Osisko Development Corp.: Exhibit 99.7 - Filed by newsfilecorp.com

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

As further described in Note 2, the information for the period prior to November 25, 2020 is presented on a carve-out basis.

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

As further described in Note 2, the information for the period prior to November 25, 2020 is presented on a carve-out basis.

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

As further described in Note 2, the information for the period prior to November 25, 2020 is presented on a carve-out basis.

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

(i) The shares issued to the parent upon the Reverse Take-Over transaction are deemed to have been issued and outstanding as at January 1, 2020 for purposes of these interim consolidated financial statements.

As further described in Note 2, the information for the period prior to November 25, 2020 is presented on a carve-out basis.

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

Osisko Development Corp.

Notes to the Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2021 and 2020
(Unaudited)

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

In November 2020, Osisko Gold Royalties Ltd ("Osisko Gold Royalties or "Parent Company") transferred mining properties and a portfolio of marketable securities to Barolo Ventures Corp. ("Barolo"), in exchange for common shares of Barolo, which resulted in a Reverse Take-Over of Barolo (the "RTO") under the policies of the TSX Venture Exchange ("TSX-V") and which, in connection with the RTO, Barolo changed its name to Osisko Development Corp. ("Osisko Development" or "the Company").

The common shares of Osisko Development began trading on the TSX-V on December 2, 2020 under the symbol "ODV". The Company's registered and business address is 1100, avenue des Canadiens-de-Montréal, suite 300, Montreal, Québec.

The principal subsidiaries of the Company and their geographic locations at June 30, 2021 were as follows:

Osisko Development is focused on exploring and developing its mining assets, including the Cariboo Gold and Bonanza Ledge II gold projects in British Columbia and the San Antonio gold project in Mexico.

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 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, 2020, 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, unless otherwise noted.

As further described in the Company's last annual audited financial statements, the Company's financial information for periods and dates prior to November 25, 2020, and thus the comparative financial information from January 1 to June 30, 2020 represents the carve-out financial information of the mining activities of Osisko Gold Royalties and reflect the activities, assets and liabilities of the Osisko Gold Royalties Contributed Assets on a "carve-out" basis, rather than representing the legal form applicable at the time.

The carve-out financial information has been derived from Osisko Gold Royalties historical accounting records and estimates that were established by Osisko Development's management. The consolidated statements of loss and comprehensive loss include a pro rata of Osisko Gold Royalties income and expenses for assets attributable to the Company.

The Board of Directors approved these condensed interim consolidated financial statements on August 9, 2021.

The duration and full financial effect of the COVID-19 pandemic is unknown at this time, as are the measures taken by governments, companies and others to attempt to reduce the spread of COVID-19. Any estimate of the length and severity of these developments is therefore subject to significant uncertainty, and accordingly estimates of the extent to which the COVID-19 may materially and adversely affect the Company's operations, financial results and condition in future periods are also subject to significant uncertainty, including potential restrictions on exploration and development sites access and supply chains disruptions that could delay the exploration and development plans of the main assets of the Company. In the current environment, the assumptions and judgements made by the Company 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, the Company's valuation of its long-term assets, including the assessment for impairment and impairment reversal. Actual results may differ materially from these estimates.

Osisko Development Corp.

Notes to the Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2021 and 2020
(Unaudited)

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

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. The Company early adopted the amendment to IAS 16 whereby proceeds from the sale of precious metals before the related property, plant and equipment is available for use should be recognized in profit or loss, together with the costs of producing those items.

As a result, the net proceeds of $0.8 million received from selling recovered gold and silver from its Bonanza Ledge II project has been recognized as revenue in the consolidated statement of loss for the three and six months ended June 30, 2021. The Company had no prior period pre-production revenues. The related cost of sales in relation to the gold and silver sold of $0.8 million was also recognized in the consolidated statement of loss for the three and six months ended June 30, 2021 in accordance to IAS 2 at the net realizable value of inventory sold.

Revenues generated from sale of metals is recognized when the Company satisfies the performance obligations associated with the sale. Typically, this is accomplished when control over the metals are passed from the Company to the buyer. Primary factors that indicate the point in time when control has passed to the buyer includes but is not limited to (a) the Company has transferred physical possession and legal title of the asset to the purchaser and (b) the Company has present right to payment.

As at June 30, 2021 and December 31, 2020, cash held in U.S. dollars amounted respectively to US$41.6 million ($51.6 million) and US$47.2 million ($60.1 million).

	June 30,	December 31,
	2021	2020
Current	$	$

Ore in stockpiles	16,680	8,426
Gold-in-circuit inventory	3,210	-
Refined precious metals	1,618	-
Supplies	4,331	1,599
Total current inventories	25,839	10,025

Non-current
Ore in stockpiles (note 10)⁽ⁱ⁾	3,901	17,279

(i) The non-current Ore in stockpile is presented in other assets on the consolidated statements of financial position.

Osisko Development Corp.

Notes to the Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2021 and 2020
(Unaudited)

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

Gold-in-circuit and ore in stockpiles are measured at the lower of weighted average production cost and net realizable value. Net realizable value is calculated as the difference between the estimated selling price and estimated costs to complete processing into a saleable form plus variable selling expenses. Production costs include the cost of materials, labour, mine site production overheads and depreciation to the applicable stage of processing. The cost of ore stockpiles is increased based on the related current cost of production for the period. Stockpiles are segregated between current and non-current based on the period of planned usage.

Stockpile inventory (reflected in inventory and other assets on the statements of financial position) held by Sapuchi Minera, S. de R.L. de C.V ("Sapuchi") was revalued to net realizable value, resulting in an impairment charge of $4.4 million as at June 30, 2021 recognized in the consolidated statements of loss.

	Six months ended		Year ended
	June 30,		December 31,
	2021		2020
	$		$

Balance - Beginning of period	9,636		14,284
Acquisitions	-		972
Exercise of warrants	1,437		36
Share of loss and comprehensive loss, net	(1,157	)	(2,015	)
Net gain on ownership dilution	1,391		-
Gain on deemed disposals ⁽ⁱ⁾	-		5,357
Transfers to other investments ⁽ⁱ⁾	-		(8,998	)
Balance - End of period	11,307		9,636

(i) In 2020, the gain on deemed disposals is related to investments in certain associates that were transferred to other investments as the Company has considered that it has lost its significant influence over the investees.

	Six months ended		Year ended
	June 30,		December 31,
	2021		2020
	$		$
Fair value through profit or loss (warrants)
Balance - Beginning of period	1,892		529
Acquisitions	92		769
Exercises	(1,121	)	(7	)
Change in fair value	(305	)	601
Balance - End of period	558		1,892

Fair value through other comprehensive income (shares)
Balance - Beginning of period	98,616		43,544
Acquisitions	1,219		12,047
Transfer from associates	-		8,998
Change in fair value	(2,603	)	34,027
Disposals	(23,235	)	-
Balance - End of period	73,997		98,616

Total	74,555		100,508

Osisko Development Corp.

Notes to the Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2021 and 2020
(Unaudited)

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

Other investments comprise common shares and warrants, almost exclusively from Canadian publicly traded companies.

	Six months ended		Year ended
	June 30,		December 31,
	2021		2020
	$		$

Balance - Beginning of period	385,802		263,938
Acquisition of the San Antonio gold project	-		57,038
Additions	70,259		71,006
Mining tax credit	(1,585	)	(4,608	)
Asset retirement obligation	-		3,414
Depreciation capitalized	2,267		4,019
Share-based compensation capitalized	395		688
Transfers	(11,221	)	-
Impairment (note 10)	(36,052	)	-
Sale of a royalty ⁽ⁱ⁾	-		(13,000	)
Other adjustments	2,492		-
Currency translation adjustments	(1,530	)	3,307
Balance - End of period	410,827		385,802

(i) In November 2020, Osisko Gold Royalties exercised its option to purchase an additional 1% NSR royalty on the Cariboo and the Bonanza Ledge Phase 2 gold projects for $13.0 million.

Osisko Gold Royalties holds a 5% NSR royalty on the Cariboo and Bonanza Ledge properties and a 15% gold and silver stream on the San Antonio property (Note 12). The Cariboo and Bonanza Ledge properties 5% NSR royalty is perpetual and is secured by a debenture on all of Barkerville Gold Mines Ltd ("Barkerville") movable and immovable assets, including Barkerville's interest in the property and mineral rights, in an amount of not less than $150 million and a debenture on all of Williams Creek's movable and immovable assets, including Williams Creek's interest in the property and mineral rights, in an amount of not less than $150 million. The security shall be first ranking, subject to permitted encumbrances.

	Six months ended		Year ended
	June 30,		December 31,
	2021		2020
	$		$
Cost- Beginning of period	25,713		14,015
Acquisition of San Antonio gold project	-		1,330
Additions	34,447		10,749
Disposals	(23	)	-
Write-off	(962	)	(388	)
Transfers	11,221		-
Currency translation adjustments	26		7
Cost - End of period	70,422		25,713

Osisko Development Corp.

Notes to the Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2021 and 2020
(Unaudited)

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

Accumulated depreciation - Beginning of period	4,515		245
Depreciation	2,320		4,270
Disposals	-		-
Write-off	(953	)	-

Accumulated depreciation - End of period	5,882		4,515

Net book value
Cost	70,422		25,713
Accumulated depreciation	(5,882	)	(4,515	)
Net book value	64,540		21,198

Property, plant and equipment includes net right-of-use assets of $14.8 million as at June 30, 2021 ($2.4 million as at December 31, 2020).

	Six months ended		Year ended
	June 30,		December 31,
	2021		2020
	$		$

Net book value - December 31, 2020	41,869		42,949
Additions	2,830		201
Conversions to royalties ⁽ⁱ⁾	-		(631	)
Sale of royalties ⁽ⁱⁱ⁾	-		(650	)
Net book value - End of period	44,699		41,869

Balance - End of period
Cost	102,889		100,059
Accumulated impairment	(58,190	)	(58,190	)

Net book value - End of period	44,699		41,869

(i) In 2016, Osisko Gold Royalties entered into earn-in agreements for properties in the James Bay area. In 2019 and 2020, the ownership of certain properties were transferred to the counterparty of the earn-in agreements, and the Parent Company retained royalties on these properties. The earn-in agreements were terminated by the parties in 2020.

(ii) In 2020, Osisko Gold Royalties acquired a 3% NSR royalty on the exploration and evaluation properties owned by Osisko Development prior to the closing of the Arrangement for $0.7 million.

In March 2021, processing of ore commenced at the Bonanza Ledge II Project ("BL2"), with first gold sales occurring in May 2021. As a result of operational challenges incurred during the second quarter of 2021, it was determined that total capital and production costs related to BL2 would be significant 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. The Company recorded an impairment charge of $36.1 million on its BL2 mining interest during the three months ended June 30, 2021, recognized in the consolidated statement of loss.

Osisko Development Corp.

Notes to the Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2021 and 2020
(Unaudited)

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

On June 30, 2021, BL2 was impaired to its estimated recoverable amount of $12.4 million, which was determined by the value- in-use using discounted cash-flows approach based on the revised life of mine plan. 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 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 once 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 grade per ounce applied to the cash flows had been 10% lower, the Company would have recognized an additional impairment charge of $12.4 million. If the recovery rate applied to the cash flows had been 10% lower, the Company would have recognized an additional impairment charge of $12.4 million.

The movement of the lease liabilities for the six months ended June 30, 2021 is as follows:

	Six months ended		Year ended
	June 30,		December 31,
	2021		2020
	$		$

Balance - Beginning of period	2,035		-
Additions	13,228		2,394
Repayment of liabilities	(2,368	)	(359	)

Balance - End of period	12,895		2,035

Current liabilities	9,468		578
Non-current liabilities	3,427		1,457

	12,895		2,035

On November 20, 2020, Sapuchi completed a gold and silver stream agreement with Osisko Bermuda Ltd, a subsidiary of Osisko Gold Royalties for US$15.0 million ($19.1 million). An amount of US$10.5 million was paid in November 2020 and the remaining US$4.5 million was paid in February 2021.

Under the terms of the stream agreement, Osisko Bermuda Ltd will purchase 15% of the payable gold and silver from the San Antonio gold project at a price equal to 15% of the daily per ounce gold and silver market price. The initial term of the stream agreement is for 40 years and can be renewed for successive 10 year periods. The stream is also secured with (i) a first priority lien in all of the collateral now owned or hereafter acquired; (ii) a pledge by Osisko Development of its shares of Sapuchi Minera Holdings Two B.V. and (iii) a guarantee by Osisko Development. The interest rate used to calculate the accretion on the contract liability's financing component is 24%.

Osisko Development Corp.

Notes to the Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2021 and 2020
(Unaudited)

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

	Six months ended		Year ended
	June 30,		December 31,
	2021		2020
	$		$

Balance - Beginning of period	14,007		-
Deposits	5,653		13,824
Accretion on the contract liability's financing component	2,413		350
Currency translation adjustment	(447	)	(167	)

Balance - End of period	21,626		14,007

Current liabilities	2,345		1,606
Non-current liabilities	19,281		12,401

	21,626		14,007

Under IFRS 15, the stream agreement is considered to have a significant financing component. The Company therefore records notional non-cash interest, which is subject to capitalization into Mining interests, as borrowing costs.

13. Flow-through shares liability

	Six months ended		Year ended
	June 30,		December 31,
	2021		2020
	$		$
Balance - Beginning of period	-		-
Deferred premium on flow-through shares issued, net of share issue costs (note 15)	7,885		-
Recognition of deferred premium on flow-through shares	(3,268	)	-

Balance - End of period	4,617		-

The Company is committed to spending the proceeds on exploration activities by December 31, 2022. As at June 30, 2021, the balance remaining to be spent totals $19.7 million.

Osisko Development Corp.

Notes to the Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2021 and 2020
(Unaudited)

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

	Six months ended		Year ended
	June 30,		December 31,
	2021		2020
	$		$

Balance - Beginning of period	34,601		20,527
Acquisition of San Antonio gold project	-		9,301
New liabilities	1,520		4,176
Revision of estimates	(962	)	(310	)
Accretion expense	576		820
Settlement of liabilities / payment of liabilities	(293	)	(500	)
Currency translation adjustment	(257	)	587

Balance - End of period	35,185		34,601

Current liabilities	6,477		3,019
Non-current liabilities	28,708		31,582

	35,185		34,601

The environmental rehabilitation provision represents the legal and contractual obligations associated with the eventual closure of the Company's mining interests, property, plant and equipment and exploration and evaluation assets. As at June 30, 2021, the estimated inflation-adjusted undiscounted cash flows required to settle the environmental rehabilitation amounts to $40.6 million. The weighted average actualization rate used is 3.5% and the disbursements are expected to be made between 2021 and 2030 as per the current closure plans.

In January and February 2021, Osisko Development closed the first and final tranches respectively of a non-brokered private placement for 10,862,195 units of Osisko Development at a price of $7.50 per unit (or the Canadian dollar equivalent of US$5.75 per unit) for aggregate gross proceeds of approximately $79.8 million. Each 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 (or the prevailing U.S. dollar equivalent at the time of exercise) on or prior to December 1, 2023. Share issue expenses related to this private placement amounted to $1.1 million ($0.8 million net of income taxes).

Osisko Development Corp.

Notes to the Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2021 and 2020
(Unaudited)

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

In March 2021, the Company closed a bought deal private placement of: (i) 2,055,742 flow-through shares ("FT Shares") of the Company at a price of $9.05 per FT Shares; and (ii) 1,334,500 charity flow-through shares of the Company ("Charity FT Shares") at a price of $11.24 per Charity FT Share, for aggregate gross proceeds of $33.6 million. The carrying value of the FT shares and the Charity FT shares is presented net of the liability related to the premium on FT shares of $7.9 million, which was recorded at the date of the issuance of the FT shares and the Charity FT shares. Share issue expenses related to this private placement amounted to $1.5 million ($1.1 million net of income taxes).

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

	Six months ended			Year ended
			June 30, 2021	December 31, 2020
			Weighted		Weighted
	Number of		average	Number of	average
	Warrants		exercise price	Warrants	exercise price
			$		$

Balance - Beginning of period	9,358,525		10.00	-	-
Issued - bought-deal private placement ⁽ⁱ⁾	-		-	6,675,000	10.00
Issued - brokered private placement ⁽ⁱ⁾	-		-	2,683,525	10.00
Issued - non-brokered private placement⁽ⁱ⁾	5,431,098		10.00	-	-
Warrants exercised	(250	)	10.00	-	-

Balance - End of period ⁽ⁱ⁾	14,789,373		10.00	9,358,525	10.00

The Company offers a share option plan to their respective directors, officers, management, employees and consultants. The following table summarizes information about the movement of the share options outstanding under the Company's plan:

Six months ended

Year ended

June 30, 2021

December 31, 2020

Number of

Weighted

average

Number of

average

options

exercise price

options

exercise price

Balance - Beginning of period

1,199,100

7.62

Granted

592,800

7.15

1,199,100

7.62

Forfeited

(66,900

)

7.62

Balance - End of period

1,725,000

7.46

1,199,100

7.62

Options exercisable - End of period

Osisko Development Corp.

Notes to the Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2021 and 2020
(Unaudited)

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

The following table summarizes the share options outstanding as at June 30, 2021:

			Options outstanding
			Weighted
			average
		Exercise	remaining contractual
Grant date	Number	price	life (years)
		$
December 23, 2020	1,132,200	7.62	4.48
February 4, 2021	31,600	8.10	4.60
June 23, 2021	561,200	7.10	4.98
	1,725,000	7.46	4.65

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:

		June 30, 2021		December 31, 2020

Dividend per share		-		-
Expected volatility		68%		63%
Risk-free interest rate		0.8%		0.4%
Expected life		48 months		48 months
Share price	$	7.15	$	7.62
Fair value of options granted	$	3.64	$	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. During the three and six months ended June 30, 2021, the total share-based compensation related to share options granted under the Company's plan on the consolidated statements of loss amounted to $0.4 million and $0.8 million, respectively (nil for the three and six months ended June 30, 2020), including $0.1 million and $0.2 million capitalized to mining assets and plant and equipment (nil for the three and six months ended June 30, 2020).

The Company offers a DSU plan and a RSU plan, which allow DSU and RSU to be granted to directors, officers and employees as part of their long-term compensation package.

Osisko Development Corp.

Notes to the Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2021 and 2020
(Unaudited)

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

Six months ended

Year ended

June 30, 2021

December 31, 2020

DSU⁽ⁱ⁾

RSU⁽ⁱⁱ⁾

DSU⁽ⁱ⁾

RSU⁽ⁱⁱ⁾

(equity)

Balance - Beginning of period

170,620

Granted

68,730

485,600

170,620

Replacement RSU granted

458,450

Balance - End of period

239,350

944,050

170,620

Balance - Vested

(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 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 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.

(ii) Following the launch of Osisko Development, Osisko Gold Royalties and Osisko Development mutually agreed that a pro-rata portion of the outstanding long-term equity incentive compensation awarded by Osisko Gold Royalties to their employees that transferred to Osisko Development would be exchanged for restricted shares units of Osisko Development ("Replacement RSU") and the related Osisko Gold Royalties RSUs would be cancelled. Accordingly, on June 1, 2021, 458,450 Replacement RSU were granted to officers and employees who held Osisko Gold Royalties RSUs that were cancelled. The maturity date is the same as the maturity date of the corresponding Osisko Gold Royalties RSUs cancelled. Replacement RSUs are payable in common shares, cash or a combination of common shares and cash, at the sole discretion of the Company.

The remaining RSUs granted 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 total share-based compensation expense related to the Osisko Development's DSU and RSU plans for the three and six months ended June 30, 2021 amounted to $0.5 million and $0.8 million, respectively ($nil for the three and six months ended June 30, 2020).

Based on the closing price of the common shares at June 30, 2021 ($7.00) 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 RSU and DSU outstanding amounts to $4.4 million ($0.7 million as at December 31, 2020).

Prior to the RTO transaction, the Parent Company, offered a share option plan and a RSU plan for the benefit of the Company's senior management and directors. The fair value of the share options and RSU is recognized as compensation expense over the vesting period. For the three and six months ended June 30, 2021, the total share-based compensation related to share options and RSUs granted under the Parent Company's plan on the consolidated statements of loss was a recovery of $0.3 million (2020 - expense of $0.2 million) and expense of $0.5 million (2020 - $0.3 million) respectively.

Osisko Development Corp.

Notes to the Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2021 and 2020
(Unaudited)

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

	Three months ended		Six months ended
	June 30,		June 30,
	2021	2020	2021	2020
	$	$	$	$

Compensation	1,637	372	3,424	800
Share-based compensation	471	165	1,675	334
Depreciation	43	21	64	189
Other general and administrative expenses	1,655	406	3,508	846
	3,806	964	8,671	2,169

	Three months ended			Six months ended
	June 30,			June 30,
	2021		2020	2021		2020
	$		$	$		$

Interest income, net	271		5	583		35
Foreign exchange loss	(519	)	-	(1,583	)	-
Premium on flow-through shares	2,798		-	3,268		-
Other	383		2,586	1,505		5,010
	2,933		2,591	3,773		5,045

	Three months ended				Six months ended
	June 30,				June 30,
	2021		2020		2021	2020
	$		$		$	$
Changes in non-cash working capital items
Decrease in amounts receivable	772		1,207		55	585
Decrease (increase) in inventory	1,096		(142	)	(7,595)	(22	)
Increase in other current assets	(2,626	)	(1,168	)	(2,268)	(463	)
Decrease in accounts payable and accrued liabilities	(1,958	)	(470	)	(5,034)	(1,867	)
	(2,716	)	(573	)	(14,842)	(1,767	)

Osisko Development Corp.

Notes to the Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2021 and 2020
(Unaudited)

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

The following table provides information about financial assets and liabilities measured at fair value in the consolidated statements of financial position 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).

June 30, 2021

Level 1

Level 2

Level 3

Total

Recurring measurements

Financial assets at fair value through profit or loss

Warrants on equity securities

Publicly traded mining exploration and development companies

Precious metals

377

Other minerals

181

Financial assets at fair value through other comprehensive loss

Equity securities

Publicly traded mining exploration and development companies

Precious metals

62,580

Other minerals

11,417

73,997

558

74,555

			December 31, 2020
	Level 1	Level 2	Level 3	Total
	$	$	$	$
Recurring measurements

Financial assets at fair value through profit or loss
Warrants on equity securities
Publicly traded mining exploration and development companies
Precious metals	-	-	1,162	1,162
Other minerals	-	-	730	730
Financial assets at fair value through other comprehensive loss
Equity securities
Publicly traded mining exploration and development companies
Precious metals	82,423	-	-	82,423
Other minerals	16,193	-	-	16,193
	98,616	-	1,892	100,508

Osisko Development Corp.

Notes to the Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2021 and 2020
(Unaudited)

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

During the six months periods ended June 30, 2021 and 2020, there were no transfers among Level 1, Level 2 and Level 3.

The following table presents the changes in the Level 3 investments (warrants) for the six month period ended June 30, 2021 and the year ended December 31, 2020:

	2021		2020
	$		$

Balance - Beginning of period	1,892		529
Acquisitions	92		769
Warrants exercised	(1,121	)	(7	)
Change in fair value - warrants exercised ⁽ⁱ⁾	299		17
Change in fair value - deemed disposed ⁽ⁱ⁾	-		(48	)
Change in fair value - held at the end of the period ⁽ⁱ⁾	(604	)	632

Balance - End of period	558		1,892

(i) Recognized in the consolidated statements of loss under other income, 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 of publicly traded mining exploration and development companies, classified as Level 3, 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 insignificant variation in the fair value of the warrants as at June 30, 2021 and December 31, 2020.

The chief operating decision-maker organizes and manages the business under operating segments, being the acquisition, exploration and development of mineral properties.

The assets related to the exploration, evaluation and development of mining projects are located in Canada and in Mexico, and are detailed as follows as at June 30, 2021:

			June 30, 2021
	Canada	Mexico	Total
	$	$	$
Other assets (non-current)	621	11,727	12,348
Mining interest	343,000	67,827	410,827
Property, plant and equipment	54,267	10,273	64,540
Exploration and evaluation assets	43,402	1,297	44,699
Total non-current assets	441,290	91,124	532,414

Osisko Development Corp.

Notes to the Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2021 and 2020
(Unaudited)

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

		December 31, 2020
	Canada	Mexico	Total
	$	$	$

Other assets (non-current)	599	24,054	24,653
Mining interest and plant and equipment	344,903	62,097	407,000
Exploration and evaluation assets	40,680	1,189	41,869
Total non-current assets	386,182	87,340	473,522

	Canada		Mexico	Total
	$		$	$

For the three months ended June 30, 2021
Revenues	775		-	775
Cost of sales	(775	)	-	(775	)
Impairment of assets	(36,052	)	(4,427)	(40,479	)
Operating expenses	(3,786	)	(863)	(4,649	)
For the six months ended June 30, 2021
Revenues	775		-	775
Cost of sales	(775	)	-	(775	)
Impairment of assets	(36,052	)	(4,427)	(40,479	)
Operating expenses	(8,472	)	(1,379)	(9,851	)
For the three months ended June 30, 2020
Operating expenses
Operating expenses	(966	)	(32)	(998	)
For the six months ended June 30, 2020
Operating expenses
Operating expenses	(2,180	)	(65)	(2,245	)

During the three and six month periods ended June 30, 2020, impairment of assets, revenue and cost of sales were $nil.

		June 30,		December 31,
		2021		2020
	Notes	$		$
Assets
Current assets
Cash	4	144,622		197,427
Amounts receivable		9,626		6,977
Inventories	5	25,839		10,025
Other assets		2,374		4,049
		182,461		218,478
Non-current assets
Investments in associates	6	11,307		9,636
Other investments	6	74,555		100,508
Mining interests	7	410,827		385,802
Property, plant and equipment	8	64,540		21,198
Exploration and evaluation	9	44,699		41,869
Other assets		12,348		24,653
		800,737		802,144

Liabilities

Current liabilities		33,444		37,636
Accounts payable and accrued liabilities		4,617		-
Deferred premium on flow-through shares	13	9,468		578
Lease liabilities	11	2,345		1,606
Contract liability	12	6,477		3,019
Environmental rehabilitation provision	14	56,351		42,839

Non-current liabilities		3,427		1,457
Lease liabilities	11	19,281		12,401
Contract liability	12	28,708		31,582
Environmental rehabilitation provision	14	10,831		14,299
Deferred income and mining taxes		118,598		102,578

Equity		716,591		613,127
Share capital	15	-		73,945
Shares to be issued		2,067		69
Contributed surplus		28,991		15,018
Accumulated other comprehensive income		(65,510	)	(2,593	)
Deficit		682,139		699,566
		800,737		802,144

		Three months ended				Six months ended
				June 30				June 30,
		2021		2020		2021		2020
	Notes	$		$		$		$

Revenues	3	775		-		775		-
Operating expenses
Cost of sales		(775	)	-		(775	)	-
General and administrative	17	(3,806	)	(964	)	(8,671	)	(2,169	)
Exploration and evaluation, net of tax credits		(843	)	(34	)	(1,180	)	(76	)
Impairment of assets	10	(40,479	)	-		(40,479	)	-
Operating loss		(45,128	)	(998	)	(50,330	)	(2,245	)
Accretion expense		(19	)	(236	)	(133	)	(1,034	)
Share of loss of associates	6	(749	)	(830	)	(1,156	)	(1,389	)
Other income, net	18	2,933		2,591		3,773		5,045
Loss before income taxes		(42,963	)	527		(47,846	)	377

Deferred income tax recovery (expense)		1,559		(260	)	2,741		(434	)
Net (loss) income		(41,404	)	267		(45,105	)	(57	)

Basic and diluted loss per share		(0.31	)	0.00		(0.34	)	(0.00	)
Weighted average number of shares outstanding		133,203,232		100,000,100		131,046,266		100,000,100

	Three months ended				Six months ended
			June 30,				June 30,
	2021		2020		2021		2020
	$		$		$		$

Net loss	(41,404	)	267		(45,105	)	(57	)

Other comprehensive income (loss)

Items that will not be reclassified to the consolidated statements of loss

Changes in fair value of financial assets at fair value through comprehensive income	(4,305	)	37,654		(2,602	)	20,269

Income tax effect	529		(4,167	)	53		(3,226	)

Items that may be reclassified to the consolidated statements of loss

Currency translation adjustments	702		-		(1,290	)	-

Other comprehensive loss	(3,074	)	33,487		(3,839	)	17,043

Comprehensive loss	(44,478	)	33,754		(48,944	)	16,986

		Three months ended				Six months ended
				June 30,				June 30,
		2021		2020		2021		2020
	Notes	$		$		$		$

Operating activities
Net (loss) income		(41,404	)	267		(45,105	)	(57	)
Adjustments for:
Share-based compensation		472		165		1,675		338
Depreciation		43		21		64		189
Accretion		14		236		134		1,034
Gain on disposal of assets		(225	)	-		(225	)	-
Share of loss of associates		750		830		1,157		1,389
Realized gain on sale of marketable securities		-		(1,226	)	-		(1,226	)

Net gain on acquisition of investments		-		-		-		(2,951	)

Change in fair value of financial assets at fair value through profit and loss		225		(1,360	)	305		(699	)
Unrealized gain on dilution	6	-		-		(1,391	)	-
Foreign exchange loss		791		-		1,535		-
Deferred income tax expense (recovery)		(1,558	)	260		(2,740	)	434
Impairment of assets		40,479		-		40,479		-
Premium on flow-through shares	13	(3,268	)	-		(3,268	)	-
Contract liability proceeds	12	-		-		5,653		-
Other		(27	)	-		442		-
Net cash flows used in operating activities before changes in non-cash working capital items		(3,708	)	(807	)	(1,285	)	(1,549	)
Changes in non-cash working capital items	19	(2,716	)	(573	)	(14,842	)	(1,767	)
Net cash flows used in operating activities		(6,424	)	(1,380	)	(16,127	)	(3,316	)

Investing activities
Mining interests		(46,598	)	(11,453	)	(75,130	)	(26,288	)
Property, plant and equipment		(7,229	)	-		(14,496	)	-
Exploration and evaluation expenses		(1,028	)	-		(1,163	)	(116	)
Proceeds on disposals of investments		8,336		-		23,233		-
Acquisition of investments		(744	)	-		(1,415	)	-
Reclamation deposit		-		(6	)	-		(207	)
Other		(201	)	-		(201	)	-
Net cash flows used in investing activities		(47,464	)	(11,459	)	(69,172	)	(26,611	)

Financing activities
Private placements	15	-		-		38,841		-
Share issue expense	15	-		-		(2,581	)	-
Exercise warrants		3				3
Capital payments on lease liabilities	11	(1,721	)	-		(2,368	)	-
Investments from parent company		-		12,927		-		24,809
Other		-		(114	)	-		(114	)
Net cash flows (used) provided by financing activities		(1,718	)	12,813		33,895		24,695

Decrease in cash before impact of exchange rate		(55,606	)	(26	)	(51,404	)	(5,232	)
Effects of exchange rate changes on cash		(752	)	-		(1,401	)	-

Increase (decrease) in cash		(56,358	)	(26	)	(52,805	)	(5,232	)
Cash - Beginning of period		200,980		2,800		197,427		8,006
Cash - end of period		144,622		2,774		144,622		2,774

		Number of					Accumulated
		common					other		Retained
		shares	Share		Contributed		comprehensive		earnings
	Notes	Outstanding	capital		surplus		income (loss)		(deficit)		Total
			$		$		$		$		$

Balance - January 1, 2021		118,950,545	687,072		69		15,018		(2,593	)	699,566

Net loss		-	-		-		-		(45,105	)	(45,105	)
Other comprehensive loss		-	-		-		(3,839	)	-		(3,839	)
Comprehensive loss		-	-		-		(3,839	)	(45,105	)	(48,944	)

Transfer of realized loss on financial assets at fair value through other comprehensive income, net of taxes		-	-		-		17,812		(17,812	)	-
Private placements - Non-brokered	15	10,862,195	6,156		-		-		-		6,156
Private placements - Flow-through	15	3,390,242	25,257		-		-		-		25,257
Issue costs on financings (net of income taxes)	15	-	(1,897	)	-		-		-		(1,897	)
Share options - Share-based compensation		-	-		1,206		-		-		1,206

Exercise of warrants		250	3		-		-		-		3

Restricted share units from parent company - Share-based compensation		-	-		266		-		-		266
Deferred share units to be settled in common shares - Share-based compensation		-	-		537		-		-		537
Income tax impact		-	-		(11	)	-		-		(11	)

Balance - June 30, 2021		133,203,232	716,591		2,067		28,991		(65,510	)	682,139

	Notes	Number of common shares Outstanding⁽ⁱ⁾	Net parent company investment	Accumulated other comprehensive income (loss)		Retained earnings (deficit)		Total
				$				$

Balance - January 1, 2020		100,000,100	374,118	(19,104	)	-		355,014

Net earnings (loss)		-	-	-		(57	)	(57	)
Other comprehensive income		-	-	17,043		-		17,043
Comprehensive income (loss)		-	-	17,043		(57	)	16,986

Net parent company investment		-	33,342	-		57		33,399

Balance - June 30, 2020		100,000,100	407,460	(2,061	)	-		405,399

Entity	Jurisdiction
Barkerville Gold Mines Ltd.	British Columbia
Coulon Mines Inc.	Québec
General Partnership Osisko James Bay	Québec
Sapuchi Minera, S. de R.L. de C.V. ⁽ⁱ⁾	Mexico
(i) From August 21, 2020