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

 

OSISKO GOLD ROYALTIES LTD

 

. . . . . . . . . . . . . . . . . . . . . . .
Unaudited Condensed Interim
Consolidated Financial Statements

For the three months
ended
March 31, 2019


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

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

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

2


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

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

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

3


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

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

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

4


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

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

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

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

5


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

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

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

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

6


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

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

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

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

7


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

1.

Nature of activities

   

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

   

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

   
2.

Basis of presentation

   

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

   

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

   
3.

New accounting standard

   

IFRS 16, Leases

   

In J anuary 2016, the IASB issued IFRS 16, Leases (“IFRS 16”). IFRS 16 s ets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, which is the customer (“lessee”) and the supplier (“lessor”). IFRS 16 replaces IAS 17, Leases (“IAS 17”), and related interpretations. All leases result in the lessee obtaining the right to use an asset at the start of the lease and incurring a financing obligation corresponding to the lease payments to be made over time. Accordingly, for lessees, IFRS 16 eliminates the classification of leases as either operating leases or finance leases as was required by IAS 17 and, instead, introduces a single lessee accounting model.

   

Applying that model, a lessee is required to recognize:


  i)

assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value; and

   ii)

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

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

8


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

3.

New accounting standards (continued)

   

IFRS 16, Leases (continued)

   

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

   

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

   

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

   

Accounting policy - Leases

   

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

   

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

   

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

   

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

   
4.

Cash

   

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

9


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

5.

Investments in associates


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

6.

Other investments


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

10


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

6.

Other investments (continued)

   

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

   

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

   
7.

Royalty, stream and other interests


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

11


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

7.

Royalty, stream and other interests (continued)

   

Main acquisitions – 2019

   

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

   

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

   

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

   

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

   

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

   

Impairment – 2019

   

Renard mine diamond stream (Stornoway Diamond Corporation)

   

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

   

On March 31, 2019, the Renard diamond stream was written down to its estimated recoverable amount of $122.4 million, which was determined by the fair value less cost of disposal using a discounted cash-flows approach. The fair value of the Renard diamond stream is classified as level 3 of the fair value hierarchy because the main valuation inputs used are significant unobservable inputs. The main valuation inputs used were the cash flows expected to be generated by the sale of diamonds from the Renard diamond stream over the estimated life of the Renard diamond mine, based on expected long-term diamond prices per carat and a post-tax real discount rate of 4.7%.

   

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

12


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

7.

Royalty, stream and other interests (continued)


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

13


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

8.

Provisions


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

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

   
9.

Long-term debt

   

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


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

14


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

9.

Long-term debt (continued)

   

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


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

  (i)

Convertible debenture (2016)

     
 

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

     
  (ii)

Convertible debentures (2017)

     
 

In November 2017, the Company closed a bought-deal offering of c onvertible senior unsecured debentures (the “Debentures”) in an aggregate principal of $300.0 million (the “Offering”). The Offering was comprised of a public offering, by way of a short form prospectus, of $184.0 million aggregate principal amount of Debentures and a private placement offering of $116.0 million aggregate principal amount of Debentures.

     
 

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

     
  (iii)

Revolving credit facility

     
 

The revolving credit facility (the “Facility”) allows the Company to borrow up to $350.0 million, with an additional uncommitted accordion of up to $100.0 million, for a total availability of up to $450.0 million. The uncommitted accordion is subject to standard due diligence procedures and acceptance of the lenders. The Facility is to be used for general corporate purposes and investments in the mineral industry, including the acquisition of royalty, stream and other interests. The Facility is secured by the Company’s assets, present and future (including the royalty, stream and other interests), and has a maturity date of November 14, 2022, which can be extended by one year on each anniversary date, subject to the approval of the lenders.

15


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

9.

Long-term debt (continued)

     
(iii)

Revolving credit facility (continued)

     

The Facility is subject to standby fees. Funds drawn bear interest based on the base rate, prime rate or London Inter-Bank Offer Rate (“LIBOR”) plus an applicable margin depending on the Company’s leverage ratio. The Facility includes covenants that require the Company to maintain certain financial ratios, including the Company’s leverage ratios and meet certain non-financial requirements. As at March 31, 2019, all such ratios and requirements were met.


10.

Share capital and warrants

   

Normal Course Issuer Bid

   

In December 2018, Osisko renewed its normal course issuer bid (“NCIB”) program. Under the terms of the 2018 NCIB program, Osisko may acquire up to 10,459,829 of its common shares from time to time in accordance with the normal course issuer bid procedures of the TSX. Repurchases under the 2018 NCIB program are authorized until December 11, 2019. Daily purchases will be limited to 71,940 common shares, other than block purchase exemptions, representing 25% of the average daily trading volume of the common shares on the TSX for the six-month period ending November 30, 2018, being 287,760 Common Shares.

   

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

   

Dividends

   

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

   

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

   

Warrants

   

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


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

  (i)

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

  (ii)

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

16


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

11.

Share-based compensation

   

Share options

   

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


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

  (i)

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

  (ii)

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

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

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

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

17


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

11.

Share-based compensation (continued)

   

Share options – Fair value

   

The options, when granted, are accounted for at their fair value determined by the Black-Scholes option pricing model based on the vesting period. No options were granted during the three months ended March 31, 2019.

   

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

   

Deferred and restricted share units

   

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


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

  (i)

The DSU granted vest the day prior to the next annual general meeting and are payable in cash to each director when he or she leaves the board or is not re-elected. The value of the payout will be determined by multiplying the number of DSU vested at the payout date by the closing price of the Company’s shares on the day prior to the payout date. The value to be recognized at each reporting date is determined based on the closing price of the Company’s shares and is recognized over the vesting period.

     
  (ii)

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

     
  (iii)

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

     
 

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

18


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

11.

Share-based compensation (continued)

   

Deferred and restricted share units (continued)

   

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

   
12.

Additional information on the consolidated statements of income (loss)


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

  (i)

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

  (ii)

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

19


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

13.

Net earnings (loss) per share


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

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

14.

Additional information on the consolidated statements of cash flows


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

20


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

15.

Fair value of financial instruments

   

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

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

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

                  December 31, 2018  
      Level 1     Level 2     Level 3     Total  
      $    

$

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

  (i)

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

 21


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

15.

Fair value of financial instruments (continued)

   

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

   

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


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

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

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

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

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

Foreign exchange contracts

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

Financial instruments not measured at fair value on the balance sheet

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

22


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

15.

Fair value of financial instruments (continued)

   

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

   

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


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

16.

Segment disclosure

   

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

   

Geographic revenues

   

Geographic revenues from the sale of metals and diamonds received or acquired from in-kind royalties, streams and other interests are determined by the location of the mining operations giving rise to the royalty, stream or other interest. For the three months ended March 31, 2019 and 2018, royalty, stream and other interest revenues were mainly earned from the following jurisdictions:


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

  (i)

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

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

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

23


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

16.

Segment disclosure (continued)

   

Royalty, stream and other interests, net

   

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


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

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

  (i)

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


17.

Related party transactions

   

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


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

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

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

24


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

17.

Related party transactions (continued)

   

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

   

Additional transactions with related parties are described under Note 7.

   
18.

Subsequent event

   

Dividends

   

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

25