered Shares might not constitute capital property may make, in certain circumstances, an irrevocable election permitted by subsection 39(4) of the Tax Act to deem the Offered Shares, and every other “Canadian security” as defined in the Tax Act, held by such persons in the taxation year of the election and each subsequent taxation year to be capital property. Resident Holders should consult their own tax advisors regarding this election.
Dividends
Dividends received or deemed to be received on the Offered Shares will be included in computing a Resident Holder’s income. In the case of an individual (other than certain trusts), such dividends will be subject to the gross-up and dividend tax credit rules normally applicable in respect of “taxable dividends” received from “taxable Canadian corporations” ​(each as defined in the Tax Act). An enhanced gross-up and dividend tax credit will be available to individuals in respect of “eligible dividends” designated by the Corporation to the Resident Holder in accordance with the provisions of the Tax Act. There may be limitations on the ability of the Corporation to designate dividends as eligible dividends.
Dividends received or deemed to be received on an Offered Share by a Resident Holder that is a corporation will be included in computing the corporation’s income and will generally be deductible in computing its taxable income. In certain circumstances, subsection 55(2) of the Tax Act will treat a taxable dividend received (or deemed to be received) by a Resident Holder that is a corporation as proceeds of disposition or a capital gain. Resident Holders that are corporations should consult their own tax advisors in this regard.
A Resident Holder that is a “private corporation” ​(as defined in the Tax Act) or a “subject corporation” (as defined in subsection 186(3) of the Tax Act) may be liable to pay an additional tax (refundable in certain circumstances) under Part IV of the Tax Act on dividends received or deemed to be received on the Offered Shares to the extent such dividends are deductible in computing the Resident Holder’s taxable income. Resident Holders that are corporations should consult their own tax advisors regarding their particular circumstances.
Dispositions of Offered Shares
Upon a disposition (or a deemed disposition) of an Offered Share (other than a disposition to the Corporation that is not a sale in the open market in the manner in which shares would normally be purchased by any member of the public in an open market), a Resident Holder generally will realize a capital gain (or a capital loss) equal to the amount by which the proceeds of disposition of such share, net of any reasonable costs of disposition, are greater (or are less) than the adjusted cost base of such share to the Resident Holder immediately before the disposition or deemed disposition. The adjusted cost base to a Resident Holder of an Offered Share will be determined by averaging the cost of that Offered Share with the adjusted cost base (determined immediately before the acquisition of the Offered Share) of all other Common Shares held as capital property at that time by the Resident Holder. For a description of the treatment of capital gains and capital losses, see “Certain Canadian Federal Income Tax Considerations — Holders Resident in Canada — Capital Gain / Loss” below.
Capital Gain / Loss
Generally, a Resident Holder is required to include in computing its income for a taxation year one-half of the amount of any capital gain (a “taxable capital gain”) realized in the year. Subject to and in accordance with the provisions of the Tax Act, a Resident Holder is required to deduct one-half of the amount of any capital loss (an “allowable capital loss”) realized in a taxation year from taxable capital gains realized in the year by such Resident Holder. Allowable capital losses in excess of taxable capital gains for the taxation year of disposition may be carried back and deducted in any of the three preceding
 
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taxation years or carried forward and deducted in any following taxation year against net taxable capital gains realized in such years to the extent and under the circumstances described in the Tax Act.
The amount of any capital loss realized on the disposition or deemed disposition of Offered Shares by a Resident Holder that is a corporation may be reduced by the amount of dividends received or deemed to have been received by it on such shares or shares substituted for such shares to the extent and in the circumstances specified by the Tax Act. Similar rules may apply where an Offered Share is owned by a partnership or trust of which a corporation, trust or partnership is a member or beneficiary. Resident Holders to whom these rules may be relevant should consult their own tax advisors.
A Resident Holder that is, throughout the relevant taxation year, a “Canadian-controlled private corporation” ​(as defined in the Tax Act) will be subject to an additional tax (refundable in certain circumstances) in respect of its “aggregate investment income” ​(as defined in the Tax Act) for the year, which will include taxable capital gains. Resident Holders that are “Canadian-controlled private corporations” should consult their own tax advisors regarding their particular circumstances.
Minimum Tax
Capital gains realized and dividends received (or deemed to be received) by a Resident Holder that is an individual or a trust, other than certain specified trusts, may give rise to minimum tax under the Tax Act. Resident Holders that are individuals should consult their own tax advisors in this regard.
Holders Not Resident in Canada
The following portion of this summary is generally applicable to a Holder who at all relevant times, for purposes of the Tax Act, (i) is not, and is not deemed to be, resident in Canada; and (ii) does not use or hold and is not deemed to use or hold its Offered Shares in, or in the course of carrying on, a business in Canada (a “Non-Resident Holder”). Special rules, which are not discussed in this summary, may apply to a Non-Resident Holder that is an insurer carrying on business in Canada and elsewhere or that is an “authorized foreign bank” ​(as defined in the Tax Act). Such Non-Resident Holders should consult their own tax advisors.
Dividends
Dividends paid or credited or deemed under the Tax Act to be paid or credited by the Corporation to a Non-Resident Holder on the Offered Shares will generally be subject to Canadian withholding tax at the rate of 25% on the gross amount of the dividend, unless such rate is reduced by the terms of an applicable income tax treaty or convention. Under the Canada-United States Tax Convention (1980), as amended (the “Canada — US Tax Treaty”), the withholding rate on any such dividend beneficially owned by a Non-Resident Holder that is a resident of the United States for purposes of the Canada — US Tax Treaty and fully entitled to the benefits of such treaty is generally reduced to 15%, and to 5% if such Non-Resident Holder is a company that beneficially owns at least 10% of the voting stock of the Corporation.
Dispositions of Offered Shares
A Non-Resident Holder generally will not be subject to tax under the Tax Act in respect of a capital gain realized on the disposition or deemed disposition of an Offered Share unless the Offered Share constitutes (or is deemed to constitute) “taxable Canadian property” to the Non-Resident Holder thereof for purposes of the Tax Act at the time of disposition, and the gain is not exempt from tax pursuant to the terms of an applicable tax treaty or convention.
Provided the Offered Shares are listed on a “designated stock exchange”, as defined in the Tax Act (which currently includes the TSX and NYSE), at the time of disposition, the Offered Shares generally will not constitute taxable Canadian property of a Non-Resident Holder at that time, unless at any time during the 60 month period immediately preceding the disposition the following two conditions are met concurrently: (i) the Non-Resident Holder, persons with whom the Non-Resident Holder did not deal at arm’s length, partnerships in which the Non-Resident Holder or any such non-arm’s length person holds a membership interest (either directly or indirectly through one or more partnerships), or the Non-Resident Holder together
 
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with all such persons and partnerships, owned 25% or more of the issued shares of any class or series of shares of the Corporation; and (ii) more than 50% of the fair market value of the shares of the Corporation was derived directly or indirectly from one or any combination of real or immovable property situated in Canada, Canadian resource properties (as defined in the Tax Act), timber resource properties (as defined in the Tax Act) or options, interests or for civil law rights in such property, whether or not such property exists. Notwithstanding the foregoing, an Offered Share may be deemed to be “taxable Canadian property” in certain other circumstances. Non-Resident Holders should consult their own tax advisors as to whether their Offered Shares constitute “taxable Canadian property”.
If the Offered Shares are “taxable Canadian property” to a Non-Resident Holder and such Non-Resident Holder is not exempt from tax under the Tax Act in respect of the disposition of such Offered Shares pursuant to an applicable income tax treaty or convention, the tax consequences as described above under the headings “Certain Canadian Federal Income Tax Considerations — Holders Resident in Canada — Dispositions of Offered Shares” and “Certain Canadian Federal Income Tax Considerations — Holders Resident in Canada — Capital Gain / Loss” will generally apply. Such Non-Resident Holders should consult their own tax advisors.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain U.S. federal income tax considerations generally applicable to a U.S. Holder (as defined below) of the ownership and disposition of the Offered Shares acquired pursuant to this short form prospectus. This discussion does not address all potentially relevant U.S. federal income tax considerations applicable to the ownership or disposition of the Offered Shares acquired pursuant to this short form prospectus, and unless otherwise specifically provided, it does not address any state, local or non-U.S. tax considerations, or any aspect of U.S. federal tax law other than income taxation (e.g., alternative minimum tax or estate or gift tax). Except as specifically set forth below, this summary does not discuss applicable income tax reporting requirements.
As used herein, the term “U.S. Holder” means a beneficial owner of our Offered Shares that, for U.S. federal income tax purposes, is or is treated as: (1) a citizen or individual resident of the United States; (2) a corporation (or other entity classified as a corporation for U.S. federal income tax purposes) organized under the laws of the United States, any state thereof, or the District of Columbia, (3) an estate whose income is subject to U.S. federal income taxation regardless of its source, or (4) a trust (A) if a U.S. court is able to exercise primary jurisdiction over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (B) that has elected to be treated as a U.S. person under applicable U.S. Treasury Regulations.
If a partnership (or other entity or arrangement treated as a partnership for U.S. federal tax purposes) holds our Offered Shares, the tax treatment of a partner in the partnership or other entity or arrangement will generally depend upon the status of the partner and the activities of the partnership. Prospective investors who are partners in partnerships (or other entities or arrangements treated as partnerships for U.S. federal tax purposes) that are beneficial owners of our Offered Shares are urged to consult their tax advisors regarding the tax consequences of the ownership and disposition of the Offered Shares.
This summary is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), administrative pronouncements, U.S. judicial decisions and existing and proposed U.S. Treasury Regulations, all of which are subject to differing interpretations, and changes to any of which subsequent to the date of this short form prospectus may affect the tax consequences described herein, possibly on a retroactive basis. This summary is not binding on the U.S. Internal Revenue Service (the “IRS”) and no ruling has been requested, or will be obtained, regarding the U.S. federal income tax consequences of the ownership of disposition of the Offered Shares, and the IRS is not precluded from taking a position that is different from, and contrary to, the discussion set forth in this summary. In addition, because the authorities on which this summary is based are subject to various interpretations, the IRS and U.S. courts could disagree with one or more of the positions taken in this summary.
This summary does not purport to address all U.S. federal income tax consequences that may be relevant to a U.S. Holder as a result of the ownership and disposition of the Offered Shares, nor does it take into account the specific circumstances of any particular holder, some of which may be subject to special
 
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tax rules, including, but not limited to, tax exempt organizations, partnerships and other pass through entities and their owners, banks or other financial institutions, insurance companies, qualified retirement plans, individual retirement accounts or other tax-deferred accounts, persons that hold our Offered Shares as part of a straddle, hedging transaction, conversion transaction, constructive sale or other similar arrangements, persons that acquired our Offered Shares in connection with the exercise of employee stock options or otherwise as compensation for services, dealers in securities or foreign currencies, traders in securities electing to mark to market, U.S. persons whose functional currency (as defined in the Code) is not the U.S. dollar, holders subject to the alternative minimum tax, U.S. expatriates, persons that hold our Offered Shares other than as a capital asset within the meaning of the Code, or persons that own directly, indirectly or by application of the constructive ownership rules of the Code 10% or more of our shares by voting power or by value.
This summary is of a general nature only and is not intended to be tax advice to any prospective investor, and no representation with respect to the tax consequences to any particular investor is made. Prospective investors are urged to consult their tax advisors with respect to the U.S. federal, state, local and non-U.S. income and other tax considerations relevant to them, having regard to their particular circumstances.
Distributions
In the event we make a distribution with respect to our Offered Shares, subject to the PFIC rules below, a U.S. Holder will generally recognize, to the extent out of our current or accumulated earnings and profits (determined in accordance with U.S. federal income tax principles), dividend income on the date of receipt of the distribution on our Offered Shares. Because we do not expect to maintain calculations of our earnings and profits in accordance with U.S. federal income tax principles, U.S. Holders should expect that a distribution will generally be treated as a dividend for U.S. federal income tax purposes.
The amount of any distributions paid in Canadian dollars will equal the U.S. dollar value of such distributions determined by reference to the exchange rate on the day they are received by the U.S. Holder (with the value of such distributions computed before any reduction for any Canadian withholding tax). A U.S. Holder will have a tax basis in Canadian dollars equal to their U.S. dollar value on the date of receipt. If the Canadian dollars received are converted into U.S. dollars on the date of receipt, the U.S. Holder should generally not be required to recognize foreign currency gain or loss in respect of the distribution. If the Canadian dollars received are not converted into U.S. dollars on the date of receipt, a U.S. Holder may recognize foreign currency gain or loss on a subsequent conversion or other disposition of the Canadian dollars. Such gain or loss generally will be treated as U.S. source ordinary income or loss.
Provided that we are not treated as a PFIC in the current or prior taxable year, as discussed below, we believe that we are a “qualified foreign corporation,” and therefore dividends paid by us to certain non-corporate U.S. Holders may be eligible for a preferential tax rate provided applicable holding period and no-hedging requirements are satisfied. Any amount of such distributions treated as dividends generally will not be eligible for the dividends received deduction available to certain U.S. corporate shareholders.
As discussed above under “Certain Canadian Federal Income Tax Consequences — Holders Not Resident in Canada”, distributions to a U.S. Holder with respect to our Offered Shares will be subject to Canadian non-resident withholding tax. Any Canadian withholding tax paid will not reduce the amount treated as received by the U.S. Holder for U.S. federal income tax purposes. However, subject to limitations imposed by U.S. law, a U.S. Holder may be eligible to receive a foreign tax credit for the Canadian withholding tax. Because the rules applicable to the foreign tax credit rules are complex, U.S. Holders are urged to consult their advisors concerning the application of these rules in light of their particular circumstances. U.S. Holders who do not elect to claim a foreign tax credit may be able to claim an ordinary income tax deduction for Canadian income tax withheld, but only for a taxable year in which the U.S. Holder elects to do so with respect to all non-U.S. income taxes paid or accrued in such taxable year.
Dispositions
Subject to the PFIC rules discussed below, upon a sale, exchange or other taxable disposition of an Offered Share, a U.S. Holder will generally recognize a capital gain or loss equal to the difference between the amount realized on such sale, exchange or other taxable disposition (or, if the amount realized is
 
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denominated in Canadian dollars, its U.S. dollar equivalent, determined by reference to the spot rate of exchange on the date of disposition) and the tax basis of such Offered Share. Such gain or loss will be a long-term capital gain or loss if the Offered Share has been held for more than one year and will be short-term gain or loss if the holding period is equal to or less than one year. Such gain or loss generally will be considered U.S. source gain or loss for U.S. foreign tax credit purposes. Long-term capital gains of certain non-corporate taxpayers are eligible for reduced rates of taxation. For both corporate and non-corporate taxpayers, limitations apply to the deductibility of capital losses. If a U.S. Holder receives any foreign currency on the sale of the Offered Shares, the U.S. Holder may recognize ordinary income or loss as a result of currency fluctuations between the date of the sale of the Offered Shares and the date the sale proceeds are converted into U.S. dollars.
Passive Foreign Investment Company
Special, generally unfavourable, U.S. federal income tax rules apply to U.S. Holders owning stock of a PFIC within the meaning of Section 1297 of the Code. A foreign corporation will be considered a PFIC for any taxable year in which, after taking into account the income and assets of the corporation and certain subsidiaries pursuant to applicable “look through” rules, either (1) at least 75 percent of its gross income is “passive” income (the “income test”) or (2) at least 50 percent of the average value of its assets is attributable to assets that produce passive income or are held for the production of passive income (the “asset test”). For this purpose, “passive income” generally includes, among other things, interest, dividends, rents, royalties, certain gains from the sale of stock and securities and certain gains from commodities transactions. Active business gains arising from the sale of commodities generally are excluded from passive income if substantially all of a non-U.S. corporation’s commodities are stock in trade or inventory, depreciable property used in a trade or business, or supplies regularly used or consumed in the ordinary course of a trade or business. For purposes of determining whether a foreign corporation will be considered a PFIC, such foreign corporation will be treated as holding its proportionate share of the assets and receiving directly its proportionate share of the income of any other corporation in which it owns, directly or indirectly, more than 25 percent (by value) of the stock. PFIC status is fundamentally factual in nature. It generally cannot be determined until the close of the taxable year in question and is determined annually.
The determination of PFIC status for any year is very fact specific, being based on the types of income we earn and the types and value of our assets from time to time, all of which are subject to change, as well as, in part, the application of complex U.S. federal income tax rules, which are subject to differing interpretations. Additionally, the U.S. Treasury Department has not issued specific guidance on how the income and assets of a non-U.S. corporation such as us will be treated under the PFIC rules, including the treatment of royalties, streams and precious metal offtakes under such rules. Based upon advice from our tax advisors, we believe, on a more likely than not basis, that we were not a PFIC for our tax year ended December 31, 2021, and, based on our current and anticipated business activities and financial expectations, we expect, on a more likely than not basis that we will not be a PFIC for our current tax year and for the foreseeable future. If, contrary to our belief and expectation, we were classified as a PFIC in any year during which a U.S. Holder holds our Offered Shares, we generally will continue to be treated as a PFIC as to such U.S. Holder in all succeeding years that such U.S. Holder continues to hold our Offered Shares, regardless of whether we continue to meet the income or asset test discussed above, unless the U.S. Holder terminates this deemed PFIC status by making a “deemed sale” election.
If we were classified as a PFIC for any taxable year during which a U.S. Holder holds our Offered Shares, such U.S. Holder would generally be subject to increased tax liability (generally including an interest charge) upon the sale or other disposition of our Offered Shares or upon the receipt of certain distributions treated as “excess distributions”. An excess distribution generally would be the portion of any distributions to a U.S. Holder with respect to our Offered Shares during a single taxable year that is in total greater than 125% of the average annual distributions received by such U.S. Holder with respect to our Offered Shares during the three preceding taxable years or, if shorter, during such U.S. Holder’s holding period for our Offered Shares. Generally, a U.S. Holder would be required to allocate any excess distribution or gain from the sale or other disposition of our Offered Shares ratably over its holding period for the Offered Shares. The amounts allocated to the taxable year of the excess distribution and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax
 
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at the highest rate in effect for individuals or corporations in such taxable year, as appropriate, and an interest charge would be imposed on the amount allocated to that taxable year.
If we were classified as a PFIC, certain elections could be available to mitigate such consequences. If our Offered Shares are regularly traded on a registered national securities exchange or certain other exchanges or markets, then our Offered Shares will constitute “marketable stock” for purposes of the PFIC rules. We expect that our Offered Shares will constitute “marketable stock” for purposes of the PFIC rules. U.S. Holders that make a “mark-to-market election” with respect to such marketable stock would not be subject to the foregoing PFIC rules. After making such an election, a U.S. Holder generally would include as ordinary income each year during which the election is in effect and during which we are a PFIC the excess, if any, of the fair market value of Offered Shares at the end of the taxable year over the U.S. Holder’s adjusted tax basis in our Offered Shares. These amounts of ordinary income would not be eligible for the preferential tax rates applicable to qualified dividend income or long-term capital gains. A U.S. Holder with a mark-to-market election in effect also would be allowed to take an ordinary loss in respect of the excess, if any, of its adjusted tax basis in Offered Shares over their fair market value at the end of the taxable year (but only to the extent of the net amount of income that was previously included as a result of the mark-to-market election). A U.S. Holder’s tax basis in Offered Shares would be adjusted to reflect any income or loss amounts resulting from a mark-to-market election. If made, a mark-to-market election would be effective for the taxable year for which the election was made and for all subsequent taxable years unless our Offered Shares ceased to qualify as “marketable stock” for purposes of the PFIC rules or the IRS consented to the revocation of the election. Such mark-to-market election will not be available with respect to our subsidiaries. In the event that we are classified as a PFIC, U.S. Holders are urged to consult their own tax advisor regarding the availability of the mark-to-market election, and whether the election would be advisable in their particular circumstances.
If we were a PFIC for any tax year in which a U.S. Holder held Offered Shares, and such U.S. Holder had made a timely and effective election to treat us as a “qualified electing fund” ​(a “QEF Election”) for the first tax year of such U.S. Holder’s holding period in which we were classified as a PFIC, then such U.S. Holder generally would not be subject to the PFIC rules described in the preceding two paragraphs. Instead, such U.S. Holder would be subject to U.S. federal income tax on such holder’s pro rata share of (a) our net capital gain, which would be taxed as long-term capital gain to such U.S. Holder, and (b) our ordinary earnings, which would be taxed as ordinary income to such U.S. Holder. A QEF Election, once made, would be effective with respect to such U.S. Holder’s Offered Shares for all subsequent tax years in which we were treated as a PFIC, unless the QEF Election is invalidated or terminated or the IRS consents to revocation of the QEF Election. The QEF Election will not be available, however, if we do not provide the information necessary to make such an election. If we were classified as a PFIC, we do not expect to provide the information necessary to make a QEF Election, and thus, the QEF Election will not be available with respect to Offered Shares.
As discussed above in “Distributions,” notwithstanding any election made with respect to our Offered Shares, if we were a PFIC in either the taxable year of the distribution or the preceding taxable year, dividends received with respect to Offered Shares will not qualify for reduced rates of taxation.
In any year in which we were classified as a PFIC, a U.S. Holder generally will be required to file an annual report with the IRS containing certain information regarding such holder’s interest in us, subject to certain exceptions. A failure to satisfy such reporting requirement could result in the extension of the statute of limitations with respect to federal income tax returns filed by such U.S. Holder. The PFIC rules are complex, and each U.S. Holder is urged to consult its own tax advisor regarding the foregoing reporting requirements, the advisability of making a QEF Election or mark-to-market election, and any other tax consequences under the PFIC rules of acquiring, owning and disposing of our Offered Shares.
Net Investment Income Tax
Certain U.S. Holders who are individuals, estates or trusts, and whose income exceeds certain thresholds, are required to pay an additional 3.8 percent tax on their “net investment income,” which includes, among other items, dividends and net gain from the sale or other disposition of property (other than property held
 
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in certain trades or businesses). U.S. Holders who are individuals, estates or trusts are urged to consult their tax advisors regarding the effect, if any, of this tax on their ownership and disposition of our Offered Shares.
Information Reporting and Backup Withholding
Certain U.S. Holders are required to report information relating to an interest in our Offered Shares, subject to certain exceptions (including an exception for common shares held in accounts maintained by certain financial institutions), by attaching a completed IRS Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold an interest in our Offered Shares. Additionally, information reporting will apply to dividends paid to a U.S. Holder in respect of Offered Shares and the proceeds received by a U.S. Holder from the sale, exchange or other disposition of Offered Shares within the United States unless the U.S. Holder is an exempt recipient. A backup withholding tax may apply to such payments if the U.S. Holder fails to provide a taxpayer identification number or certification of exempt status or fails to report in full dividend and interest income. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be allowed as a refund or credit against a U.S. Holder’s U.S. federal income tax liability, provided that the required information is furnished to the IRS in a timely manner. U.S. Holders are urged to consult their tax advisors regarding information reporting requirements relating to their ownership of our Offered Shares.
PRIOR SALES
Other than as described below, during the twelve-month period before the date of this short form prospectus, the Corporation has not issued any other Common Shares or securities that are convertible into Common Shares.
Date
​ ​
Number of
Securities
​ ​
Issue Price Per
Security
​
Stock Option Plan Exercise ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
March 8, 2021
​ ​ ​ ​ 1,333 ​ ​ ​ ​ $ 12.97 ​ ​
March 15, 2021
​ ​ ​ ​ 5,000 ​ ​ ​ ​ $ 13.38 ​ ​
March 18, 2021
​ ​ ​ ​ 132,600 ​ ​ ​ ​ $ 13.38 ​ ​
March 19, 2021
​ ​ ​ ​ 48,000 ​ ​ ​ ​ $ 13.38 ​ ​
March 22, 2021
​ ​ ​ ​ 41,454 ​ ​ ​ ​ $ 13.38 ​ ​
March 23, 2021
​ ​ ​ ​ 11,000 ​ ​ ​ ​ $ 13.38 ​ ​
April 6, 2021
​ ​ ​ ​ 4,563 ​ ​ ​ ​ $ 10.58 ​ ​
April 9, 2021
​ ​ ​ ​ 5,333 ​ ​ ​ ​ $ 12.97 ​ ​
April 12, 2021
​ ​ ​ ​ 10,000 ​ ​ ​ ​ $ 13.61 ​ ​
April 19, 2021
​ ​ ​ ​ 38,377 ​ ​ ​ ​ $ 13.10 ​ ​
April 19, 2021
​ ​ ​ ​ 20,000 ​ ​ ​ ​ $ 13.61 ​ ​
April 23, 2021
​ ​ ​ ​ 4,516 ​ ​ ​ ​ $ 13.62 ​ ​
April 23, 2021
​ ​ ​ ​ 10,000 ​ ​ ​ ​ $ 13.61 ​ ​
May 5, 2021
​ ​ ​ ​ 23,067 ​ ​ ​ ​ $ 12.97 ​ ​
May 5, 2021
​ ​ ​ ​ 9,667 ​ ​ ​ ​ $ 13.61 ​ ​
May 10, 2021
​ ​ ​ ​ 4,516 ​ ​ ​ ​ $ 13.93 ​ ​
May 10, 2021
​ ​ ​ ​ 20,000 ​ ​ ​ ​ $ 12.97 ​ ​
May 10, 2021
​ ​ ​ ​ 5,333 ​ ​ ​ ​ $ 13.61 ​ ​
May 11, 2021
​ ​ ​ ​ 36,667 ​ ​ ​ ​ $ 12.97 ​ ​
May 11, 2021
​ ​ ​ ​ 3,570 ​ ​ ​ ​ $ 12.19 ​ ​
May 14, 2021
​ ​ ​ ​ 2,667 ​ ​ ​ ​ $ 12.97 ​ ​
May 14, 2021
​ ​ ​ ​ 10,533 ​ ​ ​ ​ $ 13.61 ​ ​
 
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Date
​ ​
Number of
Securities
​ ​
Issue Price Per
Security
​
May 18, 2021
​ ​ ​ ​ 13,333 ​ ​ ​ ​ $ 12.97 ​ ​
May 18, 2021
​ ​ ​ ​ 9,817 ​ ​ ​ ​ $ 12.19 ​ ​
May 18, 2021
​ ​ ​ ​ 5,333 ​ ​ ​ ​ $ 13.61 ​ ​
May 19, 2021
​ ​ ​ ​ 2,667 ​ ​ ​ ​ $ 14.78 ​ ​
May 19, 2021
​ ​ ​ ​ 10,000 ​ ​ ​ ​ $ 16.66 ​ ​
May 19, 2021
​ ​ ​ ​ 2,034 ​ ​ ​ ​ $ 12.35 ​ ​
May 19, 2021
​ ​ ​ ​ 14,733 ​ ​ ​ ​ $ 12.97 ​ ​
May 19, 2021
​ ​ ​ ​ 2,677 ​ ​ ​ ​ $ 12.19 ​ ​
May 19, 2021
​ ​ ​ ​ 6,667 ​ ​ ​ ​ $ 13.61 ​ ​
May 19, 2021
​ ​ ​ ​ 19,167 ​ ​ ​ ​ $ 13.50 ​ ​
May 20, 2021
​ ​ ​ ​ 3,333 ​ ​ ​ ​ $ 12.97 ​ ​
May 20, 2021
​ ​ ​ ​ 3,334 ​ ​ ​ ​ $ 13.61 ​ ​
May 20, 2021
​ ​ ​ ​ 2,533 ​ ​ ​ ​ $ 13.50 ​ ​
May 27, 2021
​ ​ ​ ​ 10,000 ​ ​ ​ ​ $ 16.66 ​ ​
May 27, 2021
​ ​ ​ ​ 23,733 ​ ​ ​ ​ $ 12.97 ​ ​
May 27, 2021
​ ​ ​ ​ 6,333 ​ ​ ​ ​ $ 13.61 ​ ​
May 27, 2021
​ ​ ​ ​ 15,633 ​ ​ ​ ​ $ 13.50 ​ ​
May 28, 2021
​ ​ ​ ​ 10,000 ​ ​ ​ ​ $ 16.66 ​ ​
May 28, 2021
​ ​ ​ ​ 2,000 ​ ​ ​ ​ $ 12.97 ​ ​
May 28, 2021
​ ​ ​ ​ 8,925 ​ ​ ​ ​ $ 16.81 ​ ​
May 28, 2021
​ ​ ​ ​ 2,133 ​ ​ ​ ​ $ 13.61 ​ ​
May 28, 2021
​ ​ ​ ​ 2,667 ​ ​ ​ ​ $ 13.79 ​ ​
May 28, 2021
​ ​ ​ ​ 7,234 ​ ​ ​ ​ $ 13.50 ​ ​
May 31, 2021
​ ​ ​ ​ 2,667 ​ ​ ​ ​ $ 12.35 ​ ​
May 31, 2021
​ ​ ​ ​ 1,000 ​ ​ ​ ​ $ 12.97 ​ ​
May 31, 2021
​ ​ ​ ​ 2,000 ​ ​ ​ ​ $ 13.61 ​ ​
May 31, 2021
​ ​ ​ ​ 7,001 ​ ​ ​ ​ $ 13.50 ​ ​
June 1, 2021
​ ​ ​ ​ 10,000 ​ ​ ​ ​ $ 16.66 ​ ​
June 3, 2021
​ ​ ​ ​ 10,000 ​ ​ ​ ​ $ 16.66 ​ ​
June 3, 2021
​ ​ ​ ​ 6,667 ​ ​ ​ ​ $ 13.61 ​ ​
June 3, 2021
​ ​ ​ ​ 4,433 ​ ​ ​ ​ $ 13.50 ​ ​
June 4, 2021
​ ​ ​ ​ 3,333 ​ ​ ​ ​ $ 14.78 ​ ​
June 4, 2021
​ ​ ​ ​ 33,000 ​ ​ ​ ​ $ 16.66 ​ ​
June 4, 2021
​ ​ ​ ​ 7,140 ​ ​ ​ ​ $ 16.81 ​ ​
June 7, 2021
​ ​ ​ ​ 5,000 ​ ​ ​ ​ $ 16.66 ​ ​
June 8, 2021
​ ​ ​ ​ 7,000 ​ ​ ​ ​ $ 16.66 ​ ​
June 8, 2021
​ ​ ​ ​ 8,000 ​ ​ ​ ​ $ 12.35 ​ ​
June 8, 2021
​ ​ ​ ​ 10,000 ​ ​ ​ ​ $ 12.97 ​ ​
June 9, 2021
​ ​ ​ ​ 10,000 ​ ​ ​ ​ $ 16.66 ​ ​
June 10, 2021
​ ​ ​ ​ 5,000 ​ ​ ​ ​ $ 16.66 ​ ​
June 15, 2021
​ ​ ​ ​ 8,000 ​ ​ ​ ​ $ 16.66 ​ ​
June 15, 2021
​ ​ ​ ​ 2,667 ​ ​ ​ ​ $ 12.97 ​ ​
 
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Date
​ ​
Number of
Securities
​ ​
Issue Price Per
Security
​
June 16, 2021
​ ​ ​ ​ 2,283 ​ ​ ​ ​ $ 9.83 ​ ​
June 16, 2021
​ ​ ​ ​ 2,258 ​ ​ ​ ​ $ 13.93 ​ ​
June 16, 2021
​ ​ ​ ​ 2,258 ​ ​ ​ ​ $ 13.62 ​ ​
June 16, 2021
​ ​ ​ ​ 19,900 ​ ​ ​ ​ $ 16.66 ​ ​
June 17, 2021
​ ​ ​ ​ 2,280 ​ ​ ​ ​ $ 10.73 ​ ​
June 18, 2021
​ ​ ​ ​ 3,000 ​ ​ ​ ​ $ 13.61 ​ ​
June 21, 2021
​ ​ ​ ​ 2,667 ​ ​ ​ ​ $ 13.79 ​ ​
June 25, 2021
​ ​ ​ ​ 1,000 ​ ​ ​ ​ $ 13.50 ​ ​
June 25, 2021
​ ​ ​ ​ 1,333 ​ ​ ​ ​ $ 12.82 ​ ​
July 8, 2021
​ ​ ​ ​ 3,233 ​ ​ ​ ​ $ 13.50 ​ ​
November 15, 2021
​ ​ ​ ​ 2,738 ​ ​ ​ ​ $ 10.58 ​ ​
November 15, 2021
​ ​ ​ ​ 2,710 ​ ​ ​ ​ $ 13.93 ​ ​
November 15, 2021
​ ​ ​ ​ 2,710 ​ ​ ​ ​ $ 13.62 ​ ​
November 16, 2021
​ ​ ​ ​ 10,000 ​ ​ ​ ​ $ 13.41 ​ ​
November 16, 2021
​ ​ ​ ​ 8,925 ​ ​ ​ ​ $ 13.10 ​ ​
November 16, 2021
​ ​ ​ ​ 12,495 ​ ​ ​ ​ $ 12.19 ​ ​
November 18, 2021
​ ​ ​ ​ 3,570 ​ ​ ​ ​ $ 13.10 ​ ​
November 22, 2021
​ ​ ​ ​ 7,000 ​ ​ ​ ​ $ 13.41 ​ ​
November 23, 2021
​ ​ ​ ​ 7,400 ​ ​ ​ ​ $ 13.41 ​ ​
November 30, 2021
​ ​ ​ ​ 15,000 ​ ​ ​ ​ $ 13.10 ​ ​
December 3, 2021
​ ​ ​ ​ 24,270 ​ ​ ​ ​ $ 13.10 ​ ​
December 7, 2021
​ ​ ​ ​ 3,570 ​ ​ ​ ​ $ 13.10 ​ ​
January 21, 2022
​ ​ ​ ​ 2,856 ​ ​ ​ ​ $ 12.19 ​ ​
January 21, 2022
​ ​ ​ ​ 2,667 ​ ​ ​ ​ $ 13.50 ​ ​
January 28, 2022
​ ​ ​ ​ 6,667 ​ ​ ​ ​ $ 13.61 ​ ​
February 18, 2022
​ ​ ​ ​ 1,000 ​ ​ ​ ​ $ 13.50 ​ ​
February 22, 2022
​ ​ ​ ​ 1,670 ​ ​ ​ ​ $ 12.97 ​ ​
March 3, 2022
​ ​ ​ ​ 2,666 ​ ​ ​ ​ $ 13.79 ​ ​
March 3, 2022
​ ​ ​ ​ 2,000 ​ ​ ​ ​ $ 14.50 ​ ​
March 3, 2022
​ ​ ​ ​ 1,000 ​ ​ ​ ​ $ 12.70 ​ ​
March 7, 2022
​ ​ ​ ​ 10,000 ​ ​ ​ ​ $ 16.66 ​ ​
March 8, 2022
​ ​ ​ ​ 1,000 ​ ​ ​ ​ $ 13.50 ​ ​
Date
​ ​
Number of
Securities
​ ​
Issue Price Per
Security
​
Dividend Reinvestment Plan ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
April 15, 2021
​ ​ ​ ​ 30,643 ​ ​ ​ ​ $ 14.67 ​ ​
July 15, 2021
​ ​ ​ ​ 21,747 ​ ​ ​ ​ $ 16.33 ​ ​
October 15, 2021
​ ​ ​ ​ 30,588 ​ ​ ​ ​ $ 14.39 ​ ​
January 14, 2022
​ ​ ​ ​ 29,929 ​ ​ ​ ​ $ 14.50 ​ ​
Date
​ ​
Number of
Securities
​ ​
Issue Price Per
Security
​
Deferred Stock Unit Grant ​ ​ ​ ​ ​ ​ ​
 
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Date
​ ​
Number of
Securities
​ ​
Issue Price Per
Security
​
March 1, 2021
​ ​ ​ ​ 15,900 ​ ​ ​ ​ $ 12.70 ​ ​
May 14, 2021
​ ​ ​ ​ 49,061 ​ ​ ​ ​ $ 16.46 ​ ​
Date
​ ​
Number of
Securities
​ ​
Issue Price Per
Security
​
Payment of Deferred Stock Unit Plan (in shares) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
May 14, 2021
​ ​ ​ ​ 16,540 ​ ​ ​ ​ $ 16.46 ​ ​
June 15, 2021
​ ​ ​ ​ 30,849 ​ ​ ​ ​ $ 18.08 ​ ​
Date
​ ​
Number of
Securities
​ ​
Issue Price Per
Security
​
Employee Stock Purchase Plan ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
April 7, 2021
​ ​ ​ ​ 4,870 ​ ​ ​ ​ $ 13.84 ​ ​
September 16, 2021
​ ​ ​ ​ 3,925 ​ ​ ​ ​ $ 16.93 ​ ​
October 7, 2021
​ ​ ​ ​ 5,247 ​ ​ ​ ​ $ 14.26 ​ ​
January 6, 2022
​ ​ ​ ​ 4,809 ​ ​ ​ ​ $ 15.33 ​ ​
Date
​ ​
Number of
Securities
​ ​
Issue Price Per
Security
​
Options Grant ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
March 1, 2021
​ ​ ​ ​ 658,300 ​ ​ ​ ​ $ 12.70 ​ ​
May 14, 2021
​ ​ ​ ​ 45,000 ​ ​ ​ ​ $ 16.46 ​ ​
June 25, 2021
​ ​ ​ ​ 55,400 ​ ​ ​ ​ $ 17.12 ​ ​
November 12, 2021
​ ​ ​ ​ 5,000 ​ ​ ​ ​ $ 16.71 ​ ​
Date
​ ​
Number of
Securities
​ ​
Issue Price Per
Security
​
Payment of Restricted Stock Unit Plan (in shares) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
March 1, 2021
​ ​ ​ ​ 15,351 ​ ​ ​ ​ $ 14.00 ​ ​
May 7, 2021
​ ​ ​ ​ 138,876 ​ ​ ​ ​ $ 16.10 ​ ​
May 17, 2021
​ ​ ​ ​ 13,942 ​ ​ ​ ​ $ 16.64 ​ ​
December 1, 2021
​ ​ ​ ​ 7,414 ​ ​ ​ ​ $ 15.61 ​ ​
December 31, 2021
​ ​ ​ ​ 23,892 ​ ​ ​ ​ $ 15.39 ​ ​
Date
​ ​
Number of
Securities
​ ​
Issue Price Per
Security
​
Restricted Stock Unit Plan (Grant) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
March 1, 2021
​ ​ ​ ​ 256,803 ​ ​ ​ ​ $ 12.70 ​ ​
May 14, 2021
​ ​ ​ ​ 15,255 ​ ​ ​ ​ $ 16.46 ​ ​
June 25, 2021
​ ​ ​ ​ 23,268 ​ ​ ​ ​ $ 17.12 ​ ​
 
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TRADING PRICE AND VOLUME
The Common Shares are listed and posted for trading on the TSX and the NYSE under the symbol “OR”.
Common Shares
The following table sets forth the reported high and low prices (including intra-day prices) and the total volume of trading of the Common Shares on the TSX and the NYSE, respectively, for the periods indicated below.
​ ​ ​
TSX
​ ​
NYSE
​
​ ​ ​
High
​ ​
Low
​ ​
Volume
​ ​
High
​ ​
Low
​ ​
Volume
​
​ ​ ​
($)
​ ​
($)
​ ​
(#)
​ ​
(US$)
​ ​
(US$)
​ ​
(#)
​
2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
March
​ ​ ​ ​ 14.54 ​ ​ ​ ​ ​ 12.39 ​ ​ ​ ​ ​ 8,457,920 ​ ​ ​ ​ ​ 11.65 ​ ​ ​ ​ ​ 9.79 ​ ​ ​ ​ ​ 6,803,590 ​ ​
April
​ ​ ​ ​ 15.76 ​ ​ ​ ​ ​ 14.02 ​ ​ ​ ​ ​ 5,455,543 ​ ​ ​ ​ ​ 12.62 ​ ​ ​ ​ ​ 11.19 ​ ​ ​ ​ ​ 2,995,583 ​ ​
May
​ ​ ​ ​ 17.47 ​ ​ ​ ​ ​ 15.03 ​ ​ ​ ​ ​ 7,265,312 ​ ​ ​ ​ ​ 14.40 ​ ​ ​ ​ ​ 12.23 ​ ​ ​ ​ ​ 3,658,201 ​ ​
June
​ ​ ​ ​ 18.40 ​ ​ ​ ​ ​ 16.43 ​ ​ ​ ​ ​ 6,901,025 ​ ​ ​ ​ ​ 15.12 ​ ​ ​ ​ ​ 13.26 ​ ​ ​ ​ ​ 5,470,482 ​ ​
July
​ ​ ​ ​ 17.67 ​ ​ ​ ​ ​ 16.19 ​ ​ ​ ​ ​ 10,330,704 ​ ​ ​ ​ ​ 14.28 ​ ​ ​ ​ ​ 12.75 ​ ​ ​ ​ ​ 3,683,501 ​ ​
August
​ ​ ​ ​ 17.33 ​ ​ ​ ​ ​ 14.88 ​ ​ ​ ​ ​ 6,998,034 ​ ​ ​ ​ ​ 13.80 ​ ​ ​ ​ ​ 11.55 ​ ​ ​ ​ ​ 3,855,110 ​ ​
September
​ ​ ​ ​ 15.65 ​ ​ ​ ​ ​ 14.03 ​ ​ ​ ​ ​ 7,432,505 ​ ​ ​ ​ ​ 12.50 ​ ​ ​ ​ ​ 11.02 ​ ​ ​ ​ ​ 5,134,727 ​ ​
October
​ ​ ​ ​ 16.11 ​ ​ ​ ​ ​ 13.85 ​ ​ ​ ​ ​ 6,423,637 ​ ​ ​ ​ ​ 13.05 ​ ​ ​ ​ ​ 11.02 ​ ​ ​ ​ ​ 3,737,516 ​ ​
November
​ ​ ​ ​ 17.14 ​ ​ ​ ​ ​ 14.98 ​ ​ ​ ​ ​ 8,000,377 ​ ​ ​ ​ ​ 13.68 ​ ​ ​ ​ ​ 12.06 ​ ​ ​ ​ ​ 4,157,801 ​ ​
December
​ ​ ​ ​ 15.73 ​ ​ ​ ​ ​ 14.01 ​ ​ ​ ​ ​ 6,030,625 ​ ​ ​ ​ ​ 12.35 ​ ​ ​ ​ ​ 10.93 ​ ​ ​ ​ ​ 6,690,002 ​ ​
2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
January
​ ​ ​ ​ 15.51 ​ ​ ​ ​ ​ 13.60 ​ ​ ​ ​ ​ 7,827,677 ​ ​ ​ ​ ​ 12.38 ​ ​ ​ ​ ​ 10.64 ​ ​ ​ ​ ​ 5,498,391 ​ ​
February
​ ​ ​ ​ 16.35 ​ ​ ​ ​ ​ 13.89 ​ ​ ​ ​ ​ 6,654,061 ​ ​ ​ ​ ​ 12.81 ​ ​ ​ ​ ​ 10.94 ​ ​ ​ ​ ​ 5,583,086 ​ ​
March 1 to March 16
​ ​ ​ ​ 18.59 ​ ​ ​ ​ ​ 15.65 ​ ​ ​ ​ ​ 6,781,873 ​ ​ ​ ​ ​ 14.57 ​ ​ ​ ​ ​ 12.37 ​ ​ ​ ​ ​ 5,689,198 ​ ​
On March 16, 2022, the last trading day on the NYSE prior to the date of this short form prospectus, the closing price of the Common Shares was US$13.97. On March 16, 2022, the last trading day on the TSX prior to the date of this short form prospectus, the closing price of the Common Shares was $17.72.
Convertible Debentures
The Corporation’s convertible debentures (the “Debentures”) are listed on the TSX under the symbol “OR.DB”. The following table sets forth the price range and trading volume for the Debentures on the TSX, for the periods indicated:
​ ​ ​
OR.DB
​
​ ​ ​
High
($)
​ ​
Low
($)
​ ​
Volume
(#)
​
2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
March
​ ​ ​ ​ 102.03 ​ ​ ​ ​ ​ 100.75 ​ ​ ​ ​ ​ 69,930 ​ ​
April
​ ​ ​ ​ 103.50 ​ ​ ​ ​ ​ 101.50 ​ ​ ​ ​ ​ 28,850 ​ ​
May
​ ​ ​ ​ 105.08 ​ ​ ​ ​ ​ 103.43 ​ ​ ​ ​ ​ 194,590 ​ ​
June
​ ​ ​ ​ 105.99 ​ ​ ​ ​ ​ 103.75 ​ ​ ​ ​ ​ 9,610 ​ ​
July
​ ​ ​ ​ 104.64 ​ ​ ​ ​ ​ 103.16 ​ ​ ​ ​ ​ 10,250 ​ ​
August
​ ​ ​ ​ 102.05 ​ ​ ​ ​ ​ 100.81 ​ ​ ​ ​ ​ 54,180 ​ ​
September
​ ​ ​ ​ 102.04 ​ ​ ​ ​ ​ 100.30 ​ ​ ​ ​ ​ 169,240 ​ ​
 
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​ ​ ​
OR.DB
​
​ ​ ​
High
($)
​ ​
Low
($)
​ ​
Volume
(#)
​
October
​ ​ ​ ​ 102.00 ​ ​ ​ ​ ​ 100.50 ​ ​ ​ ​ ​ 135,010 ​ ​
November
​ ​ ​ ​ 103.50 ​ ​ ​ ​ ​ 101.50 ​ ​ ​ ​ ​ 6,260 ​ ​
December
​ ​ ​ ​ 102.50 ​ ​ ​ ​ ​ 100.51 ​ ​ ​ ​ ​ 11,140 ​ ​
2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
January
​ ​ ​ ​ 101.56 ​ ​ ​ ​ ​ 100.51 ​ ​ ​ ​ ​ 4,850 ​ ​
February
​ ​ ​ ​ 101.78 ​ ​ ​ ​ ​ 100.08 ​ ​ ​ ​ ​ 17,650 ​ ​
March 1 to March 16
​ ​ ​ ​ 103.00 ​ ​ ​ ​ ​ 101.00 ​ ​ ​ ​ ​ 2,272,000 ​ ​
On March 16, 2022, the last complete trading day prior to the filing of this short form prospectus, the closing price of the Debentures on the TSX was $102.05.
RISK FACTORS
An investment in the Offered Shares, as well as the Corporation’s prospects, are speculative due to the risky nature of its business and the present stage of its development. Investors may lose their entire investment.
Investors should carefully consider the risk factors described below and under the heading “Risk Factors” in the AIF. The risks described below and in the AIF are not the only ones facing the Corporation. Additional risks not currently known to the Corporation, or that the Corporation currently deems immaterial, may also impair the Corporation’s operations. There is no assurance that risk management steps taken will avoid future loss due to the occurrence of the risks described below or other unforeseen risks. If any of the risks described below or in the AIF actually occur, the Corporation’s business, financial condition and operating results could be adversely affected. Investors should carefully consider the risks below and in the AIF and the other information elsewhere in this short form prospectus and consult with their professional advisors to assess any investment in the Offered Shares.
A positive return in an investment in the Offered Shares is not guaranteed.
There is no guarantee that an investment in the Offered Shares will earn any positive return in the short term or long term. An investment in the Offered Shares involves a high degree of risk and should be undertaken only by investors whose financial resources are sufficient to enable them to assume such risks and who have no need for immediate liquidity in their investment. An investment in the Offered Shares is appropriate only for investors who have the capacity to absorb a loss of some or all of their investment.
The Corporation has broad discretion to use the net proceeds from this Offering.
The Corporation intends to use the net proceeds from the Offering to achieve its stated business objectives as set forth under “Use of Proceeds”. The Corporation maintains broad discretion to spend the proceeds in ways that it deems most efficient. The application of the proceeds to various items may not necessarily enhance the value of the Offered Shares. The failure of the Corporation to apply the net proceeds as set forth under “Use of Proceeds”, or the failure of the Corporation to achieve its stated business objectives set forth in such section, could adversely affect the Corporation’s business and, consequently, could adversely affect the price of the Offered Shares on the open market.
The market price for the Offered Shares may fluctuate.
There can be no assurance that an active market for the Offered Shares will be sustained after the Offering. Securities markets have a high level of price and volume volatility, and the market price of securities of many companies have experienced wide fluctuations in price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. It may be anticipated that any market for the Offered Shares will be subject to market trends generally and the value of the Offered Shares on the TSX and NYSE may be affected by such volatility in response to numerous factors. Factors unrelated to the financial performance or prospects of the Corporation include
 
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macroeconomic developments, and market perceptions of the attractiveness of particular industries. There can be no assurance that continued fluctuations in commodity prices will not occur. As a result of any of these factors, the market price of the securities of the Corporation at any given point in time may not accurately reflect the long term value of the Corporation.
The Corporation may not be able to raise additional funds.
The Corporation’s activities do have scope for flexibility in terms of the amount and timing of expenditure, and expenditures may be adjusted accordingly. Further operations will require additional capital and will depend on the Corporation’s ability to obtain financing through debt, equity, or other means. Following the completion of the Offering, along with cash on hand and amounts available to the Corporation pursuant to its Revolving Credit Facility, the Corporation believes that it has sufficient funds to conduct its operations for the foreseeable future; however there may be factors that result in the Corporation’s need to raise additional funds. The Corporation’s ability to meet its obligations and maintain operations may be contingent upon successful completion of additional financing arrangements. Although the Corporation has been successful in raising funds to date, there is no assurance that the Corporation will be successful in obtaining the required financing in the future or that such financing will be available on terms acceptable to the Corporation.
Purchasers of Offered Shares may experience dilution.
Additional financing needed to fund the Corporation’s acquisition strategy and the growth of its asset base, may require the Corporation to issue additional securities. The issuance of additional securities and the exercise of stock options and other convertible securities will result in dilution of the equity interests of any persons who are or may become holders of Common Shares.
The Corporation may be a “Passive Foreign Investment Company”, or PFIC, under applicable U.S. income tax rules.
If the Corporation were to constitute a PFIC for any year during a U.S. holder’s holding period, then certain potentially adverse U.S. federal income tax rules would affect the U.S. federal income tax consequences to such U.S. holder resulting from the acquisition, ownership and disposition of the Offered Shares.
The U.S. Treasury Department has not issued specific guidance on how the income and assets of a non-U.S. corporation such as the Corporation will be treated under the PFIC rules, including the treatment of royalties, streams and precious metal offtakes under such rules. Based upon advice from its tax advisors, the Corporation believes, on a more likely than not basis, that it was not a PFIC for its tax year ended December 31, 2021, and, based on its current and anticipated business activities and financial expectations, the Corporation expects, on a more likely than not basis that it will not be a PFIC for its current tax year and for the foreseeable future.
The determination as to whether a corporation is, or will be, a PFIC for a particular tax year depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations and uncertainty. In addition, there is limited authority on the application of the relevant PFIC rules to entities such as the Corporation. Accordingly, there can be no assurance that the Internal Revenue Service will not challenge the views of the Corporation concerning its PFIC status. In addition, whether any corporation will be a PFIC for any tax year depends on its assets and income over the course of such tax year, and, as a result, the Corporation’s PFIC status for its current tax year and any future tax year cannot be predicted with certainty. Each U.S. holder should consult its own tax adviser regarding the PFIC status of the Corporation.
The Corporation’s production estimates, forecasts and outlook may not be accurate.
The Corporation prepares estimates, forecasts and outlook of future attributable production from the mining operations of the assets on which the Corporation holds a royalties, streams or other interests (“Mining Operations”) and relies on public disclosure and other information it receives from the owners, operators and independent experts of the Mining Operations to prepare such estimates, forecasts and outlook. Such information is necessarily imprecise because it depends upon the judgment of the individuals who
 
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operate the Mining Operations as well as those who review and assess the geological and engineering information. These production estimates and projections are based on existing mine plans and other assumptions with respect to the Mining Operations, which change from time to time, and over which the Corporation has no control, including the availability, accessibility, sufficiency and quality of ore, the costs of production, the operators’ ability to sustain and increase production levels, the sufficiency of infrastructure, the performance of personnel and equipment, the ability to maintain and obtain mining interests and permits and compliance with existing and future laws and regulations. Any such information is forward-looking and no assurance can be given that such production estimates and projections will be achieved. Actual attributable production may vary from the Corporation’s estimates, forecasts and outlook for a variety of reasons, including: actual ore mined varying from estimates of grade, tonnage, dilution and metallurgical and other characteristics; actual ore mined being less amenable than expected to mining or treatment; short-term operating factors relating to the ore reserves, such as the need for sequential development of orebodies and the processing of new or different ore grades; delays in the commencement of production and ramp up at new mines; revisions to mine plans; unusual or unexpected orebody formations; risks and hazards associated with the Mining Operations, including but not limited to cave-ins, rock falls, rock bursts, pit wall failures, seismic activity, weather related complications, fires or flooding or as a result of other operational problems such as production drilling challenges, power failures or a failure of a key production component such as a hoist, an autoclave, a filter press or a grinding mill; and unexpected labour shortages, strikes, local community opposition or blockades. Occurrences of this nature and other accidents, adverse conditions or operational problems in future years may result in the Corporation’s failure to achieve the production estimates, forecasts or outlook currently anticipated. If the Corporation’s production estimates, forecasts or outlook prove to be incorrect, it may have a material adverse effect on the Corporation.
The Corporation may not complete any announced transactions and acquired assets may expose the Corporation to exploration and development risk.
The Corporation is in the business of bidding for, and may acquire royalties, streams or other interests in respect of a variety of assets, including those that are based on properties that are speculative and there can be no guarantee that anticipated returns will be realized or, in relation to earlier stage projects, that mineable deposits will be discovered or developed.
The Corporation is engaged in the business to acquire royalties, streams and other interests in mining assets. From time to time the Corporation may enter into binding transactions to acquire, or create through investments, such assets. There can be no assurances the Corporation will successfully complete any announced transactions as a variety of conditions may exist that need to be waived or satisfied prior to completion. There can be no certainty that proposed benefits of transactions to acquire such assets will be realized as anticipated.
Certain of the assets acquired by the Corporation involve exposure to exploration and development risks.
Exploration for metals and minerals is a speculative venture necessarily involving substantial risk. There is no certainty that the expenditures made by the operator of any given project will result in discoveries of commercial quantities of minerals on lands where the Corporation holds royalties, streams or other interests.
If mineable deposits are discovered, substantial expenditures are required to establish reserves through drilling, to develop processes to extract the resources and, in the case of new properties, to develop the extraction and processing facilities and infrastructure at any site chosen for extraction. Although substantial benefits may be derived from the discovery of a major deposit, no assurance can be given that resources will be discovered in sufficient quantities to justify commercial operations or that the funds required for development can be obtained on terms acceptable to the operator or at all. Although, in respect of these properties, the Corporation intends to only hold royalties, streams or other interests and not be responsible for these expenditures, the operator may not be in a financial position to obtain the necessary funds to advance the project.
 
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DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT
In addition to the documents specified in this short form prospectus under “Documents Incorporated by Reference,” the underwriting agreement described in this short form prospectus, the consents of auditors, Guy Desharnais, Ph.D., P.Geo, and legal counsel, and the powers of attorney from the directors and certain officers of the Corporation have been or will be filed with the SEC as part of the registration statement of which this short form prospectus forms a part.
LEGAL MATTERS
Certain legal matters relating to the Offering and this prospectus will be passed upon by Bennett Jones LLP, with respect to Canadian law, and Paul, Weiss, Rifkind, Wharton & Garrison LLP, with respect to United States law, on behalf of the Corporation, and Osler, Hoskin & Harcourt LLP, with respect to Canadian law and Skadden, Arps, Slate, Meagher & Flom LLP, with respect to certain United States legal matters on behalf of the Underwriters.
INTERESTS OF EXPERTS
Guy Desharnais, Ph.D., P.Geo, has reviewed and approved certain scientific and technical information as set out herein in relation to the Corporation and is named in the AIF as having reviewed and approved certain scientific and technical information as set out under the heading “Material Mineral Projects — The Canadian Malartic Royalty” with respect to the Canadian Malartic Royalty, in the AIF.
As of the date hereof, Dr. Guy Desharnais, Ph.D., P.Geo, holds (i) 5,046 Common Shares, (ii) 59,700 options to purchase Common Shares, and (iii) 21,465 RSUs.
As of the date hereof, the partners and associates of each of Bennett Jones LLP and Osler, Hoskin & Harcourt LLP, each as a group, own, directly or indirectly less than 1% of the outstanding Common Shares.
AUDITORS, TRANSFER AGENT AND REGISTRAR
The auditors of the Corporation are PricewaterhouseCoopers LLP, a partnership of Chartered Professional Accountants, located at 1250 René-Lévesque Boulevard West, Suite 2500, Montréal, Québec, Canada H3B 4Y1. PricewaterhouseCoopers LLP has confirmed that it is independent of the Corporation within the meaning of the code of ethics of chartered professional accountants (Quebec) and within the meaning PCAOB Rule 3520, Auditor Independence.
The transfer agent and registrar for the Common Shares is AST Trust Company (Canada), which is located at 2001 Robert-Bourassa, Suite 1600, Montréal, Québec, Canada H3A 2A6, where transfers of Osisko’s securities may be recorded.
 
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PART II
INFORMATION NOT REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS
Indemnification of Directors and Officers
Under the Québec Business Corporations Act (the “QBCA”), the Registrant may indemnify a present or former director or officer of the Registrant or another individual who acts or acted at the Registrant’s request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the Registrant or other entity. The Registrant may not indemnify an individual unless the individual acted honestly and in good faith with a view to the best interests of the Registrant, or, as the case may be, to the best interests of the other entity for which the individual acted as a director or officer or in a similar capacity at the Registrant’s request and in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that the conduct was lawful (the “Indemnity Conditions”). The indemnification may be made in connection with a derivative action only with court approval. The aforementioned individuals are entitled to indemnification from the Registrant as a matter of right if they were not judged by the court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done, and they fulfill the Indemnity Conditions. The Registrant may advance moneys to the individual for the costs, charges and expenses of a proceeding; however, the individual shall repay the moneys if the individual does not fulfill the Indemnity Conditions.
The by-laws of the Registrant provide that the Registrant may, subject to the QBCA, purchase and maintain insurance for the benefit of any director, officer, or certain other persons as set out above, against any liability incurred by them in their capacity as a director or officer of the Registrant or an individual acting in a similar capacity of the Registrant or of another body corporate where he or she acts or acted in that capacity at the Registrant’s request. The Registrant has purchased third party director and officer liability insurance. In addition, the Registrant has entered into indemnity agreements with its directors.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers or persons controlling the Registrant pursuant to the foregoing provisions, the Registrant has been informed that in the opinion of the U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is therefore unenforceable.
The exhibits listed in the exhibit index, appearing elsewhere in this Registration Statement, have been filed as part of this Registration Statement.
 
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PART III
UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
Item 1.   Undertaking
The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to the securities registered pursuant to Form F-10 or to transactions in said securities.
Item 2.   Consent to Service of Process
A written Appointment of Agent for Service of Process and Undertaking on Form F-X for the Registrant and its agent for service of process is being filed concurrently herewith.
Any change to the name or address of the agent for service of process of the Registrant shall be communicated promptly to the Commission by amendment to Form F-X referencing the file number of this Registration Statement on Form F-10.
 
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EXHIBIT INDEX
Exhibit
Number 		​ ​
Description
​
  3.1* ​ ​ Underwriting Agreement. ​
  3.2* ​ ​ Term Sheet. ​
  4.1 ​ ​ Annual information form of the Registrant for the financial year ended December 31, 2021, dated March 17, 2022. ​
  4.2 ​ ​ Audited consolidated financial statements of the Registrant as at and for the years ended December 31, 2021 and December 31, 2020, together with the notes thereto and the auditors’ report thereon (the “Annual Financial Statements”), dated February 24, 2022. ​
  4.3 ​ ​ ​
  4.4 ​ ​ ​
  5.1 ​ ​ ​
  5.2 ​ ​ ​
  5.3 ​ ​ ​
  5.4 ​ ​ ​
  5.5 ​ ​ ​
  6.1 ​ ​ ​
107 ​ ​ ​
​
*
To be filed by amendment.
​
 
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-10 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Montreal, Québec, on March 17, 2022.
​ ​ ​ ​ OSISKO GOLD ROYALTIES LTD ​
​ ​ ​ ​ By: ​ ​
/s/ Frédéric Ruel
​
Name: Frédéric Ruel
Title:
Chief Financial Officer and Vice President, Finance
​
 ​
 
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POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Sandeep Singh, Frédéric Ruel and André Le Bel, or any of them, his or her true and lawful attorneys-in-fact and agents, each of whom may act alone, with full powers of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments to this Registration Statement, including post-effective amendments, and any and all additional registration statements (including amendments and post-effective amendments thereto) in connection with any increase in the amount of securities registered with the Securities and Exchange Commission, and to file the same, with all exhibits thereto, and other documents and in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, and hereby ratifies and confirms all his or her said attorneys-in-fact and agents or any of them or his or her substitute or substitutes may lawfully do or cause to be done by virtue hereof.
This Power of Attorney may be executed in multiple counterparts, each of which shall be deemed an original, but which taken together shall constitute one instrument.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated and on the dates indicated.
​
Signature
​ ​
Capacity
​ ​
Date
​
​
/s/ Sandeep Singh
​
Sandeep Singh
​ ​ President, Chief Executive Officer and Director (Principal Executive Officer) ​ ​
March 17, 2022
​
​
/s/ Frédéric Ruel
​
Frédéric Ruel
​ ​ Chief Financial Officer and Vice President, Finance (Principal Financial and Accounting Officer) ​ ​
March 17, 2022
​
​
/s/ Sean Roosen
​
Sean Roosen
​ ​ Executive Chair of the Board of Directors ​ ​
March 17, 2022
​
​
/s/ Joanne Ferstman
​
Joanne Ferstman
​ ​ Lead Director ​ ​
March 17, 2022
​
​
/s/ John R. Baird
​
John R. Baird
​ ​ Director ​ ​
March 17, 2022
​
​
/s/ Christopher C. Curfman
​
Christopher C. Curfman
​ ​ Director ​ ​
March 17, 2022
​
​
/s/ Candace MacGibbon
​
Candace MacGibbon
​ ​ Director ​ ​
March 17, 2022
​
​
/s/ Pierre Labbé
​
Pierre Labbé
​ ​ Director ​ ​
March 17, 2022
​
​
/s/ William Murray John
​
William Murray John
​ ​ Director ​ ​
March 17, 2022
​
​
/s/ Charles E. Page
​
Charles E. Page
​ ​ Director ​ ​
March 17, 2022
​
 
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AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of Section 6(a) of the Securities Act of 1933, as amended, the undersigned has signed this Registration Statement, in the capacity of the duly authorized representative of the Registrant in the United States, on March 17, 2022.
​ ​ ​ ​ Osisko Mining (USA) Inc. ​
​ ​ ​ ​ By: ​ ​
/s/ André Le Bel
​
Name: André Le Bel
Title:
Secretary
​
 ​
 
III-5

 

Exhibit 4.1 

 

 

 

 

ANNUAL INFORMATION FORM

 

FOR THE FISCAL YEAR ENDED

DECEMBER 31, 2021

 

DATED AS OF MARCH 17, 2022

 

 

 

 

TABLE OF CONTENTS

 

General matters 3
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTs 3
CAUTIONARY NOTE TO U.S. INVESTORS REGARDING  PREPARATION OF FINANCIAL INFORMATION 4
CAUTIONARY NOTE TO U.S. INVESTORS REGARDING  THE USE OF MINERAL RESERVE AND MINERAL RESOURCE ESTIMATES 5
Exchange Rate Data 6
GLOSSARY OF TERMS 7
Corporate Structure 15
DESCRIPTION OF BUSINESS 16
General Development of Osisko’s Business 26
RISK FACTORS 32
Material MINERAL Project 48
Dividends 49
Description of capital structure 50
MARKET FOR SECURITIES 53
Directors and Officers 56
Legal Proceedings and regulatory actions 63
Interest of Management and Others in Material Transactions 63
Transfer Agents and Registrars 63
Material Contracts 64
Interests Of Experts 64
ADDITIONAL INFORMATION 64
Audit AND RISK Committee 64
SCHEDULE A AUDIT AND RISK COMMITTEE CHARTER 68
SCHEDULE B - TECHNICAL INFORMATION UNDERLYING THE CANADIAN MALARTIC PROPERTY 74

 

2

 

 

General matters

 

The information contained in this Annual Information Form, unless otherwise indicated, is given as of December 31, 2021, with specific updates post-financial year end where specifically indicated. More current information may be available on our public website at www.osiskogr.com, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. In addition, we generally maintain supporting materials on our website which may assist in reviewing (but are not to be considered part of) this Annual Information Form.

 

All capitalized terms used in this Annual Information Form and not defined herein have the meaning ascribed in the “Glossary of Terms” or elsewhere in this Annual Information Form.

 

Unless otherwise noted or the context otherwise indicates, the term “Osisko” refers to Osisko Gold Royalties Ltd and its subsidiaries.

 

For reporting purposes, Osisko presents its financial statements in Canadian dollars and in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”).

 

Unless otherwise indicated herein, references to “$”, “C$” or “Canadian dollars” are to Canadian dollars, and references to “US$” or “U.S. dollars” are to United States dollars. See “Exchange Rate Data”. See also “Cautionary Statement Regarding Forward-Looking Statements”.

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTs

 

Certain statements contained in this Annual Information Form may be deemed “forward looking information” and “forward-looking statements” within the meaning of applicable Canadian Securities Laws and the United States Private Securities Litigation Reform Act of 1995 (collectively, the “forward-looking statements”). All statements in this Annual Information Form, 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 mineral resources and gold equivalent ounces are forward-looking statements, as they involve implied assessment, based on certain estimates and assumptions, and no assurance can be given that the estimates will be realized. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”, “projects”, “potential”, “scheduled” and similar expressions or variations (including negative variations), or that events or conditions “will”, “would”, “may”, “could” or “should” occur including, without limitation, the performance of the assets of Osisko, any estimate of gold equivalent ounces to be received, the realization of the anticipated benefits deriving from Osisko’s investments and transactions, the actual results of exploration and development activities 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 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 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” status (“PFIC”) as defined in Section 1297 of the United States Internal Revenue Code of 1986, as amended; regulations and political or economic developments in any of the countries where properties in which Osisko holds royalties, streams or other interests are located or through which they are held; risks related to the operators of the properties in which Osisko holds royalties, streams or other interests; influence of macroeconomic developments; 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 royalties, streams or other interests; development, permitting, infrastructure, operating or technical difficulties on any of the properties in which Osisko holds royalties, stream or other interests; rate and timing of production differences from resource estimates or production forecasts by operators of properties in which Osisko holds royalties, streams or other interests; risks and hazards associated with the business of exploring, development and mining on any of the properties in which Osisko holds royalties, streams or other interests, 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 responses of relevant governments to the COVID-19 outbreak and the effectiveness of such response and the potential impact of COVID-19 on Osisko’s business, operations and financial condition and the integration of acquired assets. The forward-looking statements contained in this Annual Information Form are based upon assumptions management believes to be reasonable, including, without limitation: the ongoing operation by the operators of the properties in which Osisko holds royalties, streams or other interests by the operators of such properties in a manner consistent with past practice; the accuracy of public statements and disclosures made by the operators of such underlying properties; the absence of material adverse change in the market price of the commodities that underlie the asset portfolio; Osisko’s ongoing income and assets relating to determination of its PFIC status; no adverse development in respect of any significant property in which Osisko holds royalties, streams or other interests; the accuracy of publicly disclosed expectations for the development of underlying properties that are not yet in production; integration of acquired assets; and the absence of any other factors that could cause actions, events or results to differ from those anticipated, estimated or intended.

 

3

 

 

Although Osisko has attempted to identify important factors that could cause actual plans, actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause plans, actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual plans, results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

 

Certain of the forward-looking statements and other information contained herein concerning the mining industry and Osisko’s general expectations concerning the mining industry are based on estimates prepared by Osisko using data from publicly available industry sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which Osisko believes to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, this data is inherently imprecise. While Osisko is not aware of any misstatement regarding any industry data presented herein, the mining industry involves risks and uncertainties that are subject to change based on various factors.

 

The readers are cautioned not to place undue reliance on forward-looking statements. Osisko undertakes no obligation to update any of the forward-looking statements in this Annual Information Form, except as required by law. Unless otherwise indicated, these statements are made as of the date of this Annual Information Form.

 

CAUTIONARY NOTE TO U.S. INVESTORS REGARDING
PREPARATION OF FINANCIAL INFORMATION

 

As a Canadian company, Osisko prepares its financial statements in accordance with IFRS. Consequently, all of the financial statements and financial information of Osisko is prepared in accordance with IFRS, which are materially different than financial statements and financial information prepared in accordance with U.S. generally accepted accounting principles.

 

4

 

 

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 information regarding mineral properties, mineralization and estimates of mineral reserves and mineral resources in accordance Canadian reporting requirements, which are governed by Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects. As such, the information contained in this Annual Information Form concerning mineral properties, mineralization and estimates of mineral reserves and mineral resources is not comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements of the U.S. Securities and Exchange Commission.

 

CAUTIONARY STATEMENT REGARDING THIRD PARTY INFORMATION

 

The disclosure in this Annual Information Form relating to the properties in which Osisko holds royalties, streams or other interests and the operations on such properties is based on information publicly disclosed by the owners or operators of these properties and information or data available in the public domain as at March 17, 2022 (except where stated otherwise), and none of this information or data has been independently verified by Osisko. As a holder of royalties, streams and other interests, Osisko generally has limited, if any, access to the properties included in or relating to its asset portfolio. Therefore, in preparing disclosure pertaining to the properties in which Osisko holds royalties, streams or other interests and the operations on such properties, Osisko is dependent on information publicly disclosed by the owners or operators of these properties and information or data available in the public domain and generally has limited or no ability to independently verify such information or data. Although Osisko has no knowledge that such information or data is incomplete or inaccurate, there can be no assurance that such third party information or data is complete or accurate. Additionally, some information or data publicly reported by the owners or operators may relate to a larger property than the area covered by the royalties, streams or other interests of Osisko. Sometimes, the royalties, streams or other interests of Osisko cover less than 100% and sometimes only a portion of the publicly reported mineral reserves, mineral resources or production of a property.

 

NON-IFRS FINANCIAL PERFORMANCE MEASURES

 

The Corporation has included certain performance measures in this Annual Information Form that do not have any standardized meaning prescribed by IFRS including (i) cash margin (in dollars and in percentage or revenues), (ii) adjusted earnings (loss) and (iii) adjusted earnings (loss) per basic share. The presentation of these non-IFRS measures 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. These measures are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. As Osisko’s operations are primarily focused on precious metals, the Corporation presents cash margins and adjusted earnings as it believes that certain investors use this information, together with measures determined in accordance with IFRS, to evaluate the Corporation’s performance in comparison to other companies in the precious metals mining industry who present results on a similar basis. However, other companies may calculate these non-IFRS measures differently. For information regarding the non-IFRS financial measures used by Osisko, see “Non-IFRS Financial Performance Measures” in Osisko’s management’s discussion and analysis for the year ended December 31, 2021, which section is incorporated by reference herein. The financial statements and management’s discussion and analysis of Osisko are available on SEDAR at www.sedar.com.

 

5

 

 

Exchange Rate Data

 

The following table sets forth the high and low exchange rates for one U.S. dollar expressed in Canadian dollars for each period indicated, the average of the exchange rates for each period indicated and the exchange rate at the end of each such period, based upon the exchange rates provided by the Bank of Canada:

 

   Year Ended December 31 
   2021   2020   2019 
   ($C)   ($C)   ($C) 
High   1.2942    1.4496    1.3600 
Low   1.2040    1.2718    1.2988 
Average rate for period   1.2535    1.3415    1.3269 
Rate at end of period   1.2678    1.2732    1.2988 

 

On March 16, 2022, the exchange rate for one U.S. dollar expressed in Canadian dollars as reported by the Bank of Canada, was 1.2721.

 

6

 

 

GLOSSARY OF TERMS

 

In this Annual Information Form, the following capitalized words and terms shall have the following meanings:

 

“2021 NCIB Program” means the Corporation’s Normal Course Issuer Bid program for 2021.

 

“2022 NCIB Program” means the Corporation’s Normal Course Issuer Bid program for 2022.

 

“affiliate” has the meaning ascribed in the Securities Act (Québec), unless stated otherwise.

 

“Ag” is the chemical symbol for silver.

 

“Agnico” means Agnico Eagle Mines Limited.

 

“associate” has the meaning ascribed in the Securities Act (Québec), unless stated otherwise.

 

“Au” is the chemical symbol for gold.

 

“BAPE” means the Bureau des Audiences Publiques sur l’Environnement.

 

“Barkerville” means Barkerville Gold Mines Ltd.

 

“Barkerville Arrangement Effective Date” means November 21, 2019.

 

“Barkerville Options” means the options to purchase Barkerville Shares granted under the Barkerville stock option plan that were outstanding on the Barkerville Arrangement Effective Date.

 

“Barkerville Shares” means common shares in the capital of Barkerville.

 

“Bonanza Ledge Phase II Property” means the mineral property and high grade deposit located within the Cariboo Gold Project (in the Cariboo Gold District of British Columbia).

 

“Canadian Malartic Properties” means the properties that are subject to the Canadian Malartic Royalty.

 

“Canadian Malartic Report” has the meaning ascribed under “Schedule B - Technical Information Underlying the Canadian Malartic Property”.

 

“Canadian Malartic Royalty” has the meaning ascribed under the heading “Material Mineral Project - The Canadian Malartic Royalty”.

 

“Canadian Malartic Royalty Agreement” means the amended and restated net smelter return royalty agreement dated June 16, 2014 between Osisko and Canadian Malartic GP.

 

“Cariboo Gold Project” means the mineral property located in the historical Wells-Barkerville mining camp (also known as the Cariboo Gold District) of British Columbia and extending for approximately 60 km from northwest to southeast.

 

“CDPQ” means Caisse de dépôt et placement du Québec.

 

“CIM” means the Canadian Institute of Mining, Metallurgy and Petroleum.

 

“Coulon Project” means the Coulon zinc project, a mineral exploration property located in northern Québec.

 

“CRA” means the Canada Revenue Agency.

 

7

 

 

“Credit Facility” means the revolving credit facility of $550 million with a syndicate of financial institutions with a maturity date of July 30, 2025, including an additional uncommitted accordion of up to $100 million for a total availability of up to $650 million.

 

“CSA Mine” has the meaning ascribed under “Description of Business”.

 

“Cu” is the chemical symbol for copper.

 

“Debentures” has the meaning ascribed under the heading “Description of Capital Structure - Debentures”.

 

“Dividend Reinvestment Plan” means Osisko’s dividend reinvestment plan.

 

“EDGAR” means the Electronic Data Gathering, Analysis and Retrieval system.

 

“Falco” means Falco Resources Ltd.

 

“Falco Convertible Loan” has the meaning ascribed under the heading “General Development of Osisko’s Business - Falco Silver Stream”.

 

“Falco Maturity Extension” has the meaning ascribed under the heading “General Development of Osisko’s Business - Falco Silver Stream”.

 

“Falco Secured Loan” has the meaning ascribed under the heading “General Development of Osisko’s Business - Falco Silver Stream”.

 

“Falco Shares” means common shares in the share capital of Falco.

 

“Falco Silver Stream” has the meaning ascribed under the heading “General Development of Osisko’s Business - Falco Silver Stream”.

 

“Falco Warrants” means common share purchase warrants of Falco.

 

“forward-looking statements” has the meaning ascribed under the heading “Cautionary Statement Regarding Forward-Looking Statements”.

 

“GEOs” means gold equivalent ounces.

 

“GoGold” means GoGold Resources Corp.

 

“Guerrero Properties” means the mineral exploration properties consisting of approximately 900,000 hectares located in the Guerrero Gold Belt in Guerrero, Mexico.


“g/t” means gram per tonne.

 

“ha” means hectare.

 

“Horne 5 Project” means Falco’s development-stage project located in Rouyn-Noranda, Québec.

 

“IFRS” means International Financial Reporting Standards adopted by the International Accounting Standards Board, as updated and amended from time to time.

 

“IT” means information technology.

 

“James Bay Properties” means a group of 26 mineral exploration properties located in the James Bay area of Québec (excluding the Coulon Project).

 

“k” means thousand.

 

“kg” means kilogram.

 

“km” means kilometre.

 

8

 

 

“km²” means square kilometre.

 

“kV” means kilovolt.

 

“l” means litre.

 

“L” means Mine level (depth below surface in metres).

 

‘‘LLCFZ’’ means Larder Lake-Cadillac Fault Zone.

 

“Lydian” means Lydian International Limited.

 

“LOM” means life-of-mine.

 

“m” means metre.

 

“m²” means square metre.

 

“m3” means cubic metre.

 

“MAC” means Metals Acquisition Corp.

 

“MAC Silver Stream” has the meaning ascribed under “Description of Business”.

 

“Mantos” means Mantos Copper S.A.

 

“Mantos Blancos Mine” means the Mantos Blancos copper mine located in northern Chile operated by Mantos.

 

“mineralization” means rock containing an undetermined amount of minerals or metals.

 

“mm” means millimetre.

 

“Mt” means million tonnes (metric tons).

 

“NI 43-101” means National Instrument 43-101 - Standards of Disclosure for Mineral Projects (or Regulation 43-101 respecting Standards of Disclosure for Mineral Projects in the Province of Québec).

 

“NI 51-102” means National Instrument 51-102 - Continuous Disclosure Obligations (or Regulation 51-102 respecting Continuous Disclosure Obligations in the Province of Québec).

 

“NI 52-110” means National Instrument 52-110 - Audit Committees (or Regulation 52-110 respecting Audit Committees in the Province of Québec).

 

“NSR” means net smelter return.

 

“NYSE” means the New York Stock Exchange.

 

“OBL” means Osisko Bermuda Limited, a wholly-owned subsidiary of Osisko.

 

“Odyssey Study” has the meaning ascribed under “Schedule B - Technical Information Underlying the Canadian Malartic Property”.

 

“ODV Brokered Offered Securities” has the meaning ascribed under the heading “General Development of Osisko’s Business - Launch of Osisko Development Corp.”.

 

“ODV Brokered Offering” has the meaning ascribed under the heading “General Development of Osisko’s Business - Launch of Osisko Development Corp.”.

 

“ODV Brokered Release Condition” has the meaning ascribed under the heading “General Development of Osisko’s Business - Launch of Osisko Development Corp.”.

 

9

 

 

“ODV Brokered Subscription Receipts” has the meaning ascribed under the heading “General Development of Osisko’s Business - Launch of Osisko Development Corp.”.

 

“ODV Brokered Units” has the meaning ascribed under the heading “General Development of Osisko’s Business - Launch of Osisko Development Corp.”.

 

“ODV Non-Brokered Offering” has the meaning ascribed under the heading “General Development of Osisko’s Business - Launch of Osisko Development Corp.”.

 

“ODV Non-Brokered Release Condition” has the meaning ascribed under the heading “General Development of Osisko’s Business - Launch of Osisko Development Corp.”.

 

“ODV Non-Brokered Subscription Receipts” has the meaning ascribed under the heading “General Development of Osisko’s Business - Launch of Osisko Development Corp.”.

 

“ODV Non-Brokered Units” has the meaning ascribed under the heading “General Development of Osisko’s Business - Launch of Osisko Development Corp.”.

 

“ODV Shares” means common shares in the share capital of Osisko Development.

 

“ODV Transaction” has the meaning ascribed under the heading “General Development of Osisko’s Business - Launch of Osisko Development Corp.”.

 

“ODV Warrants” means the common share purchase warrants of Osisko Development.

 

“Orion Aggregate Purchase Price” has the meaning ascribed under the heading “General Development of Osisko’s Business - Share Repurchase and Secondary Offering”.

 

“Orion Secondary Offering” has the meaning ascribed under the heading “General Development of Osisko’s Business - Share Repurchase and Secondary Offering”.

 

“Orion Share Repurchase” has the meaning ascribed under the heading “General Development of Osisko’s Business - Share Repurchase and Secondary Offering”.

 

“Osisko” or “Corporation” means Osisko Gold Royalties Ltd.

 

“Osisko Board” means the board of directors of Osisko, as the same is constituted from time to time.

 

“Osisko Development” means Osisko Development Corp.

 

“Osisko DSUs” means Osisko’s Deferred Share Units granted under the DSU Plan.

 

“Osisko DSU Plan” means Osisko’s Deferred Share Unit Plan.

 

“Osisko Mining” means Osisko Mining Inc.

 

“Osisko Options” means the outstanding options to purchase Osisko Shares granted under Osisko Stock Option Plan or otherwise granted by Osisko.

 

“Osisko Preferred Shares” has the meaning ascribed under the heading “Description of Capital Structure - Osisko Preferred Shares”.

 

“Osisko RSUs” means Osisko’s Restricted Share Units granted under the Osisko RSU Plan.

 

“Osisko RSU Plan” means Osisko’s Restricted Share Unit Plan.

 

“Osisko Shareholders” means the holders of Osisko Shares.

 

“Osisko Shares” means common shares in the share capital of Osisko.

 

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“Osisko Stock Option Plan” means the stock option plan of Osisko.

 

“Osisko Warrants” means the common share purchase warrants of Osisko.

 

“oz” means ounce.

 

“Pb” is the chemical symbol for lead.

 

“PEA” means preliminary economic assessment.

 

“PFIC” means “passive foreign investment company” status as defined in Section 1297 of the United States Internal Revenue Code of 1986, as amended.

 

“Pretium” means, collectively, Pretium Exploration and Pretium Resources.

 

“Pretium Exploration” means Pretium Exploration Inc.

 

“Pretium Resources” means Pretium Resources Inc.

 

“QA/QC” means quality assurance and quality control.

 

“QBCA” means the Business Corporations Act (Québec) and the regulations made thereunder.

 

“qualified person” has the meaning ascribed in NI 43-101.

 

“Renard Diamond Mine” means the Renard diamond mine located in north-central Québec, which is held by SDCI.

 

“Renard Stream” means a 9.6% diamond stream on the Renard Diamond Mine.

 

“Renard Streamers” means Osisko along with CDPQ, Triple Flag Mining Finance Bermuda Ltd., Albion Exploration Fund, LLC and Washington State Investment Board.

 

“Replacement Osisko Options” means, collectively, the options to purchase Osisko Shares that were granted by Osisko on the Barkerville Arrangement Effective Date in exchange for Barkerville Options.

 

“ROM” means run-of-mine.

 

“San Antonio Gold Project” means the mineral property located in Sonora, Mexico.


“SDCI” means Stornoway Diamonds (Canada) Inc., the current holder of the Renard Diamond Mine.

 

“SEC” means the United States Securities and Exchange Commission.

 

“SEDAR” means the System for Electronic Document Analysis and Retrieval.

 

“SOX” means the Sarbanes-Oxley Act of 2002.

 

“Stornoway” means Stornoway Diamond Corporation or, if the context requires, SDCI.

 

“Stornoway Bridge Facility” has the meaning ascribed under the heading “General Development of Osisko’s Business - Renard Stream”.

 

“Stornoway Credit Bid Transaction” has the meaning ascribed under the heading “General Development of Osisko’s Business - Renard Stream”.

 

“Stornoway Secured Creditors” has the meaning ascribed under the heading “General Development of Osisko’s Business - Renard Stream”.

 

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“t” means tonne.

 

“Taseko” means Taseko Mines Limited.

 

“Tintic Agreements” has the meaning ascribed under the “General Development of Osisko’s Business - Highlights subsequent to 2021”.

 

“Tocantinzinho” means the Tocantinzinho gold project.

 

“tpd” means tonnes per day.

 

“TSX” means the Toronto Stock Exchange.

 

“TSXV” means the TSX Venture Exchange.

 

“U.S. Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

 

“V” means volts.

 

“Victoria” means Victoria Gold Corp.

 

“Yamana” means Yamana Gold Inc.

 

“Zn” is the chemical symbol for zinc.

 

NI 43-101 Definitions

 

“Indicated Mineral Resource” Refers to that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.

 

“Inferred Mineral Resource” Refers to that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.

 

“Measured Mineral Resource” Refers to that part of a Mineral Resource for which quantity grade or quality, densities, shape and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.

 

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“Mineral Reserve” A Mineral Reserve is the economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at pre-feasibility or feasibility level as appropriate that include application of Modifying Factors. Such studies demonstrate that, at the time of reporting, extraction could reasonably be justified.

 

  Mineral Reserves are categorized as follows on the basis of the degree of confidence in the estimate of the quantity and grade of the deposit: probable Mineral Reserves and proven Mineral Reserves.

 

“Mineral Resource” A Mineral Resource is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling.

 

“Modifying Factors” Modifying Factors are considerations used to convert Mineral Resources to Mineral Reserves. These include, but are not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors.
   
“NI 43-101” National Instrument 43-101 - Standards of Disclosure for Mineral Projects. An instrument developed by the Canadian Securities Administrators (an umbrella group of Canada’s provincial and territorial securities regulators) that governs public disclosure by mining and mineral exploration issuers. The instrument establishes certain standards for all public disclosure of scientific and technical information concerning mineral projects.

 

“pre-feasibility study”
and “feasibility study”		 Refers to a comprehensive study of the viability of a mineral project that has advanced to a stage where the mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, has been established and an effective method of mineral processing has been determined, and includes a financial analysis based on reasonable assumptions of technical, engineering, legal, operating, economic, social, and environmental factors and the evaluation of other relevant factors which are sufficient for a qualified person, acting reasonably, to determine if all or part of the Mineral Resource may be classified as a Mineral Reserve. Feasibility studies have a greater degree of confidence associated with all aspects.

 

“preliminary
assessment”		 The term “preliminary assessment” or “preliminary economic assessment”, commonly referred to as a scoping study, means a study that includes an economic analysis of the potential viability of Mineral Resources taken at an early stage of the project prior to the completion of a preliminary feasibility study.

“Probable Mineral
Reserve”		 Refers to an economically mineable part of an Indicated, and in some circumstances, a Measured Mineral Resource. The confidence in the Modifying Factors applying to a Probable Mineral Reserve is lower than that applying to a Proven Mineral Reserve.

 

“Proven Mineral
Reserve”		 A Proven Mineral Reserve is the economically mineable part of a Measured Mineral Resource. A Proven Mineral Reserve implies a high degree of confidence in the Modifying Factors.

 

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“qualified person” Means an individual who (a) is an engineer or geoscientist with at least five years experience in mineral exploration, mine development or operation or mineral project assessment, or any combination of these; (b) has experience relevant to the subject matter of the mineral project and the technical report; and (c) is a member in good standing of a professional association that, among other things, is self-regulatory, has been given authority by statute, admits members based on their qualifications and experience, requires compliance with professional standards of competence and ethics and has disciplinary powers to suspend or expel a member, as defined in NI 43-101.

 

The terms “Mineral Resource”, “Measured Mineral Resource”, “Modifying Factors”, “Indicated Mineral Resource”, “Inferred Mineral Resource”, “Probable Mineral Reserve” and “Proven Mineral Reserve” used are Canadian mining terms as defined in accordance with NI 43 101 under the guidelines set out in the CIM Standards.

 

Conversion Factors

 

To Convert From

 
  

To

 
  

Multiply By

 
Feet   Metres   0.305
Metres   Feet   3.281
Acres   Hectares   0.405
Hectares   Acres   2.471
Grams   Ounces (Troy)   0.03215
Grams/Tonnes   Ounces (Troy)/Short Ton   0.02917
Tonnes (metric)   Pounds   2,205
Tonnes (metric)   Short Tons   1.1023

 

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Corporate Structure

 

Name, Address and Incorporation

 

Osisko was incorporated on April 29, 2014 under the name “Osisko Gold Royalties Ltd / Redevances Aurifères Osisko ltée” pursuant to the QBCA, as a wholly-owned subsidiary of Osisko Mining Corporation (now Canadian Malartic Corporation). On January 1, 2017, Osisko and its wholly-owned subsidiary Osisko Exploration James Bay Inc. amalgamated under the name “Osisko Gold Royalties Ltd / Redevances Aurifères Osisko ltée”.

 

The Osisko Shares are listed on the TSX and on the NYSE under the symbol “OR”.

 

Warrants of Osisko were listed on the TSX under the symbol OR.WT until their expiration on February 18, 2022.

 

The Debentures are listed on the TSX under the symbol “OR.DB” (conversion price $22.89 per Osisko Share and conversion rate of 43.6872 Osisko Shares per $1,000 principal amount of Debentures).

 

As of the date of this Annual Information Form, Osisko is a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland. Osisko is also a reporting issuer in the United States.

 

Osisko’s head office is located at 1100 avenue des Canadiens-de-Montréal, Suite 300, Montreal, Québec H3B 2S2.

 

Intercorporate Relationships

 

As of December 31, 2021, Osisko’s only material subsidiaries for the purposes of NI 51-102 were: (a) OBL, a wholly-owned subsidiary of Osisko; and (b) Osisko Development, a subsidiary of the Corporation held at 75.1% by the Corporation as at December 31, 2021. As of March 17, 2022, following closing on March 2, 2022 of the ODV Brokered Offering and closing on March 4, 2022 of the first tranche of the ODV Non-Brokered Offering, Osisko held an interest of 70.0% in Osisko Development. See “General Development of Osisko’s Business - Launch of Osisko Development Corp.”. The following organizational chart reflect the ownership of the Corporation in its material subsidiaries as at March 17, 2022.

 

 

 

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DESCRIPTION OF BUSINESS

 

Description of the Business

 

Osisko is engaged in the business of acquiring and managing precious metals and other high-quality royalties, streams and other interests in Canada and worldwide and is focused on maximizing returns for its shareholders by growing its asset base, both organically and through accretive acquisitions. Osisko 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. The Corporation’s cornerstone asset is a 5% NSR royalty on the Canadian Malartic mine, located in Canada.

 

The Corporation was formed on April 29, 2014 in conjunction with the acquisition of Osisko Mining Corporation, which held the Canadian Malartic mine and other assets in development, by a partnership formed by Agnico Eagle Mines Limited and Yamana Gold Inc. Between 2014 and 2020, the Corporation completed the acquisition of Virginia Mines Inc. in February 2015, and acquired a portfolio of 74 assets from Orion Mine Finance (and related funds) in July 2017 to increase its total number of assets at that time to 135 royalties, streams and precious metal offtakes. In November 2020, Osisko completed the spin out transaction of its mining assets and certain equity investments to Osisko Development, which is now engaged in the exploration, evaluation and development of mining projects. The ODV Shares began trading on the TSX Venture Exchange on December 2, 2020, and its main asset is the Cariboo Gold Project located in British Columbia, Canada. Osisko expects the advancement of the assets held by Osisko Development to be funded through the public markets such that Osisko’s ownership in Osisko Development will be diluted as Osisko Development's assets are advanced.

 

Business Model and Strategy

 

Osisko's main focus is on high quality, long-life precious metals assets located in favourable jurisdictions and operated by established mining companies, as Osisko believes these assets provide the best risk/return profile. The Corporation also evaluates and invests in opportunities in other commodities and jurisdictions. Given that a core aspect of the Corporation's business is the ability to compete for investment opportunities, Osisko plans to maintain a strong balance sheet and ability to deploy capital.

 

Highlights - 2021

 

· 80,000 gold equivalent ounces (GEOs1) earned, excluding 9,210 GEOs earned from the Renard diamond stream (compared to 66,113 in 2019, excluding 1,754 GEOs earned from the Renard diamond stream), in line with guidance.

  

· Record revenues from royalties and streams of $199.6 million ($156.6 million in 2020).

 

·Record operating cash flows generated by the royalties and streams segment of $153.2 million ($114.0 million in 2020).

 

·In February 2021, Osisko repaid a $50 million convertible debenture in favor of Investissement Québec and drew the Credit Facility by the same amount, thereby reducing the interest rate payable by approximately 1.5% per annum.

 

 

 

1GEOs 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.

 

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·Announcement by Agnico and Yamana of a positive construction decision for the Odyssey underground mine project. The preliminary economic study highlights a total of 7.29 million gold ounces of resources (6.18Mt at 2.07 g/t Au indicated resources and 75.9Mt at 2.82 g/t Au inferred resources). Underground mine production is planned to start in 2023 and is expected to ramp up to an average of 545,400 gold ounces per year from 2029 to 2039, thereby extending the life of mine.

 

·Investments and strategic partnership with Carbon Streaming Corporation to promote global decarbonization and biodiversity efforts through carbon credit streaming transactions.

 

·Publication of the inaugural ESG report and announcement of commitment to the United Nations Global Compact.

 

·In April, 2021, Osisko acquired six royalties and one precious metals offtake from two private sellers for total cash consideration of US$26 million ($32.6 million). Four of the royalties are on claims overlying the Spring Valley project, and increased Osisko’s current NSR royalty on Spring Valley project from 0.5% to between 2.5% - 3.0% (sliding scale royalty percentages as long as gold prices are above US$700 per ounce). Immediately to the north of Spring Valley project lies the Moonlight exploration property, where Osisko also acquired a 1% NSR royalty. Osisko also acquired a 0.5% NSR royalty and a 30% gold and silver offtake right covering the Almaden project in western Idaho.

 

·In April 2021, GoGold Resources Inc. (“GoGold”) and OBL, a subsidiary of Osisko, entered into an agreement to convert the Parral gold and silver offtake into a life-of-mine gold and silver stream. Under the stream, OBL has been receiving, effective April 29, 2021, 2.4% of the gold and silver produced from tailings piles currently owned or acquired by GoGold, with a transfer price of 30% of the gold and silver spot prices.

 

·In July 2021, Osisko acquired a 2.75% NSR royalty on Tocantinzinho for cash consideration of US$10 million ($12.6 million). The operator of Tocantinzinho has a buy-down option in relation to the royalty. At the time of project construction, the operator may make a payment of US$5.5 million to reduce the royalty percentage by 2% resulting in a royalty of 0.75%. Pursuant to a pre-existing agreement, the buy-down payment is payable to the original royalty owners. In November 2021, the operator has early exercised the first 1% of the buy-down, therefore reducing the effective NSR royalty to 1.75%.

 

·In October 2021, the Corporation acquired from Barrick TZ Limited, a subsidiary of Barrick Gold Corp., royalties for total cash consideration of US$11.8 million ($14.8 million), including a 2% NSR royalty on the licenses comprising the West Kenya project operated by Shanta Gold Limited, a 1% NSR royalty on the Frontier project operated by Metalor SA, a private company, and a 1% NSR royalty on the Central Houndé project operated by Thor Explorations Ltd.

 

·In July 2021, the Corporation amended its Credit Facility and increased the amount available by $150 million to $550 million, with an additional uncommitted accordion of up to $100 million (for a total availability of up to $650.0 million). The maturity date of the Credit Facility was extended to July 30, 2025, which can be extended annually.

 

·In December 2021, Osisko entered into an agreement with Talisker Resources Ltd. to acquire the following royalties for total cash consideration of $7,500,000: (i) an additional 0.5% NSR royalty on all minerals produced from the Bralorne property, increasing Osisko’s total NSR royalty interest on Bralorne property to 1.7%; (ii) a 1.5% NSR royalty on all minerals produced from the Ladner property which was recently acquired by Talisker Resources Ltd through its purchase of New Carolin Gold Corp.; and (iii) a future 1% NSR royalty on all minerals produced from the Golden Hornet property which becomes effective should Talisker Resources Ltd. exercise its option to acquire control of Golden Hornet property.

 

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Highlights subsequent to 2021

 

·In January 2022, Osisko Development entered into definitive agreements to acquire 100% of Tintic Consolidated Metals LLC. OBL entered into a non-binding metals stream term sheet, with a wholly-owned subsidiary of Osisko Development, for between US$20 million and US$40 million. In the event that the full amount of US$40 million is drawn, Osisko Development will deliver to OBL 5% of all metals produced from the Tintic property until 53,400 ounces of refined gold have been delivered and 4.0% thereafter.

 

·Osisko declared a quarterly dividend of $0.055 per Osisko Share payable on April 14, 2022 to shareholders of record as of the close of business on March 31, 2022.
   
 · On March 17, 2022, Osisko announced that its wholly-owned subsidiary, OBL, had entered into a binding agreement with Metals Acquisition Corp. with respect to a US$90 million silver stream (the “MAC Silver Stream”) to facilitate MAC’s acquisition of the producing CSA mine in New South Wales, Australia (the “CSA Mine”) and concurrently with the above announcement, MAC announced the entering into of an agreement to acquire 100% of the shares of the owner of the CSA Mine from a subsidiary of Glencore plc. Osisko has also provided MAC with an option to draw up to an additional US$100 million in upfront proceeds through the sale of a copper stream, subject to the parties finalizing definitive terms and conditions. Transaction details with respect to the MAC Silver Stream include that (a) OBL will purchase 100% of payable silver produced from the CSA Mine for the life of the CSA Mine, (b) OBL will make ongoing payments for refined silver delivered equal to 4% of the spot silver price at the time of delivery, (c) OBL with be provided with corporate guarantees and other security by MAC over their assets for its obligations under the MAC Silver Stream, (d) OBL has agreed to subscribe for US$15 million in equity of MAC as part of its concurrent equity financing and (e) MAC has granted OBL a right of first refusal in respect of the sale, transfer or buy-back of any royalty, stream or similar interest in the products mined or otherwise extracted from any property owned or acquired by MAC or an affiliate between the closing date and the 3rd anniversary of the closing date. Closing of the MAC Silver Stream and equity subscription is expected in the second half of 2022, and is subject to certain conditions precedent, including, among others, closing of the transaction between MAC and Glencore.

 

Cornerstone Asset: Canadian Malartic Royalty (5% NSR)

 

Osisko’s cornerstone asset is the Canadian Malartic Royalty (5.0% NSR) on the Canadian Malartic open pit mine located in Malartic, Québec and operated by Agnico and Yamana. Canadian Malartic is Canada’s largest producing gold mine.

 

In addition to a royalty on the open pit at Canadian Malartic, Osisko holds royalties on the recently discovered “Odyssey underground” project; a 5% NSR royalty on East Gouldie, Odyssey South and the western half of East Malartic and a 3% NSR royalty on Odyssey North and the eastern half of East Malartic. Additionally, Osisko holds a C$0.40/tonne processing royalty on any ore from outside its royalty boundaries processed through the Canadian Malartic mill.

 

On February 17, 2022, Yamana reported production guidance of 640,000 ounces of gold at Canadian Malartic for the year 2022. At Canadian Malartic, production is expected to transition from the open pit to the underground between 2023 and 2029.

 

During the fourth quarter of 2022, Canadian Malartic benefitted from higher grades and recoveries from ore in the Malartic pit as the operation continues to transition to the Barnat pit. In 2021, full year production of 714,784 ounces of gold (100% basis) exceeded guidance of 700,000 ounces.

 

Gold mineral reserves at December 31, 2021 were estimated at 100,450,000 tonnes at 1.09g/t gold for 3.54 million ounces. This reflects depletion from 2021 production and an adjustment of approximately 96,000 ounces due to a slight increase in cut-off grade, and a localized adjustment in the lower benches of the Canadian Malartic pit. The Odyssey underground project continues to grow as a result of ongoing exploration drilling, with a total of 25Mt at 2.9 g/t gold for 2.35 million ounces of indicated resources and 86.8Mt at 2.35g/t gold for 13.15 million ounces of inferred resources. The majority of the upgraded resource came from infill drilling at East Gouldie, which now hosts an indicated resource of 12Mt of 3.88g/t gold for 1.45 million ounces of gold. Expansion of the mineral resource envelope on all sides added new inferred mineral resources with a high potential for future conversion in the mine plan, while step out drilling extended the mineralized zone 1,260 metres beyond the reported East Gouldie mineral resource and identified a new subparallel zone, located 400 metres in the footwall of the East Gouldie zone. These exploration holes are still widely spaced and therefore not yet considered in the mineral resource statement.

 

Odyssey Underground Mine Project

 

In February 2021, Agnico and Yamana announced that, following the completion of an internal technical study in late 2020, Canadian Malartic GP had approved construction of a new underground mining complex.

 

In addition to the open pit at Canadian Malartic, the asset hosts the recently discovered “Odyssey underground” project, which is contained within three main underground-mineralized zones: East Gouldie, East Malartic and Odyssey, the latter of which is sub-divided into the Odyssey North, Odyssey South and Odyssey Internal zones.

 

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In March 2021, Agnico filed the Canadian Malartic Report to present and support the results of an updated mineral resource and mineral reserve estimates, summarize the current open pit mining operation and disclose the results of a PEA for the underground Odyssey project. The basis for the mine plan is a potentially mineable resource of 7.29 million ounces (6.18Mt of 2.07 g/t Au indicated resources and 75.9Mt of 2.82 g/t Au inferred resources). The East Gouldie deposit makes up most of this mineral inventory, whose total inferred resources contains 6.42 million ounces (62.9Mt of 3.17 g/t Au). Combined with the East Malartic and Odyssey deposits the total underground inferred resources contains 13.8 million ounces (177.5Mt of 2.42 g/t Au), as well as indicated resources of 0.86 million ounces (13.3Mt of 2.01 g/t Au). Note that a portion of the East Gouldie inferred resources has since been upgraded to indicated (December 31, 2021 described above) and the numbers quoted in this paragraph are fixed to the previous mine plan described in the Canadian Malartic Report from March 2021. The results of the mine plan are not expected to change materially based on the updated resource estimation.

 

The project has advanced significantly throughout 2021, with several milestones achieved in the past several months. In October 2021, the concrete pour to construct the 93-metre-tall headframe was completed on schedule, in preparation for shaft sinking to begin in 2022. The production shaft will be 6.5 metres in diameter and 1,800 metres deep, with the first of two loading stations at 1,135 metres below surface.

 

In parallel, the ramp from surface to the upper zones is advancing according to plan and, as of the end of November 2021, the ramp heading is approximately 250 metres below surface. By the end of the year 2022, the ramp is expected to be at the elevation of the third production level and the base of the first stoping horizon. Underground development is planned to increase in 2022 with the opening of additional headings and the addition of Canadian Malartic development crews to complement the existing contractor crews. The first underground ore from Odyssey South is on track to be processed through the existing Canadian Malartic plant in early 2023.

 

Opportunities also exist for supplemental production sources to increase throughput beyond 20,000 tpd and utilize the excess process capacity of the 60,000 tpd Canadian Malartic plant. Exploration drilling of the East Gouldie Extension and parallel structures, while widely spaced, indicate that a corridor of mineralization extends at least 1.3 kilometres to the east of East Gouldie. Although at the very early stages, these results suggest the potential for a second production shaft that could increase throughput over the longer term. Open pit and underground exploration targets within the Canadian Malartic land package present additional potential ore sources.

 

For further details, see Schedule “B” entitled “Technical Information underlying the Canadian Malartic Property”.

 

Malartic Exploration Update

 

On September 7, 2021, Yamana provided an update on the ongoing exploration programs at Canadian Malartic. The district exploration program has discovered a deep eastern extension of the East Gouldie structure as well as a new zone located 400 metres south of East Gouldie, and intercepted further promising mineralization below the known East Amphi deposit. These results support the continued growth of Canadian Malartic as it transitions from an open pit mine to a large underground operation with a decade-long mine life. Drilling highlights in the East Gouldie infill area include the following estimated true width intercepts: 6.2 g/t Au over 61.7 metres including 10.9 g/t Au over 21.0 metres at 1,102 metres depth (MEX19-154WC).

 

East Amphi is located three kilometres northwest of the Canadian Malartic pit. To date, 7,900 metres of drilling have been completed at East Amphi and results indicate the presence of significant mineralization at depth below the historic workings. Two zones are being defined with new intercepts in the Nessie zone of 2.16 g/t Au over an estimated true width of 17.19 metres in drill hole EA20-4187, and 14.13 g/t Au over an estimated true width of 1.70 metres in drill hole EA21-4196. Follow up drilling of the adjacent Kraken zone, returned an intercept of 2.01 g/t Au over an estimated true width of 29.77 metres.

 

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Recent results in the Chert zone also suggest the potential to add additional mineral resources between the East Malartic and East Gouldie deposits. The size and shape of the Chert zone is not well understood yet, but recent results of drill hole MEX20-164WD, returned 7.0 g/t Au over 77.9 metres core length at 890 metres depth.

 

On November 2, 2021, Agnico reported the eastern most hole on East Gouldie returning 6.3 g/t Au over 4.8 metres at 1,989 metres depth, 1.5 kilometres east of the current mineral resource, further demonstrating the excellent potential to significantly grow the size of the East Gouldie deposit.

 

Summary of Principal Royalties, Streams and Other Interests

 

As of March 17, 2022, Osisko owned a portfolio of 150 royalties, 10 streams and 3 offtakes assets, as well as 6 royalty options.

 

Currently, Osisko has 19 producing assets.

 

Producing assets

Asset   Operator   Interest   Commodity   Jurisdiction
                 
North America                
Canadian Malartic   Agnico Eagle Mines Limited and Yamana Gold Inc.   5% NSR royalty   Au, Ag   Canada
Eagle Gold   Victoria Gold Corp.   5% NSR royalty   Au   Canada
Éléonore   Newmont Corporation   2.2-3.5% NSR royalty   Au   Canada
Seabee   SSR Mining Inc.   3% NSR royalty   Au   Canada
Gibraltar   Taseko Mines Limited   75% stream   Ag   Canada
Island Gold   Alamos Gold Inc.   1.38-3% NSR royalty   Au   Canada
Pan   Fiore Gold Ltd.   4% NSR royalty   Au   USA
Lamaque   Eldorado Gold Corporation   1% NSR royalty   Au   Canada

Bald Mtn. Alligator Ridge /

Duke & Trapper

   Kinross Gold Corporation   1% / 4% GSR royalty(i)   Au   USA
Parral(ii)   GoGold Resources Inc.   2.4% stream   Au, Ag   Mexico
Santana   Minera Alamos Inc.   3% NSR royalty   Au   Mexico
Ermitaño   First Majestic Silver Corp.   2% NSR   Au, Ag   Mexico
Renard(iii)  

Stornoway Diamonds

(Canada) Inc.

   9.6% stream   Diamonds   Canada
Outside of North America                
                 
Mantos Blancos   Mantos Copper Holding SpA   100% stream   Ag   Chile
Sasa   Central Asia Metals plc   100% stream   Ag   Macedonia
Kwale   Base Resources Limited   1.5% GRR(iv)   Rutile, Ilmenite, Zircon   Kenya
Matilda   Blackham Resources Limited   1.65% stream   Au   Australia
Fruta del Norte   Lundin Gold Inc.   0.1% NSR royalty   Au   Ecuador
Brauna   Lipari Mineração Ltda   1% GRR(iv)   Diamonds   Brazil

 

(i)Gross smelter return (“GSR”).
(ii)Effective April 29, 2021, the Parral offtake was converted into a 2.4% gold and silver stream.
(iii)Osisko became a 35.1% shareholder of the private entity holding the Renard diamond mine on November 1, 2019.
(iv)Gross revenue royalty (“GRR”).

 

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Key development / exploration and evaluation assets (vi)

 

Asset   Operator   Interest   Commodities   Jurisdiction
                 
Akasaba West   Agnico Eagle Mines Limited   2.5% NSR royalty   Au   Canada
Altar   Aldebaran and Sibanye-Stillwater   1% NSR royalty   Cu, Au   Argentina
Arctic   South 32 / Trilogy Metals Inc.   1% NSR royalty   Cu   USA
Amulsar(v)   Lydian Canada Ventures Corporation   4.22% Au / 62.5% Ag stream   Au, Ag   Armenia
Amulsar   Lydian Canada Ventures Corporation   81.9% offtake   Au   Armenia
Back Forty   Aquila Resources Inc.   18.5% Au / 85% Ag streams   Au, Ag   USA
Canadian Malartic Underground   Agnico Eagle Mines Limited and Yamana Gold Inc.   3.0 – 5.0% NSR royalty   Au   Canada
Cariboo(vi)   Osisko Development Corp.   5% NSR royalty   Au   Canada
Casino   Western Copper & Gold Corporation   2.75% NSR royalty   Au, Ag, Cu   Canada
Cerro del Gallo   Argonaut Gold Inc.   3% NSR royalty   Au, Ag, Cu   Mexico
Copperwood/White Pine(vii)   Highland Copper Company Inc.   1.5% NSR royalty   Ag, Cu   USA
Copperwood/White Pine(vii)   Highland Copper Company Inc.   3/26th NSR royalty   Ag   USA
Dolphin Tungsten   King Island Scheelite Limited   1.5% Gross Revenue Royalty   Tungsten (W)   Tasmania
Hammond Reef   Agnico Eagle Mines Limited   2% NSR royalty   Au   Canada
Hermosa   South 32 Limited   1% NSR royalty   Zn, Pb, Ag   USA
Horne 5   Falco Resources Ltd.   90%-100% stream   Ag   Canada
Liontown   Red River Resources Limited   0.8% NSR   Au, Ag, Zn, Cu   Australia
Magino   Argonaut Gold Inc.   3% NSR royalty   Au   Canada
Ollachea   Minera IRL Limited   1% NSR royalty   Au   Peru
San Antonio(vi)   Osisko Development Corp.   15% Au & Ag stream   Au, Ag   Mexico
Spring Valley(viii)   Waterton Global Resource Management   2.53% NSR royalty   Au   USA
Tocantinzinho(ix)   G Mining Ventures Corp.   1.75% NSR royalty   Au   Brazil
Upper Beaver   Agnico Eagle Mines Limited.   2% NSR royalty   Au, Cu   Canada
West Kenya   Shanta Gold Limited   2% NSR royalty   Au   Kenya
Wharekirauponga (WKP)   OceanaGold Corporation   2% NSR royalty   Au   New Zealand
Windfall   Osisko Mining Inc.   2.0 - 3.0% NSR royalty   Au   Canada

 

(v)As at December 31, 2019, Lydian International Limited, the owner of the Amulsar project, was granted protection under the Companies’ Creditors Arrangement Act. In July 2020, a credit bid was completed and Osisko became a shareholder of Lydian Canada Ventures Corporation, which is the private entity now holding the Amulsar project in Armenia. As of the date hereof, Osisko holds 35.6% of Lydian Canada Ventures Corporation.
(vi)The 5% NSR royalty on the Cariboo gold project and the 15% gold and silver stream on the San Antonio gold project held by Osisko are not presented in Osisko’s financial statements as Osisko consolidates the assets of Osisko Development.
(vii)3% 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%. Osisko also exercised in June 2021 a portion of its option and acquired a 3/26th NSR royalty on the silver production from Copperwood and White Pine (the remaining option can be exercised by Osisko for US$23 million).
(viii)The 3% NSR royalty is on the core resource area; a separate 1% is applicable on the periphery of the property.
(ix)The current effective NSR royalty is 1.75%. However, the operator has a buy-down option to reduce the royalty by 1% to 0.75% at the time of project construction.

 

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Main Producing Assets

 

 

Geographical Distribution of Assets

 

 

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Equity Investments

 

Osisko’s assets include a portfolio of shares, mainly of publicly traded exploration and development mining companies. Osisko invests 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 royalties, streams or similar interests. In addition to investment objectives, in some cases, Osisko may decide to take a more active role, including providing management personnel and/or administrative support, as well as nominating individuals to the investee’s board of directors.

 

Main Investments

 

The following table presents the main investments of Osisko in marketable securities as at December 31, 2021:

 

 

Investment

 

Corporation holding

the investment

 

Number of

Shares Held

  

 

Ownership

 
          % 
Osisko Development Corp.  Osisko   100,000,100    75.1(1)
Osisko Mining Inc.  Osisko   50,023,569    14.4 
Osisko Metals Incorporated  Osisko   31,127,397    15.4 

 

(1) As of March 17, 2022, the Corporation held an interest of 70.0% in Osisko Development.

 

Sustainability Activities

 

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

 

Osisko 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;
•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 partner companies to adhere to the same areas of focus in sustainability.

 

In April 2021, Osisko released its inaugural ESG report. In addition to a discussion of corporate governance practices, the report provides a focused review of how Osisko assesses potential investments through its diligence process and monitors existing assets to ensure Osisko is well positioned to deliver growth responsibly.

 

As part of its broader ESG initiative, Osisko has joined the UN Global Compact, the world’s largest voluntary corporate sustainability initiative, with over 15,000 participants across 165 countries. The UN Global Compact is based on ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption. By signing onto the initiative, Osisko has committed to align with these principles, intended to promote and strengthen responsible corporate policies and practices worldwide. As part of its commitment, Osisko will release an annual communication on progress that outlines the Corporation’s efforts to operate responsibly and implement the ten principles.

 

Osisko also announced a strategic partnership with Carbon Streaming Corporation to help promote global decarbonization and biodiversity projects. The group’s management team consists of seasoned executives with significant streaming expertise and recognized climate change experts. Carbon Streaming Corporation’s business model is to fund carbon-offset projects that avoid, reduce or remove greenhouse gas emissions globally. The investment affords Osisko a 20% right to participate in any streaming transactions conducted by Carbon Streaming Corporation under certain circumstances. On July 27, 2021 Carbon Streaming Corporation listed on the NEO Exchange.

 

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Human Resources

 

As of December 31, 2021, Osisko had 26 employees and OBL had 2 employees.

 

Osisko has a succession plan in order to mitigate the risk of being dependent on key management. From time to time, Osisko may also need to identify and retain additional skilled management and specialized technical personnel to efficiently operate its business.

 

Material Mineral Project

 

Osisko considers that the Canadian Malartic Royalty is currently its only material mineral project for the purposes of NI 43-101.

 

General Development of Osisko’s Business

 

The following is a description of the events that have influenced the general development of Osisko’s business over the last three (3) completed financial years.

 

Board and Senior Management Appointments

 

On November 25, 2020, Mr. Sandeep Singh (who was appointed as President of Osisko on December 31, 2019) became the President, Chief Executive Officer of Osisko and a member of the Osisko Board and Mr. Sean Roosen was appointed as Executive Chair of the Osisko Board, transitioning from his role as Chief Executive Officer of Osisko to Chief Executive Officer of Osisko Development.

 

On April 6, 2020, Osisko announced the appointment of The Hon. John Baird to the Osisko Board and on February 20, 2020, Osisko appointed Mr. Frédéric Ruel as Chief Financial Officer and Vice President, Finance and Mr. Iain Farmer as Vice President, Corporate Development.

 

In August 2020, Mr. Guy Desharnais was appointed as Vice President, Project Evaluation of Osisko.

 

In January, 2021, Osisko announced the appointment of Ms. Candace MacGibbon to the Osisko Board and the appointment of Ms. Heather Taylor as Vice President, Investor Relations.

 

MAC Silver Stream

 

On March 17, 2022, Osisko announced that its wholly-owned subsidiary, OBL, had entered into a binding agreement with Metals Acquisition Corp. with respect to a US$90 million silver stream to facilitate MAC’s acquisition of the producing CSA mine in New South Wales, Australia and concurrently with the above announcement, MAC announced the entering into of an agreement to acquire 100% of the shares of the owner of the CSA Mine from a subsidiary of Glencore plc. Osisko has also provided MAC with an option to draw up to an additional US$100 million in upfront proceeds through the sale of a copper stream, subject to the parties finalizing definitive terms and conditions. Transaction details with respect to the MAC Silver Stream include that (a) OBL will purchase 100% of payable silver produced from the CSA Mine for the life of the CSA Mine, (b) OBL will make ongoing payments for refined silver delivered equal to 4% of the spot silver price at the time of delivery, (c) OBL with be provided with corporate guarantees and other security by MAC over their assets for its obligations under the MAC Silver Stream, (d) OBL has agreed to subscribe for US$15 million in equity of MAC as part of its concurrent equity financing and (e) MAC has granted OBL a right of first refusal in respect of the sale, transfer or buy-back of any royalty, stream or similar interest in the products mined or otherwise extracted from any property owned or acquired by MAC or an affiliate between the closing date and the 3rd anniversary of the closing date. Closing of the MAC Silver Stream and equity subscription is expected in the second half of 2022, and is subject to certain conditions precedent, including, among others, closing of the transaction between MAC and Glencore.

 

Acquisition of Tintic Consolidated Metals LLC

 

On January 25, 2022, Osisko Development announced that it had entered into definitive agreements (together, the “Tintic Agreements”) with IG Tintic LLC and Ruby Hollow LLC to acquire 100% of Tintic Consolidated Metals LLC. On completion of the Transaction, Osisko Development will acquire 100% ownership of the producing Trixie Mine, as well as mineral claims covering more than 17,000 acres (including over 14,200 acres of which are patented) in Central Utah’s historic Tintic Mining District. Pursuant to the terms of the Tintic Agreements, Osisko Development will acquire 100% of Tintic Consolidated Metals LLC from IG Tintic LLC and Ruby Hollow LLC for aggregate payments at closing totaling approximately US$177 million, of which approximately US$54 million will be paid in cash and approximately US$123 million will be paid by the issuance of 35,099,611 common shares of Osisko Development at a price of C$4.32 per share. In addition, Osisko Development will pay IG Tintic LLC and Ruby Hollow LLC: (i) deferred payments of US$12.5 million payable in equal instalments annually over five years in cash or common shares at Osisko Development’s election; (ii) two 1% NSR royalty grants, each with a 50% buyback right in favour of Osisko Development for US$7.5 million which is exercisable within 5 years; (iii) a right to receive the financial equivalent of 10% of the NSR from stockpiled ore extracted from Trixie Mine since January 1, 2018 and sitting on surface; (iv) the set-off of a US$5 million loan owed to Osisko Development; and (v) US$10 million contingent upon commencement of production at the Burgin Mine.

 

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Purchase of Royalties from Barrick TZ Limited

 

On October 27, 2021, Osisko announced the conclusion of a transaction with Barrick TZ Limited, a subsidiary of Barrick Gold Corporation, to acquire the following royalties for total cash consideration of US$11,750,000: (a) a 2% NSR royalty on the AfriOre and Gold Rim licenses comprising the West Kenya project operated by Shanta Gold Limited; (b) a 1% NSR royalty on the Frontier project operated by Metalor SA, a private company; and (c) a 1% NSR royalty on the Central Houndé project operated by Thor Explorations Ltd.

 

Spring Valley Royalty Portfolio

 

In April 2021, the Corporation acquired six royalties and one precious metals offtake, from two private sellers, for total cash consideration of US$26.0 million ($32.6 million). The acquisitions were funded through cash on hand. Four of the royalties are on claims overlying the Spring Valley project, and increase the Corporation’s current NSR royalty on Spring Valley from 0.5% to between 2.5% - 3.0% (sliding scale royalty percentages as long as gold prices are above US$700 per ounce). Immediately to the north of Spring Valley lies the Moonlight exploration property, where Osisko has agreed to acquire a 1.0% NSR royalty. Osisko has also agreed to acquire a 0.5% NSR royalty and 30% gold and silver offtake right covering the Almaden Project in western Idaho.

 

Conversion of the Parral Offtake to a Gold and Silver Stream

 

In April 2021, GoGold and OBL entered into an agreement to convert the gold and silver offtake into a gold and silver stream. Under the stream, OBL will receive, effective April 29, 2021, 2.4% of the gold and silver produced from tailings piles currently owned or acquired by GoGold, with a transfer price of 30% of the gold and silver spot prices. Osisko has currently no other offtake agreement in production.

 

Tocantinzinho Royalty

 

In July 2021, Osisko entered into a royalty transfer agreement with Sailfish Royalty Corp. pursuant to which Osisko purchased a 2.75% NSR royalty on the Tocantinzinho gold project (“Tocantinzinho”), located in Brazil, and operated by G Mining Ventures Corp. (formerly owned by Eldorado Gold Corporation) for cash consideration of US$10 million ($12.6 million). The operator of Tocantinzinho has a buy-down option in relation to the royalty. At the time of project construction the operator may make a payment of US$5.5 million to reduce the royalty percentage by 2% resulting in a royalty of 0.75%. Pursuant to a pre-existing agreement entered into by Sailfish Royalty Corp., the buy-down payment is payable to the original royalty owners. In November 2021, the operator has early exercised the first 1% of the buy-down, therefore reducing the effective NSR royalty to 1.75%.

 

Launch of Osisko Development Corp.

 

On November 21, 2019, Osisko acquired all of the issued and outstanding common shares of Barkerville that it did not own by way of a court approved plan of arrangement pursuant to which each shareholder of Barkerville (excluding Osisko) received 0.0357 of an Osisko Share for each share of Barkerville held.

 

On November 25, 2020, Osisko transferred to Barolo several mining properties (or securities of the entities that directly or indirectly own such mining properties), and a portfolio of marketable securities valued at approximately $116 million, in exchange for Barolo Shares, resulting in a “reverse take-over” of Barolo under the policies of the TSXV (the “ODV Transaction”).

 

In connection with the ODV Transaction, the following mining properties were transferred (directly or indirectly) to Osisko Development: (a) the Cariboo Gold Project; (b) the San Antonio Gold Project; (c) the Bonanza Ledge Phase II Property; (d) the Coulon Project; (e) the James Bay Properties; and (f) the Guerrero Properties. As part of the Osisko Development Transaction, Osisko exercised its royalty option on the Cariboo Gold Project and increased its existing royalty to 5% NSR.

 

25

 

 

Following the ODV Transaction, Osisko retains the following royalty or stream interests in the assets of Osisko Development: (a) a 5% NSR royalty on the Cariboo Gold Project and Bonanza Ledge Phase II Property; (b) a 15% gold and silver stream (with ongoing per-ounce payments equal to 15% of the prevailing price of gold and silver, as applicable) on the San Antonio Gold Project; and (c) 3% NSR royalties on the James Bay Properties, Coulon Property and Guerrero Properties. Osisko was also granted a right of first refusal on all future royalties and streams to be offered by Osisko Development, a right to participate in buybacks of existing royalties held by Osisko Development and other rights customary with a transaction of this nature.

 

In 2021, Osisko Development conducted an extensive drilling program of approximately 152,000 metres to expand and delineate the known and new vein corridors and deposits. This exploration focused on the expansion of the Lowhee Zone and further delineation of the Cow, Valley, Mosquito and Shaft deposits with ten diamond drill rigs. Regional greenfield exploration focused along the Burns, Yanks and Cariboo Hudson targets and included geological mapping and geochemical surface sampling. The Cariboo Gold Project has current indicated resources totaling 21.2Mt of 4.6g/t gold for 3.2 million ounces and inferred resources of 21.6Mt of 3.9g/t gold for 2.7 million ounces on a brownfield site in British Columbia, Canada.

 

The San Antonio Gold Project is a past-producing oxide copper mine located in Sonora, Mexico. In 2020, following the acquisition of the project, Osisko Development concentrated its efforts in obtaining the required permits and amendments to the permits to perform its activities. Osisko Development has filed preventive reports for the processing of the gold stockpile on site and for a 15,000-meter drilling program for the Sapuchi, Golfo de Oro and California zones. In 2021, Osisko Development focused on various activities that pertain to permitting, local community relations, exploration drilling and preparations towards the processing of the ore stockpile on site.

 

As part of the ODV Transaction, a “bought deal” private placement was conducted through the issuance of subscription receipts for gross proceeds of approximately $100 million.

 

On February 2, 2022, Osisko Development announced a non-brokered private placement of up to 2,857,142 subscription receipts of Osisko Development (the “ODV Non-Brokered Subscription Receipts”) at a price of US$3.50 per ODV Non-Brokered Subscription Receipt (the “ODV Non-Brokered Offering”). Each ODV Non-Brokered Subscription Receipt will entitle the holder thereof to receive, upon the satisfaction of the ODV Non-Brokered Escrow Release Condition (as defined below) and without payment of additional consideration, one (1) unit of Osisko Development (each, a “ODV Non-Brokered Unit”). Each ODV Non-Brokered Unit is comprised of one (1) ODV Share and one (1) ODV Warrant, with each ODV Warrant entitling the holder thereof to purchase one (1) additional ODV Share at a price of US$6.00 per ODV Share for a period of five (5) years following the date of issue. The gross proceeds of the ODV Non-Brokered Offering will be held in escrow pending, among other things, the completion of the listing of the ODV Shares on the NYSE (the “ODV Non-Brokered Escrow Release Condition”), which is contingent upon Osisko Development meeting the listing requirements of the NYSE and may involve, among other things, a consolidation of the ODV Shares. On March 4, 2022, Osisko Development announced the closing of the first tranche of the ODV Non-Brokered Offering, pursuant to which a total of 24,215,099 ODV Non-Brokered Subscription Receipts were issued for gross proceeds of approximately US$84.8 million. Osisko Development anticipates closing a second tranche of the ODV Non-Brokered Offering in late March 2022, pursuant to which an additional up to US$25.5 million of ODV Non-Brokered Subscription Receipts may be issued to accommodate additional interest for the ODV Non-Brokered Subscription Receipts.

 

26

 

 

On February 9, 2022, Osisko Development announced a “bought deal” brokered private placement of an aggregate 9,000,000 subscription receipts of Osisko Development (the “ODV Brokered Subscription Receipts”) and/or units of Osisko Development (the “ODV Brokered Units” and, together with the ODV Brokered Subscription Receipts, the “ODV Brokered Offered Securities”) at a price of $4.45 per ODV Brokered Offered Security (the “ODV Brokered Offering”). Each ODV Brokered Unit is comprised of one (1) ODV Shares and one (1) ODV Warrant, with each ODV Warrant entitling the holder thereof to purchase one (1) additional ODV Share at a price of $7.60 per ODV Share for a period of 60 months following the closing date of the ODV Brokered Offering. Each ODV Brokered Subscription Receipt will entitle the holder thereof to receive, upon the satisfaction of the ODV Brokered Escrow Release Condition (as defined below), and without payment of additional consideration, one ODV Brokered Unit. Osisko Development has granted the underwriters an option, exercisable in whole or in part up to 48 hours prior to the closing of the ODV Brokered Offering, to purchase up to an additional aggregate amount of 1,350,000 ODV Brokered Subscription Receipts and/or ODV Brokered Units for additional gross proceeds of up to $6,007,500. The gross proceeds from the sale of the ODV Brokered Subscription Receipts, net of expenses of the underwriters and 50% of the commissions payable to the underwriters in respect of the ODV Brokered Subscription Receipts, will be placed into escrow and will be released immediately prior to the completion of the proposed acquisition by Osisko Development of Tintic Consolidated Metals LLC (the “ODV Brokered Escrow Release Condition”). If the ODV Brokered Escrow Release Condition is not satisfied prior to the date that is 90 days from the closing of the ODV Brokered Offering, the escrowed proceeds of the ODV Brokered Offering will be returned to the holders of the ODV Brokered Subscription Receipts On March 2, 2022, Osisko Development announced the completion of the ODV Brokered Offering of an aggregate of (i) 13,732,900 ODV Brokered Subscription Receipts and (ii) 9,525,850 ODV Brokered Units for aggregate gross proceeds of approximately $103.5 million, including the full exercise of the underwriters' option.

 

Acquisition of an Additional 15% Ownership in a Canadian Precious Metal Royalty Portfolio

 

On August 12, 2020, Osisko announced its acquisition of the outstanding 15% ownership in a portfolio of Canadian precious metals royalties held by CDPQ for cash consideration of $12.5 million. This 15% interest represented the remaining portion of the portfolio of royalties purchased by Osisko from Teck Resources Ltd. in October 2015.

 

Gibraltar Silver Stream

 

On April 29, 2020, Osisko and Taseko amended the silver stream with respect to the Gibraltar copper mine located in British Columbia, Canada by reducing the price paid by Osisko for each ounce of refined silver from US $2.75 to nil in exchange for cash consideration of $8.5 million to Taseko.

 

Silver Stream on Mantos Blancos Copper Mine

 

On September 3, 2019, Osisko announced that OBL entered into a definitive agreement with Mantos to enhance its existing silver purchase agreement with respect to 100% of the silver produced from the Mantos Blancos Mine located in Chile, pursuant to which OBL agreed to provide an additional deposit of US$25 million to Mantos in exchange for certain amendments to the existing silver purchase agreement, including: (a) reduction of the ongoing transfer price payment per ounce from 25% to 8% of the spot silver price on the date of delivery; and (b) increase in the tail stream from 30% to 40% of payable silver after 19.3 million ounces of refined silver have been delivered. Mantos’s right to buy back 50% of the silver stream was also terminated.

 

On November 30, 2021 Capstone Mining Corp. and Mantos Copper (Bermuda) Limited announced that they entered into a definitive agreement to combine pursuant to a plan of arrangement. Upon completion of the transaction, the new company will be renamed Capstone Copper Corp. The transaction is subject to customary closing conditions and regulatory approvals and is expected to close in March or April 2022.

 

27

 

 

Private Placement with Investissement Québec of $85M

 

On April 1, 2020, Osisko announced the closing of a private placement with Investissement Québec of 7,727,273 Osisko Shares at a price of $11.00 per share for total gross proceeds of $85,000,003.

 

Share Repurchase and Secondary Offering

 

On June 25, 2019, Osisko announced that Betelgeuse LLC (“Orion”), a jointly owned subsidiary of certain investment funds managed by Orion Resource Partners, entered into an underwriting agreement pursuant to which the 2019 Underwriters agreed to purchase, on a bought deal basis, an aggregate of 7,850,000 Osisko Shares held by Orion at an offering price of $14.10 per Osisko Share for total gross proceeds to Orion of $110,685,000 (the “Orion Secondary Offering”). On July 11, 2019, the Orion Secondary Offering closed. On July 18, 2019, the 2019 Underwriters purchased an additional 1,177,500 Osisko Shares held by Orion following the exercise in full of their option to purchase additional shares.

 

In a concurrent transaction, Osisko agreed to purchase for cancellation an aggregate of 12,385,717 Osisko Shares from Orion at $14.10 per Osisko Share, for an aggregate purchase price paid by Osisko to Orion (the “Orion Share Repurchase”) of approximately $174.6 million (the “Orion Aggregate Purchase Price”). Osisko sold to separate entities managed by Orion Resource Partners all of the shares of Victoria and Dalradian Resources Inc. held by Osisko. The Orion Aggregate Purchase Price was satisfied by cash in the amount of $129.5 million as well as the direct transfer of certain other equity securities of exploration and development companies held by Osisko. On June 28, 2019, a first tranche of the Orion Share Repurchase closed for 7,319,499 Osisko Shares. On July 15, 2019, the second and final tranche of the Orion Share Repurchase closed for 5,066,218 Osisko Shares. In a concurrent transaction, Osisko disposed of all of the common shares of Victoria then held by Osisko to another entity managed by Orion Resource Partners for cash consideration of $71.4 million.

 

Brucejack Offtake Agreement

 

On September 16, 2019, Osisko announced that OBL had entered into an agreement with Pretium Exploration, a subsidiary of Pretium Resources, in regards to the sale of OBL’s interest in the Brucejack gold offtake agreement for a cash purchase price of US$41.3 million. On September 30, 2019, Pretium made a payment of US$31.2 million to OBL and the remainder of the purchase price was paid on November 29, 2019.

 

Renard Stream

 

Pursuant to the Stornoway Stream Agreement, the Renard Streamers hold a 20% interest (9.6% stream attributable to Osisko) in all diamonds produced from the Renard Diamond Mine for the life of mine. Upon the completion of a sale of diamonds, the Renard Streamers will remit to Stornoway a cash transfer payment which shall be the lesser of 40% of achieved sales price and US$40 per carat. On October 2, 2018, the Renard Streamers paid Stornoway the U.S. dollar equivalent of $45 million in cash ($21.6 million attributable to Osisko) as an additional up-front deposit.

 

On June 11, 2019, Osisko and certain secured lenders provided to Stornoway a senior-secured bridge credit facility (the “Stornoway Bridge Facility”) and agreed to advance an amount equivalent to the stream net proceeds payable under the Stornoway Stream Agreement, up to an estimated amount of $5.9 million ($2.8 million attributable to Osisko). The Stornoway Bridge Facility is secured by a first-ranking security interest over all present and future assets and property of Stornoway.

 

On September 9, 2019, Osisko announced the execution of a letter of intent with Stornoway and other secured creditors under the Stornoway Bridge Facility (collectively the “Stornoway Secured Creditors”), pursuant to which Osisko and the Stornoway Secured Creditors agreed to form an entity to acquire, by way of a credit bid transaction, all or substantially all of the assets and properties of Stornoway, and assume the debts and liabilities owing to the Stornoway Secured Creditors as well as the ongoing obligations relating to the operation of the Renard Diamond Mine, subject to certain limited exceptions (the “Stornoway Credit Bid Transaction”). Osisko and certain of the Stornoway Secured Creditors also entered into a working capital facility agreement with Stornoway providing for a working capital facility in an initial amount of $20 million (approximately $7 million attributable to Osisko), which facility is secured by a priority charge over the assets of Stornoway and can be increased for additional amounts at the option of the Stornoway Secured Creditors.

 

28

 

 

The Stornoway Credit Bid Transaction closed on November 1, 2019 and Osisko became a 35.1% shareholder of 11272420 Canada Inc., who holds a 100% interest in SDCI, the company holding the Renard Diamond Mine. Pursuant to the Stornoway Credit Bid Transaction, Osisko maintained its 9.6% diamond stream and will continue to receive stream deliveries, and agreed to reinvest its proceeds from the stream for a period of one (1) year following closing of the Stornoway Credit Bid Transaction.

 

Stornoway announced in April 2020 that it had decided to keep the mine on care and maintenance, given the structural challenges affecting the diamond market sales as well as the depressed prices for diamonds due to COVID-19. The mine restarted its activities in September 2020.

 

Stornoway’s focus has been on cost reduction while the diamond market recovers. During the first quarter of 2021, the company sold 444,936 carats at an average price of US$74.03 per carat, a significant improvement over pre-COVID pricing levels. During the second quarter of 2021, the company sold 439,028 carats at an average price of US$83.80 per carat. During the third quarter of 2021, the company sold 468,354 carats at an average price of US$97.85 per carat and during the fourth quarter of 2021, the company sold 491,053 carats at an average price of US$116.23 per carat. The last sale that was completed in February had an average price of over US$170 per carat, a continued upward trend.

 

Stornoway’s cost reductions, coupled with strengthening diamond prices resulted in positive cash generation from Renard and no additional drawdowns on the company’s working capital facility in 2021. Stornoway repaid $3.9 million to Osisko, or approximately 50% of the working capital facility (and interests receivable) outstanding at the end of December 2021. Osisko has agreed to defer payments from the stream until April 2022. Payments can be made prior to this date if the financial situation of Stornoway permits.

 

Falco Silver Stream

 

On February 22, 2019, Osisko closed $10 million senior secured loan (the “Falco Secured Loan”) with Falco. The Falco Secured Loan had an initial maturity date of December 31, 2019.

 

On February 27, 2019, Osisko entered into a senior secured silver stream facility with Falco pursuant to which Osisko agreed to commit up to $180 million through a silver stream toward the funding of the development of the Horne 5 Project, including an optional payment of $40 million at the sole discretion of Osisko to increase stream percentage from 90% to 100% (the “Falco Silver Stream”). Under the terms of the Falco Silver Stream, Osisko will purchase up to 100% of the refined silver from the Horne 5 Project and Osisko will pay Falco ongoing payments equal to 20% of the spot price of silver on the day of delivery, subject to a maximum payment of US$6 per silver ounce. The Falco Silver Stream is secured by the assets of Falco. This transaction included the repayment of a $10 million loan originally made in May 2016 to Falco (as amended from time to time).

 

On November 22, 2019, the Falco Secured Loan was amended, increasing the principal amount by $5.9 million to $15.9 million and the maturity date was extended to December 31, 2020.

 

On January 31, 2020 and on February 11, 2022, Falco and Osisko executed amendment agreements to the Falco Silver Stream, whereby Osisko agreed to postpone by one (1) year each of the deadlines granted to Falco to achieve milestones set as a condition precedent to Osisko funding the stream deposit and certain other deadlines.

 

On November 17, 2020, Osisko entered into an agreement with Falco in order to extend the maturity date of the Falco Secured Loan from December 31, 2020 to December 31, 2022 (the “Falco Maturity Extension”). In consideration for the Falco Maturity Extension, the Falco Secured Loan was amended to become convertible (the “Falco Convertible Loan”) after the first anniversary of the closing date into Falco Shares at a conversion price of $0.55 per Falco Share. The Falco Convertible Loan bears interest at a rate of 7.0% per annum, compounded quarterly, and will continue to be secured by a hypothec on certain assets of Falco. In consideration for the Falco Maturity Extension, Falco issued to Osisko 10,664,324 Falco Warrants, each exercisable for one Falco Share at an exercise price of $0.69 up to 24 months from the date of issuance of the Falco Warrants.

 

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In August 2021, the Corporation made an advance payment of $10 million under the Falco Silver Stream. The payment corresponds to half of the $20 million second installment payment, which was payable at the receipt of all necessary material third-party approvals, licenses, rights of way and surface rights on the Horne 5 Project.

 

Lydian International Limited

 

Osisko, through OBL, owns a 4.22% gold stream and 62.5% silver stream on the Amulsar project, owned by Lydian Canada Ventures Corporation and located in southern Armenia. On December 23, 2019, Osisko was informed that Lydian and its direct and indirect wholly owned subsidiaries, Lydian Canada Ventures Corporation and Lydian U.K. Corporation Limited, have obtained an initial order as a result of the ongoing unlawful activities against Lydian’s Amulsar project in Armenia.

 

On July 6, 2020, Lydian completed a plan of arrangement with its secured creditors, including Osisko, as part of its corporate restructuring and winding up. As of the date hereof, Osisko holds 35.6% of Lydian Canada Ventures Corporation, which is the private entity now holding the Amulsar project and an associate of Osisko.

 

Significant Acquisitions

 

Osisko has not completed any significant acquisition during its most recently completed financial year and for which disclosure is required under Part 8 of NI 51-102.

 

RISK FACTORS

 

In evaluating Osisko and its business, the readers should carefully consider the risk factors which follow. These risk factors may not be a definitive list of all risk factors associated with an investment in Osisko or in connection with the business and operations of Osisko.

 

Commodity Price Risks

 

Changes in the market price of the commodities underlying Osisko’s interests may affect the profitability of Osisko and the revenue generated therefrom

 

The revenue derived by Osisko from its portfolio of royalties, streams and other interests and investments might be significantly affected by changes in the market price of the commodities underlying its agreements. Commodity prices, including those to which Osisko is exposed, fluctuate on a daily basis and are affected by numerous factors beyond the control of Osisko, including levels of supply and demand, industrial development levels, inflation and the level of interest rates, the strength of the U.S. dollar and geopolitical factors. All commodities, by their nature, are subject to wide price fluctuations and future material price declines could result in a decrease in revenue or, in the case of severe declines that cause a suspension or termination of production by relevant operators, a complete cessation of revenue from royalties, streams or other interests applicable to one or more relevant commodities. Moreover, the broader commodity market tends to be cyclical, and a general downturn in overall commodity prices could result in a significant decrease in overall revenue. Any such price decline may result in a material adverse effect on Osisko’s profitability, results of operations and financial condition. Furthermore, in connection with increasing tensions related to the ongoing conflict between Russia and Ukraine, and economic sanctions imposed in relation thereto, further volatility in commodity and input prices has been encountered. Further escalation of geopolitical tensions could have a broader impact that expands into commodities and markets where Osisko carries on business activities, which could adversely affect its business and/or supply chain, the economic conditions under which Osisko operates, and its counterparties.

 

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Hedging Risk

 

Osisko has a foreign exchange hedging policy and may consider adopting a precious metal policy that permits hedging its foreign exchange and precious metal price exposures to reduce the risks associated with currency and precious metal price fluctuations. Hedging involves certain inherent risks including: (a) credit risk - the risk that the creditworthiness of a counterparty may adversely affect its ability to perform its payment and other obligations under its agreement with Osisko or adversely affect the financial and other terms the counterparty is able to offer Osisko; (b) market liquidity risk - the risk that Osisko has entered into a hedging position that cannot be closed out quickly, by either liquidating such hedging instrument or by establishing an offsetting position; and (c) unrealized fair value adjustment risk - the risk that, in respect of certain hedging products, an adverse change in market prices for commodities, currencies or interest rates will result in Osisko incurring losses in respect of such hedging products as a result of the hedging products being out-of-the money on their settlement dates. There is no assurance that a hedging policy designed to reduce the risks associated with foreign exchange/currency or precious metal price fluctuations would be successful. Although hedging may protect Osisko from adverse changes in foreign exchange/currency or precious metal price fluctuations, it may also prevent Osisko from fully benefitting from positive changes.

 

Third Party Operator Risks

 

Osisko has limited access to data regarding the operation of mines in which it has royalties, streams or other interests

 

As a holder of royalties, streams or other interests, Osisko does not serve as the mine’s operator and has little or no input into how the operations are conducted. As such, Osisko has varying access to data on the operations or to the actual properties themselves. This could affect its ability to assess the value of its interest or enhance the performance thereof. It is difficult or impossible for Osisko to ensure that the properties are operated in its best interest. Payments related to Osisko’s royalties, streams or other interests may be calculated by the payors in a manner different from Osisko’s projections. Osisko does, however, have rights of audit with respect to such royalties, streams or other interests.

 

Production Estimates, Forecasts and Outlook

 

The Corporation prepares estimates, forecasts and outlook of future attributable production from the mining operations of the assets on which the Corporation holds a royalty, stream or other interests (“Mining Operations”) and relies on public disclosure and other information it receives from the owners, operators and independent experts of the Mining Operations to prepare such estimates, forecast or outlook. Such information is necessarily imprecise because it depends upon the judgment of the individuals who operate the Mining Operations as well as those who review and assess the geological and engineering information. These production estimates and projections are based on existing mine plans and other assumptions with respect to the Mining Operations which change from time to time, and over which the Corporation has no control, including the availability, accessibility, sufficiency and quality of ore, the costs of production, the operators' ability to sustain and increase production levels, the sufficiency of infrastructure, the performance of personnel and equipment, the ability to maintain and obtain mining interests and permits and compliance with existing and future laws and regulations. Any such information is forward-looking and no assurance can be given that such production estimates and projections will be achieved. Actual attributable production may vary from the Corporation's estimates, forecast and outlook for a variety of reasons, including: actual ore mined varying from estimates of grade, tonnage, dilution and metallurgical and other characteristics; actual ore mined being less amenable than expected to mining or treatment; short-term operating factors relating to the ore reserves, such as the need for sequential development of orebodies and the processing of new or different ore grades; delays in the commencement of production and ramp up at new mines; revisions to mine plans; unusual or unexpected orebody formations; risks and hazards associated with the Mining Operations, including but not limited to cave-ins, rock falls, rock bursts, pit wall failures, seismic activity, weather related complications, fires or flooding or as a result of other operational problems such as production drilling challenges, power failures or a failure of a key production component such as a hoist, an autoclave, a filter press or a grinding mill; and unexpected labour shortages, strikes, local community opposition or blockades. Occurrences of this nature and other accidents, adverse conditions or operational problems in future years may result in the Corporation's failure to achieve the production estimates, forecasts or outlook currently anticipated. If the Corporation's production estimates, forecasts or outlook prove to be incorrect, it may have a material adverse effect on the Corporation.

 

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Osisko has little or no control over mining operations in which it holds royalties, streams or other interests

 

Osisko has few or no contractual rights relating to the operation or development of mines in which it only holds royalties, streams or other interests. Osisko may not be entitled to any material compensation if these mining operations do not meet their forecasted production targets in any specified period or if the mines shut down or discontinue their operations on a temporary or permanent basis. Certain of these properties may not commence production within the time frames anticipated, if at all, and there can be no assurance that the production, if any, from such properties will ultimately meet forecasts or targets. At any time, any of the operators of the mines or their successors may decide to suspend or discontinue operations. Osisko is subject to the risks that the mines shut down on a temporary or permanent basis due to issues including, but not limited to, economic, lack of financial capital, floods, fire, mechanical malfunctions, social unrest, expropriation, community relations and other risks. These issues are common in the mining industry and can occur frequently.

 

Osisko is dependent on the payment or delivery of amounts for royalties, streams or other interests by the owners and operators of certain properties and any delay in or failure of such payments or deliveries will affect the revenues generated by Osisko’s asset portfolio

 

Royalties, streams and other interests in natural resource properties are largely contractual in nature. Parties to contracts do not always honour contractual terms and contracts themselves may be subject to interpretation or technical defects. To the extent grantors of royalties, streams or other interests do not abide by their contractual obligations, Osisko would be forced to take legal action to enforce its contractual rights. Such litigation may be time consuming and costly and there is no guarantee of success. While any proceedings or actions are pending, or if any decision is determined adversely to Osisko, such litigation may have a material adverse effect on Osisko’s profitability, results of operations and financial condition.

 

In addition, Osisko is dependent to a large extent upon the financial viability and operational effectiveness of owners and operators of the relevant properties. Payments and/or deliveries from production generally flow through the operator and there is a risk of delay and additional expense in receiving such revenues. Payments and/or deliveries may be delayed by restrictions imposed by lenders, delays in the sale or delivery of products, the ability or willingness of smelters and refiners to process mine products, recovery by the operators of expenses incurred in the operation of the properties, the establishment by the operators of reserves for such expenses or the insolvency of the operator. Osisko’s rights to payment and/or delivery under the royalties, streams or other interests must, in most cases, be enforced by contract without the protection of a security interest over property that Osisko could readily liquidate. This inhibits Osisko’s ability to collect outstanding royalties, streams or other interests upon a default. In the event of a bankruptcy of an operator or owner, Osisko may have a limited prospect for full recovery of revenues. Failure to receive any payments and/or deliveries from the owners and operators of the relevant properties may result in a material and adverse effect on Osisko’s profitability, results of operation and financial condition.

 

Osisko is exposed to risks related to exploration, permitting, construction and/or development in relation to the projects and properties in which it holds a royalty, stream or other interest

 

Many of the projects or properties in which Osisko holds a royalty, stream or other interest in are in the exploration, permitting, construction and/or development stage and such projects are subject to numerous risks, including but not limited to, delays in obtaining equipment, materials and services essential to the exploration, construction and development of such projects in a timely manner, delays or inability to obtain required permits, changes in environmental regulations or other regulations, currency exchange rates, labour shortages, cost escalations and fluctuations in metal prices. There can be no assurance that the owners or operators of such projects will have the financial, technical and operational resources to complete exploration, permitting, construction and/or development of such projects in accordance with current expectations or at all. It is also possible that such owners or operators will require additional capital in order for their projects to become producing mines. Osisko may be asked to provide additional capital to these entities and may decide to do so to preserve the value of its initial investment. There is a risk that the carrying values of certain of Osisko’s assets may not be recoverable if the operating entities cannot raise additional capital to continue to explore and develop their assets. The value of Osisko’s interests in these projects could thus be negatively affected by many factors, some of which cannot be assessed at the time of investment. Although Osisko undertakes a due diligence process for every investment, mining exploration and development are subject to many risks and it is possible that the value realized by Osisko be less than the original investment.

 

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Some agreements may provide limited recourse in particular circumstances which may further inhibit Osisko’s ability to recover or obtain equitable relief in the event of a default under such agreements

 

Osisko’s rights to payment under royalties, streams or other interests must, in most cases, be enforced by contract. Osisko’s ability to collect outstanding royalties, streams or other interests, or obtain equitable relief upon cases of default, might be limited pursuant to such contracts. Certain royalty and stream agreements provide for certain protections and security interests in favour of Osisko. However, security arrangements may be difficult to realize upon and also be subordinate, which may cause Osisko to be at a disadvantage in the event of a default. In the event of a bankruptcy, it is possible that an operator or owner claims that Osisko should be treated as an unsecured creditor and that Osisko’s rights should be terminated in an insolvency proceeding. Failure to receive payments from the owners and operators of the relevant properties, or termination of Osisko’s rights, may result in a material and adverse effect on Osisko’s profitability, results of operations and financial condition.

 

Risks related to mining operations

 

Mining operations involve significant risks that even a combination of careful evaluation, experience and knowledge may not eliminate or adequately mitigate. Major expenditures are required to develop metallurgical processes and to construct mining and processing facilities at a particular site. Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are: the particular attributes of the deposit, such as size, grade and proximity to infrastructure; metal prices, which are highly volatile; and governmental regulations, including those relating to prices, taxes, royalties, land tenure, land use, allowable production, importing and exporting of minerals and environmental protection.

 

Thus, Osisko’s business might be impacted by such risks inherent to mining operations and is dependent, among other things, on mining operations conducted by third parties.

 

Osisko may acquire royalties, streams or other interests in respect of properties that are speculative and there can be no guarantee that mineable deposits will be discovered or developed

 

Exploration for metals and minerals is a speculative venture necessarily involving substantial risk. There is no certainty that the expenditures made by the operator of any given project will result in discoveries of commercial quantities of minerals on lands where Osisko holds royalties, streams or other interests.

 

If mineable deposits are discovered, substantial expenditures are required to establish reserves through drilling, to develop processes to extract the resources and, in the case of new properties, to develop the extraction and processing facilities and infrastructure at any site chosen for extraction. Although substantial benefits may be derived from the discovery of a major deposit, no assurance can be given that resources will be discovered in sufficient quantities to justify commercial operations or that the funds required for development can be obtained on terms acceptable to the operator or at all. Although, in respect of these properties, Osisko intends to only hold royalties, streams or other interests and not be responsible for these expenditures, the operator may not be in a financial position to obtain the necessary funds to advance the project.

 

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The Corporation may not complete any announced transactions and acquired assets may expose the Corporation to exploration and development risk.

 

The Corporation is in the business of bidding for, and may acquire royalties, streams or other interests in respect of a variety of assets, including those that are based on properties that are speculative and there can be no guarantee that anticipated returns will be realized or, in relation to earlier stage projects, that mineable deposits will be discovered or developed.

 

The Corporation is engaged in the business to acquire royalties, streams and other interests in mining assets. From time to time the Corporation may enter into binding transactions to acquire, or create through investments, such assets. There can be no assurances the Corporation will successfully complete any announced transactions as a variety of conditions may exist that need to be waived or satisfied prior to completion. There can be no certainty that proposed benefits of transactions to acquire such assets will be realized as anticipated.

 

Certain of the assets acquired by the Corporation involve exposure to exploration and development risks.

 

Exploration for metals and minerals is a speculative venture necessarily involving substantial risk. There is no certainty that the expenditures made by the operator of any given project will result in discoveries of commercial quantities of minerals on lands where the Corporation holds royalties, streams or other interests.

 

If mineable deposits are discovered, substantial expenditures are required to establish reserves through drilling, to develop processes to extract the resources and, in the case of new properties, to develop the extraction and processing facilities and infrastructure at any site chosen for extraction. Although substantial benefits may be derived from the discovery of a major deposit, no assurance can be given that resources will be discovered in sufficient quantities to justify commercial operations or that the funds required for development can be obtained on terms acceptable to the operator or at all. Although, in respect of these properties, the Corporation intends to only hold royalties, streams or other interests and not be responsible for these expenditures, the operator may not be in a financial position to obtain the necessary funds to advance the project.

 

Operational Risks

 

The properties on which Osisko holds royalties, streams or other interests are subject to exploration and mining risks

 

Osisko seeks to acquire royalties, streams or other interests in mineral properties or equity interests in companies that have exploration properties, advanced staged development projects or operating mines. Royalties, streams or other interests are non-operating interests in mining projects that provide the right to revenue or production from the project after deducting specified costs, if any. Mineral exploration and development involves a high degree of risk and few properties which are explored are ultimately developed into producing mines. The long-term profitability of Osisko’s operations will be in part directly related to the cost and ultimate success of the operating mines in which Osisko has royalties, streams or other interest or the companies in which Osisko has equity interests, which may be affected by a number of factors beyond Osisko’s control.

 

Operating a producing mine involves many risks, which even a combination of experience, knowledge and careful evaluation may not be able to overcome. Operations in which Osisko has a direct or indirect interest are and will be subject to all the hazards and risks normally incidental to exploration, development and production of mineral resources and mineral reserves, any of which could result in work stoppages, damage to property, and possible environmental damage.

 

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Hazards such as unusual or unexpected geological formations and other conditions such as fire, power outages, flooding, explosions, cave-ins, landslides and the inability to obtain suitable machinery, equipment or labour are involved in mineral exploration, development and operation. Operating companies which operate on properties on which Osisko has royalties, streams or other interests may become subject to liability for pollution, cave-ins or hazards against which they cannot insure or against which they may elect not to insure. The payment of such liabilities may have a material, adverse effect on the financial position of such operating companies, and in turn, may have a material adverse effect on the financial position of Osisko.

 

In addition, labour disruptions are a hazard to mineral exploration, development and operation. There is always a risk that strikes or other types of conflict with unions or employees may occur at any one of the properties on which Osisko may hold royalties, streams or other interests. Although it is uncertain whether labour disruptions will be used to advocate labour, political or social goals in the future, labour disruptions could have a material adverse effect on the results of operations of the mineral properties in which Osisko may hold an interest.

 

Agreements pertaining to royalties, streams or other interests are based on mine life and in some instances a drop in metal prices or a change in metallurgy may result in a project being shut down with a material, adverse effect on that company’s financial position, and in turn, may have a material adverse effect on the financial position of Osisko.

 

The properties on which Osisko holds royalties, streams or other interests may require permits and licenses

 

The properties on which Osisko holds royalties, streams or other interests, including the mine operations, may require licenses and permits from various governmental authorities. There can be no assurance that the operator of any given project will be able to obtain or maintain, in a timely manner and on terms favourable to such operator, all necessary licenses and permits that may be required to carry out exploration, development and mining operations.

 

Mineral resource and mineral reserve estimates have inherent uncertainty

 

Mineral resource and mineral reserve figures are only estimates. Such estimates are expressions of judgment based on knowledge, mining experience, analysis of drilling results and industry practices. While Osisko believes that the mineral resource and mineral reserve estimates, as applicable, in respect of properties in which Osisko holds royalties, streams or other interests reflect best estimates performed by or on behalf of the owner of such properties, the estimating of mineral resources and mineral reserves is a subjective process and the accuracy of mineral resource and mineral reserve estimates is a function of the quantity and quality of available data, the accuracy of statistical computations, and the assumptions used and judgments made in interpreting available engineering and geological information. There is significant uncertainty in any mineral resource and mineral reserve estimate and the actual deposits encountered and the economic viability of a deposit may differ materially from estimates. Estimated mineral resources and mineral reserves may have to be re-estimated based on changes in prices of gold or other minerals, further exploration or development activity or actual production experience. This could materially and adversely affect estimates of the volume or grade of mineralization, estimated recovery rates or other important factors that influence such estimates. In addition, mineral resources are not mineral reserves and there is no assurance that any mineral resource estimate will ultimately be reclassified as proven or probable mineral reserves. Mineral resources which are not mineral reserves do not have demonstrated economic viability.

 

If operators reduce their mineral reserves and mineral resources on properties underlying Osisko’s royalties, streams or other interests, this may result in a material and adverse effect on Osisko’s profitability, results of operations, financial condition and the trading price of Osisko’s securities.

 

Economics of developing mineral properties

 

Mineral exploration and development is speculative and involves a high degree of risk. While the discovery of an ore body may result in substantial rewards, few properties which are explored are commercially mineable and ultimately developed into producing mines. There is no assurance that any exploration properties will be commercially mineable.

 

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Should any mineral resources and mineral reserves exist, substantial expenditures will be required to confirm mineral reserves which are sufficient to commercially mine and to obtain the required environmental approvals and permitting required to commence commercial operations. The decision as to whether a property contains a commercially viable mineral deposit and should be brought into production will depend upon the results of exploration programs and/or feasibility studies, and the recommendations of duly qualified engineers and/or geologists, all of which involves significant expense. This decision will involve consideration and evaluation of several significant factors including, but not limited to: (a) costs of bringing a property into production, including exploration and development work, preparation of production feasibility studies and construction of production facilities; (b) availability and costs of financing; (c) ongoing costs of production; (d) metal prices; (e) environmental compliance regulations and restraints (including potential environmental liabilities associated with historical exploration activities); and (f) political climate and/or governmental regulation and control. Development projects are also subject to the successful completion of engineering studies, issuance of necessary governmental permits, and availability of adequate financing.

 

Factors beyond the control of Osisko

 

The potential profitability of mineral properties is dependent upon many factors beyond Osisko’s control. For instance, world prices of and markets for minerals are unpredictable, highly volatile, potentially subject to governmental fixing, pegging and/or controls and respond to changes in domestic, international, political, social and economic environments. Another factor is that rates of recovery of minerals from mined ore (assuming that such mineral deposits are known to exist) may vary from the rate experienced in tests and a reduction in the recovery rate will adversely affect profitability and, possibly, the economic viability of a property. Profitability also depends on the costs of operations, including costs of labour, equipment, electricity, environmental compliance or other production inputs. Such costs will fluctuate in ways Osisko cannot predict and are beyond Osisko’s control, and such fluctuations will impact on profitability and may eliminate profitability altogether. Additionally, due to worldwide economic uncertainty, the availability and cost of funds for development and other costs have become increasingly difficult, if not impossible, to project. These changes and events may materially affect the financial performance of Osisko.

 

Coronavirus (COVID-19)

 

Osisko faces risks related to health epidemics and other outbreaks of communicable diseases, which could significantly disrupt, directly or indirectly, its operations and may materially and adversely affect its business and financial conditions.

 

Osisko’s business could be adversely impacted by the effects of the coronavirus or other epidemics. In December 2019, a novel strain of the coronavirus emerged in China and the virus has spread to several other countries in 2020, including Canada and the U.S., and infections have been reported globally. The extent to which the coronavirus impacts Osisko’s business, including its operations and the market for its securities, will depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the duration, severity and scope of the outbreak and the actions taken to contain or treat the coronavirus outbreak. In particular, the continued spread of the coronavirus globally, together with extraordinary actions taken by public health and governmental authorities to contain the spread of COVID-19, including travel bans, social distancing, quarantines, stay-at-home orders and similar mandates to reduce or cease normal operations, could materially and adversely impact Osisko’s business including without limitation, employee health, workforce productivity, increased insurance premiums, limitations on travel, the availability of industry experts and personnel, operations and business of third party operators and owners of properties in which Osisko holds a royalty, stream or other interest, and other factors that will depend on future developments beyond Osisko’s control, which may have a material and adverse effect on its business, financial condition and results of operations. There can be no assurance that Osisko’s personnel will not be impacted by these pandemic diseases and governmental measures and ultimately see its workforce productivity reduced or incur increased medical costs / insurance premiums as a result of these health risks.

 

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In addition, a significant outbreak of coronavirus could result in a widespread global health crisis that could adversely affect global economies and financial markets resulting in an economic downturn that could have an adverse effect on the demand for precious metals and Osisko’s future prospects.

 

Several of Osisko’s operating partners announced temporary operational restrictions during the first and second quarter of 2020 due to the ongoing COVID-19 pandemic, including reduced activities and operations placed on care and maintenance. As of December 31, 2020, all operators have restarted their activities and have reached their pre-COVID-19 level of operations. However, in the current environment, the assumptions and judgements made by Osisko are subject to greater variability than normal, which could in the future significantly affect judgments, estimates and assumptions made by management as they relate to potential impact of the COVID-19 and could lead to a material adjustment to the carrying value of the assets or liabilities affected. The impact of current uncertainty on judgments, estimates and assumptions extends, but is not limited to, Osisko’s valuation of its long-term assets, including the assessment for impairment and impairment reversal. Actual results may differ materially from these estimates.

 

As a result of the COVID-19 pandemic, Osisko took action to protect its employees, contractors and the communities in which it operates. As part of the contingency plan developed by Osisko, it closed its offices in March 2020 and provided employees with adequate equipment to allow them to safely work remotely from home.

 

Influence of third party stakeholders

 

The lands held by the companies in which Osisko has royalties, streams or other interests, and the roads or other means of access which they utilize or intend to utilize in carrying out work programs or general business mandates, may be subject to interests or claims by third party individuals, groups or companies. In the event that such third parties assert any claims, work programs may be delayed even if such claims are not meritorious or the scope of the work may otherwise be affected. Such delays may result in significant financial loss and loss of opportunity for Osisko.

 

Community Relations and Social License

 

Maintaining a positive relationship with the communities is critical to continuing successful operation of existing mines as well as construction and development of existing and new projects. Community support is a key component of a successful mining project or operation.

 

The companies in which Osisko has royalties, streams or other interests may come under pressure in the jurisdictions in which they respectively operate, or will operate in the future, to demonstrate that other stakeholders (including employees, communities surrounding operations and the countries in which they respectively operate) benefit and will continue to benefit from their commercial activities, and/or that they operate in a manner that will minimize any potential damage or disruption to the interests of those stakeholders. The companies in which Osisko has royalties, streams or other interests may face opposition with respect to their respective current and future development and exploration projects which could materially adversely affect their business, results of operations, financial condition and the Osisko share price.

 

Community relations are impacted by a number of factors, both within and outside of Osisko’s control. Relations may be strained or social license lost by poor performance in areas such as health and safety, environmental impacts from the mine, increased traffic or noise. External factors such as press scrutiny or other distributed information from media, governments, non-governmental organizations or interested individuals can also influence sentiment and perceptions toward Osisko or the companies in which Osisko has royalties, streams or other interests and their respective operations.

 

Surrounding communities may affect operations and projects through restriction of site access for equipment, supplies and personnel or through legal challenges. This could interfere with work operations, and potentially pose a security threat to employees or equipment. Social license may also impact the permitting ability, reputation and ability to build positive community relationships in exploration areas or around newly acquired properties.

 

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Erosion of social licence or activities of third parties seeking to call into question social licence may have the effect of slowing down the development of new projects and potentially may increase the cost of constructing and operating these projects. Productivity may be reduced due to restriction of access, requirements to respond to security threats or proceedings initiated or delays in permitting and there may also be extra costs associated with improving the relationship with the surrounding communities.

 

Foreign operation risk

 

Certain properties held by the companies in which Osisko has royalties, streams or other interests are located outside of the United States and Canada. The ownership, development and operation of these properties may be subject to additional risks associated with conducting business in foreign countries, including, depending on the country, nationalization and expropriation, social unrest, political and economic instability, lack of infrastructure, less developed legal and regulatory systems, uncertainties in perfecting mineral titles, crime, violence, corruption, trade barriers, exchange controls and material changes in taxation. These risks may, among other things, limit or disrupt the ownership, development or operation of properties, mines or projects to which such properties relate, restrict the movement of funds, or result in the deprivation of contractual rights or the taking of property by nationalization or expropriation without fair compensation.

 

Information Systems and Cyber Security

 

Osisko relies on its IT infrastructure to meet its business objectives. Osisko uses different IT systems, networks, equipment and software and has adopted security measures to prevent and detect cyber threats. However, Osisko and its counterparties under precious metal purchase agreements, third-party service providers and vendors may be vulnerable to cyber threats, which have been evolving in terms of sophistication and new threats are emerging at an increased rate. Unauthorized third parties may be able to penetrate network security and misappropriate or compromise confidential information, create system disruptions or cause shutdowns to Osisko or its counterparties. Although Osisko has not experienced any losses relating to cyber attacks or other information security breaches, there can be no assurance that there will be no such loss in the future. Significant security breaches or system failures of Osisko or its counterparties, especially if such breach goes undetected for a period of time, may result in significant costs, loss of revenue, fines or lawsuits and damage to reputation. The significance of any cyber security breach is difficult to quantify, but may in certain circumstances be material and could have a material adverse effect on Osisko’s business, financial condition and results of operations.

 

Climate Change

 

Osisko recognizes that climate change is an international and community concern which may affect the business and operations of Osisko or the companies in which Osisko has royalties, streams or other interests, directly or indirectly. The continuing rise in global average temperatures has created varying changes to regional climates across the globe, resulting in risks to equipment and personnel. Governments at all levels are moving towards enacting legislation to address climate change by regulating carbon emissions and energy efficiency, among other things. Where legislation has already been enacted, regulation regarding emission levels and energy efficiency are becoming more stringent. The mining industry as a significant emitter of greenhouse gas emissions is particularly exposed to these regulations. Costs associated with meeting these requirements may be subject to some offset by increased energy efficiency and technological innovation; however, there is no assurance that compliance with such legislation will not have an adverse effect on Osisko’s business, results of operations, financial condition and its share price.

 

Extreme weather events (such as prolonged drought or freezing, increased flooding, increased periods of precipitation and increased frequency and intensity of storms) have the potential to disrupt operations and the transport routes. Extended disruptions could result in interruption to production which may adversely affect Osisko’s business results of operations, financial condition and its share price.

 

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Climate change is perceived as a threat to communities and governments globally. Stakeholders may increase demands for emissions reductions and call upon mining companies to better manage their consumption of climate-relevant resources (hydrocarbons, water etc.). This may attract social and reputational attention towards operations, which could have an adverse effect on Osisko’s business, results of operations, financial condition and its share price.

 

Reputational Risks

 

Osisko is subject to reputational risks

 

Reputational risk is the risk that an activity undertaken by an organization or its representatives will impair its image in the community or lower public confidence in it, resulting in loss of revenue, legal action or increased regulatory oversight and loss of valuation and share price. Possible sources of reputational risk could come from, but not limited to, operational failures, non-compliance with laws and regulations, or leading an unsuccessful financing. In addition to its risk management policies, controls and procedures, Osisko has a formal Code of Ethics to help manage and support Osisko’s reputation.

 

Financial Condition Risks

 

Osisko is subject to risks related to its financial condition

 

Osisko’s financial condition has an impact on its risk profile. A sound financial condition can allow Osisko to compete for accretive investment opportunities: the better the financial condition, the more it can bid and compete on quality assets. If additional funds are required, the source of funds that may be available to Osisko, in addition to cash flows, is through the issuance of additional equity capital, borrowings or the sale of assets. There is no assurance that such funding will continue to be available to Osisko. Furthermore, even if such financing is available, there can be no assurance that it will be obtained in a timely manner or on terms favourable to Osisko or provide Osisko with sufficient funds to meet its objectives, which may adversely affect Osisko’s business and financial condition and may be further exacerbated by global instability, international conflict and the responses thereto, and by the undetermined future impact of COVID-19 on financial markets. In addition, failure to comply with financial covenants under Osisko’s current or future debt agreements or to make scheduled payments of the principal of, or to pay interest on its indebtedness, would likely result in an event of default under the debt agreements and would allow the lenders to accelerate the debt under these agreements, which may affect Osisko’s financial condition.

 

Additional financing may result in dilution

 

Osisko may require additional funds to further its activities. To obtain such funds, Osisko may issue additional securities including, but not limited to, Osisko Shares or some form of convertible security, the effect of which could result in a substantial dilution of the equity interests of Osisko Shareholders.

 

There can be no assurance that Osisko will be able to obtain adequate financing in the future or that the terms of such financing will be favourable.

 

Declaration and payment of dividends

 

Any decisions to declare and pay dividends on the Osisko Shares is subject to the discretion of the Osisko Board, based on, among other things, Osisko’s earnings, financial requirements for Osisko’s operations, the satisfaction of applicable solvency tests for the declaration and payment of dividends and other conditions existing from time to time. As a result, no assurance can be given as to the frequency or amount of any such dividend.

 

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Osisko may be a “passive foreign investment company”, or PFIC, under applicable U.S. income tax rules, which could result in adverse tax consequences for United States investors

 

If Osisko were to constitute a PFIC for any year during a U.S. holder’s holding period, then certain potentially adverse U.S. federal income tax rules would affect the U.S. federal income tax consequences to such U.S. holder resulting from the acquisition, ownership and disposition of Osisko Shares.

 

The U.S. Treasury Department has not issued specific guidance on how the income and assets of a non-U.S. corporation such as Osisko will be treated under the PFIC rules, including the treatment of royalties, streams and precious metals offtakes under such rules. Based upon advice from its tax advisors, Osisko believes, on a more likely than not basis, that it was not a PFIC for its tax year ended December 31, 2021, and, based on its current and anticipated business activities and financial expectations, Osisko expects, on a more likely than not basis that it will not be a PFIC for its current tax year and for the foreseeable future.

 

The determination as to whether a corporation is, or will be, a PFIC for a particular tax year depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations and uncertainty. In addition, there is limited authority on the application of the relevant PFIC rules to entities such as Osisko. Accordingly, there can be no assurance that the Internal Revenue Service will not challenge the views of Osisko concerning its PFIC status. In addition, whether any corporation will be a PFIC for any tax year depends on its assets and income over the course of such tax year, and, as a result, Osisko’s PFIC status for its current tax year and any future tax year cannot be predicted with certainty. Each U.S. holder should consult its own tax adviser regarding the PFIC status of Osisko.

 

Changes in tax legislation or accounting rules could affect the profitability of Osisko

 

Changes to, or differing interpretation of, taxation laws or regulations in any of Canada, Australia, Brazil, Chile, Armenia, Kenya, Macedonia, Argentina, Peru, Mexico, Ecuador, New Zealand, Tasmania, United States of America or any of the countries in which Osisko’s assets or relevant contracting parties are located could result in some or all of Osisko’s profits being subject to additional taxation. No assurance can be given that new taxation rules or accounting policies will not be enacted or that existing rules will not be applied in a manner which could result in Osisko’s profits being subject to additional taxation or which could otherwise have a material adverse effect on Osisko’s profitability, results of operations, financial condition and the trading price of Osisko’s securities. In addition, the introduction of new tax rules or accounting policies, or changes to, or differing interpretations of, or application of, existing tax rules or accounting policies could make royalties, streams or other interests by Osisko less attractive to counterparties. Such changes could adversely affect Osisko’s ability to acquire new assets or make future investments.

 

The CRA’s recent focus on foreign income earned by Canadian companies may result in adverse tax consequences for Osisko

 

There has been a recent focus by the CRA on income earned by foreign subsidiaries of Canadian companies. The majority of Osisko’s offtake and stream assets are owned by and the related revenue is received by OBL, its Bermuda wholly-owned subsidiary. Osisko has not received any reassessment or proposal from the CRA in connection with income earned by its foreign subsidiaries. Although management believes that Osisko is in full compliance with Canadian tax law, there can be no assurance that Osisko’s structure may not be challenged in future. Tax authorities in jurisdictions applicable to Osisko may periodically conduct reviews of Osisko’s tax filings and compliance. Those reviews could result in adverse tax consequences and unexpected financial costs and exposure. In the event the CRA successfully challenges Osisko’s structure, or the manner in which Osisko or any of its subsidiaries has filed its income tax returns and reported its income, this could potentially result in additional federal and provincial taxes and penalties, which could have a material adverse effect on Osisko.

 

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Financial Reporting Risks

 

Osisko is subject to risks related to financial reporting

 

In accordance with statutory requirements and sound management practices, Osisko issues financial statements, which present its financial condition at a given date and its financial performance over a certain period. The risk of misstatement of financial or restatement of financial statements can result in significant losses to Osisko: financial losses, as a result of litigation and fines, losses in market capitalization, reputational losses. Key misstatements would include (a) fraudulent misappropriation of assets; (b) fraudulent misrepresentation of performance motivated by personal gain; and (c) inadequate estimates with an impact on valuation of assets and liabilities.

 

Osisko may fail to maintain the adequacy of internal control over financial reporting as per the requirements of the Sarbanes-Oxley Act

 

Section 404 of the SOX requires an annual assessment by management of the effectiveness of Osisko’s internal control over financial reporting and an attestation report by Osisko’s external auditor addressing this assessment. While Osisko’s internal control over financial reporting for its last completed financial year were effective, Osisko may in the future fail to achieve and maintain the adequacy of its internal control over financial reporting, as such standards are modified, supplemented or amended from time to time, and Osisko may not be able to ensure that it can conclude on an ongoing basis that it has effective internal control over financial reporting in accordance with Section 404 of SOX. Osisko’s failure to satisfy the requirements of section 404 of SOX and achieve and maintain the adequacy of its internal control over financial reporting could result in the loss of investor confidence in the reliability of its financial statements, which in turn could harm Osisko’s business and negatively impact the trading price of securities. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm Osisko’s operating results or cause it to fail to meet its reporting obligations. Future acquisitions of companies may provide Osisko with challenges in implementing the required processes, procedures and controls in its acquired operations. Acquired companies may not have disclosure controls and procedures or internal control over financial reporting that are as thorough or effective as those currently applicable to Osisko.

 

No evaluation can provide complete assurance that Osisko’s internal control over financial reporting will detect or uncover all failures of persons within Osisko to disclose material information otherwise required to be reported. The effectiveness of Osisko’s controls and procedures could also be limited by simple errors or faulty judgments. In addition, should Osisko expand in the future, the challenges involved in implementing appropriate internal control over financial reporting will increase and will require that Osisko continue to improve its internal control over financial reporting. Although Osisko intends to devote substantial time and incur substantial costs, as necessary, to ensure compliance, Osisko cannot be certain that it will be successful in complying with Section 404 on an ongoing basis.

 

Human Resources Risks

 

Osisko may experience difficulty attracting and retaining qualified management and specialized technical personnel to grow its business, which could have a material adverse effect on Osisko’s business and financial condition

 

Osisko may be dependent on the services of key executives and other highly skilled personnel focused on advancing its corporate objectives as well as the identification of new opportunities for growth and funding. The loss of these persons or its inability to attract and retain additional highly skilled employees required for its activities may have a material adverse effect on Osisko’s business and financial condition. Osisko implemented a succession plan in order to mitigate the risk of being dependent on such key management and specialized technical personnel. From time to time, Osisko may also need to identify and retain additional skilled management and specialized technical personnel to efficiently operate its business.

 

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Osisko or the companies in which Osisko holds royalties, streams or other interests may remain highly dependent upon contractors and third parties in the performance of their exploration, development and operational activities. There can be no guarantee that such contractors and third parties will be available to carry out such activities on their behalf or be available upon commercially acceptable terms.

 

Currency Risks

 

Osisko’s revenue, earnings, the value of its treasury and the value it records for its assets are subject to variations in foreign exchange rates, which may adversely affect the revenue generated by the asset portfolio or cause adjustments to the recorded value of assets

 

Osisko’s main activities and offices are currently located in Canada and the costs associated with Osisko’s activities are in majority denominated in Canadian dollar. However, Osisko’s revenues from the sale of gold, silver or other commodities are in U.S. dollars. Osisko is subject to foreign currency fluctuations and inflationary pressures, which may have a material and adverse effect on Osisko’s profitability, results of operations and financial condition. There can be no assurance that the steps taken by management to address variations in foreign exchange rates will eliminate all adverse effects and Osisko may suffer losses due to adverse foreign currency rate fluctuations.

 

Financial Markets Risks

 

Osisko is subject to risks related to financial markets

 

Failure of financial markets can have a significant impact on the valuation of Osisko and its assets, and increasing financial and takeover risks.

 

Fluctuation in market value of Osisko Shares

 

The market price of the Osisko Shares is affected by many variables not directly related to the corporate performance of Osisko, including the strength of the economy generally, the availability and attractiveness of alternative investments, and the breadth of the public market for the securities. The effect of these and other factors on the market price of Osisko Shares in the future cannot be predicted.

 

Securities markets have a high level of price and volume volatility, and the market price of securities of many companies have experienced wide fluctuations in price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. Factors unrelated to the financial performance or prospects of Osisko include macroeconomic developments in North America and globally, and market perceptions of the attractiveness of particular industries or asset classes. There can be no assurance that continued fluctuations in mineral prices will not occur. As a result of any of these factors, the market price of Osisko’s securities at any given time may not accurately reflect the long term value of Osisko.

 

Equity Price Risk and Liquidity of Investments

 

Osisko is exposed to equity price risk as a result of holding a portfolio of investments in publicly listed companies. Just as investing in Osisko is inherent with risks such as those set out in this Annual Information Form, by investing in these other companies, Osisko is exposed to the risks associated with owning equity securities and those risks inherent in the investee companies. Osisko may have difficulty in selling its investments in exploration and mining companies in the event such sales would be contemplated.

 

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Legal Risks

 

Osisko is subject to significant governmental regulations

 

Osisko’s activities are subject to extensive federal, provincial and local laws and regulations governing various matters, including environmental protection; management and use of toxic substances and explosives; management of natural resources; exploration of mineral properties; exports; price controls; taxation; labour standards and occupational health and safety, including mine safety; and historic and cultural preservation.

 

Failure to comply with applicable laws and regulations may result in civil or criminal fines or penalties or enforcement actions, including orders issued by regulatory or judicial authorities enjoining or curtailing operations or requiring corrective measures, installation of additional equipment or remedial actions, any of which could result in significant expenditures. Osisko may also be required to compensate private parties suffering loss or damage by reason of a breach of such laws, regulations or permitting requirements. It is also possible that future laws and regulations, or more stringent enforcement of current laws and regulations by governmental authorities, could cause additional expense, capital expenditures, restrictions on or suspensions of Osisko’s activities and delays in the exploration of properties.

 

Osisko’s business is subject to evolving corporate governance and public disclosure regulations that have increased both Osisko’s compliance costs and the risk of non compliance, which could have an adverse effect on the price of Osisko’s securities

 

Osisko is subject to changing rules and regulations promulgated by a number of Canadian and U.S. governmental and self-regulated organizations. These rules and regulations continue to evolve in scope and complexity and many new requirements have been created, making compliance more difficult and uncertain. Osisko’s efforts to comply with rules and regulations have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

 

Osisko may be subject to liability or sustain loss for certain risks and hazards against which it does not or cannot economically insure

 

Mining is capital intensive and subject to a number of risks and hazards, including environmental pollution, accidents or spills, industrial and transportation accidents, labour disputes, changes in the regulatory environment, natural phenomena (such as inclement weather conditions, earthquakes and encountering unusual or unexpected geological conditions. Such risk and hazards might impact the business of Osisko or of the companies in which Osisko holds royalties, streams or other interests. Consequently, many of the foregoing risks and hazards could result in damage to, or destruction of, mineral properties or future processing facilities, personal injury or death, environmental damage, delays in or interruption of or cessation of their exploration or development activities, delay in or inability to receive required regulatory approvals, or costs, monetary losses and potential legal liability and adverse governmental action. Osisko, or the companies in which Osisko holds royalties, streams or other interests, may be subject to liability or sustain loss for certain risks and hazards against which they do not or cannot insure or against which they may reasonably elect not to insure because of the cost. This lack of insurance coverage could result in material economic harm to Osisko.

 

There can be no assurance of title to property

 

There may be challenges to title to the mineral properties held by Osisko or the companies in which Osisko has royalties, streams or other interests. If there are title defects with respect to any such properties, they might be required to compensate other persons or perhaps reduce its interest in the affected property. Also, in any such case, the investigation and resolution of title issues would divert management’s time from ongoing programs.

 

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There may be amendments to laws

 

Amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on Osisko and cause increases in capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in development of new mining properties.

 

Disputes may arise over the existence, validity, enforceability and geographic extent of royalties, streams or other interests

 

Royalties, streams and other interests are subject to title and other defects and contestation by operators of mining projects and holders of mining rights, and these risks may be difficult to identify. While Osisko seeks to confirm the existence, validity, enforceability and geographic extent of the royalties, streams and other interests it holds, there can be no assurance that disputes over these and other matters will not arise.

 

The properties on which Osisko holds royalties, streams or other interests or the companies in which Osisko has an equity interest may be the subject of litigation

 

Potential litigation may arise on a property on which Osisko holds royalties, streams or other interests (for example litigation between joint venture partners or original property owners) or with respect to a company in which Osisko holds an equity interest. As a holder of royalties, streams or other interests, Osisko will not generally have any influence on the litigation nor will it generally have access to data.

 

The registration of royalties, streams or other interests may not protect Osisko’s interests

 

The right to record or register royalties, streams or other interests in various registries or mining recorders offices may not necessarily provide any protection to Osisko. Accordingly, Osisko may be subject to risk from third parties.

 

Environmental risks and hazards

 

Osisko and the companies in which Osisko has royalties, streams or other interest are subject to environmental regulation in the jurisdictions in which they operate. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set forth limitations on the general, transportation, storage and disposal of solid and hazardous waste. Environmental legislation is evolving in a manner that will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that future changes in environmental regulation, if any, will not adversely affect Osisko’s operations. Environmental hazards may exist on the properties which are unknown to Osisko at present and which have been caused by previous or existing owners or operators of the properties. Reclamation costs are uncertain and planned expenditures estimated by management may differ from the actual expenditures required.

 

Foreign countries and regulatory requirements

 

Osisko and the companies in which Osisko holds royalties, streams or other interests have investments in properties and projects located in foreign countries. The carrying values of these properties and the ability to advance development plans or bring the projects to production may be adversely affected by whatever political instability and legal and economic uncertainty might exist in such countries. These risks may limit or disrupt projects, restrict the movement of funds or result in the deprivation of contractual rights or the taking of property by nationalization, expropriation or other means without fair compensation.

 

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There can be no assurance that industries which are deemed of national or strategic importance in countries in which Osisko has assets, including mineral exploration, production and development, will not be nationalized. The risk exists that further government limitations, restrictions or requirements, not presently foreseen, will be implemented. Changes in policies intended to alter laws regulating the mining industry could have a material adverse effect on Osisko. There can be no assurance that Osisko’s assets in these countries will not be subject to nationalization, requisition or confiscation, whether legitimate or not, by an authority or body.

 

In addition, in the event of a dispute arising from foreign operations, Osisko may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of courts in Canada. Osisko also may be hindered or prevented from enforcing its rights with respect to a governmental instrumentality because of the doctrine of sovereign immunity. It is not possible for Osisko to accurately predict such developments or changes in laws or policy or to the extent to which any such developments or changes may have a material adverse effect on Osisko’s operations.

 

Conflict of Interest Risks

 

Some of Osisko’s directors and officers may have conflicts of interest as a result of their involvement with other natural resource companies

 

Some of the persons who are directors and officers of Osisko are directors or officers of other natural resource or mining-related companies and these associations may give rise to conflicts of interest from time to time. As a result of these conflicts of interest, Osisko may miss the opportunity to participate in certain transactions, which may have a material adverse effect on Osisko’s financial position.

 

Merger and Acquisitions Risks

 

Any mergers, acquisitions or joint ventures would be accompanied by risks

 

Osisko may evaluate from time to time opportunities to merge, acquire and joint venture assets and businesses. The global landscape has changed for mergers and acquisitions and there are risks associated to such transactions due to liabilities and evaluations with the aggressive timelines of closing transactions from increased competition. There is also a risk that the review and examination process of a potential investment might be inadequate and cause material negative outcomes. These acquisitions may be significant in size, may change the scale of Osisko’s business and may expose it to new geographic, political, operating, financial and geological risks. Osisko’s success in its acquisition activities will depend on its ability to identify suitable acquisition candidates and partners, acquire or joint venture them on acceptable terms and integrate their operations successfully with those of Osisko. Any acquisitions may be accompanied by risks, such as: (a) the difficulty of integrating the operations and personnel of any acquired companies; (b) the potential disruption of Osisko’s ongoing business; (c) the inability of management to maximize the financial and strategic position of Osisko through the successful incorporation of acquired assets and businesses or joint ventures; (d) additional expenses associated with amortization of acquired intangible assets; the maintenance of uniform standards, controls, procedures and policies; (e) the impairment of relationships with employees, customers and contractors as a result of any integration of new management personnel; (f) dilution of Osisko’s present shareholders or of its interests in its subsidiaries or assets as a result of the issuance of shares to pay for acquisitions or the decision to grant interests to a joint venture partner; and (g) the potential unknown liabilities associated with acquired assets and businesses. There can be no assurance that Osisko would be successful in overcoming these risks or any other problems encountered in connection with such acquisitions or joint ventures. There may be no right for shareholders to evaluate the merits or risks of any future acquisition or joint venture undertaken except as required by applicable laws and regulations.

 

Mergers and acquisitions contemplated by Osisko may require third party approvals

 

Osisko may intend to enter into agreements to acquire royalties, streams or other interests that require the consent or approval of third parties in order to complete the contemplated acquisition. There can be no assurance that such third parties, which may include shareholders of the entity disposing of the interests, regulatory bodies or entities with an interest in the applicable property or others, will provide the required approval or consent in a timely manner, or at all. Failure to complete acquisitions may result in a material adverse effect on Osisko’s profitability, results of operation and financial condition.

 

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Osisko faces competition and the mining industry is competitive at all of its stages

 

Many companies and investors are engaged in the search for and the acquisition of royalties, streams or other interests, and there is a limited supply of desirable mineral interests. The mineral exploration business is competitive in all phases. Many companies and investors are engaged in the acquisition of royalties, streams or other interests, including pension funds, private funds, mining companies, operators and large, established companies with substantial financial resources, operational capabilities and long earnings records. Osisko may be at a competitive disadvantage in acquiring interests in natural resource properties, whether by way of royalties, streams or other form of investment, as many competitors may have greater financial resources and technical staff. There can be no assurance that Osisko will be able to compete successfully against other companies and investors in acquiring interests in new natural resource properties and royalties, streams or other interests. In addition, Osisko may be unable to make acquisitions at acceptable valuations and on terms it considers to be acceptable. Osisko’s inability to acquire additional royalties, streams or other interests in mineral properties may result in a material and adverse effect on Osisko’s profitability, results of operation and financial condition.

 

In addition, there is no assurance that a ready market will exist for the sale of commercial quantities of metals. Factors beyond the control of Osisko may affect the marketability of any substances discovered. These factors include market fluctuations, the proximity and capacity of natural resource markets and processing equipment, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in Osisko not receiving any future payments related to royalties, streams or other interests or losing value on its equity investments.

 

Fraud Risks

 

Osisko is subject to potential fraud and corruption

 

Osisko is subject to risks related to potential to gain benefits from improper transactions (purchasing, gold, payroll) and financial reporting to hide operational deficiencies or enhance remuneration. Other risks include the potential for fraud and corruption by suppliers, personnel or government officials and which may implicate Osisko, compliance with applicable anti-corruption laws, by virtue of Osisko operating in jurisdictions that may be vulnerable to the possibility of bribery, collusion, kickbacks, theft, improper commissions, facilitation payments, conflicts of interest and related party transactions and Osisko’s possible failure to identify, manage and mitigate instances of fraud, corruption, or violations of its Code of Ethics and applicable regulatory requirements.

 

Material MINERAL Project

 

The Canadian Malartic Royalty

 

Pursuant to the Canadian Malartic Royalty Agreement, Osisko holds a real right in the Canadian Malartic Properties (and the associated ores, minerals and mineral resources and by-products thereof which may be extracted from the Canadian Malartic Properties) and Canadian Malartic GP has agreed to pay Osisko a 5% NSR royalty from production of metals, ores and other materials recovered from the Canadian Malartic Properties (the “Canadian Malartic Royalty”). The term of the Canadian Malartic Royalty Agreement is perpetual.

 

For a description of the Canadian Malartic Properties, see “Schedule B - Technical Information underlying the Canadian Malartic Properties”.

 

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Prior to the commencement of each fiscal year, Osisko may elect to receive payment of the Canadian Malartic Royalty for such fiscal year to the extent relating to gold and silver as an in-kind credit. If Osisko has elected to receive the in-kind royalty, where precious metals are shipped in the form of dore, Osisko’s account shall be credited with 5% of the refined gold and 5% of the refined silver as soon as practicable and in any event no later than five (5) business days after the refined gold or refined silver is credited, subject to further adjustment. Since 2014, Osisko has elected to receive the Canadian Malartic Royalty in-kind. The Canadian Malartic Royalty is payable quarterly and all payments pursuant to the Canadian Malartic Royalty to be paid in cash must be paid in U.S. dollars.

 

Osisko has the right to inspect the Canadian Malartic Properties and to inspect and audit books and records upon 20 days’ prior notice to Canadian Malartic GP. Canadian Malartic GP is required to deliver to Osisko an annual forecast report.

 

If Canadian Malartic GP intends to abandon any portion of the Canadian Malartic Properties, Osisko can elect to have such portion conveyed to it, subject to the satisfaction of certain conditions.

 

Canadian Malartic GP is required to pay Osisko a $0.40 per tonne milling fee in respect of ore milled at the Canadian Malartic Properties that is not produced from the Canadian Malartic Properties provided no fee is payable in respect of any tonnes of ore milled in excess of 65,000 tpd.

 

Osisko may assign all of its rights in the Canadian Malartic Royalty without the prior consent of Canadian Malartic GP. Canadian Malartic GP may not assign or otherwise convey the Canadian Malartic Properties unless certain conditions are satisfied.

 

A deed of hypothec was entered into in order to hypothecate the Canadian Malartic Properties in favour of Osisko and securing payment of the Canadian Malartic Royalty subject to certain terms and conditions. The hypothec is first-ranking subject to, among other things, security existing at the time of execution of the Canadian Malartic Royalty Agreement. The Canadian Malartic Royalty Agreement has been published at the Québec Public Register of Real and Immovable Mining Rights.

 

Dividends

 

Dividend Program and Dividend Payments

 

In November 2014, Osisko announced the initiation of a quarterly dividend program. Since the initiation of the program, Osisko declared dividends as follows:

 

Declaration date 

Dividend

per share

  

 

Record date(i)

 

 

Payment date(i)

  Dividends paid or 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 
Year 2019   0.20   n/a  n/a   29,976,000 
Year 2020   0.20   n/a  n/a   32,838,000 
February 21, 2021   0.050   March 31, 2021  April 15, 2021   8,364,000 
May 11, 2021   0.050   June 30, 2021  July 15, 2021   8,404,000 
August 5, 2021   0.055   September 30, 2021  October 15, 2021   9,160,000 
November 9, 2021   0.055   December 31, 2021  January 14, 2022   9,157,000 
Year 2021   0.21          32,838,000 
February 24, 2022   0.055   March 31, 2022  April 14, 2022   Tbd(ii)

 

NOTES:

 

(i)Not applicable (“n/a”) for annual summaries.
(ii)To be determined (“tbd”) on March 31, 2022 based on the number of shares outstanding and the number of shares participating in the Dividend Reinvestment Plan on the record date.

 

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Dividend Reinvestment Plan

 

In 2015, Osisko implemented the Dividend Reinvestment Plan. The Dividend Reinvestment Plan allows Canadian shareholders and U.S. shareholders (commencing with the dividend paid on October 16, 2017 for U.S. shareholders) to reinvest their cash dividends into additional Osisko shares either purchased on the open market through the facilities of the TSX or the NYSE, or issued directly from treasury by Osisko, or acquired by a combination thereof. In the case of a treasury issuance, the price will be the weighted average price of the Osisko 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 Osisko’s sole election. No commissions, service charges or brokerage fees are payable by shareholders who elect to participate in the Dividend Reinvestment Plan.

 

As at December 31, 2021, the holders of 7,891,496 Osisko Shares had elected to participate in the Dividend Reinvestment Plan, representing dividends payable of $0.4 million. During the year ended December 31, 2021, Osisko issued 120,523 Osisko Shares under the Dividend Reinvestment Plan, at a discount rate of 3%.

 

Description of capital structure

 

Osisko Shares

 

Osisko is authorized to issue an unlimited number of Osisko Shares without nominal or par value.

 

Subject to the rights and restrictions attaching to the Osisko Preferred Shares issuable in series and to the terms of an amended and restated shareholder rights plan dated May 4, 2017 (as approved for continuation on June 22, 2020) the rights, privileges, conditions and restrictions attaching to the Osisko Shares, as a class, are equal in all respects and include the following rights.

 

Dividends

 

Subject to the rights and restrictions attaching to any series of Osisko Preferred Shares, the holders of the Osisko Shares shall have the right to receive, if, as and when declared by the Osisko Board, any dividend on such dates and for such amounts as the Osisko Board may from time to time determine.

 

Participation in case of Dissolution or Liquidation

 

Subject to the rights and restrictions attaching to any series of Osisko Preferred Shares, the holders of the Osisko Shares shall have the right, upon the liquidation, dissolution or winding-up of Osisko, to receive the remaining property of Osisko.

 

Right to Vote

 

The holders of the Osisko Shares shall have the right to one (1) vote at any meeting of the shareholders of Osisko, except meetings at which only holders of any series of Osisko Preferred Shares are entitled to vote.

 

As of the date hereof, 166,246,261 Osisko Shares were issued and outstanding.

 

Renewal of Normal Course Issuer Bid

 

In December 2021, Osisko renewed its normal course issuer bid (“2022 NCIB Program”). Under the terms of the 2022 NCIB Program, Osisko may acquire up to 16,530,668 Osisko Shares from time to time in accordance with the normal course issuer bid procedures of the TSX. Repurchases under the 2022 NCIB Program are authorized until December 11, 2022. Daily purchases will be limited to 87,264 Osisko Shares, other than block purchase exemptions, representing 25% of the average daily trading volume of the Osisko Shares on the TSX for the six-month period ending November 30, 2021, being 349,057 Osisko Shares.

 

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During the year ended December 31, 2021, Osisko purchased for cancellation a total of 2,103,366 Osisko Shares for $30.8 million (average acquisition price per share of $14.64) under its previous 2021 NCIB program.

 

Osisko Preferred Shares

 

The rights and restrictions attached to the preferred shares of Osisko issuable in series (the “Osisko Preferred Shares”) are as follows.

 

Issuance in Series

 

The Osisko Preferred Shares may be issued in one or more series and subject as hereinafter provided and subject to the provisions of the QBCA, the Osisko Board shall determine, by resolution, before the issue of each series, the designation, rights and restrictions to be attached thereto, including, but without in any way limiting or restricting the generality of the foregoing: (a) the right, as the case may be, to receive dividends, the form of payment of dividends, the rate or amount or method of calculation of dividends, whether cumulative or non-cumulative, the date or dates and places of payment and the date or dates from which such dividends shall accrue or become payable; (b) the rights and/or obligations, if any, of Osisko or of the holders thereof with respect to the purchase or redemption of the Osisko Preferred Shares and the consideration for and the terms and conditions of any such purchase or redemption; (c) the conversion or exchange rights, if any, and the conditions attaching thereto; (d) the restrictions, if any, as to the payment of dividends on shares of Osisko ranking junior to the Osisko Preferred Shares; and (e) any other provisions deemed expedient by the directors, the whole subject to the issuance of a Certificate of Amendment setting forth the number and the designation, as well as the rights and restrictions to be attached to the Osisko Preferred Shares of such series.

 

Dividends

 

The Osisko Preferred Shares shall, with respect to the payment of dividends, be entitled to preference over any other class of shares of Osisko ranking junior to the Osisko Preferred Shares, and no dividends shall at any time be declared or paid or set apart for payment on any other shares of Osisko ranking junior to the Osisko Preferred Shares, nor shall Osisko call for redemption or purchase for cancellation any of the Osisko Preferred Shares unless at the date of such declaration, payment, setting apart for payment or call for redemption or purchase, as the case may be, all cumulative dividends up to and including the dividend payment for the last completed period for which such cumulative dividends shall be payable shall have been declared and paid or set apart for payment in respect of each series of cumulative Osisko Preferred Shares then issued and outstanding and the non-cumulative dividend payment for the then current fiscal year and any declared and unpaid non-cumulative dividends shall have been paid or set apart for payment in respect of each series of non-cumulative Osisko Preferred Shares then issued and outstanding.

 

Liquidation or Dissolution

 

In the event of the liquidation, dissolution or winding-up of Osisko or other distribution of assets of Osisko among shareholders for the purpose of winding-up its affairs, the holders of the Osisko Preferred Shares shall be entitled to receive, before any amount shall be paid to, or any property or assets of Osisko distributed among the holders of the Osisko Shares or of shares of any other class of shares of Osisko ranking junior to the Osisko Preferred Shares, and to the extent provided for with respect to each series, the amount of the consideration received by Osisko for such Osisko Preferred Shares, such premiums, if any, as has been provided for with respect to such series together with, in the case of cumulative Osisko Preferred Shares, all unpaid accrued dividends (which for such purpose shall be calculated as if such cumulative dividends were accruing from day to day for the period from the latest of the following dates, namely (a) the date fixed by the Osisko Board at the time of allotment and issue of such shares or if such date is not fixed, the date of their allotment and issue, or (b) the date of expiration of the last period for which cumulative dividends have been paid, up to and including the date of distribution) and, in the case of non-cumulative Osisko Preferred Shares, all declared and unpaid dividends. After payment to the holders of the Osisko Preferred Shares of the amounts so payable to them, they shall not be entitled to share in any further distribution of the property or assets of Osisko.

 

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Equal Rank of All Series

 

The Osisko Preferred Shares of each series shall rank pari passu with the Osisko Preferred Shares of every other series with respect to the payment of dividends, as the case may be, and the distribution of assets in the event of the liquidation, dissolution or winding-up of Osisko, whether voluntary or involuntary, provided, however, that in the event of there being insufficient assets to satisfy in full the repayment of all moneys owing to the holders of Osisko Preferred Shares, such assets shall be applied rateably to the repayment of the amount paid up on such Osisko Preferred Shares and, then, to the payment of all unpaid accrued cumulative dividends, whether declared or not, and all declared and unpaid non-cumulative dividends.

 

Voting Rights

 

Subject to the provisions of the QBCA and, except as otherwise expressly provided herein, the holders of any series of the Osisko Preferred Shares shall not, as such, have any voting rights for the election of directors or for any other purpose nor shall they be entitled to receive notice of or to attend shareholders’ meetings.

 

Amendments

 

As long as any of the Osisko Preferred Shares are outstanding, Osisko may not, except with the approval of the holders of the Osisko Preferred Shares hereinafter specified and after having complied with the relevant provisions of the QBCA, create any other shares ranking in priority to or pari passu with the Osisko Preferred Shares, voluntarily liquidate or dissolve Osisko or effect any reduction of capital involving a distribution of assets on other shares of its share capital or repeal, amend or otherwise alter any of the provisions relating to the Osisko Preferred Shares as a class.

 

Any approval of the holders of the Osisko Preferred Shares as aforesaid shall be deemed to have been sufficiently given if contained in a resolution adopted by a majority of not less than 2/3 of the votes cast by the shareholders who voted in respect of that resolution at a meeting of the holders of the Osisko Preferred Shares duly called and held for that purpose, at which meeting such holders shall have one vote for each Osisko Preferred Share held by them respectively, or in an instrument signed by all the holders of the then outstanding Osisko Preferred Shares.

 

If an amendment as hereinabove provided especially affects the rights of the holders of Osisko Preferred Shares of any series in a manner or to an extent different from that in or to which the rights of the holders of Osisko Preferred Shares of any other series are affected, then such amendment shall, in addition to being approved by the holders of the Osisko Preferred Shares voting separately as a class, be approved by the holders of the Osisko Preferred Shares of such series, voting separately as a series, and the provisions of this paragraph shall apply, mutatis mutandis, with respect to the giving of such approval.

 

As of the date hereof, no Osisko Preferred Shares were issued and outstanding.

 

Warrants

 

As at December 31, 2021, 5,480,000 Osisko Warrants were outstanding and entitled the holder to purchase one Osisko Share at a price of $36.50 until February 18, 2022. On February 18, 2022, these Osisko Warrants expired unexercised. The Osisko Warrants were listed on the TSX under the ticker symbol “OR.WT”.

 

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Debentures

 

On November 3, 2017, Osisko closed a “bought deal” offering of Debentures in an aggregate principal amount of $300 million (the “Debentures”). The Debentures bear interest at a rate of 4% per annum, payable semi-annually on June 30 and December 31 each year, commencing on June 30, 2018. The Debentures are convertible at the holder’s option into Osisko Shares at a conversion price equal to $22.89 per Common Share (representing a conversion rate of 43.6872 Osisko Shares per $1,000 principal amount of Debentures). The Debentures will mature on December 31, 2022 and may be redeemed by Osisko, in certain circumstances. The Debentures are listed and posted for trading on the TSX under the symbol “OR.DB”.

 

MARKET FOR SECURITIES

 

Trading Price and Volume

 

Osisko Shares

 

The Osisko Shares are currently listed on the TSX and on the NYSE under the symbol “OR”. The following table sets forth the price range and trading volume for the Osisko Shares on the TSX and the NYSE, for the periods indicated.

 

   TSX   NYSE 
   High
(C$)		   Low
(C$)		   Volume
(#)		   High
(US$)		   Low
($US)		   Volume
(#)		 
2021                        
January    17.16    14.18    10,371,387    13.34    10.95    19,270,650 
February    15.08    12.42    9,611,832    11.58    9.62    21,500,698 
March    14.54    12.39    8,457,920    11.49    9.64    20,832,407 
April    15.76    14.02    5,455,543    12.50    11.07    10,650,270 
May    17.47    15.03    7,265,312    14.26    12.09    13,564,028 
June    18.40    16.43    6,901,025    14.96    13.15    15,592,195 
July    17.67    16.19    10,330,704    14.18    12.65    11,242,599 
August    17.33    14.88    6,998,034    13.70    11.44    11,711,865 
September    15.65    14.03    7,432,505    12.41    10.97    15,962,822 
October    16.11    13.85    6,423,637    13.00    10.98    10,541,830 
November    17.14    14.98    8,000,377    13.63    12.01    11,733,484 
December    15.73    14.01    6,030,625    12.31    10.88    16,450,720 
2022                              
January    15.51    13.60    7,961,664    12.39    10.64    14,494,590 
February    16.35    13.89    6,654,061    12.81    10.93    12,905,757 
March(1)    18.59    15.65    6,764,312    14.57    12.36    13,001,602 

 

(1)Up to and including March 16, 2022.

 

The closing price of the Osisko Shares on the TSX on March 16, 2022 was $17.72. The closing price of the Osisko Shares on the NYSE on March 16, 2022 was US$13.97.

 

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Warrants

 

Up to February 18, 2022, Warrants of Osisko were listed on the TSX under the symbol OR.WT. The following tables sets forth the price range and trading volume for the warrants on the TSX, for the periods indicated.

 

   OR.WT 
   High
(C$)		   Low
(C$)		   Volume
(#)		 
2021               
January    0.375    0.32    136,316 
February    0.32    0.18    169,114 
March    0.22    0.19    33,387 
April    0.21    0.14    127,497 
May    0.15    0.135    49,300 
June    0.155    0.125    34,316 
July    0.115    0.07    35,500 
August    0.085    0.08    15,800 
September    0.11    0.03    198,715 
October    0.055    0.02    105,832 
November    0.055    0.04    70,010 
December    0.04    0.015    95,750 
2022               
January    0.015    0.005    115,277 
February(1)    0.005    0.005    193,550 

 

(1)Up to and including their expiration on February 18, 2022.

 

The closing price of the warrants “OR.WT” on the TSX on February 18, 2022, their last trading day, was $0.005.

 

Debentures

 

The Debentures are listed on the TSX under the symbol “OR.DB”. The following table sets forth the price range and trading volume for the Debentures on the TSX, for the periods indicated:

 

   OR.DB 
   High
(C$)		   Low
(C$)		   Volume
(#)		 
2021               
January    105.00    101.50    8,200 
February    103.17    100.66    101,670 
March    102.03    100.75    69,930 
April    103.50    101.50    28,850 
May    105.08    103.43    194,590 
June    105.99    103.75    9,610 
July    104.64    103.16    10,250 
August    102.05    100.81    54,180 
September    102.04    100.30    169,240 
October    102.00    100.50    135,010 
November    103.50    101.50    6,260 
December    102.50    100.51    11,140 
2022               
January    101.56    100.51    4,850 
February    101.78    101.00    17,650 
March(1)    103.00    101.25    22,720 

 

(1)Up to and including March 16, 2022.

 

The closing price of the Debentures “OR.DB” on the TSX on March 16, 2022 was $102.05.

 

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Prior Sales - Securities Not Listed or Quoted on a Marketplace

 

The only securities of Osisko that were outstanding as of December 31, 2021 but not listed or quoted on a marketplace are the Osisko Options, the Replacement Osisko Options, the Osisko RSUs and the Osisko DSUs.

 

The price at which such securities have been issued by Osisko during the most recently completed financial year, the number of securities of the class issued at that price and the date on which such securities were issued are detailed hereinbelow.

 

Osisko Options

 

The following table sets forth the number of Osisko Options granted during the most recently completed financial year, the date of grant and the exercise price thereof.

 

Date of Grant  Number of Osisko Options   Exercise Price Per Osisko Option 
March 1, 2021   658,300   $12.70 
May 14, 2021   45,000   $16.46 
June 25, 2021   55,400   $17.12 
November 12, 2021   5,000   $16.71 

 

Restricted Share Units

 

During the financial year ended December 31, 2021, Osisko granted a total of 293,610 Osisko RSUs pursuant to the Osisko RSU Plan and under which equity securities of Osisko are authorized for issuance. The table below shows Osisko RSUs granted in 2021, which provide the right to receive payment in the form of Osisko Shares, cash or a combination of Osisko Shares and in cash, at Osisko’s sole discretion:

 

Date of Grant  Number of Osisko RSUs   Osisko Share Price at the time of Grant 
March 1, 2021   255,200   $12.70 
May 14, 2021   15,210   $16.46 
June 25, 2021   23,200   $17.12 

 

Deferred Share Units

 

During the financial year ended December 31, 2021, Osisko granted a total of 64,720 Osisko DSUs pursuant to the Osisko DSU Plan and under which equity securities of Osisko are authorized for issuance. The table below shows Osisko DSUs granted in 2021, which provide the right to receive payment in the form of Osisko Shares, cash or a combination of Osisko Shares and in cash, at Osisko’s sole discretion:

 

Date of Grant  Number of Osisko DSUs   Osisko Share Price at the time of Grant 
March 1, 2021   15,800   $12.70 
May 14, 2021   48,920   $16.46 

 

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Directors and Officers

 

Name, Address, Occupation and Security Holdings

 

The following table sets out the Osisko directors and officers, together with their province or state and country of residence, positions and offices held, principal occupations during the last five years, the years in which they were first appointed as directors and/or officers of Osisko, as of December 31, 2021.

 

 

 

Name and place of residence

 

 

 

Principal occupations during the last five (5) years(5)

Director and/or

Officer since

Sean Roosen

Québec, Canada

Executive Chair

 Chief Executive Officer and Chair of the Board of Directors of Osisko Development and Executive Chair of Osisko since November 2020. Chair and Chief Executive Officer of Osisko from June 2014 to November 2020. 2014

Joanne Ferstman(1,2)

Ontario, Canada

Lead Director

 Corporate Director and Chartered Professional Accountant. 2014

John R. Baird(3,4)

Ontario, Canada

Director

 Corporate Director and Advisor with Bennett Jones LLP. 2020

Christopher C. Curfman(2,3)

Illinois, United States of America

Director

 Corporate Director. 2016

Pierre Labbé(1,2,3)

Québec, Canada

Director

 Chief Financial Officer of IMV Inc. 2015

Candace MacGibbon(1,2)

Ontario, Canada

Director

 Corporate Director and former Chief Executive Officer of INV Metals Inc. from October 2015 to July 2021. 2021

William Murray John(3,4)

British Columbia, Canada

Director

 Corporate Director. 2020

Charles E. Page(1,4)

Ontario, Canada

Director

 Corporate Director and Professional Geologist. 2014

Sandeep Singh

Ontario, Canada

President, Chief Executive Officer and Director

 President and Chief Executive Officer of Osisko since November 2020 and President of Osisko from December 2019 to November 2020. Prior to December 2019, investment banker in the metals and mining industry. 2019

Guy Desharnais

Québec, Canada

Vice President, Project Evaluation

 Vice President, Project Evaluation of Osisko since August 2020. From September 2017 to August 2020, Director of Mineral Resource Evaluation for Osisko. From August 2010 to June 2017, Technical Manager of Geological Services of SGS. 2020

Iain Farmer

Québec, Canada

Vice President, Corporate Development

 Vice President, Corporate Development of Osisko. Prior to February 2020, Director of Evaluations for Osisko. 2020
André Le Bel
Québec, Canada
Vice President, Legal Affairs and Corporate Secretary		 Vice President, Legal Affairs and Corporate Secretary of Osisko. He is also the Vice President, Legal Affairs and Corporate Secretary of Falco Resources and the Corporate Secretary of Osisko Development. 2015

 

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Frédéric Ruel

Québec, Canada

Chief Financial Officer and Vice President, Finance

 Chief Financial Officer and Vice President, Finance of Osisko. Prior to February 2020, Vice President, Corporate Controller of Osisko and Falco; from January 2015 to November 2016, Corporate Controller of Osisko. From November 2016 to July 2017, Corporate Controller of Falco. 2016

Heather Taylor

Ontario, Canada

Vice President, Investor Relations

 Vice President, Investor Relations of Osisko. Prior to January 2021, Head of Business Development at Nexa Resources SA from June 2020 to December 2020 and Investor Relations at Nevsun Resources Ltd from November 2016 to January 2019. 2021

 

(1)Member of the Osisko Audit and Risk Committee. Ms. Joanne Ferstman is Chair of the Audit and Risk Committee.
(2)Member of the Osisko Human Resources Committee. Mr. Pierre Labbé is Chair of the Human Resources Committee.
(3)Member of the Osisko Governance and Nomination Committee. Mr. John R. Baird is Chair of the Governance and Nomination Committee.
(4)Member of the Osisko Environmental and Sustainability Committee. Mr. Murray John is Chair of the Environmental and Sustainability Committee.
(5)The information as to principal occupations has been furnished by each director and/or officer individually.

 

Biographic Notes

 

Sean Roosen, Executive Chair of the Board of Directors

 

Mr. Sean Roosen is a founding member of the Corporation and he was appointed Executive Chair of the Board of Directors on November 25, 2020. Prior to that, he was Chief Executive Officer and Chair of the Board of Directors of the Corporation. Mr. Roosen was a founding member of Osisko Mining Corporation (2003) and of EurAsia Holding AG, a European venture capital fund. He has over 30 years of progressive experience in the mining industry. As founder, President, Chief Executive Officer and Director of Osisko Mining Corporation, he was responsible for developing the strategic plan for the discovery, financing and development of the Canadian Malartic Mine. He also led the efforts for the maximization of shareholders’ value in the sale of Osisko Mining Corporation, which resulted in the creation of Osisko. Mr. Roosen is an active participant in the resource sector and in the formation of new companies to explore for mineral deposits both in Canada and internationally. In 2017, Mr. Roosen received an award from Mines and Money Americas for best Chief Executive Officer in North America and was, in addition, named in the “Top 20 Most Influential Individuals in Global Mining”. Mr. Roosen serves on the boards of directors of Osisko Mining Inc., as Chair and Chief Executive Officer of Osisko Development and as Chair and Chief Executive Officer of Osisko Green Acquisition Limited. He previous served on the board of directors of Victoria Gold Corp. (2018 – 2021), Barkerville Gold Mines Ltd. (2015 - 2019), Condor Petroleum Inc. (2011-2019), Dalaradian Resources Inc. (2010 – 2018) and Falco Resources Ltd. (2014 - 2019)

 

In prior years, he has been recognized by several organizations for his entrepreneurial successes and his leadership in innovative sustainability practices. Mr. Roosen is a graduate of the Haileybury School of Mines.

 

Joanne Ferstman, CPA, CA, Independent Lead Director

 

Ms. Joanne Ferstman is a corporate director, who has been serving on a number of public company boards and has over 20 years of progressive experience in the financial industry. She was until 2012 President and Chief Executive Officer of Dundee Capital Market Inc., a full service investment dealer with principal businesses that include investment banking, institutional sales and trading, and private client financial advisory. She has held several leadership positions within Dundee Corporation and DundeeWealth Inc. over 18 years, primarily as Chief Financier Officer, where she was responsible for strategic development, financial and regulatory reporting and risk management. Ms. Ferstman was appointed to the Board of Directors of Osisko Development Corp. as a nominee of the Corporation in accordance with the terms and conditions of an Investment Agreement. She also serves on the board of directors of Deam Unlimited Corp., Cogeco Communications Inc. and ATS Automatic Tooling Systems. She previously served on the board of directors of Dream Office REIT (2003 - 2018).

 

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Ms. Ferstman holds a Bachelor of Commerce and a Graduate degree in Public Accountancy from McGill University and is a Chartered Professional Accountant.

 

The Hon. John R. Baird, Independent Director

 

Mr. Baird is an advisor to a variety of firms in Canada and abroad. He was a former Senior Cabinet Minister in the Government of Canada and was the former Canadian Minister of Foreign Affairs.

 

A native of Ottawa, Mr. Baird spent three terms as a Member of Parliament and four years as Minister of Foreign Affairs where he advanced Canada/US relations and worked to strengthen ties to the Middle East and China. He also served as President of the Treasury Board, Minister of the Environment, Minister of Transport and Infrastructure, and Leader of the Government in the House of Commons. In 2010, he was selected by MPs from all parties as Parliamentarian of the Year. Prior to entering federal politics, Mr. Baird spent ten years in the Ontario Legislature where he served in several Ministerial portfolios. In addition to Canfor, Mr. Baird sits on the corporate boards of Canadian Pacific, the FWD Group, and PineBridge Investments, and is a member of the International Advisory Board of Barrick Gold Corp. He also serves as a Senior Advisor with Bennett Jones LLP, and is a Senior Advisor at Eurasia Group, a global political risk consultancy. Mr. Baird also volunteers his time with Community Living Ontario, an organization that supports individuals with developmental disabilities and the Prince’s Charities, the charitable office of His Royal Highness The Prince of Wales. Mr. Baird serves on the board of directors of Canfor Corporation, Canfor Pulp and Products Inc., Canadian Pacific Railway Limited and Canadian Pacific Railway Company.

 

Mr. Baird holds an Honours Bachelor of Arts in Political Studies from Queen’s University at Kingston and was presented with an Honorary Doctor of Law LLD at Queens’s University in 2018.

 

Christopher C. Curfman, B.Sc., Independent Director

 

Mr. Christopher C. Curfman is a corporate director and is a retired senior executive of Caterpillar Inc., one of the world’s largest mobile equipment suppliers to the mining industry. During his 21-year career with Caterpillar Financial Services Limited, Mr. Curfman has held several progressive positions in Asia, Australia and USA, including Senior Vice President of Caterpillar Financial Services Limited. and President of Caterpillar Global Mining from 2011 to his retirement at the end of 2015. Mr. Curfman also held senior positions with Deere & Company prior to joining Caterpillar Financial Services Limited. He has extensive international experience and a customer focused legacy at Caterpillar Financial Services Limited. His global leadership was key to Caterpillar Financial Services Limited’s success in the mining industry. He also served as a board member at various organisations, including the Canadian Institute of Mining, the National Mining Association, the World Coal Association and several universities.

 

Mr. Curfman holds a Bachelor of Science degree in Education from Northwestern University and has completed certificate programs in accounting and finance from the Wharton School of Business, University of Pennsylvania in 1991, a three-year executive program from Louisiana State University in 1997 and the executive program of Stanford Graduate School of Business in 2002. He was also awarded an Honorary Doctorate in Mining Engineering from the University Missouri-Rolla in 2013.

 

Pierre Labbé, CPA, CA, ICD.D, Independent Director

 

Mr. Pierre Labbé is Chief Financial Officer of IMV Inc. since March 2017. He was Vice President and Chief Financial Officer of Leddartech Inc. from April 2015 to March 2017. He has more than 25 years of progressive financial leadership roles in various industries. He was Vice President and Chief Financial Officer of the Québec Port Authority (October 2013 to April 2015), and has experience in the resource sector, having served as Chief Financial Officer of Plexmar Resources (May 2007 to November 2012), Sequoia Minerals (December 2003 to June 2004), and Mazarin Inc. (December 2002 to December 2003). Mr. Labbé, in his role as senior financial officer, has participated in the development of strategic plans and in mergers and acquisitions (over $1 billion in transactions).

 

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Mr. Labbé holds a Bachelor’s Degree in Business Administration and a license in accounting from Université Laval, Québec City. He is a member of Ordre des comptables professionnels agréés du Québec, the Chartered Professional Accountants of Canada and the Institute of Corporate Directors.

 

Candace MacGibbon, CPA, CA, Director

 

Ms. Candace MacGibbon has over 25 years of experience in the mining sector and capital markets. She was until July 2021 the Chief Executive Officer of INV Metals Inc., a Canadian mineral resource company focused on the development and exploration of the Loma Larga gold property in Ecuador. Ms. MacGibbon has a deep understanding of the capital markets as a result of her previous employment as a global mining institutional salesperson with RBC Capital Markets and in base metals research as a mining associate with BMO Capital Markets.

 

Ms. MacGibbon is a chartered professional accountant and her financial and accounting experience includes her previous role as chief financial officer of INV Metals, as well as her prior employment with Deloitte LLP.

 

She was appointed to the Board of Directors of Carbon Streaming Corporation as a nominee of the Corporation in accordance with the terms and conditions of an Investor Rights Agreement.

 

Ms. MacGibbon holds a Bachelor of Arts – Economics from the University of Western Ontario and a Diploma in Accounting from Wilfrid Laurier University.

 

William Murray John, B.Sc., MBA, Director

 

Mr. John is a mining engineer and investment industry professional. He current serves as the Chair of the Board of Directors of Discovery Silver Corp. and Prime Mining Corp. and is the Lead Director of O3 Mining. Corp. Prior to his retirement in December 2014, he was the President and Chief Executive Officer of Dundee Resources Limited, and Managing Director and a Portfolio Manager with Goodman & Company, Investment Counsel Inc., where he was responsible for managing merchant banking investments, Private Equity, resource and precious metals focused mutual funds and flow-through limited partnerships. Mr. John has been involved with the resource investment industry since 1992 and has worked as an investment banker, buy-side mining analyst, sell-side mining analyst, and portfolio manager.

 

He graduated from the Camborne School of Mines in 1980 with a Bachelor of Science (Hons) in mining engineering and an Associateship of the Camborne School of Mines. Mr. John also received a Master of Business Administration from the University of Toronto in 1993.

 

Charles E. Page, M.Sc., P.Geo., Director

 

Mr. Charles E. Page is a Professional Geologist and has more than 40 years of experience in the mineral industry. During his career, Mr. Page has held progressive leadership roles in developing strategies to explore, finance and develop mineral properties in Canada and internationally. Mr. Page worked at Queenston Mining Inc. in various capacities, including President and Chief Executive Officer, from 1990 to its sale to Osisko Mining Corporation in 2012. Mr. Page is the Lead Director of Osisko Development and also serves on the board of directors of Unigold Inc.

 

Mr. Page holds a Bachelor of Science degree in Geological Science from Brock University and a Master of Science degree in Earth Science from the University of Waterloo. He is a Professional Geologist registered in the province of Ontario and Saskatchewan and is also a Fellow of the Geological Association of Canada.

 

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Sandeep Singh, B. Eng., MBA, President and Chief Executive Officer and Director

 

Mr. Sandeep Singh joined Osisko as President in December 2019 and he was appointed as President and Chief Executive Officer of Osisko in November 2020. For the fifteen years prior, Mr. Singh was an investment banker in the metals and mining industry where he advised numerous mining companies on growth and financing strategies with Maxit Capital LP (2014-2019), Dundee Securities Ltd. (2010–2014) and BMO Capital Markets (2005-2010). As co-founder of Maxit Capital LP, he was instrumental in building an independent and highly successful advisory firm which acted on some of the most complex and value-enhancing transactions in the mining sector.

 

Mr. Singh holds a Bachelor of Mechanical Engineering degree from Concordia University and a Masters of Business Administration degree from Oxford University.

 

Guy Desharnais, Ph.D., P.Geo., Vice President, Project Evaluation

 

Mr. Guy Desharnais joined the technical services team of Osisko in 2017 and was appointed Vice President, Project Evaluation in August 2020. After completing his Ph.D. in geochemistry and igneous petrology, Mr. Desharnais worked five years as an exploration geologist with Xstrata Nickel (Glencore). He worked as a Qualified Person and manager of SGS Geostat for seven years. He led the team that won the Integra Gold Rush Challenge in 2016.

 

He was named Distinguished Lecturer by the CIM in 2017 and is an active member of the Mining Technical Advisory and Monitoring Committee for the Canadian Securities Administrators and the “Comité Consultatif du Secteur Minier” for the Autorité des Marchés Financiers.

 

Iain Farmer, B. Eng., M. Eng., MBA, CFA, Vice President, Corporate Development

 

Mr. Iain Farmer was appointed as Vice President, Corporate Development of Osisko in February 2020. Mr. Farmer has been involved in the mining industry for 10 years having most recently served as Director of Evaluations for Osisko where his responsibilities included financial and technical evaluation of investments as well as origination and execution of transactions. Prior to joining Osisko, Mr. Farmer worked in equity research covering the mining sector.

 

Mr. Farmer holds a Bachelor’s and a Master’s degree in Mining Engineering from McGill University as well as a MBA from Concordia University’s Goodman School of Investment Management, he has been a CFA Charterholder since 2016.

 

André Le Bel, LL.B., B.Sc.A, ICD.D, Vice President, Legal Affairs and Corporate Secretary

 

Mr. André Le Bel has been appointed Vice President, Legal Affairs and Corporate Secretary of Osisko in February 2015. From November 2007 to June 2014, Mr. Le Bel was Vice President, Legal Affairs and Corporate Secretary of Osisko Mining Corporation. Mr. Le Bel was Vice President Legal Affairs with IAMGOLD Corporation from November 2006 to October 2007 and before November 2006, Mr. Le Bel was Senior Legal Counsel and Assistant Corporate Secretary of Cambior Inc. Mr. Le Bel was a director of RedQuest Capital Corp. until June 2017 and currently serves on the board of directors of Brunswick Exploration Inc., listed on the TSX Venture Exchange. Mr. Le Bel was Vice President, Legal Affairs and Corporate Secretary of NioGold Mining Corp. from March 2015 to March 2016 and Corporate Secretary of Falco from November 2015 to November 2016. Since that date, he is Vice President, Legal Affairs and Corporate Secretary of Falco and was appointed Corporate Secretary of Osisko Development on February 26, 2021.

 

Mr. Le Bel obtained a Bachelor of Applied Science from Université Laval and a Bachelor of Law from Sherbrooke University. He is a member of the Québec Bar and has obtained the ICD.D designation from the Institute of Corporate Directors in December 2017.

 

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Frédéric Ruel, CPA, CA, Chief Financial Officer and Vice President, Finance

 

Mr. Frédéric Ruel was appointed as Chief Financial Officer and Vice President, Finance of Osisko in February 2020. Mr. Frédéric Ruel has previously served as Vice President, Corporate Controller of Osisko from 2016 to February 2020. Frédéric Ruel has over 15 years of experience in financial reporting and has been involved in the mining industry for over 12 years. Prior to joining Osisko, he held the position of Director, Corporate Reporting for Canadian Malartic GP, Osisko Mining Corporation and Consolidated Thompson Iron Mines. Mr. Ruel was Vice President, Corporate Controller of Falco from November 2016 to July 2017 and Chief Financial Officer of NioGold Mining Corp. from March 2015 to March 2016.

 

Mr. Ruel began his career as an auditor in a premier Canadian accounting firm where he worked for seven (7) years. Mr. Ruel is a member of the Ordre des comptables professionnels agréés du Québec and holds a Master in Accounting from Sherbrooke University.

 

Heather Taylor, BA, Vice President, Investor Relations

 

Ms. Heather Taylor joined as Vice President, Investor Relations of Osisko in January 2021. She has more than 15 years of capital markets experience specializing in the global metals and mining industry. Ms Taylor most recently served as Head of Business Development at Nexa Resources SA overseeing and executing the company’s M&A strategy and prior to that managed investor relations at Nevsun Resources Ltd, which was acquired by Zijin Mining for $1.9 billion after a lengthy hostile defence process. In addition to her roles at Nexa and Nevsun, she brings with her a broad range of experience from positions in institutional equity research, trading, sales and corporate development.

 

Ms. Taylor holds a Bachelor of Arts - Psychology from the University of Western Ontario.

 

The directors of Osisko will be elected annually at each annual general meeting of the Osisko Shareholders and will hold office until the next annual general meeting unless a director’s office is earlier vacated in accordance with the articles of Osisko or until his or her successor is duly appointed or elected.

 

As at the date of this Annual Information Form, all of the directors and officers, as a group, beneficially own, directly or indirectly, or exercise control or direction over 928,150 Osisko Shares, representing approximately 0.6% of the issued and outstanding Osisko Shares.

 

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

 

Corporate Cease Trade Orders

 

As at the date of this Annual Information Form, no current director or executive officer of Osisko is, or within the ten years prior to the date of this Annual Information Form has been, a director, chief executive officer or chief financial officer of any company (including Osisko), that:

 

(a)was subject to a cease trade order (including any management cease trade order which applied to directors or executive officers of a company, whether or not the person is named in the order), an order similar to a cease trade order, or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days (an “Order”) while that person was acting in that capacity; or
   
 (b)was subject to an Order that was issued after the current director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.

 

Bankruptcy

 

To the knowledge of Osisko, as at the date of this Annual Information Form, no current director, executive officer, or shareholder holding a sufficient number of securities of Osisko to affect materially the control of Osisko is, or within the ten years prior to the date of this Annual Information Form has:

 

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(a)other than Mr. William Murray John, who was a director of insolvent African Minerals Limited, a company who appointed Deloitte LLP as its administrator by order of the High Court of Justice, Chancery Division, Companies Court on March 26, 2015, been a director or executive officer of any company (including Osisko) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or
   
 (b)become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver manager or trustee appointed to hold the assets of the current or proposed director, executive officer or shareholder.

 

Penalties and Sanctions

 

To the knowledge of Osisko, as at the date of this Annual Information Form, no current director, executive officer, or shareholder holding a sufficient number of securities of Osisko to affect materially the control of Osisko has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority or any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

 

Conflicts of Interest

 

Certain of the directors and officers of Osisko will not be devoting all of their time to the affairs of Osisko. Certain of the directors and officers of Osisko are directors and officers of other companies, some of which are in the same business as Osisko. See “Risk Factors”.

 

The directors and officers of Osisko are required by law to act in the best interests of Osisko. They have the same obligations to the other companies in respect of which they act as directors and officers. Any decision made by any of such officers or directors involving Osisko will be made in accordance with their duties and obligations under the applicable laws of Canada.

 

As part of its business model and in connection with its investments made in various other companies, either by acquiring equity interests, purchasing royalties, streams or other interests or options thereon or otherwise, Osisko generally expects from its directors and officers to be actively involved within such investee companies, which may include occupying seats on their board of directors. Osisko acknowledges that a director or an officer serving on too many public boards of directors might be “overboarded”. Consequently, all directors and officers of Osisko must submit to the Governance and Nomination Committee any offer to join an outside board of directors in order to ensure that any additional directorship would not impair the ability to adequately fulfill the responsibilities assigned to the directors and officers of the Company.

 

As a general guideline, the Governance and Nomination Committee of Osisko will consider that a director or officer of Osisko should be regarded as “overboarded” if he or she:

 

(a)has attended fewer than 75% of Osisko’s board and committee meetings held within the past year without a valid reason for the absences;

 

and

 

(b)
(i)is the President and Chief Executive Officer of Osisko, he or she sits on more than two (2) “outside public company board”, in addition to Osisko; or

 

(ii)if not the President and Chief Executive Officer of Osisko, sits on more than five (5) public company boards, in addition to Osisko.

 

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In determining what is an ‟outside public company board”, the Governance and Nomination Committee specifically excludes investee companies for the reason that becoming a director of such companies is crucial in order to oversee and supervise Osisko’s investment in such investee companies. This representation allows Osisko to protect its shareholders’ interests.

 

Legal Proceedings and regulatory actions

 

Legal Proceedings

 

During the fiscal year ended December 31, 2021 and as of the date hereof, there have been and are no material legal proceedings outstanding, threatened or pending, by or against Osisko or to which Osisko is a party or to which any of Osisko’s property is subject, nor to Osisko’s knowledge are any such legal proceedings contemplated, and which could become material to Osisko.

 

Regulatory Actions

 

During the fiscal year ended December 31, 2021 and as of the date hereof, there have been no penalties or sanctions imposed against Osisko (a) by a court relating to securities legislation or by a securities regulatory authority or (b) by a court or regulatory body that would likely be considered important to a reasonable investor making an investment decision in Osisko. Osisko has not entered into any settlement agreements with a court relating to securities legislation or with a securities regulatory authority during the fiscal year ended December 31, 2021 and as of the date hereof.

 

Interest of Management and Others in Material Transactions

 

Within the three (3) most recently completed financial years or during the current financial year, no director or executive officer of Osisko, or shareholder who beneficially owns, or controls or directs, directly or indirectly, more than 10% of the outstanding Osisko Shares, or any known associates or affiliates of such persons, has or has had any material interest, direct or indirect, in any transaction or in any proposed transaction that has materially affected or is reasonably expected to materially affect Osisko except for Orion as a result of the Orion Share Repurchase.

 

Transfer Agents and Registrars

 

The transfer agent and registrar for the Osisko Shares is TSX Trust Company (Canada), which is located at 2001 Robert-Bourassa, Suite 1600, Montreal, Québec, Canada H3A 2A6.

 

Material Contracts

 

The following are the material contracts entered into by Osisko or its subsidiaries and that are currently in effect:

 

(a)the Canadian Malartic Royalty Agreement;

 

(b)a debenture indenture dated November 3, 2017 between Osisko and AST Trust Company (Canada), as debenture trustee, pursuant to which the Debentures were created and issued and by which they are governed; and

 

(c)the Credit Facility.

 

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Interests Of Experts

 

Mr. Guy Desharnais, Ph.D., P.Geo, is named in this Annual Information Form as having reviewed and approved certain scientific and technical information as set out in this Annual Information Form.

 

As of the date of this Annual Information Form, Mr. Guy Desharnais, Ph.D., P. Geo, beneficially owned, directly or indirectly, less than 1% of Osisko’s outstanding securities including the securities of Osisko’s associate or affiliate entities.

 

PricewaterhouseCoopers LLP, a partnership of Chartered Professional Accountants, the independent auditor of Osisko, has advised that it is independent with respect to Osisko within the meaning of the Code of ethics of chartered professional accountants (Québec) and has complied with the SEC’s rules on auditor independence and Rule 3520 Auditor Independence of the Public Company Accounting Oversight Board.

 

Other than as described above, none of the aforementioned persons or companies, nor any director, officer or employee of any of the aforementioned persons or companies is, or is expected to be elected, appointed or employed as, a director, officer or employee of Osisko or of any associate or affiliate of Osisko.

 

ADDITIONAL INFORMATION

 

Additional information relating to Osisko, which is not and shall not be deemed to be incorporated by reference in this Annual Information Form, is available electronically on SEDAR at www.sedar.com, on EDGAR at www.sec.gov and on its website at www.osiskogr.com.

 

Additional information, which is not and shall not be deemed to be incorporated by reference in this Annual Information Form, including directors’ and officers’ remuneration and indebtedness, principal holders of Osisko’s securities and securities authorized for issuance under equity compensation plans, is contained in Osisko’s management information circular for its annual meeting of shareholders held on May 12, 2021. For information relating to corporate governance related matters, please see “Statement of Corporate Governance Practices” in such circular.

 

Additional financial information, which is not and shall not be deemed to be incorporated by reference in this Annual Information Form, is provided in Osisko’s financial statements and management discussion and analysis for its most recently completed financial year.

 

Audit AND RISK Committee

 

Description of the Audit and Risk Committee

 

The Osisko Audit and Risk Committee assists the Osisko Board in fulfilling its oversight responsibilities with respect to the following: (a) in its oversight of Osisko’s accounting and financial reporting principles and policies and internal audit controls and procedures; (b) in its oversight of the integrity and transparency of Osisko’s financial statements and the independent audit thereof; (c) in selecting, evaluating and, where deemed appropriate, replacing the external auditor; (d) in evaluating the qualification, independence and performance of the external auditor; (e) in its oversight of Osisko’s risk identification, assessment and management program; and (f) in Osisko’s compliance with legal and regulatory requirements in respect of the above. The Osisko Board has adopted the Osisko Audit and Risk Committee Charter, a copy of which is attached as Schedule “A”, mandating the role of the Osisko Audit and Risk Committee in supporting the Osisko Board in meeting its responsibilities to Osisko Shareholders.

 

Audit and Risk Committee Members

 

As of the date of this Annual Information Form, the Osisko Audit and Risk Committee is comprised of four (4) members, all of whom are independent directors of Osisko, namely: Ms. Joanne Ferstman (Chair), Mr. Pierre Labbé, Mr. Charles E. Page and Ms. Candace MacGibbon. Ms. Ferstman (Chair) is an “audit committee financial expert” (as such term is defined in paragraph 8(b) of General Instruction B to Form 40-F under the U.S. Exchange Act).

 

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Relevant Education and Experience

 

Joanne Ferstman

 

Ms. Ferstman (Chair) is a corporate director, sitting on a number of public company boards. From 2013 to 2014, Ms. Ferstman was a Director of Osisko Mining Corporation. Since November 2020, she is a director of Osisko Development. Ms. Ferstman was until June 2012 the President and Chief Executive Officer of Dundee Capital Markets Inc., a full service investment dealer with principal businesses that include investment banking, institutional sales and trading and private client financial advisory. Prior to taking this position on January 31, 2011, Ms. Ferstman was Vice-Chair and Head of Capital Markets of DundeeWealth Inc., a diversified wealth management public company that managed and advised over $75 billion of assets under management and administration, including the Dynamic Funds family, at the time it was sold to the Bank of Nova Scotia in early 2011. Prior to 2009, Ms. Ferstman was Executive Vice President and Chief Financial Officer of DundeeWealth Inc. and Executive Vice President, Chief Financial Officer and Corporate Secretary of Dundee Corporation. In these senior financial roles, Ms. Ferstman was intimately involved in all corporate strategy, including acquisitions and financings, and had responsibility for all public financial reporting. Additionally, Ms. Ferstman was regularly Dundee’s nominee on investee company boards and audit committees in both the resources and real estate sectors.

 

Over 18 years, Ms. Ferstman held a variety of executive positions with the Dundee group of companies until her retirement in June 2012. Prior to joining the Dundee group of companies, Ms. Ferstman spent five years at a major international accounting firm. She served on the board of directors of Aimia Inc. from June 2008 to June 2017. Ms. Ferstman currently serves as Chair of the board of Dream Unlimited Corp, including serving as Chair of the Audit Committee, member of the Organization & Design Committee and member of the Leaders & Mentors Committee. She also serves as a director of Cogeco Communications Inc., including serving as Chair of the Audit Committee and a member of the Strategic Opportunities Committee. In August 2018 she was appointed to the board of the directors of ATS Automation Tooling Systems Inc. and currently serves as Chair of its Audit Committee and serves as a member of the Governance Committee. Ms. Ferstman holds a Bachelor of Commerce and a Graduate degree in Public Accountancy from McGill University and is a Chartered Professional Accountant.

 

Ms. Ferstman is considered to be independent of Osisko and is financially literate, within the meaning of NI 52-110 and under the U.S. Exchange Act and NYSE rules.

 

Pierre Labbé

 

Mr. Pierre Labbé is Chief Financial Officer of IMV Inc. since March 2017. He was Vice President and Chief Financial Officer of Leddartech Inc. from April 2015 to March 2017. He has more than 25 years of progressive financial leadership roles in various industries. He was Vice President and Chief Financial Officer of the Québec Port Authority (October 2013 to April 2015), and has experience in the resource sector, having served as Chief Financial Officer of Plexmar Resources (May 2007 to November 2012), Sequoia Minerals (December 2003 to June 2004), and Mazarin Inc. (December 2002 to December 2003). Mr. Labbé, in his role as senior financial officer, has participated in the development of strategic plans and in mergers and acquisitions (over $1 billion in transactions). Mr. Labbé holds a Bachelor’s Degree in Business Administration and a license in accounting from Université Laval, Québec City. He is a member of Ordre des comptables professionnels agréés du Québec, the Chartered Professional Accountants of Canada and the Institute of Corporate Directors.

 

Mr. Labbé is considered to be independent of Osisko and is financially literate, within the meaning of NI 52-110 and under the U.S. Exchange Act and NYSE rules.

 

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Charles E. Page

 

Mr. Charles E. Page is a Professional Geologist and has more than 40 years of experience in the mineral industry. Since November 2020, he is the Lead Director of Osisko Development. During his career, Mr. Page has held progressive leadership roles in developing strategies to explore, finance and develop mineral properties in Canada and internationally. Mr. Page worked at Queenston Mining Inc. in various capacities, including President and Chief Executive Officer, from 1990 to its sale to Osisko Mining Corporation in 2012. Mr. Page also serves on the board of directors of Unigold Inc. Mr. Page holds a Bachelor of Science degree in Geological Science from Brock University and a Master of Science degree in Earth Science from the University of Waterloo. He is a Professional Geologist registered in the province of Ontario and Saskatchewan and is also a Fellow of the Geological Association of Canada.

 

Mr. Page is considered to be independent of Osisko and is financially literate, within the meaning of NI 52-110 and under the U.S. Exchange Act and NYSE rules.

 

Candace MacGibbon

 

Ms. Candace MacGibbon is a corporate Director. She was the Chief Executive Officer of INV Metals Inc. from October 2015 to July 2021. She is a Chartered Professional Accountant (CPA, CA) with over 25 years’ experience in the mining sector and capital markets, as a result of her previous employment as a global mining institutional salesperson with RBC Capital Markets and in base metals research as a mining associate with BMO Capital Markets. Ms. MacGibbon’s experience in accounting matters includes her previous roles as a Manager at Deloitte LLP and as a cost analyst with Inco Limited. Ms. MacGibbon holds a Bachelor of Arts - Economics from the University of Western Ontario and a Diploma in Accounting from Wilfrid Laurier University.

 

Ms. MacGibbon is considered to be independent of Osisko and is financially literate, within the meaning of NI 52-110 and under the U.S. Exchange Act and NYSE rules.

 

External Auditor Service Fees


The fees billed to Osisko by its independent auditor, PricewaterhouseCoopers LLP, a partnership of Chartered Professional Accountants, for the fiscal years ended December 31, 2021 and December 31, 2020, by category, are as follows:

 

Year   Audit Fees(1)   Audit Related Fees(2)   Tax Fees(3)   All Other Fees 
December 31, 2021   $966,148   $66,150   $96,591   $- 
December 31, 2020   $1,265,182   $119,438   $164,844   $- 

 

NOTES:

 

(1)The audit fees include services rendered in connection with the audit of the Corporation’s annual consolidated financial statements and annual audit fees for two separate audit opinions of two subsidiaries of the Corporation. Audit fees were higher in 2020 primarily due to the services rendered in relation to the Filing Statement of Barolo Ventures Corp. dated as of November 20, 2020 in respect of the reverse takeover transaction involving Osisko.
(2)The audit-related fees are related to translation services for financial statements and management’s discussion and analysis reports.
(3)Tax fees are related to tax compliance, tax planning and tax advice services for the preparation of corporate tax returns and for proposed transactions.

 

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SCHEDULE A
AUDIT AND RISK COMMITTEE CHARTER

 

I.Purposes of the Audit and Risk Committee

 

The purposes of the Audit and Risk Committee are to assist the Board of Directors:

 

1.in its oversight of the Corporation’s accounting and financial reporting principles and policies and internal audit controls and procedures;

 

2.in its oversight of the integrity, transparency and quality of the Corporation’s financial statements and the independent audit thereof;

 

3.in selecting, evaluating and, where deemed appropriate, replacing the external auditors;

 

4.in evaluating the qualification, independence and performance of the external auditors;

 

5.in its oversight of the Corporation’s risk identification, assessment and management program; and

 

6.in the Corporation’s compliance with legal and regulatory requirements in respect of the above.

 

The function of the Audit and Risk Committee is to provide independent and objective oversight. The Corporation’s management team is responsible for the preparation, presentation and integrity of the Corporation’s financial statements. Management is responsible for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures that provide for compliance with accounting standards and applicable laws and regulations. The external auditors are responsible for planning and carrying out a proper audit of the Corporation’s annual financial statements and other procedures. In fulfilling their responsibilities hereunder, it is recognized that members of the Audit and Risk Committee are not full-time employees of the Corporation and are not, and do not represent themselves to be, accountants or auditors by profession or experts in the fields of accounting or auditing including in respect of auditor independence. As such, it is not the duty or responsibility of the Audit and Risk Committee or its members to conduct “field work” or other types of auditing or accounting reviews or procedures or to set auditor independence standards, and each member of the Audit and Risk Committee shall be entitled to rely on (i) the integrity of those persons and organizations within and external to the Corporation from which it receives information, (ii) the accuracy of the financial and other information provided to the Audit and Risk Committee by such persons or organizations absent actual knowledge to the contrary (which shall be promptly reported to the Board of Directors) and (iii) representations made by management as to non-audit services provided by the auditors to the Corporation.

 

The external auditors are ultimately accountable to the Board of Directors and the Audit and Risk Committee as representatives of shareholders. The Audit and Risk Committee is directly responsible (subject to the Board of Directors’ approval) for the appointment, compensation, retention (including termination), scope and oversight of the work of the external auditors engaged by the Corporation (including for the purpose of preparing or issuing an audit report or performing other audit, review or attestation services or other work of the Corporation), and is also directly responsible for the resolution of any disagreements between management and any such firm regarding financial reporting.

 

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The external auditors shall submit, at least annually, to the Corporation and the Audit and Risk Committee:

 

·as representatives of the shareholders of the Corporation, a formal written statement delineating all relationships between the external auditors and the Corporation (“Statement as to Independence”);
·a formal written statement of the fees billed in compliance with the disclosure requirements of Form 52-110F1 of National Instrument 52-110; and
·a report describing: the Corporation’s internal quality-control procedures; any material issues raised by the most recent internal quality control review, or peer review, of the Corporation, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the Corporation, and any steps taken to deal with any such issues.

 

II.Composition of the Audit and Risk Committee

 

The Audit and Risk Committee shall be comprised of three or more independent directors as defined under applicable legislation and stock exchange rules and guidelines and are appointed (and may be replaced) by the Board of Directors on the recommendation of the Governance and Nomination Committee. Determination as to whether a particular director satisfies the requirements for membership on the Audit and Risk Committee shall be made by the Board of Directors.

 

All members of the Audit and Risk Committee shall be financially literate within the meaning of National Instrument 52-110 – Audit Committees (“NI 52-110”) and any other securities legislation and stock exchange rules applicable to the Corporation, and as confirmed by the Board of Directors using its business judgement (including but not limited to be able to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Corporation’s financial statements), and at least one member of the Audit and Risk Committee shall have accounting or related financial expertise or sophistication as such qualifications are interpreted by the Board of Directors in light of applicable laws and stock exchange rules, including the requirement to have at least one “audit committee financial expert” as such term is defined pursuant to Form 40-F under the U.S. Securities Exchange Act of 1934, as amended. The later criteria may be satisfied by past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer of an entity with financial oversight responsibilities, as well as other requirements under applicable laws and stock exchange rules.

 

III.membership, Meetings and quorum

 

The Audit and Risk Committee shall meet at least four times annually or more frequently if circumstances dictate, to discuss with management the annual audited financial statements and quarterly financial statements, and all other related matters. The Audit and Risk Committee may request any officer or employee of the Corporation or the Corporation’s external counsel or external auditors to attend a meeting of the Audit and Risk Committee or to meet with any members of, or consultants to, the Audit and Risk Committee.

 

Proceedings and meetings of the Audit and Risk Committee are governed by the provisions of By-Laws relating to the regulation of the meetings and proceedings of the Board of Directors as they are applicable and not inconsistent with this Charter and the other provisions adopted by the Board of Directors in regards to committee composition and organization.

 

The quorum at any meeting of the Audit and Risk Committee is a majority of members in office. All members of the Audit and Risk Committee should strive to be at all meetings.

 

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IV.Duties and Powers of the Audit and Risk Committee

 

To carry out its purposes, the Audit and Risk Committee shall have unrestricted access to information and shall have the following duties and powers:

 

1.with respect to the external auditor,

 

 (i)to review and assess, at least annually, the performance of the external auditors, and recommend to the Board of Directors the nomination of the external auditors for appointment by the shareholders, or if required, the revocation of appointment of the external auditors;
   
 (ii)to review and approve the fees charged by the external auditors for audit services;
   
 (iii)to review and pre-approve all services, including non-audit services, to be provided by the Corporation’s external auditors to the Corporation or to its subsidiaries, and associated fees and to ensure that such services will not have an impact on the auditor’s independence, in accordance with procedures established by the Audit and Risk Committee. The Audit and Risk Committee may delegate such authority to one or more of its members, which member(s) shall report thereon to the Audit and Risk Committee;
   
 (iv)to ensure that the external auditors prepare and deliver annually a Statement as to Independence (it being understood that the external auditors are responsible for the accuracy and completeness of such statement), to discuss with the external auditors any relationships or services disclosed in the Statement as to Independence that may impact the objectivity and independence of the Corporation’s external auditors and to recommend that the Board of Directors take appropriate action in response to the Statement as to Independence to satisfy itself of the external auditors’ independence; and
   
 (v)to instruct the external auditors that the external auditors are ultimately accountable to the Audit and Risk Committee and the Board of Directors, as representatives of the shareholders;

 

2.             with respect to financial reporting principles and policies and internal controls,

 

 (i)to advise management that they are expected to provide to the Audit and Risk Committee a timely analysis of significant financial reporting issues and practices;
   
 (ii)to ensure that the external auditors prepare and deliver as applicable a detailed report covering 1) critical accounting policies and practices to be used; 2) material alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the external auditors; 3) other material written communications between the external auditors and management such as any management letter or schedule of unadjusted differences; and 4) such other aspects as may be required by the Audit and Risk Committee or legal or regulatory requirements;
   
(iii)to understand the scope of the annual audit of the design and operation of the Corporation’s internal control over financial reporting (based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)) and the related auditor’s report;
   
 (iv)to consider, review and discuss any reports or communications (and management’s responses thereto) submitted to the Audit and Risk Committee by the external auditors, including reports and communications related to:

 

·significant finding, deficiencies and recommendations noted following the annual audit of the design and operation of internal controls over financial reporting;

 

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·consideration of fraud in the audit of the financial statement;

 

·detection of illegal acts;

 

·the external auditors’ responsibilities under generally accepted auditing standards;

 

·significant accounting policies;

 

·management judgements and accounting estimates;

 

·adjustments arising from the audit;

 

·the responsibility of the external auditors for other information in documents containing audited financial statements;

 

·disagreements with management;

 

·consultation by management with other accountants;

 

·major issues discussed with management prior to retention of the external auditors;

 

·difficulties encountered with management in performing the audit;

 

·the external auditors judgements about the quality of the entity’s accounting principles; and

 

·reviews of interim financial information conducted by the external auditors.

 

(v)           to meet with management and external auditors:

 

·to discuss the scope, planning and staffing of the annual audit and to review and approve the audit plan;

 

·to discuss the audited financial statements, including the accompanying management’s discussion and analysis;

 

·to discuss the unaudited interim quarterly financial statements, including the accompanying management’s discussion and analysis;

 

·to discuss the appropriateness and quality of the Corporation’s accounting principles as applied in its financial reporting;

 

·to discuss any significant matters arising from any audit or report or communication referred to in item 2 (iii) above, whether raised by management or the external auditors, relating to the Corporation’s financial statements;

 

·to resolve disagreements between management and the external auditors regarding financial reporting;

 

·to review the form of opinion the external auditors propose to render to the Board of Directors and shareholders;

 

·to discuss significant changes to the Corporation’s auditing and accounting principles, policies, controls, procedures and practices proposed or contemplated by the external auditors or management, and the financial impact thereof;

 

·to review any non-routine correspondence with regulators or governmental agencies and any employee complaints or published reports that raise material issues regarding the Corporation’s financial statements or accounting policies;

 

·to review, evaluate and monitor the Corporation’s risk management program including the revenue protection program. This function should include:

 

Ø  risk assessment;

 

Ø  quantification of exposure;

 

Ø  risk mitigation measures; and

 

Ø  risk reporting;

 

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·to review the adequacy of the resources of the finance and accounting group, along with its development and succession plans;

 

·to monitor and review communications received in accordance with the Corporation’s Internal Whistle Blowing Policy;

 

·following completion of the annual audit and quarterly reviews, review separately with each of management and the independent auditor any significant changes to planned procedures, any difficulties encountered during the course of the audit and reviews, including any restrictions on the scope of the work or access to required information and the cooperation that the independent auditor received during the course of the audit and review;

 

 (vi)to discuss with the Chief Financial Officer any matters related to the financial affairs of the Corporation;
   
 (vii)to discuss with the Corporation’s management any significant legal matters that may have a material effect on the financial statements, the Corporation’s compliance policies, including material notices to or inquiries received from governmental agencies;
   
 (viii)to periodically review with management the need for an internal audit function; and
   
 (ix)to review, and discuss with the Corporation’s President and Chief Executive Officer and Vice President, Finance and Chief Financial Officer the procedure with respect to the certification of the Corporation’s financial statements pursuant to National Instrument 52-109 Certification of Disclosure in Issuer’s Annual and Interim Filings and any other applicable law or stock exchange rule.

 

3.with respect to reporting and recommendations,

 

 (i)to prepare/review any report or other financial disclosures to be included in the Corporation’s annual information form and management information circular;
   
 (ii)to review and recommend to the Board of Directors for approval, the interim and audited annual financial statements of the Corporation, management’s discussion and analysis of the financial conditions and results of operations (MD&A) and the press releases related to those financial statements;
   
 (iii)to review and recommend to the Board of Directors for approval, the annual report, management’s assessment on internal controls and any other like annual disclosure filings to be made by the Corporation under the requirements of securities laws or stock exchange rules applicable to the Corporation;
   
(iv)to review and reassess the adequacy of the procedures in place for the review of the Corporation’s public disclosure of financial information extracted or derived from the Corporation’s financial statements, other than the public disclosure referred to in paragraph 3(ii) above;
   
(v)to prepare Audit and Risk Committee report(s) as required by applicable regulators;
   
 (vi)to review this Charter at least annually and recommend any changes to the Board of Directors; and
   
 (vii)to report its activities to the Board of Directors on a regular basis and to make such recommendations with respect to the above and other matters as the Audit and Risk Committee may deem necessary or appropriate.

 

4.to review, discuss with management, and approve all related party transactions;

 

5.to create an agenda for the ensuing year;

 

6.to review quarterly expenses of the President and Chief Executive Officer;

 

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7.to establish and reassess the adequacy of the procedures for the receipt, retention and treatment of any complaint received by the Corporation regarding accounting, internal accounting controls or auditing matters, including procedures for the confidential anonymous submissions by employees of concerns regarding questionable accounting or auditing matters in accordance with applicable laws and regulations; and

 

8.to set clear hiring policies regarding partners, employees and former partners and employees of the present and, as the case may be, former external auditor of the Corporation.

 

V.Resources and Authority of the Audit and Risk Committee

 

The Audit and Risk Committee shall have the resources and authority appropriate to discharge its responsibilities, as it shall determine, including the authority to engage external auditors for special audits, reviews and other procedures and to retain special counsel and other experts or consultants. The Audit and Risk Committee shall have the sole authority (subject to the Board of Directors’ approval) to determine the terms of engagement and the extent of funding necessary (and to be provided by the Corporation) for payment of (a) compensation to the Corporation’s external auditors engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Corporation, (b) any compensation to any advisors retained to advise the Audit and Risk Committee and (c) ordinary administrative expenses of the Audit and Risk Committee that are necessary or appropriate in carrying out its duties.

 

VI.ANNUAL EVALUATION

 

At least annually, the Audit and Risk Committee shall, in a manner it determines to be appropriate:

 

·    perform a review and evaluation of the performance of the Audit and Risk Committee and its members, including the compliance with this Charter; and
     
·   Review and assess the adequacy of its Charter and recommend to the Board of Directors any improvements to this Charter that the Committee determines to be appropriate.

 

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SCHEDULE B - TECHNICAL INFORMATION UNDERLYING THE CANADIAN MALARTIC PROPERTY

 

Most Recent Technical Report

 

The most recent technical report filed by Agnico and Yamana in accordance with NI 43-101 is entitled “NI-43-101 Technical Report, Canadian Malartic Mine, Québec, Canada” with an effective date of December 31, 2020 and a signature date of March 25, 2021 (the “Canadian Malartic Report"). Reference should be made to the full text of the Canadian Malartic Report.

 

Canadian Malartic GP prepared the Canadian Malartic Report to present and support the results of an updated mineral resource and mineral reserve estimates, summarize the current open pit mining operation and disclose the results of a PEA for the underground Odyssey project on the Canadian Malartic property. Canadian Malartic GP is controlled equally by Yamana and Agnico.

 

Following the completion of an internal technical study (the “Odyssey Study’’), in February 2021 Canadian Malartic GP approved the construction of a new underground mining complex at the Odyssey project. The Odyssey project is adjacent to the Canadian Malartic mine and hosts three main underground-mineralized zones, which are East Gouldie, East Malartic and Odyssey (which is sub-divided into the Odyssey North, Odyssey South and Odyssey Internal zones).

 

In February of 2022, Agnico and Yamana provided resource and reserve updates for the Malartic Project without providing an updated life of mine plan. Reserves were depleted for production in the year with an additional downward adjustment of approximately 96,000 ounces due to a slight increase in cut-off grade, and a localized adjustment in the lower benches of the Canadian Malartic pit. The Odyssey underground project continues to grow as a result of ongoing exploration drilling, with a total of 25Mt at 2.9 grams per tonne gold for 2.35 million ounces of indicated resources and 86.8Mt at 2.35 grams per tonne gold for 13.15 million ounces of inferred resources. The majority of the upgraded resource came from infill drilling at East Gouldie, which now hosts an indicated resource of 12Mt of 3.88 grams per tonne gold for 1.45 million ounces of gold. This updated resource does not materially affect the results of the 2021 technical report described herein, except to increase the confidence level of a portion of the mineral inventory through conversion from inferred resources to indicated resources.

 

Information Contained in this Section

 

The technical information, tables and figures that follow have been derived from the Canadian Malartic Report and various news releases publicly filed by Agnico and/or Yamana which may all be consulted under Agnico’s and/or Yamana’s issuer profiles on SEDAR at www.sedar.com and none of which is nor shall be deemed to be incorporated by reference in this Annual Information Form.

 

The technical information contained in this section has been reviewed and approved by Mr. Guy Desharnais, Ph.D., P.Geo, who is a “qualified person” for the purpose of NI 43-101. Portions of the following information are based on assumptions, qualifications and procedures which are not fully described herein.

 

Except where otherwise stated, the disclosure in this section relating to operations is based on information publicly disclosed by Agnico and/or Yamana and information/data available in the public domain as at March 17, 2022 (except where stated otherwise), and none of this information has been independently verified by Osisko. Osisko considers that Agnico and Yamana have publicly disclosed all scientific and technical information that is material to Osisko.

 

As a holder of royalties, streams or other interests, Osisko has limited access to properties included in its asset portfolio. Additionally, Osisko may from time to time receive operating information which it is not permitted to disclose to the public. Osisko is dependent on the operators of the properties and their qualified persons to provide information to Osisko or on publicly available information to prepare required disclosure pertaining to properties and operations on the properties on which Osisko holds interests and generally has limited or no ability to independently verify such information. Although Osisko does not have any knowledge that such information may not be accurate, there can be no assurance that such third party information is complete or accurate. Some information publicly reported by operators may relate to a larger property than the area covered by Osisko’s interest. Osisko’s interests often cover less than 100%, and sometimes only a portion of, the publicly reported mineral reserves, mineral resources and production of the property. Osisko shall not be held liable for any eventual misrepresentations in any scientific or technical information excerpted from any technical information publicly filed by Agnico and/or Yamana.

 

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Project Description, Location and Access

 

The Canadian Malartic mine is located within the town of Malartic, Quebec, approximately 25 kilometres west of the City of Val-d’Or and 80 kilometres east of City of Rouyn-Noranda. It straddles the townships of Fournière, Malartic and Surimau. At December 31, 2021, the Canadian Malartic mine was estimated to have proven and probable mineral reserves from open pits containing approximately 3.54 million ounces of gold comprised of 100.5Mt of ore grading 1.09 grams per tonne.

 

The Canadian Malartic mine operates under mining leases obtained from the Ministry of Energy and Natural Resources (Quebec) and under certificates of approval granted by the Ministry of Environment and the Fight Against Climate Change (Quebec). The Canadian Malartic property is comprised of the East Amphi property, the CHL Malartic prospect, the Canadian Malartic mine, and the Fournière, Midway, Piche Harvey and Rand properties. The Odyssey project is located east of the Canadian Malartic mine and extends into the CHL Malartic prospect. The Canadian Malartic property consists of a contiguous block comprising one mining concession, five mining leases and 293 mining claims. Expiration dates for the mining leases on the Canadian Malartic property vary between November 24, 2029 and July 27, 2037, and each lease is automatically renewable for three further ten year terms upon payment of a small fee.

 

The Canadian Malartic mine can be accessed from either Val-d’Or or Rouyn-Noranda via Quebec provincial highway No. 117. A paved road running north-south from the town of Malartic towards Mourier Lake cuts through the central area of the Canadian Malartic property. The Canadian Malartic property is further accessible via a series of logging roads and trails. The Canadian Malartic mine is serviced by a rail-line which passes through the town of Malartic and the nearest airport is in Val-d’Or.

 

Following the joint acquisition of Osisko Mining Corporation (now Canadian Malartic Corporation) by Agnico and Yamana, most of the mining claims that make up the Canadian Malartic mine are subject to a 5% net smelter return royalty payable to Osisko. The mining claims comprising the CHL Malartic prospect are subject to 3% net smelter return royalties payable to each of Osisko and Gold Royalty Corp. In addition, 172 of the mining claims at the Canadian Malartic property are also subject to other net smelter return royalties that vary between 1% and 2%, payable under varying circumstances.

 

History

 

Gold was first discovered in the Malartic area in 1923. Gold production on the Canadian Malartic property began in 1935 and continued uninterrupted until 1965. Following various ownership changes over the ensuing years, Osisko Mining Corporation acquired ownership of the Canadian Malartic property in 2004. Based on a feasibility study completed in December 2008, Osisko Mining Corporation completed construction of a 55,000 tonne per day mill complex, tailings impoundment area, five million cubic metre polishing pond and road network by February 2011, and the mill was commissioned in March 2011. The Canadian Malartic mine achieved commercial production on May 19, 2011.

 

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Mining and Milling Facilities

 

Surface Plan, and Cross Sections Highlights of the Canadian Malartic Mine (as at November 2, 2021)

 

 

 

 

Source: Agnico’s Exploration Update, November 2, 2021:

https://s21.q4cdn.com/374334112/files/doc_presentations/2021/Exploration-Update_Final-11-02-2021.pdf

 

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The Canadian Malartic mine is a large open pit operation comprised of the Canadian Malartic and Barnat pits. In 2020, commercial production was achieved at the Barnat pit, which will become the primary source of ore until 2027, and will continue production until 2029. In addition to the open pit at Canadian Malartic, the asset hosts the recently discovered “Odyssey underground” project which is contained within three main underground-mineralized zones: East Gouldie, East Malartic and Odyssey, the latter of which is sub-divided into the Odyssey North, Odyssey South and Odyssey Internal zones.

 

Agnico Eagle also announced production guidance at the Malartic mine at 640,000 ounces (“oz”) in 2022, 660,000 oz in 2023 and 680,000 oz in 2024. The Partnership recently reviewed the potential to increase capacity in a portion of the tailings facility. However, the Partnership determined that the best option was to optimize the processing plan to improve the production profile during the transition to the Odyssey underground project. This has resulted in an adjustment of the mill rate to 51,500 tonnes per day in 2022. The mill throughput is forecast to return to full capacity of approximately 60,000 tonnes per day in the second half of 2024 as the underground mining operations ramp up.

 

Mining Methods

 

Mining at the Canadian Malartic mine is by open pit method with excavators and trucks, using large scale equipment. The primary loading tools are hydraulic excavators, with wheel loaders used as a secondary loading tool. The current mine production schedule was developed to feed the mill at a nominal rate of 57,000 tonnes per day. The continuity and consistency of the mineralization, coupled with tight definition drilling, that has been confirmed by many years of mining operations, demonstrate the amenability of the mineral reserves and mineral resources to the selected mining method.

 

Mining at the Odyssey project will be done by underground methods. The conceptual mine design at the Odyssey project includes a 1,800 metre deep production-services shaft with an expected capacity of approximately 20,000 tonnes per day. The preliminary mining concept is based on a sublevel open stoping mining method with paste backfill. Longitudinal retreat and transverse primary-secondary mining methods will also be used dependent on mineralization geometry and stope design criteria. The project is expected to use a combination of conventional and automated equipment, similar to what is currently used at the LaRonde Complex.

 

Underground development in 2021 was in line with expectations with 1,487 linear meters of ramp completed and 2,081 equivalent meters of lateral development achieved. An exploration drift has been installed on Level 16 and ramp access is now down to level 26, which is approximately half the depth extent of the Odyssey South deposit. Development is expected to ramp up from the current level of 425 meters per month to approximately 860 meters per month in the second half of 2022. To facilitate the increased development rate, the Partnership will be adding its own development crews and additional underground equipment (both diesel and electric) in the second quarter of 2022.

 

Surface Facilities

 

Surface facilities at the Canadian Malartic mine include the administration/warehouse building, the mine office/truck shop building, the processing plant and the crushing plant. The processing plant has a nominal capacity of 57,000 tonnes of ore per day, however 60,000 tonnes per day or more was achieved over multiple quarters.

 

Ore is processed through conventional cyanidation. Ore blasted from the pit is first crushed by a gyratory crusher followed by secondary crushing prior to grinding. Ground ore feeds successively into leach and CIP circuits. A Zadra elution circuit is used to extract the gold from the loaded carbon. Pregnant solution is processed using electrowinning and the resulting precipitate is smelted into gold/silver dore bars. Mill tails are thickened and detoxified using a Caro acid process, reducing cyanide levels below 20 parts per million. Detoxified slurry is subsequently pumped to a conventional tailings facility.

 

The Odyssey project will use the existing surface infrastructure at the Canadian Malartic site, including the tailing storage facilities, the processing plant and the maintenance facilities.

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The concrete headframe slipform pour started on September 29, 2021 and was completed in October 2021. The structural steel installation started in the fourth quarter of 2021. The headframe construction and sinking infrastructure procurement was on schedule and on budget at the end of 2021. The shaft sinking is expected to start in the fourth quarter of 2022. Surface construction activities for the Odyssey underground project is progressing well, with the maintenance garage and warehouse erected and fully enclosed at the end of 2021. The garage is expected to be fully functional by April 2022. Work on the foundations for the first phase of the paste plant started in February and the plant is expected to be fully functional in the first quarter of 2023.

 

Production and Mineral Recoveries

 

During 2021, the Canadian Malartic mine’s payable production was 714,784 ounces of gold from 22.26Mt of ore grading 1.11 grams of gold per tonne. The total cash costs per ounce of gold produced at Canadian Malartic in 2021 was $791 on a by-product basis and $663 on a co-product basis. The Canadian Malartic processing facility averaged 60,986 tonnes per day. The production costs per tonne at Canadian Malartic and the minesite costs was $28 in 2021.

 

Annual production at the Canadian Malartic mine in 2022 is expected to consist of approximately 640,000 ounces of gold from 18.97Mt of ore grading 1.17 grams of gold per tonne. The total production costs in 2022 is expected to be $34.09 per tonne, with estimated gold recovery of 89.7%.

 

Environmental, Permitting and Social Matters

 

In 2015, Canadian Malartic GP developed and implemented an action plan to mitigate noise, vibrations, atmospheric emissions and ancillary issues related to the Canadian Malartic mine. Mitigation measures were put in place to improve the process and avoid environmental non-compliance events. As a result, over time, Canadian Malartic GP has improved its environmental performance. With respect to activities in 2020, Canadian Malartic GP received two non-compliance notices for NOx emissions. The mine’s team of on-site environmental experts continues to monitor regulatory compliance in terms of approvals, permits and observance of directives and requirements and continues to implement improvement measures.

 

Since the spring of 2015, Canadian Malartic GP has been working collaboratively with the community of Malartic and its citizens, including the development of a ’‘Good Neighbour Guide’’. Implementation of the Good Neighbour Guide, which includes compensation and home-acquisition programs, began on September 1, 2016. Over 90% of the residents of Malartic have agreed to participate in the compensation program. Compensation offered to eligible residents of Malartic in 2020 will be paid in the first quarter of 2021. Under the home-acquisition program, 57 residences have been acquired to date in the southern sector of Malartic, of which 45 have subsequently been sold under Canadian Malartic GP’s resale program that was implemented in April 2018.

 

As part of ongoing stakeholder engagement, an agreement with four First Nations groups was entered into in 2020. As with the Good Neighbour Guide and other community relations efforts at Canadian Malartic, Canadian Malartic GP is working collaboratively with stakeholders to establish cooperative relationships that support the long-term potential of the mine.

 

The waste rock pile was originally designed to accommodate approximately 326Mt of waste rock requiring a total storage capacity of approximately 161 million cubic metres. The design of the waste rock pile has been modified to accommodate the Canadian Malartic pit extension and now includes storage capacity for approximately 740Mt.

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The expansion of the open pit, with production from the Canadian Malartic pit extension, is expected to increase the total amount of tailings to approximately 300Mt over the life of mine. The total capacity of the current tailings management facility is estimated to be 230Mt, including a tailings cell authorized by the Ministry of Environment and the Fight Against Climate Change (Quebec) in September 2017. Construction of this cell started in 2017 and operations began in 2018. Canadian Malartic GP also plans to store additional tailings in the Canadian Malartic pit at the end of its operations. According to the mine plan, between 70 and 80Mt of tailings could be deposited in the Canadian Malartic pit once mining in the pit is completed.

 

All permits related to mining the Canadian Malartic pit extension have been received. As part of the permitting process for in-pit tailings deposition, Canadian Malartic GP has committed to completing a hydrogeological study to demonstrate that the Canadian Malartic pit would provide a hydraulic trap and contain the tailings with minimal environmental risk. Golder Associates Ltd. is preparing this study.

 

Permits for Odyssey North and South were granted in 2020 to allow the first phase of the Odyssey project to begin. At this time, the Certificate of Authorization (’’CofA’’) for the shaft has not yet been obtained and the CofA for the waste rock management facility requires modification. A request for a decree amendment, including permits to develop the East Gouldie and East Malartic zones has been submitted. Canadian Malartic GP has received confirmation that mining the additional zones at the project does not trigger additional Federal permitting requirements.

 

An annual hydrological site balance is maintained to provide a yearly estimate of water volumes that must be managed in the different structures of the water management system of the Canadian Malartic mine during an average climatic year (in terms of precipitation). Results of this hydrological balance indicate that excess water from the southeast pond may have to be released into the environment. If excess water does need to be treated, a water treatment plant is in place to treat the water that will be released into the environment so that it meets water quality requirements. In addition to ensuring effluent compliance, this water treatment plant reduces the risks associated with surface water management and adds flexibility to the water usage system.

 

Reclamation and closure costs have been estimated for rehabilitating the tailings facility and waste dump, revegetating the surrounding area, dismantling the plant and associated infrastructure and performing environmental inspection and monitoring for a period of ten years. In accordance with applicable regulations, financial guarantees have been provided for these estimated reclamation and closure costs. Reclamation plans were updated in 2020, and an updated closure plan was submitted in accordance with regulatory requirements.

 

Geology, Mineralization, Exploration and Drilling Geology

 

The Canadian Malartic property straddles the southern margin of the eastern portion of the Abitibi Subprovince, an Archean greenstone belt situated in the southeastern part of the Superior Province of the Canadian Shield. The Abitibi Subprovince is limited to the north by gneisses and plutons of the Opatica Subprovince, and to the south by metasediments and intrusive rocks of the Pontiac Subprovince. The contact between the Pontiac Subprovince and the rocks of the Abitibi greenstone belt is characterized by a major fault corridor, the east-west trending Larder Lake-Cadillac Fault Zone. This structure runs from Larder Lake, Ontario through Rouyn-Noranda, Cadillac, Malartic, Val-d’Or and Louvicourt, Québec, at which point it is truncated by the Grenville Front.

 

The regional stratigraphy of the southeastern Abitibi area is divided into groups of alternating volcanic and sedimentary rocks, generally oriented at N280-N330 and separated by fault zones. The main lithostratigraphic divisions in this region are, from south to north, the Pontiac Group of the Pontiac Subprovince and the Piché, Cadillac, Blake River, Kewagama and Malartic groups of the Abitibi Subprovince. The various lithological groups within the Abitibi Subprovince are metamorphosed to greenschist facies. Metamorphic grade increases toward the southern limit of the Abitibi belt, where rocks of the Piché Group and the northern part of the Pontiac Group have been metamorphosed to upper greenschist facies.

 

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The majority of the Canadian Malartic property is underlain by metasedimentary units of the Pontiac Group, lying immediately south of the LLCFZ. The north-central portion of the property covers an approximately 9.5 kilometre section of the LLCFZ corridor and is underlain by mafic-ultramafic metavolcanic rocks of the Piché Group cut by intermediate porphyritic and mafic intrusions. The Cadillac Group covers the northern part of the property (north of the LLCFZ). It consists of greywacke containing lenses of conglomerate.

 

Mineralization

 

Mineralization in the Canadian Malartic deposit occurs as a continuous shell of 1% to 5% disseminated pyrite associated with fine native gold and traces of chalcopyrite, sphalerite and tellurides. It extends on a 2 kilometre strike and a width of 1 kilometre (perpendicular to the strike), and from surface to 400 metres below surface. The gold resource is mostly hosted by altered clastic sedimentary rocks of the Pontiac Group (70%) overlying an epizonal dioritic porphyry intrusion.

 

Surface drilling by Lac Minerals Ltd. in the 1980s defined several near-surface mineralized zones now included in the Canadian Malartic deposit (the F, P, A, Wolfe and Gilbert zones), all expressions of a larger, continuous mineralized system located at depth around the historical underground workings of the Canadian Malartic and Sladen mines. In addition to these, the Western Porphyry Zone occurs one kilometre northeast of the main Canadian Malartic deposit and the Gouldie mineralized zone occurs approximately 1.2 kilometres southeast of the main Canadian Malartic deposit. Approximately 1.5 kilometres to the east is the Odyssey deposit, with mineralization associated with a fault along both hanging wall and footwall contacts of a 300 metre wide dioritic intrusive.

 

The South Barnat deposit is located to the north and south of the old South Barnat and East Malartic mine workings, largely along the southern edge of the LLCFZ. The deposit that is originally modelled for surface mining evaluation extends on a 1.7 kilometre strike and a width of 900 metres (perpendicular to the strike), and from surface to 480 metres below surface. The disseminated/stockwork gold mineralization at South Barnat is hosted both in potassic altered, silicified greywackes of the Pontiac Group (south of the fault contact) and in potassic altered porphyry dykes and schistose, carbonatized and biotitic ultramafic volcanic rocks (north of the fault contact).

 

The East Malartic deposit (as modelled for the underground mining model) has been previously mined by the East Malartic, Barnat and Sladen mines along the contact between the LLCFZ and the Pontiac Group sedimentary rocks. This deposit includes the deeper portion of the South Barnat deposit (below actual pit design). This deposit extends on a 3 kilometre strike and a width of 1.1 kilometres (perpendicular to the strike), and the bottom of the South Barnat actual pit design to 1,800 metres below surface. The geological settings are similar to those found in other areas of the property, corresponding mainly to the depth extension of the geological context presented above for the South Barnat open pit deposit.

 

The Odyssey deposit is also located at the contact between the LLCFZ and the Pontiac Group sedimentary rocks in the eastern extension of the East Malartic deposit. It extends on a 2 kilometre strike and a width of 500 metres (perpendicular to the strike), and from surface to -1,500 metres below surface. It is characterized by the presence of a massive porphyritic unit. While the whole porphyritic intrusion is anomalous in gold, continuous zones of higher-grade (>1 g/t gold) gold mineralization occur along the south-dipping sheared margins of the intrusion (in contact with the Pontiac Group to the south and the Piché Group to the north). Within the porphyritic unit, gold mineralization is also associated with other geological features, including silica and potassic alteration zones, discrete shear zones, swarms of quartz veins, stockworks and zones with disseminated pyrite (0.7 to 2.0%).

 

The East Gouldie deposit is located south of the Odyssey deposit and has a strike length of at least 1.2 kilometres and extends from approximately 780 metres below surface to more than 1.9 kilometres depth. It is generally constrained in a west-trending high-strain corridor (40 to 100 metres true width) that dips approximately 60 degrees north. The high strain corridor is defined by a strongly developed foliation that affects Pontiac Group greywacke as well as crosscutting east-southeast-trending intermediate porphyritic dykes and mafic dykes. Evidence for folds in bedding occur in historical surface geology maps and in drill core, but the deposit is tabular and relatively straight. The mineralization is hosted in highly strained intervals of greywacke with 1% to 2% disseminated pyrite and strong silica alteration, and moderate sericite and carbonate alteration. Intermediate porphyritic dykes locally occur in the mineralized zones and are gold-bearing where affected by the high strain and alteration. Minor irregular cm- to dm-scale quartz veins occur, some with visible gold, but the bulk of the gold mineralization is interpreted to be associated with the disseminated style of mineralization.

 

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Several other mineralized zones have been documented within the LLCFZ, namely Buckshot, East Amphi, Western Porphyry and Fourax, all of which are generally spatially associated with stockworks and disseminations within or in the vicinity of dioritic or felsic porphyritic intrusions.

 

Exploration and Drilling

 

At the Canadian Malartic mine, the Partnership expects to spend approximately $23.8 million for 136,800 metres of exploration and conversion drilling. With ramp development under way as part of the Odyssey Mine project, the Partnership will be able to continue underground conversion drilling from the ramp in 2022. In addition, the Partnership is planning to spend approximately $8.2 million on 21,900 metres of exploration drilling to expand mineralization towards the east in the East Gouldie horizon and the new Titan zone at depth on the Rand property (not covered by Osisko Royalty).

 

Mineral resources from the Odyssey internal zones are not currently included in the mine plan due to the increased geological complexity of these zones. Additional infill drilling of these zones from underground is planned to increase geological understanding, which could present opportunities for additional production during the underground ramp-up period. In addition, mineral resources from the East Malartic deposit at depth could represent another opportunity for future inclusion in the mine plan, which could extend the life of the underground project. Infill drilling and additional engineering is required to evaluate the economic potential of these mineral resources. Fifteen drills were operating at Malartic in early 2022 with a focus on aggressive infill drilling at the East Gouldie deposit to improve confidence in the mineral resource, to continue the conversion of inferred mineral resources to indicated mineral resources and to refine the geological model. Some drilling is also planned on the nearby East Amphi property to extend the Nessie and Kraken zones.

 

Mineral Reserves and Mineral Resources

 

In February of 2022, Agnico and Yamana provided resource and reserve updates for the Malartic Project without providing an updated life of mine plan. Reserves were depleted for production in the year with an additional downward adjustment of approximately 96,000 ounces due to a slight increase in cut-off grade, and a localized adjustment in the lower benches of the Canadian Malartic pit. At December 31, 2021, the Canadian Malartic mine was estimated to have proven and probable mineral reserves from open pits containing approximately 3.54 million ounces of gold comprised of 100.5Mt of ore grading 1.09 grams per tonne. The Odyssey underground project continues to grow as a result of ongoing exploration drilling, with a total of 25Mt at 2.9 grams per tonne gold for 2.35 million ounces of indicated resources and 86.8Mt at 2.35 grams per tonne gold for 13.15 million ounces of inferred resources. The majority of the upgraded resource came from infill drilling at East Gouldie, which now hosts an indicated resource of 12Mt of 3.88 grams per tonne gold for 1.45 million ounces of gold. This updated resource does not materially affect the results of the 2021 technical report described herein, except to increase the confidence level of a portion of the mineral inventory through conversion from inferred resources to indicated resources.

 

Odyssey Underground Mine Project Construction

 

On February 11, 2021, Agnico and Yamana announced that following the completion of an internal technical study in late 2020, Canadian Malartic GP has approved construction of a new underground mining complex at the Odyssey project.

 

78

 

In addition to the open pit at Canadian Malartic, the asset hosts the recently discovered “Odyssey underground” project which is contained within three main underground-mineralized zones: East Gouldie, East Malartic and Odyssey, the latter of which is sub-divided into the Odyssey North, Odyssey South and Odyssey Internal zones.

 

Osisko holds a 5% NSR royalty on East Gouldie, Odyssey South and the western half of East Malartic and a 3% NSR royalty on Odyssey North and the eastern half of East Malartic, which are located adjacent to the Canadian Malartic mine.

 

The basis for the mine plan is a potentially mineable resource of 7.29 million ounces (6.18Mt of 2.07 g/t Au indicated resources and 75.9Mt of 2.82 g/t Au inferred resources). The East Gouldie deposit makes up most of this mineral inventory, whose total inferred resources contains 6.42 million ounces (62.9Mt of 3.17 g/t Au). Combined with the East Malartic and Odyssey deposits the total underground inferred resources contains 13.8 million ounces (177.5Mt of 2.42 g/t Au), as well as indicated resources of 0.86 million ounces (13.3Mt of 2.01 g/t Au). Note that a portion of the inferred resources at East Gouldie, have now been upgraded to indicated resource of 12Mt of 3.88 grams per tonne gold for 1.45 million ounces of gold. This updated resource does not materially affect the results of the 2021 technical report described herein, except to increase the confidence level of a portion of the mineral inventory through conversion from inferred resources to indicated resources.

 

For the purpose of the technical study, mineable stope shapes were generated using a gold price of US$1,250 per ounce, consistent with the price used for estimating Canadian Malartic open pit mineral reserves. The shallow mineralized zones located above 600 metres below surface will be mined using a ramp from surface. The deeper mineralized zones below 600 metres from surface will be mined with a production shaft.

 

Production via the ramp is expected to begin at Odyssey South in late 2023, increasing up to 3,500 tonnes per day in 2024. Collaring of the shaft and installation of the headframe was completed in 2021, with shaft sinking activities expected to begin in late 2022. The shaft will have an estimated depth of 1,800 metres, an expected capacity of approximately 20,000 tonnes per day, and the first loading station is expected to be commissioned in 2027 with modest production from East Gouldie. The East Malartic shallow area and Odyssey North are scheduled to enter into production in 2029 and 2030 respectively.

 

Average annual payable production is approximately 545,400 ounces of gold from 2029 to 2039, with total cash costs per ounce of approximately US$630. Sustaining capital expenditures are expected to gradually decline from 2029 to 2039, with an expected average of approximately US$56 million per year. Using a gold price of US$1,550 per ounce and a C$/US$ foreign exchange rate assumption of 1.30, the Odyssey project has an after-tax internal rate of return of 17.5% and an after-tax net present value (at a 5% discount rate) of US$1.143 billion. The project has excellent exploration potential and is currently expected to have a mine life of 17 years, including 10 years of payable gold production averaging 545,400 ounces per year (all numbers on a 100% basis) (See Chart 1 below).

 

The forecast parameters surrounding the proposed operations at the Odyssey project were based on the CM Report, which is preliminary in nature and includes inferred mineral resources that are too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves and there is no certainty that the forecast production amounts will be realized.

 

At Odyssey, the East Gouldie deposit has the highest tonnage and grade and contains more than 70% of the total ounces produced. The focus of the ongoing diamond drilling campaign from surface is to further define high quality mineral resources by the beginning of 2023 with a drill hole spacing of 75 metres. Improving the geological confidence of the mineral resources is expected to further de-risk the future production. With additional exploration, it is believed that additional mineralization will come into the mine plan in the coming years.

 

79

 

 

Chart 1 - Production profile for the Canadian Malartic mine

 

 

 

Source: Agnico and Yamana news releases, February 11, 2021.

 

Capital Expenditures

 

Canadian Malartic mine investments during 2021 included sustaining capital of $145.5 million, and development capital of $113.2 million. Budgeted 2022 sustaining capital expenditures at the Canadian Malartic mine are $153.8 million, and development capital of $207.4 million.

 

Capital expenditures on the Odyssey Project from 2021 to 2028 are expected to total approximately $1.34 billion (on a 100% basis), which includes $1,144 million in initial capital expenditures and $191 million in additional development capital expenditures. The gradual transition from open pit to underground mining allows for capital expenditures to be spread over eight years. In addition, proceeds from the early production, which is expected to begin in 2023, will significantly reduce the external cash requirements for the construction of the project

 

80

 

 

Odyssey Project Summary  
   
(All numbers are approximate and on a 100% basis)  
Estimated Total Production 6.93 million gold ounces
  2.32 million silver ounces
Average metallurgical recovery ~95.2% gold
  ~80.0% silver
   
Average Annual gold production  
2023  46,600 oz (825 k. tonnes, 1.84g/t gold and 1.10g/t silver)
2024 to 2026 (average per year)  81,500 oz (1,344 k. tonnes, 1.98g/t gold and 1.10g/t silver)
2027 256,200 oz (2,810 k. tonnes, 2.98g/t gold and 1.10g/t silver)
2028 384,600 oz (3,333 k. tonnes, 3.79g/t gold and 1.10g/t silver)
2029 to 2039 (average per year) 545,400 oz (6,463 k. tonnes, 2.76g/t gold and 1.10g/t silver)
   
Minesite costs per tonne  
2023 $93 C$/t
2024 to 2026 (average per year) $77 C$/t
2027 $79 C$/t
2028 $79 C$/t
2029 to 2039 (average per year) $61 C$/t
Average total cash costs on a by-product basis (including royalties)  
2023 to 2028 800 /oz
2029 to 2039 630 /oz
  5.5%
Royalty NSR
Mine life 17 years
   
Capital Expenditures  
Initial capital expenditures $1,144 million (2021 to 2028)
Other growth capital expenditures $191 million (2021 to 2028)
Gold production 2021 to 2028 932 thousand ounces
Sustaining capital expenditures $56 million per year (2029 – 2039)
Breakdown of Capital Expenditures by year (2021 – 2028)  
2021 $114 million
2022 $204 million
2023 (average per year) $137 million
2024 to 2026 $164 million
2027 $209 million
2028 $180 million
Breakdown of Initial Capital Expenditures by category Shaft & Surface $478 million
Mining Equipment $163 million
U/G Development & Construction $503 million
Net Present Value $1,142 million (after tax)
Internal Rate of Return 17.5%
Payback Period 10 years
   
Economic Assumptions:  
Gold Price $1,550
Silver Price $22.00
USD:CAD 1.30
Effective tax rate 38%
Discount rate 5%

 

81

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 4.2

 

 

 

OSISKO GOLD ROYALTIES LTD

 

                                     

Consolidated Financial Statements

 

For the years

ended

December 31, 2021 and 2020 

 

 

 

 

 

Osisko Gold Royalties Ltd

Consolidated Financial Statements

 

Management's Report on Internal Control over Financial Reporting

 

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

 

The Company's management assessed the effectiveness of the Company's internal control over financial reporting as at December 31, 2021. The Company's management conducted an evaluation of the Company's internal control over financial reporting based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the Company's management's assessment, the Company's internal control over financial reporting is effective as at December 31, 2021.

 

The effectiveness of the Company's internal control over financial reporting as at December 31, 2021 has been audited by PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm, as stated in their report which is located on the next pages.

 

(signed) Sandeep Singh, Chief Executive Officer (signed) Frédéric Ruel, Chief Financial Officer

 

February 24, 2022

 

 2

 

 

Report of Independent Registered Public Accounting Firm

 

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

 

Opinions on the Financial Statements and Internal Control over Financial Reporting

 

We have audited the accompanying consolidated balance sheets of Osisko Gold Royalties Ltd and its subsidiaries (together, the Company) as of December 31, 2021 and 2020, and the related consolidated statements of income (loss), comprehensive income (loss), changes in equity and cash flows for the years then ended, including the related notes (collectively referred to as the consolidated financial statements). We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

 

Basis for Opinions

 

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

 

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

 

 3

 

 

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

 

Definition and Limitations of Internal Control over Financial Reporting

 

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

 

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

 

Critical Audit Matters

 

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

 

 4

 

 

Assessment of impairment indicators of royalty, stream and other interests

 

As described in Notes 3, 5 and 14 to the consolidated financial statements, the Company's royalty, stream and other interests carrying amount was $1,154.8 million as of December 31, 2021. Management assesses at each reporting date whether there are indicators that the carrying amount may not be recoverable which give rise to the requirement to conduct a formal impairment test. Impairment is assessed at the cash-generating unit (CGU) level, which is usually at the individual royalty, stream and other interest level for each property from which cash inflows are generated. Management uses judgement when assessing whether there are indicators of impairment, including a significant change in mineral reserve and resources, significant negative industry or economic trends, significantly lower production than expected, a significant change in current or forecast commodity prices and other relevant operator and financial information.

 

The principal considerations for our determination that performing procedures relating to the assessment of impairment indicators of royalty, stream and other interests is a critical audit matter are (i) the judgement by management when assessing whether there were indicators of impairment which would require a formal impairment test to be performed; and (ii) a high degree of auditor judgement, subjectivity and effort in performing procedures to evaluate audit evidence related to management's assessment of impairment indicators related to a significant change in mineral reserve and resources, significant negative industry or economic trends, significantly lower production than expected, a significant change in current or forecast commodity prices and other relevant operator and financial information.

 

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management's assessment of impairment indicators of royalty, stream and other interests. These procedures also included, among others, evaluating the reasonableness of management's assessment of impairment indicators for a sample of royalty, stream and other interests, related to a significant change in mineral reserve and resources, significant negative industry or economic trends, significantly lower production than expected, a significant drop in current or forecast commodity prices and other relevant operator and financial information by considering (i) current and past performance of royalty, stream and other interests; (ii) consistency with external market and industry data; (iii) publicly disclosed or other relevant information of operators of royalty, stream and other interests; and (iv) consistency with evidence obtained in other areas of the audit.

 

/s/PricewaterhouseCoopers LLP

 

Montréal, Canada

February 24, 2022

 

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

 

 5

 

 

Osisko Gold Royalties Ltd

Consolidated Balance Sheets

As at December 31, 2021 and 2020

(tabular amounts expressed in thousands of Canadian dollars)

 

       December 31,   December 31, 
   Notes   2021   2020 
        $    $ 
Assets               
                
Current assets               
                
Cash   8    115,698    302,524 
Short-term investments   9    -    3,501 
Amounts receivable   10    14,691    12,894 
Inventories   11    18,596    10,025 
Other assets   11    3,941    6,244 
         152,926    335,188 
                
Non-current assets               
                
Investments in associates   12    125,354    119,219 
Other investments   13    169,010    157,514 
Royalty, stream and other interests   14    1,154,801    1,116,128 
Mining interests and plant and equipment   15    635,655    489,512 
Exploration and evaluation   16    3,635    42,519 
Goodwill   17    111,204    111,204 
Other assets   11    18,037    25,820 
         2,370,622    2,397,104 
                
Liabilities               
                
Current liabilities               
                
Accounts payable and accrued liabilities   18    30,049    46,889 
Dividends payable   21    9,157    8,358 
Provisions and other liabilities   19    12,179    4,431 
Current portion of long-term debt   20    294,891    49,867 
         346,276    109,545 
                
Non-current liabilities               
                
Provisions and other liabilities   19    60,334    41,536 
Long-term debt   20    115,544    350,562 
Deferred income taxes   24    68,407    54,429 
         590,561    556,072 
                
Equity               
                
Share capital   21    1,783,689    1,776,629 
Warrants   22    18,072    18,072 
Contributed surplus        42,525    41,570 
Equity component of convertible debentures   20    14,510    17,601 
Accumulated other comprehensive income        58,851    48,951 
Deficit        (283,042)   (174,458)
Equity attributable to Osisko Gold Royalties Ltd's shareholders        1,634,605    1,728,365 
Non-controlling interests        145,456    112,667 
Total equity        1,780,061    1,841,032 
         2,370,622    2,397,104 

 

APPROVED ON BEHALF OF THE BOARD

 

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

 

 6

 

 

Osisko Gold Royalties Ltd

Consolidated Statements of Income (Loss)

For the years ended December 31, 2021 and 2020

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

 

   Notes   2021   2020 
        $    $ 
Revenues   25    224,877    213,630 
                
Cost of sales   25    (37,646)   (63,700)
Depletion of royalty, stream and other interests   14    (48,361)   (45,605)
Gross profit        138,870    104,325 
                
Other operating expenses               
General and administrative   25    (41,265)   (25,901)
Business development   25    (4,168)   (10,290)
Exploration and evaluation   25    (1,197)   (131)
Mining operating expenses   25    (12,919)   - 
Impairments - royalty, stream and other interests   14    (2,288)   (26,300)
Impairments - mining exploration, evaluation and development   15,16    (122,250)   - 
Operating (loss) income        (45,217)   41,703 
Interest income        5,065    4,582 
Finance costs        (24,586)   (26,131)
Foreign exchange (loss) gain        (554)   1,023 
Share of loss of associates   12    (3,950)   (7,657)
Other gains, net   25    25,522    13,622 
(Loss) earnings before income taxes        (43,720)   27,142 
Income tax expense   24    (12,955)   (10,913)
Net (loss) earnings        (56,675)   16,229 
                
Net (loss) earnings attributable to:               
Osisko Gold Royalties Ltd's shareholders        (23,554)   16,876 
Non-controlling interests        (33,121)   (647)
                
Net (loss) earnings per share               
Basic and diluted   27    (0.14)   0.10 

 

Additional information per operating segment is provided in Notes 8 and 31.

 

 7

 

 

Osisko Gold Royalties Ltd

Consolidated Statements of Comprehensive Income (Loss)

For the years ended December 31, 2021 and 2020

(tabular amounts expressed in thousands of Canadian dollars)

 

   2021   2020 
Net (loss) earnings   (56,675)   16,229 
           
Other comprehensive income (loss)          
           
Items that will not be reclassified to the consolidated statement of income (loss)          
           
Changes in fair value of financial assets at fair value through comprehensive income   7,303    40,993 
Income tax effect   (471)   (9,319)
           
Share of other comprehensive (loss) income of associates   (1,665)   1,506 
           
Items that may be reclassified to the consolidated statement of income (loss)          
           
Currency translation adjustments   (2,990)   (4,555)
           
Other comprehensive income   2,177    28,625 
           
Comprehensive (loss) income   (54,498)   44,854 
           
Comprehensive (loss) income attributable to:          
Osisko Gold Royalties Ltd's shareholders   (17,889)   45,501 
Non-controlling interests   (36,609)   (647)

 

 8

 

 

Osisko Gold Royalties Ltd

Consolidated Statements of Cash Flows

For the years ended December 31, 2021 and 2020

(tabular amounts expressed in thousands of Canadian dollars)

 

   Notes   2021   2020 
      $   $ 
Operating activities               
Net (loss) earnings        (56,675)   16,229 
Adjustments for:               
Share-based compensation        13,280    9,361 
Depletion and amortization        51,934    46,904 
Impairment of assets        126,650    34,298 
Finance costs        7,721    8,409 
Share of loss of associates        3,950    7,657 
Net gain on acquisition of investments        (7,638)   (3,827)
Change in fair value of financial assets at fair value through profit and loss        (6,286)   (2,387)
Net gain on dilution of investments in associates        (1,847)   (10,381)
Net gain on disposal of investments        -    (5,357)
Foreign exchange loss (gain)        675    (652)
Flow-through shares premium income        (6,971)   - 
Deferred income tax expense        11,724    3,760 
Other        (5,423)   2,230 
Net cash flows provided by operating activities before changes in non-cash working capital items        131,094    106,244 
Changes in non-cash working capital items   28    (24,999)   1,734 
Net cash flows provided by operating activities        106,095    107,978 
                
Investing activities               
Net repayment of short-term investments        3,501    412 
Acquisition of the San Antonio gold project   7    -    (52,208)
Acquisition of investments        (46,713)   (49,194)
Proceeds from disposal of investments        50,936    10,864 
Acquisition of royalty and stream interests        (90,936)   (66,062)
Mining assets and plant and equipment        (185,297)   (71,828)
Exploration and evaluation expenses, net of tax credits        (3,175)   (202)
Restricted cash        (504)   4,762 
Other        150    357 
Net cash flows used in investing activities        (272,038)   (223,099)
                
Financing activities               
Private placement of common shares   21    -    85,000 
Investments from minority shareholders   21    39,760    214,323 
Share issue expenses from investments from minority shareholders   21    (3,044)   (5,965)
Exercise of share options and shares issued under the share purchase plan        14,547    7,835 
Increase in long-term debt        54,015    71,660 
Repayment of long-term debt        (50,251)   (19,205)
Normal course issuer bid purchase of common shares   21    (30,791)   (3,933)
Dividends paid        (32,464)   (28,914)
Capital payments on lease liabilities        (6,582)   (1,155)
Withholding taxes on settlement of restricted and deferred share units        (3,715)   (2,555)
Other        (1,076)   (230)
Net cash flows (used in) provided by financing activities        (19,601)   316,861 
                
(Decrease) increase in cash before effects of exchange rate changes on cash        (185,544)   201,740 
Effects of exchange rate changes on cash        (1,282)   (7,439)
(Decrease) increase in cash        (186,826)   194,301 
Cash - January 1        302,524    108,223 
Cash - December 31   8    115,698    302,524 

 

Additional information per operating segment is provided in Notes 8 and 31.

Additional information related to the consolidated statements of cash flows is presented in Note 28.

 

 9

 

 

Osisko Gold Royalties Ltd

Consolidated Statement of Changes in Equity

For the year ended December 31, 2021

(tabular amounts expressed in thousands of Canadian dollars)

 

         Equity attributed to Osisko Gold Royalties Ltd's shareholders       
      Number of           Equity  Accumulated             
      common           component of  other        Non-    
      shares  Share     Contributed  convertible  comprehensive        controlling    
   Notes  outstanding  capital  Warrants  surplus  debentures  income(i)  Deficit  Total  interests  Total 
         $  $  $  $  $  $  $  $  $ 
Balance - January 1, 2021       166,647,932   1,776,629   18,072   41,570   17,601   48,951   (174,458)  1,728,365   112,667   1,841,032 
                                              
Net loss       -   -   -   -   -   -   (23,554)  (23,554)  (33,121)  (56,675)
Other comprehensive income (loss )       -   -   -   -   -   5,665   -   5,665   (3,488)  2,177 
Comprehensive income (loss)       -   -   -   -   -   5,665   (23,554)  (17,889)  (36,609)  (54,498) 
                                              
Net investments from minority shareholders   21   -   -   -   -   -   -   -   -   27,314   27,314 
Effect of changes in ownership of a subsidiary on non-controlling interest       -   -   -   -   -   -   (36,482)  (36,482)  36,482   - 
Dividends declared   21   -   -   -   -   -   -   (35,085)  (35,085)  -   (35,085)
Shares issued - Dividends reinvestment plan   21   120,523   1,821   -   -   -   -   -   1,821   -   1,821 
Shares issued - Employee share purchase plan       20,496   311   -   -   -   -   -   311   -   311 
Share options- Share-based compensation       -   -   -   3,636   -   -   -   3,636   2,315   5,951 
Share options exercised       1,043,903   18,069   -   (3,720)  -   -   -   14,349   -   14,349 
Restricted share units to be settled in common shares:                                             
 Share-based compensation       -   -   -   3,527   -   -   -   3,527   1,858   5,385 
 Settlement       215,851   2,605   -   (5,113)  -   -   (671)  (3,179)  -   (3,179)
 Income tax impact       -   -   -   (184)  -   -   -   (184)  82   (102)
Deferred share units to be settled in common shares:                                             
 Share-based compensation       -   -   -   1,162   -   -   -   1,162   1,259   2,421 
 Settlement       30,849   625   -   (1,349)  -   -   (237)  (961)  -   (961)
 Income tax impact       -   -   -   (95)  -   -   -   (95)  88   (7)
Normal course issuer bid purchase of common shares   21   (2,103,366)  (22,471)  -   -   -   -   (8,320)  (30,791)  -   (30,791)
Deemed issuance of Osisko shares   12   517,409   6,100   -   -   -   -   -   6,100   -   6,100 
Maturity of convertible debenture - equity component   22   -   -   -   3,091   (3,091)  -   -   -   -   - 
                                              
Transfer of realized loss on financial assets at fair value through other comprehensive income, net of income taxes       -   -   -   -   -   4,235   (4,235)  -   -   - 
Balance - December 31, 2021       166,493,597   1,783,689   18,072   42,525   14,510   58,851   (283,042)  1,634,605   145,456   1,780,061 

 

 

(i) As at December 31, 2021, accumulated other comprehensive income comprises items that will not be recycled to the consolidated statements of income (loss) amounting to $33.7 million and items that may be recycled to the consolidated statements of income (loss) amounting to $25.1 million.

 

 10

 

 

Osisko Gold Royalties Ltd

Consolidated Statement of Changes in Equity

For the year ended December 31, 2020

(tabular amounts expressed in thousands of Canadian dollars)

 

         Equity attributed to Osisko Gold Royalties Ltd's shareholders       
      Number of           Equity  Accumulated             
      common           component of  other  Retained     Non-    
      shares  Share     Contributed  convertible  comprehensive  earnings     controlling    
   Notes  outstanding  capital  Warrants  surplus  debenture  income (loss)(i)  (deficit)  Total  interests  Total 
         $  $  $  $  $  $  $  $  $ 
Balance - January 1, 2020       156,951,952   1,656,350   18,072   37,642   17,601   13,469   (249,688)  1,493,446   -   1,493,446 
                                              
Net earnings (loss)       -   -   -   -   -   -   16,876   16,876   (647)  16,229 
Other comprehensive income       -   -   -   -   -   28,625   -   28,625   -   28,625 
Comprehensive income (loss)       -   -   -   -   -   28,625   16,876   45,501   (647)  44,854 
                                              
Private placement   21   7,727,273   85,000   -   -   -   -   -   85,000   -   85,000 
Issue costs, net of taxes       -   (136)   -   -   -   -   -   (136)  -   (136)
Income tax impact on prior year issue costs       -   3,644   -   -   -   -   -   3,644   -   3,644 
Net investments from minority shareholders, net of taxes   6, 21   -   -   -   -   -   -   -   -   209,892   209,892 
Deemed acquisition of Barolo Ventures Corp.   6   -   -   -   -   -   -   -   -   1,751   1,751 
Acquisition of the San Antonio gold project   7   1,011,374   15,846   -   -   -   -   -   15,846   -   15,846 
Gain on dilution of non-controlling interests       -   -   -   -   -   -   98,329   98,329   (98,329)  - 
Acquisition of royalty interests paid in shares       250,000   3,880   -   -   -   -   -   3,880   -   3,880 
Dividends declared   21   -   -   -   -   -   -   (32,838)  (32,838)  -   (32,838)
Shares issued - Dividends reinvestment plan   21   268,173   3,440   -   -   -   -   -   3,440   -   3,440 
Shares issued - Employee share purchase plan       30,388   391   -   -   -   -   -   391   -   391 
Share options - Shared-based compensation       -   -   -   3,104   -   -   -   3,104   -   3,104 
Share options exercised       232,964   3,932   -   (857)  -   -   -   3,075   -   3,075 
Replacement share options exercised       440,506   5,976   -   (1,461)  -   -   -   4,515   -   4,515 
Restricted share units to be settled in common shares:                                             
 Share-based compensation       -   -   -   5,835   -   -   -   5,835   -   5,835 
 Settlement       145,694   1,984   -   (4,247)  -   -   (279)  (2,542)  -   (2,542)
 Income tax impact       -   -   -   358   -   -   -   358   -   358 
Deferred share units to be settled in common shares:                                             
 Share-based compensation       -   -   -   1,113   -   -   -   1,113   -   1,113 
 Settlement       19,330   255   -   (266)  -   -   (1)  (12)  -   (12)
 Income tax impact       -   -   -   349   -   -   -   349   -   349 
Normal course issuer bid purchase of common shares   21   (429,722)   (3,933 )  -   -   -   -   -   (3,933)  -   (3,933)
Transfer of realized other comprehensive income of Associates, net of income taxes       -   -   -   -   -   (414)  414   -   -   - 
Transfer of realized loss on financial assets at fair value through other comprehensive income, net of income taxes       -   -   -   -   -   7,271   (7,271)  -   -   - 
Balance - December 31, 2020 (ii)       166,647,932   1,776,629   18,072   41,570   17,601   48,951   (174,458)  1,728,365   112,667   1,841,032 

 

(i) As at December 31, 2020, accumulated other comprehensive income comprises items that will not be recycled to the consolidated statements of income (loss) amounting to $20.8 million and items that may be recycled to the consolidated statements of income (loss) amounting to $28.1 million.

 

(ii) As at December 31, 2020, there are 167,165,341 common shares issued, of which 517,409 are deemed to have been repurchased given that one of the Company's associates owns some of the Company's common shares.

 

 11

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(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, except for Osisko Development Corp. and its subsidiaries ("Osisko Development"), which are engaged in the exploration, evaluation and development of mining projects. 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 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. The Company's cornerstone asset is a 5% net smelter return ("NSR") royalty on the Canadian Malartic mine, located in Canada.

 

In November 2020, Osisko completed the spin-out transaction of its mining assets and certain equity investments to Osisko Development, a newly created company engaged in the exploration, evaluation and development of mining projects in Canada and in Mexico (Note 6). The common shares of Osisko Development began trading on the TSX Venture Exchange (the "TSX-V") on December 2, 2020 under the symbol "ODV". On December 31, 2021, Osisko held an interest of 75.1% in Osisko Development and, as a result, the Company consolidated the assets, liabilities, results of operations and cash flows of the activities of Osisko Development and its subsidiaries. Osisko Development's main asset is the Cariboo gold project in Canada.

 

2. Basis of presentation

 

The accompanying consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The accounting policies, methods of computation and presentation applied in these consolidated financial statements are consistent with those of the previous financial year. The Board of Directors approved the audited consolidated financial statements for issue on February 24, 2022.

 

Uncertainty due to COVID-19

 

The COVID-19 pandemic has had a significant impact on the global economy and commodity and financial markets. The full extent and impact of the COVID-19 pandemic is unknown at this time and its adverse effects may continue for an extended and unknown period of time, particularly as variant strains of the virus are identified.

 

The impact of the pandemic to date has included volatility in financial markets, a slowdown in economic activity, supply chain and labour issues, and volatility in commodity prices (including gold and silver). Furthermore, as efforts have been undertaken to slow the spread of the COVID-19 pandemic, the operation and development of mining projects have been impacted. Many mining projects, including a number of the properties in which Osisko holds a royalty, stream or other interest have been impacted by the pandemic resulting in the temporary suspension of operations, and other mitigation measures that impacted production. If the operation or development of one or more of the properties in which Osisko holds a royalty, stream or other interest and from which it receives or expects to receive significant revenue is suspended as a result of the continuing COVID-19 pandemic or future pandemics or other public health emergencies, it may have a material adverse impact on Osisko's profitability, results of operations, financial condition and the trading price of Osisko's securities. The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on future developments, including a widely available vaccine in each of the countries where are located the assets on which we own a royalty, stream or other interest, the duration and severity of the pandemic and related restrictions, all of which continue to be uncertain and cannot be predicted.

 

3. Significant accounting policies

 

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

 

a) Basis of measurement

 

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

 

 12

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

3. Significant accounting policies (continued)

 

b) Business combinations

 

On the acquisition of a business, the acquisition method of accounting is used whereby the identifiable assets, liabilities and contingent liabilities (identifiable net assets) of the business are measured at fair value at the date of acquisition. Provisional fair values estimated at a reporting date are finalized as soon as the relevant information is available, which period shall not exceed twelve months from the acquisition date and are adjusted to reflect the transaction as of the acquisition date. Any excess of the consideration paid is treated as goodwill, and any bargain gain is immediately recognized in the statement of income (loss) and comprehensive income (loss). If control is lost as a result of a transaction, the participation retained is recognized on the balance sheet at fair value and the difference between the fair value recognized and the carrying value as at the date of the transaction is recognized in the statement of income (loss). Acquisition costs are expensed as incurred.

 

The Company recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognized amounts of acquiree's identifiable net assets.

 

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

 

c) Non-controlling interests

 

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

 

d) Consolidation

 

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

 

The principal subsidiaries of the Company, their geographic locations, related participation and principal operating segment (Note 31) at December 31, 2021 and 2020 were as follows:

 

Entity  Jurisdiction  Participation   Functional currency  Operating Segment
Osisko Development Corp.(i)  Québec  75.1%  Canadian dollar  Exploration/development of mining projects
Osisko Bermuda Limited  Bermuda  100%  United States dollar  Royalties, streams and similar interests
Osisko Mining (USA) Inc.  Delaware  100%  United States dollar  Royalties, streams and similar interests

 

(i) The following entities are wholly-owned subsidiaries of Osisko Development since November 25, 2020 (Note 6): Barkerville Gold Mines Ltd. (British Columbia), Coulon Mines Inc. (Canada), General Partnership Osisko James Bay (Québec) and Sapuchi Minera S. de R.L. de C.V. (Mexico) (Pesos as functional currency). Prior to that date, these subsidiaries were wholly-owned by the Company. The participation in Osisko Development on December 31, 2020 was 84.1%.

 

 13

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

3. Significant accounting policies (continued)

 

e) Foreign currency translation

 

(i) Functional and presentation currency

 

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

 

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

 

(ii) Transactions and balances

 

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

 

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

 

f) Financial instruments

 

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

 

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

 

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

 

 14

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

3. Significant accounting policies (continued)

 

f) Financial instruments (continued)

 

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

 

(i) Financial assets

 

Debt instruments

 

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

 

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

 

Equity instruments

 

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

 

(ii) Financial liabilities

 

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

 

 15

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

3. Significant accounting policies (continued)

 

f) Financial instruments (continued)

 

The Company has classified its financial instruments as follows:

 

Category Financial instrument
   
Financial assets at amortized cost

Bank balances

Short-term debt securities

Notes and loans receivable

Trade receivables

Interest income receivable

Amounts receivable from associates and other receivables

Reclamation deposits

   

Financial assets at fair value through profit or loss

 Investments in derivatives and convertible debentures
   

Financial assets at fair value through other comprehensive income or loss

 Investments in shares and equity instruments, other than in derivatives
   
Financial liabilities at amortized cost

Accounts payable and accrued liabilities

Liability component of convertible debentures

Borrowings under revolving credit facilities

Equipment financings

 

Derivatives

 

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

 

g) Impairment of financial assets

 

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

 

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

 

·Trade receivables; and

 

·Investments in debt instruments measured at amortized cost.

 

Amounts receivable

 

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

 

Investments in debt instruments

 

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

 

 16

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

3. Significant accounting policies (continued)

 

h) Cash

 

Cash includes demand deposits held with banks.

 

i) Refundable tax credits for mining exploration expenses

 

The Company is entitled to refundable tax credits on qualified mining exploration and evaluation expenses incurred in the provinces of Québec and British-Columbia. The credits are accounted for against the exploration and evaluation expenses incurred.

 

j) Inventories

 

Inventories are valued at the lower of cost and net realizable value. Cost is determined on a weighted average basis.

 

k) Investments in associates

 

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

 

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

 

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

 

l) Royalty, stream and other interests

 

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

 

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

 

 17

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

3. Significant accounting policies (continued)

 

l) Royalty, stream and other interests (continued)

 

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

 

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

 

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

 

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

 

m) Property and equipment

 

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

 

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

 

Leasehold improvements Lease term

Furniture and office equipment 2-7 years

Exploration equipment and facilities 2-20 years

Mining plant and equipment (development) 3-20 years

Right-of-use assets Shorter of useful life and lease term

 

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

 

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

 

 18

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

3. Significant accounting policies (continued)

 

n) Exploration and evaluation expenditures

 

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

 

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

 

Exploration and evaluation expenditures include the cost of:

 

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

 

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

 

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

 

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

 

(i) the Company uses the carrying value of the interest before the farm-out arrangement as the carrying value for the portion of the interest retained;

(ii) the Company credits any cash consideration received against the carrying amount of the portion of the interest retained, with an excess included as a gain in profit or loss;

(iii) in the situation where a royalty interest is retained by the Company as a result of an interest earned by the farmee, the Company records the royalty interest received at an amount corresponding to the carrying value of the exploration and evaluation property at the time of the transfer in ownership; and

(iv) the Company does not record exploration expenditures made by the farmee on the property.

 

o) Goodwill

 

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

 

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

 

 19

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

3. Significant accounting policies (continued)

 

p) Provision for environmental rehabilitation

 

Provision for environmental rehabilitation, restructuring costs and legal claims, where applicable, is recognized when:

 

(i) The Company has a present legal or constructive obligation as a result of past events.

(ii) It is probable that an outflow of resources will be required to settle the obligation.

(iii) The amount can be reliably estimated.

 

The provision is measured at management's best estimate of the expenditure required to settle the obligation at the end of the reporting period, and is discounted to present value where the effect is material. The increase in the provision due to passage of time is recognized as finance costs. Changes in assumptions or estimates are reflected in the period in which they occur.

 

Provision for environmental rehabilitation represents the legal and constructive obligations associated with the eventual closure of the Company's property, plant and equipment. These obligations consist of costs associated with reclamation and monitoring of activities and the removal of tangible assets. The discount rate used is based on a pretax rate that reflects current market assessments of the time value of money and the risks specific to the obligation, excluding the risks for which future cash flow estimates have already been adjusted.

 

Reclamation deposits

 

Reclamation deposits are term deposits held for the benefit of the Government of the Province of British Columbia as collateral for possible rehabilitation activities on Osisko Development's mineral properties in connection with permits required for exploration activities. Reclamation deposits are released once the property is restored to satisfactory condition, or as released under the surety bond agreement. As they are restricted from general use, they are included under other assets on the consolidated balance sheets.

 

q) Current and deferred income tax

 

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

 

Current income taxes

 

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

 

Deferred income taxes

 

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

 

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

 

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

 

 20

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

3. Significant accounting policies (continued)

 

q) Current and deferred income tax (continued)

 

Deferred income taxes (continued)

 

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

 

r) Convertible debentures

 

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

 

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

 

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

 

s) Share capital

 

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

 

t) Warrants

 

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

 

u) Revenue recognition

 

Revenue comprises revenues from the sale of commodities received and revenues directly earned from royalty, stream and other interests.

 

For royalty and stream agreements paid in-kind and for offtake agreements, the Company's performance obligations relate primarily to the delivery of gold, silver or other products to the customers. Revenue is recognized when control is transferred to the customers, which is achieved when a product is delivered, the customer has full discretion over the product and there is no unfulfilled obligation that could affect the customer's acceptance of the product. Control over the refined gold, silver and other products is transferred to the customers when the relevant product received (or purchased) from the operator is physically delivered and sold by the Company (or its agent) to the third party customers. For royalty and stream agreements paid in cash, revenue recognition will depend on the related agreement.

 

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

 

 21

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

3. Significant accounting policies (continued)

 

v) Leases

 

The Company is committed to long-term lease agreements, mainly for office space and mining equipment.

 

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 term 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 Company's incremental borrowing rate is used, being the rate that the Company 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.

 

w) Share-based compensation

 

Share option plan

 

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

 

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

 

Deferred and restricted share units

 

Each of the Company and its subsidiary, Osisko Development, offer a deferred share units ("DSU") plan to their respective non-executive directors and a restricted share units ("RSU") plan to their officers and employees. DSU may be granted to non-executive directors and RSU may be granted to employees and officers as part of their long-term compensation package, entitling them to receive a payment in the form of common shares, cash (based on the Osisko's share price or Osisko Development's share price at the relevant time) or a combination of common shares and cash, at the sole discretion of Osisko or Osisko Development. The fair value of the DSU and RSU granted by Osisko to be settled in common shares is measured on the grant date and is recognized over the vesting period under contributed surplus with a corresponding charge to share-based compensation. The fair value of the DSU and RSU granted by Osisko Development to be settled in common shares is measured on the grant date and is recognized over the vesting period under non-controlling interests with a corresponding charge to share-based compensation. A liability for the DSU and RSU to be settled in cash is measured at fair value on the grant date and is subsequently adjusted at each balance sheet date for changes in fair value. The liability is recognized over the vesting period with a corresponding charge to share-based compensation.

 

 22

 

  

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

3. Significant accounting policies (continued)

 

x) Earnings per share

 

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

 

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

 

y) Segment reporting

 

The operating segments are reported in a manner consistent with the internal reporting provided to the President and Chief Executive Officer ("CEO") who fulfills the role of the chief operating decision-maker. The CEO is responsible for allocating resources and assessing performance of the Company's operating segments. The Company manages its business under two operating segments: (i) acquiring and managing precious metal and other royalties, streams and similar interests, and (ii) the exploration, evaluation and development of mining projects (through Osisko Development).

 

4. New accounting standards and amendments

 

New accounting standard

 

Interest rate benchmark reform - Phase 2

 

In August 2020, the IASB made amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 to address the issues that arise during the reform of an interest rate benchmark rate, including the replacement of one benchmark with an alternative one. Affected entities need to disclose information about the nature and extent of risks arising from IBOR reform to which the entity is exposed, how the entity manages those risks, and the entity's progress in completing the transition to alternative benchmark rates and how it is managing that transition. The amendments are applicable to financial reporting periods commencing on or after January 1, 2021.

 

The Company amended its revolving credit facility in 2021 and, as such, the agreement now includes alternative benchmark rates and transition measures. As the amounts drawn under the credit facility are for a period of one to three months, the Company does not expect any significant impact on the transition to a replacement benchmark rate.

 

Accounting standards issued but not yet effective

 

The Company has not yet adopted certain standards, interpretations to existing standards and amendments which have been issued but have an effective date of later than December 31, 2021.  Many of these updates are not expected to have any significant impact on the Company and are therefore not discussed herein.

 

Amendments to IAS 16 Property, plant and equipment

 

The IASB has made amendments to IAS 16 Property, plant and equipment, which will be effective for financial years beginning on or after January 1, 2022. Proceeds from selling items before the related item of property, plant and equipment is available for use should be recognized in profit or loss, together with the costs of producing those items. The Company will therefore need to distinguish between the costs associated with producing and selling items before the item of property, plant and equipment (pre-production revenue) is available for use and the costs associated with making the item of property, plant and equipment available for its intended use. For the sale of items that are not part of a company's ordinary activities, the amendments will require the Company to disclose separately the sales proceeds and related production cost recognized in profit or loss and specify the line items in which such proceeds and costs are included in the statement of comprehensive income (loss). These amendments will have an impact on the Company's consolidated financial statements in 2022.

 

 23

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

4. New accounting standards and amendments (continued)

 

Accounting standards issued but not yet effective (continued)

 

Amendments to IAS 16 Property, plant and equipment (continued)

 

In 2022, the Company will record pre-commercial revenues generated from the mining activities engaged by Osisko Development, and will retroactively adjust its 2021 results to conform with the new amendments. This will result in additional revenues and costs of sales on the statement of income (loss) of approximately $7.3 million for the year 2021.

 

5. Critical accounting estimates and judgements

 

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

 

Critical accounting estimates and assumptions

 

Mineral reserves and resources - Royalties, streams and other assets

 

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

 

Mineral reserves and resources - Exploration and development projects

 

Mineral reserves are estimates of the amount of ore that can be economically and legally extracted from the Company's mining properties. The Company estimates its mineral reserve and mineral resources based on information compiled by Qualified Persons as defined by Canadian Securities Administrators National Instrument 43-101, Standards for Disclosure of Mineral Projects. Such information includes geological data on the size, depth and shape of the mineral deposit, and requires complex geological judgments to interpret the data. The estimation of recoverable reserves is based upon factors such as estimates of commodity prices, future capital requirements, and production costs along with geological assumptions and judgments made in estimating the size and grade that comprise the mineral reserves. Changes in the mineral reserve or mineral resource estimates may impact the carrying value of mineral properties and deferred development costs, property, plant and equipment, provision for site reclamation and closure, recognition of deferred income tax assets and depreciation and amortization charges.

 

Impairment of royalty, stream and other interests

 

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

 

 24

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

5. Critical accounting estimates and judgements (continued)

 

Critical accounting estimates and assumptions (continued)

 

Impairment of exploration and evaluation assets, mining interests and plant and equipment

 

The Company's accounting policy for exploration and evaluation expenditure results in certain items of expenditure being capitalized. This policy requires management to make certain estimates and assumptions as to future events and circumstances, in particular whether an economically viable extraction operation can be established. Any such estimates and assumptions may change as new information becomes available. If, after having capitalized the expenditure, a judgement is made that recovery of the expenditure is unlikely, the relevant capitalized amount will be written off to the consolidated statement of income (loss).

 

Development activities commence after project sanctioning by senior management. Judgement is applied by management in determining when a project has reached a stage at which economically recoverable reserves exist such that development may be sanctioned. In exercising this judgement, management is required to make certain estimates and assumptions similar to those described above for capitalized exploration and evaluation expenditure. Such estimates and assumptions may change as new information becomes available. If, after having started the development activity, a judgement is made that a development asset is impaired, the appropriate amount will be written off to the consolidated statement of income (loss).

 

The Company's recoverability of its recorded value of its exploration and evaluation assets, mining interests and plant and equipment is based on market conditions for metals, underlying mineral resources associated with the properties and future costs that may be required for ultimate realization through mining operations or by sale.

 

At each reporting date, the Company evaluates each mining property and project on results to date to determine the nature of exploration, other assessment and development work that is warranted in the future. If there is little prospect of future work on a property or project being carried out within a prolonged period from completion of previous activities, the deferred expenditures related to that property or project are written off or written down to the estimated amount recoverable unless there is persuasive evidence that an impairment allowance is not required.

 

The recoverable amounts of exploration and evaluation assets, mining interests and plant and equipment are determined using the higher of value in use or fair value less costs of disposal. Value in use consists of the net present value of future cash flows expected to be derived from the asset in its current condition based on observable data. The calculations use cash flow projections based on financial budgets approved by management. These cash flow projections are based on expected recoverable ore reserves, selling prices of metals and operating costs. Fair value less costs of disposal consists of the expected sale price (the amount that a market participant would pay for the asset) of the asset net of transaction costs.

 

The Company may use other approaches in determining the fair value which may include estimates related to (i) dollar value per ounce of mineral reserve/resource; (ii) cash-flow multiples; (iii) market capitalization of comparable assets; and (iv) comparable sales transactions. Any changes in the quality and quantity of recoverable ore reserves, expected selling prices and operating costs could materially affect the estimated fair value of mining interests, which could result in material write-downs or write-offs in the future.

 

 25

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

5. Critical accounting estimates and judgements (continued)

 

Critical accounting estimates and assumptions (continued)

 

Impairment of goodwill

 

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

 

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

 

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

 

Provision for environmental rehabilitation

 

Provision for environmental rehabilitation is based on management best estimates and assumptions, which management believes are a reasonable basis upon which to estimate the future liability, based on the current economic environment. These estimates take into account any material changes to the assumptions that occur when reviewed regularly by management and are based on current regulatory requirements. Significant changes in estimates of discount rate, contamination, rehabilitation standards and techniques will result in changes to the provision from period to period. Actual reclamation and closure costs will ultimately depend on future market prices for the costs which will reflect the market condition at the time the costs are actually incurred. The final cost of the rehabilitation provision may be higher or lower than currently provided for.

 

Critical judgements in applying the Company's accounting policies

 

Business combinations

 

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

 

Investee - significant influence

 

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

 

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

 

 26

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

5. Critical accounting estimates and judgements (continued)

 

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

 

Impairment of investments in associates

 

The Company follows the guidance of IAS 28 Investments in Associates and Joint Ventures to assess whether there are impairment indicators which may lead to the recognition of an impairment loss with respect to its net investment in an associate. This determination requires significant judgement in evaluating if a decline in fair value is significant or prolonged, which triggers a formal impairment test. In making this judgement, the Company's management evaluates, among other factors, the duration and extent to which the fair value of an investment is less than its carrying amount, the volatility of the investment and the financial health and business outlook for the investee, including factors such as the current and expected status of the investee's exploration projects and changes in financing cash flows.

 

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

 

Assessment of impairment of exploration and evaluation assets (including exploration and evaluation assets under a farm-out agreement) and royalty, stream and other interests on exploration and evaluation properties requires the use of judgements when assessing whether there are any indicators that could give rise to the requirement to conduct a formal impairment test on the Company's exploration and evaluation assets and royalty, stream and other interests on exploration and evaluation properties. Factors which could trigger an impairment review include, but are not limited to, an expiry of the right to explore in the specific area during the period or will expire in the near future and is not expected to be renewed; substantive exploration and evaluation expenditures in a specific area, taking into consideration such expenditures to be incurred by a farmee, is neither budgeted nor planned; exploration for and evaluation of mineral resources in a specific area have not led to the discovery of commercially viable quantities of mineral resources and the Company has decided to discontinue such activities in the specific area; sufficient data exists to indicate that, although a development in a specific area is likely to proceed, the carrying amount of the assets is unlikely to be recovered in full from successful development or by sale; significant negative industry or economic trends; interruptions in exploration and evaluation activities by the Company or its farmee; and a significant change in current or forecast commodity prices.

 

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

 

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

 

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

 

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

 

Deferred income tax assets

 

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

 

 27

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

6. Spin-out transaction of the mining activities

 

On November 25, 2020, Osisko completed the spin-out transaction of its mining activities to Osisko Development through a reverse take-over transaction with Barolo Ventures Corp. ("Barolo"), thus forming a new gold development company in North America, with the objective of becoming a mid-tier gold producer. Upon closing, Barolo changed its name to Osisko Development Corp.

 

History and description of the transaction

 

On October 5, 2020, Osisko and Barolo had entered into a binding letter agreement (the "Letter Agreement") outlining the terms upon which Osisko would transfer certain mining properties (as described below) and a portfolio of marketable securities (together with the mining properties, the "Contributed Osisko Assets") to Barolo in exchange for common shares of Barolo (the "Barolo Shares"), which would result in a reverse take-over" of Barolo (the "RTO") under the policies of the TSX-V.

 

The spin-out transaction resulted in, among other things, Osisko transferring certain mining properties and a portfolio of marketable securities (through the transfer of the entities that directly or indirectly own such mining properties and marketable securities) to Osisko Development Holdings Inc. ("Osisko Subco"), following which Osisko Subco and 1269598 BC Ltd. ("Barolo Subco") were amalgamated by way of a triangular amalgamation under the Business Corporations Act (British Columbia) (the "Amalgamation") to form "Amalco". Upon the Amalgamation, Osisko exchanged its Osisko Subco shares for ODV Shares, which resulted in the RTO of Osisko Development.

 

Transaction costs related to the RTO transaction amounted to approximately $1.3 million and are included under business development expenses on the consolidated statements of income (loss).

 

Contributed Osisko Assets

 

The following assets were transferred by Osisko to Osisko Development:

 

- Cariboo gold project (British Columbia, Canada)

- San Antonio gold project (Sonora, Mexico)

- Bonanza Ledge II gold project (British Columbia, Canada)

- Guerrero exploration properties (Guerrero, Mexico)

- James Bay exploration properties, including the Coulon property (Québec, Canada)

- Portfolio of publicly-listed equity positions

 

Osisko retained the following royalty or stream interests in the assets transferred to Osisko Development:

 

- 5% NSR royalty on the Cariboo gold project and Bonanza Ledge II gold project

- 15% gold and silver stream on the San Antonio gold project

- 3% NSR royalty on the James Bay and Guerrero exploration properties

 

Osisko was also granted the following rights in Osisko Development: (i) a right of first refusal on all future royalties and streams to be offered by Osisko Development; (ii) a right to participate in buybacks of existing royalties held by Osisko Development; and (iii) other rights customary with a transaction of this nature.

 

 28

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

6. Spin-out transaction of the mining activities (continued)

 

Deemed acquisition of Barolo

 

The net assets of Barolo acquired were recorded at their estimated relative fair market value at the date of closing of the RTO and are summarized below:

 

Deemed consideration paid for the deemed acquisition of Barolo  $   
       
233,395 common shares of Osisko Development deemed issued (i)   1,751 
Transaction fees   500 
    2,251 
      
Net liabilities deemed assumed     
      
Net liabilities of Barolo   (164)
Net cost of listing   2,415 

 

(i) Represents the deemed listing fees of Osisko Development.

 

Financings of Osisko Development

 

RTO Financing

 

On November 25, 2020, prior to the effective time of the Amalgamation, upon satisfaction of the escrow release conditions, a total of 13,350,000 subscription receipts of Osisko Subco were issued at a price of $7.50 per subscription receipt under a $100.1 million concurrent financing closed by Osisko Subco on October 29, 2020 (the "RTO Financing"), were converted into 13,350,000 common shares of Osisko Subco and 6,675,000 common share purchase warrants of Osisko Subco, and the net subscription proceeds were released from escrow and paid to Osisko Subco.

 

Each common share purchase warrant of Osisko Subco outstanding, immediately prior to the effective time of the Amalgamation, was exchanged for one common share purchase warrant of Osisko Development, with each common share purchase warrant of Osisko Development entitling the holder to acquire one ODV Share at a price of $10 per share for a period of 18 months from the effective date of the Amalgamation (which was subsequently extended to 36 months from the date of closing). Transaction costs amounted to $3.0 million, including the Underwriters' commission.

 

Following completion of the Amalgamation and RTO Financing, Osisko held beneficial ownership and control over 100,000,100 Osisko Development shares, representing approximately 88.0% of the issued and outstanding Osisko Development shares.

 

Brokered private placement

 

On December 30, 2020, Osisko Development closed a brokered private placement of 5,367,050 units (the "Brokered Private Placement Units") at a price of $7.50 per Brokered Private Placement Unit for aggregate gross proceeds of approximately $40.2 million, including the exercise in full of the underwriters' option (the "Brokered Private Placement"). Each Brokered Private Placement Unit consists of one common share of Osisko Development and one-half of one common share purchase warrant of Osisko Development, with each whole warrant entitling the holder thereof to acquire one common share of Osisko Development at a price of $10.00 per share on or prior to December 1, 2023. The net proceeds of the Brokered Private Placement will be used to further develop the Cariboo gold project and other exploration assets of Osisko Development, and for general corporate purposes. Transaction costs amounted to $2.1 million, including the Underwriters' commission.

 

Following completion of the Brokered Private Placement, Osisko continued to hold beneficial ownership and control over 100,000,100 Osisko Development shares, representing approximately 84.1% of the issued and outstanding Osisko Development shares.

 

 29

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

7. Acquisition of the San Antonio gold project

 

In August 2020, Osisko acquired the San Antonio gold project in the state of Sonora in Mexico for US$42.0 million through the (indirect) acquisition of Sapuchi Minera S. de R.L. de C.V. An amount of US$30.0 million was paid in cash by Osisko and the remaining US$12.0 million was paid through the issuance of common shares of Osisko. A total of 1,011,374 Osisko common shares were issued and valued at $15.8 million, based on the closing price of the Company's common shares on the transaction date. Transaction costs amounted to $5.9 million. The San Antonio gold project was subsequently transferred to Osisko Development as part of the RTO transaction (Note 6).

 

In accordance with IFRS 3 Business Combinations, the transaction has been recorded as an acquisition of assets as the acquired assets and assumed liabilities did not meet the definition of a business.

 

The total purchase price of $68.1 million was allocated to the assets acquired and the liabilities assumed based on the relative fair value at the closing date of the transaction. All financial assets acquired and financial liabilities assumed were recorded at fair value.

 

The purchase price was calculated as follows:

 

Consideration paid  $    
Issuance of 1,011,374 common shares    15,846  
Cash consideration    40,015  
Value-added tax paid on acquisition of assets    6,328  
Osisko's transaction costs    5,865  
     68,054  
        
Net assets acquired 

$

    
Inventories    7,899  
Inventories - non-current (1)    16,129  
Other non-current assets    6,328  
Mining interests and plant and equipment    58,368  
Accounts payable and accrued liabilities    (11,369)  
Provision and other liabilities    (9,301)  
     68,054  

 

(1) The inventory balance associated with the ore that was not expected to be processed within 12 months of the acquisition date was classified as non-current and was recorded in the other assets line item on the consolidated balance sheet.

 

 30

 

  

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

8. Cash

 

As at December 31, 2021 and 2020, the consolidated cash position was as follows:

 

   Osisko Gold Royalties (i)   Osisko Development (ii)   Total 
   2021   2020   2021   2020   2021   2020 
   $   $   $   $   $   $ 
Cash held in Canadian dollars   40,121    29,714    13,364    137,374    53,485    167,088 
                               
Cash held in U.S. dollars   33,262    59,208    15,810    47,167    49,072    106,375 
Cash held in U.S. dollars (Canadian equivalent)   42,170    75,383    20,043    60,053    62,213    135,436 
Total cash   82,291    105,097    33,407    197,427    115,698    302,524 

 

(i) Excluding Osisko Development and its subsidiaries.

(ii) Osisko Development and its subsidiaries.

 

9. Short-term investments

 

As at December 31, 2020, short-term investments were comprised of a $3.5 million note receivable from an exploration and development mining company, bearing an interest rate of 12.0%. The loan was repaid in 2021.

 

10. Amounts receivable

 

   December 31,   December 31, 
   2021   2020 
   $   $ 
Revenues receivable from royalty, stream and other interests   1,378    1,044 
Interest income receivable   4,655    2,474 
Amounts receivable from associates (i)   743    813 
Sales taxes and exploration tax credits   7,358    7,224 
Other receivables   557    1,339 
    14,691    12,894 

 

(i) Amounts receivable from associates are mainly related to professional services and office rent.

 

 31

 

 

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

11. Inventories and other assets

 

   December 31,   December 31, 
   2021   2020 
    $    $ 
Current          
           
Ore in stockpiles (i), (ii), (iii)   4,194    8,426 
Gold-in-circuit and doré bars (i), (ii), (iii)   9,751    - 
Supplies and others (i)   4,651    1,599 
Total current inventories   18,596    10,025 
           
Prepaid expenses and deposits   3,941    6,244 
Total current other assets   22,537    16,269 
           
Non-current          
           
Ore in stockpiles (i), (ii)   -    17,279 
Sales taxes (iv)   11,632    6,775 
Deposits (reclamation and equipment)   4,619    599 
Deferred financing fees   1,786    1,167 
Total non-current other assets   18,037    25,820 

 

(i)Inventories are held by subsidiaries of Osisko Development and are related to the Bonanza Ledge Phase 2 and San Antonio projects.
(ii)The inventory balance associated with the ore that is not expected to be processed within 12 months was classified as non-current and recorded under other assets on the consolidated balance sheet as at December 31, 2020. During the year ended December 31, 2021, the Company recorded an impairment charge of $21.2 million on the ore in stockpiles for the San Antonio exploration and development project to reduce its net book value to its net realizable value, following an increase in the expected processing and transportation costs and a decrease in the gold price.
(iii)As at December 31, 2021, the ore in stockpiles and the gold-in-circuit and doré bars inventories were recorded at their net realizable value.
(iv)The non-current sales taxes are related to value added tax in Mexico, for which the collection period is over one year.

 

 32

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

12. Investments in associates

 

   2021   2020 
    $    $ 
Balance - January 1   119,219    103,640 
Acquisitions (i)   2,366    14,954 
Exercise of warrants   1,437    36 
Share of loss   (3,950)   (7,657)
Share of other comprehensive income (loss)   (1,665)   1,506 
Net gain on ownership dilution (i)   1,847    10,381 
Gain on deemed disposals (ii)   -    5,357 
Transfers to other investments (ii)   -    (8,998)
Deemed issuance of Osisko common shares held by an associate (iii)   6,100    - 
Balance - December 31   125,354    119,219 

 

(i)In June 2020, Osisko participated in a private placement completed by Osisko Mining Inc. ("Osisko Mining"), an associate of the Company, and invested an additional $14.8 million to acquire 4,054,000 units, each unit being comprised of one common share and one-half of one common share purchase warrants (each full warrant allowing its holder to acquire one common share of Osisko Mining for $5.25 for a period of 18 months following the closing of the transaction). The acquisition price was allocated to the investments in associates ($13.6 million) and warrants ($1.2 million). Following the closing of the private placement, Osisko's interest in Osisko Mining was reduced at the time from 15.8% to 14.7%. As a result, a gain on ownership dilution of $10.4 million was recorded under other gains, net on the consolidated statement of income (loss) for the year ended December 31, 2020.
(ii)In 2020, the gain on deemed disposals is related to investments in associates that were transferred to other investments as the Company has considered that it has lost its significant influence over the investees.
(iii)Osisko Mining Inc., an associate of Osisko, held common shares of Barkerville Gold Mines Limited ("Barkerville") prior to its acquisition by Osisko in 2019. Following the acquisition of Barkerville, Osisko Mining received common shares of Osisko, which resulted in a deemed repurchase of common shares by the Company and a related reduction in the net investment in Osisko Mining, based on the ownership interest held in Osisko Mining. During the year ended December 31, 2021, Osisko Mining disposed of its shares of Osisko, which resulted in a deemed issuance of common shares by the Company and an increase in the net investment in Osisko Mining.

 

Material investment

 

Osisko Mining Inc.

 

Osisko Mining is a Canadian gold exploration and development company focused on its Windfall Lake gold project. Osisko holds a 2.0% - 3.0% NSR royalty on the Windfall Lake gold project, for which an updated positive preliminary economic assessment was released in April 2021, and a 1% NSR royalty on other properties held by Osisko Mining. The Company invested $14.8 million in Osisko Mining in 2020.

 

As at December 31, 2021, the Company holds 50,023,569 common shares representing a 14.4% interest in Osisko Mining (14.5% as at December 31, 2020). Based on the fact that one director of Osisko is also a director 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.

 

Osisko Metals Incorporated

 

Osisko Metals Incorporated ("Osisko Metals") is a Canadian base metal exploration and development company with a focus on zinc mineral assets. The company's flagship properties are the Pine Point mining camp, located in the Northwest Territories and the Bathurst mining camp, located in northern New Brunswick. The Company owns a 2.0% NSR royalty on the Pine Point mining camp and a 1% NSR royalty on the Bathurst mining camp.

 

As at December 31, 2021, the Company holds 31,127,397 common shares representing a 15.4% interest in Osisko Metals (17.4% as at December 31, 2020). Based on the fact that an officer of Osisko Development is also a director of Osisko Metals, and because of other facts and circumstances, the Company concluded that it exercises significant influence over Osisko Metals and accounts for its investment using the equity method.

 

 33

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

12. Investments in associates (continued)

 

Material investments (continued)

 

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

 

    Osisko Mining    Osisko Metals 
    2021(i)   2020(i)    2021(i)    2020(i) 
    $     $     $     $  
Current assets   185,307    326,563    5,659    1,616 
Non-current assets   664,544    486,492    89,006    91,828 
Current liabilities   31,440    43,482    2,676    3,028 
Non-current liabilities   109,502    79,316    1,607    2,935 
Revenues   -    -    -    - 
Net loss from continuing operations and net loss   (8,149)   (33,337)   (4,618)   (9,646)
Other comprehensive (loss) income   (10,730)   11,609    (36)   (9,818)
Comprehensive loss   (18,879)   (21,728)   (4,654)   (19,464)
                     
Carrying value of investment(ii)   98,885    95,379    13,470    14,204 
Fair value of investment(ii)   190,590    185,087    12,140    13,696 

 

(i) Information is for the reconstructed twelve months ended September 30, 2021 and 2020.

(ii) As at December 31, 2021 and 2020.

 

Investments in immaterial associates

 

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

 

   2021   2020 
    $    $ 
Aggregate amount of the Company's share of net loss   (2,286)   (1,981)
Aggregate amount of the Company's share of other comprehensive loss   -    (33)
Aggregate carrying value of investments   12,999    9,636 
Aggregate fair value of investments   45,426    20,951 

 

 34

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

13. Other investments

 

   2021   2020 
    $    $ 
Fair value through profit or loss (warrants and convertible instruments)          
Balance - January 1   25,063    1,700 
Acquisitions (i)   17,754    4,782 
Exercises   (1,122)   (347)
Change in fair value   6,286    2,387 
Amendment of a note receivable (ii)   -    16,541 
Balance - December 31   47,981    25,063 
           
Fair value through other comprehensive (loss) income (common shares)          
Balance - January 1   115,590    57,409 
Acquisitions   18,668    18,602 
Exercises of warrants   600    452 
Transfer from associates (Note 12)   -    8,998 
Change in fair value   7,303    40,993 
Disposals   (47,930)   (10,864)
Balance - December 31   94,231    115,590 
           
Amortized cost (notes)          
Balance - January 1   16,861    8,777 
Acquisitions   14,961    7,998 
Repayment   (3,007)   - 
Transfer from short-term investments   -    8,467 
Impairments   (2,112)   (7,998)
Foreign exchange revaluation impact   95    (383)
Balance - December 31   26,798    16,861 
Total   169,010    157,514 

 

(i) In 2021, acquisitions include an investment of $5.0 million in class A restricted voting units of Osisko Green Acquisition Limited, a newly-organized special purpose acquisition corporation, and a US$5.0 million ($6.4 million) convertible loan made by Osisko Development to IG Tintic LLC (Note 34).

(ii) In November 2020, a $15.9 million secured senior loan with Falco was amended to become convertible after the first anniversary of its execution date into common shares of Falco at a conversion price of $0.55 per share, subject to standard anti-dilution protections. The convertible debenture continues to bear interest at a rate of 7.0% per annum compounded quarterly and has a maturity date of December 31, 2022. The accrued interest receivable of $1.7 million on the loan prior to its conversion was capitalized to the capital of the note. In addition, Falco issued to Osisko 10,664,324 warrants of Falco, each exercisable for one common share of Falco at an exercise price of $0.69 for a period of 24 months from their date of issuance. The fair value of the warrants was evaluated at $1.1 million using the Black-Scholes model.

 

Other investments comprise common shares, warrants, convertible and non-convertible debentures and notes receivable, mostly from Canadian publicly traded companies as well as loan receivables from two private companies, which own the Renard diamond mine and the Amulsar gold project (the loans related to the Amulsar gold project were fully impaired), and one convertible note from a foreign private company (Note 34).

 

 35

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

14. Royalty, stream and other interests

 

   Year ended 
 December 31, 2021 
   Royalty   Stream   Offtake     
   interests   interests   interests   Total 
    $    $    $    $ 
Balance - January 1   656,661    440,941    18,526    1,116,128 
Additions   77,702    13,234    -    90,936 
Conversion of an offtake into a stream   -    4,682    (4,682)   - 
Depletion   (28,958)   (19,403)   -    (48,361)
Impairment   (2,288)   -    -    (2,288)
Translation adjustments   (4)   (1,422)   (188)   (1,614)
Balance - December 31   703,113    438,032    13,656    1,154,801 
                     
Producing                    
Cost   626,345    518,934    -    1,145,279 
Accumulated depletion and impairment   (395,874)   (210,884)   -    (606,758)
Net book value - December 31   230,471    308,050    -    538,521 
                     
Development                    
Cost   226,438    181,209    31,120    438,767 
Accumulated depletion and impairment   (572)   (51,227)   (26,424)   (78,223)
Net book value - December 31   225,866    129,982    4,696    360,544 
                     
Exploration and evaluation                    
Cost   247,680    -    8,960    256,640 
Accumulated depletion   (904)   -    -    (904)
Net book value - December 31   246,776    -    8,960    255,736 
                     
Total net book value - December 31   703,113    438,032    13,656    1,154,801 

 

Main acquisitions - 2021

 

In April 2021, the Company acquired six royalties and one precious metals offtake, from two private sellers, for total cash consideration of US$26.0 million ($32.6 million). Four of the royalties are on claims overlying the Spring Valley project, located in United States of America, and increased the Company's current NSR royalty on Spring Valley from 0.5% to between 2.5% - 3.0% (sliding scale royalty percentages as long as gold prices are above US$700 per ounce). Immediately to the north of Spring Valley lies the Moonlight exploration property, where Osisko also acquired a 1.0% NSR royalty. Osisko also acquired a 0.5% NSR royalty and a 30% gold and silver offtake right covering the Almaden project in western Idaho.

 

In July 2021, the Company entered into a royalty transfer agreement with Sailfish Royalty Corp. ("Sailfish") pursuant to which Osisko purchased a 2.75% NSR royalty on the Tocantinzinho gold project ("Tocantinzinho"), located in Brazil, and operated by G Mining Ventures Corp. for cash consideration of US$10 million ($12.6 million). The operator of Tocantinzinho has a one-time buy-down option in relation to the royalty. At the time of project construction the operator may make a payment of US$5.5 million to reduce the royalty percentage by 2% resulting in a royalty of 0.75%. Pursuant to a pre-existing agreement entered into by Sailfish, the buy-down payment is payable to the original royalty owners. In November 2021, the operator has early exercised the first 1% of the buy-down, therefore reducing the effective NSR royalty to 1.75%.

 

In August 2021, the Company made an advance payment of $10.0 million under its silver stream agreement with Falco Resources Ltd., an associate. The payment corresponds to half of the $20.0 million second installment payment, which was payable at the receipt of all necessary material third-party approvals, licenses, rights of way and surface rights on the Horne 5 property, located in Canada.

 

In October 2021, Osisko acquired from Barrick TZ Limited, a subsidiary of Barrick Gold Corporation ("Barrick"), royalties for total cash consideration of US$11.8 million, including a 2% NSR royalty on the AfriOre and Gold Rim licenses comprising the West Kenya project operated by Shanta Gold Limited, a 1% NSR royalty on the Frontier project operated by Metalor SA, a private company, and a 1% NSR royalty on the Central Houndé project operated by Thor Explorations Ltd.

 

 36

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

14. Royalty, stream and other interests (continued)

 

Conversion of the Parral offtake to a gold and silver stream

 

In April 2021, GoGold Resources Inc. ("GoGold") and Osisko Bermuda Limited ("Osisko Bermuda"), a subsidiary of Osisko, entered into an agreement to convert the current gold and silver offtake into a gold and silver stream. Under the stream, Osisko Bermuda started receiving, effective April 29, 2021, 2.4% of the gold and silver produced from tailings piles currently owned or acquired by GoGold, with a transfer price of 30% of the gold and silver spot prices. Osisko has currently no other offtake agreement in production.

 

   Year ended 
   December 31, 2020 
   Royalty   Stream   Offtake     
   interests   interests   interests   Total 
    $    $    $    $ 
Balance - January 1   627,567    483,164    19,781    1,130,512 
Additions   54,276    11,917    -    66,193 
Disposal   (357)   -    -    (357)
Depletion   (23,159)   (21,532)   (914)   (45,605)
Impairment   -    (26,300)   -    (26,300)
Translation adjustments   (1,666)   (6,308)   (341)   (8,315)
Balance - December 31   656,661    440,941    18,526    1,116,128 
                     
Producing                    
Cost   621,503    512,019    18,422    1,151,944 
Accumulated depletion and impairment   (367,232)   (188,281)   (13,609)   (569,122)
Net book value - December 31   254,271    323,738    4,813    582,822 
                     
Development                    
Cost   185,170    168,648    31,252    385,070 
Accumulated depletion and impairment   (501)   (51,445)   (26,537)   (78,483)
Net book value - December 31   184,669    117,203    4,715    306,587 
                     
Exploration and evaluation                    
Cost   218,395    -    8,998    227,393 
Accumulated depletion   (674)   -    -    (674)
Net book value - December 31   217,721    -    8,998    226,719 
                     
Total net book value - December 31   656,661    440,941    18,526    1,116,128 

 

Main acquisitions - 2020

 

In April 2020, the Company announced an amendment to its silver stream with respect to the Gibraltar copper mine, located in British Columbia, Canada, which is operated by a wholly-owned subsidiary of Taseko Mines Limited ("Taseko"). Osisko and Taseko have amended the silver stream by reducing the price paid by Osisko for each ounce of refined silver from US$2.75 to nil in exchange for cash consideration of $8.5 million to Taseko.

 

In August 2020, the Company announced a definitive agreement with Caisse de dépôt et placement du Québec to acquire the outstanding 15% ownership in a portfolio of Canadian precious metals royalties for cash consideration of $12.5 million. The 15% interest represents the remaining portion of the portfolio of royalties purchased from Teck Resources Ltd. in October 2015, including the NSR royalties on the Island Gold and Lamaque mines.

 

 37

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

14. Royalty, stream and other interests (continued)

 

Main acquisitions - 2020 (continued)

 

In October 2020, Osisko announced a strategic partnership whereby Regulus Resources Inc. ("Regulus") has agreed to grant certain rights to Osisko in exchange for an upfront cash payment (the "Upfront Payment") of US$12.5 million ($16.4 million). These rights include the right to acquire royalties to be acquired by Regulus and a right of first refusal on all future royalty or stream transactions in relation to claims of the AntaKori project where Regulus has 100% ownership or any additional claims Regulus might acquire with 100% ownership within a certain area. As a significant initial transaction under the partnership, Regulus has acquired a royalty on the Mina Volare claim of the AntaKori project which represents a 1.5% or 3% NSR depending on location, from a private vendor. As per its right under the partnership, Osisko has elected to acquire 50% of the royalty for 75% of Regulus' purchase price with Osisko's acquisition cost for the royalty included in the Upfront Payment. Regulus has cancelled the remaining 50% of the royalty. As such, the royalty on the Mina Volare claim is now reduced to 0.75% or 1.5% depending on location, in favour of Osisko.

 

In January 2020 and December 2020, Osisko acquired a 2% NSR royalty on the Pine Point zinc project held by Osisko Metals, an associate of the Company, for cash consideration of $13.0 million. Osisko was also granted a right of first offer on any future sales by Osisko Metals of any additional royalties, streams or similar interests on the Pine Point project.

 

Impairment - 2020

 

Renard mine diamond stream (Stornoway Diamonds (Canada) Inc.

 

In March 2020, the selling price of diamonds decreased significantly as a result of the impact of the COVID-19 pandemic on the diamond market. On March 24, 2020, activities at the Renard diamond mine were suspended and on April 15, 2020, despite the announcement by the Government of Québec to include mining activities as an essential service, the operator of the Renard diamond mine announced the extension of the care and maintenance period of its operations due to depressed diamond market conditions. These were considered as indicators of impairment among other facts and circumstances and, accordingly, management performed an impairment assessment as at March 31, 2020. The Company recorded an impairment charge of $26.3 million ($19.3 million, net of income taxes) on the Renard diamond stream during the three months ended March 31, 2020.

 

On March 31, 2020, the Renard diamond stream was written down to its estimated recoverable amount of $40.0 million, which was determined by the value-in-use using discounted cash-flows approaches and estimated probabilities of different restart scenarios. 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 price per carat, a pre-tax real discount rate of 10.0% and weighted probabilities of different restart scenarios.

 

A sensitivity analysis was performed by management for the long-term diamond price, the pre-tax real discount rate and the weighting of the different scenarios. 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 $4.1 million ($3.0 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 $1.9 million ($1.4 million, net of income taxes). If the probabilities of the different restart scenarios had been 10% more negative than management's estimates, the Company would have recognized an additional impairment charge of $5.5 million ($4.0 million, net of taxes).

 

 38

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

15. Mining interests and plant and equipment

 

 2021   2020 
   Mining   Plant and       Mining   Plant and     
   interests   equipment (i)   Total   interests   equipment (i)   Total 
    $    $    $    $    $    $ 
Net book value - January 1   459,303    30,209    489,512    320,008    23,685    343,693 
Acquisition of the San Antonio gold
project (Note 6)		   -    -    -    57,038    1,330    58,368 
Additions   139,183    58,192    197,375    75,437    10,915    86,352 
Impairment   (58,417)   -    (58,417)   -    -    - 
Mining exploration tax credits   (1,585)   -    (1,585)   (4,608)   -    (4,608)
Change in environmental                              
rehabilitation assets   19,522    -    19,522    3,414    -    3,414 
Depreciation   -    (7,814)   (7,814)   -    (5,340)   (5,340)
Depreciation capitalized   4,136    -    4,136    4,019    -    4,019 
Share-based compensation capitalized   2,127    -    2,127    688    -    688 
Transfers   (11,221)   11,221    -    -    -    - 
Pre-commercial revenues   (7,275)   -    (7,275)   -    -    - 
Disposals and others   -    (213)   (213)   -    (388)   (388)
Currency translation adjustments   (1,820)   107    (1,713)   3,307    7    3,314 
Net book value - December 31   543,953    91,702    635,655    459,303    30,209    489,512 
                               
Closing balance                              
Cost   602,370    105,112    707,482    459,303    37,545    496,848 
Accumulated depreciation                              
and impairment   (58,417)   (13,410)   (71,827)   -    (7,336)   (7,336)
Net book value   543,953    91,702    635,655    459,303    30,209    489,512 

 

(i) Plant and equipment includes right-of-use assets of $20.3 million as at December 31, 2021 ($10.8 million as at December 31, 2020).

 

Impairments - 2021

 

Bonanza Ledge Phase 2 Project

 

In March 2021, processing of ore commenced at the Bonanza Ledge Phase 2 project. As a result of operational challenges incurred during the second quarter for 2021, it was determined that total capital and production costs related to the Bonanza Ledge Phase 2 project would be higher than originally planned. These factors were considered indicators of impairment, among other facts and circumstances and, accordingly, management performed an impairment assessment as at June 30, 2021. As a result of the impairment assessment, the Company recorded an impairment charge of $36.1 million on the Bonanza Ledge Phase 2 project during the three months ended June 30, 2021.

 

On June 30, 2021, the Bonanza Ledge Phase 2 project was written down to its estimated recoverable amount of $12.4 million, which was determined by the value-in-use using a cash-flows approach. The main valuation inputs used were the cash flows expected to be generated by the sale of gold from the Bonanza Ledge Phase 2 project over its estimated life of the mine, based on an average gold price per ounce of US$1,797, the average grade of gold and the average recovery rate for the remaining mine life. No discount rate was used as the project has a short-term remaining mine life of approximately 18 months.

 

A sensitivity analysis was performed by management for the gold price, the average grade and the recovery rate (in isolation). If gold price per ounce applied to the cash flow projections had been 10% lower than management's estimates, the Company would have recognized an additional impairment charge of $9.3 million. If the average gold grade or gold recovery applied to the cash flows had been 10% lower, the Company would have recognized an additional impairment charge of $12.4 million.

 

 39

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

15. Mining interests and plant and equipment (continued)

 

Impairments - 2021 (continued)

 

Bonanza Ledge Phase 2 Project (continued)

 

Due to continuing operational challenges, it was determined that total capital and production costs related to the Bonanza Ledge Phase 2 project would be higher than the total revenues expected to be generated for the remaining life of the project. These factors were considered indicators of impairment, among other facts and circumstances and, accordingly, management performed an impairment assessment as at September 30, 2021. As a result of the impairment assessment, the Company recorded an impairment charge of $22.4 million on the Bonanza Ledge Phase 2 project during the three months ended September 30, 2021.

 

On September 30, 2021, the net book value of the Bonanza Ledge Phase 2 project was written down to zero as it was estimated that the net book value will not be recovered by the expected net profits to be generated from the sale of precious metals. The recoverable amount was determined by the value-in-use using a cash-flows approach. The main valuation inputs used were the cash flows expected to be generated by the sale of gold from the Bonanza Ledge Phase 2 project over its estimated life of the mine, based on an average gold price per ounce of US$1,787, the average grade of gold and the average recovery rate for the remaining mine life. No discount rate was used as the project has a short-term remaining mine life of approximately 18 months. The project value is maintained at zero and any excess operating expenses over revenues are recorded under mining operating expenses on the statements of income (loss).

 

16. Exploration and evaluation

 

   2021   2020 
    $    $ 
Net book value - January 1   42,519    42,949 
Additions   3,784    201 
Impairment   (42,668)   - 
Transfer to royalty, stream and other interests   -    (631)
Net book value - December 31   3,635    42,519 
           
Closing balance          
Cost   104,492    100,708 
Accumulated impairments   (100,857)   (58,189)
Net book value   3,635    42,519 

 

Impairment

 

In 2021, the Company incurred an impairment charge of $42.7 million ($34.6 million, net of income taxes) on exploration and evaluation properties, including the James Bay properties and the Coulon zinc project in Canada. The Company has determined that further exploration and evaluation expenditures are no longer planned in the near term on these properties and that the carrying amount of these assets is unlikely to be recovered from a sale of these properties at the current time. As a result, these properties were written down to zero on December 31, 2021.

 

 40

 

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

17. Goodwill

 

The Company's goodwill is allocated to a group of cash generating units: the Éléonore NSR royalty and the Canadian Malartic NSR royalty ("CGUs").

 

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

 

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

 

   2021   2020 
Long-term gold price (per ounce)  US$ 1,600   US$ 1,600 
Long-term silver price (per ounce)  US$ 21   US$ 20 
Post-tax real discount rate  4.3%  3.5%

 

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

 

Assumption Approach used to determine values
Long-term gold price Based on current gold market trends consistent with external sources of information, such as long-term gold price consensus.
   
Long-term silver price Based on current silver market trends consistent with external sources of information, such as long-term silver price consensus.
   
Post-tax real discount rate Reflects specific risks relating to gold mines operating in Québec, Canada.

 

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

 

 41

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

18. Accounts payable and accrued liabilities

 

   December 31,   December 31, 
   2021   2020 
   $   $ 
Trade payables   9,678    12,771 
Other payables   13,568    19,093 
Accrued interests on long-term debt   142    166 
Income taxes payable   -    6,055 
Other accrued liabilities   6,661    8,804 
    30,049    46,889 

 

19. Provisions and other liabilities

 

   Year ended   Year ended 
   December 31, 2021   December 31, 2020 
           Deferred                 
           premium on                 
   Environmental   Lease   flow-through       Environmental   Lease     
   rehabilitation(i)   liabilities(ii)   shares (iii)   Total   Rehabilitation(i)   liabilities(ii)   Total 
   $   $   $   $   $   $   $ 
Balance - Beginning of period   34,601    11,366    -    45,967    20,527    10,127    30,654 
                                    
Acquisition of the San Antonio gold project (Note 7)   -    -    -    -    9,301    -    9,301 
New liabilities   20,433    13,578    -    34,011    4,176    2,394    6,570 
Revision of estimates   (1,457)   -    -    (1,457)   (310)   -    (310)
Accretion   1,192    -    -    1,192    820    -    820 
Settlement/payments of liabilities   (1,240)   (6,582)   -    (7,822)   (500)   (1,155)   (1,655)
Issuance of flow-through shares   -    -    7,885    7,885    -    -    - 
Recognition of deferred premium on flow-through shares   -    -    (6,971)   (6,971)   -    -    - 
Currency translation adjustments   (292)   -    -    (292)   587    -    587 
Balance - End of period   53,237    18,362    914    72,513    34,601    11,366    45,967 
                                    
Current portion   2,287    8,978    914    12,179    3,019    1,412    4,431 
Non-current portion   50,950    9,384    -    60,334    31,582    9,954    41,536 
    53,237    18,362    914    72,513    34,601    11,366    45,967 

 

(i) The environmental rehabilitation provision represents the legal and contractual obligations associated with the eventual closure of the Company's mining interests, plant and equipment and exploration and evaluation assets (mostly for the Cariboo property, Bonanza Ledge Phase 2 project and San Antonio project). As at December 31, 2021, the estimated inflation-adjusted undiscounted cash flows required to settle the environmental rehabilitation amounts to $60.5 million. The weighted average actualization rate used is 3.4% and the disbursements are expected to be made from 2021 to 2030 as per the current closure plans.

 

(ii) The lease liabilities are mainly related to leases for mining equipment and for office space.

 

(iii) The flow-through shares issuance by Osisko Development is described in Note 21.

 

 42

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

20. Long-term debt

 

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

 

   2021   2020  
   $   $ 
Balance - January 1   400,429    349,042 
Increase in revolving credit facility   50,000    71,660 
Decrease in revolving credit facility   (50,000)   (19,205)
Mining equipment financings, net   3,764    - 
Amortization of transaction costs   2,204    2,238 
Accretion expense   4,308    4,972 
Foreign exchange revaluation impact   (270)   (8,278)
Balance - December 31   410,435    400,429 

 

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

 

   December 31,   December 31,  
   2021   2020  
   $   $ 
Convertible debentures(i),(ii)   300,000    350,000 
Revolving credit facility(iii)   113,389    63,659 
Mining equipment financings(vi)   3,764    - 
Long-term debt   417,153    413,659 
Unamortized debt issuance costs   (2,291)   (4,495)
Unamortized accretion on convertible debentures   (4,427)   (8,735)
Long-term debt, net of issuance costs   410,435    400,429 
Current portion   294,891    49,867 
Non-current portion   115,544    350,562 
    410,435    400,429 

 

(i) Convertible debenture (2016)

 

In February 2016, the Company issued a senior non-guaranteed convertible debenture of $50.0 million to Investissement Québec, which was repaid in full on February 12, 2021.

 

(ii) Convertible debentures (2017)

 

In November 2017, the Company closed a bought-deal offering of convertible senior unsecured debentures (the "Debentures") in an aggregate principal amount 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. The Debentures are 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. The Debentures are listed for trading on the TSX under the symbol "OR.DB".

 

 43

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

20. Long-term debt (continued)

 

(iii) Revolving credit facility

 

In July 2021, the Company amended its revolving credit facility (the "Facility") and increased the amount available by $150.0 million to $550.0 million, with an additional uncommitted accordion of up to $100.0 million (for a total availability of up to $650.0 million). The maturity date of the Facility was extended to July 30, 2025, which can be extended annually.

 

The annual extension of the Facility and the uncommitted accordion are subject to acceptance by 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 from the royalty, stream and other interests segment (which exclude the assets held by Osisko Development and its subsidiaries).

 

The Facility is subject to standby fees. Funds drawn bear interest based on the base rate, prime rate, London Inter-Bank Offer Rate ("LIBOR") or a comparable or successor rate, plus an applicable margin depending on the Company's leverage ratio. In February 2021, the Company drew $50.0 million to repay the Investissement Québec convertible debenture. As at December 31, 2021, the Facility was drawn for a total of $113.4 million ($50.0 million and US$50.0 million ($63.4 million)) and the effective interest rate was 2.25%, including the applicable margin. The Facility includes covenants that require the Company to maintain certain financial ratios, including the Company's leverage ratios and meet certain non-financial requirements. As at December 31, 2021, all such ratios and requirements were met.

 

(iv) Mining equipment financings

 

In 2021, Osisko Development financed the acquisition of mining equipment with third parties. The loans are guaranteed by the mining equipment and are payable in monthly installments over a period of 24 to 48 months.

 

21. Share capital

 

Shares

 

Authorized

 

Unlimited number of common shares, without par value

Unlimited number of preferred shares, issuable in series

 

Issued and fully paid 166,493,597 common shares

 

Year ended December 31, 2021

 

Osisko Development Corp. - Non-brokered private placement

 

In January 2021, Osisko Development completed the first tranche of a non-brokered private placement through the issuance of 9,346,464 units of Osisko Development at a price of $7.50 per unit for aggregate gross proceeds of $68.6 million. Each unit consists of one common share of Osisko Development and one-half of one common share purchase warrant of Osisko Development, which each whole warrant entitling the holder to acquire one common share of Osisko Development at a price of $10.00 per share on or prior to December 1, 2023.

 

In February 2021, Osisko Development completed the second and final tranche of a non-brokered private placement through the issuance of 1,515,731 units of Osisko Development at a price of $7.50 per unit for aggregate gross proceeds of $11.2 million. Each unit consists of one common share of Osisko Development and one-half of one common share purchase warrant of Osisko Development, which each whole warrant entitling the holder to acquire one common share of Osisko Development at a price of $10.00 per share on or prior to December 1, 2023.

 

An amount of $73.9 million from the non-brokered private placement was received in 2020, which was recorded under shares to be issued on Osisko Development's consolidated balance sheet at December 31, 2020 (under non-controlling interests on the Company's balance sheet). The share issue expenses related to the first and second tranches of the private placement amounted to $1.1 million ($0.8 million, net of income taxes).

 

 44

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

21. Share capital (continued)

 

Year ended December 31, 2021 (continued)

 

Osisko Development Corp. - Brokered private placement of flow-through shares

 

In March 2021, Osisko Development completed a "bought deal" brokered private placement of 2,055,742 flow-through shares at a price of $9.05 per flow-through share and 1,334,500 charity flow-through shares at a price of $11.24 per charity flow- through share, for aggregate gross proceeds of $33.6 million. Share issue expenses related to this private placement amounted to $1.5 million ($1.1 million, net of income taxes). The shares were issued at a premium to the market price, which was recognized as a current liability under provisions and other liabilities for $7.9 million (net of share issue costs attributed of $0.5 million). The liability will be reversed and recognized to the consolidated statement of income (loss) as flow-through premium income as the required expenditures are incurred. Osisko Development is committed to spending the proceeds on exploration and evaluation activities by December 31, 2022. As at December 31, 2021, the balance remaining to be spent amounted to $3.9 million.

 

Year ended December 31, 2020

 

Private Placement with Investissement Québec

 

In April 2020, the Company completed a private placement of 7,727,273 common shares at a price of $11.00 per common share for total gross proceeds of $85.0 million (the "Private Placement") with Investissement Québec. The net proceeds from the Private Placement was used for general working capital purposes.

 

Acquisition of the San Antonio gold project

 

In August 2020, Osisko acquired the San Antonio gold project (Note 8) in the state of Sonora in Mexico. As part of the acquisition, a total of 1,011,374 common shares of Osisko were issued and valued at $15.8 million, based on the closing price of the Company's common shares on the transaction date.

 

Osisko Development Corp. - Bought-deal private placement

 

Concurrent with the transaction described in Note 6, Osisko Development had entered into an engagement letter with underwriters pursuant to which the underwriters had agreed to buy, on a "bought deal" private placement basis, 13,350,000 subscription receipts (the "Subscription Receipts") at a subscription price of $7.50 per Subscription Receipt (the "Issue Price") for gross proceeds of approximately $100.1 million (the "Financing"). Each Subscription Receipt entitled the holder thereof to receive, for no additional consideration and without further action on the part of the holder thereof, on or about the date that the transaction was completed, one common share of Osisko Development ("Osisko Development Share") and one- half-of-one warrant to purchase an Osisko Development Share (each whole warrant, a "Warrant"). Each Warrant will entitle the holder thereof to purchase one Osisko Development Share for $10.00 for an 18-month period following the closing of the transaction (the Warrants maturity date was subsequently extended to December 1, 2023). The Financing was completed on October 29, 2020 and share issue expenses related to this private placement amounted to $3.6 million ($2.6 million, net of income taxes).

 

Osisko Development Corp. - Brokered private placement

 

On December 30, 2020, Osisko Development completed a brokered private placement through the issuance of 5,367,050 units of the Company at a price of $7.50 per unit for aggregate gross proceeds of $40.2 million. Each unit consists of one common share of Osisko Development and one-half of one common share purchase warrant of Osisko Development, which each whole warrant entitling the holder to acquire one common share of Osisko Development at a price of $10.00 per share on or prior to December 1, 2023. Share issue expenses related to this private placement amounted to $2.1 million ($1.6 million, net of income taxes).

 

Employee Share Purchase Plans

 

The Company established an employee share purchase plan. Under the terms of the plan, the Company contributes an amount equal to 60% of the eligible employee's contribution towards the acquisition of common shares from treasury on a quarterly basis. Osisko Development established a similar plan for its employees.

 

 45

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

21. Share capital (continued)

Shares (continued)

Normal Course Issuer Bid

 

In December 2021, Osisko renewed its normal course issuer bid ("NCIB") program. Under the terms of the 2021 NCIB program, Osisko may acquire up to 16,530,688 of its common shares from time to time in accordance with the normal course issuer bid procedures of the TSX. Repurchases under the 2021 NCIB program are authorized from December 12, 2021 until December 11, 2022. Daily purchases will be limited to 87,364 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, 2021, being 349,057 Common Shares.

 

Under the terms of the 2020 NCIB program, Osisko was allowed to acquire up to 14,610,718 of its common shares from time to time, from December 12, 2020 to December 11, 2021. Daily purchases were limited to 138,366 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, 2020, being 553,464 common shares.

 

During the year ended December 31, 2021, the Company purchased for cancellation a total of 2,103,366 common shares for $30.8 million (average acquisition price per share of $14.64). During the year ended December 31, 2020, the Company purchased for cancellation a total of 429,722 common shares for $3.9 million (average acquisition price per share of $9.15).

 

Dividends

 

The following table provides details on the dividends declared by the Company for the years ended December 31, 2021 and 2020:

 

                 Dividend 
   Dividend         Dividends   reinvestment 
Declaration date  per share   Record date  Payment date  payable   plan(i) 
   $         $     
February 21, 2021   0.050   March 31, 2021  April 15, 2021   8,364,000    8,989,709 
May 11, 2021   0.050   June 30, 2021  July 15, 2021   8,404,000    7,102,627 
August 8, 2021   0.055   September 30, 2021  October 15, 2021   9,160,000    8,005,584 
November 9, 2021   0.055   December 31, 2021  January 14, 2022   9,157,000    7,891,496 
                      
Year 2021   0.210          35,085,000      
                      
February 19, 2020   0.050   March 31, 2020  April 15, 2020   7,879,000    24,809,311 
May 12, 2020   0.050   June 30, 2020  July 15, 2020   8,259,000    27,492,302 
August 5, 2020   0.050   September 30, 2020  October 15, 2020   8,342,000    9,822,963 
November 9, 2020   0.050   December 31, 2020  January 15, 2021   8,358,000    11,525,456 
                      
Year 2020   0.200          32,838,000      

 

(i) Number of common shares held by shareholders participating in the dividend reinvestment plan described below.

 

Dividend reinvestment plan

 

The Company has a dividend reinvestment plan ("DRIP") that allows Canadian 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 trading days immediately preceding the dividend payment date, less a discount, if any, of up to 5%, at the Company's sole election.

 

As at December 31, 2021, the holders of 7,891,496 common shares had elected to participate in the DRIP, representing dividends payable of $0.4 million. During the year ended December 31, 2021, the Company issued 120,523 common shares under the DRIP, at a discount rate of 3% (268,173 common shares in 2020 at a discount rate of 3%). On January 14, 2022, 29,929 common shares were issued under the DRIP at a discount rate of 3%.

 

 46

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

21. Share capital (continued)

Dividends (continued)

Capital management

 

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

 

   December 31,   December 31, 
   2021   2020 
   $   $ 
Long-term debt   410,435    400,429 
Total equity   1,780,061    1,841,032 
Undrawn revolving credit facility(i)   436,610    336,340 
    2,627,106    2,577,801 

 

(i) Excluding the potential additional available credit (accordion) of $100.0 million as at December 31, 2021 and 2020 (Note 20).

 

There were no changes in the Company's approach to capital management during the year ended December 31, 2021, compared to the prior year. The Company is not subject to material externally imposed capital requirements and is in compliance with all its covenants under its revolving credit facility (Note 20) as at December 31, 2021.

 

22. Warrants

 

As at December 31, 2021 and December 31, 2020, 5,480,000 warrants were outstanding and entitled the holder to purchase one common share of Osisko at a price of $36.50 until February 18, 2022. Subsequently to year-end, the warrants expired unexercised.

 

23. Share-based compensation Share options

 

The Company and its subsidiary, Osisko Development, offer a share option plan (the "Plans") to their directors, officers, management, employees and consultants. Options may be granted at an exercise price determined by the respective Board of Directors but shall not be less than the closing market price of the common shares of the Company on the TSX on the day prior to their grant. No participant shall be granted an option which exceeds 5% of the issued and outstanding shares of the issuer at the time of granting of the option. The number of common shares issued to insiders of the issuer within one year and issuable to the insiders at any time under the Plans or combined with all other share compensation arrangements, cannot exceed 8% (10% under Osisko Development's plan) of the issued and outstanding common shares of the related issuer. The duration and the vesting period are determined by the Board of Directors. However, the expiry date may not exceed 7 years (10 years under Osisko Development's plan) after the date of granting.

 

 47

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

23. Share-based compensation (continued)

 

Share options (continued)

 

Osisko Gold Royalties Ltd

 

The following table summarizes information about the movement of the share options outstanding under the Osisko's plan:

 

       2021        2020  
       Weighted        Weighted  
   Number of   average   Number of   average  
   options   exercise price   options   exercise price  
       $       $  
Balance - January 1   4,240,869    14.22    4,939,344    14.40  
Granted (i)   763,700    13.27   1,201,100    13.51  
Exercised   (1,043,903)   13.75   (673,470 )  11.27  
Forfeited / Cancelled   (58,866)   13.45   (341,300 )  13.61  
Expired   (171,220)   16.04   (884,805 )  16.56  
Balance - December 31   3,730,580    14.09   4,240,869    14.22  
Options exercisable - December 31   1,881,416    14.78   2,988,713    14.96  

 

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

 

The weighted average share price when share options were exercised during the year ended December 31, 2021 was $16.04 ($14.83 for the year ended December 31, 2020).

 

The following table summarizes the Osisko's share options outstanding as at December 31, 2021:

 

       Options outstanding   Options exercisable 
           Weighted         
           average         
       Weighted   remaining       Weighted 
Exercise      average   contractual       average 
price range  Number   exercise price   life (years)   Number   exercise price 
$      $           $ 
10.58 - 12.97   1,322,057    12.70    3.5    536,757    12.71 
13.10 - 14.78   1,761,193    13.80    2.9    817,729    14.10 
15.97 - 18.07   579,500    16.64    1.3    459,100    16.61 
24.72 - 27.77   67,830    26.97    0.4    67,830    26.97 
    3,730,580    14.09    2.8    1,881,416    14.78 

 

 48

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

23. Share-based compensation (continued)

Share options (continued)

 

Osisko Gold Royalties Ltd (continued)

 

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

 

   2021   2020 
Dividend per share   1.5%   1.5%
Expected volatility   40%   39%
Risk-free interest rate   0.7%   0.3%
Expected life   46 months    46 months 
Weighted average share price  $13.27   $13.51 
Weighted average fair value of options granted  $3.66   $3.56 

 

The expected volatility was estimated using Osisko's historical data from the date of grant and for a period corresponding to the expected life of the options. Share options are exercisable at the closing market price of the common shares of the Company on the day prior to their grant.

 

The fair value of the share options is recognized as compensation expense over the vesting period. In 2021, the total share- based compensation related to share options granted under the Osisko's plan amounted to $3.6 million ($2.8 million in 2020), including $0.2 million capitalized to mining assets and plant and equipment ($0.1 million in 2021).

 

Osisko Development Corp.

 

The following table summarizes information about the movement of the share options outstanding under the Osisko Development's plan:

 

       2021       2020 
       Weighted       Weighted 
   Number of   average   Number of   average 
   options   exercise price   options   exercise price 
       $       $ 
Balance - January 1   1,199,100    7.62    -    - 
Granted(i)   1,005,600    6.47    1,199,100    7.62 
Forfeited   (111,100)   7.55    -    - 
Balance - December 31   2,093,600    7.07    1,199,100    7.62 
Options exercisable - December 31   -    -    -    - 

 

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

 

 49

 

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

23. Share-based compensation (continued)

 

Share options (continued)

 

Osisko Development Corp. (continued)

 

The following table summarizes the Osisko Development's share options outstanding as at December 30, 2021:

 

        Options outstanding   Options exercisable 
            Weighted         
            average         
        Weighted   remaining       Weighted 
Exercise       average   contractual       average 
price range   Number   exercise price   life (years)   Number   exercise price 
$       $           $ 
 5.40 - 5.63    412,800    5.48    4.8    -    - 
 7.10 - 8.10    1,680,800    7.46    4.1    -    - 
      2,093,600    7.07    4.3    -    - 

 

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

 

   2021   2020 
Dividend per share   -    - 
Expected volatility   66%   63%
Risk-free interest rate   0.9%   0.4%
Expected life   45 months    48 months 
Weighted average share price  $6.47   $7.62 
Weighted average fair value of options granted  $3.16   $3.64 

 

The expected volatility was estimated by benchmarking with companies having businesses similar to Osisko Development. The historical volatility of the common share price of these companies was used for benchmarking back from the date of grant and for a period corresponding to the expected life of the options.

 

The fair value of the share options is recognized as compensation expense over the vesting period. In 2021, the total share- based compensation related to share options granted under the Osisko Development's plan amounted to $2.3 million (insignificant in 2020), including $1.1 million capitalized to mining assets and plant and equipment.

 

 50

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

23. Share-based compensation (continued)

 

Deferred and restricted share units

 

The Company and its subsidiary, Osisko Development, offer a DSU plan and a RSU plan, which allow DSU and RSU to be granted to directors, officers and/or employees as part of their long-term compensation package. Under the plans, payments may be settled in the form of common shares, cash or a combination of common shares and cash, at the sole discretion of the issuer. The plans are currently classified as equity-settled plans.

 

Osisko Gold Royalties Ltd

 

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

 

   2021   2020 
   DSU(i)   RSU(ii)   DSU(i)   RSU(ii) 
Balance - Beginning of period   408,564    1,242,902    325,207    1,190,038 
Granted   64,720    293,610    97,995    504,560 
Reinvested dividends   5,185    15,102    5,558    17,143 
Settled   (102,266)   (398,173)   (20,196)   (365,399)
Forfeited (iii)   -    (275,044)   -    (103,440)
Balance - End of period   376,203    878,397    408,564    1,242,902 
Balance - Vested   311,010    -    309,862    - 

 

(i)  Unless otherwise decided by the board of directors of the Company, the DSU vest the day prior to the next annual general meeting and are payable in common shares, cash or a combination of common shares and cash, at the sole discretion of the Company, to each non-executive director when he or she leaves the board or is not re-elected. The value of the payout is determined by multiplying the number of DSU expected to be settled 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. On the settlement date, one common share will be issued for each DSU, after deducting any income taxes payable on the benefit earned by the director that must be remitted by the Company to the tax authorities. The DSU granted in 2021 have a weighted average value of $15.54 per DSU ($12.35 per DSU in 2020).

 

(ii) On December 31, 2019, 150,000 RSU were granted to an officer (with a value of $12.70 per RSU), which vest and are payable in equal tranches over a three-year period (1/3 per year), in common shares, cash or a combination of common shares and cash, at the sole discretion of the Company. An additional 75,000 RSU were also granted (with a value of $12.70 per RSU) and vested during the three months ended March 31, 2020 following the acquisition by the officer of a total of 75,000 common shares of the Company. A total of 34,852 common shares were issued to the officer (after deducting the income taxes payable on the benefit earned by the employee that must be remitted by the Company to the tax authorities). The remaining 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, when applicable. On the settlement date, one common share is issued for each RSU, after deducting any income taxes payable on the benefit earned by the employee that must be remitted by Osisko Development to the tax authorities. The RSU granted in 2021 have a weighted average value of $13.24 per RSU ($13.56 per RSU in 2020).

 

(iii) In 2021, 215,812 RSUs were forfeited by Osisko Development and RSUs were granted by Osisko Development in an equivalent value to the employees and officers that were transferred from Osisko to Osisko Development as of January 1, 2021 (refer to the Osisko Development table and notes on restricted share units outstanding presented below).

 

 51

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

23. Share-based compensation (continued)

 

Deferred and restricted share units (continued)

 

Osisko Gold Royalties Ltd (continued)

 

The total share-based compensation expense related to the Osisko's DSU and RSU plans in 2021 amounted to $4.7 million ($6.8 million in 2020, including $0.6 million capitalized to mining assets and plant and equipment expenses).

 

Based on the closing price of the common shares at December 31, 2021 ($15.48), and considering a marginal income tax rate of 53.3%, the estimated amount that Osisko is expected to transfer to the tax authorities to settle the employees' tax obligations related to the vested RSU and DSU to be settled in equity amounts to $2.6 million ($2.7 million as at December 31, 2020) and to $10.4 million based on all RSU and DSU outstanding ($14.2 million as at December 31, 2020).

 

Osisko Development Corp.

 

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

 

   2021   2020 
   DSU(i)   RSU   DSU(i)   RSU(ii) 
Balance - Beginning of period   170,620    -    -    - 
Granted - Replacement RSU (ii)   -    458,450    -    - 
Granted (iii)   68,730    599,000    170,620    - 
Forfeited   -    (21,270)   -    - 
Balance - End of period   239,350    1,036,180    170,620    - 
Balance - Vested   -    -    -    - 

 

(i) Unless otherwise decided by the board of directors of Osisko Development, the DSU vest the day prior to the next annual general meeting and are payable in common shares, cash or a combination of common shares and cash, at the sole discretion of Osisko Development, to each non-executive director when he or she leaves the board or is not re-elected. The value of the payout is determined by multiplying the number of DSU expected to be vested at the payout date by the closing price of the Osisko Development's shares on the day prior to the grant date. The fair value is recognized over the vesting period. On the settlement date, one common share will be issued for each DSU, after deducting any income taxes payable on the benefit earned by the director that must be remitted by the Osisko Development to the tax authorities. The DSU granted in 2021 have a weighted average value of $7.24 per DSU ($7.62 per DSU in 2020).

 

(ii) Following the closing of the reverse takeover transaction completed on November 25, 2020, which lead to the creation of Osisko Development and the subsequent transfer of certain Osisko employees to Osisko Development on January 1, 2021, Osisko and Osisko Development mutually agreed that a pro-rata portion of the outstanding long-term equity incentive compensation awarded by Osisko to the transferred employees in the form of RSU would be borne by Osisko Development. As a result, a pro-rata portion of the outstanding RSU awarded by Osisko (the "Osisko RSU") to the transferred employees were cancelled, and RSU (the "Replacement RSU") having a relative equivalent value were granted by Osisko Development. Accordingly, in June 2021, 458,450 Replacement RSU were granted to officers and employees who held Osisko RSU that were cancelled. The maturity date of the Replacement RSU is the same as the maturity date of the corresponding Osisko RSU that were cancelled. The replacement RSU are payable in common shares, cash or a combination of common shares and cash, at the sole discretion of Osisko Development.

 

(iii) The RSU granted vest and are payable in common shares, cash or a combination of common shares and cash, at the sole discretion of Osisko Development, three years after the grant date, one half of which depends on the achievement of certain performance measures. The RSU granted in 2021 have a weighted average value of $7.02 per RSU.

 

The total share-based compensation expense related to the Osisko Development's DSU and RSU plans in 2021 amounted to $3.3 million (insignificant in 2020), including $1.3 million capitalized to mining interests and plant and equipment.

 

Based on the closing price of the common shares at December 31, 2021 ($4.06), and considering a marginal income tax rate of 53.3%, the estimated amount that Osisko Development is expected to transfer to the tax authorities to settle the employees' tax obligations related to the vested RSU and DSU to be settled in equity amounts to nil (nil as at December 31, 2020) and to $2.8 million based on all RSU and DSU outstanding ($0.7 million as at December 31, 2020).

 

 52

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

24. Income taxes

 

(a) Income tax expense

 

The income tax recorded in the consolidated statements of income (loss) for the years ended December 31, 2021 and 2020 is presented as follows:

 

   2021   2020 
   $   $ 
Current income tax          
Expense for the year (i)   1,231    7,153 
Current income tax expense   1,231    7,153 
           
Deferred income tax (Note 26 (b)):          
Origination and reversal of temporary differences   (8,259)   (1,062)
Impact of changes in tax rates   -    11 
Change in unrecognized deductible temporary differences   20,050    6,570 
Other   (67)   (1,759)
           
Deferred income tax expense   11,724    3,760 
           
Income tax expense   12,955    10,913 

 

(i) In 2020, the current income tax expense includes an amount of US$4.5 million ($5.8 million) resulting from the San Antonio stream transaction (paid in 2021).

 

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

 

   2021   2020 
   $   $ 
(Loss) income before income taxes   (43,720)   27,142 
Income tax provision calculated using the combined Canadian federal and provincial statutory income tax rate   (11,586)   7,193 
Increase (decrease) in income taxes resulting from:          
Non-deductible expenses, net   908    (11)
(Non-deductible) non-taxable portion of capital losses, net   (761)   (1,893)
Differences in foreign statutory tax rates   (3,898)   (408)
Changed in unrecognized deferred tax assets   20,050    6,570 
Foreign withholding taxes   864    778 
Deferred premium on flow-through shares   (1,847)   - 
Effect of flow-through shares renunciation   8,021    - 
Tax rate changes of deferred income taxes   -    11 
Other   1,204    (1,327)
           
Total income tax expense   12,955    10,913 
The 2021 and 2020 Canadian federal and provincial statutory income tax rate is 26.5%.          

 

 53

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

24. Income taxes (continued)

 

(b) Deferred income taxes

 

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

 

   December 31,   December 31, 
   2021   2020 
   $   $ 
Deferred tax assets:          
Stream interests   30,100    34,278 
Non-capital losses   7,663    8,195 
Deferred and restricted share units   3,401    4,008 
Share and debt issue expenses   2,935    4,562 
    44,099    51,043 
Deferred tax liabilities:          
Royalty interests and exploration and evaluation assets   (102,782)   (93,266)
Investments   (8,077)   (9,437)
Convertible debentures Other   (1,173)   (2,315)
Other   (474)   (454)
           
    (112,506)   (105,472)
           
Deferred tax liability, net   (68,407)   (54,429)

 

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

 

The 2021 movement for deferred tax assets and deferred tax liabilities may be summarized as follows:

 

               Other         
       Statement       comprehen-         
   Dec. 31,   of inco-       sive income   Translation   Dec. 31, 
   2020   me (loss)   Equity   (loss)   adjustments   2021 
   $   $   $   $   $   $ 
Deferred tax assets:                              
Stream interests   34,278    (4,178)   -    -    -    30,100 
Non-capital losses   8,195    (532)   -    -    -    7,663 
Deferred and restricted share units   4,008    (328)   (279)   -    -    3,401 
Share and debt issue expenses   4,562    (96)   (1,531)   -    -    2,935 
Deferred tax liabilities:                              
Royalty interests and exploration and evaluation assets   (93,266)   (9,543)        -    27    (102,782)
Investments   (9,437)   1,831    -    (471)   -    (8,077)
Convertible debentures   (2,315)   1,142    -    -    -    (1,173)
Other   (454)   (20)   -    -    -    (474)
    (54,429)   (11,724)   (1,810)   (471)   27    (68,407)

 

 54

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

24. Income taxes (continued)

 

(b) Deferred income taxes (continued)

 

The 2020 movement for deferred tax assets and deferred tax liabilities may be summarized as follows:

 

               Other             
       Statement       comprehen-   Benefit from         
   Dec. 31,   of inco-       sive income   flow-through   Translation   Dec. 31, 
   2019   me (loss)   Equity   (loss)   shares   adjustments   2020 
   $   $   $   $   $   $   $ 
Deferred tax assets:                                   
Stream interests   28,826    5,452    -    -    -    -    34,278 
Non-capital losses   170    8,025    -    -    -    -    8,195 
Deferred and restricted share units   2,865    435    708    -    -    -    4,008 
Share and debt issue expenses   (113)   (569)   5,244    -    -    -    4,562 
Deferred tax liabilities:                                   
Royalty interests and exploration and evaluation assets   (77,641)   (16,204)        388    66    125    (93,266)
Investments   1,911    (1,613)   -    (9,707)   (28)   -    (9,437)
Convertible debentures   (3,632)   1,317    -    -    -    -    (2,315)
Other   149    (603)   -    -    -    -    (454)
    (47,465)   (3,760)   5,952    (9,319)   38    125    (54,429)

 

(c) Unrecognized deferred tax liabilities

 

The aggregate amount of taxable temporary differences associated with investments in subsidiaries, for which deferred tax liabilities have not been recognized as at December 31, 2021, is $114.6 million ($110.8 million as at December 31, 2020). No deferred tax liabilities are recognized on the temporary differences associated with investments in subsidiaries because the Company controls the timing of reversal and it is not probable that they will reverse in the foreseeable future.

 

(d) Unrecognized deferred tax assets

 

As at December 31, 2021, the Company had temporary differences with a tax benefit of $79.5 million ($57.3 million as at December 31, 2020) which are not recognized as deferred tax assets. The Company recognizes the benefit of tax attributes only to the extent of anticipated future taxable income that can be reduced by these attributes.

 

   December 31,   December 31, 
   2021   2020 
   $   $ 
Non-capital losses carried forward   64,650    43,379 
Mineral stream interests - Mexico   7,446    5,796 
Unrealized losses on investments   3,598    6,529 
Capital losses   2,127    - 
Other   1,694    1,632 
    79,515    57,336 

 

 55

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

25. Additional information on the consolidated statements of income (loss)

 

   2021   2020 
   $   $ 
Revenues          
           
Royalty interests   140,279    111,305 
Stream interests   59,333    45,269 
Offtake interests   25,265    57,056 
    224,877    213,630 
Cost of sales          
           
Royalty interests   551    512 
Stream interests   12,752    8,988 
Offtake interests   24,343    54,200 
    37,646    63,700 

 

   2021   2020 
   $   $ 
Operating expenses by nature          
           
Impairment of assets   124,538    26,300 
Depletion and depreciation   51,934    46,904 
Employee benefit expenses (see below)   28,586    20,142 
Professional fees   15,454    7,631 
Insurance costs   3,634    1,820 
Material, supplies and consumables   3,560    - 
Rent and office expenses   1,654    1,052 
Public company expenses   1,234    971 
Communication and promotional expenses   977    1,265 
Travel expenses   815    413 
Cost recoveries   (582)   (618)
Deemed listing fees of Osisko Development (Note 6)   -    1,751 
Other expenses   644    596 
    232,448    108,227 
Employee benefit expenses          
           
Salaries and wages   17,494    12,282 
Share-based compensation   13,280    9,361 
Cost recoveries from associates   (2,188)   (1,501)
    28,586    20,142 

 

 56

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

25. Additional information on the consolidated statements of income (loss) (continued)

 

   2021   2020 
Other gains, net          
Change in fair value of financial assets at fair value through profit and loss   6,286    2,387 
Net gain on dilution of investments in associates (Note 12)   1,847    10,381 
Net gain on acquisition of investments(i)   7,638    3,827 
Net gain on disposal of investments   -    5,357 
Impairment of other investments   (2,112)   (7,998)
Flow-through shares premium income   6,971    - 
Others   4,892    (332)
    25,522    13,622 

 

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

 

26. Key management

 

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

 

   2021   2020 
   $   $ 
Salaries and short-term employee benefits   5,369    5,776 
Share-based compensation   6,775    6,665 
Cost recoveries from associates   (144)   (300)
    12,000    12,141 

 

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

 

27. Net (loss) earnings per share

 

   2021   2020 
   $   $ 
Net (loss) earnings attributable to Osisko Gold Royalties Ltd's shareholders   (23,554)   16,876 
           
Basic weighted average number of common shares outstanding (in thousands)   167,628    162,303 
Dilutive effect of share options   -    125 
Diluted weighted average number of common shares   167,628    162,428 
           
Net (loss) earnings per share          
Basic and diluted   (0.14)   0.10 

 

 57

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

27. Net (loss) earnings per share (continued)

 

As a result of the consolidated net loss for the year ended December 31, 2021, all potentially dilutive common shares are deemed to be antidilutive for the period and thus diluted net loss per share is equal to the basic net loss per share.

 

For the year ended December 31, 2020, 3,031,912 share options, 5,480,000 outstanding warrants and the 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.

 

28. Additional information on the consolidated statements of cash flows

 

   2021   2020 
   $   $ 
Interests received measured using the effective rate method   2,891    1,673 
Interests paid on long-term debt   16,420    17,308 
Income taxes paid (i)   7,027    1,358 
           
Changes in non-cash working capital items          
Decrease (increase) in amounts receivable   476    (4,678)
Increase in inventories   (13,075)   - 
Increase in other current assets   (5,075)   (1,311)
(Decrease) increase in accounts payable and accrued liabilities   (7,325)   7,723 
    (24,999)   1,734 
Tax credits receivable related to the exploration and evaluation assets          
January 1   5,546    936 
December 31   6,193    5,546 

 

(i) In 2021, income taxes of $5.8 million were paid to the Mexican authorities in relation to the acquisition of a gold and silver stream on the San Antonio project completed in 2020.

 

29. Financial risks

 

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

 

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

 

(a) Market risks

 

(i) Interest rate risk

 

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

 

The Company's interest rate risk on financial assets is primarily related to cash, which bear interest at variable rates. However, as these investments come to maturity within a short period of time, the impact would likely be not significant. Other financial assets are not exposed to interest rate risk because they are mostly non-interest bearing or bear interest at fixed rates, except for derivative financial instruments (warrants).

 

 58

 

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

(a) Market risks (continued)

 

(i) Interest rate risk (continued)

 

Financial liabilities are not exposed to interest rate risk because they are non-interest bearing or bear a fixed interest rate, except for the revolving credit facility which bears a variable interest rate. Based on the revolving credit facility's balances as at December 31, 2021 and 2020, the impact on net financial expenses over a 12-month horizon of a 0.5% shift in interest rates would not be significant.

 

(ii) Foreign exchange risk

 

The Company is exposed to foreign exchange risk arising from currency volatility, primarily with respect to the U.S. dollar. The Company holds balances in cash denominated in U.S. dollars and can draw on its credit facility in U.S. dollars and is therefore exposed to gains or losses on foreign exchange.

 

As at December 31, 2021 and 2020, the balances in U.S. dollars held by entities having the Canadian dollar as their functional currency were as follows:

 

   December 31, 
   2021   2020 
    $    $ 
Cash and cash equivalents   23,755    90,638 
Amounts receivable   2,600    1,709 
Other assets   1,319    1,327 
Accounts payable and accrued liabilities   (117)   (110)
Revolving credit facility   (50,000)   (50,000)
           
Net exposure, in U.S. dollars   (22,443)   43,564 
           
Equivalent in Canadian dollars   (28,453)   55,466 

 

Based on the balances as at December 31, 2021, a 5% fluctuation in the exchange rates on that date (with all other variables being constant) would have resulted in a variation of net earnings of approximately $1.8 million in 2021 ($1.2 million in 2020).

 

(iii) Other price risk

 

The Company is exposed to equity price risk as a result of holding long-term investments in other exploration and development mining companies. The equity prices of long-term investments are impacted by various underlying factors including commodity prices. Based on the Company's long-term investments held as at December 31, 2021, a 10% increase (decrease) in the equity prices of these investments would increase (decrease) the net earnings by $2.5 million and the other comprehensive income (loss) by $8.2 million for the year ended December 31, 2021. Based on the Company's long-term investments held as at December 31, 2020, a 10% increase (decrease) in the equity prices of these investments would have increased (decreased) the net earnings by $1.7 million and the other comprehensive income (loss) by $10.0 million for the year ended December 31, 2020.

 

 59

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

(b) Credit risk

 

Credit risk is the risk that one party to a financial instrument will fail to discharge its obligation and cause the other party to incur a financial loss. Financial instruments that potentially subject the Company to credit risk consist of cash, amounts receivable, notes receivable, other financing facilities receivable and reclamation deposits. The Company reduces its credit risk by investing its cash in high interest savings accounts with Canadian and U.S. recognized financial institutions and its reclamation deposits in guaranteed investments certificates issued by Canadian chartered banks. In the case of amounts receivable, notes receivable and other financing facilities, the Company performs either a credit analysis or ensures that it has sufficient guarantees in case of a non-payment by the third party to cover the net book value of the note. A provision is recorded if there is an expected credit loss based on the analysis. In some cases, the loans receivable could be applied against stream deposits due by the Company or converted into a royalty if the third party is not able to reimburse its loan. As at December 31, 2021, a provision of $14.2 million ($12.7 million as at December 31, 2020) is recorded as a result of the expected credit loss analysis, mostly on loans made to the company holding the Amulsar gold project (the loans were fully provisioned as the company is not expected to be in a position to reimburse them).

 

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

 

(c) Liquidity risk

 

Liquidity risk is the risk that the Company will not be able to meet the obligations associated with its financial liabilities. The Company manages the liquidity risk by continuously monitoring actual and projected cash flows, taking into account the requirements related to its investment commitments, mining properties and exploration and evaluation assets and matching the maturity profile of financial assets and liabilities. The Board of Directors reviews and approves any material transaction out of the ordinary course of business, including proposals on mergers, acquisitions or other major investment or divestitures. The Company also manages liquidity risk through the management of its capital structure and financial leverage as outlined in Note 21. As at December 31, 2021, cash is invested in high interest savings accounts held with Canadian and U.S. recognized financial institutions.

 

As at December 31, 2021, all financial liabilities to be settled in cash or by the transfer of other financial assets mature within 90 days, except for the convertible debentures, the revolving credit facility, the equipment financings and the lease liabilities, which are described below:

 

   As at December 31, 2021 
   Total                    
   amount      Estimated annual payments 
   payable   Maturity  2022   2023   2024   2025   2026-2029 
    $       $    $    $    $    $ 
Conv. debentures   312,000   December 31, 2022   312,000    -    -    -    - 
Revolving credit facility(i)   128,788   July 30, 2025   4,297    4,297    4,297    115,897    - 
Equipment financings   3,969   October 10, 2025   1,584    1,664    393    328    - 
Lease liabilities   20,213   December 31, 2029   9,388    2,919    1,478    1,291    5,137 
    464,970       327,269    8,880    6,168    117,516    5,137 

 

(i) The interest payable is based on the actual interest rates and foreign exchange rates as at December 31, 2021.

 

 60

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

30. Fair value of financial instruments

 

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

 

Level 1- Unadjusted quoted prices in active markets for identical assets or liabilities;

 

Level 2- Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and

 

Level 3- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

 

   December 31, 2021 
   Level 1   Level 2   Level 3   Total 
    $    $    $    $ 
Recurring measurements                    
                     
Financial assets at fair value through profit or loss(i)                    
Warrants on equity securities and convertible debentures and notes                    
Publicly traded mining exploration and development companies                    
Precious metals   -    -    24,327    24,327 
Other minerals   13,048    -    10,607    23,655 
Financial assets at fair value through other comprehensive (loss) income(i)                    
Equity securities                    
Publicly traded mining exploration and development companies                    
Precious metals   46,668    -    -    46,668 
Other minerals   47,563    -    -    47,563 
    107,279    -    34,934    142,213 

 

   December 31, 2020 
   Level 1   Level 2   Level 3   Total 
    $    $    $    $ 
Recurring measurements                    
                     
Financial assets at fair value through profit or loss(i)                    
Warrants on equity securities and convertible debentures and notes                    
Publicly traded mining exploration and development companies                    
Precious metals   -    -    23,904    23,904 
Other minerals   -    -    1,159    1,159 
Financial assets at fair value through other comprehensive (loss) income (i)                    
Equity securities                    
Publicly traded mining exploration and development companies                    
Precious metals   95,796    -    -    95,796 
Other minerals   19,794    -    -    19,794 
    115,590    -    25,063    140,653 

 

(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.

 

 61

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

30. Fair value of financial instruments (continued)

 

During the year ended December 31, 2021, warrants having a fair value of $5.1 million were transferred from Level 3 to Level 1 as these warrants began trading on a recognized stock exchange. During the year ended December 31, 2020, there were no transfers among Level 1, Level 2 and Level 3.

 

Financial instruments in Level 1

 

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

 

Financial instruments in Level 2

 

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

 

Financial instruments in Level 3

 

Financial instruments classified in Level 3 include convertible debentures and warrants held by the Company that are not traded on a recognized securities exchange. The fair value of the investments in convertible debentures and warrants is determined directly or indirectly using the Black-Scholes option pricing model which includes significant inputs not based on observable market data.

 

The following table presents the changes in the Level 3 investments (comprised of convertible debentures and warrants) for the years ended December 31, 2021 and 2020:

 

   2021   2020 
   $   $ 
Balance - January 1   25,063    1,700 
Acquisitions   12,754    4,782 
Amendment of a note receivable (Note 13)   -    16,541 
Warrants exercised   (1,122)   (347)
Change in fair value - warrants exercised(i)   300    102 
Change in fair value - warrants expired(i)   (15)   (48)
Change in fair value - investments held at the end of the period(i)   (2,046)   2,333 
Balance - December 31   34,934    25,063 

 

(i) Recognized in the consolidated statements of income (loss) under other gains (losses), net.

 

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 and the convertible debentures of publicly traded mining exploration and development companies, classified as Level 3, is determined using directly or indirectly 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 have resulted in an insignificant variation of the fair value of the warrants as at December 31, 2021 and 2020.

 

 62

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

30. Fair value of financial instruments (continued)

 

Foreign exchange contracts

 

In 2021, the Company entered into foreign exchange contracts (collar options) to sell U.S. dollars and buy Canadian dollars for a total nominal amount of US$3.0 million. 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 U.S.

 

dollars) from a stronger Canadian dollar. The fair value of the contracts is booked at each reporting period on the consolidated balance sheets. As at December 31, 2021, the fair value of the outstanding contracts was insignificant.

 

Financial instruments not measured at fair value on the consolidated balance sheets

 

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, other financing facilities 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 carrying value of the liability under the revolving credit facility and the mining equipment financings approximate their fair value given that the credit spread is similar to the credit spread the Company would obtain under similar conditions at the reporting date. The fair value of the non-current notes receivable and other financing credit facilities receivable approximate their carrying value as there were no significant changes in economic and risk parameters since the issuance/acquisition or assumptions of those financial instruments.

 

The following table presents the carrying amount and the fair value of long-term debt (excluding the liability under the revolving credit facility):

 

   December 31, 2021   December 31, 2020 
   Fair   Carrying   Fair   Carrying 
   value   amount   value   amount 
    $    $           
Long-term debt - Level 1   303,000    293,281    318,000    286,903 
Long-term debt - Level 2   -    -    49,928    49,866 
Balance   303,000    293,281    367,928    336,769 

 

 63

 

 

Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

31. Segment disclosure

 

The chief operating decision-maker organizes and manages the business under two operating segments: (i) acquiring and managing precious metals and other royalties, streams and other interests, and (ii) the exploration, evaluation and development of mining projects. The assets, liabilities, revenues, expenses and cash flows of Osisko and its subsidiaries, other than Osisko Development and its subsidiaries, are attributable to the precious metals and other royalties, streams and other interests operating segment. The assets, liabilities, revenues, expenses and cash flows of Osisko Development and its subsidiaries are attributable to the exploration, evaluation and development of mining projects operating segment.

 

The following table presents the main assets, liabilities, revenues, expenses and cash flows per operating segment:

 

   As at December 31, 2021 and 2020 
   Osisko Gold   Osisko         
    Royalties (i)    Development (ii)           
        (Mining exploration,           
    (Royalties, streams    evaluation and    Intersegment      
    and other interests)    development)    transactions (iii)    Consolidated 
    $    $    $    $ 
Assets and liabilities                    
                     
As at December 31, 2021                    
Cash   82,291    33,407    -    115,698 
Current assets   91,594    61,422    (90)   152,926 
Investments in associates and other investments   231,884    62,480    -    294,364 
Royalty, stream and other interests   1,247,489    -    (92,688)   1,154,801 
Mining interests and plant and equipment   7,991    559,332    68,332    635,655 
Exploration and evaluation assets   -    3,635    -    3,635 
Goodwill   111,204    -    -    111,204 
Total assets   1,691,958    703,110    (24,446)   2,370,622 
Total liabilities (excluding long-term debt)   89,416    115,156    (24,446)   180,126 
Long-term debt   406,671    3,764    -    410,435 
                     
As at December 31, 2020                    
Cash   105,097    197,427    -    302,524 
Current assets   117,592    218,478    (882)   335,188 
Investments in associates and other investments   166,589    110,144    -    276,733 
Royalty, stream and other interests   1,203,781    -    (87,653)   1,116,128 
Mining interests and plant and equipment   9,011    407,000    73,501    489,512 
Exploration and evaluation assets   -    41,869    650    42,519 
Goodwill   111,204    -    -    111,204 
Total assets   1,609,344    802,144    (14,384)   2,397,104 
Total liabilities (excluding long-term debt)   67,449    102,578    (14,384)   155,643 
Long-term debt   400,429    -    -    400,429 

 

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Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

31. Segment disclosure (continued)

 

   Years ended December 31, 2021 and 2020 
   Osisko Gold   Osisko         
    Royalties (i)    Development (ii)           
          (Mining exploration,           
    (Royalties, streams    evaluation and    Intersegment      
    and other interests)    development)    transactions (iii)    Consolidated 
    $    $    $    $ 
Revenues, expenses and cash flows                    
                     
Year ended December 31, 2021                    
Revenues   224,877    7,275    (7,275)   224,877 
Gross profit   138,870    -    -    138,870 
Operating expenses (G&A, bus. dev and exploration)   (23,778)   (22,852)   -    (46,630)
Mining operating expenses   -    (12,919)   -    (12,919)
Impairments   (4,400)   (122,250)   -    (126,650)
Net earnings (loss)   77,277    (133,952)   -    (56,675)
Cash flows from operating activities                    
Before working capital items   158,632    (21,828)   (5,710)   131,094 
Working capital items   (5,413)   (19,586)   -    (24,999)
After working capital ite   153,219    (41,414)   (5,710)   106,095 
Cash flows from investing activities   (120,766)   (156,982)   5,710    (272,038)
Cash flows from financing activities   (54,339)   34,738    -    (19,601)
                     
Year ended December 31, 2020                    
Revenues   213,630    -    -    213,630 
Gross profit   104,325    -    -    104,325 
Operating expenses (G&A, bus. dev and exploration)   (28,021)   (8,301)   -    (36,322)
Impairments   (36,298)   -    -    (36,298)
Net earnings (loss)   23,501    (7,272)   -    16,229 
Cash flows from operating activities                    
Before working capital items   116,631    (10,387)   -    106,244 
Working capital items   (2,669)   4,403    -    1,734 
After working capital items   113,962    (5,984)   -    107,978 
Cash flows from investing activities   (161,131)   (61,968)   -    (223,099)
Cash flows from financing activities   109,444    207,417    -    316,861 

 

(i)Osisko Gold Royalties Ltd and its subsidiaries, excluding Osisko Development Corp. and its subsidiaries.

 

(ii)Osisko Development Corp. and its subsidiaries (carve-out of the mining activities of Osisko Gold Royalties prior to the reverse take-over transaction completed on November 25, 2020 and creating Osisko Development).

 

(iii)The adjustments are related to intersegment transactions and to royalties and streams held by Osisko Gold Royalties on assets held by Osisko Development, which are reclassified on consolidation, as well as adjustments related to an accounting policy difference on revenues recognition.

 

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Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

31. Segment disclosure (continued)

 

Royalty, stream and other interests - Geographic revenues

 

All of the Company's revenues are attributable to the precious metals and other royalties, streams and other interests operating segment. Geographic revenues from the sale of metals and diamonds received or acquired from in-kind royalties, streams and other interests are determined by the location of the mining operations giving rise to the royalty, stream or other interest. For the years ended December 31, 2021 and 2020, royalty, stream and other interest revenues were earned from the following jurisdictions:

 

   North   South                 
   America(i)   America   Australia   Africa   Europe   Total 
    $    $    $    $    $    $ 
2021                              
Royalties   134,544    1,112    6    4,617    -    140,279 
Streams   27,624    20,284    1,548    -    9,877    59,333 
Offtakes   25,265    -    -    -    -    25,265 
    187,433    21,396    1,554    4,617    9,877    224,877 
                               
2020                              
Royalties   106,780    554    52    3,919    -    111,305 
Streams   13,999    19,862    2,098    -    9,310    45,269 
Offtakes   57,056    -    -    -    -    57,056 
    177,835    20,416    2,150    3,919    9,310    213,630 

 

(i) 83% of the North America's revenues are generated from Canada in 2021 (65% in 2020).

 

In 2021, one royalty interest generated revenues of $81.3 million ($66.8 million in 2020), which represented 41% of revenues (43% of revenues in 2020) (excluding revenues generated from the offtake interests).

 

In 2021, revenues generated from precious metals and diamonds represented 89% and 9%, respectively, of total revenues (87% and 11% excluding offtakes, respectively). In 2020, revenues generated from precious metals and diamonds represented 94% and 4%, respectively, of total revenues (92% and 6% excluding offtakes, respectively).

 

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Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

31. Segment disclosure (continued)

 

Royalty, stream and other interests - Geographic net assets

 

The following table summarizes the royalty, stream and other interests by jurisdictions, as at December 31, 2021 and 2020, 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 
    $    $    $    $    $    $    $ 
December 31, 2021                                   
Royalties   595,931    57,673    13,742    20,453    -    15,215    703,014 
Streams   185,031    173,773    -    -    28,272    51,055    438,131 
Offtakes   -    -    8,960    -    4,696    -    13,656 
    780,962    231,446    22,702    20,453    32,968    66,270    1,154,801 
                                    
December 31, 2020                                   
Royalties   576,835    46,374    9,924    8,313    -    15,215    656,661 
Streams   172,879    183,679    1,481    -    28,392    54,510    440,941 
Offtakes   5,690    -    8,119    -    4,717    -    18,526 
    755,404    230,053    19,524    8,313    33,109    69,725    1,116,128 

 

(i) 82% of the North America's net interests are located in Canada as at December 31, 2021 (86% as at December 31, 2020).

 

Exploration, evaluation and development of mining projects

 

The inventories, mining interests, plant and equipment and exploration and evaluation assets related to the exploration, evaluation and development of mining projects (excluding the intersegment transactions) are located in Canada and in Mexico, and are detailed as follow as at December 31, 2021 and 2020:

 

   December 31, 2021   December 31, 2020 
   Canada   Mexico   Total   Canada   Mexico   Total 
    $    $    $    $    $    $ 
Assets                              
Inventories   13,933    4,663    18,596    1,599    25,705    27,304 
Mining interests, plant and equipment   455,849    103,483    559,332    344,903    62,097    407,000 
Exploration and evaluation assets   3,635    -    3,635    40,680    1,189    41,869 
Total assets   627,937    75,173    703,110    704,998    97,146    802,144 

 

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Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

32. Related party transactions

 

In 2021, interest revenues of $3.6 million were recorded on notes receivable from associates ($2.7 million in 2020). As at December 31, 2021, interests receivable from associates of $4.6 million are included in amounts receivable ($1.9 million as at December 31, 2020). Loans, notes receivable, and a convertible debenture from associates amounted to $42.3 million as at December 31, 2021 ($33.4 million as at December 31, 2020) and were included in other investments on the consolidated balance sheets.

 

Additional transactions with related parties are described under Notes 6, 7, 12, 13, 33 and 34.

 

33. Commitments

 

Investments in royalty and stream interests

 

As at December 31, 2021, significant commitments related to the acquisition of royalties and streams are detailed in the following table:

 

Company  Project (asset)  Installments  Triggering events
Aquila Resources Inc.  Back Forty project
(gold stream)		  US$5.0 million  Receipt of all material permits for the construction and operation of the project.
      US$25.0 million  Pro rata to drawdowns on debt finance facility.
          
Falco Resources Ltd.  Horne 5 project
(silver stream)		  $10.0 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 capital 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%).

 

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Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

33. Commitments (continued)

 

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  
Interest  Gold   Silver   Diamond   Gold  Silver   Diamond   agreement  contract 
Amulsar stream(1),(7)   4.22%   62.5%       $400  $4        40 years   November 2015
Amended Jan. 2019		 
Amulsar offtake(2),(7)   81.91%            Based on
quotational period		            Until delivery of
2,110,425 ounces Au		   November 2015
Amended Jan. 2019		 
Back Forty stream(3)   18.5%   85%       30% spot price
(max $600)		  $4        Life of mine   March 2015 (silver)
Nov. 2017 (gold)
Amended Dec. 2021		 
Mantos Blancos stream(4)        100%           8% spot        Life of mine   September 2015
Amended Aug. 2019		 
Renard stream             9.6%           Lesser of
40% of sales
price or $40		   40 years   July 2014
Amended Oct. 2018		 
Sasa stream(5)        100%          $5        40 years   November 2015 
Gibraltar stream(6)        75%           nil        Life of mine   March 2018
Amended April 2020		 

 

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

(2) Offtake percentage will increase to 84.87% if the operator 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 Osisko Bermuda (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 stream percentage shall be payable on 100% of silver until 19,300,000 ounces have been delivered, after which the stream percentage will be 40%. As of December 31, 2021, a total of 2.7 million ounces of silver have been delivered under the stream agreement.

(5) 3% or consumer price index (CPI) per ounce price escalation after 2016.

(6) 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. As of December 31, 2021, a total of 0.9 million ounces of silver have been delivered under the stream agreement.

(7) In December 2019, Lydian International Limited ("Lydian"), the owner of the Amulsar project, was granted protection under the Companies' Creditors Arrangement Act. In July 2020, Osisko became a shareholder of Lydian following a credit bid transaction (35.6% as at December 31, 2021).

 

Mining equipment and service contracts

 

As of December 31, 2021, Osisko Development had purchase commitments for mining equipment and service contracts amounting to $40.9 million, including $33.3 million payable in 2022 and $7.6 million in 2023.

 

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Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

34. Subsequent events

Normal course issuer bid

 

From January 1, 2022 to February 24, 2022, the Company purchased for cancellation a total of 347,492 common shares for $4.9 million (average acquisition price per share of $14.04) under its 2022 NCIB program.

 

Acquisition of Tintic by Osisko Development

 

On January 25, 2022, Osisko Development announced that it has entered into definitive agreements (together, the "Agreements") with IG Tintic LLC and Ruby Hollow LLC (together the "Vendors") to acquire 100% of Tintic Consolidated Metals LLC ("Tintic") (the "Transaction"). On completion of the Transaction, Osisko Development will acquire 100% ownership of the producing Trixie Mine ("Trixie"), as well as mineral claims covering more than 17,000 acres (including over 14,200 acres of which are patented) in Central Utah's historic Tintic Mining District.

 

Pursuant to the terms of the Transaction, Osisko Development will acquire 100% of Tintic from the Vendors for aggregate payments at closing totaling approximately US$177 million, of which approximately US$54 million will be paid in cash and approximately US$123 million will be paid by the issuance of 35,099,611 common shares of Osisko Development at a price of C$4.32 per share.

 

In addition, Osisko Development will pay the Vendors: (i) deferred payments of US$12.5 million payable in equal instalments annually over five years in cash or common shares at Osisko Development's election; (ii) two 1% NSR royalty grants, each with a 50% buyback right in favour of Osisko Development for US$7.5 million which is exercisable within 5 years; (iii) a right to receive the financial equivalent of 10% of the net smelter returns from stockpiled ore extracted from Trixie since January 1, 2018 and sitting on surface; (iv) the set-off of a US$5 million loan owed to Osisko Development; and (v) US$10 million contingent upon commencement of production at the Burgin Mine.

 

Osisko Bermuda has entered into a non-binding metals stream term sheet ("Stream") with a wholly-owned subsidiary of Osisko Development. The upfront cash payment under the Stream, of at least US$20 million and up to US$40 million, will be used by Osisko Development to fund a portion of the cash consideration payable on closing of the Transaction. In the event that the full amount of US$40 million is drawn, Osisko Development will deliver to Osisko Bermuda a maximum of 5% of all metals produced from the Tintic property up to a maximum of 53,400 ounces of refined gold and 4.0% thereafter.

 

The Transaction is expected to close in the second quarter of 2022, subject to satisfaction of regulatory approvals and customary closing conditions.

 

Non-brokered private placement by Osisko Development

 

On February 7, 2022, Osisko Development announced a non-brokered private placement ("Offering") of 31,500,000 subscription receipts of Osisko Development ("Subscription Receipts") at a price of US$3.50 per Subscription Receipt for aggregate gross proceeds of up to approximately US$110.3 million. Each Subscription Receipt issued pursuant to the Offering will entitle the holder thereof to receive, upon the satisfaction of the Escrow Release Condition (as defined below) and without payment of additional consideration, one unit of Osisko Development (each, a "Unit"). Each Unit will comprise of one common share in the capital of Osisko Development (each, a "Common Share") and one Common Share purchase warrant (each whole warrant, a "Warrant"), with each Warrant entitling the holder thereof to purchase one additional Common Share at a price of US$6.00 per Common Share for a period of five years following the date of issue. The gross proceeds of the Offering will be held in escrow pending, among other things, the completion of the listing of the Common Shares on the New York Stock Exchange ("Escrow Release Condition"), which is contingent upon Osisko Development meeting the listing requirements of the New York Stock Exchange ("NYSE") and may involve, among other things, a consolidation of the Common Shares. If the Escrow Release Condition is met, Osisko Development anticipates that the proceeds of the Offering will be used to advance the development of Osisko Development's mineral assets and for general corporate purposes. The Offering is subject to regulatory approvals.

 

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Osisko Gold Royalties Ltd

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

 

34. Subsequent events (continued)

 

"Bought deal" private placement by Osisko Development

 

On February 9, 2022, Osisko Development announced a "bought deal" private placement for an aggregate of 20,225,000 subscription receipts of Osisko Development (the "Bought Deal Subscription Receipts") and/or units of Osisko Development (the "Bought Deal Units" and, together with the Bought Deal Subscription Receipts, the "Offered Securities") at a price of $4.45 per Offered Security (the "Issue Price"), for aggregate gross proceeds of $90.0 million (the " Bought Deal Offering"). Each Bought Deal Unit will be comprised of one Common Share of Osisko Development and one common share purchase warrant (each, a "Bought Deal Warrant"), with each Bought Deal Warrant entitling the holder thereof to purchase one additional Common Share at a price of $7.60 per Common Share for a period of 60 months following the closing date of the Bought Deal Offering. Each Bought Deal Subscription Receipt will entitle the holder thereof to receive, upon the satisfaction of the escrow release condition (as defined below), and without payment of additional consideration, one Bought Deal Unit. Osisko Development has granted the Underwriters an option, exercisable in whole or in part up to 48 hours prior to the closing of the Bought Deal Offering, to purchase up to an additional aggregate amount of 3,033,750 Bought Deal Subscription Receipts and/or Bought Deal Units at the Issue Price, for additional gross proceeds of up to $13.5 million. The gross proceeds from the sale of the Bought Deal Subscription Receipts, net of expenses of the underwriters and 50% of the commissions payable to the underwriters in respect of the Bought Deal Subscription Receipts, will be placed into escrow and will be released immediately prior to the completion of Osisko Development's proposed acquisition of Tintic. If the escrow release condition is not satisfied prior to the date that is 90 days from the closing of the Bought Deal Offering, the escrowed proceeds of the Bought Deal Offering will be returned to the holders of the Bought Deal Subscription Receipts. Osisko Development intends to use the net proceeds of the Bought Deal Offering to advance the development of the company's mineral assets, including the Cariboo gold project, the San Antonio gold project and properties held by Tintic assuming the completion of the Tintic Acquisition, and for general corporate purposes. The closing date of the Bought Deal Offering is expected to occur on or about March 2, 2022, and is subject to certain customary conditions.

 

Warrants

 

On February 18, 2022, a total of 5,480,000 Osisko warrants expired unexercised.

 

Dividend

 

On February 24, 2022, the Board of Directors declared a quarterly dividend of $0.055 per common share payable on April 14, 2022 to shareholders of record as of the close of business on March 31, 2022.

 

 71

 

 

Exhibit 4.3

 

 

 

Management's Discussion and Analysis

For the year ended December 31, 2021

 

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 year ended December 31, 2021 should be read in conjunction with the Company's audited consolidated financial statements and related notes for the year ended December 31, 2021. The audited consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). Management is responsible for the preparation of the consolidated financial statements and other financial information relating to the Company included in this report. The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting. In furtherance of the foregoing, the Board of Directors has appointed an Audit and Risk Committee composed of independent directors. The Audit Committee meets with management and the auditors in order to discuss results of operations and the financial condition of the Company prior to making recommendations and submitting the consolidated financial statements to the Board of Directors for its consideration and approval for issuance to shareholders. The information included in this MD&A is as of February 24, 2022, the date when the Board of Directors has approved the Company's audited consolidated financial statements for the year ended December 31, 2021 following the recommendation of the Audit and Risk 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
Uncertainty due to COVID-19 2
Highlights - Subsequent to December 31, 2021 4
Summary table - Financial highlights 4
Portfolio of Royalty, Stream and Other Interests 5
Equity Investments 17
Sustainability Activities 21
Mining Exploration and Evaluation / Development Activities 21
Dividend Reinvestment Plan 25
Normal Course Issuer Bid 25
Gold Market and Currency 25
Selected Financial Information 26
Overview of Financial Results 27
Liquidity and Capital Resources 31
Cash Flows 32
Quarterly Information 34
Fourth Quarter Results 35
Segment Disclosure 41
Related Party Transactions 45
Contractual Obligations and Commitments 45
Off-balance Sheet Items 47
Outstanding Share Data 47
Subsequent Events to December 31, 2021 47
Risks and Uncertainties 49
Disclosure Controls and Procedures and Internal Control over Financial Reporting 49
Basis of Presentation of Consolidated Financial Statements 50
Critical Accounting Estimates and Judgements 50
Financial Instruments 50
Technical Information 50
Non-IFRS Financial Performance Measures 51
Forward-looking Statements 53
Cautionary Note to U.S. Investors Regarding the Use of Mineral Reserve and Mineral Resource Estimates 54
Corporate Information 55

 

 

 

 

Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Description of the Business

 

Osisko Gold Royalties Ltd is engaged in the business of acquiring and managing precious metals and other high-quality royalties, streams and similar interests in Canada and worldwide, except for Osisko Development Corp. and its subsidiaries ("Osisko Development"), which are engaged in the exploration, evaluation and development of mining projects. 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. The Company's cornerstone asset is a 5% net smelter return ("NSR") royalty on the Canadian Malartic mine, located in Canada.

 

On February 24, 2022 and as of the date of this MD&A, Osisko held an interest of 75.1% in Osisko Development Corp., a mining exploration, evaluation and development company created in the fourth quarter of 2020 through a reverse take-over transaction where Osisko transferred its mining assets and activities to Osisko Development. As a result, the Company consolidates the assets, liabilities, results of operations and cash flows of the activities of Osisko Development and its subsidiaries. Osisko Development's main asset is the Cariboo gold project in British Columbia, Canada.

 

In this MD&A, reference to Osisko Gold Royalties is to Osisko Gold Royalties Ltd and its subsidiaries, excluding Osisko Development Corp. and its subsidiaries (royalties and streams segment1 ). Reference to Osisko Development is to Osisko Development Corp. and its subsidiaries (mining exploration and development segment2 ).

 

Business Model and Strategy

 

Osisko is a growth-oriented and Canadian-focused precious metals 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 metals 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'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.

 

Uncertainty due to COVID-19

 

The COVID-19 pandemic has had a significant impact on the global economy and commodity and financial markets. The full extent and impact of the COVID-19 pandemic is unknown at this time and its adverse effects may continue for an extended and unknown period of time, particularly as variant strains of the virus are identified. The impact of the pandemic to date has included volatility in financial markets, a slowdown in economic activity, supply chain and labour issues, and volatility in commodity prices (including gold and silver). Furthermore, as efforts have been undertaken to slow the spread of the COVID-19 pandemic, the operation and development of mining projects have been impacted. Many mining projects, including a number of the properties in which Osisko holds a royalty, stream or other interest have been impacted by the pandemic resulting in the temporary suspension of operations, and other mitigation measures that impacted production. If the operation or development of one or more of the properties in which Osisko holds a royalty, stream or other interest and from which it receives or expects to receive significant revenue is suspended as a result of the continuing COVID-19 pandemic or future pandemics or other public health emergencies, it may have a material adverse impact on Osisko's profitability, results of operations, financial condition and the trading price of Osisko's securities. The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on future developments, including a widely available vaccine in each of the countries where are located the assets on which we own a royalty, stream or other interest, the duration and severity of the pandemic and related restrictions, all of which continue to be uncertain and cannot be predicted.

 

As a result of the COVID-19 pandemic, the Company took action to protect its employees, contractors and the communities in which it operates.

 

 

1 The royalties and streams segment refers to the royalty, stream and other interests segment, which corresponds to the activities of Osisko Gold Royalties Ltd and its subsidiaries, excluding Osisko Development.

2 The mining exploration and development segment refers to the mining exploration, evaluation and development segment, which corresponds to the activities of  Osisko Development Corp. and its subsidiaries.

 

2

 

 

Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Highlights - 2021

 

·80,000 gold equivalent ounces ("GEOs3 ") earned (excluding 9,210 GEOs earned from the Renard diamond stream4  (compared to 66,113 GEOs in 2020, excluding 1,754 GEOs earned from the Renard diamond stream);

 

·Record revenues from royalties and streams of $199.6 million ($156.6 million in 2020);

 

·Consolidated cash flows provided by operating activities of $106.1 million ($108.0 million in 2020);

 

- Record operating cash flows generated by the royalties and streams segment of $153.2 million ($114.0 million in 2020);

 

-Operating cash flows used by mining exploration and development segment (Osisko Development) of $47.1 million ($6.0 million in 2020);

 

·Consolidated net loss attributable to Osisko's shareholders of $23.6 million, $0.14 per basic share (consolidated net earnings of $16.9 million, $0.10 per basic share in 2020), mostly as a result of the impairment charges and mining operating expenses incurred by Osisko Development;

 

·Consolidated adjusted earnings5  of $59.3 million, $0.35 per basic share (compared to $48.4 million, $0.30 per basic share in 2020);

 

- Adjusted earnings from the royalties and streams segment of $94.4 million, $0.56 per basic share ($55.3 million, $0.34 per basic share in 2020);

 

- Adjusted loss from the mining exploration and development segment of $35.1 million, $0.21 per basic share ($6.9 million, $0.04 per basic share in 2020);

 

·Repaid a $50.0 million convertible debenture and drew the credit facility by the same amount, thereby reducing the interest rate payable by approximately 1.5% per annum;

 

·Announcement by Agnico Eagle Mines Limited ("Agnico Eagle") and Yamana Gold Inc. ("Yamana") of a positive construction decision for the Odyssey underground mine project. The preliminary economic study shows a total of 7.29 million gold ounces of resources (6.18 million tonnes at 2.07 g/t Au indicated resources and 75.9 million tonnes at 2.82 g/t Au inferred resources). Underground mine production is planned to start in 2023 and is expected to ramp up to an average of 545,400 gold ounces per year from 2029 to 2039, thereby extending the life of mine of our cornerstone asset for decades to come;

 

·Investments and strategic partnership with Carbon Streaming Corporation to promote global decarbonization and biodiversity efforts through carbon credit streaming transactions;

 

·Publication of the inaugural ESG report and announcement of commitment to the United Nations Global Compact ("UN Global Compact");

 

·Acquisition of six royalties and one precious metals offtake, from two private sellers, for total cash consideration of US$26.0 million ($32.6 million). Four of the royalties are on claims overlying the Spring Valley project, and increased the Company's current NSR royalty on Spring Valley from 0.5% to between 2.5% - 3.0% (sliding scale royalty percentages as long as gold prices are above US$700 per ounce). Immediately to the north of Spring Valley lies the Moonlight exploration property, where Osisko also acquired a 1.0% NSR royalty. Osisko also acquired a 0.5% NSR royalty and a 30% gold and silver offtake right covering the Almaden project in western Idaho;

 

·Conversion of the Parral gold and silver offtake into a life-of-mine gold and silver stream. Under the stream, Osisko Bermuda Limited ("Osisko Bermuda"), a subsidiary of Osisko, has been receiving, effective April 29, 2021, 2.4% of the gold and silver produced from tailings piles currently owned or acquired by GoGold, with a transfer price of 30% of the gold and silver spot prices. Osisko currently has no other offtake agreements on producing assets;

 

·Acquisition of a 2.75% NSR royalty on the Tocantinzinho gold project ("Tocantinzinho") for cash consideration of US$10 million ($12.6 million). The operator of Tocantinzinho has a one-time buy-down option in relation to the royalty. At the time of project construction, the operator may make a payment of US$5.5 million to reduce the royalty percentage by 2% resulting in a royalty of 0.75%. Pursuant to a pre-existing agreement, the buy-down payment is payable to the original royalty owners. In November 2021, the operator has early exercised the first 1% of the buy-down, therefore reducing the effective NSR royalty to 1.75%;

 

·Acquisition from Barrick TZ Limited, a subsidiary of Barrick Gold Corporation ("Barrick"), of royalties for total cash consideration of US$11.8 million ($14.8 million), including a 2% NSR royalty on the AfriOre and Gold Rim licenses comprising the West Kenya project operated by Shanta Gold Limited, a 1% NSR royalty on the Frontier project operated by Metalor SA, a private company, and a 1% NSR royalty on the Central Houndé project operated by Thor Explorations Ltd.;

 

·Amendment of the revolving credit facility (the "Facility") and increase of the amount available by $150.0 million to $550.0 million, with an additional uncommitted accordion of up to $100.0 million (for a total availability of up to $650.0 million). The maturity date of the Facility was extended to July 30, 2025, which can be extended annually; and

 

·Repurchase of 2.1 million common shares for $30.8 million under the normal course issuer bid (average acquisition price of $14.64);

 

·Osisko Development closed a non-brokered private placement for gross proceeds of $79.8 million (of which $73.9 million were received in 2020) in January and February 2021;

 

3 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. For average metal prices used, refer to the Portfolio of Royalty, Stream and Other Interests section of this MD&A.

 

4 Osisko committed to reinvest its net proceeds from the Renard diamond stream through a bridge loan with the operator until April 2022.

 

5 "Adjusted earnings (loss)" and "Adjusted earnings (loss) 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 MD&A.

 

3

 

 

Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

 ·Osisko Development closed a brokered private placement of flow-through shares for gross proceeds of $33.6 million in March 2021; and

 

·Declaration of quarterly dividends totaling $0.21 per common share in 2021, including a dividend increase of 10% in the third quarter of 2021 (for an annualized quarterly dividend of $0.22 per common share).

 

Highlights - Subsequent to December 31, 2021

 

·In January 2022, Osisko Development entered into definitive agreements to acquire 100% of Tintic Consolidated Metals LLC ("Tintic"). Osisko Bermuda entered into a non-binding metals stream term sheet, with a wholly-owned subsidiary of Osisko Development, for between US$20 million and US$40 million. In the event that the full amount of US$40 million is drawn, Osisko Development will deliver to Osisko Bermuda 5% of all metals produced from the Tintic property until 53,400 ounces of refined gold have been delivered and 4.0% thereafter;

 

·In February 2022, Osisko Development announced a bought-deal private placement of $90.0 million and a non-brokered private placement of US$110.3 million; and

 

·Declared a quarterly dividend of $0.055 per common share payable on April 14, 2022 to shareholders of record as of the close of business on March 31, 2022.

 

Summary table - Financial highlights

(in thousands of dollars, except per share amounts)

 

    Years ended December 31,  
      Osisko Gold Royalties (i)        Osisko Development (ii)        Consolidated (vi)   
      2021       2020       2021       2020       2021       2020  
      $       $       $       $       $       $  
Cash (iii)     82,291       105,097       33,407       197,427       115,698       302,524  
                                                 
Revenues     224,877       213,630       7,225       -       224,877       213,630  
Cash margin (iv)     187,231       149,930       -       -       187,231       149,930  
Gross profit     138,870       104,325       -       -       138,870       104,325  
Operating expenses (G&A, bus. dev and exploration)     (23,778 )     (28,021 )     (22,852 )     (8,301 )     (46,630 )     (36,322 )
Mining operating expenses     -       -       (12,919 )     -       -       -  
Net earnings (loss)     77,277       23,501       (133,952 )     (7,272 )     (56,675 )     16,229  
Net earnings (loss) attributable to Osisko's shareholders     77,277       23,501       (100,831 )     (6,625 )     (23,554 )     16,876  
Net earnings (loss) per share  attributable to Osisko's shareholders     0.46       0.14       (0.60 )     (0.04 )     (0.14 )     0.10  
Adjusted net earnings (loss) (v)     94,406       55,290       (35,130 )     (6,864 )     59,276       48,426  
Adjusted net earnings (loss) per basic share (v)     0.56       0.34       (0.21 )     (0.04 )     0.35       0.30  
                                                 
Cash flows from operating activities                                                
Before working capital items     158,632       116,631       (27,538 )     (10,387 )     131,094       106,244  
Working capital items     (5,413 )     (2,669 )     (19,586 )     4,403       (24,999 )     1,734  
After working capital items     153,219       113,962       (47,124 )     (5,984 )     106,095       107,978  
Cash flows from investing activities     (120,766 )     (161,131 )     (151,272 )     (61,968 )     (272,038 )     (223,099 )
Cash flows from financing activities     (54,339 )     109,444       34,738       207,417       (19,601 )     316,861  

 

(i) Osisko Gold Royalties Ltd and its subsidiaries, excluding Osisko Development Corp. and its subsidiaries. Represents the royalty, stream and other interests segment.

 

(ii) Osisko Development Corp. and its subsidiaries (carve-out of the mining activities of Osisko Gold Royalties prior to the reverse take-over transaction completed on November 25, 2020 and creating Osisko Development). Represents the exploration, evaluation and development of mining projects segment.

 

(iii) As at December 31, 2021 and 2020.

 

(iv) 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 Non-IFRS Financial Performance Measures section of this MD&A.

 

(v) Adjusted earnings (loss) and adjusted earnings (loss) 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 MD&A.

 

(vi) Consolidated results are net of the intersegment transactions and adjustments related to accounting policies. Refer to the Segment Disclosure section of this MD&A.

 

4

 

 

Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Portfolio of Royalty, Stream and Other Interests

 

The following table details the GEOs earned from Osisko Gold Royalties Ltd's producing royalty, stream and other interests:

 

   Three months ended
December 31,		   Years ended
December 31,		 
   2021   2020   2021   2020 
Gold                    
                     
Canadian Malartic royalty   8,849    8,544    35,610    27,964 
Eagle Gold royalty   2,432    1,609    8,506    4,953 
Éléonore royalty   1,420    1,377    5,632    4,797 
Seabee royalty (i)   771    961    3,452    2,390 
Island Gold royalty   471    582    2,189    1,860 
Pan royalty   539    506    1,832    1,752 
Lamaque royalty   285    359    1,264    884 
Matilda stream   104    267    685    886 
Bald Mountain royalty   88    72    511    104 
Others   231    156    1,009    601 
    15,190    14,433    60,690    46,191 
                     
Silver                    
                     
Mantos Blancos stream   2,079    2,375    9,141    8,547 
Sasa stream   1,043    950    4,441    3,933 
Gibraltar stream   828    477    2,676    2,284 
Canadian Malartic royalty   90    118    400    400 
Others   63    197    492    897 
    4,103    4,117    17,150    16,061 
Diamonds                    
                     
Renard stream (ii)   3,042    1,754    9,210    3,809 
Others   26    21    107    108 
    3,068    1,775    9,317    3,917 
Other metals                    
                     
Kwale royalty   510    258    2,050    1,675 
Others   1    -    3    23 
    511    258    2,053    1,698 
                     
Total GEOs   22,872    20,583    89,210    67,867 
                     
Total GEOs, excluding GEOs earned on the Renard stream (iii)   19,830    18,829    80,000    66,113 

 

(i) The Seabee mine restarted its operations during the second quarter of 2020 (after a shut-down due to COVID-19), and deliveries to Osisko restarted in October 2020.

 

(ii) In April 2020, the Renard diamond mine was placed on care and maintenance, given the structural challenges affecting the diamond market as well as the depressed prices for diamonds due to COVID-19. The mine restarted its operations in September 2020.

 

(iii) GEOs from the Renard diamond stream are subtracted when presenting Osisko's total attributable GEOs because cash flows from the Renard diamond stream are reinvested through a bridge loan with the operator until April 2022.

 

5

 

 

Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

GEOs by Product

 

 

 

Average Metal Prices and Exchange Rate

 

   Three months ended
December 31,		   Years ended
December 31,		 
   2021   2020   2021   2020 
Gold(i)  $1,796   $1,874   $1,799   $1,770 
Silver(ii)  $23.33   $24.39   $25.14   $20.54 
                     
Exchange rate (US$/Can$)(iii)   1.2603    1.3030    1.2535    1.3413 

 

(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.

 

6

 

 

Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Royalty, Stream and Other Interests Portfolio Overview

 

As at December 31, 2021, Osisko owned a portfolio of 149 royalties, 10 streams and 3 offtakes, as well as 6 royalty options. Currently, the Company has 19 producing assets. The Cariboo royalty and the San Antonio stream are excluded from the total number of assets, as these assets, held by Osisko, are cancelled on the accounting consolidation of Osisko Development.

 

Portfolio by asset stage

 

Asset stage  Royalties   Streams   Offtakes   Total number
of assets		 
Producing   13    6    -    19 
Development (construction)   11    4    2    17 
Exploration and evaluation   125    -    1    126 
    149    10    3    162 

 

Producing assets

 

Asset  Operator  Interest  Commodity  Jurisdiction
North America            
Canadian Malartic  Agnico Eagle Mines Limited Yamana Gold Inc.  5% NSR royalty  Au, Ag  Canada
Eagle Gold  Victoria Gold Corp.  5% NSR royalty  Au  Canada
Éléonore  Newmont Corporation  2.2-3.5% NSR royalty  Au  Canada
Seabee  SSR Mining Inc.  3% NSR royalty  Au  Canada
Gibraltar  Taseko Mines Limited  75% stream  Ag  Canada
Island Gold  Alamos Gold Inc.  1.38-3% NSR royalty  Au  Canada
Pan  Calibre Mining Corp.  4% NSR royalty  Au  USA
Lamaque  Eldorado Gold Corporation  1% NSR royalty  Au  Canada
Bald Mtn. Alligator Ridge / Duke & Trapper  Kinross Gold Corporation  1% / 4% GSR(i) royalty  Au  USA
Parral(ii)  GoGold Resources Inc.  2.4% stream  Au, Ag  Mexico
Santana  Minera Alamos Inc.  3% NSR royalty  Au  Mexico
Ermitaño  First Majestic Silver Corp.  2% NSR  Au, Ag  Mexico
Renard(iii)  Stornoway Diamonds (Canada) Inc.  9.6% stream  Diamonds  Canada
             
Outside of North America            
Mantos Blancos  Mantos Copper Holding SpA  100% stream  Ag  Chile
Sasa  Central Asia Metals plc  100% stream  Ag  Macedonia
Kwale  Base Resources Limited  1.5% GRR(iv)  Rutile, Ilmenite, Zircon  Kenya
Matilda  Wiluna Mining Corporation  1.65% stream  Au  Australia
Fruta del Norte  Lundin Gold Inc.  0.1% NSR royalty  Au  Ecuador
Brauna  Lipari Mineração Ltda  1% GRR  Diamonds  Brazil

 

7

 

 

Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Key development / exploration and evaluation assets(vi)

 

Asset  Operator  Interest  Commodities  Jurisdiction
             
Akasaba West  Agnico Eagle Mines Limited  2.5% NSR royalty  Au  Canada
Altar  Aldebaran and Sibanye-Stillwater  1% NSR royalty  Cu, Au  Argentina
Arctic  South 32 / Trilogy Metals Inc.  1% NSR royalty  Cu  USA
Amulsar(v)  Lydian Canada Ventures Corporation  4.22% Au / 62.5% Ag stream  Au, Ag  Armenia
Amulsar  Lydian Canada Ventures Corporation  81.9% offtake  Au  Armenia
Back Forty  Gold Resources Corporation  18.5% Au / 85% Ag streams  Au, Ag  USA
Canadian Malartic Underground  Agnico Eagle Mines Limited Yamana Gold Inc.  3.0 - 5.0% NSR royalty  Au  Canada
Cariboo(vi)  Osisko Development  5% NSR royalty  Au  Canada
Casino  Western Copper & Gold Corporation  2.75% NSR royalty  Au, Ag, Cu  Canada
Cerro del Gallo  Argonaut Gold Inc.  3% NSR royalty  Au, Ag, Cu  Mexico
Copperwood/White Pine(vii)  Highland Copper Company Inc.  3% NSR royalty  Ag, Cu  USA
Copperwood/White Pine(vii)  Highland Copper Company Inc.  3/26th NSR royalty  Ag  USA
Dolphin Tungsten  King Island Scheelite Limited  1.5% Gross Revenue Royalty  Tungsten (W)   
Hammond Reef  Agnico Eagle Mines Limited  2% NSR royalty  Au  Canada
Hermosa  South 32 Limited  1% NSR royalty  Zn, Mn, Pb, Ag  USA
Horne 5  Falco Resources Ltd.  90%-100% stream  Ag  Canada
Liontown  Red River Resources Limited  0.8% NSR  Au, Ag, Zn, Cu   
Magino  Argonaut Gold Inc.  3% NSR royalty  Au  Canada
Ollachea  Kuri Kullu / Minera IRL  1% NSR royalty  Au  Peru
San Antonio(vi)  Osisko Development  15% Au stream  Au, Ag  Mexico
Spring Valley(viii)  Waterton Global Resource Management  2.5-3% NSR royalty  Au  USA
Tocantinzinho(ix)  G Mining Ventures Corp.  1.75% NSR royalty  Au  Brazil
Upper Beaver  Agnico Eagle Mines Limited  2% NSR royalty  Au, Cu  Canada
West Kenya  Shanta Gold Limited  2% NSR royalty  Au   
Wharekirauponga (WKP)  OceanaGold Corporation  2% NSR royalty  Au  New Zealand
Windfall  Osisko Mining Inc.  2.0 - 3.0% NSR royalty  Au  Canada

 

(i) Gross smelter return ("GSR").

 

(ii) Effective April 29, 2021, the Parral offtake was converted into a 2.4% gold and silver stream.

 

(iii) Osisko became a 35.1% shareholder of the private entity holding the Renard diamond mine on November 1, 2019.

 

(iv) Gross revenue royalty ("GRR").

 

(v) As at December 31, 2019, Lydian International Limited, the owner of the Amulsar project, was granted protection under the Companies' Creditors Arrangement Act. In July 2020, a credit bid was completed and Osisko became a 35.6% shareholder of Lydian Canada Ventures Corporation, which is the private entity now holding the Amulsar project in Armenia.

 

(vi) The 5% NSR royalty on the Cariboo gold project and the 15% gold and silver stream on the San Antonio gold project held by Osisko are cancelled on the consolidation of Osisko Development by Osisko. As a result, they are not included in the total number of assets.

 

(vii) 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%. Osisko also exercised in June 2021 a portion of its option and acquired a 3/26th NSR royalty on the silver production from Copperwood and White Pine (the remaining option can be exercised by Osisko for US$23.0 million).

 

(viii) The 3% NSR royalty is on the core resource area; a separate 1% is applicable on the periphery of the property.

 

(ix) The current effective NSR royalty is 1.75%. However, the operator has a buy-down option to reduce the royalty by 1% to 0.75% at the time of project construction.

 

8

 

 

Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

 

 

9

 

 

Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Royalty, stream and offtake interests transactions

 

Spring Valley royalty portfolio

 

In April 2021, the Company acquired six royalties and one precious metals offtake, from two private sellers, for total cash consideration of US$26.0 million ($32.6 million). The acquisitions were funded through cash on hand. Four of the royalties are on claims overlying the Spring Valley project, and increase the Company's current NSR royalty on Spring Valley from 0.5% to between 2.5% - 3.0% (sliding scale royalty percentages as long as gold prices are above US$700 per ounce). Immediately to the north of Spring Valley lies the Moonlight exploration property, where Osisko has agreed to acquire a 1.0% NSR royalty. Osisko has also agreed to acquire a 0.5% NSR royalty and 30% gold and silver offtake right covering the Almaden Project in western Idaho.

 

Conversion of the Parral offtake to a gold and silver stream

 

In April 2021, GoGold and Osisko Bermuda entered into an agreement to convert the gold and silver offtake into a gold and silver stream. Under the stream, Osisko Bermuda will receive, effective April 29, 2021, 2.4% of the gold and silver produced from tailings piles currently owned or acquired by GoGold, with a transfer price of 30% of the gold and silver spot prices. Osisko has currently no other offtake agreement in production.

 

Tocantinzinho royalty

 

In July 2021, Osisko entered into a royalty transfer agreement with Sailfish Royalty Corp. ("Sailfish") pursuant to which Osisko purchased a 2.75% NSR royalty on the Tocantinzinho gold project ("Tocantinzinho"), located in Brazil, and operated by G Mining Ventures Corp. ("G Mining Ventures", formerly owned by Eldorado Gold Corporation) for cash consideration of US$10 million ($12.6 million). The operator of Tocantinzinho has a one-time buy-down option in relation to the royalty. At the time of project construction the operator may make a payment of US$5.5 million to reduce the royalty percentage by 2% resulting in a royalty of 0.75%. Pursuant to a pre-existing agreement entered into by Sailfish, the buy-down payment is payable to the original royalty owners. In November 2021, the operator has early exercised the first 1% of the buy-down, therefore reducing the effective NSR royalty to 1.75%.

 

In February 2022, G Mining Ventures announced the results of its 2022 feasibility study on Tocantinzinho. The study replaces the 2019 feasibility study completed by Eldorado Gold Corporation, with updated mineral resource and mineral reserve estimates, re-sequenced mine plan, refined mill designs, and updated current capital and operating cost estimates. The feasibility study confirms robust economics for a low cost, large scale, conventional open pit mining and milling operation. The feasibility study outlines total gold production of 1.8 million gold ounces over 10.5 years, resulting in an average annual gold production profile of 174,700 ounces with an All-In-Sustaining Cost ("AISC") per ounce of US$681. The project after-tax net present value (5% discount rate) is US$622 million with an after-tax internal rate of return of 24% at a gold price of US$1,600 per ounce.

 

Horne 5 stream

 

In August 2021, the Company made an advance payment of $10.0 million under its silver stream agreement with Falco Resources Ltd., an associate. The payment corresponds to half of the $20.0 million second instalment payment, which was payable at the receipt of all necessary material third-party approvals, licenses, rights of way and surface rights on the Horne 5 property.

 

Barrick TZ royalty portfolio

 

On October 27, 2021, Osisko concluded a transaction with Barrick TZ Limited to acquire royalties for total cash consideration of US$11.8 million ($14.8 million), including a 2% NSR royalty on the AfriOre and Gold Rim licenses comprising the West Kenya project operated by Shanta Gold Limited, a 1% NSR royalty on the Frontier project operated by Metalor SA, a private company, and a 1% NSR royalty on the Central Houndé project operated by Thor Explorations Ltd.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

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

 

The Company's cornerstone asset is a 5% NSR royalty on the Canadian Malartic open pit mine 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").

 

Osisko also holds a 5.0% NSR royalty on the East Gouldie and Odyssey South deposits, a 3.0% NSR royalty on the Odyssey North deposit and a 3-5% NSR on the East Malartic deposit, which are located adjacent to the Canadian Malartic mine.

 

Update on operations

 

On February 17, 2022, Yamana reported production guidance of 640,000 ounces of gold at Canadian Malartic for the year 2022. At Canadian Malartic, production is expected to transition from the open pit to the underground between 2023 to 2029.

 

Canadian Malartic produced 177,866 ounces of gold (100% basis) during the fourth quarter. Canadian Malartic benefitted from higher grades and recoveries from ore in the Malartic pit as the operation continues to transition to the Barnat pit. Full year production of 714,784 ounces of gold (100% basis) exceeded guidance of 700,000 ounces.

 

Gold mineral reserves of 3.54 million ounces, reflecting depletion from 2021 production and an adjustment of approximately 96,000 ounces due to a slight increase in cut-off grade, which will be added to the marginal stockpile, and a localized adjustment in the lower benches of the Canadian Malartic pit. For the Barnat pit, drill hole datasets from the former East Malartic and Sladen underground mines were incorporated into the resource model, increasing confidence in the Barnat grade estimation and without significantly changing mineral reserves or mineral resources. Underground mineral resources for the Odyssey project continue to grow as a result of ongoing exploration drilling, with a total of 2.35 million ounces of indicated mineral resources and 13.15 million ounces of inferred mineral resources reported at year-end. At East Gouldie, drilling added a total of 82 new pierce points in the mineralized zones, confirming estimated grades and widths and resulting in the first gold indicated mineral resources for the deposit of 1.5 million ounces, on a 100% basis. The ongoing infill drilling program continues to increase the inventory of indicated mineral resources to support the planned conversion of mineral resources to mineral reserves. Expansion of the mineral resource envelope on all sides added new inferred mineral resources with a high potential for future conversion in the mine plan, while step out drilling extended the mineralized zone 1,260 metres beyond the reported East Gouldie mineral resource and identified a new subparallel zone, located 400 metres in the footwall of the East Gouldie zone. These exploration holes are still widely spaced and therefore not yet considered in the mineral resource statement.

 

For more information, refer to Yamana's press release dated January 13, 2022 entitled "Yamana Gold Announces Preliminary Fourth Quarter and Full Year 2021 Operating Results, Exceeding Annual Production Guidance With Strong Cash Flow Generation and Standout Performances at Its Core Operations", Yamana's press release dated February 8, 2022 entitled "Yamana Gold Reports Updated Mineral Reserves and Mineral Resources Underpinning Increasing Mine Lives Across Its Portfolio" and Yamana's press release dated February 17, 2022 entitled "Yamana Gold Provides 2022-2024 Guidance and an Update to Its Ten-Year Outlook Highlighting a Sustainable Production Platform With Significant Growth", all filed on www.sedar.com.

 

Odyssey Underground Mine Project Construction

 

Following the completion of an internal technical study in late 2020, the Partnership has approved the construction of a new underground mining complex at the Odyssey project. The project is described in a NI 43-101 Preliminary Economic Assessment technical report filed on SEDAR in March 2021. The basis for the mine plan is a potentially mineable resource of 7.29 million ounces (6.18 million tonnes of 2.07 g/t Au indicated resources and 75.9 million tonnes of 2.82 g/t Au inferred resources). The East Gouldie deposit makes up most of this mineral inventory, whose total inferred resources contains 6.42 million ounces (62.9 million tonnes of 3.17 g/t Au). Combined with the East Malartic and Odyssey deposits the total underground inferred resources contains 13.8 million ounces (177.5 million tonnes of 2.42 g/t Au), as well as indicated resources of 0.86 million ounces (13.3 million tonnes of 2.01 g/t Au). More detail can be found in Agnico Eagles' press release dated February 11, 2021 entitled "Agnico Eagle Reports Fourth Quarter and Full Year 2020 Results" and filed on www.sedar.com.

 

The project has advanced significantly throughout 2021, with several milestones achieved in the past several months. In October, the concrete pour to construct the 93-metre-tall headframe was completed on schedule, in preparation for shaft sinking to begin in 2022. The production shaft will be 6.5 metres in diameter and 1,800 metres deep, with the first of two loading stations at 1,135 metres below surface.

 

In parallel, the ramp from surface to the upper zones is advancing according to plan and, as of the end of November, the ramp heading is approximately 250 metres below surface. By the end of the year, the ramp is expected to be at the elevation of the third production level and the base of the first stoping horizon. Underground development is planned to increase in 2022 with the opening of additional headings and the addition of Canadian Malartic development crews to complement the existing contractor crews. As an employer of choice in the Abitibi, the Odyssey project is successfully building a highly skilled team. The first underground ore from Odyssey South is on track to be processed through the existing Canadian Malartic plant in early 2023.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Opportunities also exist for supplemental production sources to increase throughput beyond 20,000 tpd and utilize the excess process capacity of the 60,000 tpd Canadian Malartic plant. Exploration drilling of the East Gouldie Extension and parallel structures, while widely spaced, indicate that a corridor of mineralization extends at least 1.3 kilometres to the east of East Gouldie. Although at the very early stages, these results suggest the potential for a second production shaft that could increase throughput over the longer term. Open pit and underground exploration targets within the Canadian Malartic land package present additional potential ore sources. More detail can be found in Yamana's press release dated December 1, 2021 entitled "Yamana Gold Announces the Discovery of New Mineralized Zones at Wasamac and Provides an Update on Its Growth Projects"

 

For additional information, please refer to Agnico Eagle's press release dated November 2, 2021 entitled "Agnico Eagle Provides an Update on Exploration Results: Extension of East Gouldie Deposit on the Rand Malartic Property 1,500 Metres from Current Mineral Resources Outline; Additional High-Grade Gold-Copper in Footwall Zone at Upper Beaver in Kirkland Lake; Exploration at Hope Bay Continues to Expand Doris and Madrid Deposits; Drilling at Santa Gertrudis Identifies New High-Grade Mineralization", and Yamana's press release dated February 8, 2020 entitled "Yamana Gold Reports Updated Mineral Reserves and Mineral Resources Underpinning Increasing Mine Lives Across Its Portfolio", all filed on www.sedar.com.

 

Malartic Exploration Update On September 7, 2021, Yamana provided an update on the ongoing exploration programs at Canadian Malartic. The district exploration program has discovered a deep eastern extension of the East Gouldie structure as well as a new zone located 400 metres south of East Gouldie, and intercepted further promising mineralization below the known East Amphi deposit. These results support the continued growth of Canadian Malartic as it transitions from an open pit mine to a large underground operation with a decades-long mine life. Drilling highlights in the East Gouldie infill area include the following estimated true width intercepts: 6.2 g/t Au over 61.7 metres including 10.9 g/t Au over 21.0 metres at 1,102 metres depth (MEX19-154WC).

 

East Amphi is located three kilometres northwest of the Canadian Malartic pit. To date, 7,900 metres of drilling have been completed at East Amphi and results indicate the presence of significant mineralization at depth below the historic workings. Two zones are being defined with new intercepts in the Nessie zone of 2.16 g/t Au over an estimated true width of 17.19 metres in drill hole EA20-4187, and 14.13 g/t Au over an estimated true width of 1.70 metres in drill hole EA21-4196. Follow up drilling of the adjacent Kraken zone, returned an intercept of 2.01 g/t Au over an estimated true width of 29.77 metres.

 

Recent results in the Chert zone also suggest the potential to add additional mineral resources between the East Malartic and East Gouldie deposits. The size and shape of the Chert zone is not well understood yet, but recent results of drill hole MEX20-164WD, returned 7.0 g/t Au over 77.9 metres core length at 890 metres depth. At East Amphi, recent work suggests that the mineralization remains open at depth below the historical underground mine, with hole EA21-4197 intersecting 2.0 g/t Au over an estimated true width of 29.8 metres at 544 metres depth. This broad mineralized zone is comprised of several higher-grade sub-zones. 

 

On November 2, 2021, Agnico Eagle reported positive exploration results for the Odyssey underground project. Infill drilling returned wide, high-grade intersections in the core of the East Gouldie deposit, with results of 6.8 g/t Au over 41.4 meters at 1,069 metres depth, including 10.2 g/t Au over 21.7 metres at 1,064 metres depth. The eastern extension of the deposit was tested further, with the eastern most hole returning 6.3 g/t Au over 4.8 metres at 1,989 metres depth, 1.5 kilometres east of the current mineral resource, further demonstrating the excellent potential to significantly grow the size of the East Gouldie deposit.

 

For additional information, please refer to Agnico Eagle's press release dated July 8, 2021 entitled "Agnico Eagle Provides an Update on Exploration Results for H1 2021: Discovery of a New Mineralized Horizon 400m South of East Gouldie Deposit; Additional High-Grade Gold-Copper in Footwall Zone at Upper Beaver in Kirkland Lake; Exploration at Hope Bay Confirms Expansion Potential of Doris and Madrid Deposits; Drilling at Kittila Yields Deepest Ore Grade Intersection", Agnico Eagle's press release dated October 27, 2021 entitled "Agnico Eagle Reports Third Quarter 2021 Results - Meliadine and Laronde Mines Drive Record Quarterly Gold Production; 2021 Guidance Maintained; Reintegration of Nunavummiut Workforce at Meliadine and Meadowbank Completed; Development and Exploration Activities Progressing as Planned at Odyssey; Proposed Merger of Equals Announced With Kirkland Lake Gold" and Yamana's press release dated September 7, 2021 entitled "Yamana Gold Reports Positive Exploration Results at Its Producing Mines; New Zones and Targets Identified at All Operations With the Potential to Significantly Expand the Mineral Resource Base and Increase Mine Life; East Gouldie Results Highlight Continuity and Scale of the Zone", all filed on www.sedar.com.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Mantos Blancos Stream (Mantos Copper Holding SpA)

 

Osisko owns a 100% silver stream on the Mantos Blancos mine, which is owned and operated by Mantos Copper Holding SpA ("Mantos"), a private mining company focused on the extraction and sale of copper. Mantos owns and operates the Mantos Blancos mine and Mantoverde project, located in the Antofagasta and Atacama regions in northern Chile.

 

On November 30, 2021 Capstone Mining Corp. ("Capstone") and Mantos Copper (Bermuda) Limited ("Mantos") announced that they entered into a definitive agreement to combine pursuant to a plan of arrangement under the Business Corporations Act (British Columbia). Upon completion of the transaction, the new company will be named Capstone Copper Corp. and all Capstone common shares will be exchanged for newly issued Capstone Copper shares, based on the exchange ratio of one common share in the capital of Mantos for each Capstone share held.

 

Under the stream, Osisko will receive 100% of the payable silver from the Mantos Blancos copper mine until 19.3 million ounces have been delivered (2.7 million ounces have been delivered at December 31, 2021), after which the stream percentage will be 40%. The purchase price for the silver under the Mantos Blancos stream is 8% of the monthly average silver market price for each ounce of refined silver sold and delivered and/or credited by Mantos to Osisko Bermuda.

 

Update on operations

 

As per Mantos, production at the Mantos Blancos mine and concentrator plant for the fourth quarter of 2021 of 174,306 ounces of payable silver was lower than the 180,751 ounces of payable silver in the third quarter of 2021, mainly due to lower material milled and lower recoveries (73.7% vs 79.6%), partially offset by higher grades (6.79 g/t vs 6.26 g/t).

 

The Mantos Blancos Concentrator Debottlenecking Project ("MB-CDP") has achieved an overall project progress of 99% and total construction and pre-commissioning progress of 100%. The main project milestone, the Facility Practical Completion date, remains scheduled for the first quarter of 2022.

 

The expansion is expected to increase the throughput of the operation's sulphide concentrator plant from 4.3 million tonnes per year to 7.3 million tonnes per year and extend the life of the mine to 2035. Life-of-mine deliveries of refined silver to Osisko following commissioning of the expansion are expected to total approximately 14.5 million ounces, with annual deliveries during the first five years expected to average approximately 1.3 million ounces of refined silver. Capstone have confirmed that studies for a further expansion at Mantos Blancos (Phase 2) that would increase mill processing capacity from 20ktpd to 27ktpd are already underway. For additional information, please refer to Capstone's press release entitled "Capstone and Mantos Copper Combine to Create Capstone Copper, a Premier Copper Producer With Transformational Near-Term Growth" filed on www.sedar.com.

 

Eagle Gold Royalty (Victoria Gold Corp.)

 

Osisko owns a 5% NSR royalty on the Dublin Gulch property, which hosts the Eagle Gold mine, owned and operated by Victoria Gold Corp ("Victoria"). The Dublin Gulch gold property is situated in central Yukon Territory, Canada. The Eagle Gold mine poured its first gold on September 18, 2019.

 

On October 8, 2019, Victoria made its first shipment of doré from the Eagle Gold mine and on July 1, 2020, commercial production was declared.

 

Update on operations

 

On January 6, 2022, Victoria reported gold production in the fourth quarter of 2021 of 49,497 ounces for full year 2021 gold production of 164,222 compared to the revised guidance of 162,000. The guidance was revised in December 2021 from the original guidance released in March 2021 of 180,000 - 200,000 ounces of gold. The 2021 gold production represents an increase of 41% compared to the previous year with ore mined increasing by 27%.

 

During the fourth quarter of 2021, the company was delayed approximately 5 weeks in receipt of required driplines used to irrigate the heap leach pad. During this period, "low flow" driplines were installed as an alternate until the shipment of new driplines arrived. The low flow driplines delivered less leach solution to freshly stacked ore on the heap leach pad than would be anticipated using regular driplines resulting in an extended leach cycle. Freshly stacked ore contains the highest portion of recoverable gold and contributes significantly to gold production for the first 45 days under leach. All low flow driplines have subsequently been replaced and normal leaching has resumed. However, a considerable portion of gold production expected to be recovered in the fourth quarter of 2021 is now expected to be realized in the first quarter of 2022.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

On January 17, 2022, Victoria released an update on its "Project 250", aimed at increasing the average annual gold production of the Eagle gold mine to 250,000 ounces gold by 2023. Victoria announced the completion of a scoping study designed to assess the potential incorporation of an intermediate scalping screen into the process flow sheet which will serve to bypass fine ore material from the crushing circuit directly to the heap leach pad. The results of this study demonstrate an increase to design throughput of the crushing circuit by approximately 15%, thereby increasing potential annual ore stacking on the heap leach pad by approximately 1.5 million tonnes. Project 250 targets improvements to the overall efficiency of the Eagle Gold mine processing and material handling facilities through the elimination of unnecessary recycling of fine ore material that is more suitable to direct delivery to the heap leach pad. This study has identified the required equipment, location thereof and requisite modifications to the existing process layout coupled with capital and operating cost estimates in addition to timelines to effectively execute the engineering and installation.

 

As per the recommendations of the scoping study, detailed engineering and procurement of equipment is underway to enable construction to start in the second quarter of 2022. Construction is expected to be completed by the end of 2022. The scoping study report is available on Victoria's website. In addition to the scalping screen facility, Project 250 contemplates year round stacking of the heap leach pad which will extend the overall stacking schedule from nine to eleven months a year. Stacking eleven months a year will allow for an annual four week maintenance shutdown of the crushing circuit.

 

Reserve and resource estimates

 

The Eagle and Olive deposits include proven and probable reserves of 3.3 million ounces of gold at July 1, 2019, from 155 million tonnes of ore with an average grade of 0.65 g/t Au, as outlined in a Technical Report, dated December 6, 2019.  At July 1, 2019, the Eagle pit was estimated to contain 4.4 million ounces of gold in the measured and indicated category (217 million tonnes averaging 0.63 g/t Au), inclusive of proven and probable reserves, and a further 0.4 million ounces in the inferred category (21 million tonnes averaging 0.52 g/t Au). The Olive pit was estimated to contain 0.3 million ounces of gold in the measured and indicated category (10 million tonnes averaging 1.07 g/t Au), inclusive of proven and probable reserves, and a further 0.2 million ounces in the inferred category (7 million tonnes averaging 0.89 g/t Au).

 

For additional information, please refer to Victoria's press release dated January 6, 2022 entitled "Victoria Gold: Eagle Gold Mine Q4 And Annual 2021 Production Results" and Victoria's press release dated January 17, 2022 entitled "Victoria Gold Provides Update on 'Project 250', both filed on www.sedar.com.

 

Éléonore Royalty (Newmont Corporation) 

 

Osisko owns a sliding scale 2.2% to 3.5% NSR royalty on the Éléonore gold property located in the Province of Québec and operated by Newmont Corporation ("Newmont"). Osisko currently receives a NSR royalty of 2.2% on production at the Éléonore mine.

 

Update on operations

 

On December 2, 2021, Newmont provided 2022 guidance for the Éléonore mine of 275,000 ounces of gold.

 

On October 28, 2021, Newmont announced sales of 58,000 gold ounces in the third quarter of 2021 for a total of 186,000 gold ounces in the first nine months of 2021.

 

Reserve and resource estimates

 

On February 10, 2021, Newmont updated its mineral reserve and resource estimates for the Éléonore mine as at December 31, 2020. Proven and probable gold mineral reserves and resources remained relatively unchanged after depletion. Proven and probable gold mineral reserves as of December 31, 2020 totaled 1.26 million ounces (7.8 million tonnes grading 5.0 g/t Au). Measured and indicated gold mineral resources as of December 31, 2020 were estimated at 0.44 million ounces (3 million tonnes grading 4.51 g/t Au). Inferred gold mineral resources as of December 31, 2020 were estimated at 0.46 million ounces (2.5 million tonnes grading 5.65 g/t Au).

 

For additional information, please refer to Newmont press release dated February 10, 2021 entitled "Newmont Reports 2020 Mineral Reserves of 94 Million Gold Ounces Replacing 80 Percent of Depletion", Newmont's press release dated December 2, 2021 entitled "Newmont Provides 2022 and Longer-term Outlook", and Newmont's press release dated October 28, 2021 entitled "Newmont Announces Third Quarter 2021 Results", all filed on www.sedar.com.

 

Sasa Stream (Central Asia Metals plc) 

 

Osisko, through Osisko Bermuda, 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. Osisko Bermuda'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 (currently US$5.96 per ounce).

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Update on operations

 

On January 11, 2022, Central Asia reported sales of 85,314 ounces of payable silver in the fourth quarter of 2022 for a total of 323,849 ounces for the year 2021.

 

For more information on the Sasa mine, refer to Central Asia's press release dated January 11, 2022, entitled "2021 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 January 31, 2022, SSR Mining reported that it expects to produce between 115,000 to 125,000 ounces of gold at Seabee in 2022, with a mid-point of 119,000 ounces of gold.

 

SSR Mining also announced gold production for Seabee was a record 118,888 ounces in 2021, exceeding full-year guidance. Gold production was 35,570 ounces in the fourth quarter of 2021. Seabee's production profile is expected to remain largely consistent throughout the next year. Due to continued strong performance in the mine, Seabee is targeting record throughputs above 1,100 tonnes per day ("tpd") through 2022. Seabee's outperformance is expected to continue, as strong grades drive production of 120,000 to 130,000 ounces in 2023. Continued exploration in the Santoy mine is aimed at increasing grade and production in 2024 and beyond, as the operation has managed to do for many years.

 

Update on exploration

 

On January 31, 2022, SSR Mining announced total 2022 exploration and resource development expenditures are estimated at $15 million with a focus on expansion and definition of the Santoy Gap Hanging Wall and surface drill programs at the Seabee and Fisher properties (Fisher is not covered by the royalty).

 

Reserve and resource estimates

 

On March 30, 2021, SSR Mining reported its updated mineral reserves and mineral resources as of December 31, 2020. At the Seabee gold operation, exploration activities were impacted in 2020 due to the COVID-19 pandemic, limiting exploration during the year. Mineral reserves totaled 493,000 ounces of gold (1.6 million tonnes at an average gold grade of 9.83 g/t) at year-end 2020, a decrease of 1% compared to year-end 2019. The slight decrease in reserves is due to depletion at Santoy 8 and 9, offset by mineral resource to reserve conversion at Santoy 8 and 9 and the Gap HW based on infill drilling. Measured and indicated mineral resources totaled 1,003,000 ounces of gold (3.0 million tonnes at an average gold grade of 10.38 g/t); and inferred mineral resources totaled 507,000 ounces of gold (2.03 million tonnes at an average gold grade of 7.77 g/t) at year-end 2020. Mineral resources and reserves development drilling will continue at Seabee in 2021 with a focus on Gap HW and the newly discovered adjacent Santoy hanging wall.

 

For more information, refer to SSR Mining's press release dated January 31, 2022 entitled "SSR Mining Achieves Top End of 2021 Production Guidance, Beats Aisc Guidance, Outlines Three-Year Outlook and Intends to Increase 2022 Dividend by 40%" and SSR Mining's press release dated March 30, 2021 entitled "SSR Mining Reports Mineral Reserves And Resources for Year-End 2020", both filed on www.sedar.com.

 

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 (representing 75% of the Gibraltar mine production) until the delivery to Osisko of 5.9 million ounces of silver and 35% of Gibco's share of silver production thereafter. Since April 2020, there is no transfer price for the silver ounces acquired. As of December 31, 2021, a total of 0.9 million ounces of silver have been delivered under the stream agreement.

 

Gibraltar produced 112 million pounds of copper in 2021 and 29 million pounds in the fourth quarter of 2021. However, sales in the fourth quarter were 24 million pounds due to major disruption to the highway and rail infrastructure in southern British Columbia from severe rainstorms in November. Transit times for rail shipments are gradually improving and Taseko expects to reduce copper inventories at Gibraltar in the first quarter of 2022.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

For more information, refer to Taseko's press release dated January 13, 2022 entitled "Taseko Announces Gibraltar 2021 Production and Sales", filed on www.sedar.com.

 

Island Gold Royalty (Alamos Gold Inc.)

 

Osisko owns NSR royalties ranging from 1.38% to 3.00% on the Island Gold mine property (all of the current resources and reserves are covered by the royalties), operated by Alamos Gold Inc. ("Alamos") and located in Ontario, Canada.

 

Update on operations

 

On January 17, 2022, Alamos reported its 2022 guidance for Island Gold of 125,000 to 135,000 ounces of gold. Gold production at Island Gold is expected to decrease slightly in 2022, reflecting lower planned grades which is consistent with the mineral reserve grade and the Phase 2I expansion study released in 2020 ("Phase 2I Study"). Mining and processing rates are expected to be consistent with 2021 and average 1,200 tpd. As outlined in the Phase 2I Study, grades mined are expected to decrease below the average mineral reserve grade in 2023 followed by an increase above the average mineral reserve grade in 2024 driving production higher.

 

Alamos reported gold production of 37,500 ounces at Island Gold in the fourth quarter of 2021 for an annual gold production of 140,900 ounces, meeting its guidance.

 

In 2020, Alamos reported results of the positive Phase 2I expansion study conducted on its Island Gold mine. Based on the results of the study, Alamos is proceeding with an expansion of the operation to 2,000 tonnes per day. This follows a detailed evaluation of several scenarios which demonstrated the shaft expansion as the best option, having the strongest economics, being the most efficient and productive, and the best positioned to capitalize on further growth in mineral reserves and resources. The Phase 2I expansion is expected to drive average annual gold production to 236,000 ounces per year starting in 2025 upon completion of the shaft, representing a 70% increase from 2020 production. The Phase 2I expansion study was based on mineral reserves and resources at Island Gold as of December 31, 2019 and does not include the significant growth over the past year as outlined in the 2020 year-end Mineral Reserve and Resource statement and exploration results described below. On January 17, 2022, Island Gold announced that permitting for the expansion is expected to be completed during the first half of 2022. Shaft site surface works, construction of the hoisting plant and preparation of the shaft sink will be a major focus with the pre-sink of the shaft expected to start mid-2022

 

Reserves and resources

 

On February 23, 2021, Alamos reported its updated mineral reserves and resources as of December 31, 2020. Island Gold's mineral reserves and resources increased a combined 1.0 million ounces, net of mining depletion, including: an 8% increase in proven and probable mineral reserves to 1.3 million ounces (4.2 million tonnes grading 9.71 g/t Au), a 40% increase in inferred mineral resources to 3.2 million ounces (6.9 million tonnes grading 14.43 g/t Au) with grades also increasing 9%, reflecting further higher grade additions in Island East, for combined mineral reserves and resources totalling 4.7 million ounces, a 27% increase from the end of 2019.

 

Exploration update

 

On January 17, 2022, Alamos announced that a total of $22 million has been budgeted for surface and underground exploration at Island Gold in 2022. The exploration focus remains on defining additional near mine mineral resources across the two-kilometre long Island Gold Main Zone (Island Main, West, and East), as well as advancing and evaluating several regional targets. The 2021 exploration program was successful in extending high-grade mineralization across the Island Gold Main Zone, particularly in Island East. This included the best hole drilled to date at Island Gold (71.21 g/t Au (39.24 g/t cut) over 21.33 metres true width), extending high grade mineralization down-plunge from existing Mineral Resources. High grade mineralization was also intersected in a 300 metres step out hole, the deepest drilled to date, confirming that high grade mineralization extends well beyond mineral resources to a depth of more than 1,700 metres. These results highlight the significant potential for further growth in mineral reserves and resources.

 

The 2022 surface and underground exploration drilling program will continue to test the lateral and down-plunge extensions of Island East as well as an increased focus on Island Main and West. This includes 30,000 metres of surface directional drilling, 30,000 metres of underground exploration drilling.

 

For more information, refer to Alamos' press release dated January 17, 2022 entitled "Alamos Gold Reports Fourth Quarter 2021 Production and Provides Three-Year Production and Operating Guidance" and Alamos' press release dated February 23, 2021 entitled "Alamos Gold Reports Mineral Reserves and Resources for the Year-Ended 2020", both filed on www.sedar.com.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Renard Stream (Stornoway Diamonds (Canada) Inc.)

 

Osisko owns a 9.6% diamond stream on the Renard diamond mine operated by Stornoway Diamonds (Canada) Inc. ("Stornoway") and located approximately 350 kilometres north of Chibougamau in the James Bay region of north-central Québec. The Renard stream is secured by a first-ranking security interest over all assets and properties of Stornoway.

 

A credit bid transaction was closed on November 1, 2019 and Osisko became a 35.1% shareholder of the company holding the Renard diamond mine, Stornoway Diamonds (Canada) Inc., which is considered as an associate since that date.

 

Under the stream agreement, upon the completion of a sale of diamonds, Osisko remits to Stornoway a cash transfer payment which equals to 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

 

Stornoway announced in April 2020 that it had decided to keep the mine on care and maintenance, given the structural challenges affecting the diamond market sales as well as the depressed prices for diamonds due to COVID-19. The mine restarted its activities in September 2020.

 

Stornoway's focus has been on cost reduction while the diamond market recovers. During the first quarter of 2021, the company sold 444,936 carats at an average price of US$74.03 per carat, a significant improvement over pre-COVID pricing levels. During the second quarter of 2021, the company sold 439,028 carats at an average price of US$83.80 per carat. During the third quarter of 2021, the company sold 468,354 carats at an average price of US$97.85 per carat and during the fourth quarter, the company sold 491,053 carats at an average price of US$116.23 per carat. The last sale that was completed in February had an average price of over US$170 per carat, a continued upward trend.

 

Stornoway's cost reductions, coupled with strengthening diamond prices resulted in positive cash generation from Renard and no additional drawdowns on the company's working capital facility in 2021. Stornoway repaid $3.9 million to Osisko, or approximately 50% of the working capital facility (and interests receivable) outstanding at the end of December 2021. Osisko has agreed to defer payments from the stream until April 2022. Payments can be made prior to this date if the financial situation of Stornoway permits.

 

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 other 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 other interests. In addition to investment objectives, in some cases, the Company may decide to take a more active role, including providing management personnel 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"), Osisko Metals Incorporated ("Osisko Metals") and Falco Resources Ltd. ("Falco"). Certain equity positions, including Falco, were transferred to Osisko Development as part of the reverse take-over transaction completed in the fourth quarter of 2020.

 

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

 

During the year ended December 31, 2021, Osisko acquired equity investments for $20.7 million ($15.5 million acquired by Osisko Gold Royalties and $5.2 million acquired by Osisko Development) and disposed investments for $47.9 million ($4.9 million sold by Osisko Gold Royalties and $43.0 million sold by Osisko Development).

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Fair value of marketable securities

 

The following table presents the carrying value and fair value of the investments in marketable securities (excluding notes and warrants) as at December 31, 2021 (in thousands of dollars):

 

   Osisko Gold Royalties   Osisko Development   Consolidated 
Investments  Carrying
value (i)		   Fair
Value (ii)		   Carrying
value (i)		   Fair
value (ii)		   Carrying
value (i)		   Fair
value (ii)		 
    $    $    $    $    $    $ 
Associates   112,390    203,336    12,964    44,820    125,354    248,156 
Other   51,668    51,668    42,563    42,563    94,231    94,231 
    164,058    255,004    55,527    87,383    219,585    342,387 

 

(i) The carrying value corresponds to the amount recorded on the consolidated balance sheet, which is the equity method for investments in associates and the fair value for the other investments, as per IFRS 9, Financial Instruments.

(ii) The fair value corresponds to the quoted price of the investments in a recognized stock exchange as at December 31, 2021.

 

Main Investments

 

The following table presents the main investments of the Company in marketable securities as at December 31, 2021:

 

Investment  Company Holding
the Investment		  Number of
Shares Held		   Ownership 
          % 
Osisko Mining  Osisko Gold Royalties   50,023,569    14.4 
Osisko Metals  Osisko Gold Royalties   31,127,397    15.4 
Falco  Osisko Development (i)   46,885,240    17.3 

 

(i) The investment is held by Barkerville Gold Mines Ltd, a wholly-owned subsidiary of Osisko Development.

 

Osisko Mining Inc.

 

Osisko Mining is a Canadian gold exploration and development company focused on its Windfall gold project. Osisko holds a 2.0% - 3.0% NSR royalty on the Windfall gold project, for which a positive preliminary economic assessment was released in April 2021.

 

In March 2021, Osisko Mining announced that it has placed an order for grinding equipment and ancillaries from FLSmidth for its 100% owned Windfall gold project. The grinding mills have a capacity of processing up to 176.6 dry tonnes per hour, or 3,900 tonnes per day based on 92% availability.  The equipment is expected to be delivered to the Windfall project in the second half of 2022. Installation will follow pending successful receipt of all permits and authorizations. For more information, refer to Osisko Mining's press release dated March 9, 2021 entitled "Osisko Mining Orders Milling Equipment for Windfall", filed on www.sedar.com.

 

In April 2021, Osisko Mining released an updated preliminary economic assessment with a 39% after-tax internal rate of return and a $1.5 billion after-tax net present value, using a gold price of US$1,500 per ounce. The updated preliminary economic assessment shows an average gold production of 238,000 ounces per year of an 18 year life-of-mine. The first seven years of full production is expected to average 300,000 ounces per year at an average diluted grade of 8.1 g/t Au. For more information, refer to Osisko Mining's press release dated April 7, 2021 entitled "Osisko Mining Delivers Positive PEA Update for Windfall", filed on www.sedar.com.

 

On September 14, 2021, Osisko Mining reported that drilling had confirmed the Golden Bear discovery zone ("D1") and also identified two new mineralized zones ("D2" and "D3"). All three zones display alteration, sulfide mineralization and local visible gold, and all three remain open up and down plunge and along strike. Drill hole OSK-UB-21-273 returned 67.10 g/t Au over 2.0 metres; this intercept occurred 60 metres upplunge from the discovery intercept previously reported (27.40 g/t Au over 6.7 metres). Osisko Mining also released several batches of drill results illustrating the high grade nature of the deposits at Windfall, including 2,181 g/t Au over 2.5 metres at Lynx on August 3, 2021.

 

On November 30, 2021, Osisko Mining announced that it has signed an agreement for a private placement of $154 million in a convertible senior unsecured debenture due December 1, 2025 (the "Debentures") with Northern Star Resources Limited ("Northern Star"). In addition, Osisko Mining and Northern Star had agreed to negotiate, on an exclusive basis, the terms of an earn-in and joint-venture on up to a 50% interest in Osisko Mining's Windfall project. On February 16, 2022, Osisko Mining announced the termination of the joint venture negotiations. Osisko Mining has determined that development of the Windfall project on an independent basis would be optimal for their shareholders.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

On January 10, 2022, Osisko Mining provided an updated mineral resource estimate on Windfall. Measured and indicated resources are estimated at 3.2 million ounces of gold, an increase of 73%, at an average grade of 10.5 g/t (cut-off grade of 3.5 g/t), an increase of 9%. Inferred resources are estimated at 3.6 million ounces of gold at an average grade of 8.6 g/t, reflecting a grade increase of 8%. For more information, refer to Osisko Mining's press release dated January 10, 2022 entitled "Osisko Delivers Updated Windfall Resource Estimate", filed on www.sedar.com.

 

For more information, please refer to Osisko Mining's press releases available on www.sedar.com and on their website (www.osiskomining.com).

 

As at December 31, 2021, the Company held 50,023,569 common shares representing a 14.4% interest in Osisko Mining (14.5% as at December 31, 2020). The Company concluded that it exercises significant influence over Osisko Mining and accounts for its investment using the equity method.

 

Osisko Metals Incorporated

 

Osisko Metals is a Canadian base metal exploration and development company with a focus on zinc mineral assets. The company's flagship properties are the Pine Point mining camp, located in the Northwest Territories and the Bathurst mining camp, located in northern New Brunswick. The Company owns a 2.0% NSR royalty on the Pine Point mining camp (acquired in January 2020) and a 1.0% NSR royalty on the Bathurst mining camp. On February 11, 2022, the royalty Pine Point was increased by 1% for $6.5 million for a total NSR royalty of 3.0%

 

On January 11, 2021, Osisko Metals announced its 2021 exploration and development plans for Pine Point, including an updated preliminary economic assessment and submission of the environmental assessment initiation package. On receipt of a positive decision on the environmental assessment, expected in the third quarter of 2023, the project permitting phase will commence and is expected to be completed by the third quarter of 2024.

 

On June 15, 2020, Osisko Metals released a positive independent preliminary economic assessment on the Pine Point project, including the results of an updated mineral resource estimate that converted approximately 25.5% of the global resource to the indicated mineral resource category. The preliminary economic assessment showed an estimated internal rate of return of 29.6% and a mine life of 10 years. The updated mineral resource estimate highlighted indicated mineral resources of 12.9 million tonnes grading 6.29% zinc equivalent ("ZnEq") (4.56% Zn and 1.73% Pb). Inferred mineral resources are estimated at 37.6 million tonnes grading 6.80% ZnEq (4.89% Zn and 1.91% Pb). For more information, refer to Osisko Metals' press release dated June 15, 2020 entitled "Osisko Metals Releases Positive Pine Point PEA", filed on www.sedar.com.

 

As at December 31, 2021, the Company held 31,127,397 common shares representing a 15.4% interest in Osisko Metals (17.4% as at December 31, 2020). The Company concluded that it exercises significant influence over Osisko Metals and accounts for its investment using the equity method.

 

Falco Resources Ltd.

 

Falco's main asset is the Horne 5 gold project, for which a positive updated feasibility study was released in March 2021. For more information, refer to Falco's press release dated March 24, 2021 and entitled "Updated Feasibility Study Confirms Significant Value of the Horne 5 Project" and filed on www.sedar.com.

 

The feasibility study was updated to reflect the improved commodity prices, the silver stream financing arrangement with Osisko and the copper and zinc concentrate offtake agreements with Glencore Canada Corporation and its affiliated companies ("Glencore"). The capital and operating costs were reviewed to reflect current market conditions for labour, supplies and services. At a gold price of $1,600 per ounce, the updated feasibility study shows that the Horne 5 Project would generate an after-tax net present value, at a 5% discount rate, of $761 million and an after-tax internal rate of return of 18.9%.

 

19 

 

 

Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

In June 2021, Falco entered into an agreement in principle with Glencore establishing the framework of the terms and conditions (the "Agreement in Principle") pursuant to which the parties will enter into the Principal Operating License and Indemnity Agreement (the "OLIA") in order to enable Falco to develop and operate its Horne 5 project. It is anticipated that the OLIA will be finalized in 2022. The Agreement in Principle outlines the terms to be included in the OLIA which will establish the framework to govern Falco's development and operation of its Horne 5 project, including:

 

- The creation of Technical and Strategic Committees, comprised of both Glencore and Falco representatives, to collaborate in the successful and safe development and operation of the Horne 5 Project and to capitalize on the many synergies between the parties;

- The right to appoint one Glencore representative on Falco's Board;

- Rights of access, use and transformation rights in favour of Falco; and

- Financial assurance including guarantees, and indemnification to cover risks to Glencore's copper smelting operations (the "Horne Smelter").

 

For more information, refer to Falco's press release dated June 28, 2021 entitled "Falco Enters into an Agreement in Principle with Glencore Regarding Horne 5 Development and Operating License", filed on www.sedar.com.

 

In June 2021, Falco also entered into an option agreement granting Falco the sole and exclusive right to acquire an undivided one hundred percent ownership interest in the Norbec and Millenbach sites located in the vicinity of the City of Rouyn-Noranda. The properties will serve as the tailings management facilities and are located at a former tailings facility (the old Norbec Mine), which has already been impacted by historical mining activities and is situated approximately 11 kilometres from the Horne 5 project's mining complex site. The use of this previously impacted site is consistent with Falco's environmental, social and governance strategies. For more information, refer to Falco's press release dated June 30, 2021 entitled "Falco Enters into an Option Agreement with First Quantum for its Future Tailings Management Facility Site", filed on www.sedar.com. 

 

In February 2019, Osisko provided 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") 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$6.00 per ounce. The Falco Silver Stream is secured by a first priority lien on the project and all assets of Falco. However, Osisko agreed to subordinate its first priority in favor of Glencore pending the repayment of a short-term loan to Glencore by Falco. The first installment of $25.0 million was made at the closing of the Falco Silver Stream and an additional advance of $10.0 million on the second installment ($20.0 million) was made in August 2021.

 

As at December 31, 2021, Osisko Development held 46,885,240 common shares representing a 17.3% interest in Falco (18.2% as at December 31, 2020). The Company concluded that it exercises significant influence over Falco and accounts for its investment using the equity method.

 

20 

 

 

Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Sustainability Activities

 

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

 

The Company focuses on the following key areas:

 

·Promoting the mining industry and its benefits to society;

 

·Maintaining strong relationships with the Federal government and the Provincial, Municipal and First Nations governments;

 

·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 our partners' companies to adhere to the same areas of focus in sustainability.

 

In April 2021, Osisko Gold Royalties released its inaugural ESG report (www.osiskogr.com/en/message-stakeholders/). In addition to a discussion of corporate governance practices, the report provides a focused review of how Osisko assesses potential investments through its diligence process and monitors existing assets to ensure the Company is well positioned to deliver growth responsibly.

 

As part of its broader ESG initiative, Osisko Gold Royalties is proud to have joined the UN Global Compact, the world's largest voluntary corporate sustainability initiative, with over 14,500 participants across 160 countries. The UN Global Compact is based on ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption. By signing onto the initiative, Osisko Gold Royalties has committed to align with these principles, intended to promote and strengthen responsible corporate policies and practices worldwide. As part of its commitment, Osisko Gold Royalties will release an annual communication on progress that outlines the Company's efforts to operate responsibly and implement the ten principles.

 

Osisko also proudly announced a strategic partnership with Carbon Streaming Corporation ("Carbon Streaming") to help promote global decarbonization and biodiversity projects. The group's management team consists of seasoned executives with significant streaming expertise and recognized climate change experts. Carbon Streaming's business model is to fund carbon-offset projects that avoid, reduce or remove GHG emissions globally. The investment affords Osisko a 20% right to participate in any streaming transactions conducted by Carbon Streaming under certain circumstances. Beyond the potential to offset the Company's indirect carbon emissions, Osisko expects potential synergies with current and future mine operators in its traditional royalty and stream business. Mining operations afford significant opportunities to generate carbon credits through ancillary projects that are value enhancing for the mine, the neighboring communities (through employment and conservation) and the environment overall. On July 27, 2021 Carbon Streaming listed on the NEO Exchange.

 

Mining Exploration and Evaluation / Development Activities

 

Following the spin-out of the mining activities of Osisko Gold Royalties to Osisko Development in November 2020, all mining exploration, evaluation and development assets and activities are now held, operated and financed exclusively by Osisko Development.

 

In 2021, investments in mining assets and plant and equipment amounted to respectively $185.3 million, mostly on the Cariboo gold property, Bonanza Ledge Phase 2 project and San Antonio gold project, all operated by Osisko Development.

 

Cariboo gold property

 

Exploration activities

 

A total of 152,500 meters were drilled in 2021 on the Cariboo gold property as part of the exploration and category conversion drill program to support the ongoing feasibility study. The drilling commenced in January 2021 and was completed in October 2021 with up to 12 diamond drill rigs utilized during the campaign. By deposit, a total of 61,000 meters were drilled at Shaft, 50,000 meters at Valley, 30,000 meters at Lowhee and 10,000 meters at Mosquito. An additional 1,500 meters were drilled at Quesnel River.  The drilling confirmed down dip extensions of mineralized vein corridors and high-grade intercepts within the current mineral resource estimate. The mineral resource estimate incorporates eight deposit areas; the Shaft and Mosquito Creek deposits on Island Mountain, Cow and Valley deposits on Cow Mountain, and Lowhee, KL, BC Vein and Bonanza Ledge deposits on Barkerville Mountain at a cut-off grade of 2.1 g/t Au. The objective of the 2021 exploration and delineation program is to convert inferred resources to indicated resources to support reserves for the ongoing feasibility study and to increase overall ounces in the inferred and indicated resource categories by exploring the depth and strike potential of the known deposits.

 

21 

 

 

Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

For further details on the exploration drilling results, please refer to Osisko Development's press releases filed on SEDAR (www.sedar.com) and on Osisko Development's website (www.osiskodev.com). 

 

Mineral resource estimate

 

In October 2020, Osisko announced an updated mineral resource estimate for the Cariboo gold project of 3.2 million ounces of gold (21.4 million tonnes grading 4.6 g/t Au) in the measured and indicated resource category, and 2.7 million ounces of gold (21.6 million tonnes grading 3.9 g/t Au) in the inferred resource category. Metallurgical testing has shown that the mineralization can be effectively upgraded by flotation and x-ray transmission ore-sorting, owing to the strong association of gold with pyrite. The concentrates can then be processed at the wholly-owned Quesnel River mill.

 

For more information, refer to Barkerville Gold Mines NI 43-101 Technical Report entitled "NI 43-101 Technical Report and Mineral Resource Estimate for the Cariboo Gold Project, British Columbia, Canada" (the "Technical Report") filed on SEDAR (www.sedar.com) on November 17, 2020 under Osisko Gold Royalties' profile.

 

Permitting and Environmental Assessment Process

 

On October 27, 2021 the Province of British Columbia, Lhtako Dené First Nation and Osisko Development announced the approval of amendments to Mines Act Permits M-238 and M-198 allowing for the expansion of the existing Bonanza Ledge Phase 2 underground mine. These amendments support the ongoing employment of 127 workers at the mine. The expansion of the Bonanza Ledge 2 project allows for continuity of certain mining activities while the Cariboo gold project environmental assessment proceeds.  The permitting process is still on schedule with granting of the permits anticipated by September 2022.

 

Osisko Development started an Environmental Assessment Process ("EA") in spring of 2019 for the Cariboo gold project located in British Colombia.  The project has completed several milestones to obtaining the EA Certificate planned in the fourth quarter of 2022.  The following is a summary of the steps completed and to be completed to obtain the EA Certificate that will grant Osisko Development the right to apply for the permit of the Cariboo gold project

 

The following is summary of steps towards EA certification in September 2022

 

✓ Early Engagement - Completed, initial project description and summary of engagement

✓ EA Readiness Decision - Completed, detailed project description, received notice of consent

✓ Processing planning - Completed

✓ Application Development & Review - Application submitted and under review

 

oEffects of Assessment

oRecommendation

oDecision

oPost Certificate

 

Ore Sorting Technology and Advanced Mining Equipment

 

Osisko Development commissioned TOMRA in the last quarter of 2020 to complete ore sorting tests using a XRT sensor (x-ray transmission) on a sample of approximately 2,200 kg of ore coming from the Cariboo gold project. After screening to remove the fine particles (size less than 10mm), approximately 1,800 kg of samples, corresponding to medium grade mineralized material typically encountered around high grade veins and replacements, was tested by the Tomra Sorter.  In April 2021, Osisko Development announced positive results of the recent test work aimed at confirming the use of ore sorting to improve the processed grade of mineral resources at the Cariboo gold project.  Details on the results of the test work can be viewed in the company's press release dated April 22, 2021. During the fourth quarter of 2021, Osisko Development completed the mechanical installation of the Steinert Ore Sorter. Following the electrical installation to be done in February 2022, commissioning is expected to be completed by the beginning of the second quarter of 2022.

 

During the fourth quarter of 2020, Osisko Development leased a MT720 Roadheader for 12 months, which was used for testing purposes in the first half of 2021 at the Bonanza Ledge Phase 2 project. The Roadheader was re-purposed in the second half of 2021 to build the Cow Mountain Portal. It is currently held in containment inside the portal along with winter protection awaiting the start of the development of the Lowhee underground exploration ramp. The Cow exploration ramp will gain access to a 10,000 tonne bulk sample that was permitted in 2021 under a mineral exploration (MX) permit MX-4-561. Underground development with the Roadheader is required to reach the bulk sample location and ore is expected to be processed in the fourth quarter 2022. Underground exploration will also take place as part of this work. Benefits expected to be realized from the Roadheader include, safer development for operators, reduced overbreak, faster development rate, improved integrity of the Cariboo Gold ground and better drift profile and improved ground conditions.  The leased MT720 Roadheader was purchased in the first quarter of 2022. Two additional Roadheaders (MH621) have also been ordered from Sandvik Canada in the fourth quarter of 2021, which are expected to arrive on site in the fourth quarter of 2022 and the first half of 2023.

 

22 

 

 

Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

2022 Objectives

 

Regional greenfield exploration is planned for the second and third quarters of 2022 to continue the geochemical sampling and geological mapping of the Quesnel Terrane properties with focus on the Cayenne property and the area between Burns and Yanks, known as the Yanks-Lightning Trend.

 

Osisko Development started mining operations at its Bonanza Ledge Phase 2 project in the first quarter of 2021 as it was granted in the first quarter of 2021 a notice of departure from the Ministry of Energy, Mines and Low Carbon Innovation of British Columbia.  Osisko Development announced on October 27, 2021 receipt of the final permits for the Bonanza Ledge Phase 2 mine and Qquesnel River mill. The Cow Mountain Underground Bulk Sample Permit was received in July 2021. The underground portal was completed in the fourth quarter of 2021 and Osisko Development anticipates commencing the bulk sample activities in 2022. Osisko Development will be collecting the bulk sample from the Lowhee Deposit and is on track to completing a feasibility study in the first half of 2022.

 

Impairments - Bonanza Ledge Phase 2 project

 

In March 2021, processing of ore commenced at the Bonanza Ledge Phase 2 project and Osisko Development earned their first pre-commercial production revenues since recommissioning of the Quesnel River mill.

 

As a result of operational challenges incurred during the second quarter for 2021, it was determined that total capital and production costs related to the Bonanza Ledge Phase 2 project would be higher than originally planned. These factors were considered indicators of impairment, among other facts and circumstances and, accordingly, management performed an impairment assessment as at June 30, 2021. As a result of the impairment assessment, Osisko Development recorded an impairment charge of $36.1 million on the Bonanza Ledge Phase 2 project during the three months ended June 30, 2021.

 

On June 30, 2021, the Bonanza Ledge Phase 2 project was written down to its estimated recoverable amount of $12.4 million, which was determined by the value-in-use using a cash-flows approach.

 

Due to continuing operational challenges, it was determined that total capital and production costs related to the Bonanza Ledge Phase 2 project would be higher than the total revenues expected to be generated for the remaining life of the project, mostly as a result of lower production. These factors were considered indicators of impairment, among other facts and circumstances and, accordingly, management performed an impairment assessment as at September 30, 2021. As a result of the impairment assessment, the Company recorded an impairment charge of $22.4 million on the Bonanza Ledge Phase 2 project during the three months ended September 30, 2021.

 

On September 30, 2021, the net book value of the Bonanza Ledge Phase 2 project was written down to zero as it is estimated that the net book value will not be recovered by the expected net profits to be generated from the sale of precious metals.

 

The Bonanza Ledge Phase 2 project is a small scale and short life project, which allows Osisko Development to facilitate (i) opportunities for managing historical reclamation obligations inherited by the company, (ii) hands on training and commissioning of the company's mining and processing complex for the Cariboo gold project and (iii) maintain the economic and social benefits for the First Nations partners and communities.

 

San Antonio gold project

 

The San Antonio gold project is a past-producing oxide copper mine located in Sonora, Mexico. In 2020, following the acquisition of the project, Osisko Development concentrated its efforts in obtaining the required permits and amendments to the permits to perform its activities. Osisko Development has filed preventive reports for the processing of the gold stockpile on site and for a 15,000-meter drilling program for the Sapuchi, Golfo de Oro and California zones.

 

In 2021, Osisko Development focused on various activities that pertain to permitting, local community relations, exploration drilling and preparations towards the processing of the ore stockpile on site.

 

23 

 

 

 

 

Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Mineral resource estimate

 

The processing scenario assumes heap leaching of the mineralized material sourced from open pit mining. The mineral resource has been limited to mineralized material that occurs within optimized pit shells.

 

San Antonio Gold Project Mineral Resource Estimate

 

    Tonnes   Gold Grade   Silver Grade   Gold Ounces   Silver Ounces 
Category  Deposit  ('000)   g/t   g/t   ('000)   ('000,000) 
   Golfo de Oro   11,700    1.3    2.7    503    1.0 
  California   4,900    1.2    2.1    182    0.3 
Inferred  Sapuchi   11,100    1.0    3.4    364    1.2 
Total Inferred Resources   27,600    1.2    2.9    1,049    2.5 

 

Mineral Resource Estimate notes:

 

1. The independent and qualified person for the mineral resource estimates, as defined by NI 43-101, is Leonardo de Souza, MAusIMM (CP), of Talisker Exploration Services Inc.

2. The gold cut-off grade applied to oxide, transition and sulphide ore are 0.32 g/t Au, 0.36 g/t Au and 0.42 g/t Au, respectively.

3. These mineral resources are not mineral reserves as they do not have demonstrated economic viability.

4. The mineral resource estimate follows CIM Definition Standards.

5. The estimate is reported for a potential open pit scenario assuming US$1,550 per ounce of gold.

6. Results are presented in-situ. Ounce (troy) = metric tonnes x grade / 31.103. Calculations used metric units (metres, tonnes, g/t). Any discrepancies in the totals are due to rounding effects. Rounding followed the recommendations as per NI 43-101.

7. Talisker Exploration Services Inc. is not aware of any known environmental, permitting, legal, title-related, taxation, socio- political, marketing or other relevant issues that could materially affect the mineral resource estimate other than those that may be disclosed in a NI 43-101 compliant technical report.

 

Permitting

 

Osisko Development continued the various permitting activities started in 2020. These activities consist of obtaining the permits for the MIA and the change of Use of Land while continuing the work required to complete the environmental baseline study.  Applications were submitted for four new mining claims, Sapuchi E-82/40881, Sapuchi 2 E-82/40882, Sapuchi 3 E-82/40883, Sapuchi 4 E-82/40888. 

 

Exploration Program

 

A two phase 45,000-meter drilling campaign was initiated during the second quarter of 2021. The objective of the drill program was to conduct exploration and resource drilling at a spacing of 25 metres and historic drilling validation for the three main target areas; Sapuchi, California and Golfo de Oro.  A total of 27,900 metres were drilled in 177 holes in 2021, representing 62% of the budgeted drill plan. Osisko Development expects exploration potential to expand both oxide and sulphide resources as recent metallurgical testing has shown that the sulphide resources are amenable to heap leaching.

 

Stockpile

 

By the end of 2021, construction of the sodium cyanide heap leach pad was completed.  As of December 31, 2021, a total of 47,180 tonnes were crushed and placed on the heap leach pad. 

 

Installation of the carbon-in-column processing plant and installation of related equipment was completed in the the fourth quarter of 2021 and commissioning was completed in January 2022.  Osisko Development is on track to have loaded carbon available to be shipped and realize its first gold sales in the first half of 2022.

 

The stockpile inventory was revalued at its net recoverable amount in 2021, resulting in an impairment of $21.2 million, following an increase in the expected processing and transportation costs, in part due to inflation pressures, and, to a lighter decree, a decrease in the expected realized gold price.

 

2022 Objectives

 

Osisko Development will continue to focus its efforts on the stockpile processing and will continue to advance its current permit applications.  With the completion of the 2021 drill program, Osisko Development intends to publish a resource estimate for the project in the first quarter of 2022.

 

James Bay area properties

 

In 2021, the Company incurred an impairment charge of $42.7 million ($34.6 million, net of income taxes) on exploration and evaluation properties, including the James Bay properties and the Coulon zinc project in Canada. Osisko Development has determined that further exploration and evaluation expenditures are no longer planned in the near term on these properties and that the carrying amount of these assets is unlikely to be recovered from a sale of the project at the current time. As a result, these properties were fully written down.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Dividend Reinvestment Plan

 

Osisko Gold Royalty has a dividend reinvestment plan ("DRIP") that allows Canadian 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 trading days immediately preceding the dividend payment date, less a discount, if any, of up to 5%, at the Company's sole election.

 

As at December 31, 2021, the holders of 7,891,496 common shares had elected to participate in the DRIP, representing dividends payable of $0.4 million. During the year ended December 31, 2021, the Company issued 120,523 common shares under the DRIP, at a discount rate of 3% (268,173 common shares in 2020 at a discount rate of 3%). On January 14, 2022, 29,929 common shares were issued under the DRIP at a discount rate of 3%.

 

Normal Course Issuer Bid

 

In December 2021, Osisko Gold Royalties renewed its normal course issuer bid ("NCIB") program. Under the terms of the 2022 NCIB program, Osisko Gold Royalties may acquire up to 16,530,668 of its common shares from time to time in accordance with the normal course issuer bid procedures of the TSX. Repurchases under the 2022 NCIB program are authorized until December 11, 2022. Daily purchases will be limited to 87,264 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, 2021, being 349,057 common Shares.

 

During the year ended December 31, 2021, the Company purchased for cancellation a total of 2,103,366 common shares for $30.8 million (average acquisition price per share of $14.64) under its 2021 NCIB program.

 

Gold Market and Currency

 

Gold Market

 

Gold prices recorded a mixed and volatile performance in 2021 and have fluctuated in the US$200 per ounce range for most of the year moving to a high of US$1,960 per ounce in early January to drop to a low of US$1,680 per ounce in late summer. Gold finished the year at US$1,820 per ounce (based on the LBMA AM gold price), down 3.6% or US$68 per ounce from the close of last year of US$1,888 per ounce. Gold price averaged US$1,799 per ounce in 2021, US$29 per ounce higher when compared to the average price of US$1,770 per ounce in 2020.

 

Gold prices were highly volatile during the fourth quarter with a trading range of US$112 per ounce. Prices have closed the fourth quarter at US$1,820 per ounce, up US$77 per ounce compared to the closing price of US$1,743 per ounce in the third quarter. Gold price averaged US$1,796 per ounce in the fourth quarter of 2021, which was slightly up from US$1,790 per ounce in the third quarter, and US$78 per ounce lower compared to the fourth quarter of 2020.

 

The historical price is as follows:

 

(US$/ounce of gold)   High   Low   Average   Close 
2021   $1,943   $1,684   $1,799   $1,820 
2020    2,067    1,474    1,770    1,888 
2019    1,545    1,270    1,393    1,515 
2018    1,355    1,178    1,268    1,279 
2017    1,346    1,151    1,257    1,291 

 

In Canadian dollar terms, the average gold price per ounce averaged $2,255 in 2021 $2,374 in 2020. The average price per ounce of gold averaged $2,263 in the fourth quarter of 2021, compared to $2,255 in the third quarter of 2021 and $2,442 in the fourth quarter of 2020. The gold price closed the fourth quarter of 2021 at $2,308 per ounce, up $87 per ounce from September 30, 2021.

 

Currency

 

In 2021, the Canadian dollar traded in a range of 1.2040 and 1.2942 and closed the year at 1.2678 (compared to 1.2741 on September 30, 2021 and 1.2732 on December 31, 2020). The Canadian dollar averaged 1.2535 in 2021 compared to 1.3415 in 2020.

 

The Canadian dollar traded between 1.2329 and 1.2942 in the fourth quarter of 2021 and averaged 1.2603 in the fourth quarter of 2021 compared to 1.2600 in the third quarter of 2021 and 1.3030 in the fourth quarter of 2020.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

The Bank of Canada held its target for the overnight rate at the lower bound of 0.25% at its December meeting. The Bank of Canada signaled its intention to gradually normalize monetary policy to ensure inflation stays under control on a sustainable basis.

 

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

 

    High   Low   Average   Close 
2021    1.2942    1.2040    1.2535    1.2678 
2020    1.4496    1.2718    1.3415    1.2732 
2019    1.3600    1.2988    1.3269    1.2988 
2018    1.3642    1.2288    1.2957    1.3642 
2017    1.3743    1.2128    1.2986    1.2545 

 

Selected Financial Information

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

 

   2021   2020   2019 
    $     $     $  
Revenues   224,877    213,630    392,599 
Cash margin (2)   187,231    149,930    129,718 
Gross profit   138,870    104,325    82,709 
                
Impairment of assets (3)   (126,650)   (34,298)   (260,800)
                
Operating (loss) income   (45,217)   41,703    (183,226)
Net (loss) earnings (4)   (23,554)   16,876    (234,195)
Basic and diluted net (loss) earnings per share (5)   (0.14)   0.10    (1.55)
                
Total assets   2,370,622    2,397,104    1,947,253 
Total long-term debt   410,435    400,429    349,042 
                
Average selling price of gold (per ounce sold)               
In C$ (6)   2,270    2,373    1,817 
In US$   1,797    1,782    1,371 
                
Operating cash flows   106,095    107,978    91,598 
Dividend per common share   0.21    0.20    0.20 
                
Weighted average shares outstanding (in thousands)               
Basic   167,628    162,303    151,266 
Diluted (5)   167,628    162,428    151,266 

 

(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 Non-IFRS Financial Performance Measures section of this MD&A.

(3) Including impairment on royalties, streams and other interests, on exploration, evaluation and development assets, and on investments, when applicable.

(4) Attributable to Osisko Gold Royalties Ltd's shareholders.

(5) Using actual exchange rates at the date of the transactions.

(6) As a result of the net loss for the years ended December 31, 2021 and 2019, all potentially dilutive common shares are deemed to be antidilutive for these periods and thus diluted net loss per share is equal to the basic net loss per share.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Overview of Financial Results

 

Financial Summary -2021

 

·Record revenues from royalties and streams of $199.6 million ($224.9 million including offtakes) compared to $156.6 million ($213.6 million including offtakes) in 2020;

·Record gross profit of $138.9 million compared to $104.3 million in 2020;

·Impairment charges of $42.7 million on exploration and evaluation properties, $21.2 million on the ore in stockpiles of the San Antonio project, and $58.4 million on the Bonanza Ledge Phase 2 project in 2021, all operated by Osisko Development;

·Mining operating expenses of $12.9 million on the Bonanza Ledge Phase 2 project;

·Consolidated operating loss of $45.2 million compared to operating income of $41.7 million in 2020, as a result of impairment charges and mining operating expenses incurred by Osisko Development;

·Consolidated net loss attributable to Osisko Gold Royalties' shareholders of $23.6 million or $0.14 per basic and diluted share, compared to net earnings of $16.9 million or $0.10 per basic and diluted share in 2020;

·Consolidated adjusted earnings6  of $59.3 million or $0.35 per basic share1 compared to $48.4 million or $0.30 per basic share in 2020; and

·Consolidated cash flows provided by operating activities of $106.1 million compared to $108.0 million in 2020.

 

Revenues from royalties and streams increased in 2021 compared to 2020, mostly as a result of higher deliveries and payments under the royalty and stream agreements, partially offset by lower realized prices in Canadian dollars. Revenues from offtake agreements decreased as a result of the Parral offtake conversion into a stream in April 2021. The year 2020 was also negatively affected by the impact of the COVID-19 pandemic on the mining operations of several operators.

 

Cost of sales decreased in 2021 compared to 2020, mostly following the Parral offtake conversion into a stream in April 2021.

 

Depletion expense increased by $2.8 million compared to the corresponding period in 2020, mainly as a result of the higher deliveries and payments under the royalty and stream agreements and the mix of sales.

 

Gross profit amounted to $138.9 million in 2021 compared to $104.3 million in 2020. The increase is mainly due to higher deliveries and payments under the royalty and stream agreements and lower cost of sales, partially offset by higher depletion.

 

In 2021, the Company incurred a consolidated operating loss of $45.2 million, compared to a consolidated operating income of $41.7 million in 2020, mostly as a result of an impairment charge of $21.2 million on the ore in stockpiles of the San Antonio project, impairment charges of $58.4 million on the Bonanza Ledge Phase 2 project, impairment charges of $42.7 million ($34.5 million, net of income taxes) on exploration and evaluation properties (including the James Bay properties and Coulon project), all operated by Osisko Development, and mining operating expenses of $12.9 million also related to the Bonanza Ledge Phase 2 project. In 2020, the Company had incurred an impairment charge on the Renard diamond stream of $26.3 million ($19.3 million, net of income taxes).

 

Consolidated G&A expenses increased in 2021 as a result of the creation of Osisko Development in November 2020. Consolidated G&A expenses amounted to $41.3 million in 2021 compared to $25.9 million in 2020. G&A expenses from the royalties and streams segment decreased slightly in 2021 at $19.6 million compared to $20.5 million in 2020. G&A expenses from the exploration and development segment amounted to $21.7 million compared to $5.4 million in 2020 due to increased activities in 2021.

 

Business development expenses decreased to $4.2 million in 2021 from $10.3 million in 2020. The decrease is mainly due to additional professional fees incurred in 2020 related to the RTO transaction ($1.8 million) and a non-cash listing fee of $1.7 million, also related to the RTO transaction, of which $2.7 million were assumed by Osisko Development. The balance of the decrease is explained by lower professional fees and compensation expense incurred by Osisko in 2021.

 

In 2021, Osisko Development incurred mining operating expenses of $12.9 million on the Bonanza Ledge Phase 2 project.

 

In 2021, the Company incurred a net loss attributable to Osisko's shareholders of $23.6 million, compared to net earnings of $16.9 million in 2020. The increase in gross profit in 2021 was offset by impairment charges and other operating charges from Osisko Development.

 

 
6"Adjusted earnings (loss)" and "Adjusted earnings (loss) 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 MD&A.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Consolidated adjusted earnings were $59.3 million in 2021, compared to $48.4 million in 2020, as a result of a higher gross profit, partly offset by higher consolidated G&A expenses and mining operating expenses on the Bonanza Ledge Phase 2 project. Adjusted earnings for the royalties and streams segment amounted to $94.4 million in 2021 compared to $55.3 million in 2020, mostly as a result of a higher gross profit. The adjusted loss for the exploration and development segment amounted to $35.1 million in 2021 compared to $6.9 million in 2020, as a result of increased activities. Details of adjusted earnings (loss) per segment is provided in the Non-IFRS Financial Performance Measures section of this MD&A.

 

Consolidated net cash flows provided by operating activities in 2021 was $106.1 million compared to $108.0 million in 2020. Net cash flows provided by operating activities of the royalties and streams segment were $153.2 million in 2021 compared to $114.0 million in 2020, mostly as a result of a higher cash margin. Net cash flows used by operating activities for the exploration and development segment were $47.1 million in 2021 compared to $6.0 million in 2020, as a result of increased activities. Details on cash flows per segment is provided in the Segment Disclosure section of this MD&A.

 

Consolidated Statements of Income (Loss)

 

The following table presents summarized consolidated statements of income (loss) for the years ended December 31, 2021 and 2020 (in thousands of dollars, except amounts per share):

 

       2021   2020 
         $    $ 
Revenues   (a)    224,877    213,630 
                
Cost of sales   (b)    (37,646)   (63,700)
Depletion of royalty, stream and other interests   (c)    (48,361)   (45,605)
Gross profit   (d)    138,870    104,325 
                
Other operating expenses               
General and administrative   (e)    (41,265)   (25,901)
Business development   (f)    (4,168)   (10,290)
Exploration and evaluation   (g)    (1,197)   (131)
Mining operating expenses   (h)    (12,919)   - 
Impairment of assets   (i)    (124,538)   (26,300)
                
Operating (loss) income        (45,217)   41,703 
                
Other revenues (expenses), net   (j)    1,497    (14,561)
                
(Loss) earnings before income taxes        (43,720)   27,142 
                
Income tax expense   (k)    (12,955)   (10,913)
                
Net (loss) earnings        (56,675)   16,229 
                
Net (loss) earnings attributable to:               
Osisko Gold Royalties Ltd's shareholders        (23,554)   16,876 
Non-controlling interests        (33,121)   (647)
                
Net (loss) earnings per share               
Basic and diluted        (0.14)   0.10 

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

(a) Revenues are comprised of the following:

 

   Years ended December 31, 
   2021   2020 
   Average
selling price
per ounce /
carat ($)		   Ounces /
carats sold		   Total
revenues
($000's)		   Average
selling price
per ounce /
carat ($)		   Ounces /
Carats sold		   Total
revenues
($000's)		 
Gold sold   2,265    60,621    137,215    2,373    53,276    126,415 
Silver sold   32    1,671,791    52,682    27    2,524,469    67,167 
Diamonds sold(i)   117    176,964    20,775    94    92,200    8,692 
Other (paid in cash)   -    -    14,205    -    -    11,356 
              224,877              213,630 

 

(i) The diamonds were sold by an agent for Osisko for a blended selling price of $117 (US$94) per carat in 2021. The average selling price includes 34,249 incidental carats sold outside of the run of mine sales at an average price of $23 (US$18) per carat. Excluding the incidental carats, 142,715 carats were sold at an average price of $140 (US$105) per carat in 2021. The Renard diamond mine was put on care and maintenance in March 2020 given the structural challenges affecting the diamond market sales as well as the depressed prices for diamonds due to COVID-19. The mine restarted its activities in September 2020.

 

The increase in gold ounces sold in 2021 is mainly the result of the COVID-19 pandemic, which negatively affected several mining operations in 2020, as well as strong production in 2021, partially offset by the conversion of the Parral offtake agreement into a stream in April 2021. The decrease in silver ounces sold in 2021 is mainly the result of lower silver ounces acquired under the Parral offtake agreement following the conversion of the Parral offtake into a stream, partially offset by higher deliveries under the other stream agreements.

 

(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 costs of sales in 2021 is mainly the result of the conversion of the Parral offtake into a stream in April 2021, partially offset by higher deliveries in 2021 compared to 2020.

 

(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 increase in 2021 is mostly due to the increased deliveries in 2021 and the impact of the mix of sales.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

(d) The breakdown of cash margin7  and gross profit per type of interest is as follows (in thousands of dollars):

 

   Years ended December 31 
   2021   2020 
    $    $ 
Royalty interests          
Revenues   140,279    111,305 
Less: cost of sales (excluding depletion)   (551)   (512)
Cash margin (in dollars)   139,728    110,793 
           
Depletion   (28,958)   (23,161)
Gross profit   110,770    87,632 
           
Stream interests          
Revenues   59,333    45,269 
Less: cost of sales (excluding depletion)   (12,752)   (8,988)
Cash margin (in dollars)   46,581    36,281 
           
Depletion   (19,135)   (21,531)
Gross profit   27,446    14,750 
           
Royalty and stream interests          
Total cash margin (in dollars)   186,309    147,074 
Divided by: total revenues   199,612    156,574 
Cash margin (in percentage of revenues)   93.3%   93.9%
           
Offtake interests          
Revenues   25,265    57,056 
Less: cost of sales   (24,343)   (54,200)
Cash margin (in dollars)   922    2,856 
Cash margin (in percentage of revenues)   3.6%   5.0%
           
Depletion   (268)   (913)
Gross profit   654    1,943 
           
Total - Gross profit   138,870    104,325 

 

(e) Consolidated G&A expenses increased in 2021 as a result of the creation of Osisko Development in November 2020. Consolidated G&A expenses amounted to $41.3 million in 2021 compared to $25.9 million in 2020. G&A expenses from the royalties and streams segment decreased slightly in 2021 at $19.6 million compared to $20.5 million in 2020. G&A expenses from the exploration and development segment amounted to $21.7 million compared to $5.4 million in 2020 due to increased activities in 2021.

 

(f) Business development expenses decreased to $4.2 million in 2021 from $10.3 million in 2020.  The decrease is mainly due to additional professional fees incurred in 2020 related to the RTO transaction ($1.8 million) and a non-cash listing fee of $1.7 million, also related to the RTO transaction, of which $2.7 million were assumed by Osisko Development. The balance of the decrease is explained by lower professional fees and compensation expense incurred by Osisko in 2021.

 

(g) Exploration and evaluation expenses represent expenditures incurred by Osisko Development and its subsidiaries for general exploration activities and for properties that have been previously written-off. The increase is mostly due to the earn-in agreements on exploration properties that were cancelled at the end of 2020.

 

(h) Mining operating expenses of $12.9 million in 2021 are related to operating expenses incurred by Osisko Development on the Bonanza Ledge Phase 2 project.

 

(i) In 2021, the Company recorded impairment charges of $21.2 million on the ore in stockpiles (San Antonio project, operated by Osisko Development) to reduce its net book value to its net realizable value following an increase in the expected processing and transportation costs and a decrease in the gold price. The Company recorded impairment charges of $58.4 million on the Bonanza Ledge Phase 2 project, operated by Osisko Development (refer to the Mining Exploration and Evaluation / Development Activities section of this MD&A for details on the impairment charge). Finally, the Company incurred an impairment charge of $42.7 million ($34.5 million, net of income taxes) on exploration and evaluation properties, including the James Bay properties and the Coulon zinc project in Canada. Osisko Development has determined that further exploration and evaluation expenditures are no longer planned in the near term on these properties and that the carrying amount of these assets is unlikely to be recovered from a sale of the project at the current time. As a result, these properties were fully written down in 2021.

 

 

7 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 Non-IFRS Financial Performance Measures section of this MD&A.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

(j) In 2020, the Company had incurred an impairment charge of $26.3 million ($19.3 million, net of income taxes) on its Renard diamond stream and wrote-off a royalty interest on which the royalty rights were lost as well as a loan.

 

(k) Other revenues, net of $1.5 million in 2021 include finance costs of $24.6 million, a share of loss of associate of $4.0 million and a foreign exchange loss of $0.6 million, partially offset by a net gain on investments of $13.7 million (including gains on acquisition of investments of $7.6 million and a variation in fair value on investments at fair value through profit and loss of $6.3 million), a flow-through shares premium income of $7.0 million and interest income of $5.1 million. Other revenues also include other gains of $4.9 million, mostly related to the reversal of previously recorded provisions for suppliers.

 

Other expenses, net, of $14.6 million in 2020 include finance costs of $26.1 million, gains on investments of $13.6 million (including a gain on dilution of investments in associates of $10.4 million) and a share of loss of associates of $7.7 million, partially offset by interest income of $4.6 million and a gain on foreign exchange of $1.0 million.

 

(l) The effective income tax rate 2021 is (29.6%) compared to 40.2% in 2020. The statutory rate is 26.5% in 2021 and 2020. The elements that impacted the effective income taxes are the impairments on mining exploration, evaluation and development projects, for which no deferred tax liability was recorded due to the initial recognition exemption, and the benefit of losses not recognized, revenues taxable at a lower rate and the recognition of previously unrecognized non-capital losses. Cash taxes related to taxes on royalties earned in foreign jurisdictions were paid in 2021 for $1.2 million and $1.4 million in 2020. In addition, income taxes of US$4.5 million ($5.7 million) were paid in Mexico by a subsidiary of Osisko Development in 2021 as a result of the acquisition of the San Antonio stream by Osisko in 2020.

 

Liquidity and Capital Resources

 

As at December 31, 2021, the Company's consolidated cash position amounted to $115.7 million compared to $151.9 million as at September 30, 2021 and $302.5 million as at December 31, 2020. Cash held by Osisko Gold Royalties amounted to $82.3 million and cash held by Osisko Development amounted to $33.4 million at the end of 2021. As at December 31, 2022, the Company has a negative working capital of $193.4 million, as a result of the $300 million convertible debentures that are due on December 31, 2022. The Company will evaluate the different options to repay these convertible debentures during the year, including drawing its revolving credit facility. Significant variations in the liquidity and capital resources in 2021 are explained below under the Cash Flows section.

 

Osisko Development financings

 

Osisko Development - Non-brokered private placement

 

In January 2021, Osisko Development completed the first tranche of a non-brokered private placement through the issuance of 9,346,464 units of Osisko Development at a price of $7.50 per unit for aggregate gross proceeds of $68.6 million. Each unit consists of one common share of Osisko Development and one-half of one common share purchase warrant of Osisko Development, which each whole warrant entitling the holder to acquire one common share of Osisko Development at a price of $10.00 per share on or prior to December 1, 2023.

 

In February 2021, Osisko Development completed the second and final tranche of a non-brokered private placement through the issuance of 1,515,731 units of Osisko Development at a price of $7.50 per unit for aggregate gross proceeds of $11.2 million. Each unit consists of one common share of Osisko Development and one-half of one common share purchase warrant of Osisko Development, which each whole warrant entitling the holder to acquire one common share of Osisko Development at a price of $10.00 per share on or prior to December 1, 2023.

 

An amount of $73.9 million from the non-brokered private placement was received in 2020. The share issue expenses related to the first and second tranches of the private placement amounted to $1.1 million ($0.8 million, net of income taxes).

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Osisko Development - Brokered private placement of flow-through shares

 

In March 2021, Osisko Development completed a "bought deal" brokered private placement of 2,055,742 flow-through shares at a price of $9.05 per flow-through share and 1,334,500 charity flow-through shares at a price of $11.24 per charity flow-through share, for aggregate gross proceeds of $33.6 million. Share issue expenses related to this private placement amounted to $1.5 million ($1.1 million, net of income taxes). The shares were issued at a premium to the market price, which was recognized as a current liability under provisions and other liabilities for $7.9 million (net of share issue costs attributed of $0.5 million). The liability will be reversed and recognized to the consolidated statements of income (loss) as flow-through premium income as the required expenditures are incurred. Osisko Development is committed to spending the proceeds on exploration and evaluation activities by December 31, 2022. As at September 30, 2021, the balance remaining to be spent amounted to $4.3 million.

 

Credit facility

 

In July 2021, the Company amended its revolving credit facility and increased the amount available by $150.0 million to $550.0 million, with an additional uncommitted accordion of up to $100.0 million (for a total availability of up to $650.0 million). The maturity date of the Facility was extended to July 30, 2025, which can be further extended annually.

 

The annual extension of the Facility and the uncommitted accordion are subject to acceptance by 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 from the royalty, stream and other interests segment (which exclude the assets held by Osisko Development and its subsidiaries).

 

The Facility is subject to standby fees. Funds drawn bear interest based on the base rate, prime rate, London Inter-Bank Offer Rate ("LIBOR") or a comparable or successor rate, plus an applicable margin depending on the Company's leverage ratio. In February 2021, the Company drew $50.0 million to repay the Investissement Québec convertible debenture. As at December 31, 2021, the Facility was drawn for a total of $113.4 million ($50.0 million and US$50.0 million ($63.4 million)) and the effective interest rate was 2.25%, including the applicable margin. The Facility includes covenants that require the Company to maintain certain financial ratios, including the Company's leverage ratios and meet certain non-financial requirements.  As at December 31, 2021, all such ratios and requirements were met.

 

Cash Flows

 

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

 

   Years ended
December 31,		 
   2021   2020 
    $    $ 
Cash flows          
Operations   131,094    106,244 
Working capital items   (24,999)   1,734 
Operating activities   106,095    107,978 
Investing activities   (272,038)   (223,099)
Financing activities   (19,601)   316,861 
Effects of exchange rate changes on cash and cash equivalents   (1,282)   (7,439)
(Decrease) increase in cash   (186,826)   194,301 
Cash - beginning of period   302,524    108,223 
Cash - end of period   115,698    302,524 

 

Additional details on cash flows per segment is provided in the Segment Disclosure section of this MD&A.

 

Operating Activities

 

Consolidated cash flows provided by operating activities in 2021 amounted to $106.1 million compared to $108.0 million in 2020.  In 2021, the royalties and streams segment generated operating cash flows of $153.2 million, compared to $114.0 million in 2020, as a result of a higher cash margin, which was partially offset by net cash flows used by operating activities of $47.1 million from the mining exploration and development segment, compared to $6.0 million in 2020, as a result of increased activities by Osisko Development.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Investing Activities

 

Consolidated cash flows used in investing activities amounted to $272.0 million in 2021 compared to $223.1 million in 2020.

 

In 2021, Osisko Gold Royalties invested $90.9 million in royalty interests (including $33.2 million to acquire royalties on the Spring Valley project, $14.4 million to acquire a royalty on the West Kenya project and $12.6 million to acquire a royalty on the Tocantinzinho project), acquired investments for $46.7 million (including an additional investment of $9.2 million with Carbon Streaming Corp. and reinvestments of the net proceeds from the Renard diamond stream of $12.9 million) and received proceeds of $50.9 million from the sale of investments. Osisko Development (mining exploration and development segment) invested $185.3 million in mining assets, plant and equipment, mostly on the Bonanza Ledge Phase 2 project, the San Antonio gold project and the Cariboo gold property, and $3.2 million in exploration and evaluation expenses.

 

In 2020, Osisko acquired the San Antonio gold project for US$42.0 million, including US$30.0 million ($40.0 million) in cash and US$12.0 million ($15.8 million) in shares. In addition, the Company paid US$4.8 million ($6.3 million) in value-added tax on the acquisition of the assets and $5.9 million in transaction costs. Osisko also invested $49.2 million in marketable securities and notes receivable (including $14.8 million for an additional investment in Osisko Mining), and $66.1 million in acquisitions of royalty and stream interests (including US$12.5 million through a strategic partnership with Regulus Resources Inc. where Osisko acquired a NSR royalty on the Antakori copper-gold project, $12.5 million to acquire the remaining 15% royalty interests that it did not already hold in a portfolio of assets, including NSR royalties on the Island Gold and Lamaque mines, $8.5 million to improve the Gibraltar silver stream, $13.0 million to acquire a 2.0% NSR royalty on the Pine Point project and $5.0 million to acquire a 3% NSR royalty on the Santana gold project being developed by Minera Alamos Inc.). The Company received proceeds of $10.9 million from the sale of marketable securities and generated $4.8 million following a reduction in restricted cash (from a bond held for site restoration on the Cariboo property). Investments in mining interests and plant and equipment were $71.8 million, mainly on the Cariboo gold property (now managed and financed exclusively by Osisko Development).

 

Financing Activities

 

Consolidated cash flows used by financing activities amounted to $19.6 million in 2021 compared to cash flows provided by financing activities of $316.9 million in 2020.

 

In 2021, Osisko repaid a $50.0 million convertible debenture, and drew on its credit facility by the same amount, therefore reducing the interest rate payable on the debt. Osisko paid $32.5 million in dividends to its shareholders and purchased for cancellation a total of 2,103,366 common shares under its 2021 NCIB program for $30.8 million (average acquisition price per share of $14.64). Osisko also received proceeds from the exercise of share options and the share purchase plan for $14.5 million. Investments from minority shareholders in Osisko Development amounted to $36.7 million, net of share issue costs.

 

In 2020, Osisko completed a private placement of $85.0 million with Investissement Québec. Osisko drew its revolving credit facility by US$50.0 million ($71.7 million), of which it repaid US$15.0 million ($19.2 million), paid dividends of $28.9 million to its shareholders and invested $3.9 million under its 2020 NCIB program. The exercise of share options and shares issued under the share purchase plan generated $7.8 million. Osisko Development completed equity financings of $140.3 million and received proceeds of $73.9 million in 2020 from a private placement that was closed in 2021. Share issue expenses related to Osisko Development financings amounted to $6.0 million.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Quarterly Information

 

The selected quarterly financial information(1) for the past eight financial quarters is outlined below: 

(in thousands of dollars, except for amounts per share)

 

   2021   2020 
    Q4    Q3    Q2    Q1    Q4    Q3    Q2    Q1 
GEOs(2)   19,830    20,032    20,178    19,960    18,829    16,739    12,386    18,159 
Cash   115,698    151,945    254,963    320,630    302,524    160,705    201,971    158,325 
Short-term investments   -    -    3,408    3,458    3,501    21,568    21,105    21,228 
Working capital   (193,350)   117,947    236,320    300,876    225,643    110,333    162,996    117,090 
Total assets   2,370,622    2,390,325    2,410,727    2,435,861    2,397,104    2,200,070    2,128,588    2,016,189 
Total long-term debt   410,435    405,306    401,954    401,266    400,429    421,590    421,652    423,499 
Equity   1,780,061    1,811,600    1,842,230    1,875,729    1,841,032    1,638,178    1,604,676    1,492,346 
Revenues   50,673    50,035    57,246    66,923    213,630    55,707    40,758    52,605 
Net cash flows from operating activities   12,771    41,083    30,917    21,324    32,633    36,123    15,422    23,800 
Impairment of assets, net of income taxes   (40,308)   (33,320)   (40,479)   (3,794)   (3,600)   (1,281)   (3,117)   (19,300)
Net earnings (loss) (3)   (21,184)   1,795    (14,759)   10,594    4,632    12,514    13,048    (13,318)
Basic and diluted net earnings (loss) per share(3)   (0.13)   0.01    (0.09)   0.06    0.03    0.08    0.08    (0.09)
Weighted average shares outstanding (000's)                                        
- Basic   166,807    167,924    167,895    167,253    166,093    166,110    164,733    155,374 
- Diluted   166,807    168,220    167,895    167,711    166,321    166,397    164,815    155,374 
Share price - TSX - closing   15.48    14.23    16.99    13.84    16.13    15.75    13.56    10.50 
Share price - NYSE - closing   12.25    11.23    13.70    11.02    12.68    11.83    10.00    7.44 
Warrant price - TSX - closing                                        
OR.WT   0.015    0.04    0.15    0.21    0.32    0.34    0.31    0.16 
Debenture price - TSX - closing(4)                                        
OR.DB   101.00    100.94    104.04    100.75    106.00    104.00    101.34    94.75 
Price of gold (average US$)   1,796    1,794    1,816    1,794    1,874    1,909    1,711    1,583 
Closing exchange rate(5) (US$/Can$)   1.2678    1.2741    1.2394    1.2575    1.2732    1.3339    1.3628    1.4187 

 

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

(2) Excluding GEOs from the Renard diamond stream in 2021 and in the fourth quarter of 2020.

(3) Attributable to Osisko Gold Royalties Ltd's shareholders.

(4) Osisko 4% convertible debentures is presented by tranche of nominal value of $100.00.

(5) Bank of Canada Daily Rate.

 

During the fourth quarter of 2021, Osisko Development incurred an impairment charge of $42.7 million ($34.5 million, net of income taxes) on exploration and evaluation properties, including the James Bay properties and the Coulon zinc project in Canada. Mining operating expenses of $12.9 million were also incurred on the Bonanza Ledge Phase 2, operated by Osisko Development.

 

During the second and third quarters of 2021, Osisko Development incurred impairment charges of $36.1 million and $22.3 million, respectively, on its Bonanza Ledge Phase 2 project. During the first quarter of 2021, Osisko Development completed a flow-through equity financing for gross proceeds of $33.6 million.

 

During the fourth quarter of 2020, Osisko Development completed two financings for gross proceeds of $140.3 million. In addition, Osisko Development received gross proceeds of $73.9 million in 2020 from a private placement closed in 2021.

 

During the third quarter of 2020, the Company acquired the San Antonio gold project in Mexico for US$42.0 million, including US$30.0 million paid in cash and US$12.0 million paid in shares.

 

During the second quarter of 2020, the Company completed a private placement of $85.0 million with Investissement Québec.

 

During the first quarter of 2020, the Company drew US$50.0 million on its revolving credit facility and recorded an impairment charge of $26.3 million ($19.3 million, net of income taxes) on its Renard diamond stream.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Fourth Quarter Results

 

Financial Highlights

(in thousands of dollars, except per share amounts)

 

   Three months ended December 31, 
   Osisko Gold Royalties (i)   Osisko Development (ii)   Consolidated (vi) 
   2021   2020   2021   2020   2021   2020 
   $   $   $   $   $   $ 
Revenues   50,673    64,560    2,827    -    50,673    64,560 
Cash margin (iv)   47,027    46,324    -    -    47,027    46,324 
Gross profit   34,763    32,776    -    -    34,763    32,776 
Operating expenses
(G&A, bus. dev and exploration)		   (5,839)   (8,600)   (5,801)   (4,873)   (11,640)   (13,473)
Mining operating expenses   -    -    (12,919)   -    (12,919)   - 
Net earnings (loss)   21,879    11,756    (57,102)   (7,771)   (35,223)   3,985 
Net earnings (loss) attributable to Osisko's
shareholders		   21,879    11,756    (43,063)   (7,124)   (21,184)   4,632 
Net earnings per share  attributable to
Osisko's shareholders		   0.13    0.07    (0.26)   (0.04)   (0.13)   0.03 
Adjusted net earnings (loss) (v)   23,808    19,577    (20,519)   (4,093)   3,289    15,484 
Adjusted net earnings (loss) per basic share (v)   0.14    0.12    (0.12)   (0.02)   0.02    0.09 
                               
Cash flows from operating activities (vi)                              
Before working capital items   40,276    36,211    (14,639)   (8,154)   25,637    28,057 
  Working capital items   (5,157)   (2,113)   (7,709)   6,689    (12,866)   4,576 
  After working capital items   35,119    34,098    (22,348)   (1,465)   12,771    32,633 
Cash flows from investing activities (vi)   (23,772)   (42,430)   (18,655)   (24,181)   (42,427)   (66,611)
Cash flows from financing activities   (7,998)   (39,007)   2,431    219,662    (5,567)   180,655 

 

(i) Osisko Gold Royalties Ltd and its subsidiaries, excluding Osisko Development Corp. and its subsidiaries. Represents the royalty, stream and other interests segment.

(ii) Osisko Development Corp. and its subsidiaries (carve-out of the mining activities of Osisko Gold Royalties prior to the reverse take-over transaction completed on November 25, 2020 and creating Osisko Development). Represents the exploration, evaluation and development of mining projects segment.

(iii) As at December 31, 2021 and 2020.

(iv) 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 Non-IFRS Financial Performance Measures section of this MD&A.

(v) Adjusted earnings (loss) and adjusted earnings (loss) 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 MD&A.

(vi) Consolidated results are net of the intersegment transactions and adjustments related to accounting policies. Refer to the Segment Disclosure section of this MD&A.

 

Financial Summary

 

·Record revenues from royalties and streams of $50.7 million (no revenues from offtakes in the fourth quarter of 2021) compared to $48.8 million ($64.6 million including offtakes) in the fourth quarter of 2020;
·Gross profit of $34.8 million compared to $32.8 million in the fourth quarter of 2020;
·Impairment charges of $42.7 million on exploration and evaluation properties and $5.8 million on the ore in stockpiles of the San Antonio project, in addition to mining operating expenses of $12.9 million on the Bonanza Ledge Phase 2 project;
·Consolidated operating loss of $38.2 million compared to operating income of $21.2 million in the fourth quarter of 2020, as a result of impairment charges and mining operating expenses incurred by Osisko Development;
·Consolidated net loss attributable to Osisko Gold Royalties' shareholders of $21.2 million or $0.13 per basic and diluted share, compared to net earnings of $4.6 million or $0.03 per basic and diluted share in the fourth quarter of 2020;
·Consolidated adjusted earnings8  of $3.3 million or $0.02 per basic share compared to $15.5 million or $0.09 per basic share in the fourth quarter of 2020; and
·Consolidated cash flows provided by operating activities of $12.8 million compared to $32.6 million in the fourth quarter of 2020.

 

Revenues from royalties and streams increased in the fourth quarter of 2021 compared to the fourth quarter of 2020 as a result of higher deliveries and payments under the royalty and stream agreements, partially offset by lower realized prices. Revenues from offtake agreements were nil in the fourth quarter of 2021 as a result of the Parral offtake conversion into a stream in April 2021. The fourth quarter of 2020 was also negatively affected by the impact of the COVID-19 pandemic on the mining operations of certain operators.

 

 

8 "Adjusted earnings (loss)" and "Adjusted earnings (loss) 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 MD&A.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Cost of sales decreased by $14.6 million in the fourth quarter of 2021 compared to 2020 following the Parral offtake conversion into a stream in April 2021.

 

Depletion expense decreased by $1.3 million compared to the corresponding period in 2020, mainly as a result of the mix of sales.

 

Gross profit amounted to $34.8 million in the fourth quarter of 2021 compared to $32.8 million in the fourth quarter of 2020. The increase is mainly due to higher deliveries and payments under the royalty and stream agreements and lower cost of sales and depletion expenses.

 

In the fourth quarter of 2021, the Company incurred a consolidated operating loss of $38.2 million, compared to a consolidated operating income of $19.3 million in the corresponding period of 2020, mostly as a result of impairment charges of $42.7 million ($34.5 million, net of income taxes) on exploration and evaluation properties (including the James Bay properties and Coulon project) and $5.8 million on the ore in stockpiles of the San Antonio project, in addition to mining operating expenses of $12.9 million on the Bonanza Ledge Phase 2 project, all operated by Osisko Development.

 

Consolidated G&A expenses increased in the fourth quarter of 2021 as a result of the creation of Osisko Development in November 2020. Consolidated G&A expenses amounted to $10.8 million in the fourth quarter of 2021 compared to $7.8 million in the fourth quarter of 2020. G&A expenses from the royalties and streams segment decreased in the fourth quarter of 2021 to $4.7 million compared to $6.2 million in the fourth quarter of 2020, mostly as a result of a lower compensation expense. G&A expenses from the exploration and development segment amounted to $6.1 million compared to $1.6 million in 2020 due to increased activities in 2021.

 

Business development expenses decreased to $1.1 million in the fourth quarter of 2021 from $5.6 million in the fourth quarter of 2020. The decrease is mainly due to additional professional fees incurred in the fourth quarter of 2020 related to the RTO transaction ($1.8 million) and a non-cash listing fee of $1.7 million, also related to the RTO transaction, of which $2.7 million were assumed by Osisko Development. The balance of the decrease is explained by lower professional fees incurred by Osisko in 2021.

 

In the fourth quarter of 2021, Osisko Development incurred mining operating expenses of $12.9 million on the Bonanza Ledge Phase 2 project.

In the fourth quarter of 2021, the Company incurred a consolidated net loss attributable to Osisko's shareholders of $21.2 million, compared to consolidated net earnings of $4.6 million in the fourth quarter of 2020, mostly as a result of impairment charges incurred by Osisko Development, partially offset by net gains on investments.

 

Consolidated adjusted earnings were $3.3 million in the fourth quarter of 2021, compared to $15.5 million in the fourth quarter of 2020, mostly as a result of mining operating expenses on the Bonanza Ledge Phase 2 project and income taxes paid in Mexico by a subsidiary of Osisko Development as a result of the San Antonio stream. Adjusted earnings for the royalties and streams segment amounted to $23.8 million in the fourth quarter of 2021 compared to $19.6 million in the fourth quarter of 2020, as a result of a higher gross profit. The adjusted loss for the exploration and development segment amounted to $20.5 million in the fourth quarter of 2021 compared to $4.1 million in the fourth quarter of 2020, as a result of increased activities, mining operating expenses on the Bonanza Ledge Phase 2 project and income taxes paid in Mexico by a subsidiary of Osisko Development. Details of adjusted earnings (loss) per segment is provided in the Non-IFRS Financial Performance Measures section of this MD&A.

 

Consolidated net cash flows provided by operating activities in the fourth quarter of 2021 was $12.8 million compared to $32.6 million in the fourth quarter of 2020. Net cash flows provided by operating activities of the royalties and streams segment were stable at $35.1 million in the fourth quarter of 2021 compared to $34.1 million in the fourth quarter of 2020. Net cash flows used by operating activities for the exploration and development segment were $22.3 million in the fourth quarter of 2021 compared to $1.5 million in the fourth quarter of 2020, as a result of increased activities. Details on cash flows per segment is provided in the Segment Disclosure section of this MD&A.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Consolidated Statements of Income (Loss)

 

The following table presents summarized consolidated statements of income (loss) for the three months ended December 31, 2021 and 2020 (in thousands of dollars, except amounts per share):

 

       Three months ended
December 31,		 
       2021   2020 
       $   $ 
Revenues   (a)    50,673    64,560 
                
Cost of sales   (b)    (3,646)   (18,236)
Depletion of royalty, stream and other interests   (c)    (12,264)   (13,548)
Gross profit   (d)    34,763    32,776 
                
Other operating expenses               
General and administrative   (e)    (10,829)   (7,842)
Business development   (f)    (1,130)   (5,608)
Exploration and evaluation   (g)    319    (23)
Mining operating expenses   (h)    (12,919)   - 
Impairment of assets   (i)    (48,451)   - 
                
Operating (loss) income        (38,247)   19,303 
                
Other revenues (expenses), net   (j)    4,254    (6,973)
                
(Loss) earnings before income taxes        (33,993)   12,330 
                
Income tax expense   (k)    (1,230)   (8,345)
                
Net (loss) earnings        (35,223)   3,985 
                
Net (loss) earnings attributable to:               
 Osisko Gold Royalties Ltd's shareholders        (21,184)   4,632 
 Non-controlling interests        (14,039)   (647)
                
Net (loss) earnings per share               
  Basic and diluted        (0.13)   0.03 

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

(a) Revenues are comprised of the following:

 

   Three months ended December 31, 
   2021   2020 
   Average
selling price
per ounce /
carat ($)		   Ounces /
carats sold		   Total
revenues
($000's)		   Average
selling price
per ounce /
carat ($)		   Ounces /
Carats sold		   Total
revenues
($000's)		 
Gold sold   2,270    13,697    31,125    2,444    16,174    39,528 
Silver sold   29    316,086    9,166    32    551,065    17,637 
Diamonds sold(i)   146    47,141    6,884    98    43,904    4,284 
Other (paid in cash)   -    -    3,498    -    -    3,111 
              50,673              64,560 

 

(i) The diamonds were sold by an agent for Osisko for a blended selling price of $146 (US$116) per carat in the fourth quarter of 2021. The average selling price includes 8,042 incidental carats sold outside of the run of mine sales at an average price of $37 (US$29) per carat. Excluding the incidental carats, 39,099 carats were sold at an average price of $169 (US$134) per carat in the fourth quarter of 2021. The Renard diamond mine was put on care and maintenance in March 2020 given the structural challenges affecting the diamond market sales as well as the depressed prices for diamonds due to COVID-19. The mine restarted its activities in September 2020.

 

The decrease in gold ounces sold in the fourth quarter of 2021 is mainly the results of the conversion of the Parral offtake agreement into a stream in April 2021, partially offset by higher deliveries under the other royalty agreements. The decrease in silver ounces sold in the fourth quarter of 2021 is mainly the result of the conversion of the Parral offtake into a 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 costs of sales in the fourth quarter of 2021 is mainly the result of the conversion of the Parral offtake into a stream in April 2021, partially offset by higher deliveries in the fourth quarter of 2021 compared to the fourth quarter of 2020.

 

(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 in the fourth quarter of 2021 is mostly due to the mix of sales.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

(d) The breakdown of cash margin9  and gross profit per type of interest is as follows (in thousands of dollars):

 

   Three months ended
December 31		 
   2021   2020 
   $   $ 
Royalty interests          
Revenues   34,502    34,393 
Less: cost of sales (excluding depletion)   (233)   (94)
Cash margin (in dollars)   34,269    34,299 
           
Depletion   (7,324)   (7,400)
Gross profit   26,945    26,899 
           
Stream interests          
Revenues   16,171    14,371 
Less: cost of sales (excluding depletion)   (3,413)   (3,056)
Cash margin (in dollars)   12,758    11,315 
           
Depletion   (4,940)   (5,940)
Gross profit   7,818    5,375 
           
Royalty and stream interests          
Total cash margin (in dollars)   47,027    45,614 
Divided by: total revenues   50,673    48,764 
Cash margin (in percentage of revenues)   92.8%   93.5%
           
Offtake interests          
Revenues   -    15,796 
Less: cost of sales (excluding depletion)   -    (15,086)
Cash margin (in dollars)   -    710 
Cash margin (in percentage of revenues)   -    4.5%
           
Depletion   -    (208)
Gross profit   -    502 
           
Total - Gross profit   34,763    32,776 

 

(e) Consolidated G&A expenses increased in the fourth quarter of 2021 as a result of the creation of Osisko Development in November 2020. Consolidated G&A expenses amounted to $10.8 million in the fourth quarter of 2021 compared to $7.8 million in the fourth quarter of 2020. G&A expenses from the royalties and streams segment decreased at $4.7 million compared to $6.2 million in the fourth quarter of 2020, mostly as a result of a lower compensation expense. G&A expenses from the exploration and development segment amounted to $6.1 million in the fourth quarter of 2021 compared to $1.6 million in the fourth quarter of 2020 due to increased activities.

 

(f) Business development expenses decreased to $1.1 million in the fourth quarter of 2021 from $5.6 million in 2020. The decrease is mainly due to additional professional fees incurred in 2020 related to the RTO transaction ($1.8 million), a non-cash listing fee of $1.7 million, also related to the RTO transaction, of which $2.7 million were assumed by Osisko Development. The balance of the decrease is explained by lower professional fees and compensation expense incurred by Osisko in 2021.

 

(g) Exploration and evaluation expenses represent expenditures incurred by Osisko Development and its subsidiaries for general exploration activities and for properties that have been previously written-off.

 

(h) Mining operating expenses of $12.9 million in the fourth quarter of 2021 are related to operating expenses incurred by Osisko Development on the Bonanza Ledge Phase 2 project.

 

 

9 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 Non-IFRS Financial Performance Measures section of this MD&A.

 

39 

 

 

Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

(i) In the fourth quarter of 2021, the Company recorded an impairment charge of $5.8 million on the ore in stockpiles (San Antonio project, operated by Osisko Development) to reduce its net book value to its net realizable value following an increase in the expected processing and transportation costs and a decrease in the gold price. The Company also incurred an impairment charge of $42.7 million ($34.5 million, net of income taxes) on exploration and evaluation properties, including the James Bay properties and the Coulon zinc project in Canada. Osisko Development has determined that further exploration and evaluation expenditures are no longer planned in the near term on these properties and that the carrying amount of these assets is unlikely to be recovered from a sale of the project at the current time. As a result, these properties were fully written-down.

 

(j) Other revenues, net of $4.3 million in the fourth of 2021 include finance costs of $6.3 million and a share of loss of associate of $1.3 million, partially offset by a net gain on investments of $6.7 million (including a variation in fair value on investments at fair value through profit and loss of $6.2 million), a flow-through shares premium income of $1.1 million and interest income of $1.1 million. Other revenues also include other gains of $2.7 million, mostly related to the reversal of previously recorded provisions for suppliers.

 

Other expenses, net, of $7.0 million in the fourth quarter of 2020 include finance costs of $6.2 million and a share of loss of associates of $3.7 million, partially offset by a net gain on investments of $2.2 million and interest income of $1.1 million.

 

(k) The effective income tax rate for the fourth quarter of 2021 is (3.6%) compared to 67.7% in the fourth quarter of 2020. The statutory rate is 26.5% in 2021 and 2020. The elements that impacted the effective income taxes are the impairments on mining exploration, evaluation and development projects, for which no deferred tax liability was recorded due to the initial recognition exemption, and the benefit of losses not recognized, revenues taxable at a lower rate and the recognition of previously unrecognized non-capital losses. Cash taxes related to taxes on royalties earned in foreign jurisdictions were paid in the fourth quarter of 2021 for $0.3 million and $0.4 million in the fourth of 2020. In addition, income taxes of US$4.5 million ($5.7 million) were payable in Mexico by a subsidiary of Osisko Development in the fourth quarter of 2020 as a result of the acquisition by Osisko of the San Antonio stream in 2020.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Segment Disclosure

 

The chief operating decision-maker organizes and manages the business under two operating segments: (i) acquiring and managing precious metals and other royalties, streams and other interests, and (ii) the exploration, evaluation and development of mining projects. The assets, liabilities, revenues, expenses and cash flows of Osisko and its subsidiaries, other than Osisko Development and its subsidiaries, are attributable to the precious metals and other royalties, streams and other interests operating segment. The assets, liabilities, revenues, expenses and cash flows of Osisko Development and its subsidiaries are attributable to the exploration, evaluation and development of mining projects operating segment.

 

The following tables present the main assets, liabilities, revenues, expenses and cash flows per operating segment (in thousands of dollars):

 

   As at December 31, 2021 and 2020 
   Osisko Gold
Royalties (i)		   Osisko
Development (ii)		         
   (Royalties, streams
and other interests)		   (Mining exploration,
evaluation and
development)		   Intersegment
transactions (iii)		   Consolidated 
   $   $   $   $ 
Assets and liabilities                    
                     
As at December 31, 2021                    
                     
Cash   82,291    33,407    -    115,698 
Current assets   91,594    61,422    (90)   152,926 
Investments in associates and other investments   231,884    62,480    -    294,364 
Royalty, stream and other interests   1,247,489    -    (92,688)   1,154,801 
Mining interests and plant and equipment   7,991    559,332    68,332    635,655 
Exploration and evaluation assets   -    3,635    -    3,635 
Goodwill   111,204    -    -    111,204 
                     
Total assets   1,691,958    703,110    (24,446)   2,370,622 
                     
Total liabilities (excluding long-term debt)   89,416    115,156    (24,446)   180,126 
                     
Long-term debt   406,671    3,764    -    410,435 
                     
As at December 31, 2020                    
                     
Cash   105,097    197,427    -    302,524 
Current assets   117,592    218,478    (882)   335,188 
Investments in associates and other investments   166,589    110,144    -    276,733 
Royalty, stream and other interests   1,203,781    -    (87,653)   1,116,128 
Mining interests and plant and equipment   9,011    407,000    73,501    489,512 
Exploration and evaluation assets   -    41,869    650    42,519 
Goodwill   111,204    -    -    111,204 
                     
Total assets   1,609,344    802,144    (14,384)   2,397,104 
                     
Total liabilities (excluding long-term debt)   67,449    102,578    (14,384)   155,643 
                     
Long-term debt   400,429    -    -    400,429 

 

(i) Osisko Gold Royalties Ltd and its subsidiaries, excluding Osisko Development Corp. and its subsidiaries.

 

(ii) Osisko Development Corp. and its subsidiaries (carve-out of the mining activities of Osisko Gold Royalties prior to the reverse take-over transaction completed on November 25, 2020 and creating Osisko Development).

 

(iii) The adjustments are related to intersegment transactions and to royalties and streams held by Osisko Gold Royalties on assets held by Osisko Development, which are reclassified on consolidation, as well as adjustments related to an accounting policy difference on revenues recognition.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

   For the three months ended December 31, 2021 and 2020 
   Osisko Gold
Royalties (i)		   Osisko
Development (ii)		         
   (Royalties, streams
and other interests)		   (Mining exploration,
evaluation and
development)		   Intersegment
transactions (iii)		   Consolidated 
   $   $   $   $ 
Revenues, expenses and cash flows                    
                     
For the three months ended December 31, 2021                    
                     
Revenues   50,673    2,827    (2,827)   50,673 
Gross profit   34,763    -    -    34,763 
Operating expenses (G&A, bus. dev and exploration)   (5,839)   (5,801)   -    (11,640)
Mining operating expenses   -    (12,919)   -    (12,919)
Impairments of assets   -    (48,451)   -    (48,451)
Net earnings (loss)   21,879    (57,102)   -    (35,223)
                     
Cash flows from operating activities                    
Before working capital items   40,276    (14,639)   -    25,637 
Working capital items   (5,157)   (7,709)   -    (12,866)
After working capital items   35,119    (22,348)   -    12,771 
Cash flows from investing activities   (23,772)   (18,655)   -    (42,427)
Cash flows from financing activities   (7,998)   2,431    -    (5,567)
                     
For the three months ended December 31, 2020                    
                     
Revenues   64,560    -    -    64,560 
Gross profit   32,776    -    -    32,776 
Operating expenses (G&A, bus. dev and exploration)   (8,600)   (4,873)   -    (13,473)
Impairments of assets   -    -    -    - 
Net earnings (loss)   11,756    (7,771)   -    3,985 
                     
Cash flows from operating activities                    
Before working capital items   36,211    (8,154)   -    28,057 
Working capital items   (2,113)   6,689    -    4,576 
After working capital items   34,098    (1,465)   -    32,633 
Cash flows from investing activities   (42,430)   (24,181)   -    (66,611)
Cash flows from financing activities   (39,007)   219,662    -    180,655 

 

(i) Osisko Gold Royalties Ltd and its subsidiaries, excluding Osisko Development Corp. and its subsidiaries.

 

(ii) Osisko Development Corp. and its subsidiaries (carve-out of the mining activities of Osisko Gold Royalties prior to the reverse take-over transaction completed on November 25, 2020 and creating Osisko Development).

 

(iii) The adjustments are related to intersegment transactions and to royalties and streams held by Osisko Gold Royalties on assets held by Osisko Development, which are reclassified on consolidation, as well as adjustments related to an accounting policy difference on revenues recognition.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

   Years ended December 31, 2021 and 2020 
   Osisko Gold
Royalties (i)		   Osisko 
Development (ii)		         
   (Royalties, streams
and other interests)		   (Mining exploration,
evaluation and
development)		   Intersegment
transactions (iii)		   Consolidated 
   $   $   $   $ 
Revenues, expenses and cash flows                    
                     
Year ended December 31, 2021                    
                     
Revenues   224,877    7,275    (7,275)   224,877 
Gross profit   138,870    -    -    138,870 
Operating expenses (G&A, bus. dev and exploration)   (23,778)   (22,852)   -    (46,630)
Mining operating expenses   -    (12,919)   -    (12,919)
Impairments   (4,400)   (122,250)   -    (126,650)
Net earnings (loss)   77,277    (133,952)   -    (56,675)
                     
Cash flows from operating activities                    
Before working capital items   158,632    (21,828)   (5,710)   131,094 
Working capital items   (5,413)   (19,586)   -    (24,999)
After working capital items   153,219    (41,414)   (5,710)   106,095 
Cash flows from investing activities   (120,766)   (156,982)   5,710    (272,038)
Cash flows from financing activities   (54,339)   34,738    -    (19,601)
                     
Year ended December 31, 2020                    
                     
Revenues   213,630    -    -    213,630 
Gross profit   104,325    -    -    104,325 
Operating expenses (G&A, bus. dev and exploration)   (28,021)   (8,301)   -    (36,322)
Impairments   (36,298)   -    -    (36,298)
Net earnings (loss)   23,501    (7,272)   -    16,229 
                     
Cash flows from operating activities                    
Before working capital items   116,631    (10,387)   -    106,244 
Working capital items   (2,669)   4,403    -    1,734 
After working capital items   113,962    (5,984)   -    107,978 
Cash flows from investing activities   (161,131)   (61,968)   -    (223,099)
Cash flows from financing activities   109,444    207,417    -    316,861 

 

(i) Osisko Gold Royalties Ltd and its subsidiaries, excluding Osisko Development Corp. and its subsidiaries.

 

(ii) Osisko Development Corp. and its subsidiaries (carve-out of the mining activities of Osisko Gold Royalties prior to the reverse take-over transaction completed on November 25, 2020 and creating Osisko Development).

 

(iii) The adjustments are related to intersegment transactions and to royalties and streams held by Osisko Gold Royalties on assets held by Osisko Development, which are reclassified on consolidation, as well as adjustments related to an accounting policy difference on revenues recognition.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Royalty, stream and other interests - Geographic revenues

 

All of the Company's revenues are attributable to the precious metals and other royalties, streams and other interests operating segment. Geographic revenues from the sale of metals and diamonds received or acquired from in-kind royalties, streams and other interests are determined by the location of the mining operations giving rise to the royalty, stream or other interest. For the years ended December 31, 2021 and 2020, royalty, stream and other interest revenues were earned from the following jurisdictions (in thousands of dollars):

 

    North America(i)   South America   Australia   Africa   Europe   Total 
    $   $   $   $   $   $ 
2021                               
                                
Royalties    134,544    1,112    6    4,617    -    140,279 
Streams    27,624    20,284    1,548    -    9,877    59,333 
Offtakes    25,265    -    -    -    -    25,265 
                                
     187,433    21,396    1,554    4,617    9,877    224,877 
                                
2020                               
                                
Royalties    106,780    554    52    3,919    -    111,305 
Streams    13,999    19,862    2,098    -    9,310    45,269 
Offtakes    57,056    -    -    -    -    57,056 
                                
     177,835    20,416    2,150    3,919    9,310    213,630 

 

(i) 83% of the North America's revenues are generated from Canada in 2021 (65% in 2020).

 

In 2021, one royalty interest generated revenues of $81.3 million ($66.8 million in 2020), which represented 41% of revenues (43% of revenues in 2020) (excluding revenues generated from the offtake interests).

 

In 2021, revenues generated from precious metals and diamonds represented 89% and 9%, respectively, of total revenues (87% and 11% excluding offtakes, respectively). In 2020, revenues generated from precious metals and diamonds represented 94% and 4%, respectively, of total revenues (92% and 6% excluding offtakes, respectively).

 

Royalty, stream and other interests - Geographic net assets

 

The following table summarizes the royalty, stream and other interests by jurisdictions, as at December 31, 2021 and 2020, which is based on the location of the property related to the royalty, stream or other interests (in thousands of dollars):

 

   North America(i)   South America   Australia   Africa   Asia   Europe   Total 
   $   $   $   $   $   $   $ 
December 31, 2021                                   
                                    
Royalties   595,931    57,673    13,742    20,453    -    15,215    703,014 
Streams   185,031    173,773    -    -    28,272    51,055    438,131 
Offtakes   -    -    8,960    -    4,696    -    13,656 
                                    
    780,962    231,446    22,702    20,453    32,968    66,270    1,154,801 
                                    
December 31, 2020                                   
                                    
Royalties   576,835    46,374    9,924    8,313    -    15,215    656,661 
Streams   172,879    183,679    1,481    -    28,392    54,510    440,941 
Offtakes   5,690    -    8,119    -    4,717    -    18,526 
                                    
    755,404    230,053    19,524    8,313    33,109    69,725    1,116,128 

 

(i) 82% of the North America's net interests are located in Canada as at December 31, 2021 (86% as at December 31, 2020).

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Exploration, evaluation and development of mining projects

 

The inventories, mining interests, plant and equipment and exploration and evaluation assets related to the exploration, evaluation and development of mining projects (excluding the intersegment transactions) are located in Canada and in Mexico, and are detailed as follow as at December 31, 2021 and 2020 (in thousands of dollars):

 

    December 31, 2021     December 31, 2020  
    Canada     Mexico     Total     Canada     Mexico     Total  
    $     $     $     $     $     $  
Assets                                    
Inventories   13,933     4,663     18,596     1,599     25,705     27,304  
Mining interests, plant and equipment   455,849     103,483     559,332     344,903     62,097     407,000  
Exploration and evaluation assets   3,635     -     3,635     40,680     1,189     41,869  
Total assets   627,937     75,173     703,110     704,998     97,146     802,144  

 

Related Party Transactions

 

In 2021, interest revenues of $3.6 million were recorded on notes receivable from associates ($2.7 million in 2020). As at December 31, 2021, interests receivable from associates of $4.6 million are included in amounts receivable ($1.9 million as at December 31, 2020). Loans, notes receivable, and a convertible debenture from associates amounted to $42.3 million as at December 31, 2021 ($33.4 million as at December 31, 2020) and were included in other investments on the consolidated balance sheets.

 

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

 

Contractual Obligations and Commitments

 

Investments in royalty and stream interests

 

As at December 31, 2021, significant commitments related to the acquisition of royalties and streams are detailed in the following table:

 

Company Project (asset) Installments Triggering events
       
Aquila Resources Inc.

Back Forty project

(gold stream)

 US$5.0 million Receipt of all material permits for the construction and operation of the project.
    US$25.0 million Pro rata to drawdowns on debt finance facility.
       
Falco Resources Ltd.

Horne 5 project

(silver stream)

 $10.0 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 capital 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%).

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

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
to be purchased		   Per ounce/carat
cash payment (US$)		      
Interest  Gold   Silver   Diamond   Gold  Silver   Diamond   Term of agreement  Date of contract
Amulsar
stream(1),(7)		   4.22%   62.5%       $400  $4        40 years  November 2015 Amended Jan. 2019
Amulsar
offtake(2),(7)		   81.91%            Based on
quotational
period		            Until delivery of 2,110,425 ounces Au  November 2015 Amended Jan. 2019
Back Forty
stream(3)		   18.5%   85%       30% spot
price
(max
$600)		  $4        Life of mine  March 2015 (silver) Nov. 2017 (gold) Amended June 2020
Mantos Blancos  
stream(4)		        100%           8% spot        Life of mine  September 2015
Amended Aug. 2019
Renard stream             9.6%           Lesser of
40% of
sales
price or
$40		   40 years  July 2014 Amended Oct. 2018
Sasa stream(5)        100%          $5.96        40 years  November 2015
Gibraltar
stream(6)		        75%           nil        Life of
mine		  March 2018 Amended April 2020

 

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

 

(2)Offtake percentage will increase to 84.87% if the operator 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 Osisko Bermuda (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 stream percentage shall be payable on 100% of silver until 19,300,000 ounces have been delivered, after which the stream percentage will be 40%. As of December 31, 2021, a total of 2.7 million ounces of silver have been delivered under the stream agreement.
  
(5)3% or consumer price index (CPI) per ounce price escalation after 2016.
  
(6)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. As of December 31, 2021, a total of 0.9 million ounces of silver have been delivered under the stream agreement.
  
(7)In December 2019, Lydian International Limited, the owner of the Amulsar project, was granted protection under the Companies' Creditors Arrangement Act. In July 2020, Osisko became a shareholder of Lydian following a credit bid transaction (35.6% as at December 31, 2021).
  
(8)The San Antonio stream was not included because it is cancelled on the accounting consolidation of Osisko Development.

 

Mining equipment and service contracts

 

As of December 31, 2021, Osisko Development had purchase commitments for mining equipment and service contracts amounting to $40.9 million, including $33.3 million payable in 2022 and $7.6 million in 2023.

 

Financial liabilities

 

As at December 31, 2021, all financial liabilities to be settled in cash or by the transfer of other financial assets mature within 90 days, except for the convertible debentures, the revolving credit facility, the equipment financings and the lease liabilities, which are described below (in thousands of dollars):

 

    As at December 31, 2021  
    Total
amounts		           Estimated annual payments  
    payable     Maturity     2022     2023     2024     2025     2026-2029  
    $           $     $     $     $     $  
Conv. debentures   312,000     December 31,
2022		     312,000     -     -     -     -  
Revolving credit facility(i)   128,788     July 30,
2025		     4,297     4,297     4,297     115,897     -  
Equipment financings   3,969     October 10, 2025     1,584     1,664     393     328     -  
Lease liabilities   20,213     December 31,
2029		     9,388     2,919     1,478     1,291     5,137  
    464,970           327,269     8,880     6,168     117,516     5,137  
                                           

 

(i) The interest payable is based on the actual interest rates and foreign exchange rates as at December 31, 2021.

 

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2021 - Annual Report  

 

Foreign exchange contracts

 

In 2021, the Company entered into foreign exchange contracts (collar options) to sell U.S. dollars and buy Canadian dollars for a total nominal amount of US$3.0 million. 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 U.S. dollars) from a stronger Canadian dollar. The fair value of the contracts is booked at each reporting period on the consolidated balance sheets. As at December 31, 2021, the fair value of the outstanding contracts was insignificant. 

 

Off-balance Sheet Items

 

There are no significant off-balance sheet arrangements, other than the contractual obligations and commitments mentioned above.

 

Outstanding Share Data

 

As of February 24, 2022, 166,217,925 common shares were issued and outstanding. A total of 3,715,390 share options were outstanding to purchase common shares. 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 Events to December 31, 2021

 

Normal course issuer bid

 

From January 1, 2022 to February 24, 2022, the Company purchased for cancellation a total of 347,492 common shares for $4.9 million (average acquisition price per share of $14.04) under its 2022 NCIB program.

 

Proposed acquisition of Tintic by Osisko Development

 

On January 25, 2022, Osisko Development announced that it had entered into definitive agreements (together, the "Agreements") with IG Tintic LLC and Ruby Hollow LLC (together the "Vendors") to acquire 100% of Tintic Consolidated Metals LLC (the "Transaction"). On completion of the Transaction, Osisko Development will acquire 100% ownership of the producing Trixie Mine ("Trixie"), as well as mineral claims covering more than 17,000 acres (including over 14,200 acres of which are patented) in Central Utah's historic Tintic Mining District.

 

Pursuant to the terms of the Transaction, Osisko Development will acquire 100% of Tintic from the Vendors for aggregate payments at closing totaling approximately US$177 million, of which approximately US$54 million will be paid in cash and approximately US$123 million will be paid by the issuance of 35,099,611 common shares of Osisko Development at a price of C$4.32 per share.

 

In addition, Osisko Development will pay the Vendors: (i) deferred payments of US$12.5 million payable in equal instalments annually over five years in cash or common shares at Osisko Development's election; (ii) two 1% NSR royalty grants, each with a 50% buyback right in favour of Osisko Development for US$7.5 million which is exercisable within 5 years; (iii) a right to receive the financial equivalent of 10% of the net smelter returns from stockpiled ore extracted from Trixie since January 1, 2018 and sitting on surface; (iv) the set-off of a US$5 million loan owed to Osisko Development; and (v) US$10 million contingent upon commencement of production at the Burgin Mine.

 

Osisko Bermuda has entered into a non-binding metals stream term sheet ("Stream") with a wholly-owned subsidiary of Osisko Development. The upfront cash payment under the Stream, of at least US$20 million and up to US$40 million, will be used by Osisko Development to fund a portion of the cash consideration payable on closing of the Transaction. In the event that the full amount of US$40 million is drawn, Osisko Development will deliver to Osisko Bermuda a maximum of 5% of all metals produced from the Tintic property up to a maximum of 53,400 ounces of refined gold and 4.0% thereafter.

  

The Transaction is expected to close in the second quarter of 2022, subject to satisfaction of regulatory approvals and customary closing conditions.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Non-brokered private placement by Osisko Development

 

On February 7, 2022, Osisko Development announced a non-brokered private placement ("Offering") of 31,500,000 subscription receipts of Osisko Development ("Subscription Receipts") at a price of US$3.50 per Subscription Receipt for aggregate gross proceeds of up to approximately US$110.3 million. Each Subscription Receipt issued pursuant to the Offering will entitle the holder thereof to receive, upon the satisfaction of the Escrow Release Condition (as defined below) and without payment of additional consideration, one unit of Osisko Development (each, a "Unit"). Each Unit will comprise of one common share in the capital of Osisko Development (each, a "Common Share") and one Common Share purchase warrant (each whole warrant, a "Warrant"), with each Warrant entitling the holder thereof to purchase one additional Common Share at a price of US$6.00 per Common Share for a period of five years following the date of issue. The gross proceeds of the Offering will be held in escrow pending, among other things, the completion of the listing of the Common Shares on the New York Stock Exchange ("Escrow Release Condition"), which is contingent upon Osisko Development meeting the listing requirements of the New York Stock Exchange ("NYSE") and may involve, among other things, a consolidation of the Common Shares. If the Escrow Release Condition is met, Osisko Development anticipates that the proceeds of the Offering will be used to advance the development of Osisko Development's mineral assets and for general corporate purposes. The Offering is subject to regulatory approvals.

 

"Bought deal" private placement by Osisko Development

 

On February 9, 2022, Osisko Development announced a "bought deal" private placement for an aggregate of 20,225,000 subscription receipts of Osisko Development (the "Bought Deal Subscription Receipts") and/or units of Osisko Development (the "Bought Deal Units" and, together with the Bought Deal Subscription Receipts, the "Offered Securities") at a price of $4.45 per Offered Security (the "Issue Price"), for aggregate gross proceeds of $90.0 million (the " Bought Deal Offering"). Each Bought Deal Unit will be comprised of one Osisko Development Common Share and one common share purchase warrant (each, a "Bought Deal Warrant"), with each Bought Deal Warrant entitling the holder thereof to purchase one additional Common Share at a price of $7.60 per Common Share for a period of 60 months following the closing date of the Bought Deal Offering. Each Bought Deal Subscription Receipt will entitle the holder thereof to receive, upon the satisfaction of the escrow release condition (as defined below), and without payment of additional consideration, one Bought Deal Unit. Osisko Development has granted the Underwriters an option, exercisable in whole or in part up to 48 hours prior to the closing of the Bought Deal Offering, to purchase up to an additional aggregate amount of 3,033,750 Bought Deal Subscription Receipts and/or Bought Deal Units at the Issue Price, for additional gross proceeds of up to $13.5 million. The gross proceeds from the sale of the Bought Deal Subscription Receipts, net of expenses of the underwriters and 50% of the commissions payable to the underwriters in respect of the Bought Deal Subscription Receipts, will be placed into escrow and will be released immediately prior to the completion of Osisko Development's proposed acquisition of Tintic. If the escrow release condition is not satisfied prior to the date that is 90 days from the closing of the Bought Deal Offering, the escrowed proceeds of the Bought Deal Offering will be returned to the holders of the Bought Deal Subscription Receipts. Osisko Development intends to use the net proceeds of the Bought Deal Offering to advance the development of the company's mineral assets, including the Cariboo gold project, the San Antonio gold project and properties held by Tintic assuming the completion of the Tintic Acquisition, and for general corporate purposes. The closing date of the Bought Deal Offering is expected to occur on or about March 2, 2022, and is subject to certain customary conditions.

  

Warrants

 

On February 18, 2022, a total of 5,480,000 Osisko warrants expired unexercised.

 

Dividend

 

On February 24, 2022, the Board of Directors declared a quarterly dividend of $0.055 per common share payable on April 14, 2022 to shareholders of record as of the close of business on March 31, 2022.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

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") as well as the additional risks listed below 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. 

 

Production Estimates, Forecasts and Outlook

 

The Company prepares estimates, forecasts and outlook of future attributable production from the mining operations of the assets on which the Company holds a royalty, stream or other interests (“Mining Operations”) and relies on public disclosure and other information it receives from the owners, operators and independent experts of the Mining Operations to prepare such estimates, forecast or outlook. Such information is necessarily imprecise because it depends upon the judgment of the individuals who operate the Mining Operations as well as those who review and assess the geological and engineering information. These production estimates and projections are based on existing mine plans and other assumptions with respect to the Mining Operations which change from time to time, and over which the Company has no control, including the availability, accessibility, sufficiency and quality of ore, the costs of production, the operators' ability to sustain and increase production levels, the sufficiency of infrastructure, the performance of personnel and equipment, the ability to maintain and obtain mining interests and permits and compliance with existing and future laws and regulations. Any such information is forward-looking and no assurance can be given that such production estimates and projections will be achieved. Actual attributable production may vary from the Company's estimates, forecast and outlook for a variety of reasons, including: actual ore mined varying from estimates of grade, tonnage, dilution and metallurgical and other characteristics; actual ore mined being less amenable than expected to mining or treatment; short-term operating factors relating to the ore reserves, such as the need for sequential development of orebodies and the processing of new or different ore grades; delays in the commencement of production and ramp up at new mines; revisions to mine plans; unusual or unexpected orebody formations; risks and hazards associated with the Mining Operations, including but not limited to cave-ins, rock falls, rock bursts, pit wall failures, seismic activity, weather related complications, fires or flooding or as a result of other operational problems such as production drilling challenges, power failures or a failure of a key production component such as a hoist, an autoclave, a filter press or a grinding mill; and unexpected labour shortages, strikes, local community opposition or blockades. Occurrences of this nature and other accidents, adverse conditions or operational problems in future years may result in the Company's failure to achieve the production estimates, forecasts or outlook currently anticipated. If the Company's production estimates, forecasts or outlook prove to be incorrect, it may have a material adverse effect on the Company.

 

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, is recorded, processed, summarized and reported within the appropriate time periods and that such information is accumulated and communicated to the Company's management, including the CEO and CFO, to allow for timely decisions regarding required disclosure. 

 

As required by applicable Canadian securities laws and Rule 13a-15(b) under the Exchange Act, the Company conducted an evaluation, under the supervision and with the participation of the management, including the CEO and CFO, of the effectiveness of the design and operation of the Company's DCP as of December 31, 2021. Based on this evaluation, the CEO and CFO concluded that the design and operation of the Company's DCP were effective as of December 31, 2021.

 

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.

 

The CEO and CFO have evaluated whether there were changes to the DCP during the year ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, the DCP. No such changes were identified through their evaluation.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual 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 also evaluated the effectiveness of the Company's ICFR as required by National Instrument 52-109 issued by the Canadian Securities Administrators and rules 13a-15 and 15d-15 under the Exchange Act based on the framework and criteria established in Internal Control - Integrated Framework (2013) as issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on this evaluation, the CEO and CFO concluded that the Company's ICFR was effective as of December 31, 2021.

 

The Company's ICFR may not prevent or detect all misstatements because of inherent limitations. Additionally, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because changes in conditions or deterioration in the degree of compliance with the Company's policies and procedures.

 

The CEO and CFO have evaluated whether there were changes to the ICFR during the year ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, the ICFR. No such changes were identified through their evaluation.

 

The Company's independent registered public accounting firm, PricewaterhouseCoopers LLP, have audited the  Company's consolidated financial statements for the year ended December 31, 2021 and have issued an audit report dated February 24, 2022 on the Company's ICFR based on the framework and criteria established in Internal Control - Integrated Framework (2013) as issued by COSO of the Treadway Commission.

 

Basis of Presentation of Consolidated Financial Statements

 

The consolidated financial statements for the year ended December 31, 2021 have been prepared in accordance with the IFRS as issued by the IASB. The accounting policies, methods of computation and presentation applied in the consolidated financial statements are consistent with those of the previous financial year.

 

The significant accounting policies of Osisko are detailed in the notes to the audited consolidated financial statements for the year ended December 31, 2021, filed on SEDAR at www.sedar.com, EDGAR at www.sec.gov and on Osisko's website at www.osiskogr.com.

 

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, 2021, 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, 2021, filed on SEDAR at www.sedar.com, EDGAR at www.sec.gov and on Osisko's website at www.osiskogr.com

 

Technical Information

 

The scientific and technical information contained in this MD&A has been reviewed and approved by Guy Desharnais, Ph.D., P.Geo, who is a "Qualified Person" ("QP") as defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Non-IFRS Financial Performance Measures

 

The Company has included certain performance measures in this MD&A that do not have any standardized meaning prescribed by IFRS including (i) cash margin (in dollars and in percentage or revenues), (ii) adjusted earnings (loss) and (iii) adjusted earnings (loss) per basic share. The presentation of these non-IFRS measures 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. These measures are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. As Osisko's operations are primarily focused on precious metals, the Company presents cash margins and adjusted earnings as it believes that certain investors use this information, together with measures determined in accordance with IFRS, to evaluate the Company's performance in comparison to other companies in the precious metals mining industry who present results on a similar basis. However, other companies may calculate these non-IFRS measures differently.

 

Cash margin (in dollars and in percentage of revenues)

 

Cash margin (in dollars) represents revenues less cost of sales (excluding depletion). Cash margin (in percentage of revenues) represents the cash margin (in dollars) divided by revenues. A reconciliation of the cash margin per type of interests (in dollars and percentage of revenues) is presented under the sections Overview of Financial Results and Fourth Quarter Results of this MD&A.

 

Adjusted earnings (loss) and adjusted earnings (loss) per basic share

 

Adjusted earnings (loss) is defined as: net earnings (loss) adjusted for certain items: foreign exchange gain (loss), impairment of assets (including impairment on financial assets and investments in associates), gains (losses) on disposal of exploration and evaluation assets, unrealized gain (loss) on investments, share of loss of associates, deferred premium income on flow-through shares, deferred income tax expense (recovery), transaction costs and other items such as non-cash gains (losses). Adjusted earnings (loss) per basic share is obtained from the adjusted earnings (loss) divided by the weighted average number of common shares outstanding for the period.

 

   For the three months ended December 31, 
   2021   2020 
   Osisko Gold
Royalties (i)		   Osisko
Development (ii)		   Consolidated   Osisko Gold
Royalties (i)		   Osisko
Development (ii)		   Consolidated 
(in thousands of dollars,  except
per share amounts)		  $   $   $   $   $   $ 
Net earnings (loss)   21,884    (57,107)   (35,223)   12,384    (8,399)   3,985 
                               
Adjustments:                              
Impairment of assets   -    48,451    48,451    2,694    -    2,694 
Foreign exchange loss (gain)   4    (53)   (49)   272    242    514 
Unrealized (gain) loss on investments   (6,143)   (527)   (6,670)   (1,414)   359    (1,055)
Share of loss of associates   883    402    1,285    3,342    381    3,723 
Deferred premium income on flow-through shares   -    (1,102)   (1,102)   -    -    - 
Deferred income tax expense (recovery)   7,180    (6,277)   903    1,593    577    2,170 
Other non-cash gain   -    (4,306)   (4,306)   -    -    - 

    Transaction costs
(RTO transaction)

   -    -    -    706    2,747    3,453 
                               
Adjusted earnings (loss)   23,808    (20,519)   3,289    19,577    (4,093)   15,484 
                               
Weighted
average number
of
           common
shares
outstanding
(000's)		   166,807    166,807    166,807    166,093    166,093    166,093 
                               
Adjusted
earnings (loss)
per basic share		   0.14    (0.12)   0.02    0.12    (0.02)   0.09 

 

 

(i)Osisko Gold Royalties Ltd and its subsidiaries, excluding Osisko Development Corp. and its subsidiaries. Represents the royalty, stream and other interests segment.
(ii)Osisko Development Corp. and its subsidiaries. Represents the mining exploration, evaluation and development segment.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

   For the years ended December 31, 
   2021   2020 
   Osisko
Gold
Royalties (i)		   Osisko
Development
(ii)		   Consolidated   Osisko
Gold
Royalties (i)		   Osisko
Development
(ii)		   Consolidated 
(in thousands of dollars,  except
per share amounts)		  $   $   $   $   $   $ 
                         
Net earnings (loss)   77,282    (133,957)   (56,675)   24,931    (8,702)   16,229 
                               
Adjustments:                              
Impairment of assets   4,400    122,250    126,650    34,298    -    34,298 
Foreign exchange  loss (gain)   186    489    675    (894)   242    (652)
Unrealized (gain) loss on investments   (14,403)   (1,368)   (15,771)   (12,455)   (4,140)   (16,595)
Share of loss of associates   2,246    1,704    3,950    5,678    1,979    7,657 
Deferred premium income on flow-through shares   -    (6,971)   (6,971)   -    -    - 
Deferred income tax expense (recovery)   24,695    (12,971)   11,724    2,750    1,010    3,760 
Other non-cash gain   -    (4,306)   (4,306)   -    -    - 
Transaction costs (RTO transaction)   -    -    -    982    2,747    3,729 
                               
Adjusted earnings (loss)   94,406    (35,130)   59,276    55,290    (6,864)   48,426 
                               
Weighted average
number of
        common shares
outstanding (000's)		   167,628    167,628    167,628    162,303    162,303    162,303 
                               
Adjusted earnings
(loss) per basic
share		   0.56    (0.21)   0.35    0.34    (0.04)   0.30 

 

(i)Osisko Gold Royalties Ltd and its subsidiaries, excluding Osisko Development Corp. and its subsidiaries. Represents the royalty, stream and other interests segment.
   
(ii)Osisko Development Corp. and its subsidiaries (carve-out of the mining activities of Osisko Gold Royalties prior to the reverse take-over transaction completed on November 25, 2020 and creating Osisko Development). Represents the mining exploration, evaluation and development segment.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Forward-looking Statements

 

Certain statements contained in this MD&A may be deemed "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian securities legislation. All statements in this MD&A, forward-looking statements are statements other than statements of historical fact, that address, without limitation, future events, production estimates of Osisko's assets (including increase of production), timely developments of mining properties over which Osisko has royalties, streams, offtakes and investments, management's expectations regarding Osisko's growth, results of operations, estimated future revenues, production costs, carrying value of assets, ability to continue to pay dividend, requirements for additional capital,  business prospects and opportunities future demand for and fluctuation of prices of commodities (including outlook on gold, silver, diamonds, other commodities) currency markets and general market conditions  In addition, statements and estimates (including data in tables) relating to mineral reserves and resources and gold equivalent ounces are forward-looking statements, as they involve implied assessment, based on certain estimates and assumptions, and no assurance can be given that the estimates will be realized. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential", "scheduled" and similar expressions or variations (including negative variations), or that events or conditions "will", "would", "may", "could" or "should" Forward-looking statements are subject to known and unknown risks, uncertainties and other factors, most of which are beyond the control of Osisko, and actual results may accordingly differ materially from those in forward-looking statements. Such risk factors 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; timely development, permitting, construction, commencement of production, ramp-up (including operating and technical challenges) 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; the unfavorable outcome of any challenges or litigation relating title, permit or license with respect to any of the properties in which Osisko holds a royalty, stream or other interests or to Osisko's right thereon; differences in rate and timing of production from resource estimates or production forecasts by operators of properties in which Osisko holds a royalty, stream or other interest, including conversion from resources to reserves and ability to replace resources; business opportunities that become available to, or are pursued by Osisko; continued availability of capital and financing and general economic, market or business conditions; 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 integration of acquired assets and the responses of relevant governments to the COVID-19 outbreak and the effectiveness of such response and the potential impact of COVID-19 on Osisko's business, operations and financial condition. 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 and with public disclosure (including forecast of production); the accuracy of public statements and disclosures made by the owners or operators of such underlying properties (including expectations for the development of underlying properties that are not yet in production); no adverse development in respect of any significant property in which Osisko holds a royalty, stream or other interest; that statements and estimates relating to mineral reserves and resources by owners and operators of the properties in which Osisko holds a royalty, stream or other interest are accurate; the Company's ongoing income and assets relating to determination of its PFIC status; integration of acquired assets; and the absence of any other factors that could cause actions, events or results to differ from those anticipated, estimated or intended. For additional information on risks, uncertainties and assumptions, 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 accurate as actual results and prospective events could materially differ from those anticipated such the forward looking statements and such forward-looking statements included in this MD&A are not guarantee of future performance and should not be unduly relied upon. In this MD&A, Osisko relies on information publicly disclosed by third parties pertaining to its assets and, therefore, assumes no liability for such third party public disclosure. 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.

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Cautionary Note to U.S. Investors Regarding the Use of Mineral Reserve and Mineral Resource Estimates

 

Osisko is subject to the reporting requirements of the applicable Canadian securities laws, and as a result reports its mineral reserves according to Canadian standards. Canadian reporting requirements for disclosure of mineral properties are governed by National Instrument 43-101, Standards of Disclosure for Mineral Properties ("NI 43-101"). The definitions of NI 43-101 are adopted from those given by the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM"). U.S. reporting requirements are 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) Sandeep Singh  
Sandeep Singh  
President and Chief Executive Officer  
   
February 24, 2022    

 

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Osisko Gold Royalties Ltd Management's Discussion and Analysis
2021 - Annual Report  

 

Corporate Information

 

Osisko Gold Royalties Ltd 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

 

  Osisko Development Corp.
  1100 av. des Canadiens-de-Montréal
  Suite 300
  Montréal, Québec, Canada H3B 2S2
  Tel.: (514) 940-0685
  Fax: (514) 940-0687
  Email: info@osiskodev.com
  Web site: www.osiskodev.com

 

Directors Officers
Sean Roosen, Executive Chair Sean Roosen, Executive Chair
Joanne Ferstman, Lead Director Sandeep Singh, President and Chief Executive Officer
The Hon. John R. Baird Guy Desharnais, Vice President, Project Evaluation
Christopher C. Curfman Iain Farmer, Vice President, Corporate Development
Candace MacGibbon André Le Bel, Vice President, Legal Affairs and   
William Murray John     Corporate Secretary
Pierre Labbé Frédéric Ruel, Vice President, Finance and Chief
Charles E. Page     Financial Officer
Sandeep Singh Heather Taylor, Vice President, Investor Relations
   
Qualified Person (as defined by NI 43-101)
Guy Desharnais, Ph.D., P. Geo, Vice-President, Project Evaluation
   

Exchange listings

 

Toronto Stock Exchange

 

- Common shares:  OR

- 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: TSX 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.

 

55 

 

 

Exhibit 4.4

 

 

 

Notice of Annual Meeting of Shareholders and
Management Information Circular

 

We will hold our Annual Meeting of the holders of common shares in a virtual only format on May 12, 2021 at 3:30 PM.

 

Shareholders may exercise their rights by attending the meeting by audio webcast or by completing a form of proxy.

 

YOUR VOTE AS A SHAREHOLDER IS IMPORTANT. VOTE TODAY.

 

These materials are important and require your immediate attention. If you have questions or require assistance with voting your shares, you may contact Osisko's proxy solicitation agent:

 

Laurel Hill Advisory Group 

North American Toll-Free Number: 1-877-452-7184 

Collect Calls Outside North America: 1-416-304-0211 

Email: assistance@laurelhill.com

 

 

 

 

 

 

March 29, 2021

 

Dear Fellow Shareholder:

 

We are pleased to invite you to our 7th annual meeting of shareholders to be held on May 12, 2021. Due to the evolving protocols from the public health and the Québec Government of the anticipated ongoing impact of the coronavirus ("COVID-19"), Osisko Gold Royalties Ltd ("Osisko" or the "Corporation") will once again be holding a virtual annual meeting via live audio webcast to protect the health and safety of its employees, shareholders and their families as well as others who usually attend our meeting.  We trust that this will simplify and increase participation by our shareholders from all locations. At this meeting, we will update you on our activities and our progress in establishing Osisko as a leading intermediate precious metals royalty and stream company.

 

Despite mine shutdowns associated with COVID-19 in the first half of the year, Osisko achieved record revenues and cash flows in 2020. Our asset base is performing well, with several recent positive developments, including a major catalyst on the Odyssey underground project extending production from our flagship Canadian Malartic asset until at least 2039. Elsewhere, our operating partners are replacing reserves, extending mine lives, outlining new discoveries and announcing, or further justifying, mine expansions.

 

Our development exposure assets have also continued to mature and advance towards production decisions. In 2020, we also launched Osisko Development Corp., a new North American gold development company, which resulted in a meaningful simplification of our royalty and streaming business.

 

The Corporation is in excellent position to benefit from a supportive commodity price environment and deliver increased value to shareholders.

 

 

1100, Avenue des Canadiens-de-Montréal, suite 300, Montréal, Québec, Canada H3B 2S2 

Telephone (514) 940-0670 - Fax (514) 940-0669 

www.osiskogr.com

 

 

 

 

During our meeting, we will ask you to receive the financial statements of Osisko and to approve the resolutions put forward by your Board of Directors and the management team, including:

 

1.The election of 9 candidates to our Board of Directors;

 

2.The appointment of PricewaterhouseCoopers LLP as the Corporation's independent auditor for 2021;

 

3.The approval of the unallocated rights and entitlements under the Employee Share Purchase Plan;

 

4.The approval of amendments to the Restricted Share Unit Plan and approval of the unallocated rights and entitlements under the plan;

 

5.We will also ask you to confirm our approach to our Executive Compensation Program, which has been established to attract and retain a team to execute our value creation strategy and deliver returns in a highly competitive market.

 

We invite you to review our attached management information circular, which provides you with background information on the matters that will be addressed at the meeting and details information on how to remotely attend the annual meeting and how to vote.

 

If you have comments or questions about Osisko, you may contact me directly at (Chair-Board@osiskogr.com) or you may contact our Investor Relations Group at (info@osiskogr.com). We would be pleased to respond to your comments or queries.

 

We thank you for your ongoing support and confidence as we continue to build shareholder value at Osisko Gold Royalties Ltd.

 

Respectfully,

 

 

 

Sean Roosen 

Executive Chair of the Board of Directors

 

 

1100, Avenue des Canadiens-de-Montréal, suite 300, Montréal, Québec, Canada H3B 2S2 

Telephone (514) 940-0670 - Fax (514) 940-0669 

www.osiskogr.com

 

 

 

 

TABLE OF CONTENTS

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS  5 
     
MANAGEMENT INFORMATION CIRCULAR  6 
     
PROXY MATTERS AND VOTING INFORMATION  6 
     
INSTRUCTIONS FOR THE VIRTUAL MEETING  8 
     
NOTICE-AND-ACCESS RULES  9 
     
VOTING SECURITIES  9 
     
PRINCIPAL HOLDER OF VOTING SECURITIES  9 
     
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON  10 
     
SHAREHOLDER VOTING MATTERS AND RECOMMENDATION  10 
     
FINANCIAL STATEMENTS  10 
     
ELECTION OF DIRECTORS  10 
     
VOTING RESULTS OF 2020 ANNUAL MEETING  21 
     
TENURE OF THE BOARD  21 
     
2020 BOARD AND COMMITTEE ATTENDANCE RECORD  21 
     
DIRECTOR COMPENSATION  23 
RETAINER, ATTENDANCE FEES AND SHARE-BASED REMUNERATION  23 
DIRECTOR COMPENSATION TABLE  24 
     
STATEMENT OF EXECUTIVE COMPENSATION  27 
COMPENSATION GOVERNANCE  27 
COMPENSATION DISCUSSION AND ANALYSIS  29 
     
PERFORMANCE GRAPH  46 
     
CHIEF EXECUTIVE OFFICER COMPENSATION LOOKBACK  47 
     
CHIEF EXECUTIVE OFFICER SECURITIES OWNERSHIP AND VALUE AT RISK  47 
     
EXECUTIVE COMPENSATION  48 
     
PENSION PLAN BENEFITS  66 
     
TERMINATION AND CHANGE OF CONTROL BENEFITS  66 
     
SECURITIES OWNERSHIP  69 
     
STATEMENT OF CORPORATE GOVERNANCE PRACTICES  71 
     
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS  90 
     
INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS  90 
     
LIABILITY INSURANCE  90 
     
APPOINTMENT AND REMUNERATION OF AUDITORS  90 
     
APPROVAL OF THE UNALLOCATED RIGHTS AND ENTITLEMENTS UNDER THE EMPLOYEE SHARE PURCHASE PLAN  91 
     
APPROVAL OF AMENDMENTS TO THE RESTRICTED SHARE UNIT PLAN AND APPROVAL OF THE UNALLOCATED RIGHTS AND ENTITLEMENTS UNDER THE PLAN  91 
     
ADVISORY VOTE ON EXECUTIVE COMPENSATION  92 
     
SHAREHOLDER PROPOSALS FOR THE 2022 ANNUAL MEETING  93 
     
ADDITIONAL INFORMATION  93 
     
CONTACTING OSISKO'S BOARD OF DIRECTORS  93 
     
APPROVAL  93 
     
SCHEDULE "A" BOARD OF DIRECTORS CHARTER  94 

 

 

 

 

OSISKO GOLD ROYALTIES LTD

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

To the shareholders of Osisko Gold Royalties Ltd (the "Corporation" or "Osisko"):

 

NOTICE IS HEREBY GIVEN that the virtual annual meeting (the "Meeting") of the holders of common shares of the Corporation (the "Common Shares") will be held at 3:30 PM (Eastern Daylight Time) on May 12, 2021, for the following purposes:

 

1.To receive the Corporation's audited consolidated financial statements for the year ended December 31, 2020 and the independent auditor's report thereon;

 

2.To elect the Corporation's directors for the ensuing year;

 

3.To appoint PricewaterhouseCoopers LLP as the Corporation's independent auditor for fiscal year 2021 and to authorize the directors to fix its remuneration;

 

4.To consider, and if deemed advisable, adopt an ordinary resolution to approve the unallocated rights and entitlements under the Employee Share Purchase Plan, as more fully described in the accompanying management information circular;

 

5.To consider, and if deemed advisable, adopt an ordinary resolution to approve amendments to the Restricted Share Unit Plan and approve the unallocated rights and entitlements under the plan, as more fully described in the accompanying management information circular;

 

6.To consider and, if deemed advisable, adopt an advisory resolution supporting Osisko's approach to executive compensation, the full text of which is reproduced in the accompanying management information circular; and

 

7.To transact such other business as may properly be brought before the Meeting or at any adjournment thereof.

 

Dated at Montréal, Québec, Canada this 29th day of March, 2021.

 

By order of the Board of Directors,

 

 

 

André Le Bel

Vice President, Legal Affairs and Corporate Secretary

 

IMPORTANT

 

It is desirable that as many Common Shares as possible be represented at the Meeting. As always, we encourage shareholders to vote their shares prior to the proxy voting deadline even if you expect to attend the Meeting. If you do not expect to attend the Meeting or any adjournment thereof in person, and would like your Common Shares represented, please date, sign and return the enclosed form of proxy for use at the Meeting or any adjournment thereof. To be effective, the proxy must be received by the Corporation's transfer agent, AST Trust Company (Canada), by email at: proxyvote@astfinancial.com, by mail: 2001 Robert-Bourassa Blvd., Suite 1600, Montréal, Québec, H3A 2A6; or by fax to 1 (866) 781-3111 (North American Toll Free) no later than 3:30 p.m. (Eastern Daylight Time) on May, 10, 2021 or 48 hours (other than a Saturday, Sunday or holiday) prior to the time to which the Meeting may be adjourned. Notwithstanding the foregoing, the chair of the Meeting has the discretion to accept proxies received after such deadline. Shareholders who hold their shares through a bank, broker or other intermediary should refer to, "Beneficial Shareholders" below.

 

 2021 Management Information Circular5

 

 

MANAGEMENT INFORMATION CIRCULAR

 

This management information circular (the "Circular") is provided in connection with the solicitation of proxies by the management of Osisko Gold Royalties Ltd (the "Corporation" or "Osisko") for use at the annual meeting of the shareholders of the Corporation (the "Shareholders") to be held on May 12, 2021 at 3:30 PM (Eastern Daylight Time) (the "Meeting") and at every adjournment thereof. Except where otherwise indicated, this Circular contains information as of the close of business on March 22, 2021 and all currency amounts are shown in Canadian dollars.  The Meeting will be held in a virtual only format, which will be conducted via live audio webcast at https://web.lumiagm.com/495445383. Shareholders will not be able to physically attend the Meeting.  For a summary of how shareholders may attend the Meeting online, see "Instructions for the Virtual Meeting" below.

 

PROXY MATTERS AND VOTING INFORMATION

 

Solicitation of Proxies

 

The enclosed proxy is being solicited by the management of the Corporation. Solicitation will be primarily by mail but proxies may also be solicited by telephone, or personally by directors, officers or employees of the Corporation. In addition, the Corporation has retained the services of Laurel Hill Advisory Group ("Laurel Hill") to provide the following services in connection with the Meeting: review and analysis of the Circular, recommending corporate governance best practices where applicable, liaising with proxy advisory firms, developing and implementing shareholder proxies, and the solicitation of proxies including contacting Shareholders by telephone. For these services, Laurel Hill will receive a fee of $37,500, plus reasonable out-of-pocket expenses. The Corporation will bear all expenses in connection with the solicitation of proxies. In addition, the Corporation shall, upon request, reimburse brokerage firms and other custodians for their reasonable expenses in forwarding proxies and related material to beneficial owners of Common Shares.

 

Appointment of Proxy

 

The persons named in the enclosed form of proxy are executive officers of the Corporation. A Shareholder has the right to appoint a person, who need not be a Shareholder of the Corporation, other than the persons designated in the accompanying form of proxy, to attend and act on his or her behalf at the Meeting. To exercise this right, a Shareholder may insert such other person's name in the blank space provided in the accompanying form of proxy or complete another appropriate form of proxy.

 

Revocability of Proxy

 

A proxy given pursuant to this solicitation may be revoked by an instrument in writing executed by the Shareholder or by the Shareholder's attorney authorized in writing and delivered either to AST Trust Company (Canada) ("AST") at 2001 Robert-Bourassa Blvd., Suite 1600, Montréal, Québec, H3A 2A6, or by fax to 1 (866) 781-3111, no later than 3:30 PM (Eastern Daylight Time) on Monday, May 10, 2021 or at any time up to and including the last business day preceding the day of any adjournment of the Meeting at which the proxy is to be used, or to the Chair or Secretary of such Meeting on the day of the Meeting or any adjournment thereof, or by any other manner permitted by law. Any proxy given by a registered Shareholder can also be revoked by the Shareholder if he or she so requests. If a registered Shareholder follows the process for attending and voting at the Meeting online, voting at the Meeting online will also revoke your previous proxy.

 

Beneficial Shareholders (as defined herein) will have different methods and should carefully follow the instructions provided to them from their intermediary.

 

Beneficial Shareholders

 

A beneficial Shareholder is a Shareholder whose shares are registered in the name of a representative, such as an investment dealer or another intermediary (collectively, "Intermediaries"), rather than in the Shareholder's name ("Beneficial Shareholder"). Most of the Corporation's Shareholders are Beneficial Shareholders.

 

In accordance with Canadian securities legislation, the Meeting materials are being sent to both registered and Beneficial Shareholders. There are two types of Beneficial Shareholders – Shareholders who have objected to the disclosure of their identities and share positions ("OBO's") and Shareholders who do not object to the Corporation knowing who they are ("NOBO's").

 

62021 Management Information Circular

 

 

In the case of NOBO's, Meeting materials have either (a) been sent by the Corporation (or its agent) directly to NOBO's, or (b) been sent by the Corporation (or its agent) to intermediaries holding on behalf of NOBO's for distribution to such shareholder. If you are a NOBO and the Corporation (or its agent) has sent the Meeting materials directly to you, your personal information has been obtained in accordance with applicable securities regulatory requirements from the intermediary holding on your behalf. By choosing to send these materials to you directly, the Corporation (and not the intermediary holding on your behalf) has assumed responsibility for (i) delivering these materials to you, and (ii) executing your proper voting instructions.

 

As it relates to OBO's, the Corporation intends to pay Intermediaries to send proxy-related materials and voting instruction forms to OBO's. Most intermediaries delegate responsibility for obtaining voting instructions from clients to Broadridge Financial Solutions, Inc. ("Broadridge"). Broadridge mails a voting instruction form ("VIF") in lieu of a form of proxy provided by Osisko. For your Common Shares to be voted, you must follow the instructions on the VIF that is provided to you. You can complete the VIF by: (i) calling the phone number listed thereon; (ii) mailing the completed VIF in the envelope provided; or (iii) using the internet at www.proxyvote.com.

 

Voting Information

 

Common Shares represented by properly executed proxies in favour of the persons designated in the enclosed form of proxy will be voted or withheld from voting on any ballot that may be called for and, if the Shareholder specifies a choice in respect of the matters to be voted upon, the Common Shares shall be voted or withheld from voting in accordance with the specification made by the Shareholder. If no specification is made, such Common Shares will be voted FOR all of the following agenda items: (i) the election of each of the proposed nominees as directors of the Corporation for the ensuing year; (ii) the appointment of PricewaterhouseCoopers LLP as independent auditor of the Corporation and the fixing of its remuneration by the directors; (iii) the adoption of an ordinary resolution to approve the unallocated rights and entitlements under the Employee Share Purchase Plan; (iv) the adoption by an ordinary resolution to approve amendments to the Restricted Share Unit Plan and approve the unallocated rights and entitlements under the plan; and (v) the adoption of an advisory resolution supporting Osisko's approach to executive compensation. These Items are further described and discussed in the Circular.

 

The enclosed proxy confers discretionary authority upon the persons named therein to vote as he or she sees fit with respect to amendments or variations to matters identified in the notice relating to the Meeting and other matters which may properly come before the Meeting. At the date of this Circular, the management of the Corporation is not aware that any such amendments, variations, or other matters are to be presented for action at the Meeting.

 

Registered Shareholders and duly appointed proxyholders will be able to attend, participate and vote at the Meeting and vote in real time, provided they are connected to the internet and follow the instructions below. However, voting by proxy is the easiest way to vote because you can appoint anyone to be your proxyholder to attend the Meeting and vote your Common Shares according to your instructions. This person does not need to be a shareholder.

 

Voting by proxy can easily be completed by way of telephone voting, the internet, fax or by returning the proxy card. Completed and signed proxies must be deposited at the office of the Corporation's registrar and transfer agent, AST Trust Company (Canada), 2001 Robert-Bourassa Blvd., Suite 1600, Montréal, Québec, H3A 2A6, and must be received not later than forty-eight (48) hours, excluding Saturdays, Sundays and holidays, prior to the time of the Meeting, unless the Chair of the Meeting elects to exercise his discretion to accept proxies received subsequently. Telephone voting can be completed at 1 (888) 489-7352. Internet voting can be completed at www.astvotemyproxy.com. Alternatively, you may fax your proxy to 1 (416) 368-2502 or toll free in Canada and the United States to 1 (866) 781-3111, or scan and email to proxyvote@astfinancial.com. Beneficial Shareholders will have different voting methods and are encouraged to carefully follow the instructions provided on the VIF.

 

If you are a Beneficial Shareholder and are unable to attend the Meeting, but wish that your voting rights be exercised on your behalf by a proxyholder, you must follow the voting instructions on the VIF. If you are a Beneficial Shareholder and wish to exercise your voting rights at the Meeting, you must indicate your own name in the space provided for such purpose on the VIF in order to appoint yourself as proxyholder and follow the instructions therein with respect to the execution and transmission of the document. If you have any questions with respect to the foregoing or need help with voting, we invite you to contact Laurel Hill by calling toll-free 1 (877) 452-7184 if you are in North America, or 1 (416) 304-0211 if you are outside North America, or by emailing at assistance@laurelhill.com.

 

 2021 Management Information Circular7

 

 

INSTRUCTIONS FOR THE VIRTUAL MEETING

 

Due to the evolving guidelines from the national public health and the Québec Government of the ongoing impact of the coronavirus ("COVID-19"), the Meeting will be conducted by way of a live audio webcast through a virtual platform with integrated slides and real-time balloting in order to protect the health and safety of its shareholders, employees, families and others who usually attend such meeting. We hope that hosting a virtual meeting will increase participation by our Shareholders, as it will enable Shareholders to more easily attend, securely vote and ask questions at the Meeting regardless of their geographic location. Shareholders will not be able to physically attend the Meeting. Even if you plan on attending the Meeting, we nonetheless recommend to vote prior to the Meeting in order to tabulate your vote in advance.

 

Instructions on Voting at the Meeting

 

Registered Shareholders and duly appointed proxyholders will be able to attend the virtual Meeting and vote in real time, provided they are connected to the internet and follow the instructions in this Circular. Non-registered Shareholders who have not duly appointed themselves as proxyholder will be able to attend the virtual Meeting as guests but will not be able to vote at the virtual Meeting.

 

Shareholders who wish to appoint a person other than the Management Nominees identified in the form of proxy or voting instruction form (including a non-registered Shareholder who wishes to appoint themselves to attend the virtual Meeting) must carefully follow the instructions in this Circular and on their form of proxy or voting instruction form. These instructions include the additional step of registering such proxyholder with our transfer agent, AST, after submitting the form of proxy or voting instruction form. Failure to register the proxyholder with AST will result in the proxyholder not receiving a proxyholder control number to participate in the virtual Meeting and only being able to attend as a guest. Guests will be able to listen to the virtual Meeting but will not be able to vote.

 

We encourage you to log into the Meeting at least one hour (1 hr) prior to the commencement of the Meeting. You may begin to log into the Meeting virtual platform beginning at 2:30 PM (Eastern Daylight Time) on May 12, 2021, the Meeting will begin promptly at 3:30 PM (Eastern Daylight Time).

 

How to Vote

 

You have two ways to vote your Common Shares:

 

➢ by submitting your form of proxy or other voting instruction form as per instructions indicated; or

 

➢ during the Meeting by online ballot, when called for, through the virtual platform.

 

Registered Shareholders and duly appointed proxyholders (including non-registered Shareholders who have duly appointed themselves as proxyholder) that attend the Meeting online will be able to vote by completing a ballot online, when called for, during the Meeting through the virtual platform.

 

Guests (including non-registered Shareholders who have not duly appointed themselves as proxyholder) can log into the Meeting as set out below. Guests will be able to listen to the Meeting but will not be able to vote during the Meeting.

 

To Access and Vote at the Virtual Meeting:

 

➢ Step 1: Log into the Virtual Platform online at https://web.lumiagm.com/495445383

 

➢ Step 2: Follow these instructions:

 

Registered Shareholders: Click "control #/ No de contrôle" and then enter your unique 13-digit proxyholder control number and password "osisko2021" (case-sensitive). The 13-digit proxyholder control number located on the form of proxy received from AST is your control number. If you use your control number to log into the Meeting, any vote you cast at the Meeting will revoke any proxy you previously submitted. If you do not wish to revoke a previously submitted proxy, you should not vote during the Meeting.

 

Duly appointed proxyholders: Click "I have a control number" and then enter your unique 13-digit control number and password "osisko2021" (case-sensitive). The 13-digit number will have been provided by email from AST following your registration at 1 (866) 751-6315 (within North America) or 1 (212) 235-5754 (outside of North America) or by completing the electronic form available at https://lp.astfinancial.com/ControlNumber by no later than 3:30 p.m. (Eastern Daylight Time) on May 10, 2021. Failing to register will result in the proxyholder not receiving a proxyholder control number, which is required to vote at the Meeting.

 

82021 Management Information Circular

 

 

Voting Results

 

Following the Meeting of Shareholders, a report on the voting results will be filed with the Canadian securities regulatory authorities at www.sedar.com.

 

NOTICE-AND-ACCESS RULES

 

The Corporation has elected to use the notice-and-access provisions under Regulation 51-102 - Continuous Disclosure Obligations ("Regulation 51-102") and Regulation 54-101 - Communications with Beneficial Owners of Securities of a Reporting Issuer ("Regulation 54-101", and together with Regulation 51-102, the "Notice-and-Access Provisions") for the Meeting. The Notice-and-Access Provisions are a set of rules developed by the Canadian Securities Administrators that allows issuers to post electronic versions of proxy-related materials on-line, via the System for Electronic Document Analysis and Retrieval ("SEDAR") and one other website, rather than mailing paper copies of such materials to Shareholders.

 

Instead of receiving this Circular, Shareholders will receive a Notice of Meeting with the proxy or voting instruction form, as the case may be, along with instructions on how to access the Meeting materials online. The Corporation will send the Notice of Meeting and proxy form directly to registered Shareholders and NOBOs. The Corporation will pay for intermediaries to deliver the Notice of Meeting, voting instruction form and other Meeting materials requested by OBOs. This Circular and other relevant materials are available on the Corporation's corporate Internet website (http://www.osiskogr.com/en/2021-agm/) or on SEDAR (www.sedar.com).

 

Objecting Beneficial Shareholders may request a paper copy of the Meeting materials, at no cost, from Broadridge Investor Communications Corporation by calling toll-free 1 (877) 907-7643 and entering the 16-digit control number located on the voting instruction form or via internet at www.proxyvote.com by using the 16-digit control number located in the voting instruction form. To ensure that you receive the materials in advance of the voting deadline and the Meeting, all requests must be received no later than May 10, 2021 to ensure timely receipt. Requests for Meeting materials may be made up to one year from the date the Circular is filed on SEDAR.

 

If you are a registered Shareholder or a NOBO and wish to receive a copy of this Circular or need help with voting, we invite you to contact Laurel Hill by calling toll-free 1 (877) 452-7184 if you are in North America, or 1 (416) 304-0211 if you are outside North America, or by emailing your request to assistance@laurelhill.com.

 

The Corporation will not use procedures known as 'stratification' in relation to the use of Notice-and-Access Provisions. Stratification occurs when an issuer using Notice-and-Access Provisions sends a paper copy of the Circular to some Shareholders with a Notice Package.

 

If you request a paper copy of the materials, please take note that no additional proxy form or voting instruction form shall be sent to you. Therefore, please make sure that you retain the form that you received with the Notice of Meeting for voting purposes.

 

VOTING SECURITIES

 

As of March 22, 2021, 167,229,019 Common Shares of the Corporation were outstanding. Holders of Common Shares of record at the close of business on March 22, 2021 (the "Record Date") will be entitled to one vote for each such Common Share held by them.

 

PRINCIPAL HOLDER OF VOTING SECURITIES

 

To the knowledge of the directors and executive officers of the Corporation and according to the latest data available as of March 22, 2021, there is one Shareholder owning, directly or indirectly, or exercising control or direction over more than 10% of the voting rights attached to all Common Shares.

 

 2021 Management Information Circular9

 

 

Name  Number of
Common Shares
(#)		   Percentage of Outstanding
Common Shares
(%)		 
Caisse de dépôt et placement du Québec   19,754,940(1)(2)    11.81 

 

NOTES:

 

(1)On the basis of the information available on SEDAR (www.sedar.com) and on SEDI (www.sedi.ca).

 

(2)Of which, 1,391,961 Common Shares are held directly by the CDPQ Sodémex Inc. and 18,362,979 Common Shares are held by CDP Investissements Inc., both wholly-owned subsidiaries of the Caisse de dépôt et placement du Québec.

 

INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

 

Unless as otherwise disclosed in this Circular, no director or executive officer, past, present or nominated hereunder, or any associate or affiliate of such persons, or any person on behalf of whom this solicitation is made, has any interest, direct or indirect, in any matter to be acted upon at the Meeting, except that such persons may be directly involved in the normal business of the Meeting or the general affairs of the Corporation.

 

BUSINESS TO BE TRANSACTED AT THE MEETING

 

SHAREHOLDER VOTING MATTERS AND RECOMMENDATION

 

Voting Matters  Election of
9 Directors		   Appointment of
PricewaterhouseCoopers
LLP as independent
auditors for 2021		   Approval of
the
unallocated
rights and
entitlements
under the
Employee
Share
Purchase
Plan		   Approval of
amendments
to the
Restricted
Share Unit
Plan and
approval of
the
unallocated
rights and
entitlements under the
plan		   Advisory
Resolution on
Executive
Compensation		 
Board Vote Recommendation  FOR
EACH
NOMINEE		   FOR   FOR   FOR   FOR 
For more information See Page   10    88    89    89    90 

 

FINANCIAL STATEMENTS

 

The audited consolidated financial statements of the Corporation for the financial year ended December 31, 2020 and the report of the auditor thereon will be presented at the Meeting. These consolidated financial statements and management's discussion and analysis were sent to all Shareholders who have requested a copy with this Notice of Annual Meeting of Shareholders and Circular, as applicable. The Corporation's consolidated financial statements and related management discussion and analysis for the year ended December 31, 2020 are available on SEDAR (www.sedar.com) and on EDGAR (www.sec.gov) as well as on the Corporation's website (www.osiskogr.com).

 

ELECTION OF DIRECTORS

 

The executive management team (the "Management") of the Corporation is supervised by the board of directors (the "Board of Directors" or "Board") as per the Business Corporations Act (Québec). The members of the Board are elected annually at each annual meeting of Shareholders to hold office until the next annual meeting unless, prior thereto, he or she resigns, or the office of such director becomes vacant by death, removal, or other cause. The articles of incorporation of the Corporation provide that our Board shall consist of a minimum of three (3) and a maximum of fifteen (15) directors. Accordingly, nine (9) nominees are being proposed as directors for election by the Shareholders at the Meeting for the current year, each to hold office until the next annual meeting of Shareholders or until such person's successor is elected or appointed. You can vote for all of these proposed directors, vote for some of them and withhold for others, or withhold for all of them.

 

Ms. Françoise Bertrand has decided not to stand for re-election at the Meeting given that she has reached the retirement age of 72 years old based on the terms of the Corporation's Policy regarding tenure on the Board of Directors and Mr. John Burzynski has decided not to stand for re-election at the Meeting. As such, they are not part of the nominees that are being proposed as directors for election by the Shareholders at the Meeting for the ensuing year. Based on the foregoing, the Board of Directors has decided to establish the size of the Board to nine (9) directors.  Pursuant to an investor rights agreement entered into between the Caisse and the Corporation, the Caisse retains the right to designate one nominee to the Board of Directors of the Corporation, for so long as the Caisse, together with its affiliates, owns more than 10% of the outstanding Common Shares of the Corporation; the Caisse has not exercised its right for the upcoming Meeting.

 

102021 Management Information Circular 

 

 

The members of the Board of Directors would like to express their appreciation to Ms. Bertrand and Mr. Burzsynski for their contribution over the years and also wish to extend to them their gratitude for their guidance and services during their mandate as directors of the Corporation and, in the case of Mr. Burzynski, as co-founder of the Corporation.

 

The following tables set out information about each nominee director's summary career profile, their board committee memberships (the "Board Committee Membership" or "Board Committee"), meeting attendance during the most recently completed financial year, principal directorships with other reporting issuers as well as other public and parapublic corporations on whose boards the nominees currently serve or have served in the past five years, areas of expertise and the number of securities they hold, either in the form of Common Shares, stock options ("options"), deferred share units ("DSUs"), restricted share units ("RSUs"), or debentures of the Corporation.

 

Unless otherwise directed, the persons named in the enclosed proxy form intend to VOTE FOR the election of each of the proposed nominees whose names are set out below. The proposal requires the approval of a majority of the votes cast at the Meeting.

 

Each of the nominees has provided the information as to the Common Shares of the Corporation he or she beneficially owns or over which he or she exercises control or direction, as at March 22, 2021. All nominees have served continuously as director of the Corporation since their appointment or first election in such capacity.

 

The Corporation has adopted a majority voting policy, which is further described in the Circular under the heading "Statement of Corporate Governance Practices - Majority Voting and Director Resignation Policy for Election of Directors".

 

 2021 Management Information Circular11

 

 




THE HONORABLE
JOHN R. BAIRD
Ontario, Canada
Age: 51

 


Status: Independent(1)

 

Director since: April 2020

 

Annual Meeting Votes:

2020: 99.65% In Favour

 

Areas of Expertise:

 

·       Governance

·       Government Relations

·       Human Resources

·       International Business

·       Management

·       Sustainability

 Board and Committee Meeting Attendance during
2020
  Regular Ad Hoc Total
Board(2) 3/3 11/11 14/14
Environmental and Sustainability Committee(3)(4) 2/2 1/1 3/3
Governance and Nomination Committee(4) 1/1 N/A 1/1
Overall Attendance: 100%
Public Board Membership in the past 5 years and
Interlocking Directorships

·       Canfor Corporation - No Interlock

·       Canfor Pulp Products Inc. - No Interlock

·       Canadian Pacific Railway Limited - No Interlock

·       Canadian Pacific Railway Company - No Interlock

 

Investment, Ownership and Total Value of Equity
  2021(5)
(March 22)
(#)		 2021(5)
Value
($)		 2020(6)
(May 8)
(#)		 2020(6)
Value
($)
Osisko Common Shares 2,818 40,805 2,818 37,536
Osisko DSUs 18,937 274,208 18,055 240,493
  Value ($)   315,012   278,029
Ownership Requirement - Target Date to Meet
Target to be attained by April 6, 2023

Mr. Baird is a director and advisor to a variety of firms in Canada and abroad. He was a former Senior Cabinet Minister in the Government of Canada and was the former Canadian Minister of Foreign Affairs.

 

A native of Ottawa, Baird spent three terms as a Member of Parliament and four years as Minister of Foreign Affairs where he advanced Canada/US relations and worked to strengthen ties to the Middle East and China. He also served as President of the Treasury Board, Minister of the Environment, Minister of Transport and Infrastructure, and Leader of the Government in the House of Commons. In 2010, he was selected by MPs from all parties as Parliamentarian of the Year. Prior to entering federal politics, Mr. Baird spent ten years in the Ontario Legislature where he served in several Ministerial portfolios. In addition to Canfor, Mr. Baird sits on the corporate boards of Canadian Pacific, the FWD Group, and PineBridge Investments, and is a member of the International Advisory Board of Barrick Gold Corp. He also serves as a Senior Advisor with Bennett Jones LLP, and is a Senior Advisor at Eurasia Group, a global political risk consultancy. Until January 2020 he served as Global Strategic Advisor to Hatch Ltd, a Canadian global multidisciplinary management, engineering and development consultancy. Mr. Baird also volunteers his time with Community Living Ontario, an organization that supports individuals with developmental disabilities and the Prince's Charities, the charitable office of His Royal Highness The Prince of Wales.

 

Mr. Baird holds an Honours Bachelor of Arts in Political Studies from Queen's University at Kingston.

                   

 

122021 Management Information Circular

 

 


CHRISTOPHER C. CURFMAN

Illinois, United States of America

Age: 69

 

 


Status: Independent(1)

 

Director since: May 2016

 

Annual Meeting Votes:

2020: 99.70% In Favour

2019: 99.73% In Favour 2018: 99.58% In Favour

 

Areas of Expertise:

 

·       Corporate

Governance

·       Financial

·       General

Management

·       Human

Resources

·       International

Business

·       Mergers/Acquisitions

·       Sustainability

·       Technical/Mining

 Board and Committee Meeting Attendance during
2020
  Regular Ad
Hoc		 Total
Board 4/4 8/13 12/17
Governance and Nomination Committee 3/3 1/1 4/4
Human Resources Committee(3) 4/4 3/3 7/7
Overall Attendance: 82%
Public Board Membership in the past 5 years and
Interlocking Directorships
N/A
Investment, Ownership and Total Value of Equity
  2021(5)
(March 22)
(#)		 2021(5)
Value ($)		 2020(6)
(May 8)
(#)		 2020(6)
Value
($)
Osisko Common Shares 10,500 139,860 10,500 139,860
Osisko DSUs 48,856 519,254 38,983 519,254
Value ($)   859,475   659,114
Ownership Requirement - Target Date to Meet

Target Attained in 2018

Mr. Christopher C. Curfman is a retired senior executive of Caterpillar Inc., one of the world's largest mobile equipment suppliers to the mining industry. During his 21-year career with Caterpillar, Mr. Curfman has held several progressive positions in Asia, Australia and USA, including Senior Vice President of Caterpillar and President of Caterpillar Global Mining from 2011 to his retirement at the end of 2015. Mr. Curfman also held senior positions with Deere & Company prior to joining Caterpillar. He has extensive international experience and a customer focused legacy at Caterpillar. His global leadership was key to Caterpillar's success in the mining industry. He also served as a board member at various organizations, including the Canadian Institute of Mining, the National Mining Association, the World Coal Association and several universities.

 

Mr. Curfman holds a Bachelor of Science degree in Education from Northwestern University, and has completed certificate programs in accounting and finance from the Wharton School of Business, University of Pennsylvania in 1991, a three-year executive program from Louisiana State University in 1997 and the executive program of Stanford Graduate School of Business in 2002. He was also awarded an Honorary Doctorate in Mining Engineering from the University Missouri-Rolla in 2013.

                   

 

 2021 Management Information Circular13

 

 


JOANNE
FERSTMAN

Ontario, Canada
Age: 53

 


Status: Independent(1)

 

Lead Director since:
April 2014

 

Annual Meeting Votes:

2020: 98.87% In Favour

2019: 97.89% In Favour

2018: 99.47% In Favour

 

Areas of Expertise:

 

·       Corporate

Governance

·       Financial

·       General

Management

·       Human

Resources

·       Mergers/Acquisitions

·       Information

Security Risk

Management

 Board and Committee Meeting Attendance during
2020
  Regular Ad
Hoc		 Total
Board 4/4 13/13 17/17
Audit and Risk Committee 4/4 3/3 7/7
Human Resources Committee(3) 4/4 2/3 6/6
Overall Attendance: 97%
Public Board Membership in the past 5 years and
Interlocking Directorships

·       Dream Unlimited Corp. ─ No interlock

·       Cogeco Communications Inc. ─ No interlock

·       ATS Automatic Tooling Systems ─ No interlock

·       Osisko Development Corp. - Interlock with Sean Roosen and Charles E. Page

·       Aimia Inc. (2008 - 2017)

·       Dream Office REIT (2003 - 2018)

 

 

 

 

 

  Investment, Ownership and Total Value of Equity
  2021(5)
(March 22) (#)		 2021(5)
Value
($)		 2020(6)
(May 8)
(#)		 2020(6)
Value
($)
Osisko Common Shares 19,500 282,360 19,500 259,740
Osisko DSUs 99,375 1,438,950 84,412  1,124,368
Osisko Debentures(7) 100 101,075 100 99,000
Value ($)   1,721,310   1,483,108
Ownership Requirement - Target Date to Meet
Target Attained in 2016
   

Ms. Joanne Ferstman is a corporate director, who has been serving on a number of public company boards and has over 20 years of progressive experience in the financial industry.  She was until 2012 President and Chief Executive Officer of Dundee Capital Market Inc., a full service investment dealer with principal businesses that include investment banking, institutional sales and trading, and private client financial advisory. She has held several leadership positions within Dundee Corporation and DundeeWealth Inc. over 18 years, primarily as Chief Financier Officer, where she was responsible for strategic development, financial and regulatory reporting and risk management.

 

Ms. Ferstman was appointed to the Board of Directors of Osisko Development Corp. as a nominee of the Corporation in accordance with the terms and conditions of an Investment Agreement.

 

Ms. Ferstman holds a Bachelor of Commerce and a Graduate degree in Public Accountancy from McGill University and is a Chartered Professional Accountant.

                     

 

142021 Management Information Circular 

 

 

 

W. MURRAY JOHN

British Columbia, Canada
Age: 62

Status: Independent(1)

Director since: February 2020

Annual Meeting Votes:

2020: 99.70% In Favour

 

Areas of Expertise:

 

·   Corporate Governance  

·   Financial  

·   General Management 

·   Human Resources 

·   International Business 

·   Mergers/Acquisitions 

·   Sustainability 

·   Technical/Mining

 Board and Committee Meeting Attendance during
2020
  Regular Ad
Hoc		 Total
Board(8) 4/4 12/13 16/17
Audit and Risk Committee(8) 4/4 3/3 7/7
Environmental and Sustainability Committee(3) 2/2 1/1 3/3
Overall Attendance: 96%
Public Board Membership in the past 5 years and
Interlocking Directorships

·   Discovery Metals Corp. - No Interlock 

·   O3 Mining Inc. - No Interlock  

·   Prime Mining Corp. - No Interlock 

·   Osisko Mining Inc. (2015 - 2018) 

·   Dundee Precious Metals Inc. (2005 - 2017)

 

 

 

 

 

Investment, Ownership and Total Value of Equity
  2021(5)
(March 22)
(#)		 2021(5)
Value
($)		 2020(6)
(May 8)
(#)		 2020(6)
Value
($)
Osisko Common Shares 10,000 144,800 25,000 333,000
Osisko DSUs 18,490 267,735 16,810 223,909
Value ($)   412,535   556,909
  Ownership Requirement - Target Date to Meet
Target attained in 2020

Mr. John currently is a corporate director, who has been serving on a number of public company. Prior to his retirement in December 2014, he was the President and Chief Executive Officer of Dundee Resources Limited, and Managing Director and a Portfolio Manager with Goodman & Company, Investment Counsel Inc., where he was responsible for managing Private Equity resource and precious metals focused mutual funds and flow-through limited partnerships. Mr. John has been involved with the resource investment industry since 1992 and has worked as an investment banker, buy-side mining analyst, sell-side mining analyst, and portfolio manager.

 

He graduated from the Camborne School of Mines in 1980 with a Bachelor of Science (Hons) in mining engineering and received an award from the Associateship of the Camborne School of Mines. Mr. John also received a Master of Business Administration from the University of Toronto in 1993.

                   

 

 2021 Management Information Circular15

 

 

PIERRE LABBÉ

Québec, Canada

Age: 55 

 

Status: Independent(1)

Director since: February 2015

Annual Meeting Votes:

2020: 99.52% In Favour

2019: 99.87% In Favour

2018: 99.74% In Favour

 

Areas of Expertise:

 

·   Corporate Governance  

·   Financial  

·   General Management 

·   International Business 

·   Mergers/Acquisitions 

·   Technical/Mining 

·   Information Security Risk Management

 

 Board and Committee Meeting Attendance during
2020
  Regular Ad
Hoc		 Total
Board 4/4 13/13 17/17
Audit and Risk Committee 4/4 3/3 7/7
Governance and Nomination Committee 3/3 1/1 4/4
Human Resources Committee(3)(9) 1/1 1/1 2/2
Overall Attendance: 100%
Public Board Membership in the past 5 years and
Interlocking Directorships
·   Agility Health Inc. (2013 - 2018)
Investment, Ownership and Total Value of Equity
  2021(5)
(March 22)
(#)		 2021(5)
Value
($)		 2020(6)
(May 8)
(#)		 2020(6)
Value
($)
Osisko Common Shares 6,145 88,980 6,145 81,851
Osisko DSUs 55,986 810,677 46,044 613,306
  Osisko Debentures(7) 25 25,269 25 24,750
Value ($)   924,926   719,907
Ownership Requirement - Target Date to Meet
Target Attainted in 2016

Mr. Pierre Labbé is Chief Financial Officer of IMV Inc., a clinical-stage biopharmaceutical company since March 2017. He has more than 30 years of progressive financial leadership roles in various industries. He was Vice President and Chief Financial Officer of Leddartech Inc. from April 2015 to March 2017 and was Vice President and Chief Financial Officer of the Québec Port Authority (October 2013 - April 2015). He also has experience in the resource sector, having served as Chief Financial Officer of Plexmar Resources (2007-2012), Sequoia Minerals (2003-2004), and Mazarin Inc. (2000-2003). Mr. Labbé, in his role as senior financial officer, has participated in the development of strategic plans and in mergers and acquisitions (over $1 billion in transactions). Mr. Labbé was a nominee to the Osisko Board by Virginia Mines Inc. as part of the Osisko-Virginia business combination in 2015.

 

Mr. Labbé holds a Bachelor's Degree in Business Administration and a license in accounting from Université Laval, Québec City. He is a member of Ordre des comptables professionnels agréés du Québec, the Chartered Professional Accountants of Canada and the Institute of Corporate Directors.

                   

 

162021 Management Information Circular 

 

 

 

CANDACE MACGIBBON

Ontario, Canada
Age: 46

 

Status: Independent(1)

Director since: January 2021

Annual Meeting Votes:

N/A

 

Areas of Expertise:

 

·   Corporate Governance  

·   Financial  

·   General Management 

·   Government Relations 

·   Human Resources 

·   International Business 

·   Mergers/Acquisitions 

·   Sustainability 

·   Technical/Mining 

 Board and Committee Meeting Attendance
during 2020
  Regular Ad
Hoc		 Total
Board(10) n/a n/a n/a
Overall Attendance: n/a
Public Board Membership in the past 5 years and
Interlocking Directorships

·   INV Metals Inc. - No Interlock 

·   Nickel 28 Capital Corp. (formerly Conic Metals Corp.)(11) - No Interlock 

·   Cobalt 27 Capital Corp. (2017 - 2019) 

  Investment, Ownership and Total Value of
Equity
  2021(5)
(March 22) (#)		 2021(5)
Value ($)		 2020(6)
(May 8) (#)		 2020(6)
Value ($)
  Osisko Common Shares nil nil n/a n/a
Osisko DSUs 15,800 228,784 n/a n/a
  Value ($)   228,784   n/a
Ownership Requirement - Target Date to Meet
Target to be attained by January 19, 2024
   

Ms. Candace MacGibbon has over 25 years of experience in the mining sector and capital markets. She is currently the Chief Executive Officer of INV Metals Inc., a Canadian mineral resource company focused on the development and exploration of the Loma Larga gold property in Ecuador. Ms. MacGibbon has a deep understanding of the capital markets as a result of her previous employment as a global mining institutional salesperson with RBC Capital Markets and in base metals research as a mining associate with BMO Capital Markets.

 

Ms. MacGibbon is a chartered professional accountant and her financial and accounting experience includes her previous role as chief financial officer of INV Metals, as well as her prior employment with Deloitte LLP.

 

Ms. MacGibbon holds a Bachelor of Arts - Economics from the University of Western Ontario and a Diploma in Accounting from Wilfrid Laurier University.

                     

 

 2021 Management Information Circular17

 

 

CHARLES E. PAGE

Ontario, Canada
Age: 69

 

Status: Independent(1)

Director since: April 2014

Annual Meeting Votes

2020: 99.74% In Favour
2019: 99.91% In Favour

2018: 99.57% In Favour

 

Areas of Expertise:

 

·   Corporate Governance  

·   Financial 

·   General Management 

·   Government Relations 

·   Human Resources  

·   International Business 

·   Mergers/Acquisitions 

·   Sustainability 

·   Technical/Mining 

 Board and Committee Meeting Attendance during
2020
  Regular Ad
Hoc		 Total
Board 4/4 12/13 16/17
Audit and Risk Committee 4/4 3/3 7/7
Human Resources Committee(3) 3/3 1/2 4/5
Environmental and Sustainability Committee(3) 2/2 1/1 3/3
Overall Attendance 94%
Public Board Membership in the past 5 years and Interlocking Directorships

·   Osisko Development Corp. - Interlock with Joanne Ferstman and Sean Roosen 

·   Unigold Inc. - No interlock 

·   Wesdome Gold Mines Ltd. (2015 - 2019)

 

Investment, Ownership and Total Value of Equity
  2020(5)
(March 22)
(#)		 2020(5)
Value
($)		 2020(6)
(May 8)
(#)		 2020(6)
Value
($)
Osisko Common Shares 55,215 799,513 55,215 735,464
Osisko DSUs 66,318 960,285 56,276 749,596
  Value ($)   1,759,798   1,485,060
Ownership Requirement - Target Date to Meet
Target Attained in 2014
   

Mr. Charles E. Page is a corporate director and has more than 40 years of experience in the mineral industry. During his career, Mr. Page has held progressive leadership roles in developing strategies to explore, finance and develop mineral properties in Canada and internationally. Mr. Page worked at Queenston Mining Inc. in various capacities, including President and Chief Executive Officer, from 1990 to its sale to Osisko Mining Corporation in 2012.

 

Mr. Page was appointed to the Board of Directors of Osisko Development Corp. as a nominee of the Corporation in accordance with the terms and conditions of an Investment Agreement.

 

Mr. Page holds a Bachelor of Science degree in Geological Science from Brock University and a Master of Science degree in Earth Science from the University of Waterloo. He is a Professional Geologist registered in the province of Ontario and Saskatchewan and is also a Fellow of the Geological Association of Canada.

                     

 

182021 Management Information Circular 

 

 

 

SEAN ROOSEN

Québec, Canada

Age: 57

 

Status: Non Independent(1)

Director since: April 2014

Annual Meeting Votes:

2020: 96.91% In Favour

2019: 96.07% In Favour

2018: 98.84% In Favour

 

Areas of Expertise:

 

·   Corporate Governance  

·   Financial  

·   General Management 

·   Government Relations 

·   Human Resources 

·   International Business 

·   Mergers/Acquisitions 

·   Sustainability 

·   Technical/Mining

 Board and Committee Meeting Attendance during 2020
  Regular Ad Hoc Total
Board 4/4 13/13 17/17
Overall Attendance: 100%
Public Board Membership in the past 5 years and Interlocking Directorships

·   Osisko Development Corp. ─ Interlock with Joanne Ferstman and Charles E. Page 

·   Osisko Mining Inc. ─ No Interlock  

·   Victoria Gold Corp. ─ No Interlock 

·   Barkerville Gold Mines Ltd. (2015 - 2019) 

·   Condor Petroleum Inc. (2011 - 2019) 

·   Dalradian Resources Inc. (2010 - 2018) 

·   Falco Resources Ltd. (2014 - 2019)

 

Investment, Ownership and Total Value of Equity
  2021(5)
(March 22)
(#)		 2021(5)
Value
($)		 2020(6)
(May 8)
(#)		 2020(6)
Value
($)

 

 

 Osisko Common Shares 584,183 8,458,970 649,659 8,653,458
Osisko RSUs 244,662 3,542,706 203,265 2,707,490
Value ($)   12,001,676   11,360,948
Ownership Requirement - Target Date to Meet
Target Attainted in 2014
Options

Grant
Date

(mm-dd-yy)

 Expiry
Date
(mm-dd-yy)		 Options
(#)		 Exercise
Price
($)

Total Unexercised

(#)

Value of
Unexercised
Options(12)

($)

06-07-17 -
03-01-21		 06-07-22 -
03-01-24		 517,930 12.19 -16.66 517,930 469,528

Mr. Sean Roosen is a founding member of the Corporation and he was appointed Executive Chair of the Board of Directors on November 25, 2020. Prior to that, he was Chief Executive Officer and Chair of the Board of Directors of the Corporation. Mr. Roosen was a founding member of Osisko Mining Corporation (2003) and of EurAsia Holding AG, a European venture capital fund.

 

Mr. Roosen has over 30 years of progressive experience in the mining industry. As founder, President, Chief Executive Officer and Director of Osisko Mining Corporation, he was responsible for developing the strategic plan for the discovery, financing and development of the Canadian Malartic Mine. He also led the efforts for the maximization of shareholders' value in the sale of Osisko Mining Corporation, which resulted in the creation of Osisko. Mr. Roosen is an active participant in the resource sector and in the formation of new companies to explore for mineral deposits both in Canada and internationally.

 

In 2017, Mr. Roosen received an award from Mines and Money Americas for best Chief Executive Officer in North America and was, in addition, named in the "Top 20 Most Influential Individuals in Global Mining".

 

In prior years, he has been recognized by several organizations for his entrepreneurial successes and his leadership in innovative sustainability practices. Mr. Roosen is a graduate of the Haileybury School of Mines.

 

Mr. Roosen serves on the board of directors of Osisko Mining Inc. ("Osisko Mining") as a representative of Osisko.

                         

 

 2021 Management Information Circular19

 

 

SANDEEP SINGH

Ontario, Canada
Age: 41

 

Status: Non Independent(1)

Director since: November 2020

Annual Meeting Votes:

N/A

 

Areas of Expertise:

 

·   Corporate Governance

·   Financial 

·   General Management 

·   Government Relations 

·   Human Resources 

·   International Business 

·   Mergers/Acquisitions

·   Sustainability 

·   Technical/Mining 

 Board and Committee Meeting Attendance during 2020
  Regular Ad Hoc Total
Board(13) n/a n/a n/a
Overall Attendance: n/a
Public Board Membership in the past 5 years and
Interlocking Directorships
N/A
    Investment, Ownership and Total Value of Equity
    2021(5)
(March 22)
(#)		 2021(5)
Value
($)		 2020(6)
(May 8)
(#)		 2020(6)
Value
($)
Osisko Common Shares 139,795 2,024,232 Nil Nil
Osisko RSUs 281,201 4,071,790 225,000 2,997,000
Value ($)   6,096,022   2,997,000
Ownership Requirement - Target Date to Meet
Target attained in 2020
Options
  Grant
Date
(mm-dd-yy)		 Expiry
Date
(mm-dd-yy)		 Options
(#)		 Exercise
Price
($)		 Total Unexercised
(#)		 Value of
Unexercised
Options(12)
($)
  12-31-19 -
03-01-21		 05-15-25
12-31-26		 687,400 12.70 -
13.50		 687,400 1,024,052

Mr. Sandeep Singh joined Osisko as President in January 2020. He became President and Chief Executive Officer in November 2020. For the fifteen years prior, Mr. Singh was an investment banker in the metals and mining industry where he advised numerous mining companies on growth and financing strategies with Maxit Capital (2014 - 2020), Dundee Securities (2010 - 2014) and BMO Capital Markets (2005 - 2010). As co-founder of Maxit Capital, he was instrumental in building an independent and highly successful advisory firm, which acted on some of the most complex and value-enhancing transactions in the mining sector.

 

Mr. Singh holds a Bachelor of Mechanical Engineering degree from Concordia University and a Masters of Business Administration degree from Oxford University.

 

                                 

NOTES:
(1)  "Independent" refers to the standards of independence established in sections 1.4 and 1.5 of the Regulation 52-110 respecting Audit and Risk Committees ("Regulation 52-110").
(2)  Mr. John R. Baird was appointed to the Board of Directors on April 6, 2020.

(3)  Following the annual meeting of Shareholders held on June 22, 2020, the mandate of the Human Resources and Sustainability Committee was divided between two standing Committees of the Board, namely the Human Resources Committee and the newly formed Environmental and Sustainability Committee.
(4)  Effective June 22, 2020, Mr. Baird was appointed to the Environmental and Sustainability Committee and Governance and Nomination Committee.
(5)  The 2021 Value is equal to, as applicable, the sum of: (i) the product of the closing price of the Common Shares of the Corporation on the Toronto Stock Exchange ("TSX") on March 22, 2021, being $14.48, by the number of Common Shares, DSUs and RSUs held at such date; and (ii) the face value of debentures held.
(6)  The 2020 Value is equal to, as applicable, the sum of: (i) the product of the closing price of the Common Shares of the Corporation on TSX on May 8, 2020, being $13.32 (as disclosed in the management information circular of the Corporation dated May 8, 2020) by the number of Common Shares, DSUs and RSUs held at such date; and (ii) the face value of debentures held.
(7)  Value of Debentures is not taken into account in the determination of securities ownership requirement.
(8)  Mr. Murray John was appointed to the Board of Directors on February 19, 2020 and was appointed to the Audit and Risk Committee and the Environmental and Sustainability Committee on June 22, 2020.
(9)  Effective June 22, 2020, Mr. Labbé was appointed to the Human Resources Committee.
(10)  Ms. Candace MacGibbon was appointed to the Board of Directors on January 19, 2021.
(11)  Ms. MacGibbon will not stand for re-election for the Nickel 28 Capital Corp. (formerly Conic Metals Corp.) board of directors, which term is expected to terminate in 2021.
(12)  "Value of Unexercised Options" is calculated on the basis of the difference between the closing price of the Common Shares on the TSX on March 22, 2021, being $14.48, and the exercise price of the options, multiplied by the number of unexercised options (vested or non-vested) held as at such date.
(13)  Mr. Sandeep Singh was appointed to the Board of Directors on November 25, 2020. As part of his 2019 hiring terms, Mr. Singh was granted 250,000 Initial Options of the Corporation vesting in four equal tranches of 25% over a period of 4 years and having a term of 7 years.

 

202021 Management Information Circular 

 

 

 

 VOTING RESULTS OF 2020 ANNUAL MEETING

 

The voting results for the election of directors at the 2020 annual meeting of Shareholders of the Corporation were as follows:

 

  VOTES FOR   VOTES WITHHELD 
NAME OF NOMINEE  Number   %   Number       % 
John R. Baird   119,475,799    99.65    425,058    0.35 
Françoise Bertrand   119,462,309    99.63    438,548    0.37 
John Burzynski   98,081,698    81.80    21,819,159    18.20 
Christopher C. Curfman   119,541,059    99.70    359,798    0.30 
Joanne Ferstman   118,540,387    98.87    1,360,470    1.13 
W. Murray John   119,546,602    99.70    354,255    0.30 
Pierre Labbé   119,320,100    99.52    580,757    0.48 
Charles E. Page   119,593,070    99.74    307,787    0.26 
Sean Roosen   116,192,479    96.91    3,708,378    3.09 

 

TENURE OF THE BOARD

 

The following table illustrates the age group, gender, applicable tenure and location of residence for each of the nominee non-executive directors:

 

 

2020 BOARD AND COMMITTEE ATTENDANCE RECORD

 

The table below reflects the record of attendance by directors at meetings of the Board of Directors and its standing Committees, as well as the total number of Board and Committee meetings held during the most recently completed financial year:

 

 2021 Management Information Circular21

 

 

    ATTENDANCE - 2020 MEETINGS         TOTAL  
   Board of Directors    Audit and Risk Committee    Human Resources
Committee 		    Governance and
Nomination Committee		    Environmental and Sustainability Committee    Committees     Overall  
Member   Number    %    Number    %    Number    %    Number   %    Number    %    Number and %     Number and %  
BAIRD,
John R.(1)		   14/14   100    -    -    -    -    1/1   100    3/3   100    4/4
100		    18/18
100		 
BERTRAND,
Françoise		   17/17   100    -    -    7/7   100    4/4   100    -    -    11/11
100		    28/28
100		 
BURZYNSKI,
John		   16/17   94    -    -    -    -    -   -    -    -    -    16/17
94		 
CURFMAN,
Christopher C.		   12/17   71    -    -    7/7   100    4/4   100    -    -    11/11
100		    23/28
82		 
FERSTMAN,
Joanne		   17/17   100    7/7   100    6/7   86    -   -    -    -    12/13
93		    30/31
97		 
JOHN, W.
Murray(2)		   16/17   94    4/4   100    -    -    -   -    3/3   100    7/7
100		    23/24
96		 
LABBÉ,
Pierre		   17/17   100    7/7   100    2/2   100    4/4   100    -    -    13/13
100		    30/30
100		 
MACGIBBON,
Candace(3)		   n/a    n/a    n/a    n/a    n/a    n/a    n/a   n/a    n/a    n/a    n/a    n/a 
PAGE,
Charles E		   16/17   94    7/7   100    4/5   80    -   -    3/3   100    14/15
93		    30/32
94		 
ROOSEN,
Sean		   17/17   100    -    -    -    -    -   -    -    -    -    17/17
100		 
SINGH,
Sandeep(4)		   n/a    n/a    n/a    n/a    n/a    n/a    n/a   n/a    n/a    n/a    n/a    n/a 
Total (%)   95    100    91    100    100    98    96 

 

NOTES: 

 

(1) Mr. John R. Baird was appointed to the Board of Directors on April 6, 2020. 

(2) Mr. W. Murray John was appointed to the Board of Directors on February 19, 2020. 

(3) Ms. Candace MacGibbon was appointed to the Board of Directors on January 19, 2021. 

(4) Mr. Sandeep Singh was appointed to the Board of Directors on November 25, 2020.

 

A private session is included in the agenda of every Board and Committee meeting and the non-executive directors or the Committee members have the prerogative to hold such private session or not at their discretion. At the request of the directors or the Committee members, attendance of certain members of Management of the Corporation may be required from time to time.

 

The table below displays the total number of private sessions held by non-executive directors during the most recently completed financial year:

 

    Board of Directors    Audit and Risk Committee    Human Resources Committee    Governance and Nomination Committee    Environmental and Sustainability Committee 
    Regular    Ad Hoc    Regular    Ad Hoc    Regular    Ad Hoc    Regular    Ad Hoc    Regular    Ad Hoc 
Number of Private Sessions held with Management:   4 of 4    7 of 17    4 of 4    Nil    1 of 4    1 of 3    Nil    Nil    Nil    Nil 
Number of Private Sessions held without Management:   4 of 4    7 of 17    4 of 4    3 of 3    4 of 4    3 of 3    Nil    Nil    1 of 2    Nil 

 

222021 Management Information Circular 

 

 

DIRECTOR COMPENSATION

 

retainer, attendance fees and share-based remuneration

 

The Human Resources Committee (the "HR Committee") oversees non-executive directors' compensation and determines, from time to time, the respective value of the annual retainer and DSU grant to be made to non-executive directors and makes its recommendation to the Board of Directors.

 

In the summer of 2020, the HR Committee mandated Hugessen Consulting Inc. ("Hugessen") to assist the HR Committee to review and assess the non-executive directors' compensation.  To assess the competitiveness of the Corporation's non-executive director compensation on a comparable basis, Hugessen conducted an analysis using data sourced from the most recent public proxy filings of the peer group of companied listed on page 30 of this Circular.

 

Hugessen's analysis was also conducted using a standardized Board structure and four (4) director profiles, namely: (i) a director who is a member of two Committees;  (ii) Chair of the Audit and Risk Committee and member of the HR Committee; (iii) Chair of the HR Committee and member of the Governance and Nomination Committee; and (iv) the Chair of the Board and Lead Director, collectively (the "Director Profile").

 

In December 2020, the HR Committee received and discussed the findings of Hugessen's benchmarking review and analysis, and concluded that the base retainer and meeting fees are reasonable and align the interests of the directors with those of Shareholders over the long-term, particularly as equity is delivered in the form of DSUs.  However, with respect to the based retainer of the Chair of the HR Committee and other Committees, the HR Committee recommended to the Board of Directors in February 2021 to increase the annual retainer of the Chair of the HR Committee to $20,000 and other Committees to $15,000. The Board approved such recommendation, effective as of January 1st, 2021.

 

An annual retainer and attendance fees for Board and Committee service are paid on a quarterly basis to non-executive directors only.

 

The Board of Directors makes fixed value DSU grants to non-executive directors. The Board of Directors adopted the DSU plan (the "DSU Plan"), which is further described below under the heading "Deferred Share Unit Plan", and elected to fix an annual value to such grant at approximately $120,000 for the non-executive Board members and approximately $180,000 for the lead director ("Lead Director"). Furthermore, each new non-executive director is granted an initial one-time grant having a value of approximately $200,000. The Lead Director is granted an initial one-time grant having a value of approximately $300,000. Such initial DSU grants (the "Initial DSU Grants") are consistent with the practice of welcoming new non-executive Board members by making an initial long-term incentive award. With respect to the annual grant of DSUs to a non-executive director in the year following the receipt of the Initial DSU Grant, such annual grant is pro-rated to take into account that the Initial DSU Grant shall cover an initial period of twelve (12) months.

 

All annual and initial DSU grants, as well as annual retainers and attendance fees paid to non-executive directors are described below (effective as of January 1st, 2021):

 

ANNUAL RETAINERS — Board  RETAINERS
AND FEES
($)		 
Non-executive director of the Board   40,000 
Additional retainer allocated to the Lead Director of the Board   60,000 
ANNUAL RETAINERS — Committees/Members and Chairs   ($) 
Chair of the Audit and Risk Committee   20,000 
Chair of the HR Committees(1)   20,000 
Chair of all other Committees(1)   15,000 
Non-executive member of a Committee   5,000 
PER MEETING FEES — Attendance/Travel   ($) 
Board and Committee Meeting Attendance Fees
(in person or via conference call)		   1,500 
Special Committee Meeting Attendance Fees
(in person or via conference call)		   1,500 

 

 

 2021 Management Information Circular23

 

 

ANNUAL RETAINERS — Board  RETAINERS
AND FEES
($)		 
Board and Committee Meeting Per Diem Fee
(payable to non-executive directors who are required to travel for at least four hours to attend a meeting)		   1,000 
DSUs — Initial and Annual ($ Value)   ($) 
Annual grant to the Lead Director of the Board(2)   180,000 
Annual grant to a non-executive director of the Board(2)   120,000 
Initial one-time grant to the Lead Director   300,000 
Initial one-time grant to a new non-executive director   200,000 

 

NOTES:

 

(1) The annual retainer applicable to the Chair of the HR Committee and all other Committees for the financial year ended December 31, 2020 was $10,000. 

(2) With respect to the annual grant of DSUs to a non-executive director in the year following the receipt of the Initial DSU Grant, such annual grant is pro-rated to take into account that the Initial DSU Grant shall cover an initial period of twelve (12) months.

 

director compensation table

 

The total value of retainers, attendance fees and share-based awards paid by the Corporation to non-executive directors in respect of meetings of the Board and its standing Committees during the most recently completed financial year was $1,939,045. The following table provides a summary of the compensation received by each non-executive director of the Corporation for the most recently completed financial year:

 

Name(1)  Fees
Earned
($)		   Share-Based
Awards
($)(2)		   Option-Based
Awards
($)		   Non-Equity Incentive
Plan Compensation
($)		   Pension
Value
($)		   All Other
Compensation(3)
($)		   Total
($)
John R. Baird(4)        57,060    209,081    -    -    -    -   266,141
Françoise Bertrand        94,000    120,000    -    -    -    -   214,000
John Burzynski        62,500    120,000    -    -    -    -   182,500
Christopher C. Curfman        83,000    120,000    -    -    -    -   203,000
Joanne Ferstman        167,000    180,000    -    -    -    -   347,000
W. Murray John(5)        75,335    219,459    -    -    -    -   294,794
Pierre Labbé        99,610    120,000    -    -    -    -   219,610
Charles E. Page        92,000    120,000    -    -    -    -   212,000

 

NOTES:
 
(1) Mr. Sean Roosen, Executive Chair of the Board of the Corporation (formerly Chair and Chief Executive Officer) and Mr. Sandeep Singh, President and Chief Executive Officer of the Corporation, do not receive any compensation as directors of the Corporation. Mr. Roosen's and Mr. Singh's compensation is further disclosed in the Summary Compensation Table and elsewhere in this Circular.
(2) Share-based awards in the form of Initial DSU Grants were made under the DSU Plan as fully described under the heading "Long-term Incentive Compensation". The value price of each DSU at the date of the annual grant, as per the terms of the DSU Plan, was $12.82 for all non-executive directors, except for Mr. Baird and Mr. John for whom the value price of their initial grant was respectively $11.08 and $11.95.
(3) Directors traveling more than 4 hours to attend meetings are entitled to a $1,000 per diem.
(4) Mr. John R. Baird was appointed to the Board of Directors on April 6, 2020, therefore, the retainer and attendance fee payments took effect upon his appointment.
(5) Mr. W. Murray John was appointed to the Board of Directors on February 19, 2020, therefore, the retainer and attendance fee payments took effect upon his appointment.
                 

 

The following table sets forth in detail each component of the total retainer, attendance fees and per diem paid to each non-executive directors during the financial year ended December 31, 2020:

 

Annual Retainer(1)(2)  Attendance Fees and Per Diem(3) 
Name 

Board
Member

($)

   Committee
Member
($)		   Committee
Chair
($)		   Board
Meetings
($)		   Committee
Meetings
($)		   Per
Diem
($)		   Total
Fees
($)		 
John R.Baird(4)   29,340    5,220    -    16,500    6,000    -    57,060 
Françoise Bertrand   40,000    5,000    10,000    22,500    16,500    -    94,000 
John Burzynski   40,000    -    -    22,500    -    -    62,500 
Christopher C. Curfman   40,000    10,000    -    16,500    16,500    -    83,000 
Joanne Ferstman   100,000    5,000    20,000    22,500    19,500    -    167,000 
W. Murray John(5)   34,505    2,610    5,220    22,500    10,500    -    75,335 
Pierre Labbé   40,000    7,610    10,000    22,500    19,500    -    99,610 
Charles E. Page   40,000    10,000    -    21,000    21,000    -    92,000 
TOTAL:   363,845    45,440    45,220    166,500    109,500    -    730,505 

 

242021 Management Information Circular 

 

 

NOTES:
 
(1) Mr. Sean Roosen, Executive Chair of the Board of the Corporation (formerly Chair and Chief Executive Officer) and Mr. Sandeep Singh, President and Chief Executive Officer of the Corporation, do not receive any compensation as directors of the Corporation. Mr. Roosen's and Mr. Singh's compensation is further disclosed in the Summary Compensation Table and elsewhere in this Circular.
(2) Share-based awards in the form of Initial DSU Grants were made under the DSU Plan as fully described under the heading "Long-term Incentive Compensation". The value price of each DSU at the date of the annual grant, as per the terms of the DSU Plan, was $12.82 for all non-executive directors, except for Mr. Baird and Mr. John for whom the value price of their initial grant was respectively $11.08 and $11.95.
(3) Directors traveling more than 4 hours to attend meetings are entitled to a $1,000 per diem; Mr. John did not travel to attend meetings in person in 2020 given the COVID-19 pandemic.
(4) Mr. John R. Baird was appointed to the Board of Directors on April 6, 2020, therefore, the retainer and attendance fee payments took effect upon his appointment.
(5) Mr. W. Murray John was appointed to the Board of Directors on February 19, 2020, therefore, the retainer and attendance fee payments took effect upon his appointment.

 

Deferred Share Unit Plan

 

The Corporation's DSU Plan, which is in effect since the date of its assent, April 30, 2014, was adopted to enhance the Corporation's ability to attract and retain talented individuals to serve as members of the Board of Directors or as officers and executives of the Corporation and its subsidiaries and to promote alignment of interests between such individuals and Shareholders of the Corporation. In March 2019, the Board of Directors approved amendments to the Corporation's DSU Plan, which now provides for the right to receive upon settlement a payment either in the form of Common Shares, cash or a combination of Common Shares and in cash (the "Amended DSU Plan").

 

For the most recently completed financial year, 19,330 Common Shares of the Corporation have been issued under the Amended DSU Plan to a former director.

 

The Board of Directors may grant DSUs on a discretionary basis. The number of DSUs credited to a director's account is calculated on the basis of the closing price of the Common Shares of the Corporation traded on the TSX on the day prior to the date of grant. Additional DSUs will automatically be granted to each participant whenever dividends are paid on the Common Shares of the Corporation.

 

As at December 31, 2020, the aggregate value of DSUs held by the Corporation's non-executive directors was $6,590,137.

 

Outstanding Share-Based Awards and Option-Based Awards

 

The table below sets forth, for each non-executive director, information regarding option-based and share-based awards outstanding as at December 31, 2020.

 

   Option-based awards    Share-based awards  
Name(1)   Number of
securities
underlying
unexercised
options
(#)		    Option
exercise
price
($)		    Option
expiration
date
(yyyy-mm-dd)		    Value of
unexercised
in-the-
money
options(2) 
($)		    Number of
shares
or units of
shares
that have not
vested(3) 
(#)		    Market or payout
value of share-based
awards that have
not vested(3) 
($)		     Market or
payout value
of vested
share-based
awards not paid
out or
distributed(3) 
($)		  
John R. Baird(4)   -    -    -    -    18,755    302,518    - 
Françoise Bertrand(5)   -    -    -    -    9,400    151,622    861,342 
John Burzynski(5)   17,850(6)
2,677(6)
2,677(6)		    24.72
18.07
12.19		    2022-06-30
2022-12-08
2024-01-31		    10,547    9,400    151,622    408,089 
Christopher C. Curfman   -    -    -    -    9,400    151,622    604,875 
Joanne Ferstman   -    -    -    -    14,000    225,820    1,296,852 
W. Murray John(7)   -    -    -    -    18,240    294,211    - 
Pierre Labbé   -    -    -    -    9,400    151,622    710,817 
Charles E. Page   -    -    -    -    9,400    151,622    864,568 

 

 2021 Management Information Circular25

 

 

 

 

NOTES:
 
(1) Mr. Sean Roosen, Executive Chair of the Board of the Corporation (formerly Chair and Chief Executive Officer) and Mr. Sandeep Singh, President and Chief Executive Officer of the Corporation, do not receive any compensation as directors of the Corporation. Mr. Roosen's and Mr. Singh's compensation is further disclosed in the Summary Compensation Table and elsewhere in this Circular.
(2) The closing price of the Common Shares of the Corporation on the TSX on December 31, 2020 was $16.13
(3) All DSUs granted by the Corporation in 2020 vest on the day prior to the next annual meeting of Shareholders following such grant.
(4) Mr. John R. Baird was appointed to the Board on April 6, 2020.
(5) Ms. Françoise Bertrand and Mr. John Burzynski will not stand for re-election at the annual meeting of Shareholders to be held on May 12, 2021.
(6) The number of unexercised options represent Replacement Osisko Options pursuant to a plan of arrangement involving Osisko and Barkerville, which took effect on November 21, 2019.
(7) Mr. W. Murray John was appointed to the Board of Directors on February 19, 2020.

 

Incentive Plan Awards - Value Vested or Earned during the Year

 

The following table discloses the aggregate dollar value that would have been realized during the year ended December 31, 2020 if the DSUs and options awards had been exercised on their respective vesting date and the aggregate value realized upon vesting of option-based awards and share-based awards.

 

Name 

Option-Based
Awards
Value Vested during
the Year

($)

  Share-Based Awards
(DSUs) 
Value Vested during
the year(1)(2)
($)		   Non-Equity Incentive Plan
Compensation
Value earned during the Year(3)
($)
John R. Baird(4)  N/A    N/A   N/A
Françoise Bertrand(5)  N/A   112,816   N/A
John Burzynski(5)  N/A   112,816   N/A
Christopher C. Curfman  N/A   112,816   N/A
Joanne Ferstman  N/A   169,224   N/A
W. Murray John(6)  N/A   N/A   N/A
Pierre Labbé  N/A   112,816   N/A
Charles E. Page  N/A   112,816   N/A

 

NOTES:

 

(1)Unless otherwise decided by the Board of Directors, all DSUs granted by the Corporation vest on the day prior to the next annual meeting of Shareholders following such grant.
(2)Furthermore, the value of vested DSUs is based on the closing price of the Common Shares on the TSX one day prior to the annual meeting of shareholders held on June 22, 2020, being $12.82 multiplied by the number of DSUs vested in 2020.
(3)The Corporation's Non-Equity Incentive Plan Compensation does not apply to non-executive directors.
(4)Mr. Baird was appointed to the Board of Directors on April 6, 2020.
(5)Ms. Françoise Bertrand and Mr. John Burzynski will not stand for re-election at the annual meeting of Shareholders to be held on May 12, 2021.
(6)Mr. W. Murray John was appointed to the Board of Directors on February 19, 2020.

 

Options Exercised during the Year

 

No options were exercised by directors during the financial year ended December 31, 2020. Under the Corporation's stock option plan (the "Stock Option Plan"), non-executive directors are not eligible to option grants.

 

Settlement of DSUs

 

On December 10, 2020, a former director of the Corporation, requested the settlement of all his DSUs.  Accordingly, 20,196 DSUs were settled at a price of $14.47, being the closing market price on the TSX on December 9, 2020, for the total issue of 19,330 Common Shares of the Corporation, net of tax withholdings.

 

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

 

To the Corporation's knowledge, no proposed director is, at the date of this Circular, has been, within 10 years before the date of this Circular, a director, chief executive officer or chief financial officer of any company (including the Corporation) that, (i) while the proposed director was acting in that capacity, was the subject of a cease trade order or similar order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days, or (ii) after the proposed director ceased to act in that capacity but which resulted from an event that occurred while that person was acting in such capacity, was the subject of a cease trade order or similar order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days.

 

26   2021 Management Information Circular 

 

 

To the Corporation's knowledge, no proposed director is, as at the date of this Circular, or has been, within 10 years before the date of this Circular, a director or executive officer of any company that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets, except for Mr. W. Murray John, who was a director of insolvent African Minerals Limited, a company who appointed Deloitte LLP as its administrator by order of the High Court of Justice, Chancery Division, Companies Court on March 26, 2015.

 

In addition, to the knowledge of the Corporation, no proposed director has, within 10 years before the date of this Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold his assets.

 

Furthermore, to the knowledge of the Corporation, no proposed director has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority, or has been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable Shareholder in deciding whether to vote for a proposed director.

 

STATEMENT OF EXECUTIVE COMPENSATION

 

compensation governance

 

The Board of Directors of Osisko is responsible for establishing and administrating a compensation program for the Executive Chair (formerly the Chair and Chief Executive Officer), the President and Chief Executive Officer, and the Named Executive Officers (collectively "Named Executives") of the Corporation. The Board of Directors has delegated the oversight of the compensation program and human resources matters to the HR Committee, which is composed entirely of independent directors.

 

The HR Committee has the responsibility to ensure that the Corporation attracts and retains senior leadership team that will develop and execute a strategic plan, with a view to deliver superior value over the long-term to the Corporation's Shareholders and other stakeholders. In carrying out its duties, the HR Committee consults the Executive Chair, the President and Chief Executive Officer, the Chief Financial Officer and the Vice President, Legal Affairs and Corporate Secretary.  The HR Committee may also hire and retain, from time to time, the services of external consultants, at its discretion. The HR Committee also reviews various senior management development programs, as well as a succession plan for key positions.

 

The Corporation also engages with Shareholders with respect to compensation matters in addition to submitting to its Shareholders annually an advisory resolution on Osisko's approach to executive compensation.  The HR Committee assesses the compensation structure on an annual basis in order to ensure that it is aligned with Shareholders' interests.

 

Composition of the Human Resources Committee

 

The HR Committee is currently comprised of the following four directors: Ms. Françoise Bertrand (Chair), Mr. Christopher Curfman, Ms. Joanne Ferstman and Mr. Pierre Labbé, all of whom are independent as defined under Regulation 52-110. Ms. Bertrand is not standing for re-election at the Meeting.

 

Relevant Education and Experience of Members of the HR Committee

 

The Board recognizes the importance of appointing independent, knowledgeable and experienced members to the HR Committee, who have the necessary background in executive compensation and risk management to fulfill the HR Committee's duties and responsibilities. All members of the HR Committee have extensive experience as described in the directors' biographies outlined previously. Specifically, they bring the following experience and skills set to the HR Committee:

 

 

 2021 Management Information Circular   27

 

 

Ms. Françoise Bertrand

Ms. Bertrand has extensive experience in leadership roles of public, private and not for profit organizations. She brings compensation and talent management insights to the HR Committee. Ms. Bertrand has previous experience on Human Resources/Compensation Committees of public companies, including chairing the Compensation Committee of a large entrepreneurial public media company.  Notwithstanding the designation of the HR Committee throughout the years, Ms. Bertrand has been a member of the Human Resources Committee since February 2015.

Mr. Christopher Curfman

Mr. Curfman brings to the HR Committee more than 21 years of experience in the mining industry. He has held several progressive positions in Asia, Australia and USA, including Senior Vice President of Caterpillar and President of Caterpillar Global Mining. He has extensive international experience and an in-depth knowledge of mining operations. His global leadership was key to Caterpillar's success in the mining industry. He also served as a board member at various organizations, including the Canadian Institute of Mining, the National Mining Association, the World Coal Association and several universities.  Notwithstanding the designation of the HR Committee throughout the years, Mr. Curfman has been a member of the Human Resources Committee since May 2018.

Ms. Joanne Ferstman

Ms. Ferstman's experience includes the development, implementation and maintenance of compensation programs in the financial industry and in an entrepreneurial environment as well as negotiation of executive employment. As a professional accountant, Ms. Ferstman also has experience in risk management with respect to compensation management. She is Chair of the Corporation's Audit and Risk Committee and has many years of experience as chair and member of Human Resources/Compensation Committees of other public companies. She meets regularly with external compensation consultants and is up to date on compensation trends and philosophies. Notwithstanding the designation of the HR Committee throughout the years, Ms. Ferstman has been a member of the Human Resources Committee since June 2014.

Mr. Pierre Labbé

Mr. Pierre Labbé is Chief Financial Officer of IMV Inc., a clinical-stage biopharmaceutical company since March 2017.  He has more than 30 years of progressive financial leadership roles in various industries. He was Vice President and Chief Financial Officer of Leddartech Inc. from April 2015 to March 2017 and was Vice President and Chief Financial Officer of the Québec Port Authority (October 2013 - April 2015). He also has experience in the resource sector, having served as Chief Financial Officer of Plexmar Resources (2007-2012), Sequoia Minerals (2003-2004), and Mazarin Inc. (2000-2003). Mr. Labbé, in his role as senior financial officer, has participated in the development of strategic plans and in mergers and acquisitions (over $1 billion in transactions). Mr. Labbé was a nominee to the Osisko Board by Virginia Mines Inc. as part of the Osisko-Virginia business combination in 2015. He has been appointed member of the Human Resources Committee in June 2020.

 

Work Performed by the Human Resources Committee

 

The following summarizes the work highlights performed by the HR Committee in relation to the 2019 - 2020 exercise:

 

Compensation Matters

 

·Reviewed the organizational structure of the Corporation, including the hiring of executives;

 

·Reviewed the Corporation's compensation philosophy;

 

·Reviewed and recommended the approval of the 2019 short-term incentive payout;

 

·Reviewed and recommended to the Board of Directors the approval of the 2020 corporate objectives under the short-term incentive program. The HR Committee monitored the performance against these objectives and in early 2021, conducted a detailed review of the achievements of the executives, and recommended the annual payout;

 

·Reviewed and amended the policy on the prevention of psychological and sexual harassment in the workplace and the handling of complaints;

 

·Reviewed and amended the Corporation's equity plans reducing the number of issued and outstanding shares for each of the Employee Share Purchase Plan (0.1%), the Stock Option Plan (4%) and the RSU Plan (1.8%) and clarifying that only an increase to the number of Common Shares issuable under these plans is subject to Shareholder approval in compliance with the TSX rules;

 

28   2021 Management Information Circular 

 

 

·Retained the services of Hugessen to assist the HR Committee in assessing the 2017 Long-term incentive payout;

 

·Monitored the long-term incentive programs (options and RSUs), including the performance against established objectives, which was further assessed by Hugessen and thereafter led to the recommendation of the 2017 RSUs payout;

 

·Reviewed the long-term incentive and short-term incentive programs with Hugessen and based on their review and analysis, the long-term and short-term incentive programs were maintained;

 

·Reviewed the compensation of the executives and decided that no changes were required in 2020, with the exception of individuals promoted as officers of the Corporation in February 2020;

 

·Reviewed and recommended the approval of the 2020-2023 long-term objectives for the 2020 RSU grants following a benchmarking review performed by Hugessen;

 

·Reviewed and recommended the approval of the annual 2020 long-term grants (options and RSUs) pursuant to the long-term incentive program;

 

·Reviewed and recommended the approval of the 2020 annual grants of DSUs to non-executive directors;

 

·Reviewed the 2020 voting results for the advisory resolution on executive compensation ("Say-on-Pay");

 

·Monitored development in talent management, remuneration practices and governance related thereto;

 

·Reviewed and assessed the performance of the Executive Chair and former Chief Executive Officer and President and current Chief Executive Officer;

 

·Reviewed and amended the employment agreements for the Executives regarding the non-competition clauses;

 

·Retained the services of Hugessen to assist the HR Committee in determining the Corporate Objectives under the 2021 Short-term incentive program and the 2021 Long-Term Incentive Program;

 

·With the assistance of Hugessen, the HR Committee reviewed and recommended amendments to the annual retainer applicable to the Chair of the HR Committee and other Committees, which was approved by the Board of Directors in February 2021.

 

Governance and Administrative Matters

 

·Reviewed and approved the amended Charter of the HR Committee and approved the Annual Work Program following the creation of the Environmental and Sustainability Committee; and

 

·Reviewed and recommended to the Board to approve the compensation disclosure contained in the Circular.

 

Succession Planning

 

The Committee regularly meets the Management of the Corporation. During these meetings, the members of the HR Committee have the opportunity to evaluate potential successors to senior Management. In addition, the HR Committee monitors training and development programs of Management.

 

compensation discussion and analysis

 

The compensation philosophy of the Corporation is based on providing a highly competitive base salary, along with short and long-term incentives that payout on the achievements of key performance and strategic goals, which will create value for Shareholders and other stakeholders over the long-term.

 

For purposes of this Circular, named executives ("Named Executives") of the Corporation means, at any time during the most recently completed financial year:

 

(i) The Corporation's current and former chief executive officer;

 

(ii) The Corporation's current and former chief financial officer; and

 

(iii) The three (3) most highly compensated executive officers of the Corporation, including its subsidiaries, other than the chief executive officer (current and former) and chief financial officer (current and former) at the end of the most recently completed financial year whose total compensation was more than $150,000 for that financial year.

 

 2021 Management Information Circular   29

 

 

During the Corporation's fiscal year ended December 31, 2020, the following individuals were Named Executives of the Corporation:

 

- Sean Roosen, Executive Chair and former Chief Executive Officer; 

- Sandeep Singh, President and Chief Executive Officer; 

- Frédéric Ruel, Chief Financial Officer and Vice President, Finance 

- Elif Lévesque, former Chief Financial Officer and Vice President, Finance 

- Luc Lessard, Senior Vice President, Technical Services; 

- Chris Lodder, President of Osisko Development Corp. ("ODV"), a subsidiary held at approximately 75% by the Corporation; and 

- André Le Bel, Vice President, Legal Affairs and Corporate Secretary.

 

In establishing the compensation programs for the Named Executives, the HR Committee monitors compensation trends within the mining industry and seeks input from external advisors as required and may also conduct comparative studies. The HR Committee also monitors Shareholders' feedback on compensation, including the results of the annual advisory vote on compensation received from Shareholders.  One of the key responsibilities of the HR Committee is to ensure that such compensation will allow the Corporation to attract and retain senior individuals to develop and execute the strategic plan of the Corporation to maximize Shareholder value.

 

In addition, the HR Committee monitors and reviews the inherent risks related to the compensation program.  To date, the Corporation has generally been able to attract and retain Management talent to develop and execute its value creation plan.

 

The Corporation advocates a team approach for the short and long-term incentive compensation of the Named Executives given the small nature of the team and the transactional nature of the Corporation's business model. Performance monitoring of Named Executives since 2014 has confirmed the validity of this approach. Based on the recommendation of the HR Committee, the Board of Directors approves the corporate objectives for Named Executives of the Corporation.

 

Independent Compensation Consultants

 

The HR Committee receives detailed compensation analysis from Management on various companies from the mining sector in order to ensure the continued market competitiveness of the compensation of the Named Executives. In May 2020, the HR Committee mandated Hugessen to assess the long-term performance against the 2017-2020 Long-Term Objectives.  Hugessen also assisted the HR Committee to establish the performance criteria for the 2020-2023 performance based RSUs. In August 2020, the HR Committee mandated Hugessen to conduct a review and analysis of directors and executives' compensation within the sector. Hugessen's report was submitted to the HR Committee in December 2020.

 

2020 Compensation Advisory Fees

 

The following table illustrates in detail the components of the advisory fees incurred by the Corporation for compensation consultants in 2020 and in 2019:

 

    Fees incurred in 2020
($)		     Fees incurred in 2019
($)
Hugessen Consulting Inc.        
Compensation consulting services      144,966     Nil

 

Compensation Comparator Group 

 

In order to allow the members of the HR Committee to proceed with a review of the compensation of the Named Executives, Management and the HR Committee's advisor may collect compensation information from management information circulars of a number of peer companies or consult other sources of information for compensation decision-making purposes. For the financial year 2020, the HR Committee, assisted by Hugessen, and reviewed by Management, conducted a review of the Corporation's compensation peers and selected twelve publicly-traded Canadian and US public issuers to comprise the 2021 peer group ("Peer Group"). The Peer Group was primarily screened based on relevant industry, mining or mining royalty business, and relative company size, based on market capitalisation, to position the Corporation at the approximate median of the peers.

 

30   2021 Management Information Circular 

 

 

Company  Sector  Head Office 

Market Cap

in ($ M)(1)

 
Alamos Gold Inc.  Gold Mining  Canada   4,368 
Centerra Gold Inc.  Gold Mining  Canada   4,361 
Eldorado Gold Corporation  Gold Mining  Canada   2,951 
Hudbay Minerals Inc.  Diversified Metals and Mining  Canada   2,328 
IAMGOLD Corporation  Gold Mining  Canada   2,220 
Lundin Gold Inc.  Gold Mining  Canada   2,515 
Maverix Metals Inc.  Gold Mining  Canada   985 
Pretium Resources Inc.  Gold Mining  Canada   2,735 
Royal Gold Inc.  Gold Royalty  USA   8,891 
Sandstorm Gold Ltd.  Gold Royalty  Canada   1,781 
SSR Mining Inc.  Gold Mining  Canada   5,613 
Wesdome Gold Mines Ltd.  Gold Mining  Canada   1,479 
Peer Group Median   n/a  n/a   2,591 
Osisko Gold Royalties Ltd  Gold Royalty  Canada   2,696 

 

NOTE:

(1) As at December 31, 2020.

 

For each of the Executive Chair, the President and current Chief Executive Officer, the Chief Financial Officer and the Vice President, Legal Affairs and Corporate Secretary, the members of the HR Committee compared the compensation mix and overall compensation package to the compensation benchmarked from the Peer Group review.  Further to its analysis, the HR Committee determined that compensation levels and mixes were adequate for

 

all Named Executives and, accordingly, no modification to the base salary or compensation mix were proposed for 2021.

 

Compensation Policy

 

As is typical in the mining industry, the Corporation's executive compensation policy is comprised of a combination of cash and stock option grants and RSU grants to Named Executives.

 

Components of the Compensation Program

 

 

 

The combination of base salaries, annual incentive, option grants and RSU grants (which are full value phantom shares, payable in cash or in Common Shares, at the Corporation's discretion, as at the end of the three-year vesting period), reflects the Corporation's evolving nature and is intended to attract and retain talent in a competitive employment market. Grant of options and RSUs to Named Executives are made on an annual basis, at a moment deemed appropriate by the HR Committee. Annual incentive, option grants and RSU grants (timed-based and performance-based) represent the value at risk portion of the total compensation of each Named Executive.

 

 2021 Management Information Circular   31

 

 

For any grant, options vest as to one third of the total grant at each of the first three anniversaries of such grant, unless otherwise decided by the HR Committee, as provided for in the Stock Option Plan. RSU grants are generally subject to the following vesting terms: one half (1/2) is time-based and vests on the third anniversary of such grant while the remaining half (1/2) performance RSUs, which also vests on the third anniversary of such grant, is subject to the achievement of approved long-term objectives over a three-year period (as more thoroughly described below under the heading "Long-Term Incentive Compensation"). The HR Committee considers that such performance criteria improves Named Executives' alignment with Shareholders' interests and further promotes value creation.

 

Options and RSUs also enable the Corporation to balance the ratio of long-term to short-term compensation to levels commensurate with mining industry companies and to enhance Named Executives' alignment with Shareholder value creation. The Stock Option Plan, RSU Plan and the DSU Plan are further described under the heading "Long-Term Incentive Compensation" below.

 

Pay Mix

 

Following are the targets for each of the four components of the compensation of the Named Executives in comparison to the actual compensation they received for 2020:

 

   Base Salary   Short-term incentive   Options   RSUs 
   Target   2020   Target   2020   Target   2020   Target   2020 
Executive Chair and former Chief Executive Officer(1)   20%   19%   20%   23%   24%   23%   36%   35%
President and current Chief Executive Officer(2)   17%   17%   17%   20%   26%   25%   39%   38%
Senior Vice President(3)   22%   22%   22%   24%   22%   22%   33%   32%
President of ODV(4)   33%   20%   33%   22%   13%   8%   20%   50%
Former Chief Financial Officer(5)   n/a    n/a    n/a    n/a    n/a    n/a    n/a    n/a 
Chief Financial Officer and Vice President, Finance(6)   24%   23%   24%   27%   21%   20%   31%   30%
Vice President, Legal Affairs and Corporate Secretary   23%   22%   23%   27%   21%   20%   32%   31%

 

NOTES:

 

(1) As part of the reverse takeover bid transaction ("RTO Transaction") with ODV, Mr. Sean Roosen was appointed as Executive Chair of the Board of the Corporation on November 25, 2020.

(2) Upon closing of the RTO Transaction, Mr. Sandeep Singh was appointed President and Chief Executive Officer effective as of November 25, 2020.

(3) As part of the RTO Transaction, Mr. Luc Lessard was appointed on November 25, 2020 Chief Operating Officer of ODV and ceased to act as Senior Vice President, Technical Services of the Corporation, effective as of January 1st, 2021.

(4) As part of the RTO Transaction, Mr. Chris Lodder was appointed as President of ODV.  Mr. Lodder is also President and Chief Executive Officer of Barkerville, which was a wholly-owned subsidiary of the Corporation until its transfer to ODV on November 25, 2020.

(5) Ms. Elif Lévesque resigned as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020.

(6) Mr. Frédéric Ruel was appointed as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020.

 

Management of Compensation Risks

 

The HR Committee structures the components of the compensation program in order to generate adequate incentives to increase Shareholders value in the long-term while maintaining a balance to limit excessive risk taking.

 

As part of measures in place to mitigate risk related to compensation structure, the HR Committee establishes the total compensation of the Named Executives based on a balanced approach between fixed and variable compensation components. The use of multiple components limits the risks associated with having the focus on one specific component and provides flexibility to compensate short to medium term goals and long-term objectives in order to maximize Shareholders value.

 

The fixed component of the Named Executives' compensation is essentially composed of the base salary, which represents between 16% and 33% of their total compensation. The components forming the remaining 67% to 84% represent the "value at risk" and aim to focus on the achievement of short to long-term objectives and are composed of an annual incentive (100% performance-based on a yearly basis) and  annual grants of RSUs (one half of which is performance-based over a 3-year period) and  options.

 

32   2021 Management Information Circular 

 

 

The long-term compensation comprises RSUs and options. The HR Committee believes that its granting and vesting practices provide sufficient incentives to motivate the Named Executives in the long-term to increase the overall value of the Corporation and thereby provide an adequate alignment of their interest with those of the Shareholders.

 

Options granted annually vest over a three-year period and have a five-year term. The HR Committee considers that these characteristics provide sufficient incentives to motivate the Named Executives in the long-term to increase the overall value of the Corporation.  Notwithstanding the foregoing, because of the nature of an option, market volatility may result in financial benefit, which may not be strictly related to the performance of the Corporation.  In assessing the component and respective proportion of the elements forming part of the long-term compensation components, the HR Committee has established options at 40% of the long-term incentive and 60% for RSUs (half performance-based) in order to ensure that interests of the Named Executives are aligned with those of the Shareholders.

 

Within the scope of ensuring best practices, the HR Committee adopted formal securities ownership guidelines in 2015 which was revised in 2020 in order to further align the long-term interests of the Shareholders.  The revised guidelines provides that the calculation of the minimum shareholding be based on:

 

(i) the value of the holding on the last trading day of each year; and

 

(ii) with respect to RSUs, only those which are exclusively subject to time-based vesting shall be used in the determination of the minimum securities ownership.

 

Additional information on the securities ownership guidelines is provided under the heading "Securities Ownership".

 

Also, as part of the risks review presented to the Corporation's Audit and Risk Committee, none was related to compensation among all risks identified. As Ms. Joanne Ferstman and Mr. Pierre Labbé are both members of the Audit and Risk Committee and of the HR Committee, they bring their knowledge, experience and insight on risk issues to the HR Committee. Any identified risk related to human resources and compensation of Management are transmitted to the HR Committee which is responsible to follow-up on the implementation of the recommendations according to established priorities. The HR Committee then reports the results back to the Board of Directors.

 

Based on the review performed in the last financial year, no risks associated with the Corporation's compensation policies and practices that are likely to have a material adverse effect on the Corporation were identified. The HR Committee considers that the procedures and guidelines currently in place to mitigate key risks relating to compensation are adequately managed and do not encourage excessive risk taking that would likely have a material adverse effect on the Corporation. The HR Committee will continue to monitor and review the Corporation's compensation policies and practices annually to ensure that no component of the Named Executives' compensation constitutes a risk.

 

The compensation components are detailed below. The Corporation has not adopted any retirement plan or pension plan for its directors and officers.

 

Base Salary

 

The base salary is the only fixed component of the compensation of the Named Executives. The Corporation's policy is to establish base salaries for executive officers that are competitive with relevant salaries paid to executive officers of a comparator group, while recognizing executive officers' experience, competencies and track record of accomplishments and preserving a "team approach" toward remuneration. Salary levels therefore reflect the overall corporate performance of the Corporation, comparative market data and individual performance. The salaries of the Named Executives are reviewed and, as applicable, adjusted yearly by the HR Committee considering the overall corporate performance of the Named Executives team, the comparator group metrics, and, as applicable, general market conditions and other relevant sources of information.

 

There was no salary increase for the Named Executives in 2020.  The base salary of Mr. Frédéric Ruel was adjusted following his appointment as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020.

 

 2021 Management Information Circular   33

 

 

Compensation Reimbursements - Associate Companies

 

As part of its business model and strategy for growth, the Corporation invests in associate companies and, as a result, members of Management, including certain Named Executives, may, from time to time, be appointed to the board of directors or executive positions in such associate companies. The Corporation allocates and charges back a portion of such Named Executive's base salary to such associate company or, as applicable, takes into account the remuneration paid by such associate company to such Named Executive in reviewing and establishing the total compensation. As such, the annual base salary level shown below is the total salary that a Named Executive is receiving taking into account the portion of salary assumed directly by the Corporation and the portion assumed by associate companies, as applicable. In addition, the Corporation also reduces the long-term compensation of the Named Executive up to a value representing 50% of such long-term compensation to take into account share based awards received from associate companies.

 

The following table lists the associate companies with respect to which certain Named Executives assumed or were assuming a directorship role or an executive function during the year 2020. As part of the RTO Transaction concluded on November 25, 2020, the Corporation transferred certain of its investments to ODV, including its shareholding in Falco Resources Ltd.

 

Companies Officers Directors
Osisko Metals Incorporated N/A Luc Lessard
Falco Resources Ltd.

Luc Lessard

André Le Bel

 Luc Lessard
Osisko Mining N/A Sean Roosen

 

The actual salary effectively assumed by the Corporation for each of the Named Executives is therefore adjusted to take into account the cash remuneration received by the Named Executives for their services to such associate companies.

 

The table below shows the annual base salary level and actual salary assumed by the Corporation, net of remuneration assumed by associate companies, for each of the Named Executives in 2020 and 2019:

 

Named Executives  Annual Base
Salary level as
at
January 1st,
2020
($)		   Actual
Salary
assumed by
the
Corporation in
2020
($)		   Annual Base
Salary level as
at
January 1st,
2019
($)		   Actual
Salary assumed
by the
Corporation in
2019
($)		 
Sean Roosen, Executive Chair of the Board and former Chief Executive Officer(1)   718,000    682,689    718,000    535,438 
Sandeep Singh, President and current Chief Executive Officer(2)   600,000    600,000    n/a    n/a 
Frédéric Ruel, current Chief Financial Officer and Vice President, Finance(3)   275,000    269,676    236,000    236,000 
Elif Lévesque, former Chief Financial Officer and Vice President, Finance(4)   70,457    70,457    359,000    359,000 
Luc Lessard, Senior Vice President, Technical Services(5)   513,000    264,180    513,000    93,000 
Chris Lodder, President of ODV(6)   425,000    383,197    425,000    425,000 
André Le Bel, Vice President, Legal Affairs and Corporate Secretary   318,000    218,732    318,000    218,732 

 

NOTES: 

 

(1) As part of the RTO Transaction with ODV, Mr. Sean Roosen was appointed as Executive Chair of the Board of the Corporation on November 25, 2020 to focus on the launch of ODV. Effective as of November 25, 2020, his salary level in the Corporation went from $718,000 to $359,000 because as part of the RTO Transaction his total compensation is shared equally between the Corporation and ODV (except for current outstanding equity component of his compensation). 

(2) Upon the closing of the RTO Transaction, Mr. Sandeep Singh was appointed to take on the role of President and Chief Executive Officer and Director of the Corporation, effective as of November 25, 2020. 

(3) Mr. Frédéric Ruel was appointed as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020. 

(4) Ms. Elif Lévesque resigned as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020. 

(5) As part of the RTO Transaction, Mr. Luc Lessard was appointed on November 25, 2020 Chief Operating Officer of ODV and ceased to act as Senior Vice President, Technical Services of the Corporation, effective as of January 1st, 2021. 

(6) As part of the RTO Transaction, Mr. Chris Lodder was appointed as President of ODV.  Mr. Lodder is also President and Chief Executive Officer of Barkerville, which was a wholly-owned subsidiary of the Corporation until its transfer to ODV on November 25, 2020.

 

34   2021 Management Information Circular 

 

 

 

The table below shows the Long-term Incentive level and actual Long-term Incentive assumed by the Corporation, net of remuneration assumed by associate companies, for each of the Named Executives in 2020 and 2019:

 

Named Executives  Annual LTI
level
as at
January 1st,
2020
($)		   Actual
LTI assumed by
the Corporation
in 2020
($)		   Annual LTI
level
as at
January 1st,
2019
($)		   Actual
LTI assumed by
the Corporation
in 2019
($)		 
Sean Roosen, Executive Chair of the Board and former Chief Executive Officer(1)   2,154,000    1,077,000    2,154,000    1,459,070 
Sandeep Singh, President and current Chief Executive Officer(2)   2,258,600    2,258,600    3,738,293    3,738,293 
Frédéric Ruel, current Chief Financial Officer and Vice President, Finance(3)   588,500    588,500    472,000    472,000 
Elif Lévesque, former Chief Financial Officer and Vice President, Finance(4)   n/a    n/a    825,700    825,700 
Luc Lessard, Senior Vice President, Technical Services(5)   1,282,500    1,042,812    1,282,500    1,179,144 
Chris Lodder, President of ODV(6)   1,270,000    1,270,000    285,900    285,900 
André Le Bel, Vice President, Legal Affairs and Corporate Secretary   731,400    692,107    731,400    731,400 

  

NOTES:

 

(1) As part of the RTO Transaction with ODV, Mr. Sean Roosen was appointed as Executive Chair of the Board of the Corporation on November 25, 2020 to focus on the launch of ODV

(2) Upon closing of the RTO Transaction, Mr. Sandeep Singh was appointed to take on the role of President and Chief Executive Officer and Director of the Corporation, effective as of November 25, 2020.

(3) Mr. Frédéric Ruel was appointed as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020.

(4) Ms. Elif Lévesque resigned as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020.

(5) As part of the RTO Transaction, Mr. Luc Lessard was appointed on November 25, 2020 Chief Operating Officer of ODV and ceased to act as Senior Vice President, Technical Services of the Corporation, effective as of January 1st, 2021.

(6) As part of the RTO Transaction, Mr. Chris Lodder was appointed as President of ODV.  Mr. Lodder is also President and Chief Executive Officer of Barkerville, which was a wholly-owned subsidiary of the Corporation until its transfer to ODV on November 25, 2020.

 

Annual Incentive Compensation

 

The HR Committee believes that long-term growth of value for Shareholders is derived from the execution of short and long-term approved strategic initiatives.

 

The annual incentive program for the Named Executives is based on their performance as a team against corporate objectives approved by the Board of Directors. Bonuses are paid in full following awards approved by the Board of Directors, based on the recommendation of the HR Committee. While the target for annual incentive compensation for Named Executives has been contractually established at 100% of their respective base salary, the Board of Directors retains full discretion in assessing such achievement. In addition, the Board may also factor in individual achievement, if warranted. For greater certainty, annual incentive compensation does not represent a guaranteed compensation item for the Named Executives as the determination of the performance relating to such compensation remains the sole prerogative of the Board of Directors who can decide not to pay any bonus to any Named Executive.

 

As part of its duties and responsibilities and in conjunction with year-end assessments, the HR Committee reviews the realization of the Corporation's objectives and meet with Management to discuss and consider each element contained in the corporate objectives. The HR Committee also meets in camera to discuss this matter.

 

In 2020, further to the acquisition of Barkerville in November 2019, the HR Committee decided that for Mr. Chris Lodder and Mr. Luc Lessard, their Short-term objectives would be based as to 50% on Corporate Objectives established for the Corporation and the remaining 50% on Corporate Objectives relating specifically to the development of the Cariboo gold project.

 

The Corporation's 2020 short-term key objectives (the "2020 Key Objectives") consist of elements included in the following six categories: growth, performance, portfolio management, North Spirit discovery Group, corporate and operational efficiencies and corporate responsibility.

 

 2021 Management Information Circular   35

 

 

The following is a summary of achievements in respect of the 2020 Key Objectives.

 

1. Growth:

 

In order to achieve this objective, Management aimed at acquiring assets that would generate cash flow over medium term.  In 2020, the Corporation completed a number of transactions in line with this objective including the acquisition of:

 

·a 15% gold and silver stream on the San Antonio property;

 

·the remaining 15% ownership in a Canadian precious metal royalty portfolio, including royalties on the Island Gold and Lamaque mines; and

 

·a royalty on Minera Alamos Inc.'s Santana project.

 

As part of its strategy, the Corporation also amended the Gibraltar silver stream concluded with Taseko Mines Limited to reduce the transfer price from US$2.75 per ounce of silver to nil.

 

These transactions allowed the Corporation to not only ensure mineral resource replacement to compensate for the depletion of its assets but also to achieve a modest increase of such mineral resource per share.

 

In addition, Management reviewed each transaction to determine its impact on the net asset value ("NAV") of the Corporation calculated based on internal financial models and concluded that the investments made in 2020, had a collective positive impact on the NAV per share.

 

2. Performance

 

In 2020, the Corporation's share price performance was relatively strong compared to the applicable Peer Group's average.  The Corporation recorded a return of 27.8% while its peers averaged showing a return of 8.4%.  The Common Shares of the Corporation closed at $16.13 on December 31, 2020, compared to $12.62 on December 31, 2019. A pre-determined share price performance matrix was used to calculate performance achievement for this objective.

 

3. Portfolio management

 

Through 2020, Management focused considerable efforts on managing issues relating to several underperforming assets including the Renard and Amulsar streams. Progress was made in terms of protecting and advancing these assets. The Corporation's equity portfolio was mostly transferred to ODV on November 25, 2020.

 

4. North Spirit Discovery Group

 

A significant strategic priority in 2020 was the successful restructuring of the Cariboo project into a dedicated operating vehicle.  This was accomplished with the formation of ODV, which also included the San Antonio gold project and certain marketable securities.  Financings totalling over $200 million were also completed by ODV between October 2020 and January 2021 to fast track its assets.

 

The Corporation benefited from the RTO Transaction through the equity interest it retained in ODV, and through increased royalty and streaming interest on certain assets transferred to ODV, including the 15% precious metal stream on the San Antonio Project, the increased royalty on the Cariboo project (now totalling 5% NSR), the 3% NSR royalty on the James Bay properties in Québec, Canada and the Guerrero properties in Mexico. Top end performance with respect to this objective was deemed to be surpassed given the valuation attained and amount of funding secured.

 

5. Corporate and operational efficiency

 

Like many companies, the Corporation was impacted by the COVID-19 pandemic but Management reacted promptly in order to mitigate its effect on operations.  From a financial perspective, the Corporation was able to achieve a $85 million financing, at a premium, with Investissement Québec during the pandemic.

 

 36 2021 Management Information Circular 

 

 

Further to the appointment of Mr. Sandeep Singh as president of the Corporation as the end of 2019, the executive team was also rejuvenated throughout the year by the appointment or promotion of senior individual in key roles.

 

6. Corporate Responsibility

 

The Corporation supported certain of its partners and affiliates in managing the COVID-19 pandemic through investing in COVID-19 testing labs and providing charitable donations.

 

Following last year's annual meeting of Shareholders, the Corporation formed an Environmental and Sustainability Committee to oversee all matters on environment and sustainability practices.

 

Negotiations carried out while the Corporation held the Cariboo project led to the conclusion by Barkerville of a life-of-project agreement with the Lhtako Dené Nation to facilitate the development of the Cariboo gold project.

 

The Short-term objectives adopted in connection with the Cariboo gold project held by Barkerville (the "2020 Cariboo Key Objectives") are relevant for the short-term incentive of Messrs. Lodder and Lessard as 50% of their short-term incentive is attributable to such 2020 Cariboo Key Objectives.  These objectives consist of elements included in the following three categories: exploration, operations and a broad category encompassing health, safety, environment and sustainability.

 

The following is a summary of achievements completed by the Corporation toward reaching the 2020 Cariboo Key Objectives.

 

1. Exploration

 

The exploration objective of the management team at Barkerville in 2020 was aiming at increasing the inferred resources and converting inferred resources to indicated resources to support the feasibility study. In October 2020, the Corporation announced an updated mineral resources estimate for the Cariboo gold project confirming the measured and indicated resources as well as the increase in the inferred resources category.  The objective was partly met due to an increase in gold price assumptions used. Details of these results are contained in the Corporation's press release dated October 5, 2020 available at www.sedar.com.

 

The exploration work carried out by Barkerville also allowed the identification of five new exploration targets.

 

2. Operations and Project Execution:

 

Development progressed well at Bonanza Ledge Phase II, where stockpiling began underground and the water treatment plant was completed to meet water quality at discharge as per British Columbia regulations.  The Quesnel River mill upgrade was also completed by the end of January 2021 despite COVID-19 related interruptions in contractors and procurement.

 

3. Health, Safety, Environment, Sustainability

 

Barkerville recorded no lost time accidents in 2020 and did not receive any non-compliance notices on environmental matters.  This achievement was possible through the resolution of several key legacy environmental issues attributable to the previous management team.

 

The preparation of permit request, while negatively impacted by COVID-19, was nonetheless completed in the prescribed timeline.  Accordingly, the governmental authorities have granted temporary permits to start the production at the Bonanza Ledge Phase II. Final permits are expected to the delivered in June 2021.

 

Recognizing that community engagement is key in the development of its Cariboo project, the Barkerville team held several consultation meetings and made a number of presentations to the surrounding communities as part of its permitting process.  Barkerville also entered into a life-of-project agreement with the Lhtako Dené Nation to facilitate the development of the Cariboo gold project.  Discussions with the Xatsull First Nation are ongoing.

 

 2021 Management Information Circular   37

 

 

Overall permitting for the larger Cariboo project was kept on track despite significant challenges caused by COVID-19 including issues relating to access, consultant and regulator availability.

 

Assessment of 2020 Key Objectives and 2020 Cariboo Key Objectives by the HR Committee

 

The 2020 Key Objectives and the 2020 Cariboo Key Objectives were approved by the Board of Directors, upon recommendation of the HR Committee. The HR Committee monitored the progress made by Management toward achieving said objectives. The HR Committee reviewed achievements against the Corporation's and Cariboo's objectives and thereafter met with Management.  Thereafter, the HR Committee met in camera to discuss and consider the payout under the short-term incentive program.

 

The HR Committee provided its recommendation to the Board which also deliberated with the presence of senior members of Management and determined and approved the following assessment of the 2020 Key Objectives and 2020 Cariboo Key Objectives set forth below:

 

  2020 ANNUAL CORPORATE OBJECTIVES  ALLOCATION
(%)		   ACHIEVEMENT
(%)		 
 1. Growth   25.0    20.0 
 2. Performance   25.0    32.5 
 3. Portfolio management   10.0    8.0 
 4. North Spirit Discovery Group   20.0    40.0 
 5. Corporate and operational efficiency   10.0    10.0 
 6. Corporate Responsibility   10.0    10.0 
   TOTAL   100.0    120.5 

 

  2020 CARIBOO KEY OBJECTIVES  ALLOCATION
(%)		   ACHIEVEMENT
(%)		 
 1. Exploration   30.0    26.0 
 2 Health, safety, environment and sustainability   35.0    33.5 
 3. Operations and Project Execution   35.0    30.5 
   TOTAL   100.0    90.0 
   Premium for COVID-19 risks        10.0 

 

The HR Committee also assessed the Executive Chair and President and former Chief Executive Officer's performance for 2020 and, further to such review the HR Committee provided a recommendation to the Board which took into consideration the "team approach" philosophy of the Corporation.  The HR Committee also recommended to the Board to approve the individual performance factor rate for the Named Executives, which was established at a rate of 1.0.

 

The HR Committee also assessed the performance of the Senior Vice President, Technical Services and the President of ODV for the 2020 Cariboo Key Objectives and, further to such review and taking into account the required travelling and working in the field during the COVID-19 pandemic, the HR Committee provided a recommendation to the Board to include a 10% premium for COVID-19 related risks, therefore establishing the overall achievements at 100%.

 

The Board reviewed and discussed the recommendation of the HR Committee for the Named Executives, including for the Executive Chair and former Chief Executive Officer and the President and current Chief Executive Officer and approved the following payment of the annual incentive award ("Annual Incentive Award") to the Named Executives and the and former Chief Executive Officer and the President and current Chief Executive Officer for the financial year ended December 31, 2020, which payment takes into account the individual performance factor recommended by the HR Committee:

 

 38 2021 Management Information Circular 

 

 

Named Executives  

Value of the 2020
Annual Incentive
Award

($)

     Value of the 2019
Annual Incentive
Award
($)		  
Sean Roosen, Executive Chair of the Board and former Chief Executive Officer(1)     822,649       502,600  
Sandeep Singh, President and current Chief Executive Officer(2)     723,000           n/a  
Frédéric Ruel, Chief Financial Officer and Vice President, Finance(3)     325,000       165,200  
Elif Lévesque, former Chief Financial Officer and Vice President, Finance(4)     51,800       251,300  
Luc Lessard, Senior Vice President, Technical Services(5)(6)     421,770       359,100  
Chris Lodder, President of ODV(7)     422,472       297,500  
André Le Bel, Vice President, Legal Affairs and Corporate Secretary(5)     340,657       180,057  

 

NOTES:

 

(1)As part of the RTO Transaction with ODV, Mr. Sean Roosen was appointed as Executive Chair of the Board of the Corporation on November 25, 2020 to focus on the launch of ODV.
(2)Upon closing of the RTO Transaction, Mr. Sandeep Singh was appointed to take on the role of President and Chief Executive Officer and Director of the Corporation, effective as of November 25, 2020. Mr. Singh was hired on December 31, 2019.
(3)Mr. Frédéric Ruel was appointed as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020.
(4)Ms. Elif Lévesque resigned as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020.
(5)Net of annual incentive award assumed by associate companies.
(6)As part of the RTO Transaction, Mr. Luc Lessard was appointed on November 25, 2020 Chief Operating Officer of ODV and ceased to act as Senior Vice President, Technical Services of the Corporation, effective as of January 1st, 2021.
(7)As part of the RTO Transaction, Mr. Chris Lodder was appointed as President of ODV.  Mr. Lodder is also President and Chief Executive Officer of Barkerville, which was a wholly-owned subsidiary of the Corporation until its transfer to ODV on November 25, 2020.

 

Named Executives 

Value of the 2020
Annual Incentive
Award

($)

   Value of the 2019
Annual Incentive
Award
($)		 
Sean Roosen, Executive Chair of the Board and former Chief Executive Officer(1)   822,649    502,600 
Sandeep Singh, President and current Chief Executive Officer(2)   723,000        n/a 
Frédéric Ruel, Chief Financial Officer and Vice President, Finance(3)   325,000    165,200 
Elif Lévesque, former Chief Financial Officer and Vice President, Finance(4)   51,800    251,300 
Luc Lessard, Senior Vice President, Technical Services(5)(6)   421,770    359,100 
Chris Lodder, President of ODV(7)   422,472    297,500 
André Le Bel, Vice President, Legal Affairs and Corporate Secretary(5)   340,657    180,057 

 

NOTES:

 

(1) As part of the RTO Transaction with ODV, Mr. Sean Roosen was appointed as Executive Chair of the Board of the Corporation on November 25, 2020 to focus on the launch of ODV.

(2) Upon closing of the RTO Transaction, Mr. Sandeep Singh was appointed to take on the role of President and Chief Executive Officer and Director of the Corporation, effective as of November 25, 2020. Mr. Singh was hired on December 31, 2019.

(3) Mr. Frédéric Ruel was appointed as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020.

(4) Ms. Elif Lévesque resigned as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020.

(5) Net of annual incentive award assumed by associate companies.

(6) As part of the RTO Transaction, Mr. Luc Lessard was appointed on November 25, 2020 Chief Operating Officer of ODV and ceased to act as Senior Vice President, Technical Services of the Corporation, effective as of January 1st, 2021.

(7) As part of the RTO Transaction, Mr. Chris Lodder was appointed as President of ODV.  Mr. Lodder is also President and Chief Executive Officer of Barkerville, which was a wholly-owned subsidiary of the Corporation until its transfer to ODV on November 25, 2020.

 

Long-term Incentive Compensation

 

The Corporation's long-term compensation program ensures the alignment of the Named Executives with Shareholders and other stakeholders in the value creation process. The long-term compensation provides an effective retention measure for key senior executives. The establishment of a balance between short and long-term compensation is essential for the Corporation's sustained performance, including its ability to attract, motivate and retain a pool of talented executives in a very competitive employment market. To achieve this balance and to complement the existing Stock Option Plan, the Corporation adopted an Employee Share Purchase Plan and a RSU Plan.

 

The targeted quantum of the long-term component of the Named Executives' compensation as a percentage of their total compensation is identified below, however such percentage remains subject to a review by the HR Committee:

 

Named Executives  Targeted Percentage of the long-term component
of
Named Executives' compensation
over their total compensation
(%)		 
Executive Chair and former Chief Executive Officer   60 
President and current Chief Executive Officer   65 
Senior Vice President   55 
President of ODV   33 
Chief Financial Officer and Vice President, Finance   52 
Vice President, Legal Affairs and Corporate Secretary   53 

 

The Stock Option Plan, the Employee Share Purchase Plan, the RSU Plan and the DSU Plan are hereinafter collectively referred to as "Osisko's Long-Term Incentive Plans".

 

The HR Committee manages Osisko's Long-Term Incentive Plans with full authority. The HR Committee considers ad hoc and annual grants of options, RSUs and DSUs based on recommendations made by the Executive Chair of the Board and the President and Chief Executive Officer from time to time, for participants other than themselves. The HR Committee, in turn, considers such recommendations and, as appropriate, makes recommendations to the Board of Directors, including any awards to the Executive Chair of the Board and the President and Chief Executive Officer. In reviewing Management's recommendation relating to grants under the Long-Term Incentive Plans, the HR Committee and the Board of Directors may take into account past grants and factor in any such grants made by associate companies to any of the Corporation's Named Executives.

 

 2021 Management Information Circular   39

 

  

Options

 

The Shareholders of the Corporation have re-confirmed at the 2020 annual meeting the Stock Option Plan which was initially approved in 2014, allowing for the grant of options to officers and employees of the Corporation, designated by the Board of Directors, at its entire discretion, to align their interest to those of Shareholders.

 

Options are granted by the Board of Directors based on recommendations made by the Executive Chair of the Board and the President and Chief Executive Officer from time to time, except in respect of grants to themselves. The total number of options issued over the past years to an employee may be taken into consideration but does not have a material impact on the number of options to be granted to said employee, except for same year grants, if any. The Black-Scholes value of options granted by associate companies to any Named Executive for their executive role reduces the options to be granted to any such Named Executive by the Corporation.

 

Options may be granted at an exercise price determined by the Board but shall not be less than the closing market price of the Common Shares of the Corporation on the TSX on the day prior to their grant. No participant shall be granted an option which exceeds 4% of the issued and outstanding Common Shares of the Corporation at the time of granting of the option. The number of Common Shares issued to insiders of the Corporation within one year and issuable to the insiders of the Corporation at any time under the Stock Option Plan or combined with all other share compensation arrangements, cannot exceed 10% of the issued and outstanding Common Shares.  The duration and the vesting period are determined by the Board. However, the expiry date may not exceed seven years after the date of grant. To date, all grants are set to expire five years after the date of grant, with the exception of the Initial Options granted to Mr. Sandeep Singh, President of the Corporation as part of his hiring grant, which have a term of seven years.

 

The tables below provides additional information on the Stock Option Plan, RSU Plan and DSU Plan for the relevant financial years.

 

Burn Rate - Options

 

Year   Options granted
(#)		   Weighted average
Number of Common
Shares issued and
outstanding
(#)		   Burn Rate(1)
(%)		 
2020    1,201,100    163,015,000    0.7 
2019    1,292,200    151,041,000    0.9 
2018    886,900    156,617,000    0.6 
2017    763,400    127,939,000    0.6 
2016    1,084,700    104,671,000    1.0 

 

NOTE:

 

(1) Burn Rate: means the total number of options granted in a year divided by the weighted average number of Common Shares for the applicable fiscal year.

 

Overhang - Options

 

Year   Options
Available
for Issue
(#)		   Options
Outstanding
(#)		   Total Available
and
Outstanding
(#)		   Weighted average
Number of Common Shares
issued and outstanding
(#)		   Overhang
Ratio(1)
(%)		 
2020    4,612,299    3,745,968    8,358,267    163,015,000    5.1 
2019    4,006,350    3,867,566    7,873,916    151,041,000    5.2 
2018    3,688,659    4,090,696    7,779,355    156,617,000    5.0 
2017    9,304,646    3,319,129    12,623,775    127,939,000    9.9 
2016    5,877,120    2,654,665    8,531,785    104,671,000    8.2 

 

NOTE:

 

(1) Overhang: means the number of options available to be granted, plus the number of options granted but not exercised divided by the weighted average of the number of Common Shares for the applicable fiscal year.

 

 40 2021 Management Information Circular 

 

 

Burn Rate - RSUs

 

Year   DSUs granted
(#)		   Weighted average
Number of Common
Shares issued and
outstanding
(#)		   Burn Rate(1)
(%)		 
2020    504,560    163,015,000    0.3 
2019    592,300    151,041,000    0.4 
2018    429,262    156,617,000    0.3 

 

NOTE:

 

(1) Burn Rate: means the total number of RSUs granted in a year divided by the weighted average number of Common Shares for the applicable fiscal year.

 

Burn Rate - DSUs

 

Year   DSUs granted
(#)		   Weighted average
Number of Common
Shares issued and
outstanding
(#)		   Burn Rate(1)
(%)		 
2020    97,995    163,015,000    0.1 
2019    66,000    151,041,000    0.0 
2018(2)      n/a            n/a    n/a 

 

NOTES:

 

(1) Burn Rate: means the total number of DSUs granted in a year divided by the weighted average number of Common Shares for the applicable fiscal year.

 

(2) In 2018, the DSU Plan provided for a cash settlement only upon vesting of the DSUs.

 

The terms and conditions of the Stock Option Plan are more specifically addressed under the heading "Security-Based Compensation Arrangements" below.

 

Restricted Share Units (RSUs)

 

The purpose of the RSU Plan is to assist the Corporation in attracting and retaining individuals with experience and ability, to allow certain employees of the Corporation and its subsidiaries designated at the HR Committee's discretion, to participate in the long-term success of the Corporation and to promote a greater alignment of interests between the employees designated under this RSU Plan and those of Shareholders.

 

The vesting of half of each annual RSU grant are subject to performance criteria unless otherwise determined by the HR Committee, all annual RSU grants are subject to the following vesting terms: one half (1/2) is time-based and will vest on the third anniversary of such grant; the remaining portion (1/2) will also vest on the third anniversary of such grant but is subject to performance criteria approved by the HR Committee and the Board of Directors.  For greater certainty, settlement of performance based RSUs granted as part of the annual long-term incentive compensation does not represent a guaranteed compensation item for the Named Executives as the determination of the performance relating to such RSU grant remains the sole prerogative of the Board of Directors.  It should be noted that, as part of his 2019 hiring terms, Mr. Singh was granted 225,000 Initial RSUs, including 75,000 RSUs the vesting of which was subject to the acquisition of 75,000 Common Shares of the Corporation; such RSUs have vested on January 14, 2020.  The balance of 150,000 Initial RSUs, vests in three equal tranches over three years; a first tranche vested on December 31, 2020.

 

The HR Committee believes that performance criteria attached to part of the annual RSU grant improves the alignment of Named Executives' interests with those of Shareholders of the Corporation and promotes sustainable growth and value creation and the achievement of key long-term corporate objectives. The HR Committee monitors the achievement of these performance criteria on a regular basis.

 

Whenever dividends are paid in Common Shares, additional RSUs are automatically granted to each participant who holds RSUs on the record date for such dividend. Following the vesting date, RSUs are settled, at the discretion of the Corporation, in Common Shares, in cash (in which case for an amount equivalent to the product of the number of vested RSUs multiplied by the closing price of a Common Share on the TSX on the day prior to the payment date) or a combination of both Common Shares and cash, less applicable withholdings.

 

 2021 Management Information Circular   41

 

  

The HR Committee may, at its entire discretion, accelerate the terms of vesting of any outstanding RSU in circumstances it deems appropriate. In the event of a change of control as defined in the RSU Plan, all RSUs outstanding on the change of control date become immediately vested, irrespective of performance conditions, if any.

 

In the event a participant resigns or is terminated by the Corporation for cause, all outstanding RSUs are cancelled. As for those participants who cease to be an employee as a result of death, termination without cause, retirement or long-term disability, the vesting of:

 

·the time-based component portion of each RSU grant will be prorated based on the sum of the number of days during which certain benefits of employment are contractually maintained and those actually worked from the date of grant of such RSUs up until the date of termination without cause, over the number of days of the original vesting schedule in relation to such grant; and

 

·all performance based RSU grant will be prorated based on the number of days actually worked from the date of grant of such RSUs up until the date of termination without cause, over the original vesting schedule in relation to such grant; the number of vested performance based RSUs resulting from such prorated calculation is multiplied by the performance percentage to be determined by the Board of Directors.

 

The value of RSU grants are based on recommendations made by the Executive Chair of the Board and the President and Chief Executive Officer (except in respect of grants to themselves) and the closing price of a Common Share on the TSX on the day prior to the grant date.

 

In connection with the 2020 grant of RSUs, the 3-year performance long-term objectives (the "2020 Long-Term Objectives") approved by the HR Committee, included production growth, performance criteria and strategic metrics.

 

As previously stated, the HR Committee has been monitoring the achievement of the 2017 Long-Term Objectives for the last three years and in May 2020 assessed performance against said objectives.  To this end, Management presented to the HR Committee its assessment of the Corporation's achievements pursuant to the 2017 Long-Term Objectives as follows:

 

(i) Growth in NAV per share

 

Management was unsuccessful in reaching this performance target; while there was an increase in the NAV per share (using standardized commodity price assumptions), the approved target was not reached.

 

(ii) Increase revenues to equivalent of 150,000 ounces of gold or to $225 million

 

While the Corporation's gold equivalent ounces increased meaningfully from 58,933 ounces to 83,000 ounces in 2020, through acquisition of producing assets and development of assets, this increase did not achieve the approved target. In hindsight, the objective was highly aggressive over a three-year period.

 

(iii) Enhance/realize investment/exploration portfolios

 

The Corporation swapped a number of equity positions for Common Shares of the Corporation held by Betelgeuse, a jointly owned subsidiary of certain investment funds managed by Orion Resource Partners, since 2017.  Such Common Shares were subsequently cancelled.

 

The acquisition of equity investments in early-stage companies provided the Corporation an opportunity to acquire royalties and streams for a net gain in the amount of $130.7 million.

 

(iv) Provide superior return to Gold Index and peers

 

The Corporation did not achieve this objective as from June 2017 to April 2020, the price of the Common Shares of the Corporation fluctuated; down from $15.85 in June 2017 to $12.71 at the end of April 2020.  During the same period, the TSX Gold Index level increased by approximately 800 points to reach 2,353 points and the Peers Index level progressed from 100.0 points to 151.4 points.

 

 42 2021 Management Information Circular 

 

  

 

(v) Maintain sound financial position

 

The Corporation maintained strong financial flexibility over the three-year span to pursue its growth strategy. The Corporation issued debentures for $350 million in 2017 and increased its credit facility by $50 million to $400 million (with a $100 million accordion).

 

The Corporation was also able to achieve a $85 financing at a premium with Investissement Québec in April 2020, during the initial phase of the COVID-19 pandemic.

 

As a result of the share repurchase and secondary offering of Common Shares of the Corporation with Betelgeuse, Betelgeuse ownership of the Corporation's issued and outstanding Common Shares has been reduced from approximately 19.5% to below 6.2%.

 

(vi) Leadership in sustainability

 

The Corporation continues to participate in advocacy role for the mining industry through representation in various associations (Association de l'Exploration Minière du Québec, Association Minière du Québec, Fédération des chambres de commerce du Québec.

 

Promoted gender diversity in mining and other business and well as the continued development of Montreal's Young Mining Professionals organization.

 

The Corporation continues to maintain an open dialogue with host communities and governments in order to ensure success of mining enterprises.  It also participates in Québec's Plan Nord initiatives and to the Fonds Restor-Action Nunavik.

 

The Corporation supports various charities and community organizations including a contribution of $75,000 to the Canadian Mineral Education Industry Foundation and assumed leadership of the foundation and administrative services.

 

Assessment of 2017 Long-Term Objectives by the Committee

 

The HR Committee reviewed the performance based portion (50%) of the 2017 RSU grant. The 2017 Long-Term Objectives were approved by the Board of Directors in 2017, upon recommendation of the HR Committee. The HR Committee regularly monitored the progress made by Management toward achieving said long-term objectives. As part of its duties and responsibilities and in conjunction with the end of period assessment, the HR Committee reviewed and discussed with Management the assessment of achievements against the Corporation's 2017 Long-Term Objectives.  Further to its review, the HR Committee postponed the approval of the 2017 RSU payout in order to re-evaluate the Corporation's approach in the determination of the long-term objectives and seek advice from Hugessen to assist the HR Committee in its assessment for the payout of the 2017 performance based of the RSU objectives.  Following such review and taking into account Management's self-assessment, the HR Committee considered concurred with Management's performance over the last three years to be determined at an overall performance rate of 48%.

 

Upon recommendation of the HR Committee, the Board of Directors deliberated and concurred with the HR Committee and set and approved the assessment of the 2017 Long-term Objectives at 48% as evidenced below.  These RSUs were settled in Common Shares of the Corporation taking into account the applicable tax withholdings so that the Corporation issues only such number of Common Shares the value of which equals the net amount to be received by the Named Executives. The portion of the RSUs that is time based (representing 50% of the 2017 grant) is paid at a rate of 100%.  These timed-based RSUS are also paid in Common Shares of the Corporation taking into account the applicable tax withholdings.

 

 2021 Management Information Circular43

 

 

 

2017 - 2020 RSU OBJECTIVES  ALLOCATION (%)   ACHIEVEMENT (%) 
Increase net asset value/share   25.00    10.00 
Increase revenues to equivalent of 150,000 ounces of gold   25.00    10.00 
Enhance/realize investment/exploration portfolio   20.00    8.00 
Provide superior return to Gold Index and peers   10.00    0.00 
Maintain sound financial position   10.00    10.00 
Leadership in sustainability   10.00    10.00 
TOTAL:   100.00    48.00 

 

Based on the foregoing, the Board approved the following payment in connection with the 2017 Long-Term Incentive Award to the Named Executives.  These RSUs were settled in Common Shares at the settlement date based on the closing market price of the Common Shares of the Corporation traded on the TSX on the day prior to the settlement date.  The Board met on June 22, 2020 to determine the payout of the performance-based RSUs; all RSU vested on June 7, 2020 and, accordingly, as per the terms of the RSU Plan, these RSUs were settled in Common Shares of the Corporation, taking into account mandatory withholdings, at a price of $12.57 per RSU, being the closing market price of the Common Shares of the Corporation traded on the TSX on June 5, 2020, being a business day prior to the vesting/settlement date.

 

Named Executives  Number of RSUs granted in 2017
(#)(1)		   Total payout under the 2017 Long-Term Incentive Award
($)(2)		   Number of Common Shares issued
(#)(3)		 
Sean Roosen(4)
Executive Chair of the Board and former Chief Executive Officer		   36,724    341,665    12,631 
Sandeep Singh(5)
President and current Chief Executive Officer		      n/a        n/a       n/a 
Frédéric Ruel(6)
Chief Financial Officer and Vice President, Finance		   16,426    152,839    5,650 
Elif Lévesque(7)
Former Chief Financial Officer and Vice President, Finance		   28,239    239,094    8,839 
Luc Lessard(8)
Senior Vice President, Technical Services		   34,420    320,221    11,838 
Chris Lodder(9)
President of ODV		      n/a        n/a       n/a 
André Le Bel
Vice President, Legal Affairs and Corporate Secretary		   25,529    237,523    8,780 

 

NOTES:

 

(1)Adjusted to take into account dividends paid since the grant as per the terms of the RSU Plan.
(2)Represents the total gross value of the payout of the 2017 Long-Term Incentive Award.
(3)Represents the number of Common Shares to be issued taking into account the net value of the payout of the 2017 Long-Term Incentive Award for each Named Executive after applicable withholdings and dividing such value by the value of the Common Shares as of the settlement date.
(4)As part of the RTO Transaction with ODV, Mr. Sean Roosen was appointed as Executive Chair of the Board of the Corporation on November 25, 2020 to focus on the launch of ODV.  Mr. Roosen was Chair of the Board and Chief Executive Officer at the time of the award.
(5)Upon closing of the RTO Transaction, Mr. Sandeep Singh was appointed to take on the role of President and Chief Executive Officer and Director of the Corporation, effective as of November 25, 2020. Mr. Singh joined the Corporation on December 31, 2019, therefore the 2017 Long-Term Incentive payout is not applicable to him.
(6)Mr. Frédéric Ruel was appointed as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020.  Mr. Ruel was Corporate Controller at the time of the award.
(7)Although Ms. Elif Lévesque resigned as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020, she was an officer of the Corporation at the time of the award.
(8)As part of the RTO Transaction, Mr. Luc Lessard was appointed on November 25, 2020 Chief Operating Officer of ODV and ceased to act as Senior Vice President, Technical Services of the Corporation, effective as of January 1st, 2021.  Mr. Lessard was an officer at the time of the award.
(9)As part of the RTO Transaction, Mr. Chris Lodder was appointed as President of ODV.  Mr. Lodder is also President and Chief Executive Officer of Barkerville, which was a wholly-owned subsidiary of the Corporation until its transfer to ODV on November 25, 2020.  At the time of the award, Mr. Lodder was an executive officer of Barkerville, which was a publicly listed company on the TSX Venture Exchange.  Mr. Lodder was not award RSUs at the time since Barkerville was a publicly listed company.

 

The terms and conditions of the RSU Plan are more specifically addressed under the heading "Security-Based Compensation Arrangements" below.

 

442021 Management Information Circular 

 

 

 

Deferred Share Units (DSUs)

 

The DSU Plan has been established to enhance the Corporation's ability to attract and retain talented individuals to serve as members of the Board of the Corporation and its subsidiaries and to promote for greater alignment of interests between such persons and the Shareholders of the Corporation.

 

Pursuant to the DSU Plan, the Board of Directors may designate, from time to time and at its sole discretion, the non-executive directors of the Board or of the board of directors of a subsidiary to become participants of the DSU Plan.

 

In order to further improve alignment of interests between directors and Shareholders, the Board of Directors can determine the vesting of any DSU so granted.  In principle, all DSUs granted to non-executive directors shall vest on the day prior to the next annual meeting of Shareholders following such grant however, if the next annual meeting is to be held in less than 6 months from the date of grant, the Board will usually postpone the vesting of such DSU to day prior to the annual meeting of Shareholders following the next annual meeting of Shareholders.

 

Vested DSUs become payable no later than the last business day in December of the first calendar year commencing after the termination of their Board mandate. Vested DSUs are settled at the Corporation's discretion at the settlement date, in Common Shares, or in cash (for an amount equivalent to the product of the number of vested DSUs multiplied by the closing price of a Common Share on the TSX on the day prior to the payment date) or in a combination of cash and Common Shares less applicable withholdings.

 

For U.S. based Directors, vested DSUs become payable during the year after the termination of their Board mandate or the next subsequent year, as determined by them at the time of the respective grant, but no later than the last business day in December of the first calendar year commencing after the termination of their mandate.

 

DSUs may only be awarded to non-executive directors.

 

Employee Share Purchase Plan

 

In 2015, the Board of Directors of the Corporation approved an employee share purchase plan to encourage eligible employees ("Eligible Employees") to hold, on a permanent basis, Common Shares. Under the Employee Share Purchase Plan, the Corporation contributes an amount equal to 60% of the Eligible Employee's contribution then held in trust by the Corporation. The Eligible Employee's contribution shall be of a minimum of $100 monthly but shall not exceed in any event 10% (unless otherwise provided by the committee authorized to oversee the Employee Share Purchase Plan) of the Eligible Employee's basic annual remuneration (exclusive of any overtime pay, bonuses or allowances of any kind whatsoever) before deduction and shall be subject to a maximum contribution of $1,250 per month. The terms and conditions of the Employee Share Purchase Plan are more specifically addressed under the heading "Security-Based Compensation Arrangements" below.

 

Benefits

 

The Corporation's executive officers benefit program includes life, medical, dental and disability insurance, outplacement services (in case of termination without cause, including as a result of a change of control) and other benefits. Such benefits are designed to be competitive with other comparable Canadian enterprises.

 

Hedging

 

The Securities Trading Policy of the Corporation forbids directors and officers from using any strategy relating to or to use derivative instruments in respect of securities of the Corporation, including purchasing financial instruments that are designed to hedge or offset a decrease in market value of the securities of the Corporation.

 

 2021 Management Information Circular45

 

 

 

PERFORMANCE GRAPH

 

The following graph compares the total cumulative Shareholder return for $100 invested in the Corporation's Common Shares on January 1st, 2016 with the cumulative total return of the S&P/TSX Composite Index (formerly TSE-300 Index) for the five most recently completed financial years. It also presents the grant value and actual value of the compensation of the former Chief Executive Officer of the Corporation for the same period.

 

 

 

LEGEND

 

Grant Value: refers to total compensation of the Chief Executive Officer after charge backs to associate companies.

 

Actual Value: refers to total compensation of the Chief Executive Officer, after charge backs to associate companies, adjusted for the actual payout amount of the share-based awards and realized amount of the option-based awards when applicable or the fair value based on the closing price of the Common Shares on the TSX on December 31, 2020, being $16.13, when not yet realized.

 

   Osisko Gold Royalties Ltd   S&P/TSX Composite Index 
December 31, 2016  $100.00   $100.00 
December 31, 2017  $110.92   $106.03 
December 31, 2018  $91.44   $93.69 
December 31, 2019  $96.41   $111.62 
December 31, 2020  $123.22   $114.04 

 

During the five-year period ending December 31, 2020, the Common Share price of the Corporation has materially outperformed the S&P/TSX Composite Index while generally moving in the same direction of the Index.  In 2019, while the first half of the year had seen a steady improvement in the share price. The share price dropped in late 2019, which the Corporation believes reflected certain underperforming assets and the share price settle on the acquisition of Barkerville.

 

Over the same five-year period, the compensation of the former Chief Executive Officer was aligned and moved in the same direction as the Common Share price in 2016 and 2017.  In 2018, while the intended compensation was reduced from 2017, the actual compensation received by the former Chief Executive Officer remained at the same level as 2017 as a result of the first payout of RSUs (which had been granted in 2014).  The former Chief Executive Officer's actual pay for 2019 includes gross income deriving from the exercise of 5-year options granted in 2014 when the Corporation was established.  The gross income generated from such exercise of options totaled approximately $440,000.  Despite this added income for 2019, the total actual compensation of the former Chief Executive Officer has been consistently lower than his intended compensation.  This is attributable to the lower Common Share price of the Corporation and the fact that the long-term compensation of the former Chief Executive Officer (comprised of options, performance-based RSUs and timed-based RSUs) represents (since 2016) 60% of his total compensation.  In 2020, due to Management's effort which led to the spin-out of certain mining assets of the Corporation to ODV and because a strong gold price, the Common Shares of the Corporation have outperformed the market.  For 2020, Mr. Roosen's actual compensation remained substantially at the same level as in 2019, equal to the intended compensation, while the Common Share price improved substantially.

 

462021 Management Information Circular 

 

 

 

These results demonstrate alignment of the balanced approach established by the Board for the compensation of the Chief Executive Officer to the interest of the Shareholders.

 

CHIEF EXECUTIVE OFFICER COMPENSATION LOOKBACK

 

The table below sets forth the total compensation awarded to the former Chief Executive Officer over the last five years from all compensation components:

 

Year  Base Salary(1)
($)		   Value of Share-Based Awards
($)		   Value of Option-Based Awards
($)		   Non-Equity Incentive Plan Compensation
($)		   Total Compensation
($)		 
2016   363,750    509,000    500,064    525,000    1,897,814 
2017   491,000    788,766    389,955    1,105,000    2,774,721 
2018   486,481    1,269,000    106,585    444,500    2,306,566 
2019   535,438    896,900    571,170    502,600    2,506,108 
2020   682,689    690,100    395,900    822,649    2,591,338(2) 

 

NOTES:

 

(1) Refers to the base salary of the Executive Chair and former Chief Executive Officer assumed by the Corporation after charge backs to associate companies.

(2) This amount does not include the consideration of $10,000 paid to him upon signing an amendment to his employment agreement for the inclusion of a new non-competition clause.

 

The following table compares the total direct compensation awarded to the former Chief Executive Officer to the actual value he received over the last five years compared to shareholder return over the same period.  Actual compensation includes base salary (after charge backs to associate companies), actual annual incentive plan award, value of vested RSUs at payout or value of RSUs outstanding at December 31, 2020 and value of options upon exercise or value of in-the-money options outstanding at December 31, 2020.

 

           Value of $100
Year  Total Direct Compensation Awarded(1) ($)   Actual Total Direct Compensation Value as of December 31, 2020(2) ($)   Period  CEO   Shareholder 
2016   1,897,814    1,711,206   2016-01-01 to 2020-12-31  $90   $127 
2017   2,774,721    2,122,089   2017-01-01 to 2020-12-31  $76   $131 
2018   2,306,566    2,603,916   2018-01-01 to 2020-12-31  $113   $116 
2019   2,506,108    2,515,770   2019-01-01 to 2020-12-31  $100   $139 
2020(3)   2,601,338    2,628,056   2020-01-01 to 2020-12-31  $101   $130 
Average 2016 - 2020:               $96   $128 

 

NOTES:

 

(1) These amounts include the base salary (after charge backs), actual bonus paid and long-term incentive plan value at time of grant (RSUs and options).

(2) These amounts include the base salary (after charge backs), actual bonus paid, options value at vesting, value of RSUs at payout and value of exercised options (using the exercise price) and in-the-money options at the closing price on the TSX on December 31, 2020, being $16.13.

(3) As part of the RTO Transaction with ODV, Mr. Sean Roosen was appointed as Executive Chair of the Board of the Corporation on November 25, 2020 to focus on the launch of ODV.

 

CHIEF EXECUTIVE OFFICER SECURITIES OWNERSHIP AND VALUE AT RISK

 

The table below shows the total value of vested and unvested Osisko securities owned by the former Chief Executive Officer as at December 31, 2020.

 

   Number of Securities   Value of Securities(1) 
Vested Securities:  (#)   ($) 
Common Shares   664,183    10,713,272 
Options   354,030    720,669 
RSUs   -    - 
Unvested Securities:          
RSUs   218,456    3,523,695 
Options   230,100    598,446 
Total Value at Risk:        15,556,082 

 

 2021 Management Information Circular47

 

 

 

NOTE:

 

(1) The value of Common Shares and RSUs is based on the closing price on the TSX on December 31, 2020, being $16.13 and the value of vested and unvested options is based on the difference between the closing price on the TSX on December 31, 2020, being $16.13, and the exercise price of the options, multiplied by the number of options vested and unvested.

 

Mr. Roosen's value at risk totals $15,556,082, which represents 43.3 times his base salary (after charge backs).

 

EXECUTIVE COMPENSATION

 

The following table sets forth, to the extent required by applicable securities legislation, all annual and long-term compensation assumed by the Corporation (net of any amount received or back charges from any associate companies) for services in all capacities to the Corporation for the three most recent completed financial years in respect of Named Executives.

 

Summary Compensation Table

 

                  Non-Equity Incentive Plan Compensation ($)             
Name and Principal Position  Year 

Salary(1)

($)

   Share-Based Awards(2)(3)
($)		   Option-Based Awards(4)(5) 
($)		   Annual Incentive Plan(6)   Long-Term Incentive Plan   Pension Value
($)		   All Other Compensation(7)
($)		   Total Compensation
($)		 
Sean Roosen(8)  2020   682,689    690,100    395,900    822,649    —    —    10,000    2,601,338 
Executive Chair of the Board and former Chief  2019   535,438    896,900    571,170    502,600    —    —    —    2,506,108 
Executive Officer  2018   486,481    1,269,000    106,585    444,500    —    —    —    2,306,566 
Sandeep Singh(9)  2020   600,000    1,361,910    903,440    723,000    —    —    10,000    3,598,350 
President and current Chief  2019   —    2,857,500    880,793    —    —    —    —    3,738,293 
Executive Officer  2018   —    —    —    —    —    —    —    — 
Frédéric Ruel(10)  2020   269,676    362,100    235,400    325,000    —    —    10,000    1,202,176 
Chief Financial Officer and  2019   236,000    292,200    188,800    165,200    —    —    —    882,200 
Vice President, Finance  2018   230,000    285,000    184,000    146,100    —    —    —    845,100 
Elif Lévesque(11)  2020   70,457    —    —    51,800    —    —    —    122,257 
Former Chief Financial Officer and  2019   359,000    504,420    330,280    251,300    —    —    —    1,445,000 
Vice President, Finance  2018   340,000    492,000    292,342    222,300    —    —    —    1,346,642 
Luc Lessard(12)
  2020   264,180    778,500    273,312    421,770    —    —    10,000    1,747,762 
Senior Vice President,  2019   93,000    778,500    409,644    159,100    —    —    —    1,440,244 
Technical Services  2018   33,750    384,000    250,000    247,500    —    —    —    915,250 
Chris Lodder(13)  2020   383,197    1,100,000    170,000    422,472    —    —    —    2,075,669 
President of  2019   425,000    261,000    24,900    297,500    —    —    —    1,008,400 
ODV  2018   425,000    130,000    —    320,000    —    —    —    881,310 
André Le Bel  2020   218,732    447,840    253,267    340,657    —    —    10,000    1,270,496 
Vice President, Legal Affairs  2019   218,732    447,840    292,560    180,057    —    —    —    1,139,189 
and Corporate Secretary  2018   209,603    435,241    239,325    153,227    —    —    —    1,037,396 

 

NOTES:

 

(1) The respective annual base salary level of the Named Executives as at December 31, 2020 was as follows: Mr. Roosen: $359,000 (effective as of November 25, 2020, Mr. Roosen's salary level in the Corporation went from $718,000 to $359,000 because as part of the RTO Transaction his total compensation became shared equally between the Corporation and ODV (except for current outstanding equity component of his compensation), Mr. Singh: $600,000, Mr. Ruel: $275,000, Mr. Lessard: $513,000, Mr. Lodder: $425,000, Mr. Le Bel: $318,000 and Ms. Lévesque: n/a. Ms. Lévesque resigned as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020. Mr. Sandeep Singh was appointed President of the Corporation on December 31, 2019; and, therefore, he received no cash compensation for 2019.  As at December 31, 2019, their respective annual base salary level were: Mr. Roosen: $718,000, Mr. Singh: $600,000, Mr. Ruel: $236,000, Ms. Lévesque: $359,000, Mr. Lessard: $513,000, Mr. Lodder: $425,000 and Mr. Le Bel: $318,000, and as at December 31, 2018, the respective annual base salary level was: Mr. Roosen: $700,000, Mr. Singh: n/a, Mr. Ruel: $230,000, Ms. Lévesque: $350,000, Mr. Lessard: $500,000, Ms. Lodder: $425,000 and Mr. Le Bel: $310,000. 
(2) As per the terms of the Employee Share Purchase Plan, the Corporation contributes an amount equal to 60% of the Eligible Employee's contribution up to a maximum contribution of $9,000 per year. The Corporation's contributed amount to the Employee Share Purchase Plan is included in the value of the share-based awards column, as applicable.
(3) Pursuant to the RSU Plan, all Named Executives, excluding Ms. Lévesque who resigned on February 20, 2020, were awarded RSUs on May 15, 2020, subject to the vesting terms, which consist of the following terms: one half (1/2) is time-based and vesting in 2023, while the remaining portion (1/2) will also vest in 2023, subject to performance criteria toward achievement of the 2020 Long-Term Objectives over a three-year period. The unit grant price on such date was $13.50.  Mr. Lodder received a retention payment of 55,200 RSUs at a price of $13.50 per RSU on May 15, 2020 instead of his change of control payment further to the acquisition of Barkerville by the Corporation in November 2019. The RSUs awarded are timed based only and 1/3 of the RSUs vesting on each anniversary of the grant.
(4) Both the grant date fair value and accounting fair value for option-based awards are calculated using the Black-Scholes option pricing model. Specifically, a Black-Scholes option pricing model was used with the following assumptions determined on the date of grant:

 

482021 Management Information Circular 

 

 

 

Grant Date  Risk Free Interest   Expected Average Life  Expected Volatility   Expected Dividend Yield   Fair Value 
May 15, 2020   0.32%  4 years   39%   1%  $3.620 
December 31, 2019   1.66%  5 years   34%   2%  $3.520 
May 3, 2019   1.62%  4 years   34%   1%  $3.440 
May 7, 2018   2.09%  4 years   35%   2%  $3.470 
June 7, 2017   0.87%  4 years   38%   1%  $4.710 
March 21, 2016   0.62%  4 years   40%   1%  $3.919 

 

  However, the share-based compensation expense included in the Corporation's financial statements are accounted for based on vesting terms reflecting the fair value amortized for the period in accordance with International Financial Reporting Standards requirements. As part of his 2019 hiring terms, Mr. Singh was granted 250,000 Initial Options of the Corporation vesting in four equal tranches of 25% over a period of 4 years and having a term of 7 years.
(5) The Corporation reduced the long-term compensation of certain Named Executives up to a value representing 50% of such long-term compensation they received from associate companies, as more fully described under the heading "Compensation reimbursement - Associate Companies".
(6) An Annual Incentive Award was paid to each Named Executive based on the assessment of achievements with respect to the 2020 Key Objectives and the 2020 Cariboo Key Objectives, which are relevant to Messrs. Lessard and Lodder as 50% of their short-term incentive is attributable to such 2020 Cariboo Key Objectives.
(7) A payment of $10,000 was made to the Executives in consideration for the entering into an amendment to their employment agreement modifying the non-competition clause.
(8) As part of the RTO Transaction with ODV, Mr. Sean Roosen was appointed as Executive Chair of the Board of the Corporation on November 25, 2020 to focus on the launch of ODV.
(9) Upon closing of the RTO Transaction, Mr. Sandeep Singh was appointed to take on the role of President and Chief Executive Officer and Director of the Corporation, effective as of November 25, 2020. As part of Mr. Singh's employment term, the Board took into consideration the period between December 31, 2019 and the date of the grant of the long-term incentive in the 2020 annual grant; accordingly, the value of his annual grant of share-based award was increased by a value of $365,211 and the value of his option based award was increased by a value of $242,474.
(10) Mr. Frédéric Ruel was appointed as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020.
(11) Ms. Elif Lévesque resigned as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020.
(12) As part of the RTO Transaction, Mr. Luc Lessard was appointed on November 25, 2020 Chief Operating Officer of ODV and ceased to act as Senior Vice President, Technical Services of the Corporation, effective as of January 1st, 2021.
(13) As part of the RTO Transaction, Mr. Chris Lodder was appointed as President of ODV.  Mr. Lodder is also President and Chief Executive Officer of Barkerville, which was a wholly-owned subsidiary of the Corporation until its transfer to ODV on November 25, 2020.  Barkerville was originally acquired by the Corporation as part of the a plan of arrangement on November 19, 2019.  Prior to such date, Barkerville was a publicly listed company.

 

The following table shows the total compensation of the Corporation's Named Executives for the relevant years, as well as the total compensation for the Named Executives as a percentage of the cash margin and as a percentage of Shareholders' equity.  For the most recent five years, the Corporation continued establishing its long-term asset base and it was expected that in the initial years, the ratios would be higher than established companies.  The results demonstrate that the ratios have generally been improving; the increase in the ratios for 2020 is mainly attributable to the hiring of Mr. Singh, the addition of Mr. Lodder as a Named Executive and the transition for the Chief Financial Officer role.

 

Year 

Total compensation of Named Executives

($)

  

Total compensation of Named Executives as percentage of Cash Margin(1)

(%)

   Total compensation of Named Executives as percentage of Shareholders' Equity
(%)		 
2020   12,618,000    8.4    0.7 
2019   10,269,000    7.9    0.7 
2018   7,035,000    5.9    0.4 
2017   10,424,000    9.6    0.6 
2016   6,533,000    10.4    0.5 

 

NOTE:

 

(1)Cash margin reflects revenues less cost of sales.  The 2017 amount is annualized for the assets related to the precious metals portfolio acquired from Orion Resources Partners for $1.1 billion on July 31, 2017.

 

 2021 Management Information Circular49

 

 

 

 

Outstanding Share-based Awards and Option-based Awards

 

The table below sets forth a summary of all awards outstanding at the end of the financial year ended December 31, 2020. All values shown in this table were calculated using the closing price of $16.13, which was the closing price of the Common Shares on the TSX on December 31, 2020.

 

   Option-Based Awards   Share-Based Awards(1) 
  Number of
Securities
Underlying
Unexercised
Options		   Option
Exercise
Price		   Option
Expiry
Date		   Value of
Unexercised
In-the-Money
Options		   Number of
Shares or
Units of
Shares that
have not
Vested		   Market or
Payout
Value of
Share-Based
Awards that
have not
Vested		   Market or
Payout Value
of Vested
Share-Based
Awards not
paid out or
distributed		 
Name  (#)   ($)   (yyyy-mm-dd)   ($)   (#)   ($)   ($) 
Sean Roosen(2)   109,300    13.50    2025-05-15    287,459    50,500(3)         - 
Executive Chair of the Board   165,800    13.61    2024-05-03    417,816    65,200(4)           
and former Chief Executive   30,800    12.97    2023-05-07    97,328    97,100(5)    3,432,464      
Officer   82,800    16.66    2022-06-07    -                
   127,600    13.38    2021-03-21    350,900                
    3,570(6)    12.19    2024-01-31    14,066                
    3,570(6)    18.07    2022-12-08    -                
    39,270(6)    13.10    2021-12-07    118,988                
    21,420(6)    14.61    2021-03-08    32,558                
Sandeep Singh(7)(8)   249,400    13.50    2025-05-15    655,922    100,400(3)           
President and current Chief    250,000    12.70    2026-12-31    857,500    100,000    3,232,452    1,209,750 
Executive Officer                             
Frédéric Ruel(9)   65,000    13.50    2025-05-15    170,950    26,200(3)           
Chief Financial   54,800    13.61    2024-05-03    138,096    20,800(4)           
Officer and Vice   53,100    12.97    2023-05-07    167,796    21,300(5)    1,101,679    - 
President, Finance   36,900    16.66    2022-06-07    -                
    24,400    13.41    2021-11-17    66,368                
    15,500    13.38    2021-03-21    42,625                
Elif Lévesque(10)   -    -    -    -    -    -    - 
Former Chief Financial Officer                                    
and Vice President, Finance                             
Luc Lessard(11)  75,500    13.50    2025-05-15    198,565    57,000(3)         
Senior Vice President,  118,900    13.61    2024-05-03    299,628    56,500(4)          
Technical Services   72,100    12.97    2023-05-07    227,836    28,900(5)   2,653,143    - 
   77,700    16.66    2022-06-07    -                
    69,200    13.38    2021-03-21    190,300                
    14,280(6)    14.61    2021-03-08    21,706                
Chris Lodder(12)   46,900    13.50    2025-05-15    123,347    26,300(3)    1,314,595    - 
President of ODV   2,677(6)    12.19    2024-01-31    10,547    55,200(12)           
    17,850(6)    16.81    2023-06-05    -                
    38,377(6)    13.10    2021-12-07    116,282                
    18,742(6)    14.61    2021-03-08    28,488                
André Le Bel   69,900    13.50    2025-05-15    183,837    32,500(3)           
Vice President,    84,900    13.61    2024-05-03    213,948    32,200(4)           
Legal Affairs and   57,300    12.97    2023-05-07    181,068    33,000(5)    1,575,901    - 
Corporate Secretary   57,600    16.66    2022-06-07    -                

 

NOTES:
(1)  Pursuant to the RSU Plan, the vesting terms generally consist of the following terms: half (1/2) is time-based (3 years) and the remaining portion (1/2) is also timed based (3 years) and subject to performance criteria toward achievement of the Long-term objectives. 
(2)  As part of the RTO Transaction with ODV, Mr. Sean Roosen was appointed as Executive Chair of the Board of the Corporation on November 25, 2020 to focus on the launch of ODV.
(3)  Such RSUs to vest in 2023 pursuant to the terms listed in note (1) above.
(4)  Such RSUs to vest in 2022 pursuant to the terms listed in note (1) above.
(5)  Such RSUs to vest in 2021 pursuant to the terms listed in note (1) above.
(6)  The number of unexercised options represent Replacement Osisko Options pursuant to a plan of arrangement involving Osisko and Barkerville, which took effect on November 21, 2019.
(7)  Upon closing of the RTO Transaction, Mr. Sandeep Singh was appointed to take on the role of President and Chief Executive Officer and Director of the Corporation, effective as of November 25, 2020.
(8)  As part of his 2019 hiring terms, Mr. Singh was granted 250,000 Initial Options of the Corporation vesting in four equal tranches of 25% over a period of 4 years and having a term of 7 years. In addition, he was also awarded 225,000 Initial RSUs, including 75,000 RSUs the vesting of which was subject to the acquisition of 75,000 Common Shares of the Corporation; such RSUs have vested on January 14, 2020.  The balance of 150,000 Initial RSUs, vests in three equal tranches over three years; a first tranche vested on December 31, 2020.
(9)  Mr. Frédéric Ruel was appointed as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020.
(10)  Ms. Elif Lévesque resigned as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020.
(11)  As part of the RTO Transaction, Mr. Luc Lessard was appointed on November 25, 2020 Chief Operating Officer of ODV and ceased to act as Senior Vice President, Technical Services of the Corporation, effective as of January 1st, 2021.
(12)  As part of the RTO Transaction, Mr. Chris Lodder was appointed as President of ODV.  Mr. Lodder is also President and Chief Executive Officer of Barkerville, which was a wholly-owned subsidiary of the Corporation until its transfer to ODV on November 25, 2020. Mr. Lodder received a retention payment of 55,200 RSUs at a price of $13.50 per RSU on May 15, 2020 instead of his change of control payment further to the acquisition of Barkerville by the Corporation in November 2019. The RSUs awarded are timed based only and 1/3 of the RSUs vesting on each anniversary of the grant.

 

502021 Management Information Circular 

 

 

 

Incentive Plan Awards - Value Vested or Earned during the Year

 

The following table discloses the aggregate dollar value that would have been realized if the options under the option-based award had been exercised on the vesting date and the aggregate value realized upon vesting of share-based awards. 

 

Name 

Option-Based Awards
- Value Vested during
the Year

($)

   Share-Based Awards -
Value Vested during
the year(1)
($)		   Non-Equity Incentive Plan
Compensation -
Value earned during the
Year(2)
($)		 
Sean Roosen(3)
Executive Chair of the Board and former Chief Executive Officer		   3,798    352,359    822,649 
Sandeep Singh(4)
President and current Chief Executive Officer		   214,375    1,739,490    723,000 
Frédéric Ruel(5)
Chief Financial Officer and Vice President, Finance		   6,549    163,533    325,000 
Elif Lévesque(6)
Former Chief Financial Officer and Vice President, Finance		   -    239,094    51,800 
Luc Lessard(7)
Senior Vice President, Technical Services		   8,893    330,915    421,770 
Chris Lodder(8)
President of ODV		   -    -    422,472 
André Le Bel
Vice President, Legal Affairs and Corporate Secretary		   8,547    248,217    340,657 

 

NOTES:
(1)  As applicable, this amount includes the value of the Corporation's contribution to the Employee Share Purchase Plan in relation to the participation of each Named Executive as well as the value of the RSUs granted in 2017 and which were settled in Common Shares of the Corporation at a price of $12.57 per RSU, being the closing price on the TSX on June 5, 2020.
(2)  This amount represents the sum of the annual cash incentive. Furthermore, the amounts shown for Messrs. Lessard and Le Bel are the amounts assumed by the Corporation, net of any reimbursement received by the Corporation in connection with any annual incentive paid by associate companies to Messrs. Lessard and Le Bel for 2020.
(3)  As part of the RTO Transaction with ODV, Mr. Sean Roosen was appointed as Executive Chair of the Board of the Corporation on November 25, 2020 to focus on the launch of ODV.
(4)  Upon closing of the RTO Transaction, Mr. Sandeep Singh was appointed to take on the role of President and Chief Executive Officer and Director of the Corporation, effective as of November 25, 2020.
(5)  Mr. Frédéric Ruel was appointed as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020.
(6)  Ms. Elif Lévesque resigned as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020.
(7)  As part of the RTO Transaction, Mr. Luc Lessard was appointed on November 25, 2020 Chief Operating Officer of ODV and ceased to act as Senior Vice President, Technical Services of the Corporation, effective as of January 1st, 2021.
(8)  As part of the RTO Transaction, Mr. Chris Lodder was appointed as President of ODV.  Mr. Lodder is also President and Chief Executive Officer of Barkerville, which was a wholly-owned subsidiary of the Corporation until its transfer to ODV on November 25, 2020.

 

Options Exercised during the Year

 

Name 

Number of
Options
Exercised

(#)

  

Option Exercise
Price

($)

   Market
Value Upon
Exercise
($)		  

Gain Realized(1)

($)

 
André Le Bel   25,300    13.38    16.29    73,623 

  

NOTE:
(1) The gain realized is calculated based on the difference between the closing price upon exercise and the exercise price of the Options, multiplied by the number of options so exercised.

 

Security-Based Compensation Arrangements

 

Options granted or securities issued by the Corporation pursuant to the Corporation's security-based compensation arrangements are governed by the following plans: the Employee Share Purchase Plan, DSU Plan, RSU Plan and the Stock Option Plan.

 

 2021 Management Information Circular51

 

 

 

 

The Employee Share Purchase Plan

 

The Employee Share Purchase Plan provides for the acquisition of Common Shares by Eligible Employees (as hereinafter defined) for the purpose of advancing the interests of the Corporation through the motivation, attraction and retention of employees of the Corporation and to secure for the Corporation and the Shareholders of the Corporation the benefits inherent in the ownership of Common Shares by employees of the Corporation, it being generally recognized that employees are more motivated and dedicated due to the opportunity offered to them to acquire a proprietary interest in the Corporation.

 

The Stock Option Plan

 

The purpose of the Stock Option Plan is to advance the interests of the Corporation by encouraging the officers, managers, employees and consultants of the Corporation and its subsidiaries to acquire shares in the Corporation, thereby increasing their proprietary interest in the Corporation, encouraging them to remain associated with the Corporation and its subsidiaries and furnishing them with additional incentive in their efforts on behalf of the Corporation and its subsidiaries.

 

The RSU Plan

 

The purpose of the RSU Plan is to assist the Corporation and its subsidiaries in attracting and retaining individuals with experience and ability, to allow certain employees of the Corporation and its subsidiaries to participate in the long-term success of the Corporation and to promote a greater alignment of interests between the employees designated under this RSU Plan and the Shareholders of the Corporation.

 

The DSU Plan

 

The purpose of the DSU Plan is to assist the Corporation and its subsidiaries in attracting and retaining individuals with experience and ability, to allow directors of the Corporation and its subsidiaries to participate in the long-term success of the Corporation and to promote a greater alignment of interests between the directors designated under this DSU Plan and the Shareholders of the Corporation.

 

ELIGIBILITY

 

Who is eligible to participate?

 

The Employee Share Purchase Plan

 

Participants in the Employee Share Purchase Plan are employees, including full-time and part-time salaried employees who have an employment agreement for a term of at least one year with the Corporation or with any associates of the Corporation designated by the Board of Directors of the Corporation or by the committee of the Board of Directors authorized to oversee the Employee Share Purchase Plan (the "Designated Affiliates"), who have provided services to the Corporation or to any Designated Affiliates for at least 60 days. The HR Committee may elect, in its absolute discretion, to waive such 60-day period or to determine that the Employee Share Purchase Plan does not apply to any Eligible Employee.

 

The Stock Option Plan

 

Pursuant to the Stock Option Plan, options may be granted in favour of executive directors, officers, employees and consultants providing ongoing services to the Corporation and its subsidiaries. Non-executive directors are not eligible to receive options. The Replacement Osisko Options, which were originally offered to Barkerville option holders, are not part of the Osisko Stock Option Plan.

 

522021 Management Information Circular 

 

 

The DSU Plan

 

Pursuant to the DSU Plan a non-executive director of the Board of Directors of the Corporation or a subsidiary is eligible to participate under the DSU Plan.

  

The RSU Plan

 

Pursuant to the RSU Plan, RSUs may be granted in favour of the executives and key employees of the Corporation or of a subsidiary. For greater certainty, non-executive members of the Board of Directors shall not participate in the RSU Plan. On March 29, 2021, the Board approved amendments to the RSU Plan to allow consultants to participate in the plan of the Corporation. Accordingly, the term "Consultant" has been defined under the RSU Plan and the provision on Eligibility now includes Consultants. As shown on the extracts of the plan below:

 

""Consultant" shall mean an individual, other than an employee of the Corporation, a Subsidiary or an affiliate thereof, that: (i) is engaged to provide, on an ongoing bona fide basis, consulting, technical, management or other services to the Corporation, a Subsidiary or an affiliate thereof, other than services provided in relation to a distribution to the Corporation's securities; (ii) provides the services under a written contract with the Corporation, a Subsidiary or an affiliate thereof for an initial, renewable or extended period of twelve months or more; and (iii) in the reasonable opinion of the Corporation, spends or will spend a significant amount of time and attention on the affairs and business of the Corporation, a Subsidiary or an affiliate thereof; and includes, for an individual consultant, a corporation of which the individual consultant is an employee or shareholder, and a partnership of which the individual consultant is an employee or partner.

 

4. ELIGIBILITY

 

The Committee designates, upon recommendation from the Executive Chair and President and Chief Executive Officer, from time to time and at their sole discretion, the executives, key employees and Consultants of the Corporation or of a Subsidiary who are entitled to participate in the Plan."

 

TERM AND VESTING

 

What is the term and vesting schedule of options or of the securities issuable under the security-based compensation arrangements?

 

The Employee Share Purchase Plan

 

Under the Employee Share Purchase Plan, any Eligible Employee may elect to contribute money on an ongoing basis. The Corporation will deduct from the remuneration of the Eligible Employee the Eligible Employee contribution in equal installments starting on the first day of such quarter and hold these amounts in trust for the Eligible Employee. As soon as practicable following March 31, June 30, September 30 and December 31 in each calendar year, the Corporation will credit the Eligible Employee with and therefore hold in trust for the Eligible Employee an amount equal to 60% of the Eligible Employee's contribution then held in trust by the Corporation (up to a maximum of $9,000 per year) and shall issue for the account of each Eligible Employee fully paid and non-assessable Common Shares equal in value to the aggregate contribution held in trust by the Corporation as of such date. The Corporation's contribution will vest on December 31st of the calendar year with respect to which they have been issued. No fraction of a Common Share shall be issued to the Eligible Employees, but any unused balance of the aggregate contribution shall be held in trust for the Eligible Employee until used in accordance with the Employee Share Purchase Plan.

 

The Employee Share Purchase Plan was initially approved by the Shareholders on June 30, 2015 and was implemented by the Corporation on October 1st, 2015.

 

 2021 Management Information Circular53

 

 

The Stock Option Plan

 

The options granted under the Stock Option Plan, shall be exercised within a period of time fixed by the Board of Directors, not to exceed seven (7) years from the date the option is granted (the "Option Period"). The options shall vest and may be exercised during the Option Period in such manner as the Board of Directors may fix by resolution. The options which have vested may be exercised in whole or in part at any time and from time to time during the Option Period. To date, all granted options have a term of five years, except for the 250,000 Initial Options granted to Mr. Sandeep Singh on December 31st, 2019, which, as part of his hiring terms, have a term of seven years.

  

Upon a change of control, all outstanding options shall vest and become immediately exercisable.

 

The DSU Plan

 

Unless otherwise indicated by the HR Committee upon grant and subject to the provision on termination of service of the DSU Plan, (i) the DSUs granted to a Participant in accordance with such Participant's election to receive all or a portion of the Participant's annual remuneration as director in DSUs, shall vest immediately upon such grant and (ii) the DSUs granted to a Participant as an annual grant shall generally vest, unless otherwise provided upon such grant, one day prior to the Corporation's next annual meeting of Shareholders. Notwithstanding the foregoing, the HR Committee may, in its entire discretion, set a different vesting or accelerate the terms of vesting of any DSUs in circumstances deemed appropriate by the HR Committee.

 

Upon a change of control, all unvested DSUs become vested at the time of the Change of Control, irrespective of any vesting conditions.  The settlement of such DSUs however remains subject to the termination of the Director's mandate.

 

At any time after the termination of service of a Participant to whom DSUs have been granted, and which have vested, but no later than the last business day in December of the first calendar year commencing after such termination, on a date chosen by such Participant (the "Settlement Date"), the Corporation shall pay to the Participant or his or her legal representative the value of such Participant's vested DSUs, in cash or in Common Shares of the Corporation or a combination of cash and Common Shares, at the Corporation's election on the Settlement Date.

 

For U.S. based Directors, vested DSUs become payable during the year after the termination of their Board mandate or the next subsequent year, as determined by them at the time of the respective grant, but no later than the last business day in December of the first calendar year commencing after the termination of their mandate.

 

Should the Corporation chose to pay the Participant in cash, such Participant will receive an amount equal to the number of DSUs vested to his or her account as of that date multiplied by the market value of one (1) Common Share on the Settlement Date, the whole subject to withholding taxes. Should the Corporation chose to issue Common Shares in payment of the DSUs to a Participant, such Participant will receive such number of Common Shares equivalent to the number of DSUs vested to his or her account as of that date, subject to withholding taxes. A Participant shall not be entitled to require payment of any amount on account of DSUs credited to such Participant's account prior to his or her termination.

 

The RSU Plan

 

Unless otherwise indicated by the HR Committee upon grant and subject to the provision on death, termination not for cause, retirement or Long-Term Disability of the RSU Plan, each RSU shall vest on the third (3rd) anniversary of the grant date. Furthermore, in the case of RSUs subject to performance vesting conditions, such RSUs shall also be multiplied by the performance percentage determined by the Board of Directors of the Corporation upon vesting, provided, however, that should such performance percentage exceeds 100%, then the Corporation shall be entitled to settle such exceeding amount in cash.  However, the HR Committee may, in its entire discretion, accelerate the terms of vesting of any RSUs in circumstances deemed appropriate by the HR Committee.

 

542021 Management Information Circular 

 

 

Upon a change of control, all outstanding RSUs vest, irrespective of any performance vesting conditions.

 

Following the vesting date, the holder of RSUs shall receive, at the election of the Corporation on the settlement date, as applicable (i) a certificate registered in the name of the holder representing in the aggregate such number of Common Shares as the holder shall then be entitled to receive and/or (ii) a payment in the form of a cheque, or other payment method as determined by the HR Committee, of any cash portion then payable to the holder, in each case, less any applicable withholding taxes and other deductions required by law to be withheld by the Corporation in connection with the satisfaction of the holder's RSUs. Once settled, the holder shall have no further entitlement in connection with such vested RSUs under the RSU Plan.

  

NUMBER OF SECURITIES ISSUED OR ISSUABLE

 

How many securities are authorized to be issued under the security-based compensation arrangements and what percentage of the Corporation's shares outstanding do they represent?

 

The Employee Share Purchase Plan

 

The maximum number of Common Shares made available for the Employee Share Purchase Plan shall not exceed 0.1% of the issued and outstanding Common Shares of the Corporation at any one time.

 

Should the Corporation issue additional Common Shares in the future, the number of Common Shares issuable under the Employee Share Purchase Plan will increase accordingly. The Employee Share Purchase Plan is considered an "evergreen" plan, since the Common Shares issued under the Employee Share Purchase Plan shall be available for subsequent grants under this plan.

 

The TSX rules provide that all unallocated options, rights or other entitlements under a security based compensation arrangement, which does not have a fixed number of maximum securities issuable, must be approved every three years. The unallocated entitlements under the Employee Share Purchase Plan were submitted and ratified by the Shareholders on May 3rd, 2018.

 

The Stock Option Plan

 

The aggregate number of Common Shares to be delivered upon the exercise of all options granted under the Stock Option Plan shall not exceed the greater of 4% of the issued and outstanding Common Shares at the time of granting of options (on a non-diluted basis) or such other number as may be approved by the TSX and the Shareholders of the Corporation from time to time.

 

If any option granted under the Stock Option Plan shall expire or terminate for any reason without having been exercised in full, the unpurchased Common Shares subject thereto shall again be available for the purpose of the Stock Option Plan.

 

As a result, should the Corporation issue additional Common Shares in the future, the number of Common Shares issuable under the Stock Option Plan will increase accordingly. The Stock Option Plan is considered an "evergreen" plan, since the Common Shares covered by options which have been exercised under the Stock Option Plan shall be available for subsequent grants under the Stock Option Plan.

 

 2021 Management Information Circular55

 

 

The TSX rules provide that all unallocated options, rights or other entitlements under a security based compensation arrangement, which does not have a fixed number of maximum securities issuable, must be approved every three years. The unallocated options under the Stock Option Plan were submitted and ratified by the Shareholders on June 22, 2020.

 

The DSU Plan

 

The total number of Common Shares reserved and available for issuance pursuant to this DSU Plan shall not exceed a number of Common Shares equal to 0.5% of the total issued and outstanding Common Shares of the Corporation on the Settlement Date (on a non-diluted basis), or such other number as may be approved by the TSX and the Shareholders of the Corporation from time to time. Any increase in the issued and outstanding Common Shares will result in an increase in the number of Common Shares that may be issued pursuant to this DSU Plan or any other proposed or established share compensation arrangement of the Corporation.

 

The TSX rules provide that all unallocated options, rights or other entitlements under a security based compensation arrangement, which does not have a fixed number of maximum securities issuable, must be approved every three years. The unallocated entitlements under the DSU Plan were submitted and ratified by the Shareholders on May 1st, 2019.

 

The RSU Plan

 

The total number of Common Shares reserved and available for grant and issuance pursuant to the RSU Plan shall not exceed a number of Common Shares equal to 1.8% of the total issued and outstanding Common Shares of the Corporation at the time of granting of RSUs (on a non-diluted basis), or such other number as may be approved by the TSX and the Shareholders of the Corporation from time to time. Any increase in the issued and outstanding Common Shares will result in an increase in the number of Common Shares that may be issued pursuant to the RSU Plan or any other proposed or established share compensation arrangement of the Corporation.

 

The TSX rules provide that all unallocated options, rights or other entitlements under a security based compensation arrangement, which does not have a fixed number of maximum securities issuable, must be approved every three years. The unallocated entitlements under the RSU Plan were submitted and ratified on May 3rd, 2018.

 

Equity Compensation Plan Information

 

The following table shows, as of December 31, 2020, aggregated information for the Corporation's compensation plans under which equity securities of the Corporation are authorized for issuance from treasury. As of December 31, 2020, the Corporation had 167,165,341 Common Shares issued and outstanding.

 

Plan Category Number of
Common Shares
to be Issued Upon
Exercise of
Outstanding
Options, DSUs or
RSUs
(#) and (% of the
issued and
outstanding
Common
Shares(5))		 Weighted
Average Exercise
Price of
Outstanding
Options
($)		 Number of Common
Shares Remaining
Available for Future
Issuance Under the
Equity Compensation
Plans
(#) and (% of the
issued and outstanding
Common Shares(5))
Equity Compensation Plans of the Corporation
approved by the Shareholders:		      
• Employee Share Purchase Plan(1)                     N/A N/A    167,165 (or 0.1%)
       
• Deferred Share Unit Plan(2) 408,564 (or 0.2%) N/A    427,262 (or 0.3%)
       
• Restricted Share Unit Plan(3) 1,242,902 (or 0.7%) N/A 1,766,074 (or 1.1%)
       
• Stock Option Plan(4) 3,745,968 (or 2.2%) 13.88 2,940,645 (or 1.8%)
       
Equity Compensation Plans of the Corporation
not approved by the Shareholders		                        N/A N/A                         N/A
Total: 5,397,434 (or 3.2%) 13.88 5,301,146 (or 3.2%)
 
NOTES:
   
(1) The aggregate number of Common Shares issuable under the Employee Share Purchase Plan shall not exceed 0.1% of the issued and outstanding Common Shares. Pursuant to the terms of the Employee Share Purchase Plan, Common Shares are issued on a quarterly basis at the weighted average closing price for the five (5) consecutive trading days prior to the end of each applicable financial quarter of the Corporation or to be purchased on the TSX at market price.  Accordingly, no exercise right is applicable to this plan.
(2) The aggregate number of Common Shares issuable under the DSU Plan shall not exceed 0.5% of the issued and outstanding Common Shares. Unless otherwise decided by the Board of Directors, DSUs vest on the day prior to the next annual meeting of Shareholders following such grant and DSUs entitle the right to receive a payment in the form of Common Shares, cash or a combination of Common Shares and in cash.  The weighted average exercise price for DSUs is not applicable, given that the DSU settlement value is based on the closing market price of the Common Shares of the Corporation traded on the TSX on the day prior to the settlement date. Settlement of DSUs is subject to withholding taxes.
(3) The aggregate number of Common Shares issuable under the RSU Plan shall not exceed 1.8% of the issued and outstanding Common Shares. Unless otherwise decided by the Board of Directors, RSUs have a three-year vesting period and RSUs provide the right to receive a payment in the form of Common Shares, cash or a combination of Common Shares and in cash.  The weighted average exercise price for RSUs is not applicable, given that the RSU settlement value is based on the closing market price of the Common Shares of the Corporation traded on the TSX on the day prior to the settlement date.  Settlement of RSUs is subject to withholding taxes.
(4) The aggregate number of Common Shares to be delivered upon the exercise of all options granted under the Stock Option Plan shall not exceed 4% of the issued and outstanding Common Shares at the time of granting options (on a non-diluted basis).
(5) Percentages are rounded to the nearest decimal.
         

In 2020, the Corporation granted 1,201,100 options to participants under the Stock Option Plan representing 0.72% of the issued and outstanding Common Shares as of December 31, 2020, the Corporation granted 504,560 RSUs to participants under the RSU Plan representing 0.30% of the issued and outstanding Common Shares as of December 31, 2020 and the Corporation granted 97,995 DSUs to participants under the DSU Plan representing 0.06% of the issued and outstanding Common Shares as of December 31, 2020.

 

As at March 22, 2021, 3,343,434 Common Shares were issuable upon the exercise of outstanding options representing 2.0% of the issued and outstanding Common Shares of the Corporation. Such options are exercisable at exercise prices ranging from $11.22 to $17.84 per share and are due to expire at the latest on December 31, 2026.

 

562021 Management Information Circular 

 

 

INSIDER PARTICIPATION LIMIT

 

What is the maximum percentage of securities available under the security-based compensation arrangements to the Corporation's insiders?

 

In order to comply with TSX rules:

 

(a) the aggregate number of Commons Shares issuable to insiders, from time to time, under all security based compensation arrangements may not exceed 10% of the total number of issued and outstanding Common Shares; and

 

(b) the number of Common Shares issued to insiders under all security based compensation arrangements during any one-year period may not exceed 10% of the total number of issued and outstanding Common Shares.

 

MAXIMUM ISSUABLE TO ONE PERSON

 

What is the maximum number of securities any one person is entitled to receive under the security-based compensation arrangements and what percentage of the Corporation's outstanding capital does this represent?

 

The Employee Share Purchase Plan

 

As per the terms of the Employee Share Purchase Plan, the Corporation contributes an amount equal to 60% of the Eligible Employee's contribution up to a maximum of $9,000 per year (assuming an Eligible Employee contributed the maximum monthly contribution of $1,250 ($15,000 annually). Common Shares are issued on a quarterly basis at the weighted average closing price of the Corporation's Common Share as listed on the TSX for the five (5) consecutive trading days prior to the end of each applicable financial quarter of the Corporation or be purchased on the TSX at market price.

 

The Stock Option Plan

 

The number of Common Shares subject to an option granted to a participant under the Stock Option Plan shall be determined in the resolution of the Board of Directors and no participant shall be granted an option which exceeds 4% of the issued and outstanding Common Shares of the Corporation at the time of granting of the option.

 

The DSU Plan

 

The number of Common Shares that may be issued to a Participant under the DSU Plan cannot exceed 0.5% of the issued and outstanding Common Shares at the time of settlement of the DSUs.

 

The RSU Plan

 

The number of Common Shares that may be issued to a Participant under the RSU Plan cannot exceed 1.8% of the issued and outstanding Common Shares at the time of settlement of the RSUs.

 

EXERCISE / PURCHASE PRICE

 

How is the exercise price determined under the security-based compensation arrangements?

 

The Employee Share Purchase Plan

 

The Common Shares issued under the Employee Share Purchase Plan shall be issued at the weighted average closing price of the Corporation's Common Share as listed on the TSX for the five (5) consecutive trading days prior to the end of each applicable financial quarter of the Corporation or be purchased on the TSX at market price.

 

 2021 Management Information Circular57

 

 

 

The Stock Option Plan

 

The exercise price of the options granted under the Stock Option Plan will be established by the Board of Directors subject to the rules of the regulatory authorities having jurisdiction over the securities of the Corporation, including the TSX. The exercise price at the time of the grant of the options shall not be less than the closing market price of the Common Shares listed on the TSX on the day prior to their grant.

 

The DSU Plan

 

The issue price pursuant to the DSU Plan is determined based on the closing market price of the Common Shares of the Corporation traded on the TSX on the day prior to the date of grant or settlement.

 

The RSU Plan

 

The value of a RSU at the time of grant or at the time of settlement is usually determined by the HR Committee based on the closing price of the Common Shares listed on the TSX on the day prior to such grant or settlement.

 

CESSATION

 

Under what circumstances is an individual no longer entitled to participate?

 

The Employee Share Purchase Plan

 

Under the Employee Share Purchase Plan, an Eligible Employee shall automatically cease to be entitled to participate in the Employee Share Purchase Plan, upon termination of the employment of the Eligible Employee with or without cause by the Corporation or the Designated Affiliate or cessation of employment of the Eligible Employee with the Corporation or a Designated Affiliate as a result of resignation or otherwise other than retirement of the Eligible Employee after having attained a stipulated age in accordance with the Corporation's normal retirement policy or earlier with the Corporation's consent.

 

The Stock Option Plan

 

If a participant to the Stock Option Plan shall cease to be an officer, manager, consultant or employee of the Corporation or a subsidiary for any reason (other than disability, retirement with the consent of the Corporation or death) the options granted to such participant may be exercised in whole or in part by the participant during a period commencing on the date of such cessation and ending 180 days thereafter or on the expiry date, whichever comes first. If a participant to the Stock Option Plan shall cease to be an officer, manager, consultant or employee of the Corporation or a subsidiary by reason of disability or retirement with the consent of the Corporation, the options granted to such participant may be exercised in whole or in part by the participant, during a period commencing on the date of such termination and ending one year thereafter or on the expiry date, whichever comes first. In the event of the death of the participant, the options previously granted to such participant shall automatically vest and may be exercised in whole or in part by the legal person representative of the participant for a period of one year or until the expiry date, whichever comes first.

 

582021 Management Information Circular 

 

 

The DSU Plan

 

Unless otherwise determined by the HR Committee, the following events shall constitute an event of Termination upon which all DSUs awarded to such Participant and vested at the time of such event of Termination shall be paid to such Participant, in accordance with the terms of the DSU Plan and the Letter of Grant:

 

(i) resignation of a Participant as member of the Board;

 

(ii) decision of a Participant not to stand for re-election as member of the Board;

 

(iii) non proposal of a Participant for re-election as member of the Board; or

 

(iv) death of a Participant.

 

The RSU Plan

 

Unless otherwise determined by the Board, the following provisions shall apply in the event that a participant ceases to be employed by the Corporation or by a subsidiary:

 

a) Termination for cause and voluntary resignation - If a Participant ceases to be an employee as a result of termination for cause, or as a result of a voluntary termination, effective as of the date notice is given to the participant of such termination, as of the date on which the Corporation or the subsidiary receives communication of a voluntary resignation, all outstanding RSUs shall be terminated.

 

b) Death, termination not for cause, retirement or long-term disability - If a participant ceases to be an employee of the Corporation or a subsidiary as a result of death, termination not for cause, retirement or long-term disability, the vesting of RSUs shall be subject to the following:

 

i. For each outstanding RSUs granted ― Fixed Component:

 

A.in the event the participant is not entitled to a benefits extension period, the vesting of the fixed component portion of each RSU grant will be prorated based on the number of days actually worked from the date of grant of such RSUs until the date of death, termination not for cause, retirement or long-term disability, over the number of days of the original vesting schedule set forth in relation to such grant; or

 

B.in the event the participant is entitled to a benefits extension period, the vesting of the fixed component portion of each RSU grant will be prorated based on the sum of the number of days within the benefits extension period and those actually worked from the date of grant of such RSUs up until the date of death, termination not for cause, retirement or long-term disability, over the number of days of the original vesting schedule set forth in relation to such grant; and

 

ii. For each outstanding RSUs granted ― Performance Vesting: the vesting of all performance based RSU grant will be prorated based on the number of days actually worked from the date of grant of such RSUs up until the date of death, termination not for cause, retirement or long term disability, over the original vesting schedule set forth in relation to such grant; the number of vested RSUs resulting from such prorated calculation will be multiplied by the performance percentage determined by the Board of Directors of the Corporation.

 

For greater clarity, a voluntary resignation will be considered as retirement if the participant has reached normal retirement age under the Corporation's benefit plans or policies, unless the HR Committee decides otherwise at its sole discretion.

 

 2021 Management Information Circular59

 

  

 

ASSIGNABILITY AND TRANSFERABILITY

 

Can options or rights held pursuant to the security-based compensation arrangements be assigned or transferred?

 

All benefits, rights and options accruing to any participant in accordance with the terms and conditions of the Employee Share Purchase Plan, DSU Plan, RSU Plan and of the Stock Option Plan shall not be transferable unless under the laws of descent and distribution or pursuant to a will. All options, DSUs, RSUs and such benefits and rights may only be exercised in accordance with such plans.

 

AMENDMENT PROVISIONS

 

How are the security-based compensation arrangements amended? Is Shareholder approval required?

 

The Employee Share Purchase Plan

 

The HR Committee authorized by the Board of Directors to oversee the Employee Share Purchase Plan has the following rights, without the approval of the Shareholders of the Corporation:

 

i) suspend or terminate and to re-instate the Employee Share Purchase Plan;

 

ii) any amendment to the Employee Share Purchase Plan not contemplated under the section requiring Shareholders' approval, including but not limited to:

 

(a) to make any amendment of a "housekeeping" nature, including, without limitation, amending the wording of any provision of the Employee Share Purchase Plan for the purpose of clarifying the meaning of existing provisions or to correct or supplement any provision of the Employee Share Purchase Plan that is inconsistent with any other provision of the Employee Share Purchase Plan, correcting grammatical or typographical errors and amending the definitions contained in the Employee Share Purchase Plan;

 

(b) any amendment to comply with the rules, policies, instruments and notices of any regulatory authority to which the Corporation is subject, including the TSX, or to otherwise comply with any applicable law or regulation;

 

(c) any amendment to the vesting provisions of the Employee Share Purchase Plan;

 

(d) any amendment to the provisions concerning the effect of the termination of an Eligible Employee employment or services on such Eligible Employee's status under the Employee Share Purchase Plan;

 

(e) any amendment respecting the administration or implementation of the Employee Share Purchase Plan.

 

The HR Committee authorized by the Board of Directors to oversee the Employee Share Purchase Plan, may with the approval of the Shareholders of the Corporation by ordinary resolution, make any of the following amendments to the Employee Share Purchase Plan:

 

i) any increase to the number of Common Shares issuable from treasury under the Plan or a change from a fixed maximum number of Common Shares to a fixed maximum percentage;

 

602021 Management Information Circular 

 

 

ii) an amendment to the level of the Corporation's contribution set to an amount that is equal to 60% of the Eligible Employee's contribution;

 

iii) any amendment to the contribution mechanism relating to the Corporation's contribution;

 

iv) any amendment to the categories of persons who are Eligible Employees; or

 

v) any amendment that may modify or delete any of this Section requiring Shareholders' approval.

 

Notwithstanding the foregoing, any amendment to the Employee Share Purchase Plan shall be subject to the receipt of all required regulatory approvals including, without limitation, the approval of the TSX.

 

The Stock Option Plan

 

The Board of Directors may, without the approval of the Shareholders of the Corporation but subject to receipt of requisite approval from the TSX, in its sole discretion make the following amendments to the Stock Option Plan:

 

i) any amendment of a "housekeeping" nature;

 

ii) a change to the vesting provisions of an option or the Stock Option Plan;

 

iii) a change to the termination provisions of an option or the Stock Option Plan which does not entail an extension beyond the original expiry date; and

 

iv) the addition of cashless exercise feature, payable in cash or securities, which provides for a full deduction of the number of underlying securities from the Stock Option Plan reserve.

 

The approval of the Board of Directors and the requisite approval from the TSX and the Shareholders shall be required for any of the following amendments to be made to the Stock Option Plan:

 

i) any increase to the number of shares issuable under the Stock Option Plan or a change from a fixed maximum number of shares to a fixed maximum percentage;

 

ii) a reduction in the exercise price of an option (for this purpose, a cancellation or termination of an option of a participant prior to its expiry for the purpose of reissuing options to the same participant with a lower exercise price shall be treated as an amendment to reduce the exercise price of an option), other than for standard anti-dilution purposes;

 

iii) an increase in the maximum number of shares that may be issued to insiders within any one-year period or that are issuable to insiders at any time;

 

iv) an extension of the term of any option beyond the original expiry date (except, for greater certainty, in cases of blackout period in conformity with the terms of the Stock Option Plan);

 

v) any change to the definition of "Participant" included in the Stock Option Plan which would have the potential of broadening or increasing insider participation;

 

 2021 Management Information Circular61

 

 

vi) the addition of any form of financial assistance;

 

vii) any amendment to a financial assistance provision which is more favorable to optionees;

 

viii) the addition of a cashless exercise feature, payable in cash or securities, which does not provide for a full deduction of the number of underlying securities from the Stock Option Plan reserve;

 

ix) the addition of a deferred or restricted share unit or any other provision which results in optionees receiving securities while no cash consideration is received by the Corporation;

 

x) any amendment to the transferability provision of the Stock Option Plan;

 

xi) any amendment that may modify or delete any of the amendment disposition requiring Shareholders' approval; and

 

xii) any other amendments that may lead to significant or unreasonable dilution in the Corporation's outstanding securities or may provide additional benefits to the participants of the Stock Option Plan, especially insiders, at the expense of the Corporation and its existing Shareholders.

 

The DSU Plan

 

The Board may, without shareholder approval but subject to receipt of requisite approval from the TSX, in its sole discretion make all other amendments to the DSU Plan that are not of the type contemplated in the amendment provision requiring Shareholders' approval, including, without limitation:

 

(i) amend, suspend or terminate the Plan in whole or in part or amend the terms of DSUs credited in accordance with the Plan. If any such amendment, suspension or termination will materially or adversely affect the rights of a Participant with respect to DSUs credited to such Participant, the written consent of such Participant to such amendment, suspension or termination shall be obtained. Notwithstanding the foregoing, the obtaining of the written consent of any Participant to an amendment, suspension or termination which materially or adversely affects the rights of such Participant with respect to any credited DSUs shall not be required if such amendment, suspension or termination is required in order to comply with applicable laws, regulations, rules, orders of government or regulatory authorities or the requirements of any stock exchange on which shares of the Corporation are listed. If the HR Committee terminates the Plan, DSUs previously credited to Participants shall remain outstanding and in effect and be settled in due course in accordance with the terms of this Plan (which shall continue to have effect, but only for such purposes) on the Settlement Date.

 

The approval of the Board of Directors and the requisite approval from the TSX and the Shareholders of the Corporation (by simple majority vote) shall be required for any of the following amendments to be made to the DSU Plan:

 

(i) any amendment to the number of shares issuable under the DSU Plan, including an increase in the fixed maximum number of shares or a change from a fixed maximum number of shares to a fixed maximum percentage;

 

(ii) any change to the definition of "Participant" which would have the potential of broadening or increasing insider participation; and

 

622021 Management Information Circular 

 

 

(iii) any amendment that may modify or delete any of the amendment provision requiring Shareholders' approval.

 

The RSU Plan

 

The Board may, without Shareholder approval but subject to receipt of requisite approval from the TSX, in its sole discretion make all other amendments to the RSU Plan that are not of the type contemplated in the amendment provision requiring Shareholders' approval, including, without limitation:

 

(i) amend, suspend or terminate the RSU Plan in whole or in part or amend the terms of RSUs credited in accordance with the RSU Plan. If any such amendment, suspension or termination will materially or adversely affect the rights of a participant with respect to RSUs credited to such participant, the written consent of such participant to such amendment, suspension or termination shall be obtained. Notwithstanding the foregoing, the obtaining of the written consent of any participant to an amendment, suspension or termination which materially or adversely affects the rights of such participant with respect to any credited RSUs shall not be required if such amendment, suspension or termination is required in order to comply with applicable laws, regulations, rules, orders of government or regulatory authorities or the requirements of any stock exchange on which shares of the Corporation are listed. If the HR Committee terminates the RSU Plan, RSUs previously credited to participants shall remain outstanding and in effect and be settled in due course in accordance with the terms of this RSU Plan (which shall continue to have effect, but only for such purposes) on the settlement date.

 

The approval of the Board of Directors and the requisite approval from the TSX and the Shareholders of the Corporation (by simple majority vote) shall be required for any of the following amendments to be made to the RSU Plan:

 

(i) any increase to the number of shares issuable under the RSU Plan or a change from a fixed maximum number of shares to a fixed maximum percentage;

 

(ii) any change to the definition of "Participant" which would have the potential of broadening or increasing insider participation; and

 

(iii) any amendment that may modify or delete any of the amendment provision requiring Shareholders' approval.

 

Were any amendments made to the security-based compensation arrangements in the last financial year?

 

On May 8, 2020, the Board of Directors resolved to amend the Corporation's Employee Share Purchase Plan, Stock Option Plan and RSU Plan. The amendments made to these plans are described below:

 

The Employee Share Purchase Plan was amended to reduce the number of Common Shares to be issued under the Employee Share Purchase Plan from 0.5% to 0.1% of the issued and outstanding Common Shares of the Corporation.

 

The Stock Option Plan was amended to reduce the number of Common Shares to be issued under the Stock Option Plan from 5% to 4% of the issued and outstanding Common Shares of the Corporation.

 

The RSU Plan was amended to reduce the number of Common Shares to be issued under the RSU Plan from 2.0% to 1.8% of the issued and outstanding Common Shares of the Corporation.

 

These plans have also been amended to clarify that only increases to the number of Common Shares issuable under the Employee Share Purchase Plan, the Stock Option Plan and the RSU Plan require the approval from Shareholders, which is in compliance with the TSX rules.

 

 2021 Management Information Circular63

 

 

FINANCIAL ASSISTANCE

 

Does the Corporation provide any financial assistance to participants to purchase shares under the security-based compensation arrangements?

 

The Employee Share Purchase Plan

 

Under the Employee Share Purchase Plan, the Corporation will contribute to the Eligible Employee contribution an amount equal to 60% of the Eligible Employee's contribution cumulated at the end of each interim period of the Corporation up to a maximum of $9,000 per year.

 

The Stock Option Plan

 

There is no provision allowing financial assistance under the Stock Option Plan.

 

The DSU Plan and RSU Plan

 

Not applicable

 

CHANGE OF CONTROL PROVISIONS

 

Are there any adjustment provisions under the security-based compensation arrangements?

 

The Employee Share Purchase Plan

 

Under the Employee Share Purchase Plan, if there is a change of control of the Corporation, all unvested Common Shares held in trust for an Eligible Employee shall be immediately deliverable to the Eligible Employee. The Corporation's contribution shall immediately be made and the Common Shares shall be issued for the then aggregate contribution based on the Current Market Value (as defined in the Employee Share Purchase Plan) of the Common Shares on the date of the change of control prior to the completion of the transaction which results in the change of control and that such Common Shares shall be immediately delivered to the Eligible Employees.

 

In addition, in the event there is any change in the Common Shares, whether by reason of a stock dividend, consolidation, subdivision, reclassification or otherwise, an appropriate adjustment shall be made by the committee authorized by the Board to oversee the Employee Share Purchase Plan in the number of Common Shares available under the Employee Share Purchase Plan. If such an adjustment shall result in a fractional Common Share, the fraction shall be disregarded. All such adjustments shall be conclusive, final and binding for all purposes of the Employee Share Purchase Plan.

 

The Stock Option Plan

 

Under the Stock Option Plan, if there is a change of control of the Corporation, all unvested options outstanding at the time of the change of control shall vest and become immediately exercisable.

 

Under the Stock Option Plan, in the event that the outstanding Common Shares are changed into or exchanged for a different number or kind of shares or other securities of the Corporation, or in the event that there is a reorganization, amalgamation, consolidation, subdivision, reclassification, dividend payable in capital stock or other change in capital stock of the Corporation, then each participant holding an option shall thereafter upon the exercise of the option granted to him, be entitled to receive, in lieu of the number of shares to which the participant was theretofore entitled upon such exercise, the kind and amount of shares or other securities or property which the participant would have been entitled to receive as a result of any such event if, on the effective date thereof, the participant had been the holder of the shares to which he was theretofore entitled upon such exercise.

 

642021 Management Information Circular 

 

 

In the event the Corporation proposes to amalgamate, merge or consolidate with any other Corporation (other than with a wholly-owned subsidiary of the Corporation) or to liquidate, dissolve or wind-up, or in the event an offer to purchase the shares of the Corporation or any part thereof shall be made to all Shareholders, the Corporation shall have the right, upon written notice thereof to each participant, to require the exercise of the option granted pursuant to the Stock Option Plan within the thirty (30) day period following the date of such notice and to determine that upon such thirty (30) day period, all rights of the participant to exercise same (to the extent not theretofore exercised) shall ipso facto terminate and cease to have any further force or effect whatsoever.

 

The DSU Plan

 

Under the DSU Plan, if a Change of Control takes place, all unvested DSUs become vested at the time of the Change of Control.  The settlement of such DSUs however remains subject to the termination of the Director's mandate.

 

Whenever dividends are paid on Common Shares, additional DSUs will be automatically granted to each participant who holds DSUs on the record date for such distribution of dividend. The number of such DSUs (rounded to the nearest whole DSU) to be credited as of a dividend payment date shall be determined by dividing the aggregate dividend that would have been paid to such participant if the participant's DSUs had been Common Shares by the market value on the date on which the distributions were paid on the Common Shares. DSUs granted to a participant under the section on credits shall be subject to the same vesting as the DSUs to which they relate.

 

The RSU Plan

 

Under the RSU Plan, if there is a change of control of the Corporation, all outstanding RSUs vest, irrespective of any performance vesting conditions.

 

In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation, recapitalization, amalgamation, plan of arrangement, reorganization, spin-off or other distribution (other than normal cash dividends) of the Corporation's assets to Shareholders or any other change affecting the Common Shares, such adjustments as are required to reflect such change shall be made with respect to the number of RSUs in the accounts maintained for each participant, provided that no fractional RSUs shall be issued to participants and the number of RSUs to be issued in such event shall be rounded down to the next whole number of RSUs.

 

Whenever dividends are paid on Common Shares, additional RSUs will be automatically granted to each participant who holds RSUs on the record date for such dividend. The number of such RSUs (rounded to the nearest whole RSU) to be credited as of a dividend payment date shall be determined by dividing the aggregate dividends that would have been paid to such participant if the participant's RSUs had been Common Shares by the market value on the date on which the dividends were paid on the Common Shares. RSUs granted to a participant under the section on credits for dividends shall be subject to the same vesting as the RSUs to which they relate.

 

BLACK-OUT PERIODS

 

Are there any blackout period provisions under the security-based compensation arrangements?

 

Under the Stock Option Plan, in the event that the term of an option expires during such period of time during which insiders are prohibited from trading in shares as provided by the Corporation's Securities Trading Policy, as it may be implemented and amended from time to time or within 10 business days thereafter, the option shall expire on the date that is 10 business days following the Blackout Period (as defined in the Stock Option Plan). Although the Blackout Period would only cover insiders of the Corporation, the extension would apply to all participants who have options, which expire during the Blackout Period.

 

 2021 Management Information Circular65

 

  

 

PENSION PLAN BENEFITS

 

The Corporation has not adopted any retirement plan or pension plan providing for payment of benefits.

 

TERMINATION AND CHANGE OF CONTROL BENEFITS

 

The Corporation has entered into employment agreements with its Named Executives on terms and conditions comparable to market practice for public issuers in the same industry and market and of the same size as the Corporation. As part of the RTO Transaction, M. Lodder's employment agreement (entered into with Barkerville), was transferred to and assumed by ODV effective on the closing of the RTO Transaction. Therefore, this section is not applicable to Mr. Lodder.  In the case of termination of employment initiated by the Corporation for reasons other than just cause, the Corporation will make the following severance payments to its Named Executives:

 

• Executive Chair of the Board and former Chief Executive Officer: 1.5 x (annual base salary level + average annualized bonus paid or declared in the last two years); and

 

• other Named Executives: 1.0 x (annual base salary level + average annualized bonus paid or declared in the last two years).

 

The Corporation shall also continue all of the Named Executive's benefits for a corresponding period of time equal to one (1) year (one and a half (1.5) year for the Executive Chair of the Board and former Chief Executive Officer) from the cessation of the Named Executive's employment (the "Extended Benefits Period"). Any RSUs held by the Named Executive, as applicable, shall vest and be payable pursuant to the provisions of the RSU plan, as amended from time to time. The Named Executives shall also be entitled to exercise options vesting during Extended Benefit Period pursuant to the provisions of the Stock Option Plan.

 

In the case of termination of employment initiated by the Corporation for reasons other than just cause, including constructive dismissal, within 18 months following a Change of Control ("CoC"), the Named Executives will be entitled to the following severance payment ("CoC severance"):

 

• Executive Chair of the Board and former Chief Executive Officer, the President and current Chief Executive Officer: 2.0 x (annual base salary level + average annualized bonus paid or declared in the last two years);

 

• other Named Executives: 1.5 x (annual base salary level + average annualized bonus paid or declared in last two years);

 

• in the event the CoC event is deemed by the Board of Directors to be "hostile", CoC severance payments may also be made to Named Executives who voluntarily resigns within 6 months following the "hostile" CoC.

 

Upon a CoC, all unvested options and RSUs vest, irrespective of any performance conditions. The Corporation shall also continue all of the Named Executives' benefits for a corresponding period of time equal to one and a half (1.5) year (two (2) years for the Executive Chair of the Board and former Chief Executive Officer and the President and current Chief Executive Officer).

 

In addition to any severance payment, the Named Executives will be entitled to the current year short-term incentive payment in accordance with the actual achievements for the period they were employed.

 

662021 Management Information Circular 

 

 

Termination by the Corporation Without Cause

 

If a Named Executive is terminated by the Corporation without cause, such Named Executive will be entitled to:

 

Compensation(1)  Sean Roosen(2)
($)		   Sandeep Singh(3)
($)		   Frédéric Ruel(4)
($)		   Luc Lessard(5)
($)		   André Le Bel
($)

Cash Severance

Annual base salary level(6)
Average Annualized Bonus(7)

  538,500
512,925		   600,000
600,000		   275,000
245,100		   513,000
462,350		   318,000
302,900

Unvested Equity acceleration

Options(8)
 RSUs(9)

     502,627
2,667,202		    433,015
1,416,568		    158,946
724,850		    242,011
1,442,818		   205,591 1,073,544

Benefits

Insurance and Others(10)

     63,600    59,700    58,300    59,100   58,600
TOTAL     4,284,854    3,109,283    1,462,196    2,719,279   1,958,635

 

NOTES:

  
(1) All amounts are calculated as at December 31, 2020; all Named Executives are entitled to one (1) time (1.5 times for Executive Chair of the Board and former Chief Executive Officer), the sum of the Named Executive's (i) annual base salary level and (ii) average annualized bonus paid or declared in the last two years (or target bonus if the Named Executive had not completed two full years of employment); they are also entitled to the acceleration of all unvested equity and the maintaining of most benefits for a term of 12 months (18 months for Executive Chair of the Board and former Chief Executive Officer). In addition, all Named Executives are also entitled to receive payment of any accrued unpaid vacation. Amounts reflected in the table do not take into consideration any part of the compensation assumed by an associate company of the Corporation.
(2) As part of the RTO Transaction with ODV, Mr. Sean Roosen was appointed as Executive Chair of the Board of the Corporation on November 25, 2020 to focus on the launch of ODV.
(3) Upon closing of the RTO Transaction, Mr. Sandeep Singh was appointed to take on the role of President and Chief Executive Officer and Director of the Corporation, effective as of November 25, 2020.
(4) Mr. Frédéric Ruel was appointed as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020.
(5) Mr. Luc Lessard's employment agreement was transferred to and is assumed by ODV effective as of January 1st, 2021.
(6) As at December 31, 2020, the respective annual base salary level of the relevant Named Executives was as follows: Mr. Roosen: $359,000 (effective as of November 25, 2020, Mr. Roosen's salary level in the Corporation went from $718,000 to $359,000 because as part of the RTO Transaction his total compensation is shared equally between the Corporation and ODV (except for current outstanding equity component of his compensation), Mr. Singh: $600,000, Mr. Ruel: $275,000, Mr. Lessard: $513,000 and Mr. Le Bel: $318,000.
(7) For the Named Executives, these amounts reflect one (1) time (1.5 times for the Executive Chair of the Board and former Chief Executive Officer) the average annualized bonus paid or declared in the last two years (or target bonus if the Named Executive had not completed two full years of employment). In addition to any severance payment, the Named Executive will be entitled to the current year payment in accordance with the actual achievements for the period they were employed.
(8) These amounts reflect the aggregate dollar value that would be realized by multiplying the number of unvested options which would vest during the Extended Benefit Period by the difference between $16.13, being the closing price of the Common Shares of the Corporation on the TSX on December 31, 2020 and the respective exercise price of such options.
(9) These amounts are prorated based on the period worked during the Extended Benefit Period (also taking into account achievement of all long-term objectives) by $16.13 being the closing price of the Common Shares of the Corporation on the TSX on December 31, 2020.
(10) These amounts represent the dollar value of the insurance benefit of the Named Executives which would be continued for a term of 12 months (18 months for the Executive Chair of the Board); benefits include group insurance (but exclude long-term disability) and outplacement benefits in an amount of $50,000 and other benefits.

 

 2021 Management Information Circular67

 

  

Termination of Employment Following Change in Control

 

The Named Executive will be entitled to the following severance payment (i) if they are terminated by the Corporation for reasons other than just cause, including constructive dismissal within 18 months following a CoC, or (ii) if the Named Executives voluntary resign within 6 months following a CoC which has been deemed "hostile" by the Board of Directors of the Corporation:

 

Compensation(1)  Sean Roosen(2)
($)		   Sandeep Singh(3)
($)		   Frédéric Ruel(4)
($)		   Luc Lessard(5)
($)		   André Le Bel
($)

Cash Severance

Annual base salary level (6)
 Average Annualized Bonus(7)

  718,000
683,900		   1,200,000
1,200,000		   412,500
367,650		   769,500
693,525		   477,000
454,350

Unvested Equity acceleration

Options(8)
RSUs(9)

     598,446
3,432,464		    1,299,047
3,232,452		    318,945
1,101,679		    474,262
2,296,912		   399,465 1,575,901
Benefits
 Insurance and Others(10)		     68,100    69,500    62,500    63,600   62,900
TOTAL     5,500,910    7,000,999    2,263,274    4,297,799   2,969,616

 

NOTES:  
(1) All amounts are calculated as at December 31, 2020; all relevant Named Executives are entitled to 1.5 time (2.0 times for Executive Chair of the Board and former Chief Executive Officer and the President and Chief Executive Officer) the sum of the Named Executive's (i) annual base salary level and (ii) average annualized bonus paid or declared in the last two years (or target bonus if the Named Executive had not completed two full years of employment) they are also entitled to the acceleration of all unvested equity and the maintaining of most benefits for a term of 18 months (24 months for the Executive Chair of the Board and former Chief Executive Officer and the President and current Chief Executive Officer). In addition, all Named Executives are also entitled to receive payment of any accrued unpaid vacation. Amounts reflected in the table do not take into consideration any part of the compensation assumed by an associate company of the Corporation.
(2) As part of the RTO Transaction with ODV, Mr. Sean Roosen was appointed as Executive Chair of the Board of the Corporation on November 25, 2020 to focus on the launch of ODV.
(3) Upon closing of the RTO Transaction, Mr. Sandeep Singh was appointed to take on the role of President and Chief Executive Officer and Director of the Corporation, effective as of November 25, 2020.
(4) Mr. Frédéric Ruel was appointed as Chief Financial Officer and Vice President, Finance of the Corporation on February 20, 2020.
(5) Mr. Luc Lessard's employment agreement was transferred to and is assumed by ODV effective as of January 1st, 2021.
(6) As at December 31, 2020, the respective annual base salary level of the relevant Named Executive was as follows: Mr. Roosen: $359,000 (effective as of November 25, 2020, his salary level in the Corporation went from $718,000 to $359,000 because as part of the RTO Transaction his total compensation is shared equally between the Corporation and ODV (except for current outstanding equity component of his compensation), Mr. Singh: $600,000, Mr. Ruel: $275,000, Mr. Lessard: $513,000 and Mr. Le Bel: $318,000.
(7) For the Named Executives, these amounts reflect 1.5 times (two (2) times for the Executive Chair of the Board and former Chief Executive Officer and the President and current Chief Executive Officer) the average annualized bonus paid or declared in the last two years (or target bonus if the Named Executive had not completed two full years of employment). In addition to any severance payment, the Named Executive will be entitled to the current year short-term incentive payment in accordance with the actual achievements for the period they were employed.
(8) These amounts reflect the aggregate dollar value that would be realized by multiplying the number of unvested options by the difference between $16.13, being the closing price of the Common Shares of the Corporation on the TSX on December 31, 2020 and the respective exercise price of such options.
(9) These amounts reflect the aggregate dollar value that would be realized by multiplying the number of RSUs (the vesting of which would be accelerated as a result of such CoC, irrespective of any performance condition) by $16.13 being the closing price of the Common Shares of the Corporation on the TSX on December 31, 2020.
(10) These amounts represent the dollar value of the insurance benefit of the Named Executives which would be continued for a term of 18 months (24 months for the Executive Chair of the Board and former Chief Executive Officer and the President and current Chief Executive Officer); benefits include group insurance (but exclude long-term disability) and outplacement benefits in an amount of $50,000 and other benefits.

 

In May 2020, the HR Committee reviewed the non-competition clauses provided for in the employment agreements of each of the Executives of the Corporation. Pursuant to its assessment and deliberations, the Board approved, following the recommendations of the HR Committee, to amend the non-competition clauses to provide for the following terms in each of the Executive employment agreements:

 

Type of Termination Non-Competition Period
For Cause 12 months  
Without Cause 6 months
By the Executive 6 months
Following a Change of Control 6 months

 

All Executives have entered into an amendment to the employment agreement originally entered into with the Corporation, except for Mr. Lodder who had a contract with Barkerville at the time, which is still in effect. The Executives received a $10,000 consideration for agreeing to amend the terms of their employment agreement.

 

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Each of the Named Executives undertakes, following the date of his termination for any reason, not to solicit the Corporation's agents, administrators, officers, directors, managers or business executives, consultants or employees for a period of 12 months.

 

For greater certainty and notwithstanding anything to the contrary, any payment to be made to a Named Executive as a result of a termination by the Corporation without cause or termination of employment following change in control will be adjusted to take into account the particulars of the employment situation of such Named Executive with associate companies or subsidiary of the Corporation.

 

Policy on Recovery of Incentive Compensation

 

In May 2015, the Board, following the recommendation of the HR Committee, adopted a written Policy on Recovery of Incentive Compensation (the "Policy" - also commonly known as a "Clawback Policy") which will apply to the Executive Chair of the Board, the President and Chief Executive Officer, Senior Vice Presidents and Vice Presidents (the "Executive Officers") of the Corporation (including former Executive Officers). While the original text of this Policy allowed the Board, in its discretion, to establish and reserve the right to recover all or portion of awards made only under the short-term incentive program (the "Annual Incentive Compensation") paid to an Executive Officer with respect to the most recent financial year upon the occurrence of certain events, the Policy was amended in March 2018 to allow the Board, in its discretion, to establish and reserve the right to recover all or portion of (i) an Annual Incentive Compensation and (ii) all cash based and equity based compensation awarded to the Corporation's Executive Officers (collectively, the "Incentive Compensation") in direct relation to and upon the occurrence of the following which shall be deemed an event that would require a recalculation:

 

(i) such amount received by an Executive Officer was calculated based on, or contingent on, achieving: (a) certain financial results that are subsequently the subject of or affected by a restatement of all or a portion of the Corporation's financial statements or (b) reported reserves or resources which are subsequently determined to be overstated;

 

(ii) an Executive Officer was involved in gross negligence, intentional misconduct or fraud that caused or partially resulted in such restatement, misstatement or overstatement; and

 

(iii) the Incentive Compensation payment received would have been lower had the financial results, production results or reserves and resources been properly reported.

 

The amended and revised Policy affects future awards made under the short-term and long-term incentive program.  Further, Management of the Corporation will continue to monitor, in conjunction with the HR Committee, the evolution of regulatory framework in Canada with respect to compensation policies and ensure that the Policy is reviewed annually and is properly aligned with Shareholders' best interests.

 

SECURITIES OWNERSHIP

 

Formal securities ownership guidelines (the "Guidelines") were assented by the Board of Directors on May 6, 2015 in order to further align the long-term interests of the Corporation's Shareholders and that of its directors and officers. On March 18, 2020, further to a review of the Guidelines by the HR Committee, changes were proposed to enhance the Guidelines.  Given recent changes in the organizational structure of the Corporation, the HR Committee and the Board amended the ownership requirement level, since the base salary together with the long-term and short-term incentives of certain Vice Presidents doesn't measure to the level as other Vice Presidents. In addition, the HR Committee and the Board also amended the method of calculation for the determination of the value of the securities held, now being based on the TSX closing price of the Common Shares of the Corporation on December 31st or, if this date is not a trading day, on the last TSX trading day of the year.

 

The ownership requirements can be met through the holding of Common Shares, DSUs and RSUs.

 

 2021 Management Information Circular69

 

  

 

The following table illustrates the amounts and levels established for the minimum requirement for non-executive directors and Named Executives, with the exception of Mr. Lodder who was never directly employed by the Corporation:

 

Categories Securities Ownership Levels
(as Multiple of Annual Base Salary Level/Retainer)
Lead Director and Directors 2.0 Times Basic Retainer and DSUs
Executive Chair and former Chief Executive Officer
President and current Chief Executive Officer		 3.0 Times Annual Base Salary Level
Senior Vice President 2.5 Times Annual Base Salary Level
CFO, Vice President, Legal Affairs and Corporate Secretary 2.0 Times Annual Base Salary Level

 

Newly elected or appointed directors, newly appointed Named Executives have three years to comply with the ownership requirements from the date of election or appointment. Further to a salary increase, each Named Executive and other Vice President whose salary has been so increased shall also have three years to comply with the increased level of ownership requirements deriving from such salary increase, starting from the effective date of such increase. The following table sets out the securities ownership status of non-executive directors and Named Executives as at December 31, 2020 at a closing price of $16.13:

 

The Securities Ownership of Directors and Named Executives:

 

   HOLDINGS 
Total Value(1)		   Securities Ownership Level(2)   Compliance with the Guidelines
Name and Position  Number of Common Shares   Number of DSUs   Number of RSUs
(Fixed Component only)		  ($)   ($)   Yes / No / Target Date
John R. Baird
Director since April 6, 2020		   2,818    18,876   n/a   349,924    320,000   Yes
Françoise Bertrand
Director since November 24, 2014		   1,200    65,887   n/a   1,082,113    320,000   Yes
John Burzynski
Director since April 30, 2014		   18,866    35,711   n/a   880,327    320,000   Yes
Christopher C. Curfman
Director since May 4, 2016		   10,500    48,698   n/a   954,863    320,000   Yes
Joanne Ferstman(3)
Lead Director since April 30, 2014		   19,500    99,053   n/a   1,912,260    560,000   Yes
W. Murray John
Director since February 19, 2020		   10,000    18,430   n/a   458,576    320,000   Yes
Pierre Labbé(3)
Director since February 17, 2015		   6,145    55,805   n/a   999,254    320,000   Yes
André Le Bel(3)
Vice President, Legal Affairs and Corporate Secretary since
February 17, 2015		   64,667    n/a   49,985   1,849,337    636,000   Yes
Luc Lessard(4)
Senior Vice President, Technical Services since June 30, 2015		   62,591    n/a   72,612   2,180,824    1,282,500   Yes
Charles E. Page
Director since April 30, 2014		   55,215    66,104   n/a   1,956,875    320,000   Yes
Sean Roosen(5)
Director since April 30, 2014
Executive Chair since November 25, 2020		   664,183    n/a   109,235   12,475,232    1,077,000   Yes
Frédéric Ruel
Chief Financial Officer and Vice President, Finance since February 20, 2020		   24,433    n/a   34,903   957,090    550,000   Yes
Sandeep Singh
President and Chief Executive Officer
since November 25, 2020		   139,795    n/a   152,019   4,706,960    1,800,000   Yes

 

NOTES:
(1)  As provided in the Guidelines, the value of holdings is based on TSX closing price of the Common Shares of the Corporation on December 31st, 2020, being $16.13.
(2)  For Named Executives, the level of securities ownership is based on salaries effective as of December 31, 2020.
(3)  Further to the closing by the Corporation of its $300 million offering of convertible senior unsecured debentures on November 3, 2017, the following directors, and Named Executives subscribed, directly or indirectly, in said financing however, their respective investment is not taken into account in determining their compliance with the Guidelines: Joanne Ferstman: $100,000, Pierre Labbé: $25,000 and André Le Bel: $25,000.
(4)  As part of the RTO Transaction, Mr. Luc Lessard was appointed on November 25, 2020 as Chief Operating Officer of ODV and ceased to act as Senior Vice President, Technical Services of the Corporation, effective as of January 1st, 2021.  Therefore, the Securities Ownership Guidelines no longer apply to Mr. Lessard.
(5)  As part of the RTO Transaction with ODV, Mr. Sean Roosen was appointed as Executive Chair of the Board of the Corporation on November 25, 2020 to focus on the launch of ODV. Effective as of November 25, 2020, his salary level in the Corporation went from $718,000 to $359,000 because as part of the RTO Transaction his total compensation is shared equally between the Corporation and ODV (except for current outstanding equity component of his compensation).
               

 

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As at December 31, 2020, the aggregate value of the total number of securities held by non-executive directors and Named Executives (only including the fixed component of RSUs) represents a value of $30,763,636 ($26,195,406 as of March 22, 2021).

 

STATEMENT OF CORPORATE GOVERNANCE PRACTICES

 

The Corporation is committed to sound corporate governance practices. The Board of Directors has carefully considered the Corporate Governance Guidelines set forth in Policy Statement 58-201 to Corporate Governance Guidelines. A description of the Corporation's corporate governance practices is set out below in response to the requirements of Regulation 58-101 respecting Disclosure of Corporate Governance Practices ("Regulation 58-201") and in the form set forth in Form 58-101F1 "Corporate Governance Disclosure".

 

Majority Voting and Director Resignation Policy for Election of Directors

 

The Majority Voting and Director Resignation Policy for uncontested director elections is in effect since April 2014 and was last amended on March 30, 2016 to reflect comments received from the TSX. Under such policy, if a nominee does not receive the affirmative vote of at least the majority of votes cast at the meeting of Shareholders, the director shall promptly tender his or her resignation for consideration by the Governance and Nomination Committee and the Board. The Governance and Nomination Committee will consider such resignation and make a recommendation to the Board of Directors. The policy is available on the Corporation's website at www.osiskogr.com.

 

Composition of the Board of Directors

 

As of March 22, 2021, the Board of Directors consists of a majority of independent directors given that, of the eleven (11) directors currently serving on the Board of Directors, nine (9) are considered independent directors (82% of the Board of Directors are independent).  Upon election of the nominee directors at the Meeting, of the nine (9) directors duly elected, seven (7) will be considered independent directors (78% of the Board of Directors will be independent).

 

The independence of each director is determined by the Board based on the results of independence questionnaires completed by each director annually and on other information reviewed on an ongoing basis.

 

Policy regarding Tenure on the Board of Directors

 

The Board of Directors is committed to a process of Board renewal and succession-planning for non-executive directors in order to balance the benefits of experience with the need for new perspectives to the Board while maintaining an appropriate degree of continuity and adequate opportunity for transition of Board and Board Committee roles and responsibilities. Accordingly, the Corporation adopted on March 30, 2016 a policy regarding the tenure on the Board of Directors (the "Board Tenure Policy").

 

The Governance and Nomination Committee is responsible for recommending nominees for election to the Board and, in furtherance of such responsibility, it analyzes the competencies and skills of existing non-executive directors, oversees an annual director evaluation process, and assesses the current and future needs of the Board, including the need to comply with the Corporation's Policy regarding the diversity of the Board of Directors (as more fully described below).

 

In order to assist the Governance and Nomination Committee and the Board in succession-planning for non-executive directors and appropriate Board renewal, the Board has adopted limits on Board tenure. Non-executive directors will not be re-nominated for election at an annual meeting after the earlier of the following has occurred:

 

(a) such director has served 12 years following the later of (i) March 30, 2016 and (ii) the date on which the director first began serving on the Board (the "Term Limit"); or

 

(b) such director has reached the age of 72 years old on or before the date of the annual or special meeting of Shareholders of the Corporation called in respect of the election of directors (the "Retirement Age"); provided that, for greater certainty, there should be no expectation that a non-executive director will serve on the Board for the periods contemplated by the Term Limit or until such director reaches the Retirement Age (collectively the "Board Tenure Limits").

 

 2021 Management Information Circular71

 

 

Notwithstanding the foregoing, the Board Tenure Limits shall not apply to a non-executive director who has yet to be elected annually for the fifth consecutive time by the Shareholders in accordance with the Corporation's Majority Voting and Director Resignation Policy. Once a non-executive director has been elected or re-elected for five (5) times, these Board Tenure Limits apply notwithstanding that such director has continued to receive satisfactory annual performance evaluations, has needed skills and experience and meets other Board policies or legal requirements for Board service.

 

Exceptionally, on a case-by-case basis and on the recommendation of the Governance and Nomination Committee, a non-executive director who has reached the Term Limit or the Retirement Age may be nominated to serve on the Board for up to a maximum of two (2) additional years.

 

In determining whether to make such a recommendation to the Board, the Governance and Nomination Committee shall consider the following factors, among others:

 

(a) the director has received positive annual performance assessments;

 

(b) the Governance and Nomination Committee believes it is in the best interests of the Corporation that the director continues to serve on the Board; and

 

(c) the director has been re-elected annually by the Corporation's Shareholders in accordance with the Corporation's Majority Voting and Director Resignation Policy.

 

Notwithstanding the foregoing, the Board retains full discretion in approving such recommendation by the Governance and Nomination Committee.

 

In addition, directors are expected to inform the Executive Chair of the Board or the Lead Director of any major change in their principal occupation so that the Board would have the opportunity to decide the appropriateness of such director's continuance as a member of the Board or of a Board Committee. Directors are also expected to provide the Executive Chair of the Board or the Lead Director with information as to all boards of directors that they sit on or that they have been asked to join so as to allow the Board to determine whether it is appropriate for such director to continue to serve as a member of the Board or of a Board Committee. The Governance and Nomination Committee will apply Board nominee selection criteria, including directors' past contributions to the Board and availability to devote sufficient time to fulfill their responsibilities, prior to recommending directors for re-election for another term. A copy of the Board Tenure Policy is available on the Corporation's website at www.osiskogr.com.

 

Independence of Directors - Majority of Directors is Independent

 

The Board has approved independence standards that require that a majority of its directors be independent. The independence of a director is determined in accordance with Regulation 52-110 or Regulation 58-101 further to voluntary disclosure by each director. Furthermore, the Board of Directors may determine that a director has no material relationship with the Corporation, including as a partner, Shareholder or officer of an organization that has a relationship with the Corporation. A "material relationship" is a relationship which could, in the view of the Board, be reasonably expected to interfere with the exercise of a director's independent judgment and includes an indirect material relationship. In determining whether a director is independent, the Board applies standards derived from the Canadian Securities Administrators director independence rules. The Board determines the independence of a director when it approves director nominees for inclusion in this Circular. Based on the results of independence questionnaires completed by each nominee and other information, the Board determined that seven (7) of the nine (9) nominees proposed for election as directors have no material relationship with the Corporation and are, therefore, independent.

 

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The following table indicates the independence status of each of the nine (9) nominees for election to the Board of Directors:

 

Name Independent Non-Independent Reason for Non-Independence
John R. Baird ✓   N/A
Christopher C. Curfman ✓   N/A
Joanne Ferstman ✓   N/A
W. Murray John ✓   N/A
Pierre Labbé ✓   N/A
Candace MacGibbon ✓   N/A
Charles E. Page ✓   N/A
Sean Roosen   ✓ Executive Chair of the Board
Sandeep Singh   ✓ President and Chief Executive Officer

 

Messrs. Roosen and Singh are non-independent directors given their respective position as Executive Chair of the Board and President and Chief Executive Officer.

 

Furthermore, in connection with the listing of the shares of the Corporation on the NYSE on July 6, 2016, the Corporation ensured that at least a majority of its directors satisfied the director independence requirements under Section 303A.02 of the NYSE corporate governance standards. On an annual basis, the Board of Directors reviews and determines the independence of each director for both Canadian and U.S. purposes.

 

The NYSE requires the Corporation, as a "foreign private issuer" that is not required to comply with all of the NYSE's corporate governance standards applicable to U.S. domestic issuers, to disclose any significant ways in which its corporate governance practices differ from those followed by NYSE listed U.S. domestic issuers. Except for one practice relating to internal audit function, the differences between the Corporation's practices and those required by the NYSE rules applicable to U.S. domestic issuers are not significant. The statement of differences can be found on the Corporation's website at osiskogr.com/en/governance-2/osisko-practices-and-nyse-rules/.

 

Non-Independent Executive Chair of the Board

 

The Board of Directors has been led by Mr. Sean Roosen since his appointment as Chair of the Board of Directors of the Corporation in April 2014. As part of the RTO Transaction, Mr. Roosen was appointed as Executive Chair of the Board and Mr. Sandeep Singh was appointed as President and Chief Executive Officer of the Corporation on November 25, 2020 in order to allow Mr. Roosen to focus on the launch and growth of ODV.

 

The Executive Chair of the Board takes all reasonable measures to ensure the Board fulfills its oversight responsibilities. The Executive Chair is responsible for the management, the development and the effective performance of the Board, and provides leadership to the Board for all aspects of the Board's work.

 

In addition to the responsibilities applicable to all directors, the responsibilities of the Executive Chair of the Board include the following: (a) presiding at all meetings of the Corporation's shareholders and of the Board; (b) planning and organizing the activities of the Board in consultation with management including the preparation for, and the conduct of, Board meetings, as well as the quality, quantity and timeliness of the information that goes to the Board; (c) during Board meetings, encouraging full participation and discussion by individual directors, stimulating debate, facilitating consensus, and ensuring that clarity regarding decisions is reached and duly recorded; (d) fostering ethical and responsible decision making by the Board and its individual members; (e) providing advice, counsel and mentorship to the President and Chief Executive Officer and fellow members of the Board; (f) acting with the Lead Director as principal liaison between the independent directors and the President and Chief Executive Officer on sensitive issues; (g) ensuring, in cooperation with the President and Chief Executive Officer and the Board, that there is an effective succession plan in place for the President and Chief Executive Officer position and the other senior management positions of the Corporation; (h) assisting the President and Chief Executive Officer and other members of the senior management team in the short and long range planning activities of the Corporation, including the acquisition and growth strategies; (i) ensuring the achievement, on an annual basis, of the corporate objectives which the management team is responsible for meeting, for the review and approval by the HR Committee and Board of Directors; (j) in conjunction with the President and Chief Executive Officer, representing the Corporation before its stakeholders, including shareholders, managers and employees, the investment community, the industry and the public; (k) undertaking the lead on any corporate governance matter that the Board may request from time to time; (l) developing and maintaining a good working relationship between the office of the Executive Chair, the President and Chief Executive Officer and the Board to assure open communication, cooperation, interdependence, mutual trust, respect, and commonality of purpose; (m) taking steps to foster the Board's understanding of its responsibilities and boundaries with management; (n) establishing any other procedures to govern the effective and efficient conduct of the Board's work; (o) establishing the agenda for the meetings of the Board in conjunction with the President and Chief Executive Officer, and ensuring the proper timely flow of information to the Board sufficiently in advance of the meetings; (p) ensuring minutes of the Board meetings are available in a timely manner; (q) ensuring Committees of the Board report to the Board on their activities; (r) assisting the Committees of the Board and Committee Chairs to bring important issues forward to the Board for consideration and resolution; and (s) carrying out other responsibilities at the request of the Board.

  

 

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Independent Lead Director of the Board

 

The Board of Directors is led by a non-executive and independent Lead Director, which contributes to the Board's ability to function independently of Management of the Corporation. Ms. Joanne Ferstman was appointed to act as the Lead Director and serve on the Board of Directors of the Corporation in April 2014.

 

In addition to the responsibilities applicable to all directors of the Corporation, the responsibilities of the Lead Director of the Board include the following: (a) providing leadership to ensure that the Board functions independently of Management of the Corporation and other non-independent directors; (b) providing leadership to foster the effectiveness of the Board; (c) working with the Executive Chair to ensure that the appropriate committee structure is in place and assisting the Corporate Governance and Nomination Committee in making recommendations for appointment to such committees; (d) recommending to the Executive Chair items for consideration on the agenda for each meeting of the Board; (e) commenting to the Executive Chair on the quality, quantity and timeliness of information provided by Management to the independent directors; (f) calling, where necessary, the holding of special meetings of the Board, outside directors or independent directors, with appropriate notice, and establishing agenda for such meetings in consultation with the other outside or independent directors, as applicable; (g) in the absence of the Executive Chair, chairing Board meetings, including, providing adequate time for discussion of issues, facilitating consensus, encouraging full participation and discussion by individual directors and confirming that clarity regarding decision-making is reached and accurately recorded; in addition, chairing each Board meeting at which only outside directors or independent directors are present; (h) consulting and meeting with any or all of the independent directors, at the discretion of either party and with or without the attendance of the Executive Chair, and representing such directors, where necessary, in discussions with Management of the Corporation on corporate governance issues and other matters; (i) working with the Executive Chair of the Board and the President and Chief Executive Officer to ensure that the Board is provided with the resources, including external advisers and consultants to the Board as considered appropriate, to permit it to carry out its responsibilities and bringing to the attention of the Executive Chair of the Board and the President and Chief Executive Officer any issues that are preventing the Board from being able to carry out its responsibilities; (j) conducting peer reviews through a process involving meeting with each director individually; these peer reviews will be conducted to coincide with the formal survey of board effectiveness; (k) ensuring non-management directors discuss among themselves, without the presence of Management, the Corporation's affairs and (l) carrying out other responsibilities at the request of the Board.

 

Policy regarding the diversity of the Board of Directors

 

The Corporation is committed to diversity among its Board of Directors. On March 30, 2016, the Board adopted a policy regarding the diversity of the Board of Directors (the "Diversity Policy") relating to candidate selection based on experience and expertise to achieve effective stewardship and management.

 

In an increasingly complex global marketplace, the ability to draw on a wide range of viewpoints, backgrounds, skills, and experience is critical to the Corporation's success. By bringing together men and women from diverse backgrounds and giving each person the opportunity to contribute their skills, experience and perspectives in an inclusive workplace, the Corporation believes that it is better able to develop solutions to challenges and deliver sustainable value for the Corporation and its stakeholders. The Corporation considers diversity to be an important attribute of a well-functioning Board, which will assist the Corporation to achieve its long-term goals.

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The Corporation recognizes that diversity is a significant aspect of diversity and also acknowledges the important role that women with appropriate and relevant skills and experience can play in contributing to the diversity of perspective on the Board. Furthermore, the Corporation believes that promotion of diversity is best served through careful consideration of all of the knowledge, experience, skills and backgrounds of each individual candidate for director in light of the needs of the Board without focusing on a single diversity characteristic and, accordingly has not adopted specific Board diversity goals other than the gender representation target. To ensure sound corporate governance, the Governance and Nomination Committee is guided by the following principles in recommending candidates to the Board of Directors:

 

i) ensuring that the Board of Directors of the Corporation is composed of directors who possess extensive knowledge, skills and competencies, diverse points of view, and relevant expertise, enabling them to make an active, informed and positive contribution to the management of the Corporation, the conduct of its business and the orientation of its development;

 

ii) seeking a balance in terms of the knowledge and competencies of directors to ensure that the Board of Directors can fulfil its role in all respects; and

 

iii) To the extent practicable, seeking directors who represent gender diversity, members of the designated groups (as defined in the Employment Equity Act), ages, cultural communities, geographic areas and other characteristics of the communities in which the Corporation conducts its business.

 

The Corporation had set an objective of reaching 40% representation of women of the independent directors of the Board. In order to achieve this goal, the Governance and Nomination Committee shall:

 

•maintain a short list of potential candidates for election to the Board of Directors which list shall include a majority of women candidates; this list shall take into account that qualified candidates may be found in a broad array of organizations;
•periodically assess the effectiveness of the nomination process at achieving the Corporation's diversity objectives outlined in this Policy; and
•in order to support the specific objective of gender diversity, consider the level of representation of women on the Board and ensure that women were included in the short list of candidates being considered for a Board position.

 

When identifying potential candidates for the Board of Directors, the Governance and Nomination Committee considers the selection criteria approved by the Board, as well as its analysis of the Board's needs based on the above criteria. These selection criteria are reviewed periodically.

 

The Diversity Policy is reviewed annually by the Governance and Nomination Committee to ensure it is effective in achieving its objectives. Any changes to the Diversity Policy as well as additional diversity achievements will be reported annually in the Corporation's management information circular. A copy of the Diversity Policy is available on the Corporation's website at www.osiskogr.com.

 

As of the date hereof, Ms. Joanne Ferstman, Ms. Françoise Bertrand and Ms. Candace MacGibbon represent 27% of the eleven (11) directors or 33% of the independent Directors.  Upon election of the nominee directors at the Meeting, there will be two (2) women on the Board of Directors or representing 22% of all Directors (29% of the independent Directors). Pursuant to an investor rights agreement entered into between the Caisse and the Corporation, the Caisse retains the right to designate one nominee to the Board of Directors of the Corporation, for so long as the Caisse, together with its affiliates, owns more than 10% of the outstanding Common Shares of the Corporation.

 

Further, the Executive Chair of the Board of the Corporation has been a member of the "30% Club" since March 2017. The "30% Club" promotes gender balance on boards to encourage better leadership and governance.  In addition, the "30% Club" also aims to develop a diverse pool of talent for all businesses through the efforts of its members who are committed to better gender balance at all levels of their organizations.

 

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The Corporation is focused on achieving its objective of 40% women representation on the Board of Directors, although, no timeline has been set to achieve such objective.  In reach of such target, the Governance and Nomination Committee will continue to review the Corporation's evergreen list of potential director candidates and maintain a "short-list" of predominantly female candidates.  Accordingly, the Governance and Nomination Committee is focused towards adding female representation to the Board of directors in the near term.

 

Policy regarding the diversity in corporate talent

 

The Corporation is committed to diversity among its Management team. On November 9, 2016, the Board adopted a policy regarding the diversity in corporate talent (the "Management Diversity Policy") relating to candidate selection based on merit in order to select the best person to fulfill each position within the organization. At the same time, the Corporation recognizes that diversity is important to ensure that the profiles of its team provide the necessary range of perspectives, experience and expertise required to achieve corporate objectives.

 

In an increasingly complex global marketplace, the ability to draw on a wide range of viewpoints, backgrounds, skills, and experience is critical to the Corporation's success. By bringing together men and women from diverse backgrounds and giving each person the opportunity to contribute their skills, experience and perspectives in an inclusive workplace, the Corporation believes that it is better able to develop solutions to challenges and deliver sustainable value for the Corporation and its stakeholders. The Corporation considers diversity to be an important attribute of a well-functioning company which will assist the Corporation to achieve its long-term goals.

 

The Corporation recognizes that diversity is a significant aspect of diversity and acknowledges the important role that women with appropriate and relevant skills and experience can play in contributing to the diversity of perspective on the Corporation.

 

The purpose of the Management Diversity Policy is to communicate the importance the Corporation places on the diversity within its organization.

 

The Corporation believes that diversity enriches discussion and performance of the team in the pursuit of its short and long-term corporate objectives. As part of its strategy to recruit and maintain a diversified organization, it will:

 

•promote diversity within its team, with particular emphasis on gender diversity;
•promote the contribution of women to the success of the organization;
•assist in the development of women within the organization through training, inside sponsorship and outside mentoring;
•ensure that for every open position within the organization, at least one female be considered as a potential candidate;
•actively participate in internal and external initiatives to promote diversity in its industry with specific focus on gender diversity;
•encourage an awareness in all staff of their rights and responsibilities with regard to fairness, equity and respect for all aspects of diversity; and
•provide work environment that accommodates family and work life balance, while maintaining a high achievement culture.

 

The Corporation aims to have 25% of officer positions held by women.

 

The executive team will report annually to the Governance and Nomination Committee on its diversity program, including:

 

i. gender distribution of employees;

ii. corporate participation on initiatives (internal and external) to promote gender diversity; and

iii. current trends in diversity programs.

 

The Corporation will also report externally on its performance in the application of diversity programs.

 

The Management Diversity Policy will be reviewed annually by the Governance and Nomination Committee to ensure it is effective in achieving its objectives. Any changes to the Management Diversity Policy as well as additional diversity achievements will be reported annually in the Corporation's management information circular. A copy of the Management Diversity Policy is available on the Corporation's website at www.osiskogr.com.

 

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As of March 22, 2021, one woman was an executive officer of the Corporation, which represents 16.6% of the executive Management team.

 

Employee Diversity

 

The Board and Management believe that diversity and inclusion efforts contribute to a culture of performance and enhance decision making at all levels of the organization.

 

Accordingly, the Corporation evaluates its approach on an ongoing basis to ensure it is responsive to evolving best practices in diversity and inclusion. In its recruiting and staffing efforts, the Corporation seeks out diversity of gender, background, experience and perspective in order to foster diversity of thought and to build diverse teams.

 

Among the Corporation, 57% of team members and 67% of managers are women. As for the Corporation's officers, 2 of 7 are woman, which represents 29% of the officers.

 

Although the Corporation has not adopted a formal target regarding employee diversity, the Corporation monitors the diversity of its workforce on an ongoing basis and when the time comes to select a candidate for a new position or as a replacement, the Corporation considers the benefit of diversity in its selection criteria.

 

Board's Skills Matrix

 

The Governance and Nomination Committee, together with the Board Executive Chair, is responsible for determining the needs of the Board in the long-term and identifying new candidates to stand as nominees for election or appointment as directors.

 

The Board ensures that the skill set developed by directors, through their business expertise and experience, meets the needs of the Board.

 

The Governance and Nomination Committee reviews annually the credentials of the members of the Board. The following table exemplifies the current skills that each nominee possesses:

 

  

NOTES:
(1) Financial: Ability to understand: (i) financial statements; (ii) financial controls and measures; (iii) capital markets; and (iv) financing options.
(2) Mergers and Acquisitions: Understanding of: (i) capital markets in friendly and unfriendly transactions; (ii) complexity of integration post-business continuation; and (iii) general legal requirements in M&A.
(3) Technical/Mining: Understanding of: (i) exploration activities; (ii) mine operations, including risks/challenges/opportunities (mining, milling); (iii) ability to have knowledge of construction/development/planning/scheduling/monitoring of construction/contract administration/forecasting; and (iv) understanding of marketing of metals.
(4) Government Relations: Understanding of: (i) legislative and decision-making process of governments; and (ii) experience in dealing with governments (policy-making, lobbying, etc.).
(5) International Experience: Consists of: (i) experience in dealing with different legislative and cultural environments; (ii) understanding foreign legislative process; and (iii) understanding opportunities and risk in non-Canadian jurisdictions.
(6) Governance: Understanding of (i) the requirements/process for oversight of management; (ii) various stakeholder requirements; and (iii) evolving trends with respect to governance of public companies.
(7) Human Resource: Ability to: (i) review management structure for large organization; (ii) develop/assess/monitor remuneration packages (salary, benefits, long-term and short-term incentives); and (iii) understand how to motivate people.
(8) Sustainability: Understanding of (i) environmental risks in the mining industry; (ii) government regulations with respect to environmental, health & safety; and (iii) understanding of and experience in community relations and stakeholder involvement.
(9) Management: Ability to plan, operate and control various activities of a business.
(10) Information Security Risk Management: Ability to manage risks associated with the use of information technology, involving identifying, assessing, and treating risks to the confidentiality, integrity and availability of Corporation's assets.

 2021 Management Information Circular77

 

 

 

Other Directorships

 

As part of its business model and in connection with its strategic investments made in other companies, either by acquiring equity interests, purchasing royalties, royalty options or otherwise, the Corporation generally expects from its directors and officers to be actively involved within such associate companies, which may include becoming a member of the board of directors of such associate companies. The Corporation acknowledges that a director or an officer serving on too many public boards of directors might be "overboarded". Consequently, all directors and officers of the Corporation must submit to the Governance and Nomination Committee any offer to join an outside board of directors in order to ensure that any additional directorship would not impair the ability to adequately fulfill the responsibilities assigned to the directors and officers of the Corporation.

 

As a general guideline, the Governance and Nomination Committee of the Corporation will consider that a director or officer of the Corporation should be regarded as "overboarded" if that person:

 

(a) has attended fewer than 75% of the Corporation's Board and Committee meetings held within the past year without a valid reason for the absences;

 

and

 

(b)

 

(i) if that person is President and Chief Executive Officer of a company, that person sits on more than two (2) outside public company board, in addition to the Corporation; or

 

(ii) if that person is not President and Chief Executive Officer of a company, that person sits on more than five (5) public company boards, in addition to the Corporation.

 

In determining what is an "outside public company board", the Governance and Nomination Committee specifically excludes associate companies for the reason that becoming a director of such companies is crucial in order to oversee and supervise the Corporation's investment in such associate companies. This representation allows the Corporation to protect its Shareholders' interests.

 

Furthermore, the President and Chief Executive Officer's position description as amended in November 2015, includes that, as part of the duties of the President and Chief Executive Officer of the Corporation, he shall, as applicable (i) become a member of the board of directors of such associate companies or (ii) delegate such duty to an officer of the Corporation.

 

The table below sets forth the name of each nominee director of the Corporation who is currently a director of another organization that is a reporting issuer, as also described under the section entitled "Election of Directors" in this Circular:

 

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Nominee Other Reporting
Issuers		 Industry Classification Market and Stock Symbol Board Committee
Membership
John R. Baird Canfor Corporation Paper and forest products TSX — CFP Joint Environmental, Health and Safety Committee - Member
Joint Capital Expenditure Committee - Member
Joint Corporate Governance Committee - Member
Canfor Pulp Products Inc. Paper and forest products TSX — CFX Joint Environmental, Health and Safety Committee - Member
Joint Capital Expenditure Committee - Member
Joint Corporate Governance Committee - Member
Canadian Pacific Railway Limited Transportation and environmental services TSX/NYSE — CP

Corporate Governance and Nomination Committee - Member

Risk and Sustainability Committee - Member

Canadian Pacific Railway Company Transportation and environmental services NYSE/London — CPRY —
Christopher C. Curfman None
Joanne Ferstman Dream Unlimited Corp. Real Estate Company TSX — DRM

Chair of the Board

Audit Committee - Chair

Organization, Design and Culture Committee - Member

Leaders and Mentors Committee - Member

Cogeco Communications Inc. Communications and Media TSX — CCA Audit Committee - Chair
Strategic Opportunities Committee  - Member
ATS Automation Tooling Systems Inc.

Industrial products - fabricating and engineering

 TSX — ATA Audit and Finance Committee - Chair
Human Resources Committee - Member
ODV
(A subsidiary held at approximately 75% by the Corporation)		 Mining Company TSX-V — ODV Audit and Risk Committee - Member
Human Resources Committee - Member

W. Murray John

 

 Discovery Metals Corp. Mining Company TSX-V — DSV Chair of the Board
Audit Committee - Member
Compensation Committee - Member
Nominating and Governance Committee - Member
O3 Mining Inc. Mining Company TSX-V — OIII

Lead Director
Health, Safety and CSR Committee - Member

Nominating and Governance Committee - Member

Prime Mining Corp. Mining Company TSX-V — PRYM
OTCQB — PRMNF
FRANKFURT — A2PRDW

Chair of the Board
Audit Committee - Member

Health, Safety and Sustainability Committee - Member

Pierre Labbé None
Candace MacGibbon INV Metals Inc. Mining Company TSX — INV —
Nickel 28 Capital Corp. (Conic Metals Corp.)(1) Mining Company TSX-V — NKL Audit Committee - Member
Charles E. Page Unigold Inc. Mining Company TSX-V — UGD Audit Committee - Member
Compensation Committee - Member
Corporate Governance and Nominating Committee - Member
Technical Committee - Member
ODV
(A subsidiary held at approximately 75% by the Corporation)		 Mining Company TSX-V — ODV Lead Director
Human Resources Committee - Member
Governance and Nomination Committee - Member
Sean Roosen ODV
(A subsidiary held at approximately 75% by the Corporation)		 Mining Company TSX-V — ODV Chair of the Board
Environmental and Sustainability Committee - Member
Osisko Mining - Associate company Mining Company TSX — OSK —
Victoria Gold Corp. Mining Company TSX — VGCX Compensation Committee - Member
Technical Committee - Member
Sandeep Singh None

 

NOTE:

 

(1) Ms. MacGibbon will not stand for re-election for the Nickel 28 Capital Corp. (formerly Conic Metals Corp.) board of directors, which term is expected to terminate in 2021.

 

 2021 Management Information Circular79

 

 

 

Interlocking Directorships

 

As of the date of the Circular, there are no interlocks of the independent director nominees serving on the compensation or equivalent committee or board of directors of another reporting issuer which has any executive officer or director serving on the HR Committee or Board of Directors of the Corporation. However, there are a number of interlocking relationships, namely: Ms. Joanne Ferstman, Messrs. Roosen and Page whom serve on the board of directors of ODV. The Board and the Governance and Nomination Committee assessed the interlock and determined that there was no conflict or other concerns for the Corporation over the independence of these directors since ODV is a subsidiary and is not a competitor of the Corporation.

 

Independent Directors Meetings

 

The independent directors do not hold regularly scheduled meetings at which non-independent directors and members of Management are not in attendance. However, where deemed necessary by the independent directors, the independent directors do hold in-camera sessions exclusive of non-independent directors and members of Management, which process facilitates open and candid discussion amongst the independent directors. A private session is included in every agenda of every board and committee meeting.

 

Related Party Transactions

 

As part of our year-end procedures, management distributes a detailed questionnaire to each member of the Board and the officers of the Corporation in order to inquire as to their knowledge of any related party transaction. Accordingly, the Corporation's internal audit procedures include: (i) distributing a detailed questionnaire to all directors and officers of the Corporation; (ii) identification and coding of related party transactions; (iii) reviewing the Corporation's current related parties and associated transactions (as applicable); (iv) disclosures from Board members and officers regarding their ownership of other entities; (v) participation on additional Boards and previous employment history; (vi) analyzing the results received; and (vii) the Corporation has established guidelines to assist its accounting personnel to determine whether a supplier qualifies as a related party.

 

In addition, the Corporation has investments in associates over which the Corporation has significant influence.  Accordingly, when assessing whether the Corporation exercises significant influence or not over such associates, Management evaluates a number of key factors, namely:

 

•Equity interest held by the Corporation;
•Officer or director role occupied by an officer and/or director of the Corporation;

•Importance of roles such as Chief Executive Officer or Chair of the Board of Directors; and
•Material/significant transactions with the associate.

 

A report on related party transactions disclosed annually by directors and officers is provided to the Audit and Risk Committee for review and consideration.

 

Record of Attendance

 

During the 2020 financial year, the Board of Directors held 17 meetings, the Audit and Risk Committee held 7 meetings, the HR Committee held 7 meetings, the Governance and Nomination Committee held 4 meetings and the Environmental and Sustainability Committee 3 meetings. Overall the combined director attendance at meetings of the Board and its standing Committees was 96%. A record of attendance of each director at Board and Committee meetings held for the financial year ended on December 31, 2020 is set out under heading "2020 Board and Committee Attendance Record" of this Circular.

 

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Board Mandate

 

The Corporation's Board is responsible for approving long-term strategic plans and annual operating plans and budgets recommended by Management. The Corporation's Board's consideration and approval is also required for material contracts and business transactions, and all debt and equity financing transactions. The Corporation's Board delegates to Management responsibility for meeting defined corporate objectives, implementing approved strategic and operating plans, carrying on the Corporation's business in the ordinary course, managing the Corporation's cash flow, evaluating new business opportunities, recruiting staff and complying with applicable regulatory requirements. The Corporation's Board also looks to Management to provide recommendations respecting corporate objectives, long-term strategic plans and annual operating plans. The Corporation's Board has a written mandate governing its operation, a copy of which is attached in this Circular as Schedule "A".

 

The following figure illustrates the dynamic between the Board, the Committees of the Board, the Shareholders of the Corporation and independent auditors.

 

 

 

Position Descriptions

 

The Board has developed written position descriptions for the Executive Chair of the Board and the Chairs of the Board Committees, as well as one for the Lead Director and the President and Chief Executive Officer. Such position descriptions can be found on the Corporation's website at www.osiskogr.com.

 

Orientation and Continuing Education

 

To facilitate the process of the orientation of new directors and to provide easily access documentation to current directors, the Corporation has developed a Directors' Handbook. This reference guide provides information related to:

 

i. The Corporation and its activities;

ii. Structure of assets (royalties, streams and offtakes);

iii. Strategic plan;

iv. Corporate policies;

v. Information on the mining industry and royalty business;

vi. Site visits;

vii. Board and Committee Charters; and

viii. Information on directors and officers of the Corporation.

 

 2021 Management Information Circular81

 

 

Throughout the year, the Board and Committee Members receive formal presentations by Management and external advisors, and are provided documentation from various advisors and consultants on various topics, including:

 

•Mineral royalty sector;
•Commodity prices;
•Mining industry opportunities and risks;
•Current governance issues;
•Talent management;
•Economic forecasts;
•Mining company performance;
•Reports on the Corporation by investment dealer analysts;
•Feedback from institutional and retail Shareholders;
•New developments in financial accounting and reporting controls;
•Financial reporting and risks; and
•Updates on political matters.

 

Furthermore, the Corporation is a corporate member of the Institute of Corporate Directors ("ICD") and each member of the Board of Directors receive educational material from the ICD and may attend their conferences. The fees for attending conferences and educational sessions are reimbursable by the Corporation.

 

Listed below are education events attended or presented by directors of the Corporation during the year:

 

Director Month Topic
John Burzynski:    
Speaker 02/2020 BMO Capital Markets Conference - Global Metals & Mining
Attendee 03/2020 PDAC Conference
Speaker 09/2020 Denver Gold Forum Americas
Joanne Ferstman:    
Speaker 2020 Hugessen - Compensation
Attendee 2020 Compensation - ICD
Attendee 2020 COVID-19 and Economy - Osler
Attendee 2020 TD Securities - Ben Bernanke Interview
Attendee 2020 Real Estate Industry Forum - CPAB
Attendee 2020 Cybersecurity - Cogeco
Pierre Labbé:    
Attendee 04/2020 International Financial Reporting Standards - PricewaterhouseCoopers Update on financial information from the first quarter: Spotlight on the impact of the COVID-19 pandemic
Attendee 04/2020 Accounting and Presentation of financial information - International Financial Reporting Standards; Update on the presentation of financial information
Attendee 05/2020 International Financial Reporting Standards - IFRS reporting implications of COVID-19 pandemic - Grant Thornton
Attendee 06/2020 International Financial Reporting Standards - Financial Reporting Update PricewaterhouseCoopers
Attendee 07/2020 Professional Ethics - Ethical behavior - Ethics for the CFO Role
Attendee 07/2020 Information Security - Trend in information and practices related to cybersecurity
Attendee 09/2020 Governance - The "raison d'être" of companies: Towards a new model of shareholder governance and stakeholders
Attendee 10/2020 Accounting and Presentation of financial information - International Financial Reporting Standards; Update on the presentation of financial information for the third quarter
Attendee 10/2020 Operational Management and Administration - CPA 2020 Meeting
Attendee 11/2020 Governance - 18th Annual Disclosure and Governance Seminar, McCarthy Tetrault
Attendee 12/2020 International Financial Reporting Standards - Fourth Quarter Financial Reporting Update, PricewaterhouseCoopers

 

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Director  Month  Topic
Sean Roosen:       
Speaker   01/2020  CIBC Conference - Royalty Presentation
Speaker   01/2020  TD Conference - Corporate Presentation
Speaker   02/2020  BMO Conference - Corporate Presentation
Attendee   03/2020  PDAC Conference
Speaker   04/2020  Grit Capital's MASTERS OF MINING
Speaker   05/2020  BoAML Conference - Royalty Presentation
Speaker   07/2020  Sprott Natural Resource - Living Legend Panel
Speaker   08/2020  Crux Investor Channel - The Best Royalty Company in the World
Attendee   09/2020  Precious Metal Summit
Speaker   09/2020  Mines and Money Connect
Speaker   09/2020  Eight Capital 2020 Virtual Precious Metals Symposium
Speaker    09/2020  Denver Gold Forum
Speaker   09/2020  6is Webinar Save Canadian Mining - Capital Markets Insights for the Pandemic Part 2: Monetary Metals
Speaker   12/2020  Zurich Event - Corporate Presentation
Sandeep Singh:      
Speaker   09/2020  RBC Mining Conference - Fireside Chat
Speaker   11/2020  NBC Mining Conference - Royalty Q&A
Speaker    11/2020  Cambridge Precious Metal Summit - Interview Q&A
Speaker   11/2020   Scotia Mining - Corporate Presentation
Speaker   12/2020  Zurich Event - Corporate Presentation

 

Ethical Business Conduct 

 

The Board has adopted a Code of Ethics (the "Code of Ethics") applicable to all of its directors, officers and employees.

 

The Code of Ethics communicates to directors, officers and employees' standards for business conduct in the use of Osisko time, resources and assets, and identifies and clarifies proper conduct in areas of potential conflict of interest. Each director, officer and employee is provided with a copy of the Code of Ethics and is asked to sign an acknowledgement that the standards and principles of the Code of Ethics will be maintained at all times on Osisko business. The Code of Ethics is designed to deter wrongdoing and promote: (a) honest and ethical conduct; (b) compliance with laws, rules and regulations; (c) prompt internal reporting of Code of Ethics violations; and (d) accountability for adherence to the Code of Ethics. Violations from standards established in the Code of Ethics, and specifically under internal accounting controls, are reported to the Vice President, Finance and Chief Financial Officer or to the Vice President, Legal Affairs and Corporate Secretary and can be reported anonymously. The Vice President, Finance, Chief Financial Officer and the Vice President, Legal Affairs and Corporate Secretary will report to the Audit and Risk Committee who will report to the Board any reported violations at least quarterly, or more frequently depending on the specifics of the reported violation.

 

The Executive Chair of the Board and the President and Chief Executive Officer and the Governance and Nomination Committee are responsible for promoting a corporate culture, which supports the highest of ethical standards, encourages personal integrity and assumes social responsibility.

 

The Corporation will adopt, from time to time, policies and guidelines relating to ethics that apply to all directors, officers and employees of the Corporation. The Corporation's Code of Ethics will be reviewed on an annual basis as well as adherence thereto.

 

The Code of Ethics is distributed to and signed by each of the Corporation's employees when they are hired. Directors, officers and designated employees are required, on an annual basis, to declare their commitment to abide by the Corporation's Code of Ethics. Management of the Corporation reports annually to the Governance and Nomination Committee all non-compliance statements so disclosed by directors, officers and designated employees.

 

The Corporation's Code of Ethics provides that directors, officers and employees must avoid conflicts of interest, both real and perceived. In practice, should a director have a material interest or be otherwise in conflict of interest as regards a transaction or agreement considered by the Board, he must disclose his conflict of interest and withdraw from any discussions, assessment or decision related to the particular transaction or agreement.

 

In the event any transactions or agreements are contemplated in respect of which a director or Executive Officer has a material interest, the matter must be initially reviewed by the Audit and Risk Committee and is then submitted to the Board of Directors. The Board may implement any measures that it finds necessary in order to ensure the exercise of independent judgment. In the event a director has a material interest in any transaction or agreement, such director will abstain from voting in that regard.

 

In addition, the Board has established under the Corporation's Internal Whistle Blowing Policy, a process for the receipt and treatment of all complaints concerning accounting, internal accounting controls, auditing or related matters submitted by any employee, including procedures for the confidential anonymous submissions by employees of concerns regarding said matters. To help in this process, the Corporation established an Ethics Line, which is a phone and Internet-based reporting system (1-844-687-8700 or ethics@osiskogr.com). All communications are forwarded directly to the Chair of the Audit and Risk Committee and to the Vice President, Legal Affairs and Corporate Secretary.

 

 2021 Management Information Circular83

 

 

There has been no material change reports filed that pertain to any conduct of a director or Executive Officer that constitutes a departure from the Code of Ethics.

 

In 2019, the Board of Directors adopted, following recommendations of the HR Committee, a policy on the prevention of psychological or sexual harassment in the workplace and the handling of complaints (the "Harassment Policy").  The Corporation does not tolerate nor accept any form of psychological or sexual harassment. The Harassment Policy is intended to prevent and put an end to any situation of psychological or sexual harassment in its business, including any form of discriminatory harassment.  The Harassment Policy also provides for intervention measures applicable to harassment complaints filed or situations of harassment reported to the Corporation. All communications are forwarded directly to the Executive Chair of the HR Committee, the Vice President, Legal Affairs and Corporate Secretary and the Manager, Tax.

 

Through the above-noted methods, the Board encourages and promotes a culture of ethical business conduct. In addition, the directors, officers and employees of the Corporation are expected to act and to hold their office within the best interests of the Corporation. The Corporation expects that all directors shall act in compliance of all laws and regulations applicable to their office as director of the Corporation.

 

Environmental, Social and Governance Matters

 

In June 2020, the Corporation enhanced its environmental, social and governance ("ESG") efforts by forming the Environmental and Sustainability Committee. This new committee is exclusively focused on ESG related topics, including but not limited to, reviewing the Corporation's investment due diligence process as it relates to ESG matters, considering corporate environmental policies and broader stakeholder relations, and providing oversight for communication of sustainability matters.

 

Although the Corporation is not actively involved in the exploration, development or operation of mining projects on which it owns a stream or a royalty, the Corporation's strategy to mitigate ESG risks consists of evaluating the risk factors related to a mining asset before making an investment and by closely monitoring an asset's performance post transaction.  The Corporation is committed to promoting sustainable development through its investments and applies strict responsibility guidelines across all of its business decisions.  Accordingly, since August 2020, the Environmental and Sustainability Committee has worked closely with Management on delivering its inaugural ESG report.  As part of the Corporation's ongoing efforts to increase disclosures and transparency, and help make the Corporation's strategy on ESG matters more widely known and understood, the Corporation has delivered an inaugural ESG report, which was adopted on March 29, 2021 by the Board of Directors, following recommendations of the Environmental and Sustainability Committee.  A copy of the Corporation's 2020 ESG report is now available on the Corporation's website at www.osiskogr.com. 

 

Committees of the Board

 

The Board has established four (4) standing committees, namely: the Audit and Risk Committee, the Governance and Nomination Committee, the Human Resources Committee and the Environmental and Sustainability Committee. Following is a description of the authority, responsibilities, duties and function of such committees.

 

Governance and Nomination Committee

 

The Governance and Nomination Committee is responsible for the monitoring of the Corporation's corporate governance and nomination matters.

 

The Governance and Nomination Committee has the general mandate to (i) consider and assess all issues that may affect the Corporation in the areas of corporate governance and nomination generally; (ii) recommend actions or measures to the Board to be taken in connection with these two (2) areas; and (iii) monitor the implementation and administration of such actions or measures, or of corporate policies and guidelines adopted by regulatory authorities or the Board with respect to said two (2) areas. The Chair of the Governance and Nomination Committee is also responsible to conduct the Corporation's outreach program toward Shareholders and stakeholders.

 

842021 Management Information Circular 

 

  

Corporate governance practices determine the process and structure used to manage and run the internal and commercial business of the Corporation with a view to preserving its financial and operational integrity, complying with all applicable rules in general and increasing its value to Shareholders.

 

As regards corporate governance matters, the Governance and Nomination Committee is responsible for establishing practices which must be followed and should be in line with corporate governance rules and guidelines in effect from time to time as adopted by relevant authorities. The Governance and Nomination Committee is also responsible for recommending to the Board new candidates for director and to assist the Board in the assessment of the performance of senior officers, of the Board and its committees and of individual directors.

 

The Governance and Nomination Committee met four (4) times during the most recently completed financial year. Since June 22, 2020, the Governance and Nomination Committee is composed of the following four (4) independent directors:

 

Pierre Labbé (Chair) John R. Baird Françoise Bertrand Christopher C. Curfman

 

Work Performed by the Governance and Nomination Committee

 

The following summarizes the work highlights performed by the Governance and Nomination Committee in 2020 and beginning of 2021:

 

•reviewed and recommended approval by the Board of Directors of the 2020 management information circular;

 

•reviewed the 2020 Shareholder voting rights results;

 

•reviewed and approved the Board assessment questionnaire and assessment process;

 

•reviewed Management's practices in maintaining open and transparent communications with the Board;

 

•reviewed the skills matrix of the members of the Board;

 

•reviewed the Corporation's disclosure on regulatory filings to assess any potential conflict and related party transactions;

 

•reviewed the directors' 2020 education program;

 

•reviewed and recommended to the Board to approve the amended position descriptions of the Executive Chair of the Board, the Lead Director, the Committee Chairs and the President and Chief Executive Officer;

 

 2021 Management Information Circular85

 

 

 

•reviewed and recommended to the Board to approve changes the Charters of the Governance and Nomination Committee and that of the Board;

 

•reviewed and approved the Governance and Nomination Committee Annual Work Program;

 

•reviewed and recommended to the Board to approve changes to the Code of Ethics, the Majority Voting and Director Resignation Policy, the Securities Trading Policy, the Diversity Policy, the Policy regarding Tenure on the Board of Directors, the Policy regarding the diversity in corporate talent and the Disclosure Policy;

 

•reviewed and recommended to the Board to approved the amended the securities ownership guidelines;

 

•reviewed the Board self-assessment and evaluation;

 

•reviewed and recommended to the Board the appointment of Messrs. Baird, John and Singh and Ms. MacGibbon;

 

•reviewed the list of directorship of public companies held by members of Management of the Corporation as representative of the Corporation;

 

•reviewed the Corporation's governance practices, including Board tenure, independence, overboarding and conflict of interest procedures;

 

•reviewed the composition of the Board and its Standing Committees;

 

•reviewed Management's relationship with the Board of Directors as well as the effectiveness the Corporation's Management organization structure; and

 

•reviewed the evergreen list of candidates for election to the Board and recommended a "short list" of candidates.

 

Audit and Risk Committee

 

The Audit and Risk Committee meets regularly in order to assist the Board of Directors in fulfilling its oversight responsibilities with respect to the following: (i) in its oversight of the Corporation's accounting and financial reporting principles and policies and internal audit controls and procedures; (ii) in its oversight of the integrity and transparency of the Corporation's financial statements and the independent audit thereof; (iii) in selecting, evaluating and, where deemed appropriate, replacing the external auditors; (iv) in evaluating the independence of the external auditors; (v) in its oversight of the Corporation's risk identification, assessment and management program; and (vi) in the Corporation's compliance with legal and regulatory requirements in respect of the above.

 

The function of the Audit and Risk Committee is to provide independent and objective oversight. The Management of the Corporation is responsible for the preparation, presentation and integrity of the Corporation's financial statements. Management is responsible for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures that provide for compliance with accounting standards and applicable laws and regulations. The external auditors are responsible for planning and carrying out a proper audit of the Corporation's annual financial statements and other procedures. In fulfilling their responsibilities hereunder, it is recognized that members of the Audit and Risk Committee are not full-time employees of the Corporation and are not, and do not represent themselves to be, accountants or auditors by profession or experts in the fields of accounting or auditing including in respect of auditor independence. As such, it is not the duty or responsibility of the Audit and Risk Committee or its members to conduct "field work" or other types of auditing or accounting reviews or procedures or to set auditor independence standards, and each member of the Audit and Risk Committee shall be entitled to rely on (i) the integrity of those persons and organizations within and external to the Corporation from which it receives information, (ii) the accuracy of the financial and other information provided to the Audit and Risk Committee by such persons or organizations absent actual knowledge to the contrary (which shall be promptly reported to the Board of Directors) and (iii) representations made by Management as to non-audit services provided by the auditors to the Corporation.

 

The Board has adopted the Audit and Risk Committee Charter, mandating the role of the Audit and Risk Committee in supporting the Board in meeting its responsibilities to Shareholders.

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The Audit and Risk Committee met seven (7) times during the most recently completed financial year. Since June 22, 2020, the Audit and Risk Committee is composed of the following four (4) independent directors:

 

 
Joanne Ferstman (Chair) W. Murray John Pierre Labbé Charles E. Page

 

Information Security Risk Oversight and Management

 

All members of the Audit and Risk Committee are independent and knowledgeable about information security risk management.  Management provides a report on information technology security, including cyber risks, data security, increased risks due to the COVID-19 pandemic, ongoing staff training, mitigation and resilience to the Audit and Risk Committee at each of its quarterly meetings.  Two (2) Directors have information security experience.  In the last three years, there have been no occurrences of security breach that generated expenses nor has there been expenses incurred from information security breach penalties and settlements. In addition, the Corporation has not experienced an information security breach in the last three years.  The Corporation is currently evaluating the possibility of entering into an information security risk insurance policy.  Since the Corporation is listed on the New York Stock Exchange and is subject to Sarbanes-Oxley Act of 2002 ("SOX") reporting requirements, the Corporation's systems are part of the annual SOX audit performed by the Corporation's auditors as well as an independent specialized firms are engaged to conduct specific procedures on our information security systems.

 

Work Performed by the Audit and Risk Committee

 

The following summarizes the work highlights performed by the Audit and Risk Committee in 2020 and beginning of 2021:

 

•reviewed the Audit and Risk Committee Charter;

 

•reviewed and approved the Audit and Risk Committee Annual Work Program;

 

•reviewed Management's report on the Corporation's Risk Evaluation Review for the year 2020 with quarterly updates;

 

•reviewed Management's report on impairment of assets;

 

•reviewed and approved the Corporation's auditors' Audit Plan;

 

•reviewed the Corporation's internal audit function;

 

•reviewed and recommended approval by the Board of Directors of proposed changes to the Corporation's Investment Policy, Delegation of Authority Policy and the U.S. Dollar Hedging Policy;

 

•reviewed the Corporation's financial group review for development and succession planning;

 

•reviewed policy on procedures for approval of audit and non-audit services by external auditor and approve their fees;

 

•reviewed the Corporation's review process in determining related party transactions;

 

•reviewed and recommended approval by the Board of Directors of the consolidated financial statements, management's discussion and analysis and press releases for the year 2020;

 

•reviewed and recommended approval by the Board of Directors of the quarterly financial statements, management's discussion and analysis and press releases related thereto;

 

•monitored compliance requirements with the Securities and Exchange Commission, including the Sarbanes-Oxley Act of 2002, and the New York Stock Exchange;

 

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•considered and recommended to the Board of Directors the appointment of the auditors of the Corporation;

 

•reviewed the efficiency of the Audit and Risk Committee;

 

•reviewed the Corporation's internal controls and compliance certifications on a quarterly basis;

 

•reviewed and approved audit and non-audit work fees;

 

•reviewed the Corporation's report on cash management;

 

•reviewed the Corporation's Information Technology related activities;

  

•reviewed the Corporation's insurance coverage;

 

•reviewed the Corporation's tax matters;

 

•reviewed the Corporation's accounting policies;

 

•received documentation provided by Management on continuing education;

 

•reviewed and recommended to the Board to approve the carve-out financial statements and management's discussion and analysis for the respective financial periods, the pro forma financial statement of ODV and audited interim condensed financial statements of Barkerville;

 

•reviewed and monitored whistle blowing and litigation matters; and

 

•met (in camera) with the Auditors of the Corporation on a quarterly basis.

 

Additional reference is made to the Section entitled "Audit and Risk Committee" of the Corporation's Annual Information Form ("AIF") that contains the information required by section 5.1 of Form 52-110F1 of Regulation  52-110. The Corporation's AIF is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov, and a copy of same will be provided free of charge, upon request, to any Shareholder of the Corporation.

 

Human Resources Committee

 

The HR Committee is responsible for approving compensation objectives and the specific compensation programs for policies and practices of the Corporation on matters of remuneration, succession planning, human resources recruitment, development, retention and performance evaluations, which policies are developed and implemented in conformity with the Corporation's objectives with the view to attracting and retaining the best qualified management and employees. The HR Committee is responsible for recommending, monitoring and reviewing compensation programs for senior executives.  It is also responsible to oversee treatment of complaints received pursuant to the Policy on the prevention of psychological or sexual harassment in the workplace and the handling of complaints.

 

The HR Committee met seven (7) times during the most recently completed financial year. Since June 22, 2020, the HR Committee is composed of four (4) independent directors:

 

   
Françoise Bertrand
(Chair)		 Christopher C. Curfman Joanne Ferstman Pierre Labbé

 

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The work performed by the HR Committee is disclosed under heading "Work Performed by the Human Resources Committee" of this Circular.

 

Environmental and Sustainability Committee

 

In June 2020, the mandate of the Human Resources and Sustainability Committee was divided between two standing Committees of the Board, namely the Human Resources Committee and the newly formed Environmental and Sustainability Committee. The Environmental and Sustainability Committee is responsible for overseeing environmental, sustainable and corporate responsibility/governance matters consistent with corporate objectives and stakeholders' expectations.  Given that the Corporation does not conduct physical operations, its mandate is focused on obtaining information from operating companies in which it has an interest or which operates properties underlying the Corporation's assets, which enables the Corporation to protect its interests by monitoring the ESG performance of such operating companies.  As such, the Environmental and Sustainability Committee has the general mandate to (i) consider and evaluate the Corporation's own ESG matters; (ii)  obtain, when possible, confirmation, from such operating companies that they comply with applicable laws; have developed and implemented appropriate ESG policies and procedures for their operations, including by implementing corporate policies, guidelines and procedures required to comply with laws and address widely accepted ESG matters; and (iii)  recommend to the Board the steps to be taken in connection with these matters.

 

The Environmental and Sustainability Committee met three (3) times during the most recently completed financial year. Since June 22, 2020, is composed of three (3) independent directors:

 

 

 
W. Murray John
(Chair)		 John R. Baird Charles E. Page

 

Work Performed by the Environmental and Sustainability Committee

 

The following summarizes the work highlights performed by the Environmental and Sustainability Committee in 2020 and beginning of 2021:

 

•reviewed and recommended to the Board to approve the Environmental and Sustainability Committee Charter;

 

•reviewed and approved the Environmental and Sustainability Committee Annual Work Program;

 

•reviewed Management's timeline for the preparation and inaugural launch of its first ESG report; the Environmental and Sustainability Committee also reviewed a draft thereof last fall;

 

•reviewed the Corporation's environmental, social and governance goals, timeline and steps to determine its objectives; and

 

•received a presentation on ESG disclosure workstream from an consultant.

 

Nomination of Directors

 

In consultation with the Executive Chair of the Board, the Governance and Nomination Committee annually reviews the competencies and skills the members of the Board should possess as well as the skills, areas of expertise, background, independence and qualifications credentials of nominees for election or re-election as members of the Board of Directors. If vacancies occur on the Board, the Governance and Nomination Committee would recommend nominees to the Board, consider their qualifications, the validity of the credentials underlying each nomination, and, for nominees who are already directors of the Corporation, an evaluation of their effectiveness and performance as members of the Board of Directors, including their attendance at Board and Committee meetings. The use of a skills matrix is also an additional tool in recommending nominees to the Board of Directors. The Board's current skills matrix is set out under heading "Board's Skills Matrix" of this Circular.

 

The Governance and Nomination Committee maintains a list of potential director candidates for planned and unforeseen vacancies through an evergreen diversified list, which is comprised of a majority of women candidates.

 

Board Assessment

 

A detailed questionnaire is distributed annually to each member of the Board in order to enable individual directors to provide feedback on the effectiveness of the Board and its standing Committees as well as the contribution of each member. As part of the assessment process review, each Board member will assess the performance of the respective Committees of the Board.

 

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In addition, the results of the questionnaires are compiled by the Assistant Corporate Secretary and reviewed by the Vice President, Legal Affairs and Corporate Secretary and thereafter provided to the Lead Director, the Chair of the Governance and Nomination Committee and the President and Chief Executive Officer of the Corporation.  The Lead Director may decide to contact each director and to conduct a confidential one-on-one meeting to discuss the results and any issues arising from the performance assessments.  Following the evaluation process, the compiled results are provided to the members of the Governance and Nomination Committee and the members of the Board for discussion at the year-end meetings. 

 

The Governance and Nomination Committee assesses the operation of the Board and its standing Committees, the adequacy of information given to directors, communication between the Board and Management, the Board size and overall skills. The Governance and Nomination Committee also recommends changes to the Board in order to enhance its performance based on the survey feedback.

 

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

 

Since January 1st, 2020, no director or executive officer of Osisko, or Shareholder who beneficially owns, or controls or directs, directly or indirectly, more than 10% of the outstanding Common Shares, or any known associates or affiliates of such persons, has or has had any material interest, direct or indirect, in any transaction or in any proposed transaction that has materially affected or is reasonably expected to materially affect the Corporation.

 

INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS

 

There is no indebtedness outstanding with any current or former director, executive officer or employee of the Corporation or its subsidiaries which is owing to the Corporation or its subsidiaries, or which is owing to another entity which indebtedness is the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Corporation or its subsidiaries, entered into in connection with a purchase of securities or otherwise.

 

LIABILITY INSURANCE

 

The Corporation subscribes to liability insurance for the benefit of its directors and officers to cover them against certain liabilities contracted by them in such capacity. For the most recently completed financial year, this insurance provided for a coverage limit of US$100 million per loss and policy year and the premium paid by the Corporation amounted to US$1.9 million on an annualized basis. ODV is covered under the same policy as the Corporation and shares the coverage limit.  A fraction of the premium is assumed by ODV. When the Corporation is authorized or required to indemnify an insured, a deductible of US$2.5 million applies. The policy contains standard industry exclusions.

 

APPOINTMENT AND REMUNERATION OF AUDITORS

 

The Board of Directors and the Audit and Risk Committee of the Corporation recommend that Shareholders vote for the appointment of PricewaterhouseCoopers LLP a partnership of chartered professional accountants ("PwC"), as independent auditor of the Corporation for the fiscal year ending December 31, 2021 and to authorize the directors to establish their remuneration. PwC was originally appointed on April 30, 2014.

 

Unless the form of proxy states otherwise, or if the right to vote is not exercised for the appointment of the auditors, the persons named in the enclosed form of proxy intend to VOTE FOR the re-appointment of PwC, Chartered Professional Accountants, as independent auditor of the Corporation and for the directors to fix their remuneration.

 

The following table illustrates in detail the components of the fees incurred in 2020 and in 2019:

 

Year  Audit Fees(1)
($)		   Audit Related
Fees
($)		   Tax Fees(2)
($)		   All Other Fees
($)		 
December 31, 2020   1,265,182    119,438    164,844    - 
December 31, 2019   945,803    -    155,637    - 

 

NOTES:

 

(1) Audit fees were higher in 2020 primarily due to the services rendered in relation to the Filing Statement of Barolo Ventures Corp. dated as of November 20, 2020 in respect of the RTO Transaction. The audit fees also include services rendered in connection with the audit of the Corporation's annual consolidated financial statements and annual audit fees for two separate audit opinions of two subsidiaries of the Corporation. In 2019, the audit fees included services rendered in relation to the Short-Form Prospectus dated June 25, 2019 and July 5, 2019 and the Management Information Circular of Barkerville dated October 15, 2019, as well as audit fees in connection with the audit of the Corporation's annual consolidated financial statements and annual audit fees for a separate audit opinion of a subsidiary of the Corporation (an amount of $136,652 was reimbursed in 2019 by Betelgeuse LLC to the Corporation in relation to the Short-Form Prospectus dated June 25, 2019 and July 5, 2019 (secondary offering)).

 

(2) The audit-related fees are related to translation services for financial statements and management's discussion and analysis reports.

 

(3) Tax fees are related to tax compliance, tax planning and tax advice services for the preparation of corporate tax returns and proposed transactions.

 

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APPROVAL OF THE UNALLOCATED RIGHTS AND ENTITLEMENTS UNDER THE EMPLOYEE SHARE PURCHASE PLAN

 

The Shareholders of the Corporation approved the replenishment of the Employee Share Purchase Plan in May 2018. The TSX rules provide that unallocated rights or other entitlements under a security based compensation arrangement, which does not have a fixed number of maximum securities issuable, must be approved every three years.

 

The Employee Share Purchase Plan provides for a maximum number of Common Shares, which shall not exceed 0.1% of the issued and outstanding Common Shares of the Corporation at all times.  Furthermore, as provided for under Section 3.4 of the Employee Share Purchase Plan, the Corporation's contribution for each eligible employee is an amount that is equal to 60% of the eligible employee's contribution, which may be amended, from time to time, at the discretion of the Corporation. A copy of the Employee Share Purchase Plan, is available on the Corporation's website at www.osiskogr.com/en/governance-2/.

 

At the Meeting, in accordance with the rules of the TSX, Shareholders will be asked to consider and, if deemed appropriate, to pass, with or without variation, an ordinary resolution, in the form set forth below, subject to such amendments, variations or additions as may be approved at the Meeting, renewing the approval of the Employee Share Purchase Plan:

 

"BE IT RESOLVED AS AN ORDINARY RESOLUTION THAT:

 

1. All unallocated rights or other entitlements under the Employee Share Purchase Plan be and are hereby approved;

 

2. The Corporation shall have the ability to issue Common Shares under the Employee Share Purchase Plan until May 12, 2024, which date is the date that is three (3) years from the date of the Shareholder meeting at which Shareholder approval is being sought; and

 

3. Any director or officer of the Corporation be and is hereby authorized and directed, for and on behalf of the Corporation, to do, or cause to be done, all such acts and things, execute and deliver, or cause to be delivered, such other documents, agreements, certificates and statements, as any such director and officer may, in their discretion, determine to be necessary or desirable in order to give full effect to the intent and purpose of these resolutions, the authority for the execution of such documents, agreements, certificates and statements and the doing of such other acts or things to be conclusively evidenced thereby."

 

Accordingly, the Board of Directors and Management are recommending that the Shareholders VOTE FOR the approval of the said ordinary resolution that requires an affirmative vote of the majority of the votes cast at the Meeting in order to be adopted. Unless contrary instructions are indicated on the proxy form or the voting instruction card, the persons designated in the accompanying form of proxy or voting instructions card intend to VOTE FOR the approval of the resolution.

 

APPROVAL OF AMENDMENTS TO THE RESTRICTED SHARE UNIT PLAN AND APPROVAL OF THE UNALLOCATED RIGHTS AND ENTITLEMENTS UNDER THE PLAN

 

The Shareholders of the Corporation originally approved the Corporation's RSU Plan and unallocated rights and entitlements under the plan in May 2018. The TSX rules provide that unallocated rights or other entitlements under a security based compensation arrangement, which does not have a fixed number of maximum securities issuable, must be approved every three years.

 

The RSU Plan provides for a maximum number of Common Shares, which shall not exceed 1.8% of the issued and outstanding Common Shares of the Corporation at all times.

 

Pursuant to a review of all current and proposed equity based plans, the Board of Directors approved on March 29, 2021 amendments to the RSU Plan which consist of allowing awards to independent consultants.  A copy of the RSU Plan, including the proposed changes described herein, is available on the Corporation's website at www.osiskogr.com/en/governance-2/.

 

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The amendments to the RSU Plan are also subject to approval by the TSX. If approved by Shareholders and the TSX, the RSU Plan as amended will supersede and replace the current RSU Plan.  Accordingly, at the Meeting, in accordance with the TSX rules, Shareholders will be asked to consider and, if deemed appropriate, to pass, with or without variation, an ordinary resolution, in the form set forth below, subject to such amendments, variations or additions as may be approved at the Meeting.

 

The TSX requires that the resolution adopting the amended RSU Plan be approved by a majority of the votes cast, by proxy or in person. In addition to Shareholders' approval, the amended RSU Plan is subject to regulatory approval.  Upon ratification by Shareholders, a copy of the amended RSU Plan will be filed on SEDAR.

 

"BE IT RESOLVED AS AN ORDINARY RESOLUTION THAT:

 

1. The Corporation be and it is hereby authorized to amend its RSU Plan to include and allow awards to independent consultants, and the RSU Plan as amended is hereby approved, confirmed and ratified;

 

2. All unallocated rights or other entitlements under the amended RSU Plan be and are hereby approved;

 

3. The Corporation shall have the ability to continue granting RSUs under the RSU Plan until May 12, 2024, which date is the date that is three (3) years from the date of the Shareholder meeting at which Shareholder approval is being sought; and

 

4. Any director or officer of the Corporation be and is hereby authorized and directed, for and on behalf of the Corporation, to do, or cause to be done, all such acts and things, execute and deliver, or cause to be delivered, such other documents, agreements, certificates and statements, as any such director and officer may, in their discretion, determine to be necessary or desirable in order to give full effect to the intent and purpose of these resolutions, the authority for the execution of such documents, agreements, certificates and statements and the doing of such other acts or things to be conclusively evidenced thereby."

 

Accordingly, the Board of Directors and Management are recommending that the Shareholders VOTE FOR the approval of the said resolution that requires an affirmative vote of the majority of the votes cast at the Meeting in order to be adopted. Unless contrary instructions are indicated on the proxy form or the voting instruction card, the persons designated in the accompanying form of proxy or voting instructions card intend to VOTE FOR the approval of the resolution.

 

ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

The Board of Directors believes that the compensation program must be competitive within the industry, provide a strong incentive to its Named Executives to achieve the Corporation's goals and ensure that interests of Management and the Corporation's Shareholders are aligned. A detailed discussion of the Corporation's executive compensation is more fully described under the heading "Statement of Executive Compensation - Compensation Discussion and Analysis" in this Circular. Under such section, you will find discussions on the Corporation's executive compensation philosophy, objectives, policies and practices and provides information on the key elements of the executive compensation program of the Corporation.

 

Advisory Resolution on Executive Compensation Approach

 

"BE IT RESOLVED, AS AN ADVISORY RESOLUTION THAT:

 

1. On an advisory basis and not to diminish the role and responsibilities of the Board of Directors of the Corporation, the Shareholders accept the approach to executive compensation disclosed in the Corporation's Circular dated March 29, 2021 delivered in advance of the Meeting;

 

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2. As this in an advisory vote, the Board of Directors of the Corporation and the HR Committee will not be bound by the results of the vote. However, the Board of Directors of the Corporation will take the results into account, together with feedback received from Shareholders, when considering its approach to executive compensation in the future; and

 

3. Results of the vote will be disclosed in the report of voting results."

 

The Board of Directors of the Corporation recommends that Shareholders indicate their support for the Corporation's approach to executive compensation disclosed in the Circular by VOTING FOR the Advisory Resolution on Executive Compensation Approach. The persons whose names appear in the attached form of proxy intend to VOTE FOR the Advisory Resolution on Executive Compensation Approach.

 

SHAREHOLDER PROPOSALS FOR THE 2022 ANNUAL MEETING

 

The final date for submitting Shareholder proposals to the Corporation for the next annual meeting of the Shareholders is December 29, 2021.

 

ADDITIONAL INFORMATION

 

Additional information relating to the Corporation is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Financial information is provided in the Corporation's financial statements and Management's Discussion and Analysis for the year ended December 31, 2020 a copy of which may be obtained upon request from the Corporate Secretary, 1100, Avenue des Canadiens-de-Montréal, Suite 300, Montréal, Québec, H3B 2S2. The Corporation may require the payment of a reasonable charge when the request is made by someone other than a Shareholder.

 

CONTACTING OSISKO'S BOARD OF DIRECTORS

 

Shareholders, employees and other interested parties may communicate directly with the Board by:

 

1. Writing to:

Executive Chair of the Board or

Lead Director of the Board
Osisko Gold Royalties Ltd

1100 Avenue des Canadiens-de-Montréal
Suite 300
Montréal, Québec, H3B 2S2

2. Calling: 514-940-0670
3. Emailing:

Chair-Board@osiskogr.com or

Lead-Director@osiskogr.com

 

APPROVAL

 

The Board of Directors of the Corporation has approved the contents of the Circular and its sending to the Shareholders.

 

Montréal, Québec, March 29, 2021. 

 

    OSISKO GOLD ROYALTIES LTD
     
  Per:  /s/ André Le Bel
   

André Le Bel

Vice President, Legal Affairs and Corporate Secretary

 

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OSISKO GOLD ROYALTIES LTD

 

SCHEDULE "A"
BOARD OF DIRECTORS CHARTER

 

I. OVERALL ROLE AND RESPONSIBILITY

 

The Board of Directors (the "Board") of Osisko Gold Royalties Ltd (the "Corporation") is elected by the Corporation's shareholders to supervise the management of the business and affairs of the Corporation.

 

The Board monitors the manner in which the Corporation conducts its business as well as the senior management responsible for the day-to-day operations of the Corporation. It sets the Corporation's policies, assesses their implementation by management and reviews the results.

 

The prime stewardship responsibility of the Board is to ensure the viability of the Corporation and to ensure that it is managed in the best interest of its shareholders as a whole while taking into account the interests of other stakeholders.

 

The Board's main expectations of the Corporation's management are to protect the Corporation's interests and ensure the long term growth of shareholder value.

 

II. MEMBERSHIP AND QUORUM

 

The Board shall be composed of a minimum of 3 and a maximum of 15 members.  The Board shall also be constituted with a majority of individuals who qualify as independent directors, as per the standards of independence established in the Regulation 58-101 respecting Disclosure of Corporate Governance Practices.

 

The quorum at any meeting of the Board is a majority of directors in office.

 

III. STRUCTURE AND OPERATIONS

 

Proceedings and meetings of the Board are governed by the provisions of the By-laws of the Corporation relating to the regulation of the meetings and proceedings of the Board insofar as they are applicable and not inconsistent with this Charter and the other provisions adopted by the Board in regards to committee composition and organization.

 

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IV. DUTIES AND RESPONSIBILITIES OF THE BOARD

 

In addition to statutory responsibilities, the Board, either directly or through one of its committees, assumes responsibility for:

 

(a) satisfying itself, to the extent feasible, as to the integrity of the Executive Chair of the Board, the President and Chief Executive Officer ("CEO"), and other senior officers, and that the CEO and other senior officers maintain a culture of integrity throughout the Corporation;

 

(b) ensuring that the Corporation is operated so as to preserve its financial integrity and in accordance with policies approved by the Board;

 

(c) ensuring, through the Governance and Nomination Committee, that appropriate structures and procedures are in place so that the Board and its committees can function independently of management and in accordance with sound corporate governance practices;

 

(d) reviewing and approving key policy statements developed by management on various issues such as ethics, regulatory compliance and communications with shareholders, other stakeholders and the general public;

 

(e) adopting a strategic planning process and thereafter reviewing and, where appropriate, approving, annually, a strategic plan and a budget which takes into account, among other things, the opportunities and risks of the business (all of which are developed at first by management), and monitoring the Corporation's performance with reference to the adopted budget and strategic plan;

 

(f) identifying the principal risks of the Corporation's business and ensuring the implementation of appropriate controls, measures and systems to manage these risks;

 

(g) appointing the CEO, setting forth the position description, as well as planning for the succession of the CEO with the recommendation of the Governance and Nomination Committee and the Human Resources Committee respectively;

 

(h) evaluating the performance and reviewing the compensation of the Executive Chair of the Board and the CEO with the Human Resources Committee, and ensuring that such compensation is competitive and measured according to appropriate benchmarks which reward contribution to shareholder value;

 

(i) appointing, training, evaluating and monitoring officers as well as planning for their succession with the recommendations of the Governance and Nomination Committee; determining management compensation with the recommendations of the Governance and Nomination Committee and the Human Resources Committee, respectively and ensuring that such compensation is competitive and measured according to appropriate industry benchmarks;

 

(j) overseeing, through the Audit and Risk Committee, the quality and integrity of the Corporation's accounting and financial reporting systems, and disclosure controls and procedures;

 

(k) ensuring, through the Audit and Risk Committee, the integrity of the Corporation's internal controls and management information systems;

 

(l) overseeing, through the Audit and Risk Committee, the process for evaluating the adequacy of internal control structures and procedures of financial reporting, and satisfy itself as to the adequacy of such process;

 

(m) advising management on critical and sensitive issues;

 

(n) ensuring that the Board's expectations of management are understood, that all appropriate matters come before the Board in a timely and effective manner and that the Board is kept informed of shareholder feedback;

 

(o) conducting annually, through the Governance and Nomination Committee, a review of Board practices and the Board's and committees' performance (including director's individual contributions), to ascertain that the Board, its committees and the directors are capable of carrying out and do carry out their roles effectively;

 

(p) ensuring with the Human Resources Committee, the adequacy and form of the compensation of non-executive directors taking into account the responsibilities and risks involved in being an effective non-executive director;

 

(q) determining, with the Governance and Nomination Committee, in light of the opportunities and risks facing the Corporation, what competencies, skills and personal qualities the Board should seek in recruiting new Board members, and the appropriate size of the Board to facilitate effective decision-making;

 

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(r) determining, annually, with the Governance and Nomination Committee, the independence of each member of the Board as such term is defined by applicable laws and regulations including, rules and guidelines of stock exchanges to which the Corporation is subject;

 

(s) setting forth, with the recommendation of the Governance and Nomination Committee, the position description for the Executive Chair of the Board and the Chair of the committees of the Board;

 

(t) determining annually, with the Audit and Risk Committee, if each member of the Audit and Risk Committee is "financially literate" as such terms are defined under applicable laws and regulations including rules and guidelines of stock exchanges to which the Corporation is subject;

 

(u) selecting, upon the recommendation of the Governance and Nomination Committee, nominees for election as directors;

 

(v) selecting the Executive Chair of the Board;

 

(w) selecting the Lead Director of the Board and ensure the director appointed as Lead Director is and remains independent;

 

(x) ensuring, through the Governance and Nomination Committee, that new directors have a good understanding of their role and responsibilities and of the contribution expected of them (including as regards attendance at, and preparation for, meetings), and that they are provided with adequate education and orientation as regards the Corporation, its business and activities;

 

(y) approving unbudgeted capital expenditures, or significant divestiture, as well as acquisitions where environmental or other liabilities exist and which could result in significant exposure to the Corporation;

 

(z) approving major investments in metals streaming transactions, royalties and shares of publicly traded companies;

 

(aa) reviewing alternate strategies in response to any possible takeover bid in order to maximize value for shareholders;

 

(bb) discussing and developing the Corporation's approach to corporate governance issues in general, with the involvement of the Governance and Nomination Committee;

 

(cc) reviewing and approving, with the involvement of the Disclosure Committee, the content of the principal communications by the Corporation to its shareholders and the public, such as quarterly and annual financial statements and management's discussion and analysis, annual information form, management information circular, prospectuses and other similar documents which may be issued and distributed, provided that the quarterly and annual financial statements and related management's discussion and analysis and earnings press releases and any other public disclosure document containing financial information may be reviewed and approved by the Audit and Risk Committee instead of the Board;

 

(dd) ensuring ethical behavior and compliance with laws;

 

(ee) monitoring, directly or through one of its committees, compliance with all codes of ethics;

 

(ff) consider the means by which stakeholders can communicate with the members of the Board (including independent directors

 

(gg) monitoring performance of the Corporation toward the achievement of approved goals and standards;approving with the recommendation of the Environmental and Sustainability Committee, changes to the Corporation's ESG practices and other significant policies of the Corporation;

 

(hh) monitoring the Corporation's commitment to the environment and sustainable development to all stakeholders and engage with stakeholders in respect of ESG issues, including all employees of the Corporation fostering a culture of respect and accountability regarding such matters;

 

(ii) ensuring that, with respect to matters under the Corporation's control, the Corporation conducts business in a climate that fosters the improvement of socio-economic conditions in the communities where it holds an interest;

 

(jj) approving with the recommendation of the Environmental and Sustainability Committee, the Corporation's annual ESG Report; and

 

(kk) reviewing and considering all other related matters and issues which may be determined, from time to time, by the Environmental and Sustainability Committee.

 

Directors are expected to make reasonable efforts to attend all Board meetings and to review materials distributed to them in advance of Board meetings.

 

V. CHARTER

 

The Governance and Nomination Committee shall periodically review this Charter and recommend appropriate changes to the Board.

 

This Charter was approved and ratified by the Board of Directors on June 30, 2014 with effect as of April 30, 2014 and was last reviewed and amended on November 9, 2020.

 

962021 Management Information Circular 

 

 

 

ANY QUESTIONS AND REQUESTS FOR ASSISTANCE

 

MAY BE DIRECTED TO THE PROXY SOLICITOR AGENT:

 

 

 

North America Toll Free 

1-877-452-7184

 

Collect Calls Outside North America 

1-416-304-0211

 

Email: assistance@laurelhill.com

 

 

  

Exhibit 5.1

  

 

 

Consent of Independent Registered Public Accounting Firm

  

We hereby consent to the use in this registration statement on Form  F-10 dated March 17, 2022 of Osisko Gold Royalties Ltd of our report dated February 24, 2022 relating to the consolidated financial statements and the effectiveness of internal control over financial reporting of Osisko Gold Royalties Ltd, which appears in such registration statement.

 

We also consent to the reference to us under the heading “Interests of Experts” in the Annual Information Form for the year ended December 31, 2021, which appears in Exhibit 4.1 in this registration statement.

 

/s/ PricewaterhouseCoopers LLP

  

Montreal, Canada

 

March 17, 2022

 

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

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

T: +1 514 205 5000, F: +1 514 876 1502

 

“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

 

 

 

  

Exhibit 5.2

 

CONSENT OF EXPERT

 

In connection with the Registration Statement on Form F-10 of Osisko Gold Royalties Ltd filed with the United States Securities and Exchange Commission (the “Registration Statement”), I, Guy Desharnais, Ph.D., P.Geo, hereby consent to the use of my name in connection with the reference to certain scientific and technical information approved by me as set out in the Registration Statement and the documents incorporated by reference therein.

 

By: /s/ Guy Desharnais  
Name: Guy Desharnais, Ph.D., P.Geo  
March 17, 2022  

  

 

 

 Exhibit 5.3

 

CONSENT OF EXPERT

 

In connection with the Registration Statement on Form F-10 of Osisko Gold Royalties Ltd filed with the United States Securities and Exchange Commission (the “Registration Statement”), I, Leonardo de Souza, MAusIMM (CP), hereby consent to the use of my name in connection with the reference to certain scientific and technical information approved by me as set out in the Registration Statement and the documents incorporated by reference therein.

 

By: /s/ Leonardo de Souza  
Name: Leonardo de Souza, MAusIMM (CP)  
March 17, 2022  

 

 

 

Exhibit 5.4

 

     

 

March 17, 2022

 

The Securities and Exchange Commission

 

Re: F-10 Registration Statement of Osisko Gold Royalties Ltd (the “Corporation”)

 

Dear Sirs/Mesdames:

 

We refer to the registration statement on Form F-10 (the “Registration Statement”) filed by the Corporation under the Securities Act of 1933, as amended (the “Act”).

 

We hereby consent to references to our firm name in the Registration Statement, including on the face page of the Registration Statement and under the headings “Enforceability of Civil Liabilities”, “Eligibility for Investment”, “Legal Matters”, and “Interests of Experts” and the use of our opinions under the heading “Eligibility for Investment” and the reference to our advice under the heading “Enforceability of Civil Liabilities”.

 

In giving this consent, we do not thereby admit that we come within the category of persons whose consent is required by the Act or the rules thereunder.

 

Yours truly,

 

/s/ Bennett Jones LLP

 

BENNETT JONES LLP

 

 

 

 

 

 

Exhibit 5.5

 

 

Osler, Hoskin & Harcourt llp

Box 50, 1 First Canadian Place
Toronto, Ontario, Canada  M5X 1B8
416.362.2111  main

416.862.6666  facsimile

 

Toronto March 17, 2022  

 

 

 

Montréal

 

  

Calgary

 

 

Ottawa

 

 

Vancouver

  
   
   
   
TO: Osisko Gold Royalties Ltd.
  1100 avenue des Canadiens-de-Montréal, Suite 300
  Montreal, Québec
  Canada, H3B 2S2
   
 

New YorkDear Ladies and Gentlemen:

 

Osisko Gold Royalties Ltd

 

We refer to the short form prospectus (the “Prospectus”) of Osisko Gold Royalties Ltd (the “Corporation”) relating to the offering by the Corporation of equity securities of the Corporation, forming part of the Registration Statement on Form F-10 (the “Registration Statement”) filed by the Corporation with the U.S. Securities and Exchange Commission.

 

We hereby consent to the reference to our firm name on the cover pages of the Registration Statement and Prospectus and under the headings “Eligibility for Investment”, “Legal Matters” and “Interests of Experts” in the Prospectus.

 

In giving this consent, we do not thereby admit that we come within the category of persons whose consent is required by the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder.

 

Yours truly,

 

/s/ Osler, Hoskin & Harcourt LLP

 

OSLER, HOSKIN & HARCOURT LLP

 

 

 

 

 

  

EX-FILING FEES

 

Calculation of Filing Fee Table

 

F-10

_________

(Form Type)

 

OSISKO GOLD ROYALTIES LTD

_______________________________________

(Exact Name of Registrant as Specified in its Charter)

 

Table 1: Newly Registered Securities

 

    Security
Type		   Security
Class
Title		   Fee
Calculation
or Carry
Forward
Rule		     Amount
Registered		   Proposed
Maximum
Offering
Price Per
Unit		     Maximum
Aggregate
Offering
Price(1)		   Fee
Rate		     Amount
of
Registration
Fee		   Carry
Forward
Form
Type		   Carry
Forward
File
Number		   Carry
Forward
Initial
effective
date		   Filing Fee
Previously
Paid In
Connection
with
Unsold
Securities
to be
Carried
Forward		  
Newly Registered Securities
Fees to Be
Paid		   Equity   Common Shares, no par value   457 (o)   (1)   (1)   $ 400,000,000   0.0000927   $ 37,080                  
    Total Offering Amounts               $ 37,080                  
    Total Fees Previously Paid                 -                  
    Total Fee Offsets                 -                  
    Net Fee Due               $ 37,080                  

______________________________________
(1)Calculated pursuant to Rule 457(o) under the Securities Act of 1933, as amended. There are being registered under this Registration Statement such indeterminate number of common shares of the Registrant as shall have an aggregate offering price not to exceed US$400,000,000.