Exhibit 4.9

 



 

OSISKO MINING CORPORATION

 




 

Unaudited Condensed Interim

Consolidated Financial Statements

 

For the three months

ended

March 31, 2014

 











 

Osisko Mining Corporation

Consolidated Balance Sheets

(Unaudited)

(tabular amounts expressed in thousands of Canadian dollars)

 

	
 
    	
 
    	
 
    	
 
    	
March 31,
    	
 
    	
December 31,
    	
 
    
	
 
    	
 
    	
Notes
    	
 
    	
2014
    	
 
    	
2013
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    
	
Assets
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Current assets
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Cash and cash equivalents
    	
 
    	
 
    	
 
    	
209,028
    	
 
    	
161,405
    	
 
    
	
Restricted cash
    	
 
    	
 
    	
 
    	
560
    	
 
    	
560
    	
 
    
	
Accounts receivable
    	
 
    	
 
    	
 
    	
26,368
    	
 
    	
24,552
    	
 
    
	
Inventories
    	
 
    	
5
    	
 
    	
72,203
    	
 
    	
79,247
    	
 
    
	
Prepaid expenses and other assets
    	
 
    	
 
    	
 
    	
25,419
    	
 
    	
24,260
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
333,578
    	
 
    	
290,024
    	
 
    
	
Non-current assets
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Restricted cash
    	
 
    	
 
    	
 
    	
48,490
    	
 
    	
48,490
    	
 
    
	
Investments in associates
    	
 
    	
 
    	
 
    	
3,251
    	
 
    	
3,557
    	
 
    
	
Other investments
    	
 
    	
 
    	
 
    	
9,834
    	
 
    	
8,998
    	
 
    
	
Property, plant and equipment
    	
 
    	
6
    	
 
    	
1,871,232
    	
 
    	
1,870,932
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
2,266,385
    	
 
    	
2,222,001
    	
 
    
	
Liabilities
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Current liabilities
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Accounts payable and accrued liabilities
    	
 
    	
 
    	
 
    	
72,515
    	
 
    	
78,967
    	
 
    
	
Current portion of long-term debt
    	
 
    	
7
    	
 
    	
75,554
    	
 
    	
71,794
    	
 
    
	
Provisions and other liabilities
    	
 
    	
8
    	
 
    	
7,100
    	
 
    	
6,913
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
155,169
    	
 
    	
157,674
    	
 
    
	
Non-current liabilities
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Long-term debt
    	
 
    	
7
    	
 
    	
235,492
    	
 
    	
245,157
    	
 
    
	
Provisions and other liabilities
    	
 
    	
8
    	
 
    	
21,668
    	
 
    	
18,499
    	
 
    
	
Deferred income and mining taxes
    	
 
    	
 
    	
 
    	
92,812
    	
 
    	
69,603
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
505,141
    	
 
    	
490,933
    	
 
    
	
Equity attributable to Osisko   Mining Corporation shareholders
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Share capital
    	
 
    	
 
    	
 
    	
2,064,857
    	
 
    	
2,060,810
    	
 
    
	
Warrants
    	
 
    	
 
    	
 
    	
20,575
    	
 
    	
20,575
    	
 
    
	
Contributed surplus
    	
 
    	
 
    	
 
    	
76,865
    	
 
    	
75,626
    	
 
    
	
Equity component of convertible debentures
    	
 
    	
 
    	
 
    	
8,005
    	
 
    	
8,005
    	
 
    
	
Accumulated other comprehensive income
    	
 
    	
 
    	
 
    	
665
    	
 
    	
16
    	
 
    
	
Deficit
    	
 
    	
 
    	
 
    	
(409,723
    	
)
    	
(433,964
    	
)
    
	
 
    	
 
    	
 
    	
 
    	
1,761,244
    	
 
    	
1,731,068
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
2,266,385
    	
 
    	
2,222,001
    	
 
    


 

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

 

2











 

Osisko Mining Corporation

Consolidated Statements of Income

For the three months ended March 31, 2014 and 2013

(Unaudited)

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

 

	
 
    	
 
    	
2014
    	
 
    	
2013
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Revenues
    	
 
    	
212,131
    	
 
    	
159,381
    	
 
    
	
Mine operating costs
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Production costs
    	
 
    	
(96,586
    	
)
    	
(81,422
    	
)
    
	
Royalties
    	
 
    	
(2,729
    	
)
    	
(1,992
    	
)
    
	
Depreciation
    	
 
    	
(35,205
    	
)
    	
(20,982
    	
)
    
	
Earnings from mine operations
    	
 
    	
77,611
    	
 
    	
54,985
    	
 
    
	
General and administrative expenses
    	
 
    	
(18,668
    	
)
    	
(7,387
    	
)
    
	
Exploration and evaluation expenses
    	
 
    	
(2,568
    	
)
    	
(3,079
    	
)
    
	
Write-off of property, plant and equipment
    	
 
    	
(2,220
    	
)
    	
(2,024
    	
)
    
	
Earnings from operations
    	
 
    	
54,155
    	
 
    	
42,495
    	
 
    
	
Interest income
    	
 
    	
692
    	
 
    	
458
    	
 
    
	
Finance costs
    	
 
    	
(6,249
    	
)
    	
(7,891
    	
)
    
	
Foreign exchange loss
    	
 
    	
(2,949
    	
)
    	
(2,281
    	
)
    
	
Share of loss of associates
    	
 
    	
(306
    	
)
    	
(121
    	
)
    
	
Other gains (losses)
    	
 
    	
2,107
    	
 
    	
(1,979
    	
)
    
	
Earnings before income and mining   taxes
    	
 
    	
47,450
    	
 
    	
30,681
    	
 
    
	
Income and mining tax expense
    	
 
    	
(23,209
    	
)
    	
(13,265
    	
)
    
	
Net earnings
    	
 
    	
24,241
    	
 
    	
17,416
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Net earnings per share
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Basic
    	
 
    	
0.06
    	
 
    	
0.04
    	
 
    
	
Diluted
    	
 
    	
0.05
    	
 
    	
0.04
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Weighted average number of common   shares outstanding
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(in thousands)
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Basic
    	
 
    	
439,546
    	
 
    	
436,502
    	
 
    
	
Diluted
    	
 
    	
441,906
    	
 
    	
436,943
    	
 
    


 

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

 

3











 

Osisko Mining Corporation

Consolidated Statements of Comprehensive Income

For the three months ended March 31, 2014 and 2013

(Unaudited)

(tabular amounts expressed in thousands of Canadian dollars)

 

	
 
    	
 
    	
2014
    	
 
    	
2013
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Net earnings
    	
 
    	
24,241
    	
 
    	
17,416
    	
 
    
	
Other comprehensive income   (loss):
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Changes in fair value of available-for-sale   financial assets
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Unrealized gain (loss)
    	
 
    	
649
    	
 
    	
(2,588
    	
)
    
	
Other comprehensive income (loss)
    	
 
    	
649
    	
 
    	
(2,588
    	
)
    
	
Comprehensive income
    	
 
    	
24,890
    	
 
    	
14,828
    	
 
    


 

Other comprehensive income (loss) is composed solely of items that may be reclassified subsequently to net earnings. Comprehensive income is solely attributable to Osisko Mining Corporation shareholders.

 

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

 

4











 

Osisko Mining Corporation

Consolidated Statements of Cash Flows

For the three months ended March 31, 2014 and 2013

(Unaudited)

(tabular amounts expressed in thousands of Canadian dollars)

 

	
 
    	
 
    	
Notes
    	
 
    	
2014
    	
 
    	
2013
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Operating activities
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Net earnings
    	
 
    	
 
    	
 
    	
24,241
    	
 
    	
17,416
    	
 
    
	
Adjustments for :
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Interest Income
    	
 
    	
 
    	
 
    	
(692
    	
)
    	
(458
    	
)
    
	
Share-based compensation
    	
 
    	
 
    	
 
    	
1,654
    	
 
    	
1,796
    	
 
    
	
Depreciation
    	
 
    	
 
    	
 
    	
35,455
    	
 
    	
21,199
    	
 
    
	
Finance costs
    	
 
    	
 
    	
 
    	
6,249
    	
 
    	
7,891
    	
 
    
	
Write-off of property, plant and equipment
    	
 
    	
 
    	
 
    	
2,220
    	
 
    	
2,024
    	
 
    
	
Unrealized foreign exchange loss
    	
 
    	
 
    	
 
    	
3,180
    	
 
    	
1,962
    	
 
    
	
Deferred gain - premium on flow-through shares
    	
 
    	
 
    	
 
    	
(2,061
    	
)
    	
—
    	
 
    
	
Provisions and other liabilities, net of   settlements
    	
 
    	
 
    	
 
    	
4,367
    	
 
    	
(114
    	
)
    
	
Income and mining tax expense
    	
 
    	
 
    	
 
    	
23,209
    	
 
    	
13,265
    	
 
    
	
Other non-cash items
    	
 
    	
11
    	
 
    	
142
    	
 
    	
2,091
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
97,964
    	
 
    	
67,072
    	
 
    
	
Change in non-cash working capital items
    	
 
    	
11
    	
 
    	
(6,097
    	
)
    	
(4,594
    	
)
    
	
Net cash flows provided by operating activities
    	
 
    	
 
    	
 
    	
91,867
    	
 
    	
62,478
    	
 
    
	
Investing activities
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Net decrease in short-term investments
    	
 
    	
 
    	
 
    	
—
    	
 
    	
19,357
    	
 
    
	
Net decrease in restricted cash
    	
 
    	
 
    	
 
    	
—
    	
 
    	
4,005
    	
 
    
	
Proceeds on disposal of investments
    	
 
    	
 
    	
 
    	
50
    	
 
    	
—
    	
 
    
	
Property, plant and equipment, net of government   credits
    	
 
    	
 
    	
 
    	
(32,894
    	
)
    	
(65,698
    	
)
    
	
Proceeds on disposal of property, plant and   equipment
    	
 
    	
 
    	
 
    	
97
    	
 
    	
15
    	
 
    
	
Interest received
    	
 
    	
 
    	
 
    	
672
    	
 
    	
388
    	
 
    
	
Net cash flows used in investing activities
    	
 
    	
 
    	
 
    	
(32,075
    	
)
    	
(41,933
    	
)
    
	
Financing activities
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Long-term debt repayments
    	
 
    	
 
    	
 
    	
(3,083
    	
)
    	
(2,471
    	
)
    
	
Finance lease payments
    	
 
    	
 
    	
 
    	
(7,215
    	
)
    	
(6,142
    	
)
    
	
Issuance of common shares, net of expenses
    	
 
    	
 
    	
 
    	
2,931
    	
 
    	
608
    	
 
    
	
Interest paid
    	
 
    	
 
    	
 
    	
(4,802
    	
)
    	
(5,411
    	
)
    
	
Net cash flows used in financing activities
    	
 
    	
 
    	
 
    	
(12,169
    	
)
    	
(13,416
    	
)
    
	
Increase in cash and cash   equivalents
    	
 
    	
 
    	
 
    	
47,623
    	
 
    	
7,129
    	
 
    
	
Cash and cash equivalents -   beginning of period
    	
 
    	
 
    	
 
    	
161,405
    	
 
    	
93,229
    	
 
    
	
Cash and cash equivalents - end   of period
    	
 
    	
 
    	
 
    	
209,028
    	
 
    	
100,358
    	
 
    


 

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

 

5










 

Osisko Mining Corporation

Consolidated Statements of Changes in Equity

For the three months ended March 31, 2014 and 2013

(Unaudited)

(tabular amounts expressed in thousands of Canadian dollars)

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Equity attributed to Osisko Mining Corporation shareholders
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Number of
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Equity
    	
 
    	
Accumulated
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
common
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
component of
    	
 
    	
other
    	
 
    	
Retained
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
shares
    	
 
    	
Share
    	
 
    	
 
    	
 
    	
Contributed
    	
 
    	
convertible
    	
 
    	
comprehensive
    	
 
    	
earnings
    	
 
    	
Total
    	
 
    
	
 
    	
 
    	
Notes
    	
 
    	
outstanding
    	
 
    	
capital
    	
 
    	
Warrants
    	
 
    	
surplus
    	
 
    	
debentures
    	
 
    	
income (loss)(i)
    	
 
    	
(deficit)
    	
 
    	
equity
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    
	
Balance - January 1, 2014
    	
 
    	
 
    	
 
    	
439,224,699
    	
 
    	
2,060,810
    	
 
    	
20,575
    	
 
    	
75,626
    	
 
    	
8,005
    	
 
    	
16
    	
 
    	
(433,964
    	
)
    	
1,731,068
    	
 
    
	
Net earnings for the period
    	
 
    	
 
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
24,241
    	
 
    	
24,241
    	
 
    
	
Other comprehensive income, net of taxes
    	
 
    	
 
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
649
    	
 
    	
—
    	
 
    	
649
    	
 
    
	
Comprehensive income for the period
    	
 
    	
 
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
649
    	
 
    	
24,241
    	
 
    	
24,890
    	
 
    
	
Share options:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Share-based compensation
    	
 
    	
 
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
1,991
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
1,991
    	
 
    
	
Fair value of options exercised
    	
 
    	
 
    	
 
    	
—
    	
 
    	
752
    	
 
    	
—
    	
 
    	
(752
    	
)
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
Proceeds from exercise of options
    	
 
    	
 
    	
 
    	
377,365
    	
 
    	
2,322
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
2,322
    	
 
    
	
Employee share purchase plan
    	
 
    	
 
    	
 
    	
211,219
    	
 
    	
973
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
973
    	
 
    
	
Balance - March 31, 2014
    	
 
    	
 
    	
 
    	
439,813,283
    	
 
    	
2,064,857
    	
 
    	
20,575
    	
 
    	
76,865
    	
 
    	
8,005
    	
 
    	
665
    	
 
    	
(409,723
    	
)
    	
1,761,244
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Balance - January 1, 2013
    	
 
    	
 
    	
 
    	
436,394,662
    	
 
    	
2,048,843
    	
 
    	
19,311
    	
 
    	
65,868
    	
 
    	
8,005
    	
 
    	
(1,148
    	
)
    	
21,139
    	
 
    	
2,162,018
    	
 
    
	
Net earnings for the period
    	
 
    	
 
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
17,416
    	
 
    	
17,416
    	
 
    
	
Other comprehensive loss, net of taxes
    	
 
    	
 
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
(2,588
    	
)
    	
—
    	
 
    	
(2,588
    	
)
    
	
Comprehensive income for the period
    	
 
    	
 
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
(2,588
    	
)
    	
17,416
    	
 
    	
14,828
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Share options:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Share-based compensation
    	
 
    	
 
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
2,209
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
2,209
    	
 
    
	
Employee share purchase plan
    	
 
    	
 
    	
 
    	
125,636
    	
 
    	
974
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
974
    	
 
    
	
Property payments
    	
 
    	
 
    	
 
    	
6,000
    	
 
    	
35
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
35
    	
 
    
	
Balance - March 31, 2013
    	
 
    	
 
    	
 
    	
436,526,298
    	
 
    	
2,049,852
    	
 
    	
19,311
    	
 
    	
68,077
    	
 
    	
8,005
    	
 
    	
(3,736
    	
)
    	
38,555
    	
 
    	
2,180,064
    	
 
    


 




(i)   Accumulated other comprehensive income (loss) relates solely to available-for-sale investments.

 

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

 

6









 

Osisko Mining Corporation

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2014 and 2013

(Unaudited)

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

 

1.              Nature of activities

 

Osisko Mining Corporation and its subsidiaries (together “Osisko” or the “Company”) are engaged in the business of acquiring, exploring, developing and operating gold properties, with interests substantially in Canada. Osisko is a public company traded on the TSX and on the Deutsche Börse and is incorporated and domiciled in Canada. The address of its registered office is 1100, avenue des Canadiens-de-Montréal, Suite 300, Montréal, Québec.

 

The Company operates the Canadian Malartic mine in the Abitibi Gold Belt, immediately south of the Town of Malartic in the Province of Québec, and conducts advance exploration activities in Canada and in other regions in the Americas.

 

2.              Basis of presentation

 

These condensed interim consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial statements, including International Accounting Standard (“IAS”) 34, Interim Financial Reporting. The condensed interim consolidated financial statements should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2013, which have been prepared in accordance with IFRS as issued by the IASB. The accounting policies, methods of computation and presentation applied in these condensed interim consolidated financial statements are consistent with those of the previous financial year, except for the changes in accounting policies presented in Note 3. The Board of Directors has approved the consolidated financial statements on May 14, 2014.

 

3.              Changes in accounting policies

 

The Company has adopted the following new standard, effective January 1, 2014. This change was made in accordance with the applicable transitional provision.

 

IFRIC 21, Levies (“IFRIC 21”)

 

In May 2013, the IASB issued International Financial Reporting Interpretations Committee (IFRIC) 21, Levies. IFRIC 21 is effective for annual periods beginning on or after January 1, 2014 and is to be applied retrospectively. IFRIC 21 provides guidance on accounting for levies in accordance with IAS 37, Provisions, Contingent Liabilities and Contingent Assets. The interpretation defines a levy as an outflow from an entity imposed by a government in accordance with legislation and confirms that an entity recognizes a liability for a levy only when the triggering event specified in the legislation occurs. The adoption of IFRIC 21 did not affect the Company.

 

4.              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.

 

In preparing these condensed interim consolidated financial statements, the significant judgements made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the annual consolidated financial statements for the year ended December 31, 2013.

 

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.

 

7











 

Osisko Mining Corporation

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2014 and 2013

(Unaudited)

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

 

5.              Inventories

 

	
 
    	
 
    	
March 31,
    	
 
    	
December 31,
    	
 
    
	
 
    	
 
    	
2014
    	
 
    	
2013
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    
	
Finished products
    	
 
    	
10,854
    	
 
    	
16,063
    	
 
    
	
Work-in-process
    	
 
    	
8,767
    	
 
    	
11,611
    	
 
    
	
Stockpiles
    	
 
    	
11,089
    	
 
    	
10,974
    	
 
    
	
Mine supplies
    	
 
    	
41,493
    	
 
    	
40,599
    	
 
    
	
 
    	
 
    	
72,203
    	
 
    	
79,247
    	
 
    


 

6.              Property, plant and equipment

 

	
 
    	
 
    	
Exploration
    	
 
    	
Producing
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
and evaluation
    	
 
    	
assets
    	
 
    	
Total
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    
	
Balance - January 1, 2013
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Cost
    	
 
    	
904,367
    	
 
    	
1,559,465
    	
 
    	
2,463,832
    	
 
    
	
Accumulated depreciation
    	
 
    	
(3,156
    	
)
    	
(108,130
    	
)
    	
(111,286
    	
)
    
	
Net book value
    	
 
    	
901,211
    	
 
    	
1,451,335
    	
 
    	
2,352,546
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Year ended December 31, 2013
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Opening net book value
    	
 
    	
901,211
    	
 
    	
1,451,335
    	
 
    	
2,352,546
    	
 
    
	
Additions, net of government credits
    	
 
    	
42,008
    	
 
    	
145,850
    	
 
    	
187,858
    	
 
    
	
Environmental restoration obligations
    	
 
    	
(174
    	
)
    	
(618
    	
)
    	
(792
    	
)
    
	
Share-based compensation capitalized
    	
 
    	
1,251
    	
 
    	
572
    	
 
    	
1,823
    	
 
    
	
Depreciation
    	
 
    	
(700
    	
)
    	
(120,574
    	
)
    	
(121,274
    	
)
    
	
Depreciation capitalized
    	
 
    	
583
    	
 
    	
—
    	
 
    	
583
    	
 
    
	
Dispositions
    	
 
    	
(135
    	
)
    	
(839
    	
)
    	
(974
    	
)
    
	
Transfers
    	
 
    	
(125
    	
)
    	
125
    	
 
    	
—
    	
 
    
	
Impairment
    	
 
    	
(530,878
    	
)
    	
—
    	
 
    	
(530,878
    	
)
    
	
Write-offs
    	
 
    	
(17,960
    	
)
    	
—
    	
 
    	
(17,960
    	
)
    
	
Closing net book value
    	
 
    	
395,081
    	
 
    	
1,475,851
    	
 
    	
1,870,932
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Balance - December 31, 2013
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Cost
    	
 
    	
929,360
    	
 
    	
1,690,195
    	
 
    	
2,619,555
    	
 
    
	
Accumulated depreciation
    	
 
    	
(3,401
    	
)
    	
(214,344
    	
)
    	
(217,745
    	
)
    
	
Accumulated impairment
    	
 
    	
(530,878
    	
)
    	
—
    	
 
    	
(530,878
    	
)
    
	
Net book value
    	
 
    	
395,081
    	
 
    	
1,475,851
    	
 
    	
1,870,932
    	
 
    


 

8











 

Osisko Mining Corporation

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2014 and 2013

(Unaudited)

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

 

6.              Property, plant and equipment (continued)

 

	
 
    	
 
    	
Exploration
    	
 
    	
Producing
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
and evaluation
    	
 
    	
assets
    	
 
    	
Total
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    
	
Three months ended March 31, 2014
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Opening net book value
    	
 
    	
395,081
    	
 
    	
1,475,851
    	
 
    	
1,870,932
    	
 
    
	
Additions, net of government credits
    	
 
    	
7,783
    	
 
    	
28,215
    	
 
    	
35,998
    	
 
    
	
Share-based compensation capitalized
    	
 
    	
607
    	
 
    	
426
    	
 
    	
1,033
    	
 
    
	
Depreciation
    	
 
    	
(52
    	
)
    	
(34,289
    	
)
    	
(34,341
    	
)
    
	
Dispositions
    	
 
    	
—
    	
 
    	
(170
    	
)
    	
(170
    	
)
    
	
Write-offs
    	
 
    	
(2,220
    	
)
    	
—
    	
 
    	
(2,220
    	
)
    
	
Closing net book value
    	
 
    	
401,199
    	
 
    	
1,470,033
    	
 
    	
1,871,232
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Balance - March 31, 2014
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Cost
    	
 
    	
935,530
    	
 
    	
1,715,233
    	
 
    	
2,650,763
    	
 
    
	
Accumulated depreciation
    	
 
    	
(3,453
    	
)
    	
(245,200
    	
)
    	
(248,653
    	
)
    
	
Accumulated impairment
    	
 
    	
(530,878
    	
)
    	
—
    	
 
    	
(530,878
    	
)
    
	
Net book value
    	
 
    	
401,199
    	
 
    	
1,470,033
    	
 
    	
1,871,232
    	
 
    


 

7.              Long-term debt

 

	
 
    	
 
    	
Three months ended
    	
 
    	
Year ended
    	
 
    
	
 
    	
 
    	
March 31,
    	
 
    	
December 31,
    	
 
    
	
 
    	
 
    	
2014
    	
 
    	
2013
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Balance - January 1
    	
 
    	
316,951
    	
 
    	
337,412
    	
 
    
	
Transaction costs - loans
    	
 
    	
—
    	
 
    	
(5,910
    	
)
    
	
New debt - obligations under finance lease
    	
 
    	
—
    	
 
    	
11,736
    	
 
    
	
Transaction costs - obligations under finance   lease
    	
 
    	
—
    	
 
    	
(113
    	
)
    
	
Repayment of debt - loans
    	
 
    	
(3,083
    	
)
    	
(11,715
    	
)
    
	
Repayment of debt - obligations under finance   lease
    	
 
    	
(7,215
    	
)
    	
(27,448
    	
)
    
	
Accretion expense
    	
 
    	
249
    	
 
    	
2,489
    	
 
    
	
Amortization of transaction costs
    	
 
    	
942
    	
 
    	
4,251
    	
 
    
	
Foreign exchange revaluation impact
    	
 
    	
3,202
    	
 
    	
6,249
    	
 
    
	
Balance - end of period
    	
 
    	
311,046
    	
 
    	
316,951
    	
 
    


 

9











 

Osisko Mining Corporation

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2014 and 2013

(Unaudited)

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

 

7.              Long-term debt (continued)

 

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

 

	
 
    	
 
    	
March 31,
    	
 
    	
December 31,
    	
 
    
	
 
    	
 
    	
2014
    	
 
    	
2013
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Loans
    	
 
    	
161,520
    	
 
    	
164,603
    	
 
    
	
Convertible debentures
    	
 
    	
75,000
    	
 
    	
75,000
    	
 
    
	
Obligations under finance lease
    	
 
    	
85,526
    	
 
    	
89,539
    	
 
    
	
Long-term debt
    	
 
    	
322,046
    	
 
    	
329,142
    	
 
    
	
Debt issuance costs
    	
 
    	
(8,194
    	
)
    	
(9,136
    	
)
    
	
Unamortized accretion on loan and convertible   debentures
    	
 
    	
(2,806
    	
)
    	
(3,055
    	
)
    
	
Long-term debt, net of issuance costs
    	
 
    	
311,046
    	
 
    	
316,951
    	
 
    
	
Current portion
    	
 
    	
75,554
    	
 
    	
71,794
    	
 
    
	
Non-current portion
    	
 
    	
235,492
    	
 
    	
245,157
    	
 
    
	
 
    	
 
    	
311,046
    	
 
    	
316,951
    	
 
    


 

As at March 31, 2014, the repayment schedule of the long-term debt is as follows:

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Obligations
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Convertible
    	
 
    	
under
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Loans
    	
 
    	
debentures
    	
 
    	
finance lease
    	
 
    	
Total
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    
	
2014 (9 months)
    	
 
    	
39,244
    	
 
    	
—
    	
 
    	
25,416
    	
 
    	
64,660
    	
 
    
	
2015
    	
 
    	
42,276
    	
 
    	
—
    	
 
    	
38,929
    	
 
    	
81,205
    	
 
    
	
2016
    	
 
    	
40,000
    	
 
    	
—
    	
 
    	
18,986
    	
 
    	
58,986
    	
 
    
	
2017
    	
 
    	
40,000
    	
 
    	
75,000
    	
 
    	
4,918
    	
 
    	
119,918
    	
 
    
	
2018
    	
 
    	
—
    	
 
    	
—
    	
 
    	
2,410
    	
 
    	
2,410
    	
 
    
	
2019
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
161,520
    	
 
    	
75,000
    	
 
    	
90,659
    	
 
    	
327,179
    	
 
    
	
Less: imputed interest
    	
 
    	
—
    	
 
    	
—
    	
 
    	
(5,133
    	
)
    	
(5,133
    	
)
    
	
 
    	
 
    	
161,520
    	
 
    	
75,000
    	
 
    	
85,526
    	
 
    	
322,046
    	
 
    


 

10









 

Osisko Mining Corporation

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2014 and 2013

(Unaudited)

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

 

8.              Provisions and other liabilities

 

	
 
    	
 
    	
Three months ended
    	
 
    	
Year ended
    	
 
    
	
 
    	
 
    	
March 31, 2014
    	
 
    	
December 31, 2013
    	
 
    
	
 
    	
 
    	
Environ.
    	
 
    	
DSU
    	
 
    	
Deferred
    	
 
    	
 
    	
 
    	
Environ.
    	
 
    	
DSU
    	
 
    	
Deferred
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
restoration
    	
 
    	
and
    	
 
    	
premium
    	
 
    	
 
    	
 
    	
restoration
    	
 
    	
and
    	
 
    	
premium
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
obligations(i)
    	
 
    	
RSU(ii)
    	
 
    	
on FTS
    	
 
    	
Total
    	
 
    	
obligations
    	
 
    	
RSU
    	
 
    	
on FTS
    	
 
    	
Total
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    
	
Balance - January 1
    	
 
    	
16,112
    	
 
    	
6,629
    	
 
    	
2,671
    	
 
    	
25,412
    	
 
    	
15,898
    	
 
    	
4,125
    	
 
    	
—
    	
 
    	
20,023
    	
 
    
	
Accretion expense
    	
 
    	
290
    	
 
    	
—
    	
 
    	
—
    	
 
    	
290
    	
 
    	
1,086
    	
 
    	
—
    	
 
    	
—
    	
 
    	
1,086
    	
 
    
	
New liabilities
    	
 
    	
—
    	
 
    	
1,859
    	
 
    	
—
    	
 
    	
1,859
    	
 
    	
721
    	
 
    	
6,256
    	
 
    	
—
    	
 
    	
6,977
    	
 
    
	
Revision of estimates
    	
 
    	
79
    	
 
    	
3,255
    	
 
    	
—
    	
 
    	
3,334
    	
 
    	
(1,593
    	
)
    	
(3,677
    	
)
    	
—
    	
 
    	
(5,270
    	
)
    
	
Liabilities settlement
    	
 
    	
(66
    	
)
    	
—
    	
 
    	
—
    	
 
    	
(66
    	
)
    	
—
    	
 
    	
(75
    	
)
    	
—
    	
 
    	
(75
    	
)
    
	
Issue of flow-through shares (“FTS”)
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
3,116
    	
 
    	
3,116
    	
 
    
	
Recognition of deferred premium on FTS
    	
 
    	
—
    	
 
    	
—
    	
 
    	
(2,061
    	
)
    	
(2,061
    	
)
    	
—
    	
 
    	
—
    	
 
    	
(445
    	
)
    	
(445
    	
)
    
	
Balance - end of period
    	
 
    	
16,415
    	
 
    	
11,743
    	
 
    	
610
    	
 
    	
28,768
    	
 
    	
16,112
    	
 
    	
6,629
    	
 
    	
2,671
    	
 
    	
25,412
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Current portion
    	
 
    	
641
    	
 
    	
5,849
    	
 
    	
610
    	
 
    	
7,100
    	
 
    	
702
    	
 
    	
3,540
    	
 
    	
2,671
    	
 
    	
6,913
    	
 
    
	
Non-current portion
    	
 
    	
15,774
    	
 
    	
5,894
    	
 
    	
—
    	
 
    	
21,668
    	
 
    	
15,410
    	
 
    	
3,089
    	
 
    	
—
    	
 
    	
18,499
    	
 
    
	
 
    	
 
    	
16,415
    	
 
    	
11,743
    	
 
    	
610
    	
 
    	
28,768
    	
 
    	
16,112
    	
 
    	
6,629
    	
 
    	
2,671
    	
 
    	
25,412
    	
 
    


 




(i)             The environmental restoration obligations represent the legal and contractual obligations associated with the eventual closure of the Company’s mining assets. As at March 31, 2014, the estimated inflation-adjusted undiscounted cash flows required to settle the environmental restoration obligations amounts to $30,960,000. The weighted average actualization rate used is 7.26% and the disbursements are expected to be made between June 2014 and December 2026 as per the closure plans.

 

(ii)          There were no restricted shares units (“RSU”) and no deferred shares units (“DSU”) granted, forfeited, cancelled or exercised during the three months ended March 31, 2014.

 

11











 

Osisko Mining Corporation

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2014 and 2013

(Unaudited)

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

 

9.              Share-based compensation

 

Share options

 

The following table summarizes information about the Company’s share options outstanding:

 

	
 
    	
 
    	
Three months ended
    	
 
    	
Year ended
    	
 
    
	
 
    	
 
    	
March 31, 2014
    	
 
    	
December 31, 2013
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Weighted
    	
 
    	
 
    	
 
    	
Weighted
    	
 
    
	
 
    	
 
    	
Number of
    	
 
    	
average
    	
 
    	
Number of
    	
 
    	
average
    	
 
    
	
 
    	
 
    	
options
    	
 
    	
exercise price
    	
 
    	
options
    	
 
    	
exercise price
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
$
    	
 
    
	
Balance - January 1
    	
 
    	
21,168,680
    	
 
    	
8.43
    	
 
    	
19,061,259
    	
 
    	
9.37
    	
 
    
	
Granted
    	
 
    	
—
    	
 
    	
—
    	
 
    	
5,671,200
    	
 
    	
4.52
    	
 
    
	
Exercised
    	
 
    	
(377,365
    	
)
    	
6.15
    	
 
    	
(668,634
    	
)
    	
2.58
    	
 
    
	
Forfeited
    	
 
    	
(220,100
    	
)
    	
9.66
    	
 
    	
(2,895,145
    	
)
    	
8.25
    	
 
    
	
Expired
    	
 
    	
(372,975
    	
)
    	
7.80
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
Balance - end of period
    	
 
    	
20,198,240
    	
 
    	
8.47
    	
 
    	
21,168,680
    	
 
    	
8.43
    	
 
    
	
Options exercisable - end of period
    	
 
    	
11,837,363
    	
 
    	
10.01
    	
 
    	
12,782,803
    	
 
    	
9.84
    	
 
    


 

10.       Key management

 

Key management includes directors (executive and non-executive) and senior executives.

 

The compensation paid or payable to key management for employee services is presented below:

 

	
 
    	
 
    	
2014
    	
 
    	
2013
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    
	
Salaries and short-term employee benefits
    	
 
    	
1,420
    	
 
    	
869
    	
 
    
	
Share-based compensation
    	
 
    	
4,687
    	
 
    	
784
    	
 
    
	
 
    	
 
    	
6,107
    	
 
    	
1,653
    	
 
    


 

In case of a change of control, key management would be entitled to receive termination payments estimated at $31,926,000.

 

12











 

Osisko Mining Corporation

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2014 and 2013

(Unaudited)

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

 

11.       Cash flow information

 

	
 
    	
 
    	
2014
    	
 
    	
2013
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    
	
Other non-cash items
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Loss on disposal of property, plant and equipment
    	
 
    	
73
    	
 
    	
45
    	
 
    
	
Share of loss of associates
    	
 
    	
306
    	
 
    	
121
    	
 
    
	
Net loss (gain) on sale of available-for-sale   financial assets
    	
 
    	
(239
    	
)
    	
991
    	
 
    
	
Net loss on financial assets at fair value through   profit and loss
    	
 
    	
2
    	
 
    	
1,073
    	
 
    
	
Other
    	
 
    	
—
    	
 
    	
(139
    	
)
    
	
 
    	
 
    	
142
    	
 
    	
2,091
    	
 
    
	
Changes in non-cash working capital items
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Increase in accounts receivable
    	
 
    	
(1,341
    	
)
    	
(456
    	
)
    
	
Decrease (increase) in inventories
    	
 
    	
5,917
    	
 
    	
(8,057
    	
)
    
	
Increase in prepaid expenses and other current   assets
    	
 
    	
(3,087
    	
)
    	
(4,836
    	
)
    
	
Increase (decrease) in accounts payable and   accrued liabilities
    	
 
    	
(7,586
    	
)
    	
8,755
    	
 
    
	
 
    	
 
    	
(6,097
    	
)
    	
(4,594
    	
)
    


 

12.       Fair value of financial instruments

 

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

 

Level 1— Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2— Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and

Level 3— Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

 

	
 
    	
 
    	
March 31, 2014
    	
 
    
	
 
    	
 
    	
Level 1
    	
 
    	
Level 2
    	
 
    	
Level 3
    	
 
    	
Total
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    
	
Recurring measurements
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Available-for-sale financial   assets(i)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Equity securities (shares)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Publicly traded gold mining exploration companies
    	
 
    	
9,834
    	
 
    	
—
    	
 
    	
—
    	
 
    	
9,834
    	
 
    
	
 
    	
 
    	
9,834
    	
 
    	
—
    	
 
    	
—
    	
 
    	
9,834
    	
 
    


 

13











 

Osisko Mining Corporation

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2014 and 2013

(Unaudited)

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

 

12. Fair value of financial instruments (continued)

 

	
 
    	
 
    	
December 31, 2013
    	
 
    
	
 
    	
 
    	
Level 1
    	
 
    	
Level 2
    	
 
    	
Level 3
    	
 
    	
Total
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    
	
Recurring measurements
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Financial assets at fair value   through profit or loss(i)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Equity securities (warrants)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Publicly traded gold mining exploration companies
    	
 
    	
—
    	
 
    	
—
    	
 
    	
2
    	
 
    	
2
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Available-for-sale financial   assets(i)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Equity securities (shares)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Publicly traded gold mining exploration companies
    	
 
    	
8,996
    	
 
    	
—
    	
 
    	
—
    	
 
    	
8,996
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
8,996
    	
 
    	
—
    	
 
    	
2
    	
 
    	
8,998
    	
 
    


 




(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.

 

The Company has no financial liabilities measured at fair value in the consolidated balance sheets as at March 31, 2014 and December 31, 2013.

 

During the three months ended March 31, 2014 and 2013, there were no transfers between Level 1, Level 2 and Level 3.

 

The following table presents the changes in the Level 3 investments (warrants) for the three months ended March 31, 2014 and 2013:

 

	
 
    	
 
    	
2014
    	
 
    	
2013
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Balance - January 1
    	
 
    	
2
    	
 
    	
1,135
    	
 
    
	
Change in fair value - investments held at the end   of the period(i)
    	
 
    	
(2
    	
)
    	
(1,073
    	
)
    
	
Balance - March 31
    	
 
    	
—
    	
 
    	
62
    	
 
    


 




(i)             Recognized in the consolidated statement of income under other gains (losses).

 

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Osisko Mining Corporation

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2014 and 2013

(Unaudited)

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

 

12.       Fair value of financial instruments (continued)

 

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, restricted cash, advances to suppliers and other receivables, accounts payable and accrued liabilities and long-term debt. The fair values of cash and cash equivalents, restricted cash, advances to suppliers and other receivables, and accounts payable and accrued liabilities approximate their carrying values due to their short-term nature. The fair value of the long-term debt is made at the balance sheet date, based on relevant market information like actual interest rates and interest risk spread and other information about the financial instruments.

 

The following table presents the carrying amount and the fair value of the long-term debt:

 

	
 
    	
 
    	
March 31, 2014
    	
 
    	
December 31, 2013
    	
 
    
	
 
    	
 
    	
Carrying
    	
 
    	
Fair
    	
 
    	
Carrying
    	
 
    	
Fair
    	
 
    
	
 
    	
 
    	
amount
    	
 
    	
value
    	
 
    	
amount
    	
 
    	
value
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Long-term debt
    	
 
    	
311,046
    	
 
    	
319,265
    	
 
    	
316,951
    	
 
    	
327,807
    	
 
    


 

13.       Commitments

 

Capital expenditures

 

As at March 31, 2014, the total purchase commitments for capital expenditures at the Canadian Malartic mine amount to approximately $7,040,000.

 

14.       Proposed transaction with Yamana Gold Inc. and Agnico Eagle Mines Limited

 

On April 16, 2014, Osisko announced that it had entered into an agreement (the “Agreement”) with Yamana Gold Inc. (“Yamana”) and Agnico Eagle Mines Limited (“Agnico Eagle”), pursuant to which Yamana and Agnico Eagle will jointly acquire 100% of Osisko’s issued and outstanding common shares, including common shares that may become outstanding after the date of the execution of the Agreement but before the effective time of the arrangement upon the conversion or exercise of share options, warrants or other securities that are convertible into or exchangeable or exercisable for common shares. Under the Agreement, Yamana and Agnico Eagle will form a joint acquisition entity (with each company owning 50%) which will acquire, by way of a statutory plan of arrangement, all of the outstanding common shares of Osisko.

 

Under the arrangement, Osisko shareholders will receive, in exchange for each of their existing common shares: (i) $2.09 in cash, (ii) 0.26471 of a Yamana common share, (iii) 0.07264 of an Agnico Eagle common share and (iv) a common share of a new company incorporated on April 29, 2014 named Osisko Gold Royalties Ltd, which collectively have an aggregate implied value of $8.15 for each outstanding Osisko common share based among others on the closing price of the Yamana and Agnico Eagle common shares on the Toronto Stock Exchange on April 15, 2014, the day preceding the Agreement announcement. In particular, such value of each of the Yamana common shares and the Agnico Eagle common shares is $2.43 per Osisko common share for an aggregate value of $4.86, and the ascribed value to the common shares of Osisko Gold Royalties Ltd is $1.20 per Osisko common share. The following will be transferred to Osisko Gold Royalties Ltd: (i) a 5% net smelter return royalty (“NSR”) on the Canadian Malartic mine, (ii) a 2% NSR on all existing exploration properties including Kirkland Lake, Hammond Reef, Pandora and Wood Pandora assets, (iii) $155.0 million in cash, (iv) all assets and liabilities of Osisko in the Guerrero camp in Mexico and (v) publicly traded equity investments in associates and other publicly traded companies.

 

15











 

Osisko Mining Corporation

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2014 and 2013

(Unaudited)

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

 

14.       Proposed transaction with Yamana Gold Inc. and Agnico Eagle Mines Limited (continued)

 

The actual value of the Yamana and Agnico Eagle common shares may differ from those presented as the closing price of the Yamana and Agnico Eagle common shares may be different at the closing date of the arrangement. The actual value of the common shares of Osisko Gold Royalties Ltd upon commencement of trading after the closing date of the arrangement may differ from the ascribed value.

 

Following completion of the arrangement, it is expected that the Osisko Gold Royalties Ltd common shares will be consolidated on the basis of one common share for every ten common shares.

 

The completion of the arrangement is subject to the satisfaction of a number of conditions, including regulatory approvals, court approval and obtaining Osisko shareholders’ approval at the annual and special meeting of shareholders scheduled to be held on May 30, 2014. There can be no assurance that the arrangement will be completed as proposed or at all.

 

The Company would be required to pay, on the date of the change of control, termination payments to officers and certain employees. In addition, all outstanding share options and restricted and deferred shares units would vest, the loans and convertible debentures would become payable at the discretion of the lenders and Fonds de solidarité FTQ could elect to convert the remaining capital portion of its loan into common shares.

 

As a result of the value maximization process implemented following the Goldcorp Inc. unsolicited take-over bid launched in January 2014 against Osisko that has lead to the proposed transaction with Yamana and Agnico Eagle, the Company has incurred significant costs in the first quarter ($7.5 million presented in the consolidated statement of income within general and administrative expenses) and is expected to incur additional significant charges in the second quarter, including professional fees for advisors.

 

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