---

Exhibit 99.2

|                                       
|---------------------------------------
|                                       
|                                       
|                                       
|OSISKO GOLD ROYALTIES LTD              
|                                       
|                                       
|                                       
|.......................................
|Consolidated Financial Statements      
|                                       
|For the years                          
|ended                                  
|December 31, 2016 and 2015             

---

Independent Auditors Report

To the Shareholders of
Osisko Gold Royalties Ltd

We have audited the accompanying consolidated financial statements of Osisko
Gold Royalties Ltd, which comprise the consolidated balance sheets as at
December 31, 2016 and 2015 and the consolidated statements of income,
comprehensive income (loss), cash flows and changes in equity for the years then
ended, and the related notes, which comprise a summary of significant accounting
policies and other explanatory information.

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

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

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

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



---



OpinionIn our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of Osisko Gold Royalties Ltd as at
December 31, 2016 and 2015 and its financial performance and its cash flows for
the years then ended in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board.

/s/ PricewaterhouseCoopers LLP (1)
Montreal, Canada
March 15, 2017

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



---

|Osisko Gold Royalties Ltd                                         
|------------------------------------------------------------------
|Consolidated Balance Sheets                                       
|As at December 31,
      2016 and 2015                            
|(tabular amounts expressed in thousands of Canadian
      dollars)

|                                                                    |  |       |  |  | December 31, |   |  | December 31, |  
|------------------------------------------------------------------- |  | ----- |  |  | ------------ | - |  | ------------ | -
|                                                                    |  |       |  |  | 2016         |   |  | 2015         |  
|                                                                    |  | Notes |  |  | **$**        |   |  | **$**        |  
|                                                                    |  |       |  |  | (Note 3      | ) |  |              |  
|Assets                                                              |  |       |  |  |              |   |  |              |  
|Current assets                                                      |  |       |  |  |              |   |  |              |  
|Cash and cash equivalents                                           |  | 9     |  |  | 499,249      |   |  | 258,509      |  
|Short-term
      investments                                        |  | 10    |  |  | 2,100        |   |  | 200          |  
|Accounts receivable                                                 |  | 11    |  |  | 8,416        |   |  | 6,244        |  
|Other assets                                                        |  | 12    |  |  | 974          |   |  | 508          |  
|                                                                    |  |       |  |  | 510,739      |   |  | 265,461      |  
|Non-current assets                                                  |  |       |  |  |              |   |  |              |  
|Investments in associates                                           |  | 13    |  |  | 82,902       |   |  | 44,011       |  
|Other investments                                                   |  | 14    |  |  | 108,409      |   |  | 105,485      |  
|Royalty interests                                                   |  | 15    |  |  | 494,768      |   |  | 449,439      |  
|Property and
      equipment                                        |  | 16    |  |  | 266          |   |  | 835          |  
|Exploration and evaluation                                          |  | 16    |  |  | 100,038      |   |  | 96,220       |  
|Goodwill                                                            |  | 8     |  |  | 111,204      |   |  | 111,204      |  
|Deferred income taxes                                               |  | 23    |  |  | 7,978        |   |  | 8,778        |  
|                                                                    |  |       |  |  | 1,416,304    |   |  | 1,081,433    |  
|Liabilities                                                         |  |       |  |  |              |   |  |              |  
|Current liabilities                                                 |  |       |  |  |              |   |  |              |  
|Accounts payable and accrued liabilities                            |  | 17    |  |  | 7,438        |   |  | 11,469       |  
|Dividends payable                                                   |  | 20    |  |  | 4,266        |   |  | 3,783        |  
|Provisions and other liabilities                                    |  | 18    |  |  | 4,153        |   |  | 1,264        |  
|                                                                    |  |       |  |  | 15,857       |   |  | 16,516       |  
|Non-current
      liabilities                                       |  |       |  |  |              |   |  |              |  
|Long-term debt                                                      |  | 19    |  |  | 45,780       |   |  | -            |  
|Provisions and other liabilities                                    |  | 18    |  |  | 12,433       |   |  | 8,912        |  
|Deferred income
      taxes                                         |  | 23    |  |  | 127,930      |   |  | 118,766      |  
|                                                                    |  |       |  |  | 202,000      |   |  | 144,194      |  
|Equity                                                              |  |       |  |  |              |   |  |              |  
|Share capital                                                       |  | 20    |  |  | 908,890      |   |  | 745,007      |  
|Warrants                                                            |  | 21    |  |  | 30,901       |   |  | 18,072       |  
|Contributed surplus                                                 |  |       |  |  | 11,411       |   |  | 10,164       |  
|Equity component
      of convertible debenture                     |  | 19    |  |  | 3,091        |   |  | -            |  
|Accumulated other comprehensive income (loss)                       |  |       |  |  | 7,838        |   |  | (41,203      | )
|Retained earnings                                                   |  |       |  |  | 250,306      |   |  | 203,800      |  
|Equity attributable to
      Osisko Gold Royalties Ltd shareholders |  |       |  |  | 1,212,437    |   |  | 935,840      |  
|Non-controlling
      interests                                     |  |       |  |  | 1,867        |   |  | 1,399        |  
|Total equity                                                        |  |       |  |  | 1,214,304    |   |  | 937,239      |  
|                                                                    |  |       |  |  | 1,416,304    |   |  | 1,081,433    |  

APPROVED ON BEHALF OF THE BOARD

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

|The notes are an integral part of these consolidated financial
statements. | 4
|-------------------------------------------------------------------------- | -

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Consolidated Statements of Income                                                           
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|                                                     |  |       |  |  | 2016    |   |  | 2015    |  
|---------------------------------------------------- |  | ----- |  |  | ------- | - |  | ------- | -
|                                                     |  | Notes |  |  | **$**   |   |  | **$**   |  
|                                                     |  |       |  |  | (Note 3 | ) |  |         |  
|                                                     |  |       |  |  |         |   |  |         |  
|                                                     |  |       |  |  |         |   |  |         |  
|Revenues                                             |  |       |  |  | 62,677  |   |  | 45,415  |  
|                                                     |  |       |  |  |         |   |  |         |  
|Expenses                                             |  |       |  |  |         |   |  |         |  
|Depletion of royalty interests                       |  |       |  |  | (11,291 | ) |  | (588    | )
|General and
      administrative                     |  | 24    |  |  | (16,858 | ) |  | (15,046 | )
|Business development                                 |  | 24    |  |  | (8,282  | ) |  | (10,982 | )
|Exploration and
      evaluation, net of tax credits |  | 24    |  |  | 1,240   |   |  | (2,409  | )
|Other gains (expenses), net                          |  | 24    |  |  | (1,436  | ) |  | 308     |  
|Cost recoveries
      from associates                |  | 24    |  |  | 3,039   |   |  | 1,526   |  
|Operating income                                     |  |       |  |  | 29,089  |   |  | 18,224  |  
|Interest income                                      |  |       |  |  | 3,260   |   |  | 4,055   |  
|Dividend income                                      |  |       |  |  | 4,931   |   |  | 5,855   |  
|Finance costs                                        |  |       |  |  | (3,435  | ) |  | (609    | )
|Foreign exchange gain (loss)                         |  |       |  |  | (5,846  | ) |  | 11,117  |  
|Share of loss of
      associates                    |  | 13    |  |  | (6,623  | ) |  | (3,519  | )
|Other gains, net                                     |  | 24    |  |  | 30,202  |   |  | 1,599   |  
|Earnings before income
      taxes                   |  |       |  |  | 51,578  |   |  | 36,722  |  
|Income tax expense                                   |  | 23    |  |  | (9,724  | ) |  | (8,194  | )
|Net earnings                                         |  |       |  |  | 41,854  |   |  | 28,528  |  
|                                                     |  |       |  |  |         |   |  |         |  
|Net earnings (loss)
      attributable to:           |  |       |  |  |         |   |  |         |  
|Osisko Gold Royalties Ltds
      shareholders       |  |       |  |  | 42,113  |   |  | 28,749  |  
|Non-controlling
      interests                      |  |       |  |  | (259    | ) |  | (221    | )
|                                                     |  |       |  |  |         |   |  |         |  
|Net earnings per share                               |  |       |  |  |         |   |  |         |  
|Basic                                                |  | 26    |  |  | 0.40    |   |  | 0.33    |  
|Diluted                                              |  | 26    |  |  | 0.40    |   |  | 0.32    |  
|                                                     |  |       |  |  |         |   |  |         |  

|The notes are an integral part of these consolidated
      financial statements. | 5
|-------------------------------------------------------------------------------- | -

---

|Osisko Gold Royalties Ltd                                         
|------------------------------------------------------------------
|Consolidated Statements of Comprehensive Income (Loss)            
|For the years
      ended December 31, 2016 and 2015              
|(tabular amounts expressed in thousands of Canadian
      dollars)

|                                                                                                 |  | 2016    |   |  | 2015    |  
|------------------------------------------------------------------------------------------------ |  | ------- | - |  | ------- | -
|                                                                                                 |  | **$**   |   |  | **$**   |  
|                                                                                                 |  | (Note 3 | ) |  |         |  
|                                                                                                 |  |         |   |  |         |  
|Net earnings                                                                                     |  | 41,854  |   |  | 28,528  |  
|                                                                                                 |  |         |   |  |         |  
|Other comprehensive income
      (loss)                                                          |  |         |   |  |         |  
|                                                                                                 |  |         |   |  |         |  
|Items that
      will not be reclassified to the statement of income                             |  |         |   |  |         |  
|Changes
      in fair value of financial assets at fair value through comprehensive
      income |  | 74,914  |   |  | -       |  
|Income tax effect                                                                                |  | (4,859  | ) |  | -       |  
|Share of other comprehensive income of associates                                                |  | 1,645   |   |  | 159     |  
|                                                                                                 |  |         |   |  |         |  
|Items that may be
      reclassified to the statement of income                                  |  |         |   |  |         |  
|                                                                                                 |  |         |   |  |         |  
|Changes in fair value of available-for-sale financial assets                                     |  |         |   |  |         |  
|Unrealized loss                                                                                  |  | -       |   |  | (43,380 | )
|Income tax effect                                                                                |  | -       |   |  | 1,175   |  
|                                                                                                 |  |         |   |  |         |  
|Disposal of available-for-sale financial assets                                                  |  |         |   |  |         |  
|Reclassification to
      the statement of income of the realized gain                           |  | -       |   |  | (5,573  | )
|Income tax effect                                                                                |  | -       |   |  | 867     |  
|Share of other comprehensive loss of associates                                                  |  | (382    | ) |  | -       |  
|Other comprehensive income (loss)                                                                |  | 71,318  |   |  | (46,752 | )
|                                                                                                 |  |         |   |  |         |  
|Comprehensive income (loss)                                                                      |  | 113,172 |   |  | (18,224 | )
|                                                                                                 |  |         |   |  |         |  
|Comprehensive income (loss) attributable
      to:                                               |  |         |   |  |         |  
|Osisko Gold Royalties Ltds shareholders                                                         |  | 113,431 |   |  | (18,003 | )
|Non-controlling
      interests                                                                  |  | (259    | ) |  | (221    | )

|The notes are an integral part of these consolidated
      financial statements. | 6
|-------------------------------------------------------------------------------- | -

---

|Osisko Gold Royalties Ltd                                         
|------------------------------------------------------------------
|Consolidated Statements of Cash Flows                             
|For the years
      ended December 31, 2016 and 2015              
|(tabular amounts expressed in thousands of Canadian
      dollars)

|                                                                                                                       |  |       |  |  | 2016    |   |  | 2015     |  
|---------------------------------------------------------------------------------------------------------------------- |  | ----- |  |  | ------- | - |  | -------- | -
|                                                                                                                       |  | Notes |  |  | **$**   |   |  | **$**    |  
|Operating activities                                                                                                   |  |       |  |  |         |   |  |          |  
|Net earnings                                                                                                           |  |       |  |  | 41,854  |   |  | 28,528   |  
|Adjustments for:                                                                                                       |  |       |  |  |         |   |  |          |  
|Share-based compensation                                                                                               |  |       |  |  | 7,380   |   |  | 5,272    |  
|Accretion
      on note receivable                                                                                     |  |       |  |  | -       |   |  | (1,382   | )
|Depletion and
      amortization                                                                                       |  |       |  |  | 11,509  |   |  | 765      |  
|Share of
      loss of associates                                                                                      |  |       |  |  | 6,623   |   |  | 3,519    |  
|Loss (gain) on
      acquisition of investments                                                                        |  |       |  |  | (8,379  | ) |  | 80       |  
|Net gain
      (loss) on dilution of investments in associates                                                         |  |       |  |  | (12,023 | ) |  | 1,627    |  
|Net gain on disposal of
      investments                                                                              |  |       |  |  | (3,410  | ) |  | (4,826   | )
|Change in
      fair value of financial assets at fair value through profit and loss                                   |  |       |  |  | (6,390  | ) |  | 483      |  
|Deferred income tax
      expense                                                                                      |  |       |  |  | 8,372   |   |  | 8,194    |  
|Foreign
      exchange loss (gain)                                                                                     |  |       |  |  | 5,851   |   |  | (11,100  | )
|Other                                                                                                                  |  | 27    |  |  | 2,832   |   |  | 1,021    |  
|Net cash flows provided by
      operating activities before changes in non-cash working capital items                 |  |       |  |  | 54,219  |   |  | 32,181   |  
|Changes in non-cash working capital items                                                                              |  | 27    |  |  | (775    | ) |  | (3,277   | )
|Net cash flows provided by
      operating activities                                                                  |  |       |  |  | 53,444  |   |  | 28,904   |  
|                                                                                                                       |  |       |  |  |         |   |  |          |  
|Investing activities                                                                                                   |  |       |  |  |         |   |  |          |  
|Cash acquired  acquisition of Virginia                                                                                |  | 8     |  |  | -       |   |  | 34,900   |  
|Decrease (increase) in
      short-term investments                                                                    |  |       |  |  | (1,800  | ) |  | 34,498   |  
|Acquisition of investments                                                                                             |  |       |  |  | (82,384 | ) |  | (171,540 | )
|Proceeds on disposal of
      investments                                                                              |  |       |  |  | 129,183 |   |  | -        |  
|Acquisition of royalty interests                                                                                       |  |       |  |  | (55,250 | ) |  | (32,200  | )
|Proceeds on sale of royalty
      interests                                                                            |  |       |  |  | 3,630   |   |  | -        |  
|Property and equipment                                                                                                 |  |       |  |  | (105    | ) |  | (300     | )
|Exploration and evaluation,
      net of tax credits                                                                   |  |       |  |  | (8,327  | ) |  | (6,059   | )
|Net cash flows used in investing activities                                                                            |  |       |  |  | (15,053 | ) |  | (140,701 | )
|                                                                                                                       |  |       |  |  |         |   |  |          |  
|Financing activities                                                                                                   |  |       |  |  |         |   |  |          |  
|Issuance of convertible
      debenture                                                                                |  |       |  |  | 50,000  |   |  | -        |  
|Issuance of common shares and warrants                                                                                 |  | 20    |  |  | 177,934 |   |  | 4,887    |  
|Investment from
      non-controlling interests                                                                        |  |       |  |  | 4,499   |   |  | -        |  
|Issuance of special warrants                                                                                           |  |       |  |  | -       |   |  | 200,020  |  
|Issue expenses                                                                                                         |  |       |  |  | (8,066  | ) |  | (10,862  | )
|Financing fees                                                                                                         |  |       |  |  | (850    | ) |  | (176     | )
|Dividends paid                                                                                                         |  |       |  |  | (15,317 | ) |  | (9,834   | )
|Net cash flows provided by financing
      activities                                                                  |  |       |  |  | 208,200 |   |  | 184,035  |  
|Increase in cash and cash
      equivalents before effects of exchange rate changes on cash and cash
      equivalents |  |       |  |  | 246,591 |   |  | 72,238   |  
|Effects of exchange rate changes on cash and
      cash equivalents                                                    |  |       |  |  | (5,851  | ) |  | 11,100   |  
|                                                                                                                       |  |       |  |  |         |   |  |          |  
|Increase in cash and cash equivalents                                                                                  |  |       |  |  | 240,740 |   |  | 83,338   |  
|Cash and cash equivalents
       January 1                                                                            |  |       |  |  | 258,509 |   |  | 175,171  |  
|Cash and cash equivalents  December
      31                                                                          |  | 9     |  |  | 499,249 |   |  | 258,509  |  

Additional information related to the consolidated statements
of cash flows is presented in Note 27.

|The notes are an integral part of these consolidated
      financial statements. | 7
|-------------------------------------------------------------------------------- | -

---

|Osisko Gold Royalties Ltd                                         
|------------------------------------------------------------------
|Consolidated Statements of Changes in Equity                      
|For the years
      ended December 31, 2016 and 2015              
|(tabular amounts expressed in thousands of Canadian
      dollars)

|                                                                                                     |  |       |  |  |             |   |  | **Equity attributed to Osisko
      Gold Royalties Ltd shareholders** |   |  |            |   |  |                 |  
|---------------------------------------------------------------------------------------------------- |  | ----- |  |  | ----------- | - |  | --------------------------------------------------------------------- | - |  | ---------- | - |  | --------------- | -
|                                                                                                     |  |       |  |  | Number of   |   |  |                                                                       |   |  |            |   |  |                 |  
|                                                                                                     |  |       |  |  | common      |   |  |                                                                       |   |  | Special    |   |  |                 |  
|                                                                                                     |  |       |  |  | shares      |   |  | Share                                                                 |   |  | warrants / |   |  | **Contributed** |  
|                                                                                                     |  | Notes |  |  | outstanding |   |  | capital                                                               |   |  | warrants   |   |  | surplus         |  
|                                                                                                     |  |       |  |  |             |   |  | **$**                                                                 |   |  | **$**      |   |  | **$**           |  
|Balance - January 1,
      2016                                                                      |  |       |  |  | 94,578,280  |   |  | 745,007                                                               |   |  | 18,072     |   |  | 10,164          |  
|Adoption of IFRS 9                                                                                   |  | 3     |  |  | -           |   |  | -                                                                     |   |  | -          |   |  | -               |  
|                                                                                                     |  |       |  |  |             |   |  |                                                                       |   |  |            |   |  |                 |  
|Net earnings (loss)                                                                                  |  |       |  |  | -           |   |  | -                                                                     |   |  | -          |   |  | -               |  
|Other comprehensive income                                                                           |  |       |  |  | -           |   |  | -                                                                     |   |  | -          |   |  | -               |  
|Comprehensive income (loss)                                                                          |  |       |  |  | -           |   |  | -                                                                     |   |  | -          |   |  | -               |  
|Issuance of shares and
      warrants                                                                |  | 20    |  |  | 11,431,000  |   |  | 159,325                                                               |   |  | 13,283     |   |  | -               |  
|Dividends declared                                                                                   |  |       |  |  | -           |   |  | -                                                                     |   |  | -          |   |  | -               |  
|Shares issued  Dividends
      reinvestment plan                                                    |  | 20    |  |  | 83,533      |   |  | 1,236                                                                 |   |  | -          |   |  | -               |  
|Shares issued  Employee share purchase plan                                                         |  |       |  |  | 36,411      |   |  | 532                                                                   |   |  | -          |   |  | -               |  
|Share options:                                                                                       |  |       |  |  |             |   |  |                                                                       |   |  |            |   |  |                 |  
|Shared-based compensation                                                                            |  |       |  |  | -           |   |  | -                                                                     |   |  | -          |   |  | 5,077           |  
|Fair value of options
      exercised                                                                |  |       |  |  | -           |   |  | 42                                                                    |   |  | -          |   |  | (42             | )
|Proceeds from exercise of options                                                                    |  |       |  |  | 12,335      |   |  | 188                                                                   |   |  | -          |   |  | -               |  
|Replacement share options:                                                                           |  |       |  |  |             |   |  |                                                                       |   |  |            |   |  |                 |  
|Fair value of options exercised                                                                      |  |       |  |  | -           |   |  | 3,788                                                                 |   |  | -          |   |  | (3,788          | )
|Proceeds from exercise
      of options                                                              |  |       |  |  | 505,756     |   |  | 4,806                                                                 |   |  | -          |   |  | -               |  
|Equity component of convertible debenture,
      net of transaction costs of $66 and taxes of $1,137 |  | 19    |  |  | -           |   |  | -                                                                     |   |  | -          |   |  | -               |  
|Investments from
      non-controlling interests                                                     |  |       |  |  | -           |   |  | -                                                                     |   |  | -          |   |  | -               |  
|Issue costs, net of taxes of $2,003 and $167                                                         |  |       |  |  | -           |   |  | (5,442                                                                | ) |  | (454       | ) |  | -               |  
|Normal course issuer bid
      purchase of common chares                                             |  | 20    |  |  | (150,000    | ) |  | (592                                                                  | ) |  | -          |   |  | -               |  
|Transfer of realized gain on financial assets
      at fair value through other comprehensive income |  |       |  |  | -           |   |  | -                                                                     |   |  | -          |   |  | -               |  
|Balance  December 31,
      2016                                                                    |  |       |  |  | 106,497,315 |   |  | 908,890                                                               |   |  | 30,901     |   |  | 11,411          |  

(i) As at December 31, 2016, accumulated other comprehensive
income relates mainly to items that will not be recycled to the statement of
income.

|The notes are an integral part of these consolidated
      financial statements. | 8
|-------------------------------------------------------------------------------- | -

---

|Osisko Gold Royalties Ltd                                         
|------------------------------------------------------------------
|Consolidated Statements of Changes in Equity                      
|For the years
      ended December 31, 2016 and 2015              
|(tabular amounts expressed in thousands of Canadian
      dollars)

|                                                          |  |       |  |  |             |  |  | **Equity attributed to Osisko
      Gold Royalties Ltd shareholders** |   |  |            |   |  |             |  
|--------------------------------------------------------- |  | ----- |  |  | ----------- |  |  | --------------------------------------------------------------------- | - |  | ---------- | - |  | ----------- | -
|                                                          |  |       |  |  | Number of   |  |  |                                                                       |   |  |            |   |  |             |  
|                                                          |  |       |  |  | common      |  |  |                                                                       |   |  | Special    |   |  |             |  
|                                                          |  |       |  |  | shares      |  |  | Share                                                                 |   |  | warrants / |   |  | Contributed |  
|                                                          |  | Notes |  |  | outstanding |  |  | capital                                                               |   |  | warrants   |   |  | surplus     |  
|                                                          |  |       |  |  |             |  |  | **$**                                                                 |   |  | **$**      |   |  | **$**       |  
|Balance - January 1, 2015                                 |  |       |  |  | 51,691,439  |  |  | 69,716                                                                |   |  | -          |   |  | 681         |  
|Net earnings                                              |  |       |  |  | -           |  |  | -                                                                     |   |  | -          |   |  | -           |  
|Other comprehensive loss                                  |  |       |  |  | -           |  |  | -                                                                     |   |  | -          |   |  | -           |  
|Comprehensive loss                                        |  |       |  |  | -           |  |  | -                                                                     |   |  | -          |   |  | -           |  
|Acquisition of Virginia Mines Inc.                        |  | 8     |  |  | 29,964,240  |  |  | 488,717                                                               |   |  | -          |   |  | -           |  
|Special warrants
      issuance                           |  | 20    |  |  | -           |  |  | -                                                                     |   |  | 200,020    |   |  | -           |  
|Special warrants exercised                                |  | 20    |  |  | 10,960,000  |  |  | 181,235                                                               |   |  | (181,235   | ) |  | -           |  
|Dividends declared                                        |  |       |  |  | -           |  |  | -                                                                     |   |  | -          |   |  | -           |  
|Shares issued  Dividends reinvestment plan               |  |       |  |  | 11,764      |  |  | 163                                                                   |   |  | -          |   |  | -           |  
|Share options:                                            |  |       |  |  |             |  |  |                                                                       |   |  |            |   |  |             |  
|Share-based compensation                                  |  |       |  |  | -           |  |  | -                                                                     |   |  | -          |   |  | 3,017       |  
|Replacement share
      options:                          |  |       |  |  |             |  |  |                                                                       |   |  |            |   |  |             |  
|Acquisition of Virginia Mines Inc.                        |  |       |  |  | -           |  |  | -                                                                     |   |  | -          |   |  | 13,842      |  
|Fair value
      of options exercised                     |  |       |  |  | -           |  |  | 7,376                                                                 |   |  | -          |   |  | (7,376      | )
|Proceeds from exercise of options                         |  |       |  |  | 750,837     |  |  | 4,887                                                                 |   |  | -          |   |  | -           |  
|Issue costs, net of
      income taxes of $2,607 and $263 |  |       |  |  | -           |  |  | (7,087                                                                | ) |  | (713       | ) |  | -           |  
|Shares issued from escrow                                 |  |       |  |  | 1,200,000   |  |  | -                                                                     |   |  | -          |   |  | -           |  
|Balance 
      December 31, 2015                         |  |       |  |  | 94,578,280  |  |  | 745,007                                                               |   |  | 18,072     |   |  | 10,164      |  

(i)As at December 31, 2015, accumulated other comprehensive
loss relates solely to items that may be recycled to the statement of income.

|The notes are an integral part of these consolidated
      financial statements. | 9
|-------------------------------------------------------------------------------- | -

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(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 and
similar interests in Canada and worldwide. Osisko is a public company traded on
the Toronto Stock Exchange (TSX) and the New York Stock Exchange constituted
under the Business Corporations Act (Québec) and is domiciled in the
Province of Québec, Canada. The address of its registered office is 1100, avenue
des Canadiens-de-Montréal, Suite 300, Montréal, Québec.

The Company owns a 5% net smelter
return (NSR) royalty on the Canadian Malartic mine in the Abitibi Gold Belt
and a sliding scale 2.0% - 3.5% NSR royalty on the Éléonore mine located in the
James Bay area in the Province of Québec. The Company also owns a portfolio of
royalties, options on royalties/stream financing and exclusive rights to
participate in future royalty/stream financings on various projects in Canada
and the U.S.A. In addition, the Company has interests (directly or indirectly)
in exploration and evaluation projects in four main gold camps: the Abitibi Gold
Belt (Val-dOr - Kirkland Lake), the James Bay area, the Cariboo mining district
and the Guerrero Gold Belt in Mexico.

|2. | Basis of presentation
|-- | ---------------------

The accompanying consolidated financial
statements have been prepared in accordance with the International Financial
Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB). The accounting policies, methods of computation
and presentation applied in these consolidated financial statements are
consistent with those of the previous financial year, except for the adoption of
a new accounting standard presented in Note 3. The Board of Directors approved
the audited consolidated financial statements for issue on March 15, 2017.

|3. | New accounting standard
|-- | -----------------------

IFRS 9, Financial Instruments
(IFRS 9)

The Company has elected to early adopt
IFRS 9. This standard essentially completes the project to replace IAS 39,
Financial Instruments: Recognition and Measurement (IAS 39). IFRS 9
replaces the current multiple classification and measurement models for
financial assets and liabilities with a single model that has only three
classification categories: amortized cost, fair value through other
comprehensive income and fair value through profit or loss. The basis of
classification depends on the entitys business model and the contractual cash
flow characteristics of the financial asset or liability. It also introduces
additional changes relating to financial liabilities and aligns hedge accounting
more closely with risk management. Under IFRS 9, equity instruments are
classified as financial instruments carried at fair value, with changes in fair
value recorded in the consolidated statement of income unless such financial
instruments are not held for trading, in which case, the financial instrument
may be irrevocably designated as fair value through other comprehensive income
on initial recognition without subsequent reclassification to net income or
loss.

The Company has adopted IFRS 9 on
January 1, 2016 on a retrospective basis without restating comparatives figures.
Accordingly, the Company has classified its financial instruments in the three
new classification categories as presented below. The main change concerns the
classification of investments in equity instruments that were previously
classified as available-for-sale under IAS 39 and are now designated as
financial assets at fair value through other comprehensive income under IFRS 9.
The main objective of the Companys investments in equity instruments is to
improve its ability to acquire interests in exploration assets, future royalties
or revenue streams. As a result, the Company considers that this classification
better reflects the main business nature of the investment. The effect of the
implementation of IFRS 9 to the Companys consolidated financial statements was
to reinstate in accumulated other comprehensive loss the impairment losses on
investments in equity instruments (other than those held for trading, which
include the derivatives) previously included in profit or loss. Cumulative gains
and losses on investments in equity are transferred from accumulated other
comprehensive income (loss) to retained earnings upon derecognition of the
investment. The implementation of IFRS 9 did not result in any significant
changes to the measurement of the Companys financial instruments.

10

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|3. | New accounting standard(continued)
|-- | ----------------------------------

IFRS 9, Financial Instruments
(IFRS 9) (continued)

The Company was required to revise its
impairment methodology for financial assets recorded at amortized cost to
reflect IFRS 9s expected loss model instead of IAS 39s incurred loss model. On
the date of initial application, there was no impact on the carrying value of
these financial assets following the revision of the impairment methodology.

The net impact of the implementation of
IFRS 9 on the balance sheet as at January 1, 2016 is as follows:

| |                                            |  | As at             |   |  | IFRS 9     |   |  | As at           |  
| | ------------------------------------------ |  | ----------------- | - |  | ---------- | - |  | --------------- | -
| |                                            |  | December 31, 2015 |   |  | adjustment |   |  | January 1, 2016 |  
| |                                            |  | **$**             |   |  | **$**      |   |  | **$**           |  
| | Accumulated other
      comprehensive loss |  | (41,203           | ) |  | (7,610     | ) |  | (48,813         | )
| | Retained earnings                          |  | 203,800           |   |  | 7,610      |   |  | 211,410         |  

|4. | Significant accounting
policies
|-- | -------------------------------

The significant accounting policies
applied in the preparation of the consolidated financial statements are
described below. Significant accounting policies indicated as effective January
1, 2016 (refer to accounting policies modified following the adoption of IFRS 9
as of January 1, 2016) and are applicable for the year ended December 31, 2016
only. Note 5 contains additional significant accounting policies applicable
exclusively for the year ended December 31, 2015 (prior to the adoption of IFRS
9).

| | a) | Basis of measurement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    | The consolidated financial statements are prepared under
      the historical cost convention, except for the revaluation of certain
      financial assets at fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | b) | Business combinations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    | On the acquisition of a business, the acquisition method
      of accounting is used whereby the purchase consideration is allocated to
      the identifiable assets, liabilities and contingent liabilities
      (identifiable net assets) of the business on the basis of the fair value
      at the date of acquisition. Provisional fair values allocated at a
      reporting date are finalized as soon as the relevant information is
      available, which period shall not exceed twelve months from the
      acquisition date and are adjusted to reflect the transaction as of the
      acquisition date. The Company recognizes any non-controlling interest in
      the acquiree on an acquisition-by-acquisition basis, either at fair value
      or at the non-controlling interests proportionate share of the recognized
      amounts of acquirees identifiable net assets.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    | The results of businesses acquired during the period are
      consolidated into the consolidated financial statements from the date on
      which control commences (generally at the closing date when the acquirer
      legally transfers the consideration).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    | When a business is acquired in a number of stages, the
      cost of each stage is compared with the fair value of the identifiable net
      assets at the date of that purchase. Any excess is treated as goodwill,
      and any discount is immediately recognized in the consolidated statement
      of income and comprehensive income (loss). If control is obtained or lost
      as a result of a transaction, the identifiable net assets are recognized
      on the balance sheet at fair value and the difference between the fair
      value recognized and the carrying value as at the date of the transaction
      is recognized in the consolidated statement of income. Acquisition costs
      are expensed as incurred.                                                                                                                                                        

11

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|4. | Significant accounting policies(continued)
|-- | ------------------------------------------

| | c) | Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | The Companys financial statements consolidate the
      accounts of Osisko Gold Royalties Ltd and its subsidiaries. All
      intercompany transactions, balances and unrealized gains or losses from
      intercompany transactions are eliminated on consolidation. Subsidiaries
      are all entities over which the Company has the ability to exercise
      control. The Company controls an entity when the group is exposed to, or
      has rights to, variable returns from its involvement with the entity and
      has the ability to affect those returns through its power over the entity.
      Subsidiaries are fully consolidated from the date on which control is
      transferred to Osisko and are de-consolidated from the date that control
      ceases. Accounting policies of subsidiaries are consistent with the
      policies adopted by Osisko.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | d) | Non-controlling interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | Non-controlling interests represent an equity interest in
      a subsidiary owned by an outside party. The share of net assets of the
      subsidiary attributable to the non-controlling interests is presented as a
      component of equity. Their share of net income or loss and comprehensive
      income or loss is recognized directly in equity. Changes in the Companys
      ownership interest in the subsidiary that do not result in a loss of
      control are accounted for as equity transactions.                                                                                                                                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | e) | Foreign currency
translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

| | (i)  | Functional and presentation currency                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |      | Items included in the financial statements of each
      consolidated entity and associate of the Company are measured using the
      currency of the primary economic environment in which the entity operates
      (the functional currency). The consolidated financial statements are
      presented in Canadian dollars, which is the functional currency of the
      Company, its subsidiaries and associates.                                                                                                                                                                                                                                                                                                                                                                                                
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (ii) | Transactions and balances                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |      | Foreign currency transactions, including revenues and
      expenses, are translated into the functional currency at the rate of
      exchange prevailing on the date of each transaction or valuation when
      items are re-measured. Monetary assets and liabilities denominated in
      currencies other than the operations functional currencies are translated
      into the functional currency at exchange rates in effect at the balance
      sheet date. Foreign exchange gains and losses resulting from the
      settlement of those transactions and from period-end translations are
      recognized in the consolidated statement of income.                                                                                                                                                      
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |      | Non-monetary assets and liabilities are translated at
      historical rates, unless such assets and liabilities are carried at market
      value, in which case, they are translated at the exchange rate in effect
      at the date of the balance sheet. Changes in fair value attributable to
      currency fluctuations of non-monetary financial assets and liabilities
      such as equities held at fair value through profit or loss are recognized
      in the consolidated statement of income as part of the fair value gain or
      loss. Such changes in fair value of non-monetary financial assets, such as
      equities classified at fair value through other comprehensive income
      (available-for-sale prior to January 1, 2016), are included in other
      comprehensive income (loss).

| | f) | Financial instruments                                                                                                                                                                                                                                                                                                                                                                              
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | Financial assets and liabilities are recognized when the
      Company becomes a party to the contractual provisions of the instrument.
      Financial assets are derecognized when the rights to receive cash flows
      from the assets have expired or have been transferred and the Company has
      transferred substantially all risks and rewards of ownership.                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | Financial assets and liabilities are offset and the net
      amount is reported in the balance sheet when there is a legally
      enforceable right to offset the recognized amounts and there is an
      intention to settle on a net basis, or realize the asset and settle the
      liability simultaneously.                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | All financial instruments are required to be measured at
      fair value on initial recognition. The fair value is based on quoted
      market prices, unless the financial instruments are not traded in an
      active market. In this case, the fair value is determined by using
      valuation techniques like the Black-Scholes option pricing model or other
      valuation techniques.

12

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|4. | Significant accounting policies(continued)
|-- | ------------------------------------------

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

| | (i)  | Financial assets (effective January 1,
  2016)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |      | Debt instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |      | Investments in debt instruments are subsequently measured
      at amortized cost when the asset is held within a business model whose
      objective is to hold assets in order to collect contractual cash flows and
      when the contractual terms of the financial asset give rise on specified
      dates to cash flows that are solely payments of principal and interest on
      the principal amount outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |      | Investments in debt instruments are subsequently measured
      at fair value when they do not qualify for measurement at amortized cost.
      Financial instruments subsequently measured at fair value can be carried
      at fair value with changes in fair value recorded in net income or loss
      unless they are held within a business model whose objective is to hold
      assets in order to collect contractual cash flows or sell the assets and
      when the contractual terms of the financial asset give rise on specified
      dates to cash flows that are solely payments of principal and interest on
      the principal amount outstanding, in which case unrealized gains and
      losses are initially recognized in other comprehensive income (loss) for
      subsequent reclassification to net income or loss through amortization of
      premiums and discounts, impairment or derecognition.                                     
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |      | Equity instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |      | Investments in equity instruments are subsequently
      measured at fair value with changes recorded in net income or loss. Equity
      instruments that are not held for trading can be irrevocably designated at
      fair value through other comprehensive income (loss) on initial
      recognition without subsequent reclassification to net income. Cumulative
      gains and losses are transferred from accumulated other comprehensive
      income (loss) to retained earnings upon derecognition of the
      investment.                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |      | Dividend income on equity instruments measured at fair
      value through other comprehensive income is recognized in the statement of
      income on the ex-dividend date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (ii) | Financial Liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |      | Financial liabilities are subsequently measured at
      amortized cost using the effective interest method, except for financial
      liabilities at fair value through profit or loss. Such liabilities,
      including derivatives that are liabilities, shall be subsequently measured
      at fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |      | Put and call options over non-controlling
      interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |      | The terms of a put and/or a call over a non-controlling
      interest is analysed to assess whether it gives the controlling interest
      in substance, the risks and rewards associated with ownership of the
      shares covered by the instruments. A put and call with a fair value
      exercise price is less likely to convey the risks and rewards of ownership
      to the controlling interest (i.e. the non-controlling shareholders still
      have present access to the associated benefits). In such cases, the
      Company uses the present access method in which the non-controlling
      interest continues to be recognised as such as it still has present access
      to the economic benefits associated with the underlying ownership
      interests. A financial liability is initially recognised against the
      parents equity for the repurchase obligation. The transaction is not
      treated as an anticipated acquisition.

13

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|4. | Significant accounting policies(continued)
|-- | ------------------------------------------

| | (f) | Financial instruments
(continued)
| | --- | ---------------------------------

The Company has classified its
financial instruments as follows (effective January 1, 2016):

| | Category                                | Financial instrument                                          
| | --------------------------------------- | --------------------------------------------------------------
| |                                         |                                                               
| | Financial assets at amortized cost      | Bank balances and cash on hand                                
| |                                         | Guaranteed investment certificates                            
| |                                         | Short-term debt securities                                    
| |                                         | Bonds                                                         
| |                                         | Notes receivable                                              
| |                                         | Trade receivables                                             
| |                                         | Interest and dividend income receivable                       
| |                                         | Amounts receivable from associates and other
      receivables
| |                                         |                                                               
| |                                         |                                                               
| | Financial assets at fair value          |                                                               
| | through profit or loss                  | Investments in derivatives                                    
| |                                         |                                                               
| | Financial assets at fair value          |                                                               
| | through other comprehensive income      | Investments in shares and equity instruments,                 
| |                                         | other than in derivatives                                     
| |                                         |                                                               
| |                                         |                                                               
| | Financial liabilities at amortized cost | Accounts payable and accrued liabilities                      
| |                                         | Liability related to share exchange rights                    
| |                                         | Liability component of convertible debenture                  

| | (g) | Impairment of financial assets (effective January 1,
      2016)                                                                                                                                                                                                                                                                                          
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                           
| |     | At each reporting date, the Company assesses, on a
      forward-looking basis, the expected credit losses associated with its
      financial assets carried at amortized cost. The impairment methodology
      applied depends on whether there has been a significant increase in the
      credit risk or if a simplified approach has been selected.
| |     |                                                                                                                                                                                                                                                                                                                                                           
| |     | The Company has two principal types of financial assets
      subject to the expected credit loss model:                                                                                                                                                                                                                                                  

| |  | Trade receivables; and                                           
| | - | -----------------------------------------------------------------
| |  | Investments in debt instruments measured at
      amortized cost.

Accounts receivables

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

Investments in debt instruments

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

14

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|4. | Significant accounting policies(continued)
|-- | ------------------------------------------

| | (h) | Cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Cash and cash equivalents include cash on hand, deposits
      held with banks and other highly liquid short-term investments with
      original maturities of three months or less or that can be redeemed at any
      time without penalties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (i) | Refundable tax credits for mining exploration
      expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | The Company is entitled to a refundable tax credit on
      qualified mining exploration and evaluation expenses incurred in the
      province of Québec. The credit is accounted for against the exploration
      and evaluation expenses incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (j) | Investments in associates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Associates are entities over which the Company has
      significant influence, but not control. The financial results of the
      Companys investments in its associates are included in the Companys
      results according to the equity method. Under the equity method, the
      investment is initially recognized at cost, and the carrying amount is
      increased or decreased to recognize the Companys share of profits or
      losses of associates after the date of acquisition. The Companys share of
      profits or losses is recognized in the consolidated statement of income
      and its share of other comprehensive income or loss of associates is
      included in other comprehensive income (loss).                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Unrealized gains on transactions between the Company and
      an associate are eliminated to the extent of the Companys interest in the
      associate. Unrealized losses are also eliminated unless the transaction
      provides evidence of an impairment of the asset transferred. Dilution
      gains and losses arising from changes in interests in investments in
      associates are recognized in the consolidated statement of
  income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | The Company assesses at each period-end whether there is
      any objective evidence that its investments in associates are impaired. If
      impaired, the carrying value of the Companys share of the underlying
      assets of associates is written down to its estimated recoverable amount
      (being the higher of fair value less costs of disposal and value in use)
      and charged to the consolidated statement of income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (k) | Royalty interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Royalty interests consist of acquired royalty interests
      in producing, advanced development and exploration and evaluation stage
      properties. Royalty interests are recorded at cost and capitalized as
      tangible assets. They are subsequently measured at cost less accumulated
      depletion and depreciation and accumulated impairment losses. The major
      categories of the Companys interests are producing, advanced development
      and exploration and evaluation. Producing assets are those that have
      generated revenue from steady-state operations for the Company. Advanced
      development assets are interests in projects that are under development,
      in permitting or feasibility stage and that in managements view, can be
      reasonably expected to generate steady-state revenue for the Company in
      the near future. Exploration and evaluation assets represent properties
      that are not yet in development, permitting or feasibility stage or that
      are speculative in nature and are expected to require several years to
      generate revenue, if ever, or are currently not active.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Producing and advanced development royalty interests are
      recorded at cost and capitalized in accordance with IAS 16, Property,
      Plant and Equipment. Producing royalty interests are depleted using
      the units-of-production method over the life of the property to which the
      interest relates, which is estimated using available estimates of proven
      and probable reserves specifically associated with the properties and may
      include a portion of resources expected to be converted into reserves.
      Management relies on information available to it under contracts with the
      operators and / or public disclosures for information on proven and
      probable reserves and resources from the operators of the producing
      royalty interests.                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | On acquisition of a producing or an advanced development
      royalty interest , an allocation of the acquisition cost is made for the
      exploration potential based on its fair value. The estimated fair value of
      this acquired exploration potential is recorded as an asset
      (non-depreciable interest) on the acquisition date. Updated reserve and
      resource information obtained from the operators of the properties is used
      to determine the amount to be converted from non-depreciable interest to
      depreciable interest.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

15

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|4. | Significant accounting policies(continued)
|-- | ------------------------------------------

| | (k) | Royalty interests (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Royalty interests for exploration and evaluation assets
      are recorded at cost and capitalized in accordance with IFRS 6,
      Exploration for and Evaluation of Mineral Resources(IFRS 6).
      Acquisition costs of exploration and evaluation royalty interests are
      capitalized and are not depleted until such time as revenue-generating
      activities begin.                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Producing and advanced development royalty interests are
      reviewed for impairment if there is any indication that the carrying
      amount may not be recoverable. Impairment is assessed at the level of
      Cash-Generating Units (CGU) which, in accordance with IAS 36,
      Impairment of Assets, are identified as the smallest identifiable
      group of assets that generates cash inflows, which are largely independent
      of the cash inflows from other assets. This is usually at the individual
      royalty level for each property from which cash inflows are
    generated.                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Royalty interests for exploration and evaluation assets
      are assessed for impairment whenever indicators of impairment exist in
      accordance with IFRS 6. An impairment loss is recognized for the amount by
      which the assets carrying value exceeds its recoverable amount, which is
      the higher of fair value less costs of disposal and value-in-use. An
      interest that has previously been classified as exploration and evaluation
      is also assessed for impairment before reclassification to advanced
      development or producing, and the impairment loss, if any, is recognized
      in net income.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (l) | Property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Property and equipment are stated at cost less
      accumulated depreciation and accumulated impairment losses. Cost includes
      expenditures that are directly attributable to the acquisition of an
      asset. Subsequent costs are included in the assets carrying amount or
      recognized as a separate asset, as appropriate, only when it is probable
      that future economic benefit associated with the item will flow to the
      Company and the cost can be measured reliably. The carrying amount of a
      replaced asset is derecognized when replaced.                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Depreciation is calculated to amortize the cost of the
      property and equipment less their residual values over their estimated
      useful lives using the straight-line method and following periods by major
      categories:                                                                                                                                                                                                                                                                                                                                                                                                         

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

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

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

16

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (m) | Exploration and evaluation expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | Exploration and evaluation assets are comprised of
      exploration and evaluation expenditures and mining properties acquisition
      costs. Expenditures incurred on activities that precede exploration and
      evaluation, being all expenditures incurred prior to securing the legal
      rights to explore an area, are expensed immediately. Exploration and
      evaluation assets include rights in mining properties, paid or acquired
      through a business combination or an acquisition of assets, and costs
      related to the initial search for mineral deposits with economic potential
      or to obtain more information about existing mineral deposits. Mining
      rights are recorded at acquisition cost less accumulated impairment
      losses. Mining rights and options to acquire undivided interests in mining
      rights are depreciated only as these properties are put into commercial
      production.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | Exploration and evaluation expenditures for each separate
      area of interest are capitalized and include costs associated with
      prospecting, sampling, trenching, drilling and other work involved in
      searching for ore like topographical, geological, geochemical and
      geophysical studies. They also reflect costs related to establishing the
      technical and commercial viability of extracting a mineral resource
      identified through exploration and evaluation or acquired through a
      business combination or asset acquisition.                                                                                                                                                                                                                                                                                                                                                                                 

17

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|4. | Significant accounting policies(continued)
|-- | ------------------------------------------

| | (m) | Exploration and evaluation expenditures
      (continued)         
| | --- | ------------------------------------------------------------------
| |     |                                                                   
| |     | Exploration and evaluation expenditures include the cost
      of:

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

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

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

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

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

| | (n) | Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | Goodwill is recognized in a business combination if the
      cost of the acquisition exceeds the fair values of the identifiable net
      assets acquired. Goodwill is then allocated to the CGU or group of CGUs
      that are expected to benefit from the synergies of the combination. The
      Company performs goodwill impairment tests on an annual basis as at
      December 31 of each year. In addition, the Company assesses for indicators
      of impairment at each reporting period end and, if an indicator of
      impairment is identified, goodwill is tested for impairment at that time.
      If the carrying value of the CGU or group of CGUs to which goodwill is
      assigned exceeds its recoverable amount, an impairment loss is recognized.
      Goodwill impairment losses are not reversed.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | The recoverable amount of a CGU or group of CGUs is
      measured as the higher of value in use and fair value less costs of
      disposal.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (o) | Current and deferred income tax                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | The tax expense for the period comprises current and
      deferred tax. Tax is recognized in the consolidated statement of income,
      except to the extent that it relates to items recognized in other
      comprehensive income (loss) or directly in equity. In this case, the tax
      is also recognized in other comprehensive income (loss) or directly in
      equity, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | Current income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | The current income tax charge is the expected tax payable
      on the taxable income for the year, using the tax laws enacted or
      substantively enacted at the balance sheet date in the jurisdictions where
      the Company and its subsidiaries operate and generate taxable income.
      Management periodically evaluates positions taken in tax returns with
      respect to situations in which applicable tax regulation is subject to
      interpretation. It establishes provisions where appropriate on the basis
      of amounts expected to be paid to the tax
authorities.                                                                                                                                                                                                                                   

18

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|4. | Significant accounting policies(continued)
|-- | ------------------------------------------

| | (o) | Current and deferred income tax
  (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | Deferred income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The Company uses the asset and liability method of
      accounting for income taxes. Under this method, deferred income tax assets
      and liabilities are recognized for future tax consequences attributable to
      temporary differences between the financial statement carrying amounts of
      existing assets and liabilities and their respective tax bases. However,
      the deferred income tax is not accounted for if it arises from initial
      recognition of an asset or liability in a transaction other than a
      business combination that at the time of the transaction affects neither
      accounting nor taxable profit or loss. Deferred income tax assets and
      liabilities are measured using enacted or substantively enacted tax rates
      (and laws) that apply to taxable income in the years in which those
      temporary differences are expected to be recovered or settled.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | Deferred income tax assets are recognized only to the
      extent that it is probable that future taxable profit will be available
      against which the temporary differences can be utilized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | Deferred income tax is provided on temporary differences
      arising on investments in subsidiaries and associates, except where the
      timing of the reversal of the temporary difference is controlled by the
      Company and it is probable that the temporary difference will not reverse
      in the foreseeable future.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | Deferred income tax assets and liabilities are presented
      as non-current and are offset when there is a legally enforceable right to
      offset current tax assets against current tax liabilities and when
      deferred tax assets and liabilities relate to income taxes levied by the
      same taxation authority on either the same taxable entity or different
      taxable entities where there is an intention to settle the balances on a
      net basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (p) | Convertible debentures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The liability and equity components of convertible
      debentures are presented separately on the consolidated balance sheet
      starting from initial recognition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The liability component is recognized initially at the
      fair value, by discounting the stream of future payments of interest and
      principal at the prevailing market rate for a similar liability of
      comparable credit status and providing substantially the same cash flows
      that do not have an associated conversion option. Subsequent to initial
      recognition, the liability component is measured at amortized cost using
      the effective interest method; the liability component is increased by
      accretion of the discounted amounts to reach the nominal value of the
      debentures at maturity.                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The carrying amount of the equity component is calculated
      by deducting the carrying amount of the financial liability from the
      amount of the debentures and is presented in shareholders equity as
      equity component of convertible debenture. The equity component is
      not re-measured subsequent to initial recognition except on conversion or
      expiry. A deferred tax liability is recognized with respect to any
      temporary difference that arises from the initial recognition of the
      equity component separately from the liability component. The deferred tax
      is charged directly to the carrying amount of the equity component.
      Subsequent changes in the deferred tax liability are recognized through
      the consolidated statement of income.                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | Transaction costs are distributed between liability and
      equity on a pro-rata basis of their carrying amounts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (q) | Share capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | Common shares are classified as equity. Incremental costs
      directly attributable to the issuance of shares are recognized as a
      deduction from the proceeds in equity in the period where the transaction
      occurs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (r) | Warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | Warrants are classified as equity. Incremental costs
      directly attributable to the issuance of warrants are recognized as a
      deduction from the proceeds in equity in the period where the transaction
      occurs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

19

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|4. | Significant accounting policies(continued)
|-- | ------------------------------------------

| | (s) | Revenue recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Revenue comprises revenues from the sale of commodities
      received under royalty interests agreements and revenues earned directly
      from royalty interests agreements. For royalty agreements paid in-kind,
      revenue recognition occurs when the relevant commodity received from the
      operator is physically delivered and sold by the Company to its third
      party customers. Significant risks and rewards of ownership are passed to
      the buyer at the time of delivery, which also corresponds to the transfer
      of the title property. For royalty agreements paid in cash, revenue
      recognition generally occurs in the month of production from the royalty
      property.                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Revenue is measured at fair value of the consideration
      received or receivable when management can reliably estimate the amount,
      pursuant to the terms of the royalty agreements. In some instances, the
      Company will not have access to sufficient information to make a
      reasonable estimate of revenue and, accordingly, revenue recognition is
      deferred until management can make a reasonable estimate. Differences
      between estimates and actual amounts are adjusted and recorded in the
      period that the actual amounts are known.                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (t) | Operating leases                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Leases in which a significant portion of the risks and
      rewards of ownership are retained by the lessor are classified as
      operating leases. Payments made under operating leases (net of any
      incentives received from the lessor) are charged to the consolidated
      income statement on a straight-line basis over the period of the
    lease.                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (u) | Share-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Share option plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | The Company offers a share option plan for its directors,
      officers, employees and consultants. Each tranche in an award is
      considered a separate award with its own vesting period and grant date
      fair value. Fair value of each tranche is measured at the date of grant
      using the Black-Scholes option pricing model. Compensation expense is
      recognized over the tranches vesting period by increasing contributed
      surplus based on the number of awards expected to vest. The number of
      awards expected to vest is reviewed at least annually, with any impact
      being recognized immediately.                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Any consideration paid on exercise of share options is
      credited to share capital. The contributed surplus resulting from
      share-based compensation is transferred to share capital when the options
      are exercised.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Deferred and restricted share units                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Deferred share units (DSU) and restricted share units
      (RSU) may be granted to employees, directors and officers as part of
      their long-term compensation package entitling them to receive payout in
      cash based on the Companys share price at the relevant time. A liability
      for DSU and RSU is measured at fair value on the grant date and is
      subsequently adjusted at each balance sheet date for changes in fair value
      according to the estimation made by management of the number of DSU and
      RSU that will eventually vest. The liability is recognized over the
      vesting period, with a corresponding charge to share-based
      compensation.                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (v) | Earnings per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | The calculation of earnings per share (EPS) is based on
      the weighted average number of shares outstanding for each period. The
      basic EPS is calculated by dividing the profit or loss attributable to the
      equity owners of Osisko by the weighted average number of common shares
      outstanding during the period.                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | The computation of diluted EPS assumes the conversion,
      exercise or contingent issuance of securities only when such conversion,
      exercise or issuance would have a dilutive effect on the income per share.
      It also includes shares issued and held in escrow. The treasury stock
      method is used to determine the dilutive effect of the warrants, share
      options and the if-converted method is used for convertible debentures.
      When the Company reports a loss, the diluted net loss per common share is
      equal to the basic net loss per common share due to the anti-dilutive
      effect of the shares held in escrow, the outstanding warrants, share
      options and convertible debentures.

20

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|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|4. | Significant accounting policies(continued)
|-- | ------------------------------------------

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

|5. | Additional significant accounting policies applicable
      only for the year ended December 31, 2015 (prior to the adoption of IFRS
      9)
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | Financial instruments
| | --- | ---------------------
| |     |                      
| |     | (i)                  
| |     |                      
| |     |                      
| |     |                      
| |     |                      
| |     |                      
| |     |                      
| |     |                      
| |     |                      
| |     |                      
| |     |                      
| |     |                      
| |     |                      
| |     |                      
| |     |                      
| |     |                      
| |     |                      
| |     |                      
| |     |                      

21

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|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|5. | Additional significant accounting policies applicable
      only for the year ended December 31, 2015 (prior to the adoption of IFRS
      9)(continued)
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | Financial instruments
      (continued)
| | --- | ---------------------------------------
| |     |                                        
| |     | (i)                                    
| |     |                                        
| |     |                                        
| |     |                                        
| |     |                                        
| |     |                                        
| |     |                                        
| |     |                                        
| |     |                                        
| |     |                                        
| |     |                                        

The Company has classified its
financial instruments as follows:

22

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|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

| |                                         |                                                               
| | --------------------------------------- | --------------------------------------------------------------
| | Category                                | Financial instrument                                          
| |                                         |                                                               
| | Financial assets at fair value          |                                                               
| | through profit and loss                 | Investments in warrants                                       
| |                                         |                                                               
| | Loans and receivables                   | Bank balances and cash on hand                                
| |                                         | Guaranteed investment certificates                            
| |                                         | Notes receivable                                              
| |                                         | Trade receivables                                             
| |                                         | Interest and dividend income receivable                       
| |                                         | Amounts receivable from associates and other
      receivables
| |                                         |                                                               
| | Held to maturity                        | Short-term debt securities                                    
| |                                         |                                                               
| | Available-for-sale financial assets     | Bonds                                                         
| |                                         | Investments in shares and equity instruments,                 
| |                                         | other than in warrants                                        
| |                                         |                                                               
| | Financial liabilities at amortized cost | Accounts payable and accrued liabilities                      
| |                                         | Liability related to share exchange rights                    

23

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|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|5. | Additional significant accounting policies
      applicable only for the year ended December 31, 2015 (prior to the
      adoption of IFRS 9)(continued)
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | Impairment of financial assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | At each reporting date, the Company assesses whether
      there is objective evidence that a financial asset is impaired. A
      financial asset is impaired and impairment losses are incurred only if
      there is objective evidence of impairment as a result of one or more
      events that occurred after initial recognition (a loss event) and that
      loss event has an impact on the estimated cash flows of the financial
      assets that can be reliably estimated. If such evidence exists, the
      Company recognizes an impairment loss, as
follows:

| |  | (i)  | Financial assets carried at amortized
  cost                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  |      | The impairment loss is the difference between the
      amortized cost of the loan or receivable and the present value of the
      estimated future cash flows, discounted using the instruments original
      effective interest rate. The carrying amount of the asset is reduced by
      this amount either directly or indirectly through the use of an allowance
      account.                                                                                                             
| |  |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  |      | Impairment losses on financial assets carried at
      amortized cost are reversed in subsequent periods if the amount of the
      loss decreases and the decrease can be related objectively to an event
      occurring after the impairment was recognized.                                                                                                                                                                                                                                      
| |  |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  |      | Impairment losses as well as reversals are recognized in
      the consolidated statement of income.                                                                                                                                                                                                                                                                                                                                                                                                 
| |  |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | (ii) | Available-for-sale financial assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  |      | The impairment loss is the difference between the
      original cost of the asset and its fair value at the measurement date,
      less any impairment losses previously recognized in the consolidated
      statement of income. This amount represents the cumulative loss in
      accumulated other comprehensive income (loss) that is reclassified to the
      consolidated statement of income. Impairment losses on equity
      available-for-sale financial assets may not be
reversed.

|6. | Accounting standards issued but not yet
      effective
|-- | -------------------------------------------------------

The Company has not yet adopted certain
standards, interpretations to existing standards and amendments which have been
issued but have an effective date of later than January 1, 2016. Many of these
updates are not relevant to the Company and are therefore not discussed herein.

IFRS 15,Revenue from
Contracts with Customers(IFRS 15)

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

The new standard is effective for
annual periods beginning on or after January 1, 2018, with early adoption
permitted. Management is currently evaluating the impact that this standard will
have on its consolidated financial statements.

24

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|6. | Accounting standards issued but not yet effective(continued)
|-- | ------------------------------------------------------------

IFRS 16,Leases(IFRS 16)

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

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

The new standard is effective for
annual periods beginning on or after January 1, 2019 with early adoption
permitted if IFRS 15 is also applied. Management is currently evaluating the
impact that this standard will have on its consolidated financial statements.

IAS 7,Statement of Cash
Flows(IAS 7)

In January 2016, the IASB issued
amendments to IAS 7. The amendments are intended to clarify IAS 7 to improve
information provided to users of financial statements about an entitys
financing activities. They are effective for annual periods beginning on or
after January 1, 2017, with earlier application being permitted. As a result of
these amendments, Osisko will be required to provide additional disclosure
related to financing activities, including a reconciliation between the
beginning and closing balance of financial liabilities arising from financing
activities.

IFRIC 22, Foreign currency
translation and advance consideration (IFRIC 22)

In December 2016, the IASB issued IFRIC
22 that addresses foreign currency transactions or parts of transactions where
there is consideration that is denominated or priced in a foreign currency; the
entity recognizes a prepayment asset or a deferred income liability in respect
of that consideration, in advance of the recognition of the related asset,
expense or income; and the prepayment asset or deferred income liability is
non-monetary. The Interpretations Committee came to the conclusion that the date
of the transaction, for the purpose of determining the exchange rate, is the
date of initial recognition of the non-monetary prepayment asset or deferred
income liability. If there are multiple payments or receipts in advance, a date
of transaction is established for each payment or receipt. IFRIC 22 is effective
for annual reporting periods beginning on or after January 1, 2018 and earlier
application is permitted. Management has not yet evaluated the impact that this
standard will have on its consolidated financial statements.

|7. | Critical accounting estimates and
  judgements
|-- | ----------------------------------------------

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

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

25

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|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|7. | Critical accounting estimates and judgements(continued)
|-- | -------------------------------------------------------

Critical accounting estimates and
assumptions

Reserves and resources

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

Impairment of royalty
interests

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

Impairment of goodwill

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

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

The Company performs annual impairment
tests using the value-in-use method to evaluate the group of CGUs supporting the
goodwill and using the most recent budgets and forecasts available, including
information from external sources. The period to be used for the projections are
based on the expected productions from the mines, the proven and probable
mineral reserves and a portion of the resources. The discount rate to be used
takes into consideration the different risk factors of the Company.

26

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|7. | Critical accounting estimates and judgements(continued)
|-- | -------------------------------------------------------

Critical judgements in applying
the Companys accounting policies

Business combinations

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

Impairment of exploration and
evaluation assets and royalty interests on exploration and evaluation properties

Assessment of impairment of exploration
and evaluation assets (including exploration and evaluation assets under a
farm-out agreement) and royalty interests on exploration and evaluation
properties requires the use of judgements when assessing whether there are any
indicators that could give rise to the requirement to conduct a formal
impairment test on the Companys exploration and evaluation assets and royalty
interests on exploration and evaluation properties.

Factors which could trigger an
impairment review include, but are not limited to:

| |  | an expiry of the right to explore in the specific area
      during the period or in the near future, and the right is not expected to
      be renewed;                                                                                                      
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | substantive exploration and evaluation expenditures in a
      specific area, taking into consideration such expenditures to be incurred
      by a farmee, are neither budgeted nor planned;                                                                 
| |  | exploration for and evaluation of mineral resources in a
      specific area have not led to the discovery of commercially viable
      quantities of mineral resources and the Company has decided to discontinue
      such activities in the specific area;
| |  | sufficient data exists to indicate that, although a
      development in a specific area is likely to proceed, the carrying amount
      of the assets is unlikely to be recovered in full from successful
      development or by sale;                      
| |  | significant negative industry or economic trends;                                                                                                                                                                                                             
| |  | interruptions in exploration and evaluation activities by
      the Company or its farmee; and                                                                                                                                                                
| |  | a significant drop in current or forecast commodity
      prices.                                                                                                                                                                                             

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

Impairment of producing and advanced
development royalty interests and goodwill

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

Changes in the judgements used in
determining the fair value of the producing or advanced development royalty
interests or goodwill could impact the impairment analysis.

Deferred income tax assets

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

27

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|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|7. | Critical accounting estimates and judgements(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Critical judgements in applying the Companys
      accounting policies (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Liability related to share exchange
  rights                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The put option is classified as a financial liability
      using the present access method. Under this method, non-controlling
      interests continue to be recognized because the non-controlling
      shareholders still have present access to the economic benefits and risks
      associated with the underlying ownership interests. The non-controlling
      shareholder may have substantially retained the risks and rewards
      associated with the continued ownership until such time that the contract
      is settled. Judgement is required when assessing the factors to consider
      resulting in benefits and losses being borne by the non-controlling
      shareholders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|8. | Acquisition of Virginia Mines Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | On November 17, 2014, Osisko and Virginia Mines Inc.
      (Virginia), a mining exploration company active in Northern Québec and
      holding a 2.0% to 3.5% royalty in the Éléonore gold property located in
      the Province of Québec and operated by Goldcorp Inc., announced that they
      had entered into a definitive agreement to combine the two companies. The
      combination of Osisko and Virginia diversifies the portfolio of assets in
      low geopolitical risk locations and improves the financial position of the
      combined company. Under the terms of the transaction, which was structured
      as a plan of arrangement, each Virginia share was exchanged for 0.92
      Osisko shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The transaction was closed on February 17, 2015
      (acquisition date) and Osisko acquired all of the outstanding common
      shares of Virginia and issued a total of 29,964,240 common shares to
      Virginia shareholders. Prior to the closing of the transaction, Osisko
      held 3,562,616 common shares of Virginia which generated a gain of
      $7,929,000 at the closing date, which was reclassified from other
      comprehensive income (loss) to other net gains (losses) on the statement
      of income. In addition, Osisko issued 1,695,770 share options as
      replacement options of Virginia using the same exchange rate of 0.92 than
      for the shares. The Virginia share options were all vested prior to the
      transaction as they had all vested at the grant date. The following
      weighted average assumptions were used with the Black-Scholes option
      pricing model to calculate the fair value of the Virginia replacement
      share options: dividend of 1%; volatility of 37%; risk-free interest rate
      of 0.4% and expected life between 1.1 and 3.0 years. Transaction costs
      related to the acquisition were expensed under business development
      expenses and amount respectively to $1,469,000 and $2,243,000 in 2014 and
      2015. The total consideration paid, including the initial investment held
      by Osisko, the shares issued to Virginia shareholders and the fair value
      of the replacement options issued amount to approximately $556.0
      million.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | In accordance with IFRS 3, Business Combinations,
      a business combination is a transaction in which an acquirer obtains
      control of a business which is defined as an integrated set of activities
      and assets that is capable of being conducted and managed to provide a
      return to investors. For an integrated set of activities and assets to be
      considered a business, the set needs to contain inputs, and processes. The
      acquisition of Virginia meets the definition of a business combination as
      Virginia generates revenues and has processes. Consequently, the
      transaction has been recorded as a business combination.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The goodwill is the result of the creation of a
      diversified portfolio of two significant producing royalties that increase
      the sources of revenues and reduce the operational risks and cost of
      capital of the combined company. In addition, the acquisition of
      exploration and evaluation projects lead by an experienced team
      diversifies the risks and increases the royalty
  opportunities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

28

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|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|8. | Acquisition of Virginia Mines Inc.(continued)
|-- | ---------------------------------------------

The table below presents the purchase
price allocation:

| | **Consideration paid**                                                  |  | **$**    |  
| | ----------------------------------------------------------------------- |  | -------- | -
| | Issuance of
      29,964,240 common shares on closing                   |  | 488,717  |  
| | Shares held in
      Virginia prior to the acquisition                  |  | 53,475   |  
| | Fair value of
      1,695,770 Virginia replacement share options issued |  | 13,842   |  
| |                                                                         |  | 556,034  |  
| | Net assets acquired                                                     |  | **$**    |  
| | Cash and cash
      equivalents                                         |  | 34,900   |  
| | Short-term
      investments                                            |  | 35,179   |  
| | Other current assets                                                    |  | 4,897    |  
| | Other
      investments                                                 |  | 2,589    |  
| | Royalty interests                                                       |  | 411,236  |  
| | Property and
      equipment                                            |  | 587      |  
| | Exploration and
      evaluation                                        |  | 87,365   |  
| | Current
      liabilities                                               |  | (3,986   | )
| | Liability for share
      exchange rights(i)                            |  | (6,867   | )
| | Deferred income
      tax liability                                     |  | (119,450 | )
| | Non-controlling
      interests(i)                                      |  | (1,620   | )
| |                                                                         |  | 444,830  |  
| | Goodwill(ii)                                                            |  | 111,204  |  

| | (i)  | The fair value of the non-controlling interests in Mines
      Coulon Inc. (Mines Coulon) was recognized in the form of a financial
      liability for the share exchange rights at its estimated fair value and
      the residual amount has been recorded as non-controlling
  interests.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                
| | (ii) | The goodwill recognized on the acquisition of Virginia
      will not be tax deductible.                                                                                                                                                                                                       

Caisse de dépôt et placement du Québec
("CDPQ") and Fonds de solidarité des travailleurs du Québec (F.T.Q.) ("Fonds")
had completed private placements into Osisko and Virginia as a part of the
business combination. Accordingly, CDPQ and Fonds were granted a combined 15%
right to participate in all future royalty or stream transactions entered into
by Osisko.

For the year ended December 31, 2015,
the revenues and net loss of the acquiree included in the statement of income
amounted to respectively to $601,000 and $3,196,000. If the acquisition had been
completed as of January 1, 2015, the consolidated revenues would have been
approximately $45,415,000 and net earnings would have been approximately
$28,337,000 for the year ended December 31, 2015. The NSR royalty payments have
been applied against the advance payment that had been received by Virginia
prior to its acquisition by Osisko until November 2015. The advance payment was
fully repaid in November 2015 and the depletion of the depreciable royalty
interests started in December 2015 when the first delivery under the NSR royalty
was received by Osisko.

29

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|9. | Cash and cash
equivalents
|-- | -------------------------

| |                  |  | December 31, |  |  | December 31, | 
| | ---------------- |  | ------------ |  |  | ------------ | 
| |                  |  | 2016         |  |  | 2015         | 
| |                  |  | **$**        |  |  | **$**        | 
| |                  |  |              |  |  |              | 
| | Cash             |  | 404,347      |  |  | 218,553      | 
| | Cash equivalents |  | 94,902       |  |  | 39,956       | 
| |                  |  | 499,249      |  |  | 258,509      | 

Cash equivalents are comprised of
bankers acceptances bearing a weighted average interest rate of 0.77% and
having original maturity dates between January and March 2017. As at December
31, 2016 and 2015, cash held in U.S. dollars amounted respectively to $243.0
million (US$181.0 million) and $143.6 million (US$103.8 million).

|10. | Short-term investments
|--- | ----------------------

As at December 31, 2016, short-term
investments include two notes receivable from a gold producer, with whom the
Company has royalty interests, having an interest rate of 7% and a maturity date
in February 2017. The two notes receivable amounted to a total of $2.0 million,
of which $1.0 million was repaid in advance in January 2017. Short-term
investments also include a guaranteed investment certificate of $100,000 issued
by a Canadian financial institution having an interest rate of 2.75% and a
maturity date in July 2017.

As at December 31, 2015, short-term
investments are comprised of two guaranteed investment certificates issued by
Canadian financial institutions having interest rates of 1.81% and 2.05% and
maturity dates of January 2016 and July 2016.

|11. | Accounts receivable
|--- | -------------------

| |                                               |  | December 31, |  |  | December 31, | 
| | --------------------------------------------- |  | ------------ |  |  | ------------ | 
| |                                               |  | 2016         |  |  | 2015         | 
| |                                               |  | **$**        |  |  | **$**        | 
| |                                               |  |              |  |  |              | 
| | Tax credits                                   |  | 6,034        |  |  | 2,287        | 
| | Sales taxes                                   |  | 190          |  |  | 639          | 
| | Interest and dividend income
      receivable |  | 852          |  |  | 1,639        | 
| | Amounts receivable from
      associates(i)   |  | 720          |  |  | 1,188        | 
| | Other receivables                             |  | 620          |  |  | 491          | 
| |                                               |  | 8,416        |  |  | 6,244        | 

| | (i) | Amounts receivable from associates for cost recoveries
      related to professional services and office rent.
| | --- | --------------------------------------------------------------------------------------------------------------

30

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|12. | Other assets
|--- | ------------

| |                             |  | December 31, |  |  | December 31, | 
| | --------------------------- |  | ------------ |  |  | ------------ | 
| |                             |  | 2016         |  |  | 2015         | 
| |                             |  | **$**        |  |  | **$**        | 
| |                             |  |              |  |  |              | 
| | Prepaid expenses            |  | 796          |  |  | 231          | 
| | Deferred financing costs(i) |  | 178          |  |  | 277          | 
| |                             |  | 974          |  |  | 508          | 

| | (i) | Unamortized deferred financing costs related to a $150.0
      million revolving credit facility (Note 19). The deferred financing costs
      are being amortized over the term of the facility. Amortization in 2016
      amounts to $175,000 ($110,000 in 2015).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|13. | Investments in
associates
|--- | -------------------------

| |                                                |  | 2016   |   |  | 2015   |  
| | ---------------------------------------------- |  | ------ | - |  | ------ | -
| |                                                |  | **$**  |   |  | **$**  |  
| |                                                |  |        |   |  |        |  
| | Balance  January 1                            |  | 44,011 |   |  | 14,052 |  
| | Acquisitions                                   |  | 14,974 |   |  | 27,505 |  
| | Exercise of warrants                           |  | 775    |   |  | -      |  
| | Transfer from other investments                |  | 13,068 |   |  | 8,476  |  
| | Share of loss, net                             |  | (6,623 | ) |  | (3,519 | )
| | Share of other comprehensive income,
      net |  | 1,264  |   |  | 159    |  
| | Net gain (loss) on
      ownership dilution    |  | 12,023 |   |  | (1,627 | )
| | Gain on disposal (i)                           |  | 3,410  |   |  | -      |  
| | Impairment charge                              |  | -      |   |  | (1,035 | )
| | Balance  December 31                          |  | 82,902 |   |  | 44,011 |  

| | (i) | In March 2016, Osisko Mining Inc. (Osisko Mining), an
      associate, acquired NioGold Mining Corp. (NioGold), another associate.
      This transaction generated a gain on the deemed disposal of the shares of
      NioGold.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Main strategic investments

Osisko Mining Inc. (formerly Oban
Mining Corporation)

In August 2015, Osisko Mining acquired
Eagle Hill Exploration Corporation, Ryan Gold Corp. and Corona Gold Corporation
to combine leadership, treasuries and assets to form a new Canadian focused gold
exploration and development company. In 2015, Osisko invested $17.8 million in
shares and was granted a right to acquire a 1% NSR royalty on all properties
held by Osisko Mining at the date of the financing. The right was exercised in
October 2016 for $5.0 million and includes a 1% NSR royalty on the Windfall Lake
gold project (bringing the total NSR royalty on the Windfall Lake gold project
to 1.5%, including the 0.5% NSR royalty acquired in 2015), where Osisko Mining
is currently pursuing significant drilling activities. In March 2016, Osisko
Mining acquired all of the outstanding shares of NioGold. In 2016, the Company
invested an additional $6.8 million in Osisko Mining. As at December 31, 2016,
the Company has a 13.5% interest in Osisko Mining (15.7% as at December 31,
2015). As some officers and directors of Osisko are also officers and directors
of Osisko Mining, the Company concluded that it exercises significant influence
over Osisko Mining since 2014 and accounts for its investment using the equity
method.

31

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|13. | Investments in associates(continued)
|--- | ------------------------------------

Main strategic investments(continued)

Falco Resources Ltd.

Falco Resources Ltd.s (Falco) main
asset is the Horne 5 gold project, for which a feasibility study is expected to
be released in 2017. In 2015 and 2016, Osisko acquired additional common shares
in Falco for $2.4 million and $3.3 million, respectively. In addition, Osisko
entered into a financing agreement of $10.0 million with Falco bearing an
interest rate of 7%, which will be
applied against a stream deposit to be negotiated by October 31, 2017 or
converted into a 1% NSR royalty on the Horne 5 project if no stream agreement is
concluded. As at December 31, 2016, the Company has a 14.2% interest in Falco
(16.2% as at December 31, 2015). As the chair of the Board of Directors and
chief executive officer of Osisko is also the chair of the Board of Directors of
Falco, the Company concluded that it exercises significant influence over Falco
since 2014 and accounts for its investment using the equity method.

Barkerville Gold Mines Ltd.

Barkerville Gold Mines Ltd.
(Barkerville) is focused on the development of its extensive land package
located in the historical Cariboo Mining District of central British Columbia,
Canada. In November, 2015, Osisko and Barkerville entered into an agreement for
Osisko to acquire a 1.5% NSR royalty on the Cariboo Gold project for cash
consideration of $25.0 million. In 2015 and 2016, Osisko acquired common shares
of Barkerville for $11.0 million and $8.2 million, respectively. As at December
31, 2016, the Company has a 17.3% interest in Barkerville (13.4% as at December
31, 2015). As the chair of the Board of Directors and chief executive officer of
Osisko is also the co-chair of the Board of Directors of Barkerville, the
Company concluded that it exercises significant influence over Barkerville since
2016 and accounts for its investment using the equity method.

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

| |                                                           |  | Osisko Mining |   |  | Falco    |   |  | Barkerville |  
| | --------------------------------------------------------- |  | ------------- | - |  | -------- | - |  | ----------- | -
| |                                                           |  | **2016(i)**   |   |  | 2015(ii) |   |  | 2016(iii)   |  
| |                                                           |  | **$**         |   |  | **$**    |   |  | **$**       |  
| |                                                           |  |               |   |  |          |   |  |             |  
| | Current assets                                            |  | 100,963       |   |  | 66,366   |   |  | 34,242      |  
| | Non-current assets                                        |  | 173,334       |   |  | 52,972   |   |  | 35,657      |  
| | Current liabilities                                       |  | 4,972         |   |  | 2,697    |   |  | 16,516      |  
| | Non-current liabilities                                   |  | 5,882         |   |  | 2,965    |   |  | 5,315       |  
| | Revenues                                                  |  | -             |   |  | -        |   |  | -           |  
| | Net loss from continuing operations                       |  | (10,051       | ) |  | (3,578   | ) |  | (8,972      | )
| | Net loss from discontinued
      operations, net of taxes |  | (5            | ) |  | (8,202   | ) |  | -           |  
| | Other comprehensive income (loss)                         |  | 9,695         |   |  | 225      |   |  | -           |  
| | Comprehensive loss                                        |  | (361          | ) |  | (11,555  | ) |  | (8,972      | )
| |                                                           |  |               |   |  |          |   |  |             |  
| | Carrying value of
      investment(vi)                    |  | 36,680        |   |  | 16,973   |   |  | 12,330      |  
| | Fair value of investment(vi)                              |  | 53,491        |   |  | 10,979   |   |  | 18,535      |  

| | (i)   | Information is for the reconstructed twelve months ended
      September 30, 2016 and as at September 30, 2016.
| | ----- | ---------------------------------------------------------------------------------------------------------------
| | (ii)  | Information is for the reconstructed twelve months ended
      September 30, 2015 and as at September 30, 2015.
| | (iii) | Information is for the reconstructed twelve months ended
      December 31, 2016 and as at December 31, 2016.  
| | (iv)  | Information is for the reconstructed twelve months ended
      December 31, 2015 and as at December 31, 2015.  
| | (v)   | Information is for the six months ended August 31, 2016
      and as at August 31, 2016.                       
| | (vi)  | As at December 31, 2016 and 2015.                                                                              

32

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|13. | Investments in associates(continued)
|--- | ------------------------------------

Investments in immaterial
associates

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

| |                                                                                    |  | 2016   |   |  | 2015   |  
| | ---------------------------------------------------------------------------------- |  | ------ | - |  | ------ | -
| |                                                                                    |  | **$**  |   |  | **$**  |  
| |                                                                                    |  |        |   |  |        |  
| | Aggregate amount of the
      Companys share of net loss                          |  | (1,645 | ) |  | (2,260 | )
| | Aggregate amount of the Companys share of
      other comprehensive income (loss) |  | (382   | ) |  | 157    |  
| | Aggregate carrying value of
    investments                                        |  | 16,983 |   |  | 20,236 |  
| | Aggregate fair value of investments                                                |  | 28,176 |   |  | 22,205 |  

|14. | Other investments
|--- | -----------------

| |                                                                                    |  | 2016     |   |  | 2015    |  
| | ---------------------------------------------------------------------------------- |  | -------- | - |  | ------- | -
| |                                                                                    |  | **$**    |   |  | **$**   |  
| | Fair value through profit
      or loss                                            |  |          |   |  |         |  
| | Balance  January
      1                                                          |  | 1,578    |   |  | 70      |  
| | Acquisition of Virginia Mines Inc. (Note 8)                                        |  | -        |   |  | 341     |  
| | Acquisitions                                                                       |  | 3,278    |   |  | 1,650   |  
| | Exercised                                                                          |  | (311     | ) |  | -       |  
| | Change in fair value                                                               |  | 6,390    |   |  | (483    | )
| | Balance  December 31                                                              |  | 10,935   |   |  | 1,578   |  
| |                                                                                    |  |          |   |  |         |  
| | Fair value through other
      comprehensive income(i)                             |  |          |   |  |         |  
| | Balance  January
      1                                                          |  | 93,607   |   |  | 57,004  |  
| | Acquisition of Virginia Mines Inc. (Note 8)                                        |  | -        |   |  | 2,048   |  
| | Acquisitions                                                                       |  | 71,137   |   |  | 140,069 |  
| | Interests on financial assets at amortized cost paid in
      shares               |  | 26       |   |  | -       |  
| | Deemed disposal of investments  acquisition of Virginia Mines Inc.
      (Note 8) |  | -        |   |  | (53,475 | )
| | Change in fair value                                                               |  | 74,914   |   |  | (43,563 | )
| | Disposals                                                                          |  | (129,342 | ) |  | -       |  
| | Transfer to investments in associates                                              |  | (13,068  | ) |  | (8,476  | )
| | Balance  December
      31                                                        |  | 97,274   |   |  | 93,607  |  
| |                                                                                    |  |          |   |  |         |  
| | Amortized cost(ii)                                                                 |  |          |   |  |         |  
| | Balance  January 1                                                                |  | 10,300   |   |  | 8,618   |  
| | Acquisition of Virginia Mines Inc. (Note 8)                                        |  | -        |   |  | 200     |  
| | Acquisitions                                                                       |  | -        |   |  | 200     |  
| | Transfer to short-term investments                                                 |  | (100     | ) |  | (100    | )
| | Conversion to royalty interests (iii)                                              |  | (10,000  | ) |  | -       |  
| | Accretion                                                                          |  | -        |   |  | 1,382   |  
| | Balance  December 31                                                              |  | 200      |   |  | 10,300  |  
| |                                                                                    |  |          |   |  |         |  
| | Total                                                                              |  | 108,409  |   |  | 105,485 |  

33

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|14. | Other investments(continued)
|--- | ----------------------------

| | (i)   | These other investments were designated as financial
      assets at fair value through other comprehensive income upon initial
      recognition following the adoption of IFRS 9 (Note 3). These other
      investments were classified as available-for-sale financial assets prior
      to the adoption of IFRS 9 as at January 1, 2016.                                                                                                                                                                                
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (ii)  | These other investments were classified as loans and
      receivables prior to the adoption of IFRS 9 as at January 1, 2016 (Note
      3).                                                                                                                                                                                                                                                                                                                                                                                  
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (iii) | Conversion of a secured note receivable of $10.0 million
      with Highland Copper Company Inc. (Highland Copper) into a 3.0% NSR
      royalty on all metals produced from the mineral rights and leases
      associated with the Copperwood project. Upon closing of the acquisition of
      the White Pine project, Highland Copper will grant Osisko a 1.5% NSR
      royalty on all metals produced from the White Pine project, and Osisko's
      NSR royalty on the Copperwood project will be reduced to
  1.5%.

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

|15. | Royalty interests
|--- | -----------------

| |                                                   |  | 2016    |   |  | 2015    |  
| | ------------------------------------------------- |  | ------- | - |  | ------- | -
| |                                                   |  | **$**   |   |  | **$**   |  
| |                                                   |  |         |   |  |         |  
| | Balance  January 1                               |  | 449,439 |   |  | 1,591   |  
| | Acquisition of Virginia
      Mines Inc. (Note 8) |  | -       |   |  | 411,236 |  
| | Acquisitions(i)                                   |  | 50,250  |   |  | 37,200  |  
| | Conversion of a note
      receivable (Note 14)   |  | 10,000  |   |  | -       |  
| | Sale(ii)                                          |  | (3,630  | ) |  | -       |  
| | Depletion                                         |  | (11,291 | ) |  | (588    | )
| | Balance  December 31                             |  | 494,768 |   |  | 449,439 |  
| |                                                   |  |         |   |  |         |  
| | Producing                                         |  |         |   |  |         |  
| | Cost                                              |  | 431,455 |   |  | 433,457 |  
| | Accumulated depletion                             |  | (11,879 | ) |  | (588    | )
| | Net book value  December
      31                |  | 419,576 |   |  | 432,869 |  
| |                                                   |  |         |   |  |         |  
| | Exploration and evaluation                        |  |         |   |  |         |  
| | Cost                                              |  | 75,192  |   |  | 16,570  |  
| | Accumulated depletion                             |  | -       |   |  | -       |  
| | Net book
      value  December 31                |  | 75,192  |   |  | 16,570  |  
| |                                                   |  |         |   |  |         |  
| | Total net book value 
      December 31(iii)     |  | 494,768 |   |  | 449,439 |  

| | (i)   | Osisko acquired a 1.5% NSR royalty on the Cariboo gold
      project (located in Canada) from Barkerville (an associate of Osisko) for
      cash consideration of $25.0 million, of which $2.0 million was paid in
      November 2015. Osisko also acquired a 1% NSR royalty on the Hermosa
      project (located in the U.S.A.) from Arizona Mining Inc. for cash
      consideration of $10.0 million and entered into a financing agreement of
      $10.0 million with Falco (an associate of Osisko). The $10.0 million
      financing with Falco will be applied against a stream deposit to be
      negotiated with Falco by October 31, 2017 or converted into a 1% NSR
      royalty on the Horne 5 project (located in Canada) if no stream agreement
      is concluded. In October 2016, Osisko exercised its right to obtain a 1%
      NSR royalty on certain projects held by Osisko Mining, an associate of
      Osisko, for $5.0
    million.
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (ii)  | CDPQ and Fonds had completed private placements into
      Osisko and Virginia Mines Inc. as a part of the business combination
      completed in 2015 (Note 8). Accordingly, CDPQ and Fonds were granted a
      combined 15% right to participate in royalty or stream transactions
      entered into by Osisko. CDPQ has exercised its participation right to
      acquire 15% of certain royalty interests acquired by Osisko in 2015. The
      transaction was completed in February 2016 for $3.6 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (iii) | As at December 31, 2016 and 2015, there were no royalty
      interests included in the Advanced developmentcategory.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

34

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|15. | Royalty interests(continued)
|--- | ----------------------------

Main royalty interests

Canadian Malartic property

Osisko owns a 5% NSR royalty on the
Canadian Malartic property in Malartic, Québec, Canada which is operated by the
Canadian Malartic General Partnership created by Agnico Eagle Mines Limited and
Yamana Gold Inc. following their acquisition of Osisko Mining Corporation in
June 2014 (the Transaction). The property extends over 220 square kilometres
and is located in the gold corridor which hosts current and past producers. The
NSR royalty originates from the Transaction and, as a result, a nominal carrying
value was attributed to this royalty.

Éléonore mine

Osisko owns a 2.0% to 3.5% NSR royalty
in the Éléonore gold property located in Québec, Canada and operated by Goldcorp
Inc. On the acquisition date of Virginia (Note 8), a value of $410,111,000 was
attributed to the Éléonore royalty and is depleted based on the proven and
probable reserves and a portion of the resources that the Company expects to be
converted into reserves. In 2016, a depletion expense of $9,419,000 ($588,000 in
2015) was recognized in the consolidated statement of income.

Teck Canadian royalties

In October 2015, Osisko entered into a
definitive agreement to acquire a portfolio of Canadian royalties held by Teck
Resources Limited and its subsidiary Teck Metals Ltd. (Teck) for cash
consideration of $24.2 million.

The portfolio consists of 28 royalties,
most of which are NSR royalties, including the following key royalties:

| |  | Three NSR royalties from 2% to 3% on the producing Island
      Gold mine located in Northern Ontario owned by Richmont Mines Inc.;                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 2% NSR royalty on the Lamaque property located
      in the Abitibi owned by Integra Gold Corp.;                                                                                                        
| |  | 2% NSR royalty on the Hewfran Block located in
      Northern Québec owned by Metanor Resources Inc.; and                                                                                               
| |  | 0.5% NSR royalty and right to $5 million payment upon
      commercial production on the Marban property in Québec owned by Osisko
      Mining and located near the Canadian Malartic mine in Malartic.

The portfolio also includes other
precious metal royalty assets on exploration and development properties. Certain
NSR royalties are subject to buy-back clauses. CDPQ has exercised its
participation right to acquire 15% of the Teck royalty interests acquired by
Osisko. The transaction was completed in February 2016 for $3.6 million.

Vezza property

In 2015, the Company acquired a 5% NSR
royalty and a 40% net profit interest royalty in the Vezza gold property
operated by Ressources Nottaway Inc. for a total acquisition price of $10.0
million, of which $5.0 million was paid in 2015 with the remaining balance paid
in 2016. The property is located 25 kilometres from Matagami, Québec, Canada.
Commercial production was achieved in August 2016.

Windfall Lake gold project

In 2015, Osisko invested $17.8 million
in shares of Osisko Mining and Osisko was granted a right to acquire a 1% NSR
royalty on all properties held by Osisko Mining at the date of the financing.
The right was exercised in October 2016 and Osisko paid $5.0 million in exchange
for the NSR royalties, which include a 1% NSR royalty on the Windfall Lake gold
project (bringing the total NSR royalty on the Windfall Lake project to 1.5%)
..

35

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|15. | Royalty interests(continued)
|--- | ----------------------------

Main royalty interests(continued)

Michigan projects

In December 2014, Osisko closed a
transaction with Highland Copper where Osisko has provided Highland Copper with
a $10.0 million secured loan in exchange for, among other things, a 3%
sliding-scale NSR royalty option on all metals produced from the White Pine
North project to be acquired by Highland Copper. In 2016, the secured note was
converted into a 3.0% NSR royalty on all metals produced from the mineral rights
and leases associated with the Copperwood project in Michigan, U.S.A. Upon
closing of the acquisition of the White Pine project, Highland Copper will grant
Osisko a 1.5% NSR royalty on all metals produced from the White Pine project,
and Osisko's NSR royalty on the Copperwood project will be reduced to 1.5% .The
White Pine North NSR royalty increases by 0.01% NSR royalty for every $0.01
increase in the copper price above $3.00 per pound.

The fair value of the loan was
calculated based on market interest rates for similar loans taking into account
the credit risk associated with the counterparty. The difference between the
fair value of the loan and the $10.0 million payment was assigned to the royalty
option interests for an amount of $1,441,000 (for a total of $11,441,000).

Cariboo Gold project

On November 30, 2015, Osisko and
Barkerville entered into an agreement for Osisko to acquire a 1.5% NSR royalty
on the Cariboo Gold project for cash consideration of $25.0 million, of which
$2.0 million was paid in 2015 and $23.0 million in 2016.

Hermosa Project

In April 2016, Osisko acquired for
$10.0 million a 1% NSR royalty on any lead/zinc/silver sulfide ores mined from
the Hermosa Project owned by Arizona Mining Inc. The Hermosa Project is located
in Santa Cruz County, Arizona, U.S.A.

Main royalty option interests

Marban block and Malartic
Hygrade-NSM block

In August 2014, Osisko completed the
purchase for $150,000 of the rights held by Osisko Mining to repurchase half of
the existing NSR royalty on the Marban block and Malartic Hygrade-NSM block,
consisting of:

| | (i)  | The right to repurchase for the price of
    $1,000,000:
| | ---- | --------------------------------------------------------
| |      | 1.                                                      
| |      | 2.                                                      
| |      | 3.                                                      
| |      |                                                         
| | (ii) | The right to repurchase for the price of
    $1,000,000:
| |      | 1.                                                      

Horne 5 project

In May 2016, Osisko entered into a
financing agreement of $10.0 million with Falco, which will be applied against a
stream deposit to be negotiated by October 31, 2017 or converted into a 1% NSR
royalty on the Horne 5 project if no stream agreement is concluded.

Michigan projects

Highland Copper granted Osisko an
exclusive option to purchase a 100% silver NSR royalty on all future silver
production from Highland Copper's White Pine North, Copperwood and Keweenaw
projects for future cash consideration of US$26.0 million. At its sole
discretion, the Company may elect to purchase the silver NSR royalty within 60
days following the delivery by Highland Copper of a feasibility study on the
Michigan projects.

36

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|16. | Property and equipment / Exploration and
      evaluation
|--- | ---------------------------------------------------------

| |                                                   |  |              |   |  | Exploration   |  
| | ------------------------------------------------- |  | ------------ | - |  | ------------- | -
| |                                                   |  | Property and |   |  | and           |  
| |                                                   |  | equipment    |   |  | evaluation(i) |  
| |                                                   |  | **$**        |   |  | **$**         |  
| | Year ended December 31,
      2016                |  |              |   |  |               |  
| | Opening net book
      value                      |  | 835          |   |  | 96,220        |  
| | Additions                                         |  | 105          |   |  | 8,245         |  
| | Disposals                                         |  | -            |   |  | (812          | )
| | Investment credits                                |  | -            |   |  | (3,430        | )
| | Share-based
      compensation capitalized        |  | -            |   |  | 483           |  
| | Depreciation                                      |  | (218         | ) |  | -             |  
| | Impairment                                        |  | (456         | ) |  | (668          | )
| | Closing net book value                            |  | 266          |   |  | 100,038       |  
| |                                                   |  |              |   |  |               |  
| | Balance - December 31, 2016                       |  |              |   |  |               |  
| | Cost                                              |  | 442          |   |  | 100,898       |  
| | Accumulated depreciation                          |  | (176         | ) |  | -             |  
| | Accumulated
      impairment                      |  | -            |   |  | (860          | )
| | Net book value                                    |  | 266          |   |  | 100,038       |  
| |                                                   |  |              |   |  |               |  
| |                                                   |  |              |   |  |               |  
| | Year ended December 31, 2015                      |  |              |   |  |               |  
| | Opening net book value                            |  | 125          |   |  | 823           |  
| | Acquisition
      of Virginia Mines Inc. (Note 8) |  | 587          |   |  | 87,365        |  
| | Additions                                         |  | 300          |   |  | 9,980         |  
| | Investment
      credits                          |  | -            |   |  | (1,862        | )
| | Share-based compensation capitalized              |  | -            |   |  | 106           |  
| | Depreciation                                      |  | (177         | ) |  | -             |  
| | Impairment                                        |  | -            |   |  | (192          | )
| | Closing net book
      value                      |  | 835          |   |  | 96,220        |  
| |                                                   |  |              |   |  |               |  
| | Balance - December 31, 2015                       |  |              |   |  |               |  
| | Cost                                              |  | 1,026        |   |  | 96,412        |  
| | Accumulated
      depreciation                    |  | (191         | ) |  | -             |  
| | Accumulated impairment                            |  | -            |   |  | (192          | )
| | Net book value                                    |  | 835          |   |  | 96,220        |  

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

37

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|17. | Accounts payable and accrued
  liabilities
|--- | ------------------------------------------

| |                     |  | December 31, |  |  | December 31, | 
| | ------------------- |  | ------------ |  |  | ------------ | 
| |                     |  | 2016         |  |  | 2015         | 
| |                     |  | **$**        |  |  | **$**        | 
| |                     |  |              |  |  |              | 
| | Trade payables      |  | 1,394        |  |  | 927          | 
| | Accrued liabilities |  | 666          |  |  | 652          | 
| | Other payables(i)   |  | 5,378        |  |  | 9,890        | 
| |                     |  | 7,438        |  |  | 11,469       | 

| | (i) | As at December 31, 2015, other payables included an
      amount of $5.0 million (for a total acquisition price of $10.0 million)
      for the acquisition of a 5% NSR royalty and a 40% net profit interest
      royalty in the Vezza property operated by Ressources Nottaway Inc., which
      was paid in 2016.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|18. | Provisions and other
liabilities
|--- | --------------------------------

| |                                                   |  | 2016           |  |  | 2015    |  
| | ------------------------------------------------- |  | -------------- |  |  | ------- | -
| |                                                   |  | Share exchange |  |  | DSU and |  
| |                                                   |  | rights(i)      |  |  | RSU(ii) |  
| |                                                   |  | **$**          |  |  | **$**   |  
| |                                                   |  |                |  |  |         |  
| | Balance  January 1                               |  | 7,067          |  |  | 3,109   |  
| | Acquisition of Virginia Mines
      Inc. (Note 8) |  | -              |  |  | -       |  
| | Accretion
      expense                           |  | 236            |  |  | -       |  
| | New liabilities                                   |  | 3,389          |  |  | 3,787   |  
| | Extinguished
      liabilities                    |  | -              |  |  | (268    | )
| | Revision of estimates                             |  | -              |  |  | (734    | )
| | Balance  December 31                             |  | 10,692         |  |  | 5,894   |  
| |                                                   |  |                |  |  |         |  
| | Current portion                                   |  | -              |  |  | 4,153   |  
| | Non-current portion                               |  | 10,692         |  |  | 1,741   |  
| |                                                   |  | 10,692         |  |  | 5,894   |  

| | (i)  | The liability related to share exchange rights represents
      a put option held by the non-controlling shareholders in Mines Coulon
      Inc., a subsidiary of the Company. On October 20, 2017 (or before under
      certain conditions), the non-controlling shareholders have the option to
      convert their shares of Mines Coulon Inc. for an amount corresponding to
      75% of the cost of their investment, such amount to be settled by the
      issuance of a variable number of common shares of the Company based on the
      fair market value of the Companys shares at the time of conversion. The
      put option is measured initially at the present value of the redemption
      amount of the option. The financial liability is subsequently measured at
      amortized cost using the effective interest method with any differences
      recognized as finance costs in the consolidated statement of income. In
      2016, the non-controlling interests invested $4,499,000 in Mines Coulon
      Inc.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (ii) | The Deferred Share Units and Restricted Share Units Plans
      are described in Note 22.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

38

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|19. | Long-term debt
|--- | --------------

Revolving credit facility

In 2015, the Company increased its
revolving credit facility (Facility) from $100.0 million to $150.0 million.
The Facility may be increased by $50.0 million at Osiskos request, subject to
standard due diligence procedures. The Facility is to be used for investments in
the mineral industry, including the acquisition of royalties and the funding of
precious metal streams. The Facility is secured by the Companys assets
(including the royalty interests) and has a two-year term (December 23, 2017),
which can be extended by one year on each anniversary date. The Facility is
subject to initial standby fees of 0.30% . Drawn funds with base and prime rate
advances will bear interest at a base/prime rate plus between 0.50% and 2.50%
and the London Inter-Bank Offer Rate (LIBOR) loans will bear interest at LIBOR
plus between 1.50% and 3.50% depending on the Companys leverage ratio. As at
December 31, 2016 and 2015, the Facility was not drawn. The Facility includes
covenants that require the Company to maintain certain financial ratios and meet
certain non-financial requirements. As at December 31, 2016, all such ratios and
requirements were met.

Convertible debenture

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

At initial recognition, net proceeds
after transaction costs of $775,000 amounted to $49,225,000. Of this amount, the
liability and equity components represented respectively $44,997,000 (net of
transaction costs of $709,000) and $3,091,000 (net of transaction costs of
$66,000 and income taxes of $1,137,000). The effective interest rate used is 6%
representing the estimated market rate at closing that the Company would obtain
for similar financing without the conversion option. For the year ended December
31, 2016, amortization of transaction costs and accretion expense amounted to
$114,000 and $669,000, respectively.

|20. | Share capital
|--- | -------------

Shares

Authorized

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

Issued and fully paid
      106,497,315 common shares

Shares in escrow

1,200,000 common shares were held by an
escrow agent for the eventual conversion of convertible debentures contracted by
Osisko Mining Corporation prior to the Transaction described in Note 15. The
conversion option was exercised and the common shares were released on June 30,
2015 by the escrow agent in favor of the convertible debentures holders.

Employee Share Purchase Plan

In October 2015, the Company
established an employee share purchase plan. Under the terms of the plan, the
Company contributes an amount equal to 60% of the eligible employees
contribution towards the acquisition of common shares from treasury on a
quarterly basis. A maximum of 2.5% of the issued and outstanding common shares
are reserved for issuance under the current plan.

39

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|20. | Share capital(continued)
|--- | ------------------------

Shares(continued)

Issuances

Year ended December 31, 2016

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

The Units were sold on a bought-deal
basis through a syndicate of underwriters, co-led by BMO Capital Markets and RBC
Capital Markets. Osisko plans to use the net proceeds from the Offering for
working capital and general corporate purposes, including funding resource
royalty and stream acquisitions.

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

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

Year ended December 31, 2015

On January 21, 2015, Osisko announced
that it had entered into an agreement with a syndicate of underwriters who had
agreed to buy, on a bought deal private placement basis, 10,960,000 special
warrants of the Company (Special Warrants) at a price of $18.25 per Special
Warrant, representing aggregate gross proceeds of $200,020,000. Each Special
Warrant entitled the holder to acquire, for no additional consideration, one
unit (Unit) of Osisko, with each Unit comprised of one common share (Common
Share) of Osisko and one-half of one common share purchase warrant (each whole
common share purchase warrant a Warrant) of Osisko. Each Warrant entitles the
holder thereof to purchase one Common Share of Osisko at a price of $36.50, for
a period of 84 months following the conversion date.

The offering was closed on February 18,
2015 and Osisko issued 10,960,000 Special Warrants for gross proceeds of
$200,020,000. On March 5, 2015, the Special Warrants were converted into
10,960,000 common shares of the Company and 5,480,000 Warrants having a maturity
date of March 5, 2022. The relative fair value of the Common Shares was
evaluated at $181,235,000 and the relative fair value of the Warrants was
evaluated at $18,785,000 using the Black-Scholes option pricing model and the
following assumptions: dividend per share of 1%; expected life of 7 years,
expected volatility of 43% and risk free interest rate of 1.01% . Transaction
costs amounted to $10,399,000 ($7,529,000 net of income taxes) and were
allocated to the Common Shares and Warrants based on their pro rata value. As a
result, transaction costs of $976,000 ($713,000 net of income taxes) were
allocated to the Warrants and $9,423,000 ($6,816,000 net of income taxes) to the
Common Shares.

Normal Course Issuer Bid

On October 17, 2016, Osisko announced
that the TSX has approved the Companys notice of intention to make a normal
course issuer bid (the NCIB Program). Under the terms of the NCIB Program,
Osisko may acquire up to 5,330,217 of its common shares from time to time in
accordance with the normal course issuer bid procedures of the TSX.

40

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|20. | Share capital(continued)
|--- | ------------------------

Shares(continued)

Normal Course Issuer Bid(continued)

Repurchases under the NCIB Program are
authorized since October 24, 2016 and will terminate on October 23, 2017 or on
such earlier date as the NCIB Program is complete. Purchases of common shares
under the NCIB Program will be made in Canada through the facilities of the TSX
in accordance with its rules. Daily purchases will be limited to 116,783 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
ended December 31, 2016, being 467,132 common shares. The price that the Company
may pay for any common shares purchased under the NCIB Program will be the
prevailing market price at the time of purchase and any common shares purchased
by the Company will be cancelled.

During the year ended December 31,
2016, the Company purchased for cancellation a total of 150,000 common shares
under the NCIB Program for $1,823,000.

Dividends

The following table provides details on
the dividends declared for the years ended December 31, 2015 and 2016:

| |                   |  |  |           |  |  |                          |  |  |                  |  |  |            |  |  | Dividend     | 
| | ----------------- |  |  | --------- |  |  | ------------------------ |  |  | ---------------- |  |  | ---------- |  |  | ------------ | 
| |                   |  |  | Dividend  |  |  |                          |  |  |                  |  |  | Dividend   |  |  | reinvestment | 
| | Declaration date  |  |  | per share |  |  | Record date              |  |  | Payment date     |  |  | payable    |  |  | plan(i)      | 
| |                   |  |  | **$**     |  |  |                          |  |  |                  |  |  | **$**      |  |  |              | 
| |                   |  |  |           |  |  |                          |  |  |                  |  |  |            |  |  |              | 
| | February 19, 2015 |  |  | 0.03      |  |  | March 31, 2015           |  |  | April 15, 2015   |  |  | 2,782,000  |  |  | -            | 
| | May 14, 2015      |  |  | 0.03      |  |  | June 30, 2015            |  |  | July 15, 2015    |  |  | 2,834,000  |  |  | -            | 
| | August 5, 2015    |  |  | 0.03      |  |  | September 30,
      2015 |  |  | October 15, 2015 |  |  | 2,830,000  |  |  | 5,430,858    | 
| | November 4, 2015  |  |  | 0.04      |  |  | December 31, 2015        |  |  | January 15, 2016 |  |  | 3,783,000  |  |  | 7,712,746    | 
| |                   |  |  |           |  |  |                          |  |  |                  |  |  |            |  |  |              | 
| |                   |  |  | 0.13      |  |  |                          |  |  |                  |  |  | 12,229,000 |  |  |              | 
| |                   |  |  |           |  |  |                          |  |  |                  |  |  |            |  |  |              | 
| | February 16, 2016 |  |  | 0.04      |  |  | March 31, 2016           |  |  | April 15, 2016   |  |  | 4,248,000  |  |  | 7,144,004    | 
| | May 4, 2016       |  |  | 0.04      |  |  | June 30, 2016            |  |  | July 15, 2016    |  |  | 4,259,000  |  |  | 11,594,125   | 
| | August 4, 2016    |  |  | 0.04      |  |  | September 30, 2016       |  |  | October 14, 2016 |  |  | 4,264,000  |  |  | 4,460,148    | 
| | November 9, 2016  |  |  | 0.04      |  |  | December 31,
      2016  |  |  | January 16, 2017 |  |  | 4,266,000  |  |  | 4,591,999    | 
| |                   |  |  |           |  |  |                          |  |  |                  |  |  |            |  |  |              | 
| |                   |  |  | 0.16      |  |  |                          |  |  |                  |  |  | 17,037,000 |  |  |              | 

| | (i) | Number of common shares held by shareholders
      participating to the dividend reinvestment plan described
  below.
| | --- | ---------------------------------------------------------------------------------------------------------------------

Dividend reinvestment plan

In 2015, the Company implemented a
dividend reinvestment plan (DRIP). The DRIP allows shareholders to reinvest
their cash dividends into additional common shares either purchased on the open
market through the facilities of the TSX, or issued directly from treasury by
the Company, or acquired by a combination thereof. In the case of a treasury
issuance, the price will be the weighted average price of the common shares on
the TSX during the five trading days immediately preceding the dividend payment
date, less a discount, if any, of up to 5%, at the Companys sole election. No
commissions, service charges or brokerage fees are payable by shareholders who
elect to participate in the DRIP.

As at December 31, 2016, the holders of
4,591,999 common shares had elected to participate in the DRIP, representing
dividends payable of $184,000 (7,712,746 common shares representing dividends
payable of $309,000 as at December 31, 2015). Therefore, 13,417 common shares
were issued on January 16, 2017.

In 2016, the Company issued 83,533
common shares (11,764 common shares in 2015) under the DRIP at a discount rate
of 3%.

41

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|20. | Share capital(continued)
|--- | ------------------------

Capital management

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

| |                                                                                      |  | December 31, |  |  | December 31, | 
| | ------------------------------------------------------------------------------------ |  | ------------ |  |  | ------------ | 
| |                                                                                      |  | 2016         |  |  | 2015         | 
| |                                                                                      |  | $            |  |  | $            | 
| |                                                                                      |  |              |  |  |              | 
| | Long-term debt                                                                       |  | 45,780       |  |  | -            | 
| | Total equity                                                                         |  | 1,214,304    |  |  | 937,239      | 
| | Undrawn revolving credit
      facility (additional $50.0 million increase capacity) |  | 150,000      |  |  | 150,000      | 
| |                                                                                      |  | 1,410,084    |  |  | 1,087,239    | 

There were no changes in the Companys
approach to capital management during the year ended December 31, 2016, compared
to the prior year. The Company is not subject to material externally imposed
capital requirements and is in compliance with all its covenants under its
revolving credit facility as at December 31, 2016.

|21. | Warrants
|--- | --------

| |                       |  | 2016       |      |  | 2015   | 
| | --------------------- |  | ---------- | ---- |  | ------ | 
| |                       |  |            |      |  |        | 
| |                       |  |            |      |  |        | 
| |                       |  | Number of  |      |  |        | 
| |                       |  | Warrants   |      |  | Amount | 
| |                       |  |            |      |  | **$**  | 
| |                       |  |            |      |  |        | 
| | Balance  January 1   |  | 5,480,000  | (i)  |  | 18,072 | 
| | Issued                |  | 5,715,500  | (ii) |  | 12,829 | 
| | Balance  December 31 |  | 11,195,500 |      |  | 30,901 | 

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

|22. | Share-based compensation
|--- | ------------------------

Share options

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

42

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|22. | Share-based compensation(continued)
|--- | -----------------------------------

Share options(continued)

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

| |                                                          |  | 2016      |   |  | 2015           | 
| | -------------------------------------------------------- |  | --------- | - |  | -------------- | 
| |                                                          |  |           |   |  | Weighted       | 
| |                                                          |  | Number of |   |  | average        | 
| |                                                          |  | options   |   |  | exercise price | 
| |                                                          |  |           |   |  | $              | 
| | Balance  January 1                                      |  | 2,823,333 |   |  | 13.71          | 
| | Granted(i)                                               |  | 1,084,700 |   |  | 13.43          | 
| | Issued  Virginia
      replacement share options(ii)    |  | -         |   |  | -              | 
| | Exercised                                                |  | (12,335   | ) |  | 15.22          | 
| | Exercised  Virginia
      replacement share options(ii) |  | (505,756  | ) |  | 9.50           | 
| | Expired                                                  |  | (30,712   | ) |  | 13.77          | 
| | Forfeited                                                |  | (296,100  | ) |  | 14.17          | 
| | Balance  December 31                                    |  | 3,063,130 |   |  | 14.25          | 
| | Options exercisable 
      December 31                  |  | 1,322,729 |   |  | 14.04          | 

| | (i)  | Options were granted to officers, management and
      employees.                                                            
| | ---- | -----------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                              
| | (ii) | Share options issued as Virginia replacement share
      options following the acquisition of Virginia Mines Inc. (Note
  8).

The weighted average share price when
share options were exercised during the year ended December 31, 2016 was $15.51
($15.62 for the year ended December 31, 2015).

The following table summarizes the
Companys share options outstanding as at December 31, 2016:

| |               |  |  | Options outstanding |  |  | Options exercisable | 
| | ------------- |  |  | ------------------- |  |  | ------------------- | 
| |               |  |  |                     |  |  |                     | 
| |               |  |  |                     |  |  |                     | 
| |               |  |  |                     |  |  | Weighted            | 
| | Exercise      |  |  |                     |  |  | average             | 
| | price range   |  |  | Number              |  |  | exercise price      | 
| | $             |  |  |                     |  |  | $                   | 
| |               |  |  |                     |  |  |                     | 
| | 8.35  9.98   |  |  | 135,117             |  |  | 9.60                | 
| | 10.58  10.73 |  |  | 117,237             |  |  | 10.66               | 
| | 13.38  14.48 |  |  | 1,082,411           |  |  | 13.46               | 
| | 14.90  15.80 |  |  | 1,718,365           |  |  | 15.34               | 
| | 17.84         |  |  | 10,000              |  |  | 17.84               | 
| |               |  |  | 3,063,130           |  |  | 14.25               | 

43

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|22. | Share-based compensation(continued)
|--- | -----------------------------------

Share options  Fair value

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

| |                               |   | 2016      |  |   | 2015      | 
| | ----------------------------- | - | --------- |  | - | --------- | 
| |                               |   |           |  |   |           | 
| | Dividend per share            |   | 1%        |  |   | 1%        | 
| | Expected volatility           |   | 41%       |  |   | 36%       | 
| | Risk-free interest rate       |   | 1%        |  |   | 1%        | 
| | Expected life                 |   | 45 months |  |   | 45 months | 
| | Share price                   | $ | 13.43     |  | $ | 15.71     | 
| | Fair value of options granted | $ | 3.88      |  | $ | 4.02      | 

The expected volatility was estimated
by benchmarking with companies having businesses similar to Osisko. 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.

Share options issued in 2015 and 2016
are exercisable at the closing market price of the common shares of the Company
on the day prior to their grant.

The fair value of the share options is
amortized over the vesting period. In 2016, the total share-based compensation
related to share options on the statement of income amounted to $4,594,000
($2,911,000 in 2015) and share-based compensation capitalized to exploration and
evaluation assets amounted to $483,000 ($106,000 in 2015).

Deferred and restricted share
units

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

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

| |                       |  | 2016    |  |  | 2015    |  
| | --------------------- |  | ------- |  |  | ------- | -
| |                       |  | DSU     |  |  | RSU     |  
| |                       |  |         |  |  |         |  
| | Balance  January 1   |  | 106,408 |  |  | 440,166 |  
| | Granted               |  | 69,038  |  |  | 216,974 |  
| | Cancelled             |  | -       |  |  | (62,064 | )
| | Balance  December 31 |  | 175,446 |  |  | 595,076 |  
| | Balance  Vested      |  | 107,573 |  |  | -       |  

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

The total share-based compensation
expense related to the DSU and RSU plans in 2016 amounted to $2,786,000
($2,348,000 in 2015).

44

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|22. | Share-based compensation(continued)
|--- | -----------------------------------

Deferred and restricted share units
 Fair value

The following table summarizes the
carrying value of the outstanding DSU and RSU and the fair value of the vested
DSU and RSU as at December 31, 2016 and 2015:

| |                     |  | December 31, 2016 |  |  | December 31, 2015 | 
| | ------------------- |  | ----------------- |  |  | ----------------- | 
| |                     |  | Carrying          |  |  | Intrinsic value   | 
| |                     |  | value             |  |  | of vested units   | 
| |                     |  | **$**             |  |  | **$**             | 
| |                     |  |                   |  |  |                   | 
| | Current portion     |  | 4,153             |  |  | 1,408             | 
| | Non-current portion |  | 1,741             |  |  | -                 | 
| |                     |  | 5,894             |  |  | 1,408             | 

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

|23. | Income taxes
|--- | ------------

| | (a) | Income tax expense
| | --- | ------------------

| |                                                         |  | 2016  |  |  | 2015  | 
| | ------------------------------------------------------- |  | ----- |  |  | ----- | 
| |                                                         |  | **$** |  |  | **$** | 
| |                                                         |  |       |  |  |       | 
| | Current income taxes                                    |  | 1,352 |  |  | -     | 
| | Deferred income taxes (Note 23 (b)):                    |  |       |  |  |       | 
| | Origination and
      reversal of temporary differences |  | 8,372 |  |  | 8,194 | 
| | Deferred income taxes                                   |  | 8,372 |  |  | 8,194 | 
| | Income taxes                                            |  | 9,724 |  |  | 8,194 | 

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

| |                                                                    |  | December 31, |   |  | December 31, |  
| | ------------------------------------------------------------------ |  | ------------ | - |  | ------------ | -
| |                                                                    |  | 2016         |   |  | 2015         |  
| |                                                                    |  | **$**        |   |  | **$**        |  
| | Deferred tax assets:                                               |  |              |   |  |              |  
| | Other assets                                                       |  | 1,587        |   |  | 904          |  
| | Share and debt
      issue expenses                                |  | 3,824        |   |  | 2,829        |  
| | Non-capital losses                                                 |  | -            |   |  | 8,475        |  
| | Royalty
      interests and exploration and evaluation assets      |  | 2,567        |   |  | 5,618        |  
| |                                                                    |  | 7,978        |   |  | 17,826       |  
| | Deferred tax liabilities:                                          |  |              |   |  |              |  
| | Royalty interests and
      exploration and evaluation assets      |  | (118,306     | ) |  | (127,814     | )
| | Investments at
      fair value through other comprehensive income |  | (8,051       | ) |  | -            |  
| | Other liabilities                                                  |  | (1,573       | ) |  | -            |  
| |                                                                    |  | (127,930     | ) |  | (127,814     | )
| |                                                                    |  | (119,952     | ) |  | (109,988     | )

45

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|23. | Income taxes(continued)
|--- | -----------------------

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

| |                                                                                                                    |  | 2016   |   |  | 2015   |  
| | ------------------------------------------------------------------------------------------------------------------ |  | ------ | - |  | ------ | -
| |                                                                                                                    |  | **$**  |   |  | **$**  |  
| |                                                                                                                    |  |        |   |  |        |  
| | Earnings before income taxes                                                                                       |  | 51,578 |   |  | 36,722 |  
| | Income tax provision calculated using the
      combined Canadian federal and provincial statutory income tax rate |  | 13,874 |   |  | 9,878  |  
| | Increase (decrease) in income
      taxes resulting from:                                                          |  |        |   |  |        |  
| | Dividends received from a
      taxable Canadian corporation                                                       |  | (1,326 | ) |  | (1,575 | )
| | Non-deductible
      expenses, net                                                                                 |  | 1,265  |   |  | 440    |  
| | Non-taxable portion of capital
      gains, net                                                                    |  | (2,341 | ) |  | (479   | )
| | Change in
      provincial tax rate                                                                                |  | (1,725 | ) |  | -      |  
| | Other, net                                                                                                         |  | (23    | ) |  | (70    | )
| | Total income tax expense                                                                                           |  | 9,724  |   |  | 8,194  |  

The statutory tax rate is 26.9% for
2016 and 2015. The Companys applicable tax rate is the Canadian combined rates
applicable in the jurisdictions in which the Company operates. From 2017 to
2020, the Quebec tax rate will be gradually reduced by 0.4% from the rate of
11.9% in 2016 to 11.5% in 2020.

| | (c) | The gross movement on the deferred income tax accounts is
      as follows:
| | --- | ---------------------------------------------------------------------------

| |                                         |  | 2016     |   |  | 2015     |  
| | --------------------------------------- |  | -------- | - |  | -------- | -
| |                                         |  | **$**    |   |  | **$**    |  
| |                                         |  |          |   |  |          |  
| | Balance, net - January 1                |  | (109,988 | ) |  | 10,194   |  
| | Income tax expense (Note 23 (a))        |  | (8,372   | ) |  | (8,194   | )
| | Tax recovery
      directly to equity   |  | 1,032    |   |  | 2,870    |  
| | Tax affecting retained earnings         |  | (2,537   | ) |  | -        |  
| | Investment in
      flow-through shares |  | 2,235    |   |  | 2,550    |  
| | Other comprehensive loss
      (income) |  | (2,322   | ) |  | 2,042    |  
| | Business
      combination (Note 8)     |  | -        |   |  | (119,450 | )
| | Balance, net - December 31              |  | (119,952 | ) |  | (109,988 | )

46

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|23. | Income taxes(continued)
|--- | -----------------------

| | (d) | The analysis of the deferred income tax assets and
      liabilities is as follows:
| | --- | -----------------------------------------------------------------------------------

| |                                                                                 |  | 2016     |   |  | 2015     |  
| | ------------------------------------------------------------------------------- |  | -------- | - |  | -------- | -
| |                                                                                 |  | **$**    |   |  | **$**    |  
| | Deferred tax assets:                                                            |  |          |   |  |          |  
| | Deferred income tax assets to be
      recovered after more than 12 months      |  | 4,389    |   |  | 8,684    |  
| | Deferred income
      tax assets to be recovered within 12 months               |  | 3,589    |   |  | 9,142    |  
| |                                                                                 |  | 7,978    |   |  | 17,826   |  
| | Deferred tax liabilities:                                                       |  |          |   |  |          |  
| | Deferred income tax liabilities
      to be recovered after more than 12 months |  | (124,630 | ) |  | (127,088 | )
| | Deferred income
      tax liabilities to be recovered within 12 months          |  | (3,300   | ) |  | (726     | )
| |                                                                                 |  | (127,930 | ) |  | (127,814 | )
| | Total income tax liabilities                                                    |  | (119,952 | ) |  | (109,988 | )

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

| |                                                                    |  |              |   |  |                  |   |  | Benefit from |   |  |        |   |  | Other   |   |  |              |  
| | ------------------------------------------------------------------ |  | ------------ | - |  | ---------------- | - |  | ------------ | - |  | ------ | - |  | ------- | - |  | ------------ | -
| |                                                                    |  |              |   |  |                  |   |  | flow-        |   |  |        |   |  | compre- |   |  |              |  
| |                                                                    |  | December 31, |   |  | **Statement of** |   |  | through      |   |  |        |   |  | hensive |   |  | December 31, |  
| |                                                                    |  | 2015         |   |  | income           |   |  | shares       |   |  | Equity |   |  | income  |   |  | 2016         |  
| |                                                                    |  | **$**        |   |  | **$**            |   |  | **$**        |   |  | **$**  |   |  | **$**   |   |  | **$**        |  
| | Deferred tax assets:                                               |  |              |   |  |                  |   |  |              |   |  |        |   |  |         |   |  |              |  
| | Other assets                                                       |  | 904          |   |  | 683              |   |  | -            |   |  | -      |   |  | -       |   |  | 1,587        |  
| | Non-capital
      losses                                           |  | 8,475        |   |  | (8,475           | ) |  | -            |   |  | -      |   |  | -       |   |  | -            |  
| | Royalty interests and
      exploration and evaluation assets      |  | 5,618        |   |  | (3,051           | ) |  | -            |   |  | -      |   |  | -       |   |  | 2,567        |  
| | Share and debt
      issue expenses                                |  | 2,829        |   |  | (1,192           | ) |  | -            |   |  | 2,187  |   |  | -       |   |  | 3,824        |  
| |                                                                    |  |              |   |  |                  |   |  |              |   |  |        |   |  |         |   |  |              |  
| | Deferred tax liabilities:                                          |  |              |   |  |                  |   |  |              |   |  |        |   |  |         |   |  |              |  
| | Investments at fair value
      through other comprehensive income |  | -            |   |  | (1,462           | ) |  | (1,730       | ) |  | -      |   |  | (4,859  | ) |  | (8,051       | )
| | Royalty
      interests and exploration and evaluation assets      |  | (127,814     | ) |  | 5,543            |   |  | 3,965        |   |  | -      |   |  | -       |   |  | (118,306     | )
| | Other liabilities                                                  |  | -            |   |  | (418             | ) |  | -            |   |  | (1,155 | ) |  | -       |   |  | (1,573       | )
| |                                                                    |  |              |   |  |                  |   |  |              |   |  |        |   |  |         |   |  |              |  
| |                                                                    |  | (109,988     | ) |  | (8,372           | ) |  | 2,235        |   |  | 1,032  |   |  | (4,859  | ) |  | (119,952     | )

47

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|23. | Income taxes(continued)
|--- | -----------------------

| |  | The 2015 movement for deferred tax assets and deferred
      tax liabilities may be summarized as follows:
  (continued)
| |  | ------------------------------------------------------------------------------------------------------------------------

| |                                                               |  |              |   |  |               |   |  | Benefit    |   |  |        |  |  | Other   |  |  |          |   |  |              |  
| | ------------------------------------------------------------- |  | ------------ | - |  | ------------- | - |  | ---------- | - |  | ------ |  |  | ------- |  |  | -------- | - |  | ------------ | -
| |                                                               |  |              |   |  |               |   |  | from flow- |   |  |        |  |  | compre- |  |  | Business |   |  |              |  
| |                                                               |  | December 31, |   |  | **Statement** |   |  | through    |   |  |        |  |  | hensive |  |  | combi-   |   |  | December 31, |  
| |                                                               |  | 2014         |   |  | of income     |   |  | shares     |   |  | Equity |  |  | income  |  |  | nation   |   |  | 2015         |  
| |                                                               |  | **$**        |   |  | **$**         |   |  | **$**      |   |  | **$**  |  |  | **$**   |  |  | **$**    |   |  | **$**        |  
| | Deferred tax assets:                                          |  |              |   |  |               |   |  |            |   |  |        |  |  |         |  |  |          |   |  |              |  
| | Other assets                                                  |  | 202          |   |  | 632           |   |  | -          |   |  | -      |  |  | -       |  |  | 70       |   |  | 904          |  
| | Non-capital
      losses                                      |  | -            |   |  | 1,325         |   |  | -          |   |  | -      |  |  | -       |  |  | 7,150    |   |  | 8,475        |  
| | Royalty interests and
      exploration and evaluation assets |  | 11,387       |   |  | (10,043       | ) |  | 4,274      |   |  | -      |  |  | -       |  |  | -        |   |  | 5,618        |  
| | Share and debt
      issue expenses                           |  | 45           |   |  | (1,016        | ) |  | -          |   |  | 2,870  |  |  | -       |  |  | 930      |   |  | 2,829        |  
| |                                                               |  |              |   |  |               |   |  |            |   |  |        |  |  |         |  |  |          |   |  |              |  
| | Deferred tax liabilities:                                     |  |              |   |  |               |   |  |            |   |  |        |  |  |         |  |  |          |   |  |              |  
| | Available-for-sale asset                                      |  | (1,440       | ) |  | 1,122         |   |  | (1,724     | ) |  | -      |  |  | 2,042   |  |  | -        |   |  | -            |  
| | Royalty
      interests and exploration and evaluation assets |  | -            |   |  | (214          | ) |  | -          |   |  | -      |  |  | -       |  |  | (127,600 | ) |  | (127,814     | )
| |                                                               |  | 10,194       |   |  | (8,194        | ) |  | 2,550      |   |  | 2,870  |  |  | 2,042   |  |  | 119,450  |   |  | (109,988     | )

|24. | Detail of expenses
|--- | ------------------

Operating expenses by
nature

| |                                                                    |  | 2016   |   |  | 2015   |  
| | ------------------------------------------------------------------ |  | ------ | - |  | ------ | -
| |                                                                    |  | **$**  |   |  | **$**  |  
| |                                                                    |  |        |   |  |        |  
| | Professional fees                                                  |  | 2,960  |   |  | 7,039  |  
| | Employee benefit expenses(i)(see
      below)                      |  | 15,295 |   |  | 15,714 |  
| | Depletion and depreciation                                         |  | 11,509 |   |  | 765    |  
| | Travel expenses                                                    |  | 1,174  |   |  | 1,090  |  
| | Rent and office expenses                                           |  | 1,536  |   |  | 1,431  |  
| | Communication and promotional expenses                             |  | 755    |   |  | 827    |  
| | Public company expenses                                            |  | 680    |   |  | 416    |  
| | Impairment of exploration and evaluation
      assets              |  | 668    |   |  | 192    |  
| | Loss (gain) on disposal of
      exploration and evaluation assets |  | 312    |   |  | (500   | )
| | Write-off of property and equipment                                |  | 456    |   |  | -      |  
| | Other cost recoveries from
      associates                        |  | (463   | ) |  | (120   | )
| | Recovery of tax credits                                            |  | (2,223 | ) |  | -      |  
| | Other expenses                                                     |  | 929    |   |  | 337    |  
| |                                                                    |  | 33,588 |   |  | 27,191 |  

| | (i) | Net of cost recoveries from associates of $2,576,000 in
      2016 ($1,406,000 in 2015).
| | --- | ----------------------------------------------------------------------------------------

48

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|24. | Detail of expenses(continued)
|--- | -----------------------------

Employee benefit
expenses

| |                                       |  | 2016   |   |  | 2015   |  
| | ------------------------------------- |  | ------ | - |  | ------ | -
| |                                       |  | **$**  |   |  | **$**  |  
| |                                       |  |        |   |  |        |  
| | Salaries and wages                    |  | 10,491 |   |  | 11,848 |  
| | Share-based compensation              |  | 7,380  |   |  | 5,272  |  
| | Cost
      recoveries from associates |  | (2,576 | ) |  | (1,406 | )
| |                                       |  | 15,295 |   |  | 15,714 |  

Other gains, net

| |                                                                                      |  | 2016   |  |  | 2015   |  
| | ------------------------------------------------------------------------------------ |  | ------ |  |  | ------ | -
| |                                                                                      |  | **$**  |  |  | **$**  |  
| |                                                                                      |  |        |  |  |        |  
| | Change in fair value of
      financial assets at fair value through profit and loss |  | 6,390  |  |  | (484   | )
| | Net gain on disposal of investments                                                  |  | 3,410  |  |  | 4,826  |  
| | Impairment on investments in
      associates                                        |  | -      |  |  | (1,035 | )
| | Net gain (loss) on dilution of investments in
      associates                       |  | 12,023 |  |  | (1,627 | )
| | Gain (loss) on acquisition of
      investments(i)                                   |  | 8,379  |  |  | (80    | )
| | Other                                                                                |  | -      |  |  | (1     | )
| |                                                                                      |  | 30,202 |  |  | 1,599  |  

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

|25. | Key management
|--- | --------------

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

| |                                                 |  | 2016  |   |  | 2015  |  
| | ----------------------------------------------- |  | ----- | - |  | ----- | -
| |                                                 |  |       |   |  |       |  
| |                                                 |  |       |   |  |       |  
| | Salaries and short-term
      employee benefits |  | 4,247 |   |  | 5,429 |  
| | Share-based compensation                        |  | 4,522 |   |  | 4,183 |  
| | Cost recoveries from
      associates           |  | (180  | ) |  | (90   | )
| |                                                 |  | 8,589 |   |  | 9,522 |  

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

49

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|26. | Net earnings per share
|--- | ----------------------

| |                                                                                 |  | 2016    |  |  | 2015   | 
| | ------------------------------------------------------------------------------- |  | ------- |  |  | ------ | 
| |                                                                                 |  | **$**   |  |  | **$**  | 
| |                                                                                 |  |         |  |  |        | 
| | Net earnings attributable to
      shareholders of Osisko Gold Royalties Ltd    |  | 42,113  |  |  | 28,749 | 
| |                                                                                 |  |         |  |  |        | 
| | Basic weighted average number
      of common shares outstanding (in thousands) |  | 104,671 |  |  | 87,856 | 
| | Dilutive effect of share options                                                |  | 153     |  |  | 487    | 
| | Dilutive effect
      of warrants                                               |  | -       |  |  | -      | 
| | Dilutive effect of convertible
      debenture                                  |  | -       |  |  | -      | 
| | Dilutive effect
      of shares held in escrow                                  |  | -       |  |  | 595    | 
| | Diluted weighted average number
      of common shares                          |  | 104,824 |  |  | 88,938 | 
| |                                                                                 |  |         |  |  |        | 
| | Net earnings per share                                                          |  |         |  |  |        | 
| | Basic                                                                           |  | 0.40    |  |  | 0.33   | 
| | Diluted                                                                         |  | 0.40    |  |  | 0.32   | 

|27. | Additional information on the statements of cash
      flows
|--- | ------------------------------------------------------------

| |                                                                     |  | 2016   |   |  | 2015   |  
| | ------------------------------------------------------------------- |  | ------ | - |  | ------ | -
| |                                                                     |  | **$**  |   |  | **$**  |  
| |                                                                     |  |        |   |  |        |  
| | Interests received                                                  |  | 2,699  |   |  | 4,112  |  
| | Interests paid on long-term debt                                    |  | 2,221  |   |  | -      |  
| | Dividends received                                                  |  | 6,276  |   |  | 4,295  |  
| |                                                                     |  |        |   |  |        |  
| | Adjustments - other                                                 |  |        |   |  |        |  
| | Impairment on
      investments in associates                       |  | -      |   |  | 1,035  |  
| | Impairment and loss on disposal - exploration and evaluation assets |  | 980    |   |  | (308   | )
| | Loss on disposal
      of property and equipment                    |  | 456    |   |  | -      |  
| | Other                                                               |  | 1,396  |   |  | 294    |  
| |                                                                     |  | 2,832  |   |  | 1,021  |  
| |                                                                     |  |        |   |  |        |  
| | Changes in non-cash working capital items                           |  |        |   |  |        |  
| | Decrease (increase) in accounts receivable                          |  | 1,037  |   |  | (2,559 | )
| | Decrease
      (increase) in other current assets                   |  | (565   | ) |  | 61     |  
| | Decrease in accounts payable and accrued liabilities                |  | (1,247 | ) |  | (779   | )
| |                                                                     |  | (775   | ) |  | (3,277 | )
| |                                                                     |  |        |   |  |        |  
| | Accounts receivable on disposal of
      investments                |  |        |   |  |        |  
| | Beginning of year                                                   |  | -      |   |  | -      |  
| | End of year                                                         |  | 159    |   |  | -      |  
| |                                                                     |  |        |   |  |        |  
| | Accounts payable on acquisition of
      investments                |  |        |   |  |        |  
| | Beginning of year                                                   |  | -      |   |  | -      |  
| | End of year                                                         |  | 819    |   |  | -      |  

50

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|27. | Additional information on the statements of cash flows(continued)
|--- | -----------------------------------------------------------------

| |                                                                                             |  | 2016  |  |  | 2015  |    
| | ------------------------------------------------------------------------------------------- |  | ----- |  |  | ----- | ---
| |                                                                                             |  | **$** |  |  | **$** |    
| |                                                                                             |  |       |  |  |       |    
| | Tax credits receivable
      related to exploration and evaluation assets                   |  |       |  |  |       |    
| | Beginning
      of year                                                                     |  | 2,083 |  |  | 3,674 | (i)
| | End of year                                                                                 |  | 5,162 |  |  | 2,083 |    
| |                                                                                             |  |       |  |  |       |    
| | Accounts payable and accrued
      liabilities related to exploration and evaluation assets |  |       |  |  |       |    
| | Beginning
      of year                                                                     |  | 704   |  |  | 470   | (i)
| | End of year                                                                                 |  | 276   |  |  | 704   |    
| | (i)   
      Assumed from Virginia Mines Inc. in February 2015 (Note 8).                    |  |       |  |  |       |    
| |                                                                                             |  |       |  |  |       |    
| | Accounts payable and accrued liabilities
      related to share issue expenses              |  |       |  |  |       |    
| | Beginning of year                                                                           |  | -     |  |  | 194   |    
| | End of year                                                                                 |  | -     |  |  | -     |    

The Company paid $5,000,000 in 2016 for
the acquisition of royalty interests that were included in accounts payable and
accrued liabilities as at December 31, 2015. In June 2016, the Company disposed
of an exploration and evaluation asset having a carrying value of $812,000 in
exchange for shares in a new associate having a fair value of $500,000 and
recorded a loss on disposal of $312,000 in the consolidated statement of income.

|28. | Financial risks
|--- | ---------------

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

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

| | (a) | Market risks
| | --- | ------------

| | (i) | Interest rate risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | Interest rate risk is the risk that the fair value of
      future cash flows of a financial instrument will fluctuate as a result of
      changes in market interest rates. The Companys interest rate risk is
      primarily related to cash and cash equivalents and short-term investments,
      which bear interest at fixed rates. However, as these investments come to
      maturity within a short period of time, the impact would likely be not
      significant.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | Other financial assets are not exposed to interest rate
      risk because they are non-interest bearing, except for derivative
      financial instruments (warrants) for which a 0.5% increase (decrease) in
      interest rates would have resulted in a variation of net earnings of
      approximately $26,000 in 2016 ($16,000 in 2015).                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | Financial liabilities are not exposed to interest rate
      risk because they are non-interest bearing, except for the convertible
      debenture which bears interest at a fixed rate.                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | The Company does not use derivatives to mitigate its
      exposure to interest rate risk.                                                                                                                                                                                                                                                                                                                                                                                        

51

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|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|28. | Financial risks(continued)
|--- | --------------------------

| | (a) | Market risks
(continued)
| | --- | ------------------------

| | (ii) | Foreign exchange risk                                                                                                                                                                                                                                         
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                               
| |      | The Company is exposed to foreign exchange risk arising
      from currency exposures, primarily with respect to the US
dollar.                                                                                                                               
| |      |                                                                                                                                                                                                                                                               
| |      | The Company holds balances in cash and cash equivalents
      denominated in U.S. dollars and is therefore exposed to gains or losses on
      foreign exchange. The Company does not use derivatives to mitigate its
      exposure to foreign currency risk.
| |      |                                                                                                                                                                                                                                                               
| |      | As at December 31, 2016 and 2015, the balances in US
      dollars were as follows:                                                                                                                                                                           

| |                                                   |  | December 31, | 
| | ------------------------------------------------- |  | ------------ | 
| |                                                   |  | 2016         | 
| |                                                   |  | **$**        | 
| |                                                   |  |              | 
| | Cash and cash equivalents (in
      U.S. dollars) |  | 180,963      | 
| |                                                   |  |              | 
| | Equivalent in Canadian
      dollars              |  | 242,979      | 

Based on the balances as at December
31, 2016, a 5% fluctuation in the exchange rates on that date (with all other
variables being constant) would have resulted in a variation of net earnings of
approximately $8,881,000 in 2016 ($5,249,000 in 2015).

| | (iii) | Other price risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       | The Company is exposed to equity price risk as a result
      of holding long-term investments in other mining and royalty companies.
      The equity prices of long-term investments are impacted by various
      underlying factors including commodity prices. Based on the Company's
      long-term investments held as at December 31, 2016, a 10% increase
      (decrease) in the equity prices of these investments would increase
      (decrease) net earnings by $1,944,000 ($1,825,000) and other comprehensive
      income by $9,727,000 ($9,727,000) for the year ended December 31, 2016.
      Based on the Company's long-term investments held as at December 31, 2015,
      a 10% increase (decrease) in the equity prices of these investments would
      increase (decrease) net earnings by $384,000 ($349,000) and other
      comprehensive income by $9,361,000 ($9,361,000) for the year ended
      December 31, 2015.

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

52

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|28. | Financial risks(continued)
|--- | --------------------------

| | (c) | Liquidity risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | Liquidity risk is the risk that the Company will not be
      able to meet the obligations associated with its financial liabilities.
      The Company manages the liquidity risk by continuously monitoring actual
      and projected cash flows, taking into account the requirements related to
      its investment commitments and mining properties and matching the maturity
      profile of financial assets and liabilities. The Board of Directors
      reviews and approves any material transaction out of the ordinary course
      of business, including proposals on mergers, acquisitions or other major
      investment or divestitures. The Company also manages liquidity risk
      through the management of its capital structure and financial leverage as
      outlined in Note 20. As at December 31, 2016, cash and cash equivalents
      and short-term investments (other than notes receivable) are invested in
      high interest savings accounts, bankers acceptances and guaranteed
      investment certificates issued by Canadian financial institutions. As a
      result, the Company estimates that with the projected cash flows from
      operations and the current liquidity position, it has enough funds
      available to meet its financial liabilities for the next year.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | As at December 31, 2016 and 2015, all financial
      liabilities to be settled in cash or other financial assets mature within
      90 days, except for the convertible debenture of $50.0 million which is
      repayable in February 2021 with interest payments of $2,000,000 each year
      until 2020 inclusive and $236,000 in 2021.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

|29. | Fair value of financial
  instruments
|--- | -------------------------------------

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

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

| |                                                                            |  | December 31, 2016 | 
| | -------------------------------------------------------------------------- |  | ----------------- | 
| |                                                                            |  | Level 1           | 
| |                                                                            |  | **$**             | 
| | 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                                                            |  | -                 | 
| | Other minerals, oil and gas                                                |  | -                 | 
| | Financial assets at fair value through
      other comprehensive income(i) |  |                   | 
| | Equity securities                                                          |  |                   | 
| | Publicly traded royalty
      companies                                    |  | 30,338            | 
| | Publicly traded mining
      exploration and development companies         |  |                   | 
| | Precious metals                                                            |  | 41,627            | 
| | Other minerals, oil and gas                                                |  | 25,309            | 
| |                                                                            |  | 97,274            | 

53

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|29. | Fair value of financial instruments(continued)
|--- | ----------------------------------------------

| |                                                                    |  | December 31, 2015 | 
| | ------------------------------------------------------------------ |  | ----------------- | 
| |                                                                    |  | Level 1           | 
| |                                                                    |  | **$**             | 
| |                                                                    |  |                   | 
| | 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                                                    |  | -                 | 
| |                                                                    |  |                   | 
| | Available-for-sale
      financial assets(i)                       |  |                   | 
| | Equity
      securities                                            |  |                   | 
| | Publicly traded royalty companies                                  |  | 64,818            | 
| | Publicly
      traded mining exploration and development companies |  |                   | 
| | Precious metals                                                    |  | 25,062            | 
| | Other minerals, oil and gas                                        |  | 3,727             | 
| |                                                                    |  | 93,607            | 

| | (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.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During the years ended December 31,
2016 and 2015, there were no transfers among Level 1, Level 2 and Level 3.

Financial instruments in Level 1

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

Financial instruments in Level 2

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

Financial instruments in Level 3

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

54

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|29. | Fair value of financial instruments(continued)
|--- | ----------------------------------------------

The following table presents the
changes in the Level 3 investments (warrants) for the years ended December 31,
2016 and 2015:

| |                                                                           |  | 2016   |   |  | 2015  |  
| | ------------------------------------------------------------------------- |  | ------ | - |  | ----- | -
| |                                                                           |  | **$**  |   |  | **$** |  
| |                                                                           |  |        |   |  |       |  
| | Balance  January 1                                                       |  | 1,578  |   |  | 70    |  
| | Acquisition of Virginia Mines Inc.
      (Note 8)                         |  | -      |   |  | 341   |  
| | Acquisitions                                                              |  | 3,278  |   |  | 1,650 |  
| | Exercised                                                                 |  | (311   | ) |  | -     |  
| | Change in fair value -
      investments exercised(i)                     |  | 271    |   |  | -     |  
| | Change in fair value - investments
      expired(i)                       |  | (88    | ) |  | (70   | )
| | Change in fair value -
      investments held at the end of the period(i) |  | 6,207  |   |  | (413  | )
| | Balance  December 31                                                     |  | 10,935 |   |  | 1,578 |  

| | (i) | Recognized in the consolidated statement of income under
      other gains, net.
| | --- | --------------------------------------------------------------------------------

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

| |                                             |  | December 31, 2016 | 
| | ------------------------------------------- |  | ----------------- | 
| |                                             |  |                   | 
| |                                             |  | Fair              | 
| |                                             |  | value             | 
| |                                             |  | **$**             | 
| | Other investments                           |  |                   | 
| | Warrants and call options on
      equity   |  |                   | 
| | securities of publicly traded
      mining  |  |                   | 
| | exploration and development
      companies |  | 10,935            | 

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

Financial instruments not measured
at fair value on the balance sheet

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

The following table presents the
carrying amount and the fair value of long-term debt, categorized as a Level 2,
as at December 31, 2016:

| |                |  | December 31, 2016 | 
| | -------------- |  | ----------------- | 
| |                |  | Fair              | 
| |                |  | value             | 
| |                |  | **$**             | 
| |                |  |                   | 
| | Long-term debt |  | 45,603            | 

55

---

|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|30. | 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 and
similar interests. All of the Companys assets and revenues are attributable to
this single operating segment.

For the year ended December 31, 2016,
revenues were mainly earned from the sale of precious metals received from the
in-kind royalties of the Canadian Malartic mine, the Éléonore mine, the Island
Gold mine and the Vezza mine, all located in Canada. For the year ended December
31, 2015, revenues were mainly earned from the sale of precious metals received
from the in-kind royalty of the Canadian Malartic and Éléonore mines. Geographic
revenues from the sale of precious metals received from in-kind royalties are
determined by the location of the mining operations giving rise to the royalty
interest.

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

| | Royalty interests, net |  | 2016    |  |  | 2015    | 
| | ---------------------- |  | ------- |  |  | ------- | 
| |                        |  | **$**   |  |  | **$**   | 
| |                        |  |         |  |  |         | 
| | Canada                 |  | 471,077 |  |  | 447,998 | 
| | United States          |  | 22,941  |  |  | 1,441   | 
| | Rest of the World      |  | 750     |  |  | -       | 
| |                        |  | 494,768 |  |  | 449,439 | 

|31. | Related party transactions
|--- | --------------------------

In addition to the transactions
with the associates described in Notes 15 and 16, an amount of $4,750,000 ($1,526,000 in 2015) was
invoiced by Osisko to associates for recoveries of costs related to professional
services and rental of offices, including $1,711,000 for professional services
related to capitalized exploration and evaluation activities (nil in 2015). In
2016, an amount of $231,000 (nil in 2015) was also invoiced to Osisko by an
associate for professional services and rental of offices, including $227,000
related to capitalized exploration and evaluation activities. As at December 31,
2016, an amount of $720,000 (including sales taxes) is receivable from
associates and included in accounts receivable ($1,188,000 as at December 31,
2015) and an amount of $1,000 (including sales taxes) is payable to an associate
and included in accounts payable and accrued liabilities (nil as at December 31,
2015).

In 2016, an interest revenue  of $418,000 (nil in 2015) was accounted for
and is receivable as at December 31, 2016, with regards to the $10.0 million
financing completed in May 2016 with Falco, an associate (Note 13).

During the years ended December 31,
2016 and 2015, certain directors and officers of Osisko have participated in
financings completed by certain associates. Each of these transactions were
concluded under the same terms and conditions offered to the other participants.

56

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|Osisko Gold Royalties Ltd                                                                   
|--------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                              
|For the years
      ended December 31, 2016 and 2015                                        
|(tabular amounts expressed in thousands of Canadian
      dollars, except per share amounts)

|32. | Commitments
|--- | -----------

The Company is committed to minimum
amounts under long-term lease agreements for office space, which expire at the
latest in 2019. As at December 31, 2016, minimum commitments remaining under
these leases were approximately $2,501,000 over the following years:

| |      |  | **$** | 
| | ---- |  | ----- | 
| |      |  |       | 
| | 2017 |  | 847   | 
| | 2018 |  | 802   | 
| | 2019 |  | 852   | 
| |      |  | 2,501 | 

|33. | Subsequent events
|--- | -----------------

Silver stream

On February 27, 2017, Osisko announced
that it has agreed to acquire from Gibraltar Mines Ltd. (Gibco), a
wholly-owned subsidiary of Taseko Mines Limited (Taseko), a silver stream with
reference to silver produced at the Gibraltar copper mine (Gibraltar), located
in British Columbia, Canada. Osisko will pay Taseko cash consideration of
US$33.0 million ($43.2 million) for the silver stream. In addition, Osisko will
make ongoing payments of US$2.75 ($3.60) per ounce of silver delivered.

Osisko will receive from Taseko an
amount equal to 100% of the Gibco silver production until the delivery of 5.9
million ounces of silver, which is equivalent to Tasekos 75% share of the
silver in the current proven and probable reserves, and 35% of silver production
thereafter for the life of mine. Gibraltar is the second largest open pit copper
mine in Canada and fourth largest in North America. The life of mine yearly
average production from Gibraltar is approximately 140 million pounds (lbs) of
copper and 2.6 million lbs of molybdenum. With a large reserve of 3.2 billion
lbs of recoverable copper and 58 million lbs of molybdenum, the estimated mine
life of the project is of 23 years (proven and probable reserves as of January
1, 2016). The acquisition is expected to increase Osiskos production by
approximately 200,000 ounces of silver for the next 14 years, increasing to an
average of 350,000 ounces of silver for the remainder of the 23-year reserve
life of Gibraltar. Any
silver in respect of which a delivery is made after January 1, 2017, is subject
to the stream.

Dividends

On March 15, 2017, the Board of
Directors declared a quarterly dividend of $0.04 per common share payable on
April 17, 2017 to shareholders of record as of the close of business on March
31, 2017.

57

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