Document:

Exhibit 4.4

 

 

Notice of Annual Meeting of Shareholders and

Management Information Circular

 

Our Annual Meeting of the holders of common shares will be held at 2:00 p.m. (Eastern Daylight Time) on May 1st, 2019 at the Fairmont The Queen Elizabeth.

 

Shareholders may exercise their rights by attending the meeting or by completing a form of proxy.

 

YOUR VOTE AS A SHAREHOLDER IS IMPORTANT. VOTE TODAY.

 

These materials are important and require your immediate attention. If you have questions or require 
 assistance with voting your shares, you may contact Osisko’s proxy solicitation agent:

 

Laurel Hill Advisory Group
  North American Toll-Free Number: 1-877-452-7184
 Collect Calls Outside North America: 1-416-304-0211
 Email: assistance@laurelhill.com

 

 

 

 

March 21, 2019

 

Dear Fellow Shareholder:

 

We are pleased to invite you to our 5th annual meeting of shareholders to be held on May 1, 2019 at the Fairmont The Queen Elizabeth Hotel, located in Montréal, Québec.

 

At this meeting, we will update you on our activities and our progress in establishing Osisko Gold Royalties Ltd as a leading intermediate precious metals royalty company. We made significant progress in 2018 in acquiring additional royalties and streams, and increasing our equity positions in emerging mine developers. Although we were greatly disappointed with the weakness in our share price during 2018, which has been affected by overall lack of interest by investors in the resource sector, we are delighted to see that since the end of 2018, we have experienced a rebound in our share price, increasing by approximately 70% as of the date of this management information circular. We maintain our positive outlook for precious metal prices, which combined with the growth profile of our gold equivalent ounces with over 85% generated from precious metals should deliver increasing cash flows. In late 2014, we instituted a dividend policy, which has distributed $86 million to date, and established share buy-back programs, totalling $45 million since their inception.

 

During our meeting, we will ask you to approve the resolutions put forward by your Board of Directors and the Management team, including:

 

1.              The election of 8 candidates to our Board of Directors;

 

2.              The appointment of PricewaterhouseCoopers LLP as the Corporation’s independent auditor for 2019;

 

3.              The approval of the amended Deferred Share Unit Plan to allow for the settlement in common shares at the Corporation’s discretion and to reserve 0.5% of common shares issued and outstanding for the plan; and

 

4.              We will also ask you to confirm our approach to our Executive Compensation Program, which has been established to attract and retain a team to execute our value creation strategy and deliver returns in a highly competitive market.

 

1100, Avenue des Canadiens-de-Montréal, suite 300, Montréal, Québec, Canada H3B 2S2
 Telephone (514) 940-0670 - Fax (514) 940-0669

www.osiskogr.com

 

 

Our management information circular provides you with background information on the matters that will be addressed at the meeting.

 

Your participation is important to us. In the event you cannot attend, we urge you to express your support by voting on the various proposals that we will be putting forward at our annual meeting, using your proxy in advance of the meeting.

 

We are also pleased to respond to your comments or queries. You may contact me directly at (Chair-Board@osiskogr.com) or you may contact our Investor Relations Group at (info@osiskogr.com).

 

We thank you for your ongoing support and confidence as we continue to build shareholder value at Osisko Gold Royalties Ltd.

 

 

Respectfully,

 

 

	
/s/ Sean Roosen
    	
 
    
	
Sean Roosen
    	
 
    
	
Chair of the Board of Directors and
    	
 
    
	
Chief Executive Officer
    	
 
    

 

 

TABLE OF CONTENTS

 

	
NOTICE OF ANNUAL   MEETING OF SHAREHOLDERS
    	
5
    
	
 
    	
 
    
	
MANAGEMENT INFORMATION   CIRCULAR
    	
6
    
	
 
    	
 
    
	
PROXY MATTERS AND VOTING   INFORMATION
    	
6
    
	
 
    	
 
    
	
VOTING SECURITIES
    	
8
    
	
 
    	
 
    
	
PRINCIPAL HOLDER OF   VOTING SECURITIES
    	
8
    
	
INTEREST   OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
    	
9
    
	
 
    	
 
    
	
SHAREHOLDER VOTING   MATTERS AND RECOMMENDATION
    	
9
    
	
 
    	
 
    
	
FINANCIAL STATEMENTS
    	
9
    
	
 
    	
 
    
	
ELECTION OF DIRECTORS
    	
9
    
	
 
    	
 
    
	
VOTING RESULTS OF 2018   ANNUAL MEETING
    	
19
    
	
 
    	
 
    
	
TENURE OF THE BOARD
    	
20
    
	
 
    	
 
    
	
2018 BOARD AND   COMMITTEE ATTENDANCE RECORD
    	
21
    
	
 
    	
 
    
	
DIRECTOR COMPENSATION
    	
22
    
	
RETAINER,   ATTENDANCE FEES AND SHARE-BASED REMUNERATION
    	
22
    
	
DIRECTOR   COMPENSATION TABLE
    	
23
    
	
 
    	
 
    
	
STATEMENT OF EXECUTIVE   COMPENSATION
    	
27
    
	
COMPENSATION   GOVERNANCE
    	
27
    
	
COMPENSATION   DISCUSSION AND ANALYSIS
    	
29
    
	
 
    	
 
    
	
PERFORMANCE GRAPH
    	
49
    
	
 
    	
 
    
	
CHIEF EXECUTIVE OFFICER   COMPENSATION LOOKBACK
    	
51
    
	
 
    	
 
    
	
CHIEF EXECUTIVE OFFICER   SECURITIES OWNERSHIP AND VALUE AT RISK
    	
51
    
	
 
    	
 
    
	
EXECUTIVE COMPENSATION
    	
52
    
	
 
    	
 
    
	
PENSION PLAN BENEFITS
    	
66
    
	
 
    	
 
    
	
TERMINATION AND CHANGE   OF CONTROL BENEFITS
    	
66
    
	
 
    	
 
    
	
SECURITIES OWNERSHIP
    	
69
    
	
 
    	
 
    
	
STATEMENT OF CORPORATE   GOVERNANCE PRACTICES
    	
70
    
	
 
    	
 
    
	
INTEREST OF INFORMED   PERSONS IN MATERIAL TRANSACTIONS
    	
90
    
	
 
    	
 
    
	
INDEBTEDNESS OF   DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS
    	
90
    
	
 
    	
 
    
	
LIABILITY INSURANCE
    	
90
    
	
 
    	
 
    
	
APPOINTMENT AND   REMUNERATION OF AUDITORS
    	
90
    
	
 
    	
 
    
	
APPROVAL OF THE AMENDED   DEFERRED SHARE UNIT PLAN
    	
91
    
	
 
    	
 
    
	
ADVISORY VOTE ON   EXECUTIVE COMPENSATION
    	
95
    
	
 
    	
 
    
	
SHAREHOLDER PROPOSALS   FOR THE 2020 ANNUAL MEETING
    	
95
    
	
 
    	
 
    
	
ADDITIONAL INFORMATION
    	
95
    
	
 
    	
 
    
	
CONTACTING OSISKO’S   BOARD OF DIRECTORS
    	
96
    
	
 
    	
 
    
	
APPROVAL
    	
96
    
	
 
    	
 
    
	
SCHEDULE “A”
    	
97
    
	
BOARD   OF DIRECTORS CHARTER
    	
97
    

 

 

(This page has been left blank intentionally.)

 

 

OSISKO GOLD ROYALTIES LTD

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

To the shareholders of Osisko Gold Royalties Ltd (the “Corporation” or “Osisko”):

 

NOTICE IS HEREBY GIVEN that the annual meeting (the “Meeting”) of the holders of common shares of the Corporation (the “Common Shares”) will be held at 2:00 p.m. (Eastern Daylight Time) on Wednesday, May 1st, 2019 at the Fairmont The Queen Elizabeth, Viger Ballroom, 900, René-Lévesque Boulevard West, Montreal, Québec, Canada, H3B 4A5, for the following purposes:

 

1.                                      To receive the Corporation’s audited consolidated financial statements for the year ended December 31, 2018 and the independent auditor’s report thereon;

 

2.                                      To elect the Corporation’s directors for the ensuing year;

 

3.                                      To appoint PricewaterhouseCoopers LLP as the Corporation’s independent auditor for fiscal year 2019 and to authorize the directors to fix their remuneration;

 

4.                                      To approve the amended Deferred Share Unit Plan to allow for the settlement in common shares at the Company’s discretion and to reserve 0.5% of common shares issued and outstanding for the plan, as more fully described in the accompanying management information circular;

 

5.                                      To consider and, if deemed advisable, adopt an advisory resolution accepting Osisko’s approach to executive compensation, the full text of which is reproduced in the accompanying management information circular; and

 

6.                                      To transact such other business as may properly be brought before the Meeting or at any adjournment thereof.

 

Dated at Montréal, Quebéc, Canada this 21st day of March, 2019.

 

By order of the Board of Directors,

 

 

	
/s/ André Le Bel
    	
 
    
	
André Le Bel
    	
 
    
	
Vice President, Legal Affairs and Corporate Secretary
    	
 
    

 

IMPORTANT

 

It is desirable that as many shares as possible be represented at the Meeting. A shareholder may attend the Meeting in person or may be represented by proxy. If you do not expect to attend the Meeting or any adjournment thereof in person, and would like your Common Shares represented, please date, sign and return the enclosed form of proxy for use at the Meeting or any adjournment thereof. To be effective, the proxy must be received by the Corporation’s transfer agent, AST Trust Company (Canada), via the internet: proxyvote@astfinancial.com, by mail: 2001 Robert-Bourassa Blvd., Suite 1600, Montréal, Québec, H3A 2A6; or by fax to 1 (866) 781-3111 (North American Toll Free) no later than 2:00 p.m. (Eastern Daylight Time) on Monday, April 29, 2019 or 48 hours (other than a Saturday, Sunday or holiday) prior to the time to which the Meeting may be adjourned. Notwithstanding the foregoing, the chair of the Meeting has the discretion to accept proxies received after such deadline.

 

2019 Management Information Circular

 

5

 

MANAGEMENT INFORMATION CIRCULAR

 

This management information circular (the “Circular”) is provided in connection with the solicitation of proxies by the management of Osisko Gold Royalties Ltd (the “Corporation” or “Osisko”) for use at the annual meeting of the shareholders of the Corporation (the “Shareholders”) to be held on Wednesday, May 1st, 2019 at 2:00 p.m. (Eastern Daylight Time) (the “Meeting”) and at every adjournment thereof. Except where otherwise indicated, this Circular contains information as of the close of business on March 19, 2019 and all currency amounts are shown in Canadian dollars.

 

PROXY MATTERS AND VOTING INFORMATION

 

Solicitation of Proxies

 

The enclosed proxy is being solicited by the management of the Corporation. Solicitation will be primarily by mail but proxies may also be solicited by telephone, or personally by directors, officers or employees of the Corporation. In addition, the Corporation has retained the services of Laurel Hill Advisory Group (“Laurel Hill”) to provide the following services in connection with the Meeting: review and analysis of the Circular, recommending corporate governance best practices where applicable, liaising with proxy advisory firms, developing and implementing shareholder proxies, and the solicitation of proxies including contacting Shareholders by telephone. For these services, Laurel Hill will receive a fee of $35,000, plus reasonable out-of-pocket expenses. The Corporation will bear all expenses in connection with the solicitation of proxies. In addition, the Corporation shall, upon request, reimburse brokerage firms and other custodians for their reasonable expenses in forwarding proxies and related material to beneficial owners of Common Shares.

 

Appointment of Proxy

 

The persons named in the enclosed form of proxy are executive officers of the Corporation. A Shareholder has the right to appoint a person, who need not be a Shareholder of the Corporation, other than the persons designated in the accompanying form of proxy, to attend and act on his or her behalf at the Meeting. To exercise this right, a Shareholder may cross out the names printed on the form of proxy and insert such other person’s name in the blank space provided in the accompanying form of proxy or complete another appropriate form of proxy.

 

Revocability of Proxy

 

A proxy given pursuant to this solicitation may be revoked by an instrument in writing executed by the Shareholder or by the Shareholder’s attorney authorized in writing and delivered either to AST Trust Company (Canada) (“AST”) at 2001 Robert-Bourassa Blvd., Suite 1600, Montréal, Québec, H3A 2A6, or by fax to 1 (866) 781-3111, no later than 2:00 p.m. (Eastern Daylight Time) on Monday, April 29, 2019 or at any time up to and including the last business day preceding the day of any adjournment of the Meeting at which the proxy is to be used, or to the Chair or Secretary of such Meeting on the day of the Meeting or any adjournment thereof, or by any other manner permitted by law. Any proxy given by a registered Shareholder can also be revoked by the Shareholder if he or she attends the Meeting in person and so requests.

 

Beneficial Shareholders (as defined herein) will have different methods and should carefully follow the instructions provided to them from their intermediary.

 

Beneficial Shareholders

 

A beneficial Shareholder is a Shareholder whose shares are registered in the name of a representative, such as an investment dealer or another intermediary (collectively, “Intermediaries”), rather than in the Shareholder’s name (“Beneficial Shareholder”).

 

In accordance with Canadian securities legislation, the Meeting materials are being sent to both registered and Beneficial Shareholders. There are two types of Beneficial Shareholders – shareholders who have objected to the disclosure of their identities and share positions (“OBO’s”) and shareholders who do not object to the Corporation knowing who they are (“NOBO’s”).

 

2019 Management Information Circular

 

6

 

In the case of NOBO’s, Meeting materials have either (a) been sent by the Corporation (or its agent) directly to NOBO’s, or (b) been sent by the Corporation (or its agent) to intermediaries holding on behalf of NOBO’s for distribution to such shareholder. If you are a NOBO and the Corporation (or its agent) has sent the Meeting materials directly to you, your personal information has been obtained in accordance with applicable securities regulatory requirements from the intermediary holding on your behalf. By choosing to send these materials to you directly, the Corporation (and not the intermediary holding on your behalf) has assumed responsibility for (i) delivering these materials to you, and (ii) executing your proper voting instructions.

 

As it relates to OBO’s, the Corporation intends to pay Intermediaries to send proxy-related materials and voting instruction forms to OBO’s. Most intermediaries delegate responsibility for obtaining voting instructions from clients to Broadridge Financial Solutions, Inc. (“Broadridge”). Broadridge mails a voting instruction form (“VIF”) in lieu of a form of proxy provided by Osisko. For your Common Shares to be voted, you must follow the instructions on the VIF that is provided to you. You can complete the VIF by: (i) calling the phone number listed thereon; (ii) mailing the completed VIF in the envelope provided; or (iii) using the internet at www.proxyvote.com.

 

If you are a Beneficial Shareholder and are unable to attend the Meeting, but wish that your voting rights be exercised on your behalf by a Proxyholder, you must follow the voting instructions on the VIF. If you are a Beneficial Shareholder and wish to exercise your voting rights in person at the Meeting, you must indicate your own name in the space provided for such purpose on the VIF in order to appoint yourself as Proxyholder and follow the instructions therein with respect to the execution and transmission of the document. If you have any questions with respect to the foregoing or need help with voting, we invite you to contact Laurel Hill by calling toll-free 1 (877) 452-7184 if you are in North America, or 1 (416) 304-0211 if you are outside North America, or by emailing at assistance@laurelhill.com.

 

Voting Information

 

Common Shares represented by properly executed proxies in favour of the persons designated in the enclosed form of proxy will be voted or withheld from voting on any ballot that may be called for and, if the Shareholder specifies a choice in respect of the matters to be voted upon, the Common Shares shall be voted or withheld from voting in accordance with the specification made by the Shareholder. If no specification is made, such Common Shares will be voted FOR all of the following agenda items: (i) the election of each of the proposed nominees as directors of the Corporation for the ensuing year; (ii) the appointment of PricewaterhouseCoopers LLP as independent auditor of the Corporation and the fixing of its remuneration by the directors; (iii) the adoption of an ordinary resolution to approve the Corporation’s amended Deferred Share Unit Plan; and (iv) the adoption of an advisory resolution accepting Osisko’s approach to executive compensation. These Items are further described and discussed in the Circular.

 

The enclosed proxy confers discretionary authority upon the persons named therein to vote as he or she sees fit with respect to amendments or variations to matters identified in the notice relating to the Meeting and other matters which may properly come before the Meeting. At the date of this Circular, the management of the Corporation is not aware that any such amendments, variations, or other matters are to be presented for action at the Meeting.

 

Completed and signed proxies must be deposited at the office of the Corporation’s registrar and transfer agent, AST Trust Company (Canada), 2001 Robert-Bourassa Blvd., Suite 1600, Montréal, Québec, H3A 2A6, and must be received not later than forty-eight (48) hours, excluding Saturdays, Sundays and holidays, prior to the time of the Meeting, unless the Chair of the Meeting elects to exercise his discretion to accept proxies received subsequently. Telephone voting can be completed at 1 (888) 489-7352. Internet voting can be completed at www.astvotemyproxy.com. Alternatively, you may fax your proxy to 1 (416) 368-2502 or toll free in Canada and the United States to 1 (866) 781-3111, or scan and email to proxyvote@astfinancial.com. Beneficial Shareholders will have different voting methods and are encouraged to carefully follow the instructions provided on the VIF.

 

2019 Management Information Circular

 

7

 

Voting Results

 

Following the Meeting of Shareholders, a report on the voting results will be filed with the Canadian securities regulatory authorities at www.sedar.com.

 

NOTICE-AND-ACCESS RULES

 

The Corporation has elected to use the notice-and-access provisions under National Instrument 51-102 — Continuous Disclosure Obligations (“NI 51-102”) and National Instrument 54-101 — Communications with Beneficial Owners of Securities of a Reporting Issuer (“NI 54-101”, and together with NI 51-102, the “Notice-and-Access Provisions”) for the Meeting. The Notice-and-Access Provisions are a set of rules developed by the Canadian Securities Administrators that allows issuers to post electronic versions of proxy-related materials on-line, via the System for Electronic Document Analysis and Retrieval (“SEDAR”) and one other website, rather than mailing paper copies of such materials to Shareholders.

 

Instead of receiving this Circular, Shareholders will receive a Notice of Meeting with the proxy or voting instruction form, as the case may be, along with instructions on how to access the Meeting materials online. The Corporation will send the Notice of Meeting and proxy form directly to registered Shareholders and NOBOs. The Corporation will pay for intermediaries to deliver the Notice of Meeting, voting instruction form and other Meeting materials requested by OBOs. This Circular and other relevant materials are available on the Corporation’s corporate Internet website (http://www.osiskogr.com/en/2019-agm/) or on SEDAR (www.sedar.com).

 

Objecting Beneficial Shareholders may request a paper copy of the Meeting materials, at no cost, from Broadridge Investor Communications Corporation by calling toll-free 1 (877) 907-7643 and entering the 16-digit control number located on the voting instruction form or via internet at www.proxyvote.com by using the 16-digit control number located in the voting instruction form. To ensure that you receive the materials in advance of the voting deadline and the Meeting, all requests must be received no later than April 16, 2019 to ensure timely receipt. Requests for Meeting materials may be made up to one year from the date the Circular is filed on SEDAR.

 

If you are a registered Shareholder or a NOBO and wish to receive a copy of this Circular or need help with voting, we invite you to contact Laurel Hill by calling toll-free 1 (877) 452-7184 if you are in North America, or 1 (416) 304-0211 if you are outside North America, or by emailing your request to assistance@laurelhill.com.

 

The Corporation will not use procedures known as ‘stratification’ in relation to the use of Notice-and-Access Provisions. Stratification occurs when an issuer using Notice-and-Access Provisions sends a paper copy of the Circular to some Shareholders with a Notice Package.

 

If you request a paper copy of the materials, please take note that no additional proxy form or voting instruction form shall be sent to you. Therefore, please make sure that you retain the form that you received with the Notice of Meeting for voting purposes.

 

VOTING SECURITIES

 

As of March 19, 2019, 154,913,345 Common Shares of the Corporation were outstanding. Holders of Common Shares of record at the close of business on March 19, 2019 (the “Record Date”) will be entitled to one vote for each such Common Share held by them.

 

PRINCIPAL HOLDER OF VOTING SECURITIES

 

To the knowledge of the directors and executive officers of the Corporation and according to the latest data available as of March 19, 2019, there are three Shareholders owning, directly or indirectly, or exercising control or direction over more than 10% of the voting rights attached to all Common Shares.

 

2019 Management Information Circular

 

8

 

	
Name
    	
 
    	
Number of Common
   Shares
   (#)
    	
 
    	
Percentage of Outstanding
   Common Shares
   (%)
    	
 
    
	
Betelgeuse LLC(1)
    	
 
    	
30,906,594
    	
(2)
    	
19.95
    	
 
    
	
Caisse de dépôt et placement du Québec(3)
    	
 
    	
19,597,694
    	
(2)
    	
12.65
    	
 
    
	
Van Eck   Associates Corporation
    	
 
    	
15,554,762
    	
(2)
    	
10.04
    	
 
    

 

Notes:

 

(1)         Betelgeuse LLC is an entity related to Orion Mine Finance.

 

(2)         On the basis of the information available on SEDAR (www.sedar.com) and on SEDI (www.sedi.ca).

 

(3)         Of which, 1,391,961 Common Shares are held directly by the CDPQ Sodèmex Inc. and 18,205,733 Common Shares are held by CDP Investissements Inc., both wholly-owned subsidiaries of the Caisse dépôt et placement du Quèbec.

 

INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

 

Unless as otherwise disclosed in this Circular, no director or executive officer, past, present or nominated hereunder, or any associate or affiliate of such persons, or any person on behalf of whom this solicitation is made, has any interest, direct or indirect, in any matter to be acted upon at the Meeting, except that such persons may be directly involved in the normal business of the Meeting or the general affairs of the Corporation.

 

BUSINESS TO BE TRANSACTED AT THE MEETING

 

SHAREHOLDER VOTING MATTERS AND RECOMMENDATION

 

	
Voting Matters
    	
 
    	
Election of 8 Directors
    	
 
    	
Appointment of
   PricewaterhouseCoopers
   LLP
    	
 
    	
Approval of the
   Amended DSU Plan
    	
 
    	
Advisory Resolution on
   Executive
   Compensation
    	
 
    
	
Board   Vote Recommendation
    	
 
    	
FOR   EACH NOMINEE
    	
 
    	
FOR
    	
 
    	
FOR
    	
 
    	
FOR
    	
 
    
	
For more   information See Page
    	
 
    	
9
    	
 
    	
90
    	
 
    	
91
    	
 
    	
95
    	
 
    

 

FINANCIAL STATEMENTS

 

The audited consolidated financial statements of the Corporation for the financial year ended December 31, 2018 and the report of the auditor thereon will be presented at the Meeting. These consolidated financial statements and management’s discussion and analysis were sent to all Shareholders who have requested a copy with this Notice of Annual and Special Meeting of Shareholders and Circular, as applicable. The Corporation’s consolidated financial statements and related management discussion and analysis for the year ended December 31, 2018 are available on SEDAR (www.sedar.com) and on EDGAR (www.sec.gov) as well as on the Corporation’s website (www.osiskogr.com).

 

ELECTION OF DIRECTORS

 

The executive management team (the “Management”) of the Corporation is supervised by the board of directors (the “Board of Directors” or “Board”) as per the Business Corporations Act (Québec). The members of the Board are elected annually at each annual meeting of Shareholders to hold office until the next annual meeting unless, prior thereto, he or she resigns, or the office of such director becomes vacant by death, removal, or other cause. The articles of incorporation of the Corporation provide that our Board shall consist of a minimum of three (3) and a maximum of fifteen (15) directors. Accordingly, eight (8) nominees are being proposed as directors for election by the Shareholders at the Meeting for the current year, each to hold office until the next annual meeting of Shareholders or until such person’s successor is elected or appointed. You can vote for all of these proposed directors, vote for some of them and withhold for others, or withhold for all of them.

 

2019 Management Information Circular

 

9

 

The following tables set out information about each director’s summary career profile, their board committee memberships (the “Board Committee Membership” or “Board Committee”), meeting attendance during the most recently completed financial year, principal directorships with other reporting issuers as well as other public and parapublic corporations on whose boards the nominees currently serve or have served in the past five years, areas of expertise and the number of securities they hold, either in the form of Common Shares, stock options (“options”), deferred share units (“DSUs”), restricted share units (“RSUs”), warrants or debentures of the Corporation.

 

Unless otherwise directed, the persons named in the enclosed proxy form intend to VOTE FOR the election of each of the proposed nominees whose names are set out below. The proposal requires the approval of a majority of the votes cast at the Meeting.

 

Mr. Pierre D. Chenard, who acted as a nominee director of the Caisse dépôt et placement du Québec (the “Caisse”) pursuant to an investor rights agreement entered into between the Caisse and the Corporation, and Mr. André Gaumond have decided not to stand for re-election at the Shareholders’ Meeting. As such, Messrs. Chenard and Gaumond are not part of the nominees that are being proposed as directors for election by the Shareholders at the Meeting for the ensuing year. Taking into account the decisions of Messrs. Chenard and Gaumond, the Board of Directors has decided to establish the size of the Board to eight (8) directors. Pursuant to an investor rights agreement entered into between the Caisse and the Corporation, the Caisse retains the right to appoint one nominee to the Board of Directors of the Corporation, for so long as the Caisse, together with its affiliates, owns more than 10% of the outstanding Common Shares of the Corporation. In addition, Betelgeuse LLC also holds a nomination right pursuant to a shareholder participating agreement entered into between Betelgeuse LLC and the Corporation and proposed Mr. Oskar Lewnowski as its nominee on the Board of Directors of the Corporation.

 

The members of the Board of Directors would like to express their appreciation to Messrs. Chenard and Gaumond for their contribution over the years and also wish to extend to them their gratitude for their guidance and services during their mandate as directors of the Corporation.

 

Each of the nominees has provided the information as to the Common Shares of the Corporation he or she beneficially owns or over which he or she exercises control or direction, as at March 19, 2019. All nominees have served continuously as director of the Corporation since their appointment or first election in such capacity.

 

The Corporation has adopted a majority voting policy, which is further described in the Circular under the heading “Statement of Corporate Governance Practices - Majority Voting and Director Resignation Policy for Election of Directors”.

 

2019 Management Information Circular

 

10

 

 FRANCOISE BERTRAND Status: Independent(1)   Quebec, Canada Age: 70 Director since: November 2014 Annual Meeting Votes:   2018: 99.44% In Favour 2017: 99.68% In Favour 2016: 95.41% In Favour 2015:   99.74% In Favour Areas of Expertise: Corporate Governance General Management   Government Relations Human Resources Sustainability Board and Committee   Meeting Attendance during 2018 Regular Ad Hoc Total Board 6/6 4/5 10/11 Human   Resources Committee 5/5 N/A 5/5 Sustainability Committee 2/2 N/A 2/2 Overall   Attendance: 94% Public Board Membership in the past 5 years and Interlocking   Directorships •Quebecor Inc. (2003 - 2014) Investment, Ownership and Total   Value of Equity 2019(2) (March 19) (#) 2019(2) Value ($) 2018(3) (March 19)   (#) 2018(3) Value ($) Osisko Common Shares 1,200 18,288 1,200 14,928 Osisko   DSUs 46,213 704,286 36,179 450,067 Total Value ($) 722,574 464,995 Ownership   Requirement - Target Date to Meet Target Attainted in 2016 Ms. Francoise   Bertrand chairs the board of directors of Via Rail Canada and the board of   directors of ProAction International since 2017. She has held leadership   roles in numerous public and private organizations. Ms. Bertrand was formerly   the President and Chief Executive Officer of the Fédération des chambres de   commerce du Québec, President of the Canadian Radio-Television and   Telecommunication Commission (CRTC), President and Chief Executive Officer of   Société de radio-télévision du Québec (Télé-Québec), and Dean of Resource   Management at the Université du Québec à Montréal (UQAM). She also has served   on the Board of Directors of various government and charitable organizations.   Ms. Bertrand was recently nominated to receive the ICD Fellowship Award at   the ICD National Conference in June 2019. Ms. Bertrand holds a Bachelor of   Arts - Major in Sociology from Université de Montréal and a Master's degree   in Environmental Studies from York University. She is a graduate from the   Directors Education Program sponsored by the Institute of Directors of Canada   and the Rotman School of Management - McGill. Ms. Bertrand's outstanding   career achievements have led her to be appointed as a Chevalier de l’Ordre   national du Québec, and an Officer of the Order of Canada.

    

 

 JOHN BURZYNSKI Status: Non Independent(1)   Ontario, Canada Age: 55 Director since: April 2014 Annual Meeting Votes:   2018: 93.91% In Favour 2017: 98.93% In Favour 2016: 97.58% In Favour 2015:   92.22% In Favour Areas of Expertise: Corporate Governance Financial General   Management Government Relations Human Resources International Business   Mergers/Acquisitions Sustainability Technical/Mining Board and Committee   Meeting Attendance during 2018 Regular Ad Hoc Total Board 6/6 4/5 10/11   Sustainability Committee(4) 1/1 N/A 1/1 Overall Attendance: 92% Public Board   Membership in the past 5 years and Interlocking Directorships Barkerville   Gold Mines Ltd. - Interlock with Sean Roosen Major Drilling Group   International Inc. - No Interlock Osisko Metals Incorporated - No Interlock   Osisko Mining Inc. - Interlock with Sean Roosen Strongbow Exploration Inc.   (2015 - 2018) Osisko Mining Corporation (2006 - 2014) Condor Petroleum Inc.   (2011 - 2016) Investment, Ownership and Total Value of Equity 2019(2) (March   19) (#) 2019(2) Value ($) 2018(3) (March 19) (#) 2018(3) Value ($) Osisko   Common Shares 17,294 263,561 18,805 233,934 Osisko DSUs 16,809 256,169 7,265   90,377 Osisko RSUs 3,255 49,606 16,796 208,942 Osisko Warrants(5) - - 5,000   8,000 Value ($) 569,336 541,253 Ownership Requirement - Target Date to Meet   Target Attainted in 2015 Options Grant Date (mm-dd-yy) Expiry Date (mm-dd-yy)   Options (#) Exercise Price ($) Total Unexercised (#) Value of Unexercised   Options(6) ($) 09-09-14 09-08-19 190,000 14.90 190,000 64,600 06-30-15   06-30-20 60,600 15.80 60,600 03-21-16 03-21-21 15,933 13.38 15,933 29,635 Mr.   John Burzynski is President and Chief Executive Officer and Director of   Osisko Mining Inc. ("Osisko Mining"), an associate company of the   Corporation. He was Senior Vice President, New Business Development of the   Corporation until August 31, 2016. Mr. Burzynski has over 30 years of   international experience in global exploration and development of mining   projects. He also has experience in developing strategy, financing and   marketing of emerging companies. He is one of the three founders of Osisko   Mining Corporation (2003) where he held various positions, including Vice   President Exploration, Vice President Corporate Development and member of its   board of directors. He is also a founding member of EurAsia Holding AG, a   European venture capital fund. Mr. Burzynski holds a Bachelor of Science   (Honours) degree in geology from Mount Allison University, and a Master of   Science in exploration and mineral economics from Queen's University. 

    

 

 CHRISTOPHER C. Status: Independent(1)   CURFMAN Illinois, United States of Director since: May 2016 America Age: 67   Annual Meeting Votes: 2018: 99.58% In Favour 2017: 99.84% In Favour 2016:   99.85% In Favour Areas of Expertise: Corporate Governance Financial General   Management Human Resources International Business Mergers/Acquisitions   Sustainability Technical/Mining Board and Committee Meeting Attendance during   2018 Regular Ad Hoc Total Board 6/6 4/5 10/11 Human Resources Committee(7)   2/2 2/2 Governance and Nomination Committee 4/4 4/4 Sustainability Committee(7)   1/1 1/1 Overall Attendance: 94% Public Board Membership in the past 5 years   and Interlocking Directorships N/A Investment, Ownership and Total Value of   Equity 2019(2) (March 19) (#) 2019(2) Value ($) 2018(3) (March 19) (#)   2018(3) Value ($) Osisko Common Shares 5,500 83,820 5,500 68,420 Osisko DSUs   29,462 449,001 19,708 245,168 Value ($) 532,821 313,588 Ownership Requirement   - Target Date to Meet Target Attained in 2018 Mr. Christopher C. Curfman is a   retired senior executive of Caterpillar Inc., one of the world's largest   mobile equipment suppliers to the mining industry. During his 21-year career   with Caterpillar, Mr. Curfman has held several progressive positions in Asia,   Australia and USA, including Senior Vice President of Caterpillar and President   of Caterpillar Global Mining from 2011 to his retirement at the end of 2015.   Mr. Curfman also held senior positions with Deere & Company prior to   joining Caterpillar. He has extensive international experience and a customer   focused legacy at Caterpillar. His global leadership was key to Caterpillar's   success in the mining industry. He also served as a board member at various   organizations, including the Canadian Institute of Mining, the National   Mining Association, the World Coal Association and several universities. Mr.   Curfman holds a Bachelor of Science degree in Education from Northwestern   University, and has completed certificate programs in accounting and finance   from the Wharton School of Business, University of Pennsylvania in 1991, a   three-year executive program from Louisiana State University in 1997 and the   executive program of Stanford Graduate School of Business in 2002. He was   also awarded an Honorary Doctorate in Mining Engineering from the University   Missouri-Rolla in 2013.

    

 

 JOANNE FERSTMAN Status: Independent(1)   Ontario, Canada Age: 51 Lead Director since: April 2014 Annual Meeting Votes:   2018: 99.47% In Favour 2017: 97.52% In Favour 2016: 95.50% In Favour 2015:   94.69% In Favour Areas of Expertise: Corporate Governance Financial General   Management Human Resources Mergers/Acquisitions Board and Committee Meeting   Attendance during 2018 Regular Ad Hoc Total Board 6/6 5/5 11/11 Audit   Committee 4/4 4/4 Human Resources Committee 5/5 5/5 Overall Attendance: 100%   Public Board Membership in the past 5 years and Interlocking Directorships   Dream Unlimited Corp. - No interlock Cogeco Communications Inc. - No   interlock ATS Automatic Tooling Systems - No interlock •Aimia Inc. (2008 -   2017) Excellon Resources Inc. (2013 - 2015) Osisko Mining Corporation (2013 -   2014) Dream Office REIT (2003 - 2018) Investment, Ownership and Total Value   of Equity 2019(2) (March 19) (#) 2019(2) Value ($) 2018(3) (March 19) (#)   2018(3) Value ($) Osisko Common Shares 19,500 297,180 14,500 180,380 Osisko   DSUs 69,634 1,061,222 54,628 679,572 Osisko Warrants(5) - - 2,500 4,000   Osisko Debentures(8) 100 103,500 100 100,000 Value ($) 1,458,402 963,952   Ownership Requirement - Target Date to Meet Target Attained in 2016 Ms.   Joanne Ferstman is a corporate director. She has over 20 years of progressive   experience in the financial industry, where she was until 2012 officer of   Dundee Capital Market Inc., a full service investment dealer with principal   businesses that include investment banking, institutional sales and trading,   and private client financial advisory. She has held several leadership   positions within Dundee Corporation and DundeeWealth Inc., where she was   responsible for strategic development, financial and regulatory reporting and   risk management. Ms. Ferstman holds a Bachelor of Commerce and a Graduate   degree in Public Accountancy from McGill University and is a Chartered   Professional Accountant. 

    

 

 PIERRE LABBE Status: Independent(1) Quebec,   Canada Age: 53 Director since: February 2015 Annual Meeting Votes: 2018:   99.74% In Favour 2017: 98.08% In Favour 2016: 99.22% In Favour 2015: 95.13%   In Favour Areas of Expertise: Corporate Governance Financial General   Management International Business Mergers/Acquisitions Technical/Mining Board   and Committee Meeting Attendance during 2018 Regular Ad Hoc Total Board 5/6   3/5 8/11 Audit Committee 4/4 4/4 Governance and Nomination Committee 4/4 4/4   Overall Attendance: 84% Public Board Membership in the past 5 years and   Interlocking Directorships Agility Health Inc. - No Interlock Virginia Mines   Inc. (2008 - 2015) Investment, Ownership and Total Value of Equity 2019(2)   (March 19) (#) 2019(2) Value ($) 2018(3) (March 19) (#) 2018(3) Value ($)   Osisko Common Shares 6,145 93,650 6,145 76,444 Osisko DSUs 36,389 554,568   26,518 329,884 Osisko Warrants(5) - - 1,000 1,600 Osisko Debentures(8) 25   25,875 25 25,000 Value ($) 674,093 432,928 Ownership Requirement - Target   Date to Meet Target Attainted in 2016 Options Grant Date (mm-dd-yy) Expiry   Date (mm-dd-yy) Options (#) Exercise Price ($) Total Unexercised (#) Value of   Unexercised Options(6) ($) 07-11-2014 07-11-2024 3,613 13.62 3,613 5,853   01-15-2014 01-15-2024 3,613 13.93 3,613 4,733 07-29-2013 07-29-2023 3,650   10.58 3,650 17,009 01-15-2013 01-15-2023 3,648 10.73 3,648 16,452 Mr. Pierre   Labbe is Chief Financial Officer of IMV Inc. and was Vice President and Chief   Financial Officer of Leddartech Inc. from April 2015 to March 2017. He has   more than 25 years of progressive financial leadership roles in various   industries. He was Vice President and Chief Financial Officer of the Quebec   Port Authority (October 2013 - April 2015), and has experience in the   resource sector, having served as Chief Financial Officer of Plexmar   Resources (2007-2012), Sequoia Minerals (2003-2004), and Mazarin Inc.   (2000-2003). Mr. Labbe, in his role as senior financial officer, has   participated in the development of strategic plans and in mergers and   acquisitions (over $1 billion in transactions). Mr. Labbe was a nominee to   the Osisko Board by Virginia Mines Inc. as part of the Osisko-Virginia   business combination in 2015. Mr. Labbe holds a Bachelor's Degree in Business   Administration and a license in accounting from Université Laval, Quebec   City. He is a member of Ordre des comptables professionnels agréés du Québec,   the Chartered Professional Accountants of Canada and the Institute of   Corporate Directors.

    

 

 OSKAR LEWNOWSKI Status: Independent(1) New   York, United States of America Director since: July 2017 Age: 53 Annual   Meeting Votes: 2018: 99.23% In Favour Areas of Expertise: Financial Corporate   Governance General Management Government Relations Human Resources   International Business Mergers/Acquisitions Technical/Mining Board and   Committee Meeting Attendance during 2018 Regular Ad Hoc Total Board 2/6 1/5   3/11 Overall Attendance: 27% Public Board Membership in the past 5 years and   Interlocking Directorships CannaRoyalty Corp. (doing business as Origin   House) - No Interlock Investment, Ownership and Total Value of Equity 2019(2)   (March 19) (#) 2019(2) Value ($) 2018(3) (March 19) (#) 2018(3) Value ($)   Osisko DSUs 19,680 299,923 12,379 153,995 Value ($) 299,923 153,995 Ownership   Requirement - Target Date to Meet Target to be Attained by July 31, 2020 Mr.   Oskar Lewnowski is the founder and Chief Investment Officer of Orion Resource   Partners. Prior to founding Orion, Mr. Lewnowski was a founding partner of   the Red Kite Group and the Chief Investment Officer of the mine finance   business. Before this, Mr. Lewnowski was a Director for Corporate Development   at Varomet Ltd, a metals processor and merchant banking firm. Before this,   Mr. Lewnowski was a Vice President for Credit Suisse First Boston in London,   where he was responsible for preparing growth companies for public   distribution of their securities. Until 1993, he held various positions in   trading as well as mergers and acquisitions at Deutsche Bank both in New York   and Frankfurt culminating in his founding membership of the Deutsche Capital   Markets Division. Mr. Lewnowski was appointed to the Board of Directors in   accordance with the acquisition of the Orion Mine Finance Group Royalty   Portfolio as a nominee as nominee of Betelgeuse LLC, the Corporation's   largest Shareholder which currently beneficially owns 30,906,594 Common   Shares of the Corporation and representing 19.95% of Osisko's issued and   outstanding Common Shares. Mr. Lewnowski earned a BS/BA in Business   Administration from Georgetown University and an MBA from the Leonard Stern   School of Business (New York University).

    

 

 CHARLES E. PAGE Status: Independent(1)   Ontario, Canada Age: 67 Director since: April 2014 Annual Meeting Votes 2018:   99.57% In Favour 2017: 99.89% In Favour 2016: 76.95% In Favour 2015: 90.28%   In Favour Areas of Expertise: Corporate Governance Financial General   Management Government Relations Human Resources International Business   Mergers/Acquisitions Sustainability Technical/Mining Board and Committee   Meeting Attendance during 2018 Regular Ad Hoc Total Board 6/6 5/5 11/11 Audit   Committee(10) 2/2 - 2/2 Human Resources Committee 5/5 - 5/5 Governance and   Nomination Committee(10) 3/3 - 3/3 Overall Attendance 100% Public Board   Membership in the past 5 years and Interlocking Directorships Unigold Inc. No   interlock Wesdome Gold Mines Ltd. No interlock Alexandria Minerals   Corporation (2007 - 2014) Osisko Mining Corporation (2013 - 2014) Investment,   Ownership and Total Value of Equity 2019(2) (March 19) (#) 2019(2) Value ($)   2018(3) (March 19) (#) 2018(3) Value ($) Osisko Common Shares 55,215 841,477   55,215 686,875 Osisko DSUs 46,423 707,486 36,385 452,629 Value ($) 1,548,963   1,139,504 Ownership Requirement - Target Date to Meet Target Attained in 2014   Mr. Charles E. Page is a corporate director and has more than 40 years of   experience in the mineral industry. During his career, Mr. Page has held   progressive leadership roles in developing strategies to explore, finance and   develop mineral properties in Canada and internationally. Mr. Page worked at   Queenston Mining Inc. in various capacities, including President and Chief   Executive Officer, from 1990 to its sale to Osisko Mining Corporation in   2012. Mr. Page holds a Bachelor of Science degree in Geological Science from   Brock University and a Master of Science degree in Earth Science from the   University of Waterloo. He is a Professional Geologist registered in the   province of Ontario and Saskatchewan, and is also a Fellow of the Geological   Association of Canada.

    

 

 SEAN ROOSEN Status: Non Independent(1)   Quebec, Canada Age: 55 Director since: April 2014 Annual Meeting Votes: 2018:   98.84% In Favour 2017: 96.01% In Favour 2016: 92.67% In Favour 2015: 92.45%   In Favour Areas of Expertise: Corporate Governance Financial General   Management Government Relations Human Resources International Business   Mergers/Acquisitions Sustainability Technical/Mining Board and Committee   Meeting Attendance during 2018 Ad Regular Hoc Total Board 6/6 5/5 11/11   Sustainability Committee 1/2 1/2 Overall Attendance: 92% Public Board   Membership in the past 5 years and Interlocking Directorships Barkerville   Gold Mines Ltd. - Interlock with John Burzynski(11) Osisko Mining Inc. -   Interlock with John Burzynski(11) Victoria Gold Corp. - No Interlock Condor   Petroleum Inc. (2011 - 2019) Dalradian Resources Inc. (2010 - 2018) Osisko   Metals Incorporated (formerly Bowmore Exploration Ltd.) (2009 - 2015) NioGold   Mining Corporation (2014 - 2016) Osisko Mining Corporation (2003 - 2014)   Falco Resources Ltd. (2014 - 2019) Investment, Ownership and Total Value of   Equity 2019(2) (March 19) (#) 2019(2) Value ($) 2018(3) (March 19) (#)   2018(3) Value ($) Osisko Common Shares 428,278 6,526,957 426,187 5,301,766   Osisko RSUs 179,714 2,738,841 112,494 1,399,425 Value ($) 9,265,798 6,701,191   Ownership Requirement - Target Date to Meet Target Attainted in 2014 Options   Grant Date (mm-dd-yy) Expiry Date (mm-dd-yy) Options (#) Exercise Price ($)   Total Unexercised (#) Value of Unexercised Options(6) ($) 09-09-14 09-08-19   253,400 14.90 253,400 86,156 06-30-15 06-30-20 121,200 15.80 121,200 03-21-16   03-21-21 127,600 13.38 127,600 237,336 06-07-17 06-07-22 82,800 16.66 82,800   05-07-18 05-07-23 30,800 12.97 30,800 69,916 Mr. Sean Roosen is the Chair of   the Board of Directors and Chief Executive Officer of the Corporation. Mr.   Roosen was a founding member of Osisko Mining Corporation (2003) and of   EurAsia Holding AG, a European venture capital fund. Mr. Roosen has over 30   years of progressive experience in the mining industry. As founder,   President, Chief Executive Officer and Director of Osisko Mining Corporation,   he was responsible for developing the strategic plan for the discovery,   financing and development of the Canadian Malartic Mine. He also led the   efforts for the maximization of shareholders' value in the sale of Osisko   Mining Corporation, which resulted in the creation of Osisko. Mr. Roosen is   an active participant in the resource sector and in the formation of new   companies to explore for mineral deposits both in Canada and internationally.   In 2017, Mr. Roosen received an award from Mines and Money Americas for best   Chief Executive Officer in North America and was, in addition, named in the   "Top 20 Most Influential Individuals in Global Mining". In prior   years, he has been recognized by several organizations for his   entrepreneurial successes and his leadership in innovative sustainability   practices. Mr. Roosen is a graduate of the Haileybury School of Mines. Mr.   Roosen serves on the board of directors of Barkerville Gold Mines Ltd.,   Osisko Mining Inc. and Victoria Gold Corp. as a representative of Osisko.

    

 

NOTES:   “Independent” refers to the standards of independence established in the   Regulation 52-110 respecting Audit Committees (“Regulation 52-110”). The 2019   Value is equal to, as applicable, the sum of: (i) the product of the   multiplication of the closing price of the Common Shares of the Corporation   on the Toronto Stock Exchange (“TSX”) on March 19, 2019, being $15.24, by the   number of Common Shares, DSUs and RSUs held at such date; and (ii) the face   value of debentures held. The 2018 Value is equal to, as applicable, the sum   of: (i) the product of the multiplication of the closing price of the Common   Shares of the Corporation on TSX on March 19, 2018, being $12.44 (as   disclosed in the management information circular of the Corporation dated   March 21, 2018) by the number of Common Shares, DSUs and RSUs held at such   date; and (ii) the product of the multiplication of the closing price of the   Warrants on the TSX on March 19, 2018, being $1.60, by the number of Warrants   also held at such date. Mr. John Burzynski ceased to act as a member of the   Sustainability Committee following the annual and special meeting of   shareholders held on May 3rd, 2018. The Warrants were issued as part of a   bought deal public offering by way of a short form prospectus. Warrant   holders were entitled to purchase one Common Share of the Corporation at a   price of $19.08 per Common Share for a period of 36 months following the   closing date. The Warrants expired on February 26, 2019. “Value of   Unexercised Options” is calculated on the basis of the difference between the   closing price of the Common Shares on the TSX on March 19, 2019, being   $15.24, and the exercise price of the options, multiplied by the number of   unexercised options held as at such date. Mr. Curfman was appointed to the   Human Resources Committee and ceased to act as a member of the Sustainability   Committee following the annual and special meeting of shareholders held on   May 3rd, 2018. Value of Debentures is not taken into account in the   determination of securities ownership requirement. The number of unexercised   options represent Replacement Osisko Options pursuant to a plan of   arrangement involving Osisko, Virginia and 9081798 Canada Inc., which took   effect on February 17, 2015. Mr. Page was appointed to the Audit Committee   and ceased to act as a member of the Governance and Nomination Committee   following the annual and special meeting of shareholders held on May 3rd,   2018. Member of the board of directors as a representative of the   Corporation, which is a significant investor in this company. VOTING RESULTS   OF 2018 ANNUAL MEETING The voting results for the election of directors at   the 2018 annual and special meeting of shareholders of the Corporation were   as follows: NAME OF NOMINEE VOTES FOR VOTES WITHHELD Number % Number %   Françoise Bertrand 124,293,169 99.44 694,519 0.56 John Burzynski 117,375,123   93.91 7,612,565 6.09 Pierre D. Chenard 124,621,716 99.71 365,972 0.29   Christopher C. Curfman 124,461,483 99.58 526,205 0.42 Joanne Ferstman   124,323,634 99.47 664,054 0.53 André Gaumond 124,035,155 99.24 952,533 0.76   Pierre Labbé 124,656,616 99.74 331,072 0.26 Oskar Lewnowski 124,031,269 99.23   956,419 0.77 Charles E. Page 124,444,166 99.57 543,522 0.43 Sean Roosen   123,542,449 98.84 1,445,239 1.16 

    

 

TENURE OF THE   BOARD The following table illustrates the age group, gender, applicable   tenure and location of residence for each of the nominee non-executive   directors: AGE GENDER APPLICABLE TENURE REGION NAME 50 - 54 55 - 59 60 - 64   65 - 70 FEMALE MALE 12 YEARS (From March 2016) (LAST ELECTION) 72 YEARS OF   AGE (LAST ELECTION) ONTARIO, CANADA QUEBEC, CANADA ILLINOIS, USA NEW YORK,   USA Françoise Bertrand – Independent (5th year of re-election - 2019)(1) 2021   John Burzynski – Non Independent 2027 Christopher C. Curfman – Independent   (5th year of re-election - 2020)(1) 2024 Joanne Ferstman – Independent 2027   Pierre Labbé – Independent (5th year of re-election - 2019) (1) 2027 Oskar   Lewnowski – Independent (5th year of re-election - 2022) (1) 2029 Charles E.   Page – Independent 2024 NOTE: (1) The Board Tenure Limits shall not apply to   a non-executive director who has yet to be elected annually for the fifth   consecutive time by the Shareholders in accordance with the Corporation’s   Majority Voting and Director Resignation Policy. Once a non-executive   director has been elected or re-elected for five (5) times, the Board Tenure   Limits, as described under the heading “Policy regarding Tenure on the Board   of Directors”, shall apply despite the fact that a director continued to   receive satisfactory annual performance evaluations, has the needed skills   and experience and meets other Board policies or legal requirements for Board   service. 

    

 

 

2018 BOARD AND COMMITTEE ATTENDANCE RECORD

 

The table below reflects the record of attendance by directors at meetings of the Board of Directors and its standing Committees, as well as the total number of Board and Committee meetings held during the most recently completed financial year:

 

	
 
    	
 
    	
ATTENDANCE — 2018 MEETINGS
    	
 
    	
TOTAL
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Human Resources
    	
 
    	
Governance and
   Nomination
    	
 
    	
Sustainability
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Board of Directors
    	
 
    	
Audit Committee
    	
 
    	
Committee
    	
 
    	
Committee
    	
 
    	
Committee
    	
 
    	
Committees
    	
 
    	
Overall
    	
 
    
	
Member
    	
 
    	
Number
    	
 
    	
%
    	
 
    	
Number
    	
 
    	
%
    	
 
    	
Number
    	
 
    	
%
    	
 
    	
Number
    	
 
    	
%
    	
 
    	
Number
    	
 
    	
%
    	
 
    	
Number
   and %
    	
 
    	
Number
   and %
    	
 
    
	
BERTRAND, Françoise
    	
 
    	
10/11
    	
 
    	
91
    	
 
    	
—
    	
 
    	
—
    	
 
    	
5/5
    	
 
    	
100
    	
 
    	
—
    	
 
    	
—
    	
 
    	
2/2
    	
 
    	
100
    	
 
    	
7/7
   100
    	
 
    	
17/18
   94
    	
 
    
	
BRADLEY, Victor H.(1)
    	
 
    	
4/4
    	
 
    	
100
    	
 
    	
2/2
    	
 
    	
100
    	
 
    	
3/3
    	
 
    	
100
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
5/5
   100
    	
 
    	
9/9
   100
    	
 
    
	
BURZYNSKI, John (2)
    	
 
    	
10/11
    	
 
    	
91
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
1/1
    	
 
    	
100
    	
 
    	
1/1
   100
    	
 
    	
11/12
   92
    	
 
    
	
CHENARD, Pierre D.(3)
    	
 
    	
11/11
    	
 
    	
100
    	
 
    	
2/2
    	
 
    	
100
    	
 
    	
—
    	
 
    	
—
    	
 
    	
4/4
    	
 
    	
100
    	
 
    	
1/1
    	
 
    	
100
    	
 
    	
7/7
   100
    	
 
    	
18/18
   100
    	
 
    
	
CURFMAN, Christopher C.(4)
    	
 
    	
10/11
    	
 
    	
91
    	
 
    	
—
    	
 
    	
—
    	
 
    	
2/2
    	
 
    	
100
    	
 
    	
4/4
    	
 
    	
100
    	
 
    	
1/1
    	
 
    	
100
    	
 
    	
7/7
   100
    	
 
    	
17/18
   94
    	
 
    
	
FERSTMAN, Joanne
    	
 
    	
11/11
    	
 
    	
100
    	
 
    	
4/4
    	
 
    	
100
    	
 
    	
5/5
    	
 
    	
100
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
9/9
   100
    	
 
    	
20/20
   100
    	
 
    
	
GAUMOND, André(5)
    	
 
    	
10/11
    	
 
    	
91
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
2/2
    	
 
    	
100
    	
 
    	
2/2
   100
    	
 
    	
12/13
   92
    	
 
    
	
LABBÉ, Pierre
    	
 
    	
8/11
    	
 
    	
73
    	
 
    	
4/4
    	
 
    	
100
    	
 
    	
—
    	
 
    	
—
    	
 
    	
4/4
    	
 
    	
100
    	
 
    	
—
    	
 
    	
—
    	
 
    	
8/8
   100
    	
 
    	
16/19
   84
    	
 
    
	
LEWNOWSKI, Oskar
    	
 
    	
3/11
    	
 
    	
27
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
3/11
   27
    	
 
    
	
PAGE, Charles E.(6)
    	
 
    	
11/11
    	
 
    	
100
    	
 
    	
2/2
    	
 
    	
100
    	
 
    	
5/5
    	
 
    	
100
    	
 
    	
3/3
    	
 
    	
100
    	
 
    	
—
    	
 
    	
—
    	
 
    	
10/10
   100
    	
 
    	
21/21
   100
    	
 
    
	
PERRON, Jacques(1)
    	
 
    	
4/4
    	
 
    	
100
    	
 
    	
2/2
    	
 
    	
100
    	
 
    	
—
    	
 
    	
—
    	
 
    	
3/3
    	
 
    	
100
    	
 
    	
—
    	
 
    	
—
    	
 
    	
5/5
   100
    	
 
    	
9/9
   100
    	
 
    
	
ROOSEN, Sean
    	
 
    	
11/11
    	
 
    	
100
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
1/2
    	
 
    	
50
    	
 
    	
1/2
   50
    	
 
    	
12/13
   92
    	
 
    
	
TOTAL (%):
    	
 
    	
89
    	
 
    	
100
    	
 
    	
100
    	
 
    	
100
    	
 
    	
92
    	
 
    	
95
    	
 
    	
90
    	
 
    

 

NOTES:

(1)                  Mr. Victor H. Bradley and Mr. Jacques Parron did not stand for re-election in May 2018.

(2)                  Mr. John Burzynski ceased to act as a member of the Sustainability Committee following the annual and special meeting of shareholders held on May 3rd, 2018.

(3)                  Mr. Pierre D. Chenard was appointed to the Audit Committee and the Sustainability Committee following the annual and special meeting of shareholders held on May 3rd, 2018. In addition, Mr. Chenard, who acted as a nominee director of the Caisse pursuant to an investor rights agreement entered into between the Caisse and the Corporation, decided not to stand for re-election at this Meeting.

(4)                  Mr. Christopher Curfman was appointed to the Human Resources Committee and ceased to act as a member of the Sustainability Committee following the annual and special meeting of shareholders held on May 3rd, 2018.

(5)                  Mr. André Gaumond is not standing for re-election at this Meeting.

(6)                  Mr. Charles E. Page was appointed to the Audit Committee and ceased to act as a member of the Governance and Nomination Committee following the annual and special meeting of shareholders held on May 3rd, 2018.

 

A private session is included in the agenda of every Board and Committee meeting and the non-executive directors or the Committee members have the prerogative to hold such private session or not at their discretion. At the request of the directors or the Committee members, attendance of certain members of Management of the Corporation may be required from time to time.

 

2019 Management Information Circular

 

21

 

The table below displays the total number of private sessions held by directors during the most recently completed financial year:

 

	
 
    	
 
    	
Board of Directors
    	
 
    	
Audit Committee
    	
 
    	
Human
 Resources
 Committee
    	
 
    	
Governance and
 Nomination
 Committee
    	
 
    	
Sustainability
 Committee
    	
 
    
	
 
    	
 
    	
Regular
    	
 
    	
Ad Hoc
    	
 
    	
Regular
    	
 
    	
Regular
    	
 
    	
Regular
    	
 
    	
Regular
    	
 
    
	
Number  of  Private Sessions  held:
    	
 
    	
5 of   5
    	
 
    	
3 of  6
    	
 
    	
4 of  4
    	
 
    	
3 of  5
    	
 
    	
3 of  4
    	
 
    	
2 of  2
    	
 
    

 

DIRECTOR COMPENSATION

 

RETAINER, ATTENDANCE FEES AND SHARE-BASED REMUNERATION

 

The directors’ total compensation is reviewed annually by the Human Resources Committee (the “Committee”). In 2016, the Committee requested that an external review be conducted by Meridian Compensation Partners LLC (“Meridian”), in order to assist the Committee in reviewing the directors’ total compensation. Based on such review, the Board, upon recommendation of the Committee, concluded that the compensation structure was reasonable and aligned the interests of directors with those of Shareholders over the long-term, particularly as equity is delivered in the form of DSUs.

 

The Committee oversees directors’ compensation. The Committee determines, from time to time, the respective value of the annual retainer and DSU grant to be made to non-executive directors and makes its recommendation to the Board of Directors.

 

An annual retainer and attendance fees for Board and Committee service are paid on a quarterly basis to non-executive directors only.

 

The Board of Directors makes fixed value DSU grants to non-executive directors. The Board of Directors adopted the DSU plan (the “DSU Plan”), which is further described below under the heading “Deferred Share Unit Plan”, and elected to fix an annual value to such grant at approximately $120,000 for the non-executive Board members and $180,000 for the lead director (“Lead Director”). Furthermore, each new non-executive director is granted an initial one-time grant having a value of $200,000. The Lead Director is granted an initial one-time grant having a value of $300,000. Such initial DSU grants (the “Initial DSU Grants”) are consistent with the practice of welcoming new non-executive Board members by making an initial long-term incentive award. With respect to the annual grant of DSUs to a non-executive director in the year following the receipt of the Initial DSU Grant, such annual grant is pro-rated to take into account that the Initial DSU Grant shall cover an initial period of twelve (12) months.

 

Non-executive directors are not eligible to receive options. Mr. Burzynski received options of the Corporation given his executive role until 2016. As shown in the biography of Mr. Labbé, Replacement Osisko Options are also outstanding, which are scheduled to expire at the latest on July 11, 2024.

 

All annual and initial DSU grants, as well as annual retainers and attendance fees paid to non-executive directors are described below:

 

	
ANNUAL RETAINERS — Board
    	
 
    	
RETAINERS
   AND FEES
   ($)
    	
 
    
	
Non-executive   director of the Board
    	
 
    	
40,000
    	
 
    
	
Additional   retainer allocated to the Lead Director of the Board
    	
 
    	
60,000
    	
 
    

 

	
ANNUAL RETAINERS — Committees/Members and Chairs
    	
 
    	
($)
    	
 
    
	
Chair of the   Audit Committee
    	
 
    	
20,000
    	
 
    
	
Chair of all   other Committees
    	
 
    	
10,000
    	
 
    
	
Non-executive   member of a Committee
    	
 
    	
5,000
    	
 
    

 

2019 Management Information Circular

 

22

 

	
PER MEETING FEES — Attendance/Travel
    	
 
    	
($)
    	
 
    
	
Board and   Committee Meeting Attendance Fees
   (in person or via conference call)
    	
 
    	
1,500
    	
 
    
	
Special   Committee Meeting Attendance Fees
   (in person or via conference call)
    	
 
    	
1,500
    	
 
    
	
Board and   Committee Meeting Per Diem Fee
   (payable to non-executive directors who are required to travel for at least   four hours to attend a meeting)
    	
 
    	
1,000
    	
 
    

 

	
DSUs — Initial and Annual ($ Value)
    	
 
    	
($)
    	
 
    
	
Annual grant to   the Lead Director of the Board
    	
 
    	
180,000
    	
 
    
	
Annual grant to   a non-executive director of the Board
    	
 
    	
120,000
    	
 
    
	
Initial one-time   grant to the Lead Director
    	
 
    	
300,000
    	
 
    
	
Initial one-time   grant to a new non-executive director
    	
 
    	
200,000
    	
 
    

 

DIRECTOR COMPENSATION TABLE

 

The total value of retainers, attendance fees and share-based awards paid by the Corporation to non-executive directors in respect of meetings of the Board and its standing Committees during the most recently completed financial year was $1,855,346. The following table provides a summary of the compensation received by each non-executive director of the Corporation for the most recently completed financial year:

 

	
Name(1)
    	
 
    	
Fees
   Earned
   ($)
    	
 
    	
Share-Based
   Awards
   ($)(2)
    	
 
    	
Option-
   Based
   Awards
   ($)
    	
 
    	
Non-Equity Incentive
   Plan Compensation
   ($)
    	
 
    	
Pension
   Value
   ($)
    	
 
    	
All Other
   Compensation(3)
   ($)
    	
 
    	
Total
   ($)
    	
 
    
	
Françoise   Bertrand
    	
 
    	
79,041
    	
 
    	
120,000
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
199,041
    	
 
    
	
Victor H.   Bradley(4)
    	
 
    	
30,736
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
2,000
    	
 
    	
32,736
    	
 
    
	
John Burzynski
    	
 
    	
60,014
    	
 
    	
120,000
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
180,014
    	
 
    
	
Pierre D.   Chenard
    	
 
    	
80,431
    	
 
    	
77,143
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
157,574
    	
 
    
	
Christopher C.   Curfman
    	
 
    	
74,014
    	
 
    	
120,000
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
194,014
    	
 
    
	
Joanne Ferstman
    	
 
    	
153,500
    	
 
    	
180,000
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
333,500
    	
 
    
	
André Gaumond
    	
 
    	
66,310
    	
 
    	
120,000
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
186,310
    	
 
    
	
Pierre Labbé
    	
 
    	
77,500
    	
 
    	
120,000
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
197,500
    	
 
    
	
Oskar Lewnowski
    	
 
    	
46,000
    	
 
    	
90,989
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
136,989
    	
 
    
	
Charles E. Page
    	
 
    	
86,635
    	
 
    	
120,000
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
206,635
    	
 
    
	
Jacques Perron(4)
    	
 
    	
29,033
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
2,000
    	
 
    	
31,033
    	
 
    

 

NOTES:

(1)              Mr. Sean Roosen, Chair of the Board and Chief Executive Officer of the Corporation does not receive any compensation as director of the Corporation. Mr. Roosen’s compensation is further disclosed in the Summary Compensation Table and elsewhere in this Circular.

(2)              Share-based awards in the form of Initial DSU Grants were made under the DSU Plan as fully described under the heading “Long-term Incentive Compensation”. The value price of each DSU at the date of grant, as per the terms of the DSU Plan, was $12.97 for all non-executive directors.

(3)              Directors traveling more than 4 hours to attend meetings are entitled to a $1,000 per diem.

(4)              Messrs. Victor H. Bradley and Jacques Perron did not stand for re-election in May 2018.

 

2019 Management Information Circular

 

23

 

The following table sets forth in detail each component of the total retainer, attendance fees and per diem paid to each non-executive directors during the financial year ended December 31, 2018:

 

	
 
    	
 
    	
Annual Retainer
    	
 
    	
Attendance Fees and Per Diem
    	
 
    
	
Name(1)
    	
 
    	
Board Member
   ($)
    	
 
    	
Committee
   Member
   ($)
    	
 
    	
Committee
   Chair
   ($)
    	
 
    	
Board
   Meetings
   ($)
    	
 
    	
Committee
   Meetings
   ($)
    	
 
    	
Per
   Diem
   ($)
    	
 
    	
Total Fees
   ($)
    	
 
    
	
Françoise   Bertrand
    	
 
    	
40,000
    	
 
    	
5,014
    	
 
    	
10,027
    	
 
    	
13,500
    	
 
    	
10,500
    	
 
    	
—
    	
 
    	
79,041
    	
 
    
	
Victor H.   Bradley(2)
    	
 
    	
13,626
    	
 
    	
1,703
    	
 
    	
3,407
    	
 
    	
4,500
    	
 
    	
7,500
    	
 
    	
2,000
    	
 
    	
32,736
    	
 
    
	
John Burzynski(3)
    	
 
    	
40,000
    	
 
    	
5,014
    	
 
    	
—
    	
 
    	
13,500
    	
 
    	
1,500
    	
 
    	
—
    	
 
    	
60,014
    	
 
    
	
Pierre D.   Chenard(4)
    	
 
    	
40,000
    	
 
    	
8,310
    	
 
    	
6,621
    	
 
    	
15,000
    	
 
    	
10,500
    	
 
    	
—
    	
 
    	
80,431
    	
 
    
	
Christopher C.   Curfman(5)
    	
 
    	
40,000
    	
 
    	
10,014
    	
 
    	
—
    	
 
    	
13,500
    	
 
    	
10,500
    	
 
    	
—
    	
 
    	
74,014
    	
 
    
	
Joanne Ferstman
    	
 
    	
100,000
    	
 
    	
5,000
    	
 
    	
20,000
    	
 
    	
15,000
    	
 
    	
13,500
    	
 
    	
—
    	
 
    	
153,500
    	
 
    
	
André Gaumond
    	
 
    	
40,000
    	
 
    	
8,310
    	
 
    	
—
    	
 
    	
15,000
    	
 
    	
3,000
    	
 
    	
—
    	
 
    	
66,310
    	
 
    
	
Pierre Labbé
    	
 
    	
40,000
    	
 
    	
5,000
    	
 
    	
10,000
    	
 
    	
10,500
    	
 
    	
12,000
    	
 
    	
—
    	
 
    	
77,500
    	
 
    
	
Oskar Lewnowski
    	
 
    	
40,000
    	
 
    	
—
    	
 
    	
—
    	
 
    	
6,000
    	
 
    	
—
    	
 
    	
—
    	
 
    	
46,000
    	
 
    
	
Charles E. Page(6)
    	
 
    	
40,000
    	
 
    	
10,014
    	
 
    	
6,621
    	
 
    	
15,000
    	
 
    	
15,000
    	
 
    	
—
    	
 
    	
86,635
    	
 
    
	
Jacques Perron(2)
    	
 
    	
13,626
    	
 
    	
3,407
    	
 
    	
—
    	
 
    	
4,500
    	
 
    	
7,500
    	
 
    	
2,000
    	
 
    	
31,033
    	
 
    
	
TOTAL:
    	
 
    	
447,252
    	
 
    	
61,786
    	
 
    	
56,676
    	
 
    	
126,000
    	
 
    	
91,500
    	
 
    	
4,000
    	
 
    	
787,214
    	
 
    

 

NOTES:

(1)              Mr. Sean Roosen, Chair of the Board and Chief Executive Officer of the Corporation does not receive any compensation as director of the Corporation. Mr. Roosen’s compensation is further disclosed in the Summary Compensation Table and elsewhere in this Circular.

(2)              Messrs. Victor H. Bradley and Jacques Perron did not stand for re-election in May 2018. The retainer and attendance fees were paid until the annual and special meeting of shareholders held on May 3rd, 2018.

(3)              Mr. John Burzynski ceased to act as a member of the Sustainability Committee following the annual and special meeting of shareholders held on May 3rd, 2018. The retainer and attendance fees for such Committee were paid until the annual and special meeting of shareholders held on May 3rd, 2018.

(4)              Mr. Pierre D. Chenard was appointed to the Audit Committee and the Sustainability Committee following the annual and special meeting of shareholders held on May 3rd, 2018. The retainer and attendance fees payments took effect upon his appointment.

(5)              Mr. Christopher C. Curfman was appointed to the Human Resources Committee and ceased to act as a member of the Sustainability Committee following the annual and special meeting of shareholders held on May 3rd, 2018. The retainer and attendance fees were paid based on such changes.

(6)              Mr. Charles E. Page was appointed to the Audit Committee and ceased to act as a member of the Governance and Nomination Committee following the annual and special meeting of shareholders held on May 3rd, 2018. The retainer and attendance fees were paid based on such changes.

 

Deferred Share Unit Plan

 

The Corporation’s DSU Plan, which is in effect since the date of its assent, April 30, 2014, was adopted to enhance the Corporation’s ability to attract and retain talented individuals to serve as members of the Board of Directors or as officers and executives of the Corporation and its subsidiaries and to promote alignment of interests between such individuals and Shareholders of the Corporation.

 

The Board of Directors may grant DSUs on a discretionary basis. The number of DSUs credited to a director’s account is calculated on the basis of the closing price of the Common Shares of the Corporation traded on the TSX on the day prior to the date of grant. Additional DSUs will automatically be granted to each participant whenever dividends are paid on the Common Shares of the Corporation.

 

As at December 31, 2018, the aggregate value of DSUs held by the Corporation’s non-executive directors was $3,898,741.

 

2019 Management Information Circular

 

24

 

Outstanding Share-Based Awards and Option-Based Awards

 

The table below sets forth, for each non-executive director, information regarding option-based and share-based awards outstanding as at December 31, 2018.

 

	
 
    	
 
    	
Option-based awards
    	
 
    	
Share-based awards(2)
    	
 
    
	
Name(1)
    	
 
    	
Number of
    securities
    underlying
    unexercised
    options
 (#)
    	
 
    	
Option
    exercise
    price
 ($)
    	
 
    	
Option
    expiration
    date
 (yyyy-mm-dd)
    	
 
    	
Value of
    unexercised in-
    the-money
    options(3)
 ($)
    	
 
    	
Number of
    shares or units
    of shares that
    have not vested
    (#)
    	
 
    	
Market or payout
    value of share-
   based awards
    that have not
    vested(3)
 ($)
    	
 
    	
Market or payout
    value of vested
    share-based
    awards not paid
    out or
    distributed(3)
 ($)
    	
 
    
	
Françoise  Bertrand
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
9,300
    	
 
    	
111,321
    	
 
    	
422,541
    	
 
    
	
John  Burzynski(4)
    	
 
    	
15,933
    	
 
    	
13.38
    	
 
    	
2021-03-21
    	
 
    	
—
    	
 
    	
12,438
    	
 
    	
148,883
    	
 
    	
86,184
    	
 
    
	
 
    	
 
    	
60,600
    	
 
    	
15.80
    	
 
    	
2020-06-30
    	
 
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
190,000
    	
 
    	
14.90
    	
 
    	
2019-09-08
    	
 
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Pierre  D.  Chenard(5)
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
5,900
    	
 
    	
70,623
    	
 
    	
147,231
    	
 
    
	
Christopher  C.  Curfman
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
9,300
    	
 
    	
111,321
    	
 
    	
232,218
    	
 
    
	
Joanne  Ferstman
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
13,900
    	
 
    	
166,383
    	
 
    	
638,001
    	
 
    
	
André  Gaumond(6)
    	
 
    	
57,400
    	
 
    	
13.38
    	
 
    	
2021-03-21
    	
 
    	
—
    	
 
    	
17,464
    	
 
    	
209,044
    	
 
    	
86,184
    	
 
    
	
 
    	
 
    	
90,900
    	
 
    	
15.80
    	
 
    	
2020-06-30
    	
 
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
14,453(7)
    	
 
    	
13.62
    	
 
    	
2024-07-11
    	
 
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
14,453(7)
    	
 
    	
13.93
    	
 
    	
2024-01-15
    	
 
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
14,603(7)
    	
 
    	
10.58
    	
 
    	
2023-07-29
    	
 
    	
20,298
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
14,594(7)
    	
 
    	
10.73
    	
 
    	
2023-01-15
    	
 
    	
18,097
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
14,625(7)
    	
 
    	
9.79
    	
 
    	
2022-07-13
    	
 
    	
31,883
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
14,617(7)
    	
 
    	
9.83
    	
 
    	
2022-01-13
    	
 
    	
31,280
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Pierre  Labbé
    	
 
    	
3,613(7)
    	
 
    	
13.62
    	
 
    	
2024-07-11
    	
 
    	
—
    	
 
    	
9,300
    	
 
    	
111,321
    	
 
    	
310,837
    	
 
    
	
 
    	
 
    	
3,613(7)
    	
 
    	
13.93
    	
 
    	
2024-01-15
    	
 
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
3,650(7)
    	
 
    	
10.58
    	
 
    	
2023-07-29
    	
 
    	
5,074
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
3,648(7)
    	
 
    	
10.73
    	
 
    	
2023-01-15
    	
 
    	
4,524
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Oskar  Lewnowski(5)
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
7,000
    	
 
    	
83,790
    	
 
    	
147,231
    	
 
    
	
Charles  E.  Page
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
9,300
    	
 
    	
111,321
    	
 
    	
424,935
    	
 
    

 

NOTES:

(1)              Mr. Sean Roosen, Chair of the Board and Chief Executive Officer of the Corporation does not receive any compensation as director of the Corporation. Mr. Roosen’s compensation is further disclosed in the Summary Compensation Table and elsewhere in this Circular.

(2)              All DSUs granted by the Corporation in 2018 vest on the day prior to the next annual meeting of Shareholders following such grant.

(3)              The closing price of the Common Shares of the Corporation on the TSX on December 31, 2018 was $11.97.

(4)              Options and RSUs granted to Mr. Burzynski in 2016 were given during his position as Senior Vice President, New Business Development, which he held until August 2016.

(5)              DSUs granted in May 2018 to Messrs. Pierre D. Chenard and Oskar Lewnowski were pro-rated given their respective appointments to the Board of Directors in July and September 2017.

(6)              Options with expiry dates of June 30, 2020 and March 21, 2021 and RSUs granted to Mr. Gaumond in 2016 were given during his position as Senior Vice President, Northern Development, which he held until his retirement in November 2016.

(7)              The number of unexercised options represent Replacement Osisko Options pursuant to a plan of arrangement involving Osisko, Virginia and 9081798 Canada Inc. which took effect on February 17, 2015.

 

Incentive Plan Awards - Value Vested or Earned during the Year

 

The following table discloses the aggregate dollar value that would have been realized if the DSUs, RSUs and options awards had been exercised on the vesting date and the aggregate value realized upon vesting of option-based awards and share-based awards.

 

2019 Management Information Circular

 

25

 

	
Name
    	
 
    	
Option-Based Awards
   Value Vested during the Year
   ($)
    	
 
    	
Share-Based Awards (DSUs/RSUs)
   Value Vested during the yearm
   ($)
    	
 
    	
Non-Equity Incentive Plan
   Compensation
   Value earned during the Yearm
   ($)
    	
 
    
	
Françoise   Bertrand
    	
 
    	
N/A
    	
 
    	
90,792
    	
 
    	
N/A
    	
 
    
	
Victor H.   Bradley(3)
    	
 
    	
N/A
    	
 
    	
90,792
    	
 
    	
N/A
    	
 
    
	
John Burzynski(4)
    	
 
    	
—
    	
 
    	
273,371
    	
(5)
    	
N/A
    	
 
    
	
Pierre D.   Chenard
    	
 
    	
N/A
    	
 
    	
155,103
    	
 
    	
N/A
    	
 
    
	
Christopher C.   Curfman
    	
 
    	
N/A
    	
 
    	
90,792
    	
 
    	
N/A
    	
 
    
	
Joanne Ferstman
    	
 
    	
N/A
    	
 
    	
136,188
    	
 
    	
N/A
    	
 
    
	
André Gaumond(4)
    	
 
    	
—
    	
 
    	
330,953
    	
(5)
    	
N/A
    	
 
    
	
Pierre Labbé
    	
 
    	
N/A
    	
 
    	
90,792
    	
 
    	
N/A
    	
 
    
	
Oskar Lewnowski
    	
 
    	
N/A
    	
 
    	
155,103
    	
 
    	
N/A
    	
 
    
	
Charles E. Page
    	
 
    	
N/A
    	
 
    	
90,792
    	
 
    	
N/A
    	
 
    
	
Jacques Perrone(3)
    	
 
    	
N/A
    	
 
    	
35,308
    	
 
    	
N/A
    	
 
    

 

NOTES:

(1)              All DSUs granted by the Corporation vest on the day prior to the next annual meeting of Shareholders following such grant.

(2)              The Corporation’s Non-Equity Incentive Plan Compensation does not apply to non-executive directors.

(3)              Messrs. Victor H. Bradley and Jacques Perron did not stand for re-election in May 2018.

(4)              The Corporation’s Stock Option Plan does not apply to non-executive directors. Mr. John Burzynski resigned as Senior Vice President, New Business Development of the Corporation in August 2016 and Mr. Gaumond retired as Senior Vice President, Northern Development in November 2016 and options were granted to them while they were employed by the Corporation. Furthermore, the value of vested options is based on the difference between the closing price of the Common Shares on the TSX on December 31, 2018, being $11.97, and the exercise price of the options, multiplied by the number of options vested in 2018. All options vested during 2018, were not in-the-money.

(5)              The amount includes the payment for RSUs granted to Messrs. Burzynski and Gaumond in 2015 as Senior Vice President, New Business Development and Senior Vice President, Northern Development; pursuant to the RSU Plan, the vesting terms consist of the following terms: half (1/2) is time-based (3 years) and the remaining portion (1/2) is also timed based (3 years) and subject to performance criteria toward achievement of the long-term objectives. All RSUs granted in 2015 vested and were paid out in August 2018.

 

Options Exercised during the Year

 

No options were exercised by directors during the financial year ended December 31, 2018. Under the Corporation’s stock option plan (the “Stock Option Plan”), non-executive directors are not eligible to option grant.

 

Settlement of DSUs

 

On May 11, 2018, Mr. Victor H. Bradley requested the settlement of all his DSUs. Accordingly, 36,529 DSUs were settled at a share price of $13.67, being the closing market price on the TSX on May 10, 2018, for a settlement amount of $499,351, before applicable tax withholdings.

 

On March 14, 2019, Mr. Jacques Perron also requested for the settlement of all his DSUs. Accordingly, 18,556 DSUs were settled at a share price of $15.90, being the closing market price on the TSX on March 13, 2019, for a settlement amount of $295,040, before applicable tax withholdings.

 

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

 

To the Corporation’s knowledge, no proposed director is, at the date of this Circular, or has been, within 10 years before the date of this Circular, a director, chief executive officer or chief financial officer of any company (including the Corporation) that, (i) while the proposed director was acting in that capacity, was the subject of a cease trade order or similar order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days, or (ii) after the proposed director ceased to act in that capacity but which resulted from an event that occurred while that person was acting in such capacity, was the subject of a cease trade order or similar order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days.

 

2019 Management Information Circular

 

26

 

To the Corporation’s knowledge, no proposed director is, as at the date of this Circular, or has been, within 10 years before the date of this Circular, a director or executive officer of any company that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.

 

In addition, to the knowledge of the Corporation, no proposed director has, within 10 years before the date of this Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold his assets.

 

Furthermore, to the knowledge of the Corporation, no proposed director has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority, or has been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable Shareholder in deciding whether to vote for a proposed director.

 

STATEMENT OF EXECUTIVE COMPENSATION

 

COMPENSATION GOVERNANCE

 

The Board of Directors of Osisko is responsible for establishing and administrating a compensation program for its Chair and Chief Executive Officer, and its Named Executive Officers (collectively “Named Executives”) of the Corporation. The Board of Directors has delegated the oversight of the compensation program and human resources matters to the Human Resources Committee, which is composed entirely of independent directors.

 

The Committee has the responsibility to ensure that the Corporation attracts and retains senior leadership team that will develop and execute a strategic plan, through which is expected to deliver superior value over the long-term to the Corporation’s Shareholders and other stakeholders. In carrying out its duties, the Committee consults the Chair and Chief Executive Officer, the President, the Chief Financial Officer and the Vice President, Legal Affairs and Corporate Secretary. The Committee may also hire and retain, from time to time, the services of external consultants, at its discretion. The Committee also reviews various senior management development programs, as well as a succession plan for key positions.

 

As part of its Shareholder outreach program, the Corporation also engages with Shareholders with respect to compensation matters in addition to submitting to its Shareholders annually an advisory resolution on Osisko’s approach to executive compensation. The Committee assesses the compensation structure on an annual basis in order to ensure that it is aligned with Shareholders’ interests.

 

Composition of the Human Resources Committee

 

The Committee is currently comprised of the following four directors: Ms. Françoise Bertrand (Chair), Mr. Christopher Curfman, Ms. Joanne Ferstman and Mr. Charles E. Page, all of whom are independent as defined under Regulation 52-110.

 

Relevant Education and Experience of Members of the Committee

 

The Board recognizes the importance of appointing independent, knowledgeable and experienced members to the Committee, who have the necessary background in executive compensation and risk management to fulfill the Committee’s duties and responsibilities. All members of the Committee have extensive experience as described in the directors’ biographies outlined previously. Specifically, they bring the following experience and skills set to the Committee:

 

2019 Management Information Circular

 

27

 

	

    	
 
    	
Ms. Françoise Bertrand

Ms. Bertrand has extensive experience in leadership roles of   public, private and not for profit organizations. She brings compensation and   talent management insights to the Committee. Ms. Bertrand has previous   experience on Human Resources/Compensation Committees of public companies,   including chairing the Compensation Committee of a large entrepreneurial   public media company. She has been a member of the Corporation’s Human   Resources Committee since February 2015.
    
	
 
    	
 
    	
 
    
	

    	
 
    	
Mr. Christopher Curfman

Mr. Curfman brings to the Committee more than 21 years of   experience in the mining industry. He has held several progressive positions   in Asia, Australia and USA, including Senior Vice President of Caterpillar   and President of Caterpillar Global Mining. He has extensive international   experience and an in-depth knowledge of mining operations. His global   leadership was key to Caterpillar’s success in the mining industry. He also   served as a board member at various organizations, including the Canadian   Institute of Mining, the National Mining Association, the World Coal   Association and several universities. He joined the Human Resources Committee   in May 2018.
    
	
 
    	
 
    	
 
    
	

    	
 
    	
Ms. Joanne Ferstman

Ms. Ferstman’s experience includes the development,   implementation and maintenance of compensation programs in the financial   industry and in an entrepreneurial environment as well as negotiation and   terms of executive employment. As a professional accountant,   Ms. Ferstman also has experience in risk management with respect to   compensation management. She is Chair of the Corporation’s Audit Committee   and has many years of experience as chair and member of Human   Resources/Compensation Committees of other public companies. She meets   regularly with external compensation consultants and is up to date on   compensation trends and philosophies. She has been a member of the   Corporation’s Human Resources Committee since June 2014.
    
	
 
    	
 
    	
 
    
	

    	
 
    	
Mr. Charles E. Page

Mr. Page brings to the Committee more than 40 years of   experience in the mineral industry with particular insights in the management   of emerging exploration companies and creation of value in the sector. As a   professional geologist, he also provides technical insights in the risk   management to the Committee and is a member of the Human   Resources/Compensation Committees of other public companies. Mr. Page has   been a member of the Corporation’s Human Resources Committee since   June 2014.
    

 

Work Performed by the Human Resources Committee

 

The following summarizes the work highlights performed by the Committee in relation to the 2018 exercise:

 

Compensation Matters

 

·                  Reviewed the organization structure of the Corporation;

·                  Reviewed the Corporation’s compensation philosophy;

·                  Reviewed and recommended the approval of the amended RSU Plan;

·                  Reviewed and recommended the approval of the 2017 short-term incentive payout;

·                  Reviewed and recommended to the Board of Directors the approval of the 2018 objectives under the annual incentive program. The Committee monitored the quarterly performance against these objectives and in early 2019, conducted a detailed review of the achievements with the Chair and Chief Executive Officer and the President, and recommended annual payout;

·                  Reviewed and recommended the approval of the amended Stock Option Plan, which, among other changes, consisted of reducing the plan from an 8% to a 5% rolling plan;

·                  Reviewed and recommended the approval of the amended Policy on Recovery of Incentive Compensation, which consisted of including cash based and equity based compensation awarded to the Corporation’s officers duly appointed by the Board;

 

2019 Management Information Circular

 

28

 

·                  Reviewed and recommended the approval of the amended Employee Share Purchase Plan, which consisted of reducing the plan from a 1% to a 0.5% rolling plan;

·                  Monitored long-term compensation programs (options and RSUs), including the performance against established objectives which led to the payment in 2018 of the RSUs granted in 2015;

·                  Reviewed the long-term incentive programs and recommended to the Board to approve modifications to such long-term incentive programs;

·                  Reviewed and recommended the approval of a salary increase for the Chair and Chief Executive Officer of the Corporation and other executive team members;

·                  Reviewed and recommended the approval of the 2018-2021 long-term objectives for the 2018 RSU grants;

·                  Reviewed and recommended the approval of the annual 2018 long-term grants (options and RSUs) pursuant to the long-term incentive program;

·                  Reviewed the directors’ compensation program and recommended the approval of the 2018 annual grants of DSUs;

·                  Reviewed the 2018 voting results for the advisory resolution on executive compensation (“Say-on-Pay”);

·                  Reviewed settlement alternatives for RSUs and DSUs, namely providing for a settlement either in cash, Common Shares or a combination of cash and Common Shares;

·                  Monitored development in talent management, remuneration practices and governance related thereto; and

·                  Reviewed and assessed the performance of the Chief Executive Officer.

 

Governance and Administrative Matters

 

·                  Reviewed the securities ownership guidelines and executive’s ownership of the Corporation’s securities;

·                  Reviewed the Charter of the Human Resources Committee and approved the Annual Work Program; and

·                  Reviewed and recommended to the Board to approve the compensation disclosure contained in the Circular.

 

COMPENSATION DISCUSSION AND ANALYSIS

 

The Corporation was created as part of the corporate transaction between Agnico Eagle Mines Limited, Yamana Gold Inc. and Osisko Mining Corporation (“OMC”) in response to a non-solicited takeover bid (the “Osisko Transaction”). The Osisko Transaction was announced on April 16, 2014. Upon Closing of the Osisko Transaction, certain key senior executives employed by OMC were hired by the Corporation.

 

In 2014, the Committee focused on ensuring that the senior management team that had successfully created significant value for OMC be hired given their knowledge of the industry, their past execution track record and their demonstrated ability to work as a team in an entrepreneurial culture. This team also brought their extensive knowledge and understanding of the assets of the Corporation. The Committee also recognizes the positive benefits from having the entrepreneurial spirit under the leadership of Mr. Sean Roosen. The mandate of the management team was to establish a leading intermediate royalty company through the acquisition and creation of new royalties and streams to complete the initial assets of Osisko. The initial key strategic objectives, which are still in force today are:

 

(i)                  Grow asset base through the creation and acquisition of royalties, streams and investments that could lead to future cash flowing royalties and streams;

(ii)               Maintain strong financial capacity to fund asset growth;

(iii)            Attract and retain key talent to execute strategy in an entrepreneurial mode; and

(iv)           Maintain leadership in sustainability within the Québec and Canadian mining industry.

 

The Corporation has executed several transactions over the past 57 months as it builds its portfolio of royalties and streams, including a transformational transaction completed on July 31, 2017 pursuant to which the Corporation acquired from Orion Mine Finance Group (“Orion”) a portfolio of 74 assets (the “Orion

 

2019 Management Information Circular

 

29

 

Transaction”).  The Corporation has also assigned key individuals of the core management group to assume leadership position in key associate companies, including Osisko Mining, Barkerville Gold Mines Ltd. (“Barkerville”) and Falco Resources Ltd. (“Falco”) to advance exploration and development projects, thereby providing future cash flow generating assets.

 

One of the key responsibilities of the Committee in establishing a compensation program for the Named Executives (as defined herein) is to ensure that such compensation will allow the Corporation to attract and retain senior individuals to develop and execute the strategic plan of the Corporation to maximize Shareholder value.

 

Compensation Philosophy

 

Our compensation philosophy is based on providing a highly competitive base salary, along with short and long-term incentives that will provide the management team with a high payout on the achievements of key strategic goals, which will create value for Shareholders and other stakeholders over the long-term.

 

In establishing the compensation programs, the Committee conducts comparative studies, monitors compensation trends within the mining industry and seeks input from external advisors as required. The Committee also monitors Shareholders’ feedback on compensation, including the results of the annual advisory vote on compensation received from Shareholders.

 

In addition, the Committee monitors and reviews the inherent risks related to the compensation program. To date, the Corporation has successfully been able to attract and retain management talent to develop and execute its value creation plan.

 

The Corporation believes that the Named Executives’ responsibilities are best executed through their actions as a group. The creation of a new company operating in a new field dominated by few large competitors and subject to increasing competition from private equity funds, mining companies, sovereign funds, to name a few, presents significant challenges, including the implementation of an efficient management structure in order to ensure the growth of the Corporation. In addition, the business plan of the Corporation, which includes diversification of its revenues, investment in emerging junior mining companies, creation or acquisition of royalty interests and revenue streams offer additional challenges to the Named Executives who have been and will continue to be called upon to play various roles in several fields of activity.

 

For these reasons, the Corporation advocates a team approach for the short and long-term incentive compensation of the Named Executives. Performance monitoring of Named Executives over the first 57 months of existence of the Corporation has confirmed the validity of this approach. Based on the recommendation of the Committee, the Board of Directors approves the corporate objectives for Named Executives of the Corporation and has also determined them to be collective goals.

 

Independent Compensation Consultants

 

The Committee, at its discretion, hires independent compensation consultants. With the establishment of Osisko in mid-2014, the Committee had mandated PCI — Perrault Consulting Inc. to provide assistance in the establishment of initial compensation arrangements.

 

The Committee receives detailed compensation analysis from management on various companies from the mining sector in order to ensure the continued market competitiveness of the compensation of the Named Executives. At the end of 2016, the Committee mandated Meridian to conduct a review and analysis of directors and executives’ compensation within the sector. Meridian’s report was submitted to the Committee in early 2017. No independent compensation consultant was hired by the Corporation in 2018.

 

2019 Management Information Circular

 

30

 

2018 Compensation Advisory Fees

 

The following table illustrates in detail the components of the advisory fees incurred by the Corporation for compensation consultants in 2018 and in 2017:

 

	
 
    	
 
    	
Fees incurred in 2018
   ($)
    	
 
    	
Fees incurred in 2017
   ($)
    	
 
    
	
Meridian   Compensation Partners LLC
    Compensation consulting services
    	
 
    	
Nil
    	
 
    	
52,539
    	
 
    

 

Compensation Comparator Group

 

In order to allow the members of the Committee to proceed with a review of the compensation of the Named Executives, management collected compensation information from management information circulars of a number of peer companies and submitted its findings to the Committee. Following is the list of twelve companies selected by management as part of the 2018 compensation review. These publicly-traded Canadian companies were selected to form part of the 2018 peer group (“Peer Group”) based on their market capitalisation, the fact that they are in the mining or mining royalty business and have operations in Quebec, Canada.

 

	
Company
    	
 
    	
Sector
    	
 
    	
Head Office
    	
 
    	
Market Cap
   in ($ M)(1)
    	
 
    
	
Agnico Eagle   Mines Limited
    	
 
    	
Gold
    	
 
    	
Canada
    	
 
    	
13,488
    	
 
    
	
Alamos Gold Inc.
    	
 
    	
Gold
    	
 
    	
Canada
    	
 
    	
3,187
    	
 
    
	
Altius Minerals   Corporation
    	
 
    	
Diversified Metals & Mining
    	
 
    	
Canada
    	
 
    	
646
    	
 
    
	
Detour Gold   Corporation
    	
 
    	
Gold
    	
 
    	
Canada
    	
 
    	
2,585
    	
 
    
	
Hudbay Minerals
    	
 
    	
Copper
    	
 
    	
Canada
    	
 
    	
2,908
    	
 
    
	
IAMGOLD   Corporation
    	
 
    	
Gold
    	
 
    	
Canada
    	
 
    	
3,414
    	
 
    
	
Kirkland Lake   Gold Ltd.
    	
 
    	
Gold
    	
 
    	
Canada
    	
 
    	
3,989
    	
 
    
	
Pretium   Resources Inc.
    	
 
    	
Gold
    	
 
    	
Canada
    	
 
    	
2,612
    	
 
    
	
Semafo Inc.
    	
 
    	
Gold
    	
 
    	
Canada
    	
 
    	
1,160
    	
 
    
	
SSR Mining
    	
 
    	
Gold
    	
 
    	
Canada
    	
 
    	
1,326
    	
 
    
	
Stornoway   Diamond Corporation
    	
 
    	
Diamonds
    	
 
    	
Canada
    	
 
    	
552
    	
 
    
	
Wheaton Precious   Metals Corp.
    	
 
    	
Gold
    	
 
    	
Canada
    	
 
    	
12,292
    	
 
    
	
Osisko   Gold Royalties Ltd
    	
 
    	
Gold
    	
 
    	
Canada
    	
 
    	
2,291
    	
 
    

 

(1)         As at December 31, 2017.

 

For each of the Named Executives, the members of the Committee analysed the compensation mix as well as the overall compensation package in comparison with the compensation offered by the Peer Group. Further to its analysis, the Committee determined that compensation levels and mixes were adequate for all Named Executives except for the Chief Executive Officer’s base salary.

 

Compensation Policy

 

As is typical in the mining industry, the Corporation’s executive compensation policy is comprised of a combination of cash and stock option grants and RSU grants to Named Executives. The Committee may also award DSUs to Named Executives on an ad hoc basis but has not done so to date.

 

2019 Management Information Circular

 

31

 

Components of the Compensation Program

 

Direct Payout for Execution of Strategic Plan

 

 

The combination of base salaries, annual incentive, option grants and RSU grants (which are full value phantom shares, payable in cash or in shares, at the Corporation’s discretion, as at the end of the three-year vesting period), reflects the Corporation’s evolving nature and is intended to attract and retain talent in a competitive employment market. Grant of options and RSUs to Named Executives are made on an annual basis, generally following the annual meeting of Shareholders. Annual incentive, option grants and RSU grants (timed-based and performance-based) represent the value at risk portion of the total compensation of each Named Executive.

 

For any grant, options vest as to one third of the total grant at each of the first three anniversaries of such grant. RSU grants are subject to the following vesting terms: one half (1/2) is time-based and vests on the third anniversary of such grant while the remaining half (1/2), which also vests on the third anniversary of such grant, is subject to the achievement of approved long-term objectives over a three-year period (as more thoroughly described below under the heading “Long-Term Incentive Compensation”).  The Committee considers that such performance criteria improves Named Executives’ alignment with Shareholders’ interests and further promotes value creation.

 

Options and RSUs also enable the Corporation to balance the ratio of long-term to short-term compensation to levels commensurate with mining industry companies and to enhance Named Executives’ alignment with Shareholder value creation. The Stock Option Plan, RSU Plan and the DSU Plan are further described under the heading “Long-Term Incentive Compensation”  below.

 

In 2017, the Committee decided to increase the “value at risk” of the Named Executives through an increase of the targeted performance components of their compensation. At the same time, the Committee decided to modify the balanced allocation approach of the long-term compensation components (initially 50% options and 50% RSUs) to decrease the proportion of options to 40% and increase the proportion of RSUs to 60%.

 

Prior to this modification, the target of each of the four components of the compensation of the Named Executives totalled approximately 25% of the total compensation. Following are the targets for each of the four components of the compensation of the Named Executives in comparison to the actual compensation they received for 2018:

 

2019 Management Information Circular

 

32

 

	
 
    	
 
    	
Base Salary
    	
 
    	
Short term
   incentive
    	
 
    	
Stock
   Options
    	
 
    	
RSUs
    	
 
    
	
 
    	
 
    	
Target
    	
 
    	
2018
    	
 
    	
Target
    	
 
    	
2018
    	
 
    	
Target
    	
 
    	
2018
    	
 
    	
Target
    	
 
    	
2018
    	
 
    
	
Chief Executive   Officer
    	
 
    	
20
    	
%
    	
22
    	
%
    	
20
    	
%
    	
14
    	
%
    	
24
    	
%
    	
26
    	
%
    	
36
    	
%
    	
38
    	
%
    
	
President and   Senior Vice President
    	
 
    	
22
    	
%
    	
24
    	
%
    	
22
    	
%
    	
15
    	
%
    	
22
    	
%
    	
24
    	
%
    	
34
    	
%
    	
37
    	
%
    
	
Chief Financial   Officer and Vice President, Legal Affairs and Corporate Secretary
    	
 
    	
23
    	
%
    	
25
    	
%
    	
23
    	
%
    	
16
    	
%
    	
21
    	
%
    	
23
    	
%
    	
33
    	
%
    	
36
    	
%
    

 

Management of Compensation Risks

 

The Committee structures the components of the compensation program in order to generate adequate incentives to increase Shareholders value in the long-term while maintaining a balance to limit excessive risk taking.

 

As part of measures in place to mitigate risk related to compensation structure, the Committee establishes the total compensation of the Named Executives based on a balanced approach between fixed and variable compensation components. The use of multiple components limits the risks associated with having the focus on one specific component and provides flexibility to compensate short to medium term goals and long-term objectives in order to maximize Shareholders value.

 

The fixed component of the Named Executives’ compensation is essentially composed of the base salary, which represents between 20% and 23% of their total compensation. The components forming the remaining 77% to 80% represent the “value at risk” and aim at rewarding short to long-term objectives and are composed of an annual incentive (100% performance based on a yearly basis), grant of RSUs (one half of which is performance based on a 3-year period) and grant of options. In connection with the implementation of its strategic growth plan, the Corporation has generally reached its targets for each of the components of the compensation structure for the Named Executives.

 

The long-term compensation comprises RSUs and options. The Committee considers that the granting and vesting policies provide sufficient incentives to motivate the Named Executives in the long-term to increase the overall value of the Corporation and thereby provide an adequate alignment of their interest with those of the Shareholders. In addition, the increase of the performance component targets of the Named Executives, coupled with the reduction of the option component of the long-term incentives resulted in a further alignment of the Named Executives interests with those of the Shareholders.

 

Options vest over a three-year period and have a five-year term. The Committee considers that these characteristics provide sufficient incentives to motivate the Named Executives in the long-term to increase the overall value of the Corporation and thereby provide an adequate alignment of their interest with those of the Shareholders. Notwithstanding the foregoing, because of the nature of an option, market volatility may result in financial benefit which may not be strictly related to the performance of the Corporation. In assessing the component and respective proportion of the elements forming part of the long-term compensation components, the Committee decided to establish such respective proportion to 40% in options and 60% in RSUs in order to ensure that interests of the Named Executives are aligned with those of the Shareholders.

 

Within the scope of ensuring best practices, the Committee adopted formal securities ownership guidelines in 2015 in order to further align the long-term interests of the Shareholders, provided that the calculation of the minimum shareholding be based on:

 

(i)                  the higher of the acquisition cost or market value of shares;

(ii)               the higher of the issue price or market value with respect to DSUs and RSUs; and

(iii)            with respect to RSUs, only those which are exclusively subject to time-based vesting shall be used in the determination of the minimum securities ownership.

 

2019 Management Information Circular

 

33

 

Additional information on the securities ownership guidelines is provided under the heading “Securities Ownership”.

 

Also, as part of the risks review presented to the Corporation’s Audit Committee, none was related to compensation among all risks identified. As Ms. Joanne Ferstman and Mr. Charles E. Page are both members of the Audit Committee and of the Committee, they bring their knowledge, experience and insight on risk issues to the Committee. Any identified risk related to human resources and compensation of management are transmitted to the Committee which is responsible to follow-up on the implementation of the recommendations according to established priorities. The Committee then reports the results back to the Board of Directors.

 

Based on the review performed in the last financial year, no risks associated with the Corporation’s compensation policies and practices that are likely to have a material adverse effect on the Corporation were identified. The Committee considers that the procedures and guidelines currently in place to mitigate key risks relating to compensation are adequately managed and do not encourage excessive risk taking that would likely have a material adverse effect on the Corporation. The Committee will continue to monitor and review the Corporation’s compensation policies and practices annually to ensure that no component of the Named Executives’ compensation constitutes a risk.

 

The compensation components are detailed below. The Corporation has not adopted any retirement plan or pension plan for its directors and officers.

 

Base Salary

 

The base salary is the only fixed component of the compensation of the Named Executives. The Corporation’s policy is to establish base salaries for executive officers that are competitive with relevant salaries paid to executive officers of a comparator group, while recognizing executive officers’ experience, competencies and track record of accomplishments and preserving a “team approach” toward remuneration. Salary levels therefore reflect the overall corporate performance of the Corporation, comparative market data and individual performance. The salaries of the Named Executives are reviewed and, as applicable, adjusted yearly by the Committee considering the overall corporate performance of the Named Executives team, the comparator group metrics, and, as applicable, general market conditions.

 

Initial salaries for the Named Executives were set in July 2014 with effect as of the commencement of operations of the Corporation in June 2014 and reviewed annually thereafter.

 

For 2018, the base salary of each of the Named Executives remained at the 2017 levels except for the Chief Executive Officer’s base salary, which was increased following a review of the compensation of the Peer Group.

 

Compensation Reimbursements — Associate Companies

 

As part of its business model and strategy for growth, the Corporation invests in associate companies and, as a result, members of management, including certain Named Executives, may, from time to time, be appointed to the board of directors or executive positions in such associate companies. The Corporation allocates and charges back a portion of such Named Executive’s base salary to such associate company or, as applicable, takes into account the remuneration paid by such associate company to such Named Executive in reviewing and establishing the total compensation. As such, the annual base salary level shown below is the total salary that a Named Executive is receiving taking into account the portion of salary assumed directly by the Corporation and the portion assumed by associate companies, as applicable. In addition, the Corporation also reduces the long-term compensation of the Named Executive up to a value representing 50% of such long-term compensation to take into account share based awards received from associate companies.

 

The following table lists the associate companies with respect to which certain Named Executives assumed or were assuming a board member role or an executive function as of the date hereof:

 

2019 Management Information Circular

 

34

 

	
Companies
    	
 
    	
Officers
    	
 
    	
Directors
    
	
Barkerville Gold Mines Ltd.
    	
 
    	
François Vézina
    	
 
    	
Sean Roosen (Chair)
    
	
Osisko Metals Incorporated
    	
 
    	
N/A
    	
 
    	
Luc Lessard
    
	
Falco Resources Ltd.
    	
 
    	
Luc Lessard André Le Bel
    	
 
    	
Bryan A. Coates (Chair)
    
	
Osisko Mining Inc.
    	
 
    	
N/A
    	
 
    	
Sean Roosen (Chair)
    
	
TerraX Minerals Inc.
    	
 
    	
N/A
    	
 
    	
Elif Lévesque
    
	
Victoria Gold Corp.
    	
 
    	
N/A
    	
 
    	
Sean Roosen
    

 

The actual salary effectively assumed by the Corporation for each of the Named Executives is therefore adjusted to take into account the cash remuneration received by the Named Executives for their services to such associate companies.

 

The table below shows the annual base salary level and actual salary assumed by the Corporation, net of remuneration assumed by associate companies, for each of the Named Executives in 2017 and 2018:

 

	
Named Executives
    	
 
    	
Annual Base Salary
   level as at
   January 1st, 2018
   ($)
    	
 
    	
Actual
   Salary assumed by
   the Corporation in
   2018
   ($)
    	
 
    	
Annual Base Salary
   level as at
   January 1st, 2017
   ($)
    	
 
    	
Actual
   Salary assumed by
   the Corporation in
   2017
   ($)
    	
 
    
	
Sean Roosen,   Chair of the Board and Chief Executive Officer
    	
 
    	
700,000
    	
 
    	
486,481
    	
 
    	
650,000
    	
 
    	
491,000
    	
 
    
	
Bryan A. Coates,   President
    	
 
    	
500,000
    	
 
    	
478,000
    	
 
    	
500,000
    	
 
    	
482,460
    	
 
    
	
Elif Lévesque,   Chief Financial Officer and Vice President, Finance
    	
 
    	
350,000
    	
 
    	
340,000
    	
 
    	
350,000
    	
 
    	
345,000
    	
 
    
	
Luc Lessard,   Senior Vice President, Technical Services
    	
 
    	
500,000
    	
 
    	
33,750
    	
 
    	
500,000
    	
 
    	
176,359
    	
 
    
	
André Le Bel,   Vice President, Legal Affairs and Corporate Secretary
    	
 
    	
310,000
    	
 
    	
209,603
    	
 
    	
310,000
    	
 
    	
229,493
    	
 
    

 

The table below shows the Long-term Incentive level and actual Long-term Incentive assumed by the Corporation, net of remuneration assumed by associate companies, for each of the Named Executives in 2017 and 2018:

 

	
Named Executives
    	
 
    	
Annual LTI level
   as at
   January 1st, 2018
   ($)
    	
 
    	
Actual
   LTI assumed by the
   Corporation in 2018
   ($)
    	
 
    	
Annual LTI level
   as at
   January 1st, 2017
   ($)
    	
 
    	
Actual
   LTI assumed by the
   Corporation in 2017
   ($)
    	
 
    
	
Sean Roosen,   Chair of the Board and Chief Executive Officer
    	
 
    	
2,100,000
    	
 
    	
1,375,585
    	
 
    	
1,950,000
    	
 
    	
983,721
    	
 
    
	
Bryan A. Coates,   President
    	
 
    	
1,250,000
    	
 
    	
634,000
    	
 
    	
1,250,000
    	
 
    	
1,208,621
    	
 
    
	
Elif Lévesque,   Chief Financial Officer and Vice President, Finance
    	
 
    	
805,000
    	
 
    	
784,342
    	
 
    	
805,000
    	
 
    	
758,351
    	
 
    
	
Luc Lessard,   Senior Vice President, Technical Services
    	
 
    	
1,250,000
    	
 
    	
634,000
    	
 
    	
1,250,000
    	
 
    	
923,050
    	
 
    
	
André Le Bel,   Vice President, Legal Affairs and Corporate Secretary
    	
 
    	
713,000
    	
 
    	
674,566
    	
 
    	
713,000
    	
 
    	
682,618
    	
 
    

 

2019 Management Information Circular

 

35

 

Annual Incentive Compensation

 

The Committee believes that long-term growth of value for Shareholders is derived from the execution of short and long-term approved strategic initiatives.

 

The annual incentive program for the Named Executives is based on their performance as a team against corporate objectives approved by the Board of Directors. Bonuses are paid in full following awards approved by the Board of Directors, based on recommendation of the Committee. While the target for annual incentive compensation for Named Executives has been contractually established at 100% of their respective base salary, the Board of Directors retains full discretion in assessing such achievement. In addition, the Board may also factor in individual achievement, if warranted. For greater certainty, annual incentive compensation does not represent a guaranteed compensation item for the Named Executives as the determination of the performance relating to such compensation remains the sole prerogative of the Board of Directors.

 

As part of its duties and responsibilities and in conjunction with year-end assessments, the Committee reviews the realization of the Corporation’s objectives and meet with management to discuss and consider each element contained in the corporate objectives. The Committee also meets in camera to discuss this matter.

 

The Corporation’s 2018 short-term key objectives (the “2018 Key Objectives”)  consist of eight key categories, which are set forth below:

 

	
2018 CORPORATE OBJECTIVES
    	
 
    	
Allocation
   %
    	
 
    
	
1)
    	
 
    	
Acquire new royalties or streaming assets with   targeted cash flow within short-term. Investment target set at $150 million.
    	
 
    	
30.0
    	
 
    
	
2)
    	
 
    	
Increase mining asset net asset value (“NAV”)  per share by   10%.
    	
 
    	
10.0
    	
 
    
	
3)
    	
 
    	
Outperform TSX Gold Index by 10%.
    	
 
    	
5.0
    	
 
    
	
4)
    	
 
    	
Restructure offtake agreements to reduce working   capital requirements, and reduce general and administration costs.
    	
 
    	
10.0
    	
 
    
	
5)
    	
 
    	
Increase Shareholder value through the execution of   buyback of shares through its normal course issuer bid and/or increase of   dividend and reduce major’s Shareholders’ position.
    	
 
    	
15.0
    	
 
    
	
6)
    	
 
    	
Reduce debt by $50 million
    	
 
    	
10.0
    	
 
    
	
7)
    	
 
    	
Review the management of the equity portfolio,   including potential creation of the Corporation’s capital, to enhance returns   and create additional value for Shareholders
    	
 
    	
10.0
    	
 
    
	
8)
    	
 
    	
Maintain leadership in sustainability
    	
 
    	
10.0
    	
 
    
	
TOTAL
    	
 
    	
 
    	
100.0
    	
 
    

 

The following is a summary of achievements completed by the Corporation toward reaching the 2018 Key Objectives:

 

1.                                      Acquisition of new royalties or streaming assets with targeted cash flow within short-term  period of three years. Investment targeted at $150 million

 

·                                          Entered into an amended and restated purchase and sale agreement with Stornoway Diamond Corporation (“Stornoway”)  in relation to the Renard stream. As part of the improved streaming terms the Corporation shall continue to hold a 9.6% stream in all diamonds produced from the Renard mining property for the life of the mine. Upon the completion of a sale of diamonds, the Corporation will remit to Stornoway a cash transfer payment that shall be the lesser of 40% of achieved sales price and US$40 per carat; the Corporation invested an additional $21.6 million with Stornoway as part of this transaction;

·                                          Acquired from Victoria Gold Corp. (“Victoria”)  a 5% net smelter return (“NSR”)  royalty for $98 million on the Dublin Gulch property which hosts the Eagle Project located in Yukon, Canada;

·                                          Received $159.4 million from Pretium Exploration Inc. following the exercise of its option to fully repurchase from Osisko Bermuda Limited its interest in the Brucejack gold and silver stream;

 

2019 Management Information Circular

 

36

 

·                                          Completed the acquisition of a 1.75% NSR royalty on the Cariboo property held by Barkerville Gold Mines Ltd. (“Barkerville”)  for an aggregate purchase price of $20 million, thus increasing the Corporation’s NSR royalty to a total of 4% and including an option to acquire an additional 1% NSR royalty for $13 million;

·                                          Negotiated a silver stream purchase agreement for 90% (may increase to 100%) of payable silver produced at Home 5 Project held by Falco for $180 million; the transaction closed at the end of February 2019;

·                                          Notified Osisko Mining Inc. (“Osisko Mining”)  of its intent to exercise its right to purchase Osisko Mining’s buy-back rights on existing royalties on the Windfall Lake property for $5 million, thus allowing the Corporation to increase its royalty by an additional 1% to 2% NSR royalty;

·                                          Acquired royalties on the Dublin Tin Project held by Strongbow Exploration Inc., Algold Resources Ltd.’s Tijirit Gold Project in Mauritania and Sunny Side project operated by Barksdale Capital Corp.;

·                                          Participated in the financial restructuring of the Amulsar project held by Lydian International Limited in Armenia, pending government sanctioned construction suspension;

·                                          Total investment reached more than $145 million (as part of the total commitment of more than $350 million); and

·                                          As part of new stream/financing transactions, the Corporation invested approximately $62.5 million in equities.

 

2.                                      Increase mining asset NAV per share by 10%

 

·                                          As at year end, the Corporation’s NAV per Common Share had increased by 0.2% over the value as at the end of 2017.

 

3.                                      Outperform TSX Gold Index by 10%

 

·                                          As at year end, the Corporation’s price per Common Share was at $11.97, a decrease of 17.6% compared to a 7.6% decrease for the TSX Gold Index.

 

4.                                      Restructure offtake agreements to reduce working capital requirements and reduce general  and administration costs

 

·                                          Converted the gold offtake agreement of the Matilda project operated by Blackham Resources Limited into a 1.65% gold stream; thereby reducing the working capital by US$2 million; and

·                                          Amended the Corporation’s RSU plan to eliminate volatility on expenses.

 

5.                                      Increase Shareholder value through the execution of the Corporation’s share buyback  program, increase dividend or reducing major Shareholders’ position

 

·                                          Acquired a total of 2,709,779 Common Shares under the Corporation’s normal course issuer bid (“NCIB”)  at an average price of $12.15 per Common Share;

·                                          Renewed its NCIB allowing for a buyback of up to 10,459,829 Common Shares; furthermore, the Corporation declared its intent to use up to $100 million of the proceeds received from Pretium Exploration Inc. to fund share repurchases as part of its NCIB, as deemed appropriate by the Corporation from time to time;

·                                          Declared and paid since inception of the Corporation’s quarterly dividend program an aggregate amount of $86 million.

 

6.                                      Reduction of debt by $50 million

 

·                                          Repaid $123.5 million on its revolving credit facility and extended the maturity date thereof by one year to November 14, 2022.

 

2019 Management Information Circular

 

37

 

7.                                      Review the management of the equity portfolio, to enhance returns and create additional value  for Shareholders

 

·                                          Delivered shares of AuRico Metals Inc. to Centerra Gold Inc. for a $1.80 cash consideration per share and for total proceeds of $25.5 million, generating a gain of $15.5 million, based on the cash cost of the shares;

·                                          Participated with Orion Mine Finance Fund II in the privatization of Dalradian Resources Inc. (“Dalradian”)  increasing the Corporation’s interest from 7.9% to 10.7%.

·                                          Acquired additional shares of Osisko Mining and of Osisko Metals Incorporated (“Osisko Metals”)  as part of private placements completed in September 2018;

·                                          Purchased a secured debenture for an amount of $7 million from Falco that was converted into 12,104,444 Falco shares and 6,052,222 common share purchase warrants following the approval of a majority of the disinterested shareholders of Falco in November 2018;

·                                          Completed, as part of the 5% NSR royalty acquisition completed with Victoria, a share subscription totalling $50 million to acquire common shares of Victoria;

·                                          Acquired, as part of the 1.75% NSR royalty acquisition completed with Barkerville, 10,000,000 common share purchase warrants of Barkerville having an exercise price of $0.75 per Barkerville common share and which may be exercised during a period of 36 months following the closing of the transaction; and

·                                          Including the above-mentioned items, invested $104.7 million in equities and received $27.0 million as proceeds of disposal of shares.

 

8.                                      Maintain leadership in sustainability

 

The Corporation’s leadership in sustainability can be grouped under 5 themes: mining industry, host communities and Governments, charities and sponsorship, project specific and governance.

 

(a)                                 Mining Industry

 

·                                          The Corporation continues to participate in advocacy role for the mining industry through representation in various associations (Association de l‘Exploration Minière du Québec, Association Miniére du Québec, Fédération des chambres de commerce du Québec).

 

·                                          Sponsorship of conferences at industry related events.

 

·                                          Promoted gender diversity in mining and other business and continued development of Montreal’s Young Mining Professionals organization.

 

·                                          Ms. Elif Lévesque was recognized as Québec’s Chief Financial Officer of the Year for small and medium enterprises by the Québec chapter of FEI Canada and was nominated and selected for the 2018 edition of the Top 100 Global Inspirational Women in Mining — co-sponsored by Women in Mining and BMO Capital Markets.

 

(b)                                 Host Communities and Governments

 

·                                          The Corporation continues to maintain an open dialogue with host communities and governments in order to ensure success of mining enterprises. It also participates in Québec’s Plan Nord initiatives.

 

·                                          Members of management of the Corporation also participated with the Québec Government on increasing investor and stakeholder awareness for resource development in Québec.

 

2019 Management Information Circular

 

38

 

·                                          The Corporation is actively involved with the Fonds Restor-Action Nunavik, which goal is the cleaning and rehabilitation of abandoned mining sites in partnership with governments, Inuit and First Nations.

 

(c)                                  Charities and Sponsorship

 

·                                          The Corporation supports various charities and community organizations.

 

·                                          It also promotes higher education either through direct sponsorship or through lectures and conferences given by members of management.

 

(d)                                 Project specific

 

·                                          The Corporation initiated dialogue with the Québec Government on projects being developed by associate companies.

 

·                                          Through its growth, the Corporation was able to maintain strong employee engagement. The participation of its employees in the Employee Share Purchase Plan stands at above 89%.

 

(e)                                  Governance

 

·                                          The Corporation, being fully aware that mining projects depend not only on compliance with applicable regulations but also, and sometimes to a greater extent, on maintaining the social licence (the support) from host communities, promotes and maintains strong relationships with its stakeholders through regular meetings held in various locations.

 

·                                          The Corporation engages with Shareholders with respect to compensation matters. The Committee assesses the compensation structure on an annual basis in order to ensure that it remains aligned with Shareholders’ interests. Although most public companies, are impacted by the general trend of decreasing support on such matter, the Corporation has nonetheless achieved strong support from its Shareholders, namely 98% in 2015, 98% in 2016, 94% in 2017 and 99% in 2018.

 

Assessment of 2018 Key Objectives by the Committee

 

The 2018 Key Objectives were approved by the Board of Directors, upon recommendation of the Committee. The Committee monitored on a quarterly basis the progress made by management toward achieving said objectives. The Committee reviewed achievements against the Corporation’s objectives and thereafter met with management and in camera to discuss and consider the payout under the short-term incentive program.

 

The Committee provided its recommendation to the Board which also deliberated with the presence of senior members of management and determined and approved the following assessment of the 2018 Key Objectives set forth below:

 

2019 Management Information Circular

 

39

 

	
2018 CORPORATE OBJECTIVES
    	
 
    	
Allocation
   %
    	
 
    	
Achievement
   %
    	
 
    
	
1)
    	
 
    	
Acquire new royalties or streaming assets with   targeted cash flow within short-term. Investment target set at $150 million.
    	
 
    	
30.0
    	
 
    	
30.0
    	
 
    
	
2)
    	
 
    	
Increase mining asset NAV per share by 10%.
    	
 
    	
10.0
    	
 
    	
0.0
    	
 
    
	
3)
    	
 
    	
Outperform TSX Gold Index by 10%.
    	
 
    	
5.0
    	
 
    	
0.0
    	
 
    
	
4)
    	
 
    	
Restructure offtake agreements to reduce working   capital requirements, and reduce general and administration costs.
    	
 
    	
10.0
    	
 
    	
5.0
    	
 
    
	
5)
    	
 
    	
Increase Shareholder value through the execution of   buyback of shares through its normal course issuer bid and/or increase of   dividend and reduce majors Shareholders’ position.
    	
 
    	
15.0
    	
 
    	
6.0
    	
 
    
	
6)
    	
 
    	
Reduce debt by $50 million
    	
 
    	
10.0
    	
 
    	
12.5
    	
 
    
	
7)
    	
 
    	
Review the management of the equity portfolio,   including potential creation of the Corporation’s capital, to enhance returns   and create additional value for Shareholders
    	
 
    	
10.0
    	
 
    	
0.0
    	
 
    
	
8)
    	
 
    	
Maintain leadership in sustainability
    	
 
    	
10.0
    	
 
    	
10.0
    	
 
    
	
TOTAL
    	
 
    	
 
    	
100.0
    	
 
    	
63.5
    	
 
    

 

The Committee also assessed the Chief Executive Officer’s performance for 2018 and, further to such review the Committee provided a recommendation to the Board which took into consideration the “team approach” philosophy of the Corporation. The Committee also recommended to the Board to approve the individual performance factor rate for the Named Executives, which was established at a rate of 1.0.

 

The Board reviewed and discussed the recommendation of the Committee for the Named Executives, including for the Chief Executive Officer and approved the following payment of the annual incentive award (“Annual Incentive Award”)  to the Named Executives and the Chief Executive Officer for the financial year ended December 31, 2018, which payment takes into account the individual performance factor recommended by the Committee:

 

	
Named Executives
    	
 
    	
Value of the 2018
   Annual Incentive
   Award
   ($)
    	
 
    	
Value of the 2017
   Annual Incentive
   Award
   ($)
    	
 
    
	
Sean Roosen,   Chair of the Board and Chief Executive Officer
    	
 
    	
444,500
    	
 
    	
1,300,000
    	
 
    
	
Bryan A. Coates,   President
    	
 
    	
317,500
    	
 
    	
900,000
    	
 
    
	
Elif Lévesque,   Chief Financial Officer and Vice President, Finance
    	
 
    	
222,300
    	
 
    	
665,000
    	
 
    
	
Luc Lessard,   Senior Vice President, Technical Services(1)
    	
 
    	
247,500
    	
 
    	
756,937
    	
 
    
	
André Le Bel,   Vice President, Legal Affairs and Corporate Secretary(1)
    	
 
    	
153,227
    	
 
    	
521,557
    	
 
    

 

NOTE:

 

(1)                                 Net of annual incentive award assumed by associate companies.

 

Long-term Incentive Compensation

 

The Corporation’s long-term compensation program ensures the alignment of the Named Executives with Shareholders and other stakeholders in the value creation process. The long-term compensation provides an effective retention measure for key senior executives. The establishment of a balance between short and long-term compensation is essential for the Corporation’s sustained performance, including its ability to attract, motivate and retain a pool of talented executives in a very competitive employment market. To achieve this balance while limiting Shareholder dilution and to complement the existing Stock Option Plan, the Corporation adopted a RSU Plan and a DSU Plan.

 

2019 Management Information Circular

 

40

 

Until December 31, 2016, the total compensation included approximately 50% long-term compensation components in the form of options and RSU grants of equal value. Since 2017, the percentage of the long-term component of the Named Executives’ compensation over their total compensation has been increased as follows:

 

	
Named Executives
    	
 
    	
Percentage of the long-term component of
   Named Executives’ compensation
   over their total compensation
   (%)
    	
 
    
	
Chief Executive   Officer
    	
 
    	
60
    	
 
    
	
President and   Senior Vice President
    	
 
    	
56
    	
 
    
	
Chief Financial   Officer and Vice President, Legal Affairs and Corporate Secretary
    	
 
    	
54
    	
 
    

 

The Stock Option Plan, the RSU Plan and the DSU Plan are hereinafter collectively referred to as “Osisko’s Long-Term Incentive Plans”.

 

The Committee manages Osisko’s Long-Term Incentive Plans with full authority. The Committee considers ad hoc and annual grants of options, RSUs and DSUs based on recommendations made by the Chair of the Board and Chief Executive Officer from time to time, for participants other than himself. The Committee, in turn, considers such recommendations and, as appropriate, makes recommendations to the Board of Directors, including any awards to the Chair of the Board and Chief Executive Officer. In reviewing management’s recommendation relating to grants under the Long-Term Incentive Plans, the Committee and the Board of Directors may take into account past grants and factor in any such grants made by associate companies to any of the Corporation’s Named Executives.

 

Options

 

The Shareholders of the Corporation have re-confirmed at the 2017 annual meeting the Stock Option Plan which was approved initially in 2014, allowing for the grant of options to officers and employees of the Corporation, designated by the Board of Directors, at its entire discretion, to align their interest to those of Shareholders.

 

Options are granted by the Board of Directors based on recommendations made by the Chair of the Board and Chief Executive Officer from time to time, except in respect of grants to himself. The total number of options issued over the past years to an employee may be taken into consideration but does not have a material impact on the number of options to be granted to said employee, except for same year grants, if any. The Black-Scholes value of options granted by associate companies to any Named Executive for their executive role reduces the options to be granted to any such Named Executive by the Corporation.

 

Options may be granted at an exercise price determined by the Board but shall not be less than the closing market price of the Common Shares of the Corporation on the TSX on the day prior to their grant. No participant shall be granted an option which exceeds 5% of the issued and outstanding Common Shares of the Corporation at the time of granting of the option. The number of Common Shares issued to insiders of the Corporation within one year and issuable to the insiders of the Corporation at any time under the Stock Option Plan or combined with all other share compensation arrangements, cannot exceed 10% of the issued and outstanding Common Shares. The duration and the vesting period are determined by the Board. However, the expiry date may not exceed 7 years after the date of grant. To date, all grants are set to expire five years after the date of grant.

 

The table below provides additional information on the Stock Option Plan for each of the last five financial years ended on December 31.

 

2019 Management Information Circular

 

41

 

	
Year
    	
 
    	
Options granted
   (#)
    	
 
    	
Weighted average
   Number of Common Shares
   issued and outstanding
   (#)
    	
 
    	
Burn Rate(1)
   (%)
    	
 
    
	
2018
    	
 
    	
886,900
    	
 
    	
156,617,000
    	
 
    	
0.6
    	
 
    
	
2017
    	
 
    	
763,400
    	
 
    	
127,939,000
    	
 
    	
0.6
    	
 
    
	
2016
    	
 
    	
1,084,700
    	
 
    	
104,671,000
    	
 
    	
1.0
    	
 
    
	
2015
    	
 
    	
987,000
    	
 
    	
87,856,000
    	
 
    	
1.1
    	
 
    
	
2014
    	
 
    	
901,400
    	
 
    	
45,964,000
    	
 
    	
2.0
    	
 
    

 

(1)         Burn Rate: means the total number of options granted in a year divided by the weighted average number of Common Shares for the applicable fiscal year.

 

The terms and conditions of the Stock Option Plan, as well as the proposed modifications, are more specifically addressed under the heading “Security-Based Compensation Arrangements” below.

 

Restricted Share Units (RSUs)

 

The purpose of the RSU Plan is to assist the Corporation in attracting and retaining individuals with experience and ability, to allow certain employees of the Corporation and its subsidiaries designated at the Committee’s discretion, to participate in the long-term success of the Corporation and to promote a greater alignment of interests between the employees designated under this RSU Plan and those of Shareholders.

 

The vesting of half of each RSU grant are subject to performance criteria. All RSU grants (except the Special RSU Grant) are subject to the following vesting terms: one half (1/2) is time-based and will vest on the third anniversary of such grant; the remaining portion (1/2) will also vest on the third anniversary of such grant but is subject to performance criteria approved by the Committee and the Board of Directors. For greater certainty, settlement of performance based RSUs granted as part of the annual long-term incentive compensation does not represent a guaranteed compensation item for the Named Executives as the determination of the performance relating to such RSU grant remains the sole prerogative of the Board of Directors. The terms and conditions of the Special RSU Grant are more specifically addressed under the heading “Annual Incentive Award” above.

 

The Committee considers that such performance criteria improves the alignment of Named Executives’ interests with those of Shareholders of the Corporation and promotes sustainable growth and value creation. The Committee monitors the achievement of these performance criteria on a regular basis.

 

Whenever dividends are paid on Common Shares, additional RSUs are automatically granted to each participant who holds RSUs on the record date for such dividend. Following the vesting date, RSUs are settled, at the discretion of the Corporation, in Common Shares, in cash (in which case for an amount equivalent to the product of the number of vested RSUs multiplied by the closing price of a Common Share on the TSX on the day prior to the payment date) or a combination of both Common Shares and cash, less applicable withholdings.

 

The Committee may, at its entire discretion, accelerate the terms of vesting of any outstanding RSU in circumstances it deems appropriate. In the event of a change of control as defined in the RSU Plan, all RSUs outstanding on the change of control date become immediately vested, irrespective of performance conditions, if any.

 

In the event a participant resigns or is terminated by the Corporation for cause, all outstanding RSUs are cancelled. As for those participants who cease to be an employee as a result of death, termination without cause, retirement or long-term disability, the vesting of:

 

·                  the time-based component portion of each RSU grant will be prorated based on the sum of the number of days during which certain benefits of employment are contractually maintained and those actually worked from the date of grant of such RSUs up until the date of termination without cause, over the number of days of the original vesting schedule in relation to such grant; and

 

2019 Management Information Circular

 

42

 

·                  all performance based RSU grant will be prorated based on the number of days actually worked from the date of grant of such RSUs up until the date of termination without cause, over the original vesting schedule in relation to such grant; the number of vested performance based RSUs resulting from such prorated calculation is multiplied by the performance percentage to be determined by the Board of Directors.

 

The value of RSU grants are based on recommendations made by the Chair of the Board and Chief Executive Officer (except in respect of grants to himself) and the closing price of a Common Share on the TSX on the day prior to the grant date.

 

In connection with the 2018 grant of RSUs, the following 3-year performance long-term objectives (the “2018 Long-Term Objectives”)  were approved by the Committee:

 

i.                                          increase NAV per share by 12%;

ii.                                       increase revenues to equivalent of 184,000 ounces of gold;

iii.                                    increase annual operating cash flow to $218 million;

iv.                                   enhance/realize investment/exploration portfolio by 20% and develop accelerator business;

v.                                      provide superior return to Gold Index and peers;

vi.                                   maintain sound financial position — reduce strategic investors position to below 10% and refinance debentures of $350 million with maturity dates in 2021 and 2022; and

vii.                                establish leadership in sustainability.

 

In connection with the 2017 grant of RSUs, the following 3-year performance long-term objectives were approved by the Committee:

 

i.                                          increase NAV per share by 16%;

ii.                                       increase revenues to equivalent of 150,000 ounces of gold;

iii.                                    enhance/realize investment/exploration portfolio by 20%;

iv.                                   provide superior return to Gold Index and peers;

v.                                      maintain sound financial position; and

vi.                                   establish leadership in sustainability.

 

In connection with the 2016 grants of RSUs, the following 3-year performance long-term objectives were approved by the Committee:

 

i.                                          increase asset base to $1,850 million;

ii.                                       increase revenues to equivalent of 60,000 ounces of gold;

iii.                                    enhance/realize investment/exploration portfolio by 20%;

iv.                                   provide superior return to Gold Index and peers;

v.                                      maintain sound financial position; and

vi.                                   establish leadership in sustainability.

 

In connection with the 2015 grants of RSUs, the following 3-year performance long-term objectives were approved by the Committee:

 

i.                                          increase asset base by 50% approximately to $1.5 billion;

ii.                                       diversify corporate revenue stream by reducing Canadian Malartic to 40% of overall contribution;

iii.                                    enhance/realize value of equity and exploration portfolios by 20%;

iv.                                   provide superior return to Gold Index and peers;

v.                                      maintain sound financial position; and

vi.                                   establish leadership in sustainability.

 

The year 2018 was the second year in which settlement of RSUs was performed by the Corporation. As previously stated, the Committee has been monitoring the achievement of the 2015 Long-Term Objectives for the last three years and assessed in August 2018 how such objectives were met. To this effect, management presented to the Committee its assessment of the Corporation’s achievements pursuant to the 2015 Long-Term Objectives as follows:

 

2019 Management Information Circular

 

43

 

(i)            Increase asset base by 50% approximately to $1.5 billion (25%);

 

(a)                                 From June 2015 to June 2018, the book value of the assets of the Corporation increased from $1 billion to $2.5 billion. This $1.5 billion increase represents a 131% growth.

 

(ii)           Diversify corporate revenues stream by reducing the Canadian Malartic royalty to 40% of  overall contribution;

 

(a)                                 The Corporation completed on July 31, 2017 a transformative transaction to acquire Orion’s portfolio of Royalties, stream and offtake assets for $1.125 billion. This portfolio includes cash flowing assets mainly in the Americas.

 

(b)                                 The Corporation acquired a silver stream on Taseko Mines Limited’s participation in the Gibraltar Mine.

 

(c)                                  The Corporation acquired from Teck Resources Limited its Eastern Canadian Gold Royalty portfolio.

 

(d)                                 The Corporation acquired a 5% NSR royalty on the Eagle Project held by Victoria.

 

(e)                                  The Corporation acquired a gold stream on the Back Forty Project from Aquila Resources Inc.

 

(f)                                   The Corporation acquired a 5% NSR royalty and a 40% net profit interest royalty in the Vezza gold property operated by Ressources Nottaway Inc.

 

(g)                                  The Corporation has exercised its option to acquire a 1% NSR royalty on Osisko Mining’s Windfall Lake project and it also negotiated an earn-in deal with Osisko Mining in order to convert the James Bay exploration properties into sliding scale 1.5 to 3.5% NSR royalties.

 

(h)                                 The Corporation acquired a 2.25% NSR royalty on the Cariboo gold project from Barkerville.

 

(i)                                     The Corporation acquired 1% NSR royalty on any lead/zinc/silver sulfide ores mined from the Hermosa project owned by South 33 Limited (formerly Arizona Mining inc.).

 

(j)                                    The Corporation acquired a 0.75% NSR royalty on Monarques Gold Corporation’s Croinor property.

 

(k)                                 The Corporation acquired a 1% NSR royalty on Osisko Metals’ properties and negotiated a right of first refusal on future royalties, stream or similar interests.

 

(l)                                     The Corporation also acquired royalties on the Dublin Tin Project held by Strongbow Exploration Inc., on Algold Resources Ltd.’s Tijirit Gold Project in Mauritania and Erris Resources plc’s Irish properties.

 

(m)                             The Corporation also entered into options to acquire royalties through its portfolio of investments.

 

Throughout these acquisitions, the contribution of the revenues derived from the Canadian Malartic mine royalty to the overall revenues of the Corporation has been progressively reduced to 46%.

 

(iii)         Enhance/realize value of equity and exploration portfolios by 20%;

 

(a)                                 In the last three years, the Corporation participated in the re-launch of Osisko Mining through funding and entering into mutually beneficial transactions with Osisko Mining.

 

2019 Management Information Circular

 

44

 

(b)                                 Through its financing support as well as its technical assistance, it supported (i) the development of Falco’s Home 5 project, including filing of new resources and of a feasibility study, (ii) the issuance of a new resource calculation and preliminary economic assessment at Osisko Mining’s Marban project, (iii) the initiation of the preliminary economic assessment and the environmental impact assessment at the Windfall Lake project held by Osisko Mining, (iv) the development of Barkerville’s Cariboo project.

 

(c)                                  The Corporation invested $50 million in Victoria Gold Corp. as part of a royalty transaction in 2018 and $28.2 million in Dalradian Gold Limited in 2017.

 

(d)                                 The Corporation also increased the value of its portfolio by approximately $70 million through crystalizing gains on, among others, Labrador Iron Ore Royalty Corporation, Arizona Mining Inc. and AuRico Metals Inc.

 

(iv)          Provide superior return to Gold Index and peers;

 

(a)                                 From June 2015 to June 2018, the price of the common shares of the Corporation fluctuated; however, at the end of June 2018, the share price was at $12.45, down from $15.72 at the end of June 2015. During the same period, the TSX Gold Index level progressed from 1,248 points to 1,482 points.

 

(v)           Maintain sound financial position

 

In the last three years, the Corporation increase its financial flexibility to pursue its growth strategy by:

 

(a)                                 Completing, in February 2016, a $150 million equity financing.

 

(b)                                 Securing with Investissement Québec a $50 million financing by way of a convertible debenture bearing 4% interest; the debt matures in February 2021 and is convertible at a price of $19.08.

 

(c)                                  Increasing its credit facility to $350 million (with a $100 million accordion).

 

(d)                                 Concurrent to the closing of the Orion Transaction, the Corporation completed a $275 million private placement with the Caisse ($200 million) and Fonds FTQ ($75 million).

 

(e)                                  The Corporation completed in November 2017 a $300 million financing by way of a convertible debenture bearing interest at a rate of 4% and having a 5 year maturity date.

 

(vi)          Establish leadership in sustainability

 

The Corporation’s leadership in sustainability can be grouped under 5 themes: mining industry, host communities and Governments, charities and sponsorship, project specific and governance.

 

(a)           Mining Industry

 

·                  The Corporation continues to participate in advocacy role for the mining industry through representation in various associations (Association de l‘Exploration Miniére du Québec, Association Miniére du Québec, Fédération des chambres de commerce du Québec).

 

·                  The corporation received recognition at the Mines and Money conference held in Toronto in 2017 where the Orion Transaction was awarded the award for “Best Transaction globally and in North America” and Sean Roosen was awarded the distinction of “Best CEO for North America”.

 

·                  Sponsorship of conferences at industry related events.

 

2019 Management Information Circular

 

45

 

·                  Promoted gender diversity in mining and other business and well as the continued development of Montreal’s Young Mining Professionals organization.

 

(b)           Host Communities and Governments

 

·                  The Corporation continues to maintain an open dialogue with host communities and governments in order to ensure success of mining enterprises. It also participates in Québec’s Plan Nord initiatives.

 

·                  Members of management of the Corporation also participated with the Québec Government on increasing investor’s awareness to resource development in Québec.

 

(c)           Charities and Sponsorship

 

·                  The Corporation supports various charities and community organizations.

 

·                  It also promotes higher education either through direct sponsorship or through lectures and conferences given by members of management.

 

(d)           Project specific

 

·                  The Corporation maintained dialogue with the Québec Government on projects being developed by associated companies (Falco’s Horne 5 project and Osisko Mining’s Windfall project).

 

·                  Through its growth, the Corporation was able to maintain strong employee engagement. The participation of its employees in Employee Share Purchase Plan stands at above 85%. Further to its acquisition of Virginia, the Corporation also ensured the successful integration of its new employees and their continued employment through a transfer to Osisko Mining.

 

(e)           Governance

 

·                  The Corporation, being fully aware that mining projects depend not only on compliance with applicable regulations but also, and sometimes to a greater extent, on maintaining the social licence (the support) from host communities, promotes and maintains strong relationships with its stakeholders through regular meetings held in various locations.

 

·                  The Corporation engages with Shareholders with respect to compensation matters. The Committee assesses the compensation structure on an annual basis in order to ensure that it remains aligned with Shareholders’ interests. Although most public companies, are impacted by the general trend of decreasing support on such matter, the Corporation has nonetheless achieved strong support from its Shareholders, namely 98% in 2015, 98% in 2016, 94% in 2017 and 99% in 2018.

 

·                  The Corporation achieved top 100 ranking in 2015, 2016 and 2017 in the Globe and Mail’s Report on Business Governance Rankings.

 

Assessment of 2015 Long-Term Objectives by the Committee

 

The Committee reviewed the 50% performance based portion of the 2015 grant. The 2015 Long-Term Objectives were approved by the Board of Directors in 2015, upon recommendation of the Committee. The Committee monitored on a quarterly basis the progress made by management toward achieving said long-term objectives. As part of its duties and responsibilities and in conjunction with the end of period assessment, the Committee reviewed the achievements against the Corporation’s 2015 Long-Term Objectives and thereafter met with management and in camera for discussion and consideration of each element contained

 

2019 Management Information Circular

 

46

 

in the 2015 Long-Term Objectives, as presented by management, and including management’s proposed payout.

 

Further to its review, the Committee was satisfied that the management team had exceeded the performance objectives which were established in 2015 as evidenced below by the achievement assessment compared to the objectives. Accordingly, taking into account management’s self-assessment, the Committee considered, approved and recommended to the Board to approve that, given management’s outstanding contribution and strong performance over the last three years the overall performance rate be established at 120%. The Committee considered that this adjustment was warranted given the sustained growth of the Corporation through the innovative “accelerator model” strategy developed, implemented and proven by the management team, which allowed the Corporation to position itself for long term growth using reasonable cash resources. This strategy, developed in 2014 as a tool to enable the Corporation to invest at an early stage and benefit from the growth profile of such associate companies, continues to allow the Corporation to build an organic pipeline of investments. This strategy proved successful and has since been replicated by other companies.

 

Upon recommendation of the Committee, which took into account management’s assessment, the Board of Directors concurred with the Committee and set and approved the assessment of the 2015 Long-term Objectives at 120% as evidenced below. As these RSUs were settled in cash, any payout exceeding 100% is also settled in cash. The portion of the RSUs that are time based (representing 50% of the 2015 grant) are paid at a rate of 100%.

 

	
2015-2018 OBJECTIVES
    	
 
    	
ALLOCATION
   (%)
    	
 
    	
ACHIEVEMENT
   (%)
    	
 
    
	
Increase asset   base by 50% to approximately $1.5 billion
    	
 
    	
25
    	
 
    	
30.00
    	
 
    
	
Diversify corporate   revenue stream by reducing the Canadian Malartic Royalty to 40% of overall   contribution
    	
 
    	
25
    	
 
    	
30.00
    	
 
    
	
Enhance/realize   value of equity and exploration portfolios by 20%
    	
 
    	
20
    	
 
    	
21.25
    	
 
    
	
Provide superior   return to Gold Index and peers
    	
 
    	
10
    	
 
    	
—
    	
 
    
	
Maintain sound   financial position
    	
 
    	
10
    	
 
    	
12.50
    	
 
    
	
Establish   leadership in sustainability
    	
 
    	
10
    	
 
    	
15.00
    	
 
    
	
TOTAL:
    	
 
    	
100
    	
 
    	
108.75
    	
 
    
	
TOTAL   ADJUSTED PERFORMANCE RATE
    	
 
    	
 
    	
 
    	
120.00
    	
 
    

 

Based on the foregoing, the Board approved the following payment in connection with the 2015 Long-Term Incentive Award to the Named Executives. These RSUs were settled in cash at the settlement date based on the closing market price of the Common Shares of the Corporation traded on the TSX on the day prior to the settlement date. While the Board met on August 2, 2018 to determine the payout of the performance-based RSUs, all RSU vested on June 30, 2018 and, accordingly, as per the terms of the RSU Plan, these RSUs were settled at a price of $12.45 per RSU, being the closing market price of the Common Shares of the Corporation traded on the TSX on June 29, 2018, being the day prior to the vesting/settlement date.

 

2019 Management Information Circular

 

47

 

	
Named Executives
    	
 
    	
Number of RSUs
   granted in 2015
   (#)(1)
    	
 
    	
Value of the 2015
   Long-Term
   Incentive Award
   ($)(2)
    	
 
    	
Additional Cash
   Payout
   ($)(3)
    	
 
    	
Total payout
   under the 2015
   Long-Term
   Incentive Award
   ($)(4)
    	
 
    
	
Sean Roosen   Chair of the Board and Chief Executive Officer
    	
 
    	
32,802
    	
 
    	
408,385
    	
 
    	
40,811
    	
 
    	
449,196
    	
 
    
	
Bryan A. Coates   President
    	
 
    	
24,600
    	
 
    	
306,270
    	
 
    	
30,602
    	
 
    	
336,872
    	
 
    
	
Elif Lévesque   Chief Financial Officer and Vice President, Finance
    	
 
    	
18,477
    	
 
    	
230,039
    	
 
    	
22,982
    	
 
    	
253,021
    	
 
    
	
Luc Lessard   Senior Vice President, Technical Services
    	
 
    	
24,600
    	
 
    	
306,270
    	
 
    	
30,602
    	
 
    	
336,872
    	
 
    
	
André Le Bel   Vice President, Legal Affairs and Corporate Secretary
    	
 
    	
18,063
    	
 
    	
224,884
    	
 
    	
22,473
    	
 
    	
247,357
    	
 
    

 

NOTES:

(1)         Adjusted to take into account dividends paid since the grant as per the terms of the RSU Plan.

(2)         Represents the product of the number of RSUs held by a Named Executive multiplied by $12.45, which is the closing market price of the Common Shares of the Corporation traded on the TSX on the day prior to the vesting/settlement date, being June 29, 2018.

(3)         Represents the amount obtained by multiplying the number of performance based RSUs (50% of the adjusted 2015 RSU grant) by the difference between the total performance achievement percentage minus 100% and then multiplying such proceed by $12.45, being the price used for the settlement.

(4)         Represents the sum of the “Value of the 2015 Long-Term Incentive Award” and the Additional Cash Payout.

 

The terms and conditions of the RSU Plan are more specifically addressed under the heading “Security-Based Compensation Arrangements” below.

 

Deferred Share Units (DSUs)

 

The DSU Plan has been established to enhance the Corporation’s ability to attract and retain talented individuals to serve as members of the Board of the Corporation and its subsidiaries and to promote for greater alignment of interests between such persons and the Shareholders of the Corporation.

 

Pursuant to the DSU Plan, the Board of Directors may designate, from time to time and at its sole discretion, the non-executive directors of the Board or of the board of directors of a subsidiary to become participants of the DSU Plan.

 

In order to further improve alignment of interests between directors and Shareholders, all DSUs granted to non-executive directors shall vest on the day prior to the next annual meeting of Shareholders following such grant.

 

Vested DSUs become payable no later than the last business day in December of the first calendar year commencing after the termination of employment or mandate in the case of a Board member. Vested DSUs are settled at the Corporation’s discretion at the settlement date, in Common Shares, or in cash (for an amount equivalent to the product of the number of vested DSUs multiplied by the closing price of a Common Share on the TSX on the day prior to the payment date) or in a combination of cash and Common Shares less applicable withholdings.

 

Since the Corporation’s adoption of the DSU Plan in April 2014, DSUs have been awarded to non-executive directors only. On March 21, 2019, the Board of Directors approved amendments to the DSU Plan. Such amendments are subject to Shareholders’ approval. The amendments to the DSU Plan are more specifically addressed under the heading “Approval of the Amended Deferred Share Unit Plan”.

 

2019 Management Information Circular

 

48

 

Employee Share Purchase Plan

 

In 2015, the Board of Directors of the Corporation approved an employee share purchase plan to encourage eligible employees (“Eligible Employees”) to hold, on a  permanent basis, Common Shares. Under the Employee Share Purchase Plan, the Corporation contributes an amount equal to 60% of the Eligible Employee’s contribution then held in trust by the Corporation. The Eligible Employee’s contribution shall be of a minimum of $100 monthly but shall not exceed in any event 10% (unless otherwise provided by the committee authorized to oversee the Employee Share Purchase Plan) of the Eligible Employee’s basic annual remuneration (exclusive of any overtime pay, bonuses or allowances of any kind whatsoever) before deduction and shall be subject to a maximum contribution of $1,250 per month. The terms and conditions of the Employee Share Purchase Plan are more specifically addressed under the heading “Security-Based Compensation Arrangements”  below.

 

Benefits

 

The Corporation’s executive officers benefit program includes life, medical, dental and disability insurance, outplacement services (in case of termination without cause, including as a result of a change of control) and other benefits. Such benefits are designed to be competitive with other comparable Canadian enterprises.

 

Hedging

 

The Securities Trading Policy of the Corporation forbids directors and officers from using any strategy relating to or to use derivative instruments in respect of securities of the Corporation, including purchasing financial instruments that are designed to hedge or offset a decrease in market value of the securities of the Corporation.

 

PERFORMANCE GRAPH

 

The following graph compares the total cumulative Shareholder return for $100 invested in the Corporation’s Common Shares on June 16, 2014 with the cumulative total return of the S&P/TSX Composite Index (formerly TSE-300 Index) for the five most recently completed financial years. It also presents the grant value and actual value of the compensation of the Chief Executive Officer of the Corporation for the same period.

 

2019 Management Information Circular

 

49

 

 

LEGEND

 

Grant Value: refers to total compensation of the Chief Executive Officer after charge backs to associate companies.

 

Actual Value: refers to total compensation of the Chief Executive Officer, after charge backs to associate companies, adjusted for the actual payout amount of the share-based awards and realized amount of the option-based awards when applicable or the fair value based on the closing price of the Common Shares on the TSX on December 31, 2018, being $11.97, when not yet realized.

 

	
 
    	
 
    	
Osisko Gold Royalties Ltd
    	
 
    	
S&P/TSX Composite Index
    	
 
    
	
June 16,   2014
    	
 
    	
$
    	
100.00
    	
 
    	
$
    	
100.00
    	
 
    
	
December 31,   2014
    	
 
    	
$
    	
103.54
    	
 
    	
$
    	
97.29
    	
 
    
	
December 31,   2015
    	
 
    	
$
    	
86.41
    	
 
    	
$
    	
86.50
    	
 
    
	
December 31,   2016
    	
 
    	
$
    	
82.74
    	
 
    	
$
    	
101.64
    	
 
    
	
December 31,   2017
    	
 
    	
$
    	
91.78
    	
 
    	
$
    	
107.77
    	
 
    
	
December 31,   2018
    	
 
    	
$
    	
75.66
    	
 
    	
$
    	
95.23
    	
 
    

 

The Corporation commenced trading in June 2014. Over the last 57 months, the Corporation has been deploying various initiatives in line with its growth strategy in order to position itself for future growth. The achievement of the Orion Transaction in 2017 provides a good example of this successful strategy.

 

Following a decline in 2015, the S&P/TSX Composite Index rebounded in 2016 and maintained a steady growth in 2017 following improved commodity prices but was again negatively affected in 2018 by lower commodity prices. The Corporation’s share price was also affected negatively by the same factors in 2015. Contrary to the S&P/TSX Composite Index, the Corporation’s share price underperformed in 2016, due in large part to the Corporation’s asset base being held in cash to fund future acquisitions of royalties and streams. This cash position enabled the Corporation to conclude the acquisition of a silver stream on Taseko’s Gilbraltar mine at the beginning of 2017 and on July 31, 2017, the Corporation successfully closed the Orion Transaction and its share price improved mainly in the second part of 2017. The share price of the Corporation was however also impacted negatively in 2018 as a result of lower commodity prices.

 

2019 Management Information Circular

 

50

 

Over the last five years, the realized/realizable compensation of the Chief Executive Officer has generally moved in the same direction of the share price as a result of the performance assessment tied to the annual bonus and the vesting conditions of the performance-based RSUs; which in turn demonstrates the good pay-for-performance alignment of the executive compensation program.

 

CHIEF EXECUTIVE OFFICER COMPENSATION LOOKBACK

 

The table below sets forth the total compensation awarded to the Chief Executive Officer over the last five years from all compensation components:

 

	
 
    	
 
    	
Base Salary(1)
    	
 
    	
Value of Share-Based
   Awards
    	
 
    	
Value of Option-
   Based Awards
    	
 
    	
Non-Equity Incentive
   Plan Compensation
    	
 
    	
Total Compensation
    	
 
    
	
Year
    	
 
    	
($)
    	
 
    	
($)
    	
 
    	
($)
    	
 
    	
($)
    	
 
    	
($)
    	
 
    
	
2018
    	
 
    	
486,481
    	
 
    	
1,269,000
    	
 
    	
106,585
    	
 
    	
444,500
    	
 
    	
2,306,566
    	
 
    
	
2017
    	
 
    	
491,000
    	
 
    	
788,766
    	
 
    	
389,955
    	
 
    	
1,105,000
    	
 
    	
2,774,721
    	
 
    
	
2016
    	
 
    	
363,750
    	
 
    	
509,000
    	
 
    	
500,064
    	
 
    	
525,000
    	
 
    	
1,897,814
    	
 
    
	
2015
    	
 
    	
475,000
    	
 
    	
502,250
    	
 
    	
500,071
    	
 
    	
655,000
    	
 
    	
2,132,321
    	
 
    
	
2014
    	
 
    	
243,755
    	
 
    	
1,000,000
    	
 
    	
1,017,654
    	
 
    	
365,600
    	
 
    	
2,627,009
    	
 
    

 

NOTE:

(1)                   Refers to the base salary of the Chief Executive Officer assumed by the Corporation after charge backs to associate companies.

 

The following table compares the total direct compensation awarded to the Chief Executive Officer to the actual value he received over the last five years compared to shareholder return over the same period. Actual compensation includes base salary (after charge backs to associate companies), actual annual incentive plan award, value of vested RSUs at payout or value of RSUs outstanding at December 31, 2018 and value of options upon exercise or value of in-the-money options outstanding at December 31, 2018.

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Value of $100
    	
 
    
	
Year
    	
 
    	
Total Direct
   Compensation
   Awarded(1) ($)
    	
 
    	
Actual Total Direct
   Compensation Value as of
   December 31, 2018(2) ($)
    	
 
    	
Period
    	
 
    	
CEO
    	
 
    	
Shareholder
    	
 
    
	
2014
    	
 
    	
2,627,009
    	
 
    	
2,322,741
    	
 
    	
2014-06-16 to   2018-12-31
    	
 
    	
$
    	
88
    	
 
    	
$
    	
79
    	
 
    
	
2015
    	
 
    	
2,132,321
    	
 
    	
1,581,123
    	
 
    	
2015-01-01 to   2018-12-31
    	
 
    	
$
    	
74
    	
 
    	
$
    	
77
    	
 
    
	
2016
    	
 
    	
1,897,814
    	
 
    	
1,261,364
    	
 
    	
2016-01-01 to   2018-12-31
    	
 
    	
$
    	
66
    	
 
    	
$
    	
91
    	
 
    
	
2017
    	
 
    	
2,774,721
    	
 
    	
2,187,150
    	
 
    	
2017-01-01 to   2018-12-31
    	
 
    	
$
    	
79
    	
 
    	
$
    	
94
    	
 
    
	
2018
    	
 
    	
2,306,566
    	
 
    	
2,102,652
    	
 
    	
2018-01-01 to   2018-12-31
    	
 
    	
$
    	
91
    	
 
    	
$
    	
84
    	
 
    
	
Average   2014 — 2018:
    	
 
    	
$
    	
80
    	
 
    	
$
    	
85
    	
 
    

 

NOTES:

(1)                   These amounts include the base salary (after charge backs), actual bonus paid and long-term incentive plan value at time of grant (RSUs and options).

(2)                   These amounts include the base salary (after charge backs), actual bonus paid, options value at vesting, value of RSUs at payout and value of exercised options (using the exercise price) and in-the-money options at the closing price on the TSX on December 31, 2018, being $11.97.

 

CHIEF EXECUTIVE OFFICER SECURITIES OWNERSHIP AND VALUE AT RISK

 

The table below shows the total value of vested and unvested Osisko securities owned by the Chief Executive Officer as of March 19, 2019.

 

	
 
    	
 
    	
Number of Securities
   (#)
    	
 
    	
Value of Securities(1)
   ($)
    	
 
    
	
Vested   Securities:
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Common   Shares
    	
 
    	
428,278
    	
 
    	
6,526,957
    	
 
    
	
Options
    	
 
    	
487,267
    	
 
    	
244,381
    	
 
    
	
RSUs
    	
 
    	
13,430
    	
 
    	
204,673
    	
 
    
	
Unvested   Securities:
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
RSUs
    	
 
    	
162,700
    	
 
    	
2,479,548
    	
 
    
	
Options
    	
 
    	
128,533
    	
 
    	
149,027
    	
 
    
	
Total   Value at Risk:
    	
 
    	
 
    	
 
    	
9,604,586
    	
 
    

 

NOTE:

(1) The value of Common Shares and RSUs is based on the closing price on the TSX on March 19, 2019, being $15.24 and the value of vested and unvested options is based on the difference between the closing price on the TSX on March 19, 2019, being $15.24, and the exercise price of the options, multiplied by the number of options vested and unvested.

 

Mr. Roosen’s value at risk totals $9,604,586, which represents 19.7 times his base salary (after charge backs).

 

2019 Management Information Circular

 

51

 

EXECUTIVE COMPENSATION

 

The following table sets forth, to the extent required by applicable securities legislation, all annual and long-term compensation assumed by the Corporation (net of any amount received or back charges from any associate companies) for services in all capacities to the Corporation for the three most recent completed financial years in respect of Named Executives.

 

Summary Compensation Table

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Non-Equity Incentive Plan
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Option-
    	
 
    	
Compensation ($)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Share-Based
    	
 
    	
Based
    	
 
    	
Annual
    	
 
    	
Long-Term
    	
 
    	
Pension
    	
 
    	
All Other
    	
 
    	
Total
    	
 
    
	
Name and Principal
    	
 
    	
 
    	
 
    	
Salary(1)
    	
 
    	
Awards(2)(3)(4)
    	
 
    	
Awards(4)(5)
    	
 
    	
Incentive
    	
 
    	
Incentive
    	
 
    	
Value
    	
 
    	
Compensation
    	
 
    	
Compensation
    	
 
    
	
Position
    	
 
    	
Year
    	
 
    	
($)
    	
 
    	
($)
    	
 
    	
($)
    	
 
    	
Plan(6)
    	
 
    	
Plan
    	
 
    	
($)
    	
 
    	
($)
    	
 
    	
($)
    	
 
    
	
Sean Roosen
   Chair of the Board and Chief Executive Officer
    	
 
    	
2018
    	
 
    	
486,481
    	
 
    	
1,269,000
    	
 
    	
106,585
    	
 
    	
444,500
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
2,306,566
    	
 
    
	
 
    	
2017
    	
 
    	
491,000
    	
 
    	
788,766
    	
 
    	
389,955
    	
 
    	
1,105,000
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
2,774,721
    	
 
    
	
 
    	
2016
    	
 
    	
363,750
    	
 
    	
509,000
    	
 
    	
500,064
    	
 
    	
525,000
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
1,897,814
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Bryan A. Coates
   President
    	
 
    	
2018
    	
 
    	
478,000
    	
 
    	
384,000
    	
 
    	
250,000
    	
 
    	
317,500
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
1,429,500
    	
 
    
	
 
    	
2017
    	
 
    	
482,460
    	
 
    	
878,712
    	
 
    	
479,909
    	
 
    	
750,000
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
2,591,081
    	
 
    
	
 
    	
2016
    	
 
    	
375,000
    	
 
    	
384,000
    	
 
    	
375,048
    	
 
    	
394,000
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
1,528,048
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Elif Levesque
   Chief Financial Officer and Vice President, Finance
    	
 
    	
2018
    	
 
    	
340,000
    	
 
    	
492,000
    	
 
    	
292,342
    	
 
    	
222,300
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
1,346,642
    	
 
    
	
 
    	
2017
    	
 
    	
345,000
    	
 
    	
563,820
    	
 
    	
299,531
    	
 
    	
560,000
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
1,768,351
    	
 
    
	
 
    	
2016
    	
 
    	
280,500
    	
 
    	
289,500
    	
 
    	
280,600
    	
 
    	
295,000
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
1,145,600
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Luc Lessard
   Senior Vice President, Technical Services
    	
 
    	
2018
    	
 
    	
33,750
    	
 
    	
384,000
    	
 
    	
250,000
    	
 
    	
247,500
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
915,250
    	
 
    
	
 
    	
2017
    	
 
    	
176,359
    	
 
    	
707,114
    	
 
    	
365,936
    	
 
    	
606,937
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
1,856,346
    	
 
    
	
 
    	
2016
    	
 
    	
66,346
    	
 
    	
384,000
    	
 
    	
271 ,1 95
    	
 
    	
245,688
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
967,229
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Andre Le Bel
   Vice President, Legal Affairs and Corporate Secretary
    	
 
    	
2018
    	
 
    	
209,603
    	
 
    	
435,241
    	
 
    	
239,325
    	
 
    	
153,227
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
1,037,396
    	
 
    
	
 
    	
2017
    	
 
    	
229,493
    	
 
    	
505,109
    	
 
    	
270,509
    	
 
    	
428,557
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
1,433,668
    	
 
    
	
 
    	
2016
    	
 
    	
238,725
    	
 
    	
254,151
    	
 
    	
245,715
    	
 
    	
255,997
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
994,588
    	
 
    
																										

 

NOTES:

(1)                   The respective annual base salary level of the Named Executives as at December 31, 2018 was as follows: Mr. Roosen: $700,000, Mr. Coates: $500,000, Mr. Lessard: $500,000, Ms. Lèvesque: $350,000 and Mr. Le Bel: $310,000. As at December 31, 2017, their respective annual base salary level were: Mr. Roosen: $650,000, Mr. Coates: $500,000, Mr. Lessard: $500,000, Ms. Lèvesque: $350,000 and Mr. Le Bel: $310,000, and as at December 31, 2016, their respective annual base salary level were: Mr. Roosen: $500,000, Mr. Coates: $375,000, Mr. Lessard: $375,000, Ms. Lèvesque: $280,500 and Mr. Le Bel: $275,400

(2)                   As per the terms of the Employee Share Purchase Plan, the Corporation contributes an amount equal to 60% of the Eligible Employee’s contribution up to a maximum contribution of $9,000 per year. All Named Executives contribute the maximum amount to the Corporation’s Employee Share Purchase Plan. Such plan was implemented on October 1st, 2015.

(3)                   Pursuant to the RSU Plan which is in effect since April 30, 2014, Named Executives were awarded RSUs on May 7th, 2018, subject to the vesting terms, which consist of the following terms: one half (1/2) is time-based and vesting in 2021, while the remaining portion (1/2) will also vest in 2021, subject to performance criteria toward achievement of the 2018 Long-Term Objectives over a three-year period. The unit grant price on such date was $12.97.

(4)                   Based on the grant date fair value of options under the Stock Option Plan. Specifically, a Black-Scholes option pricing model was used with the following assumptions determined on the date of g

 

	
Grant Date
    	
 
    	
Risk Free Interest
    	
 
    	
Expected Average Life
    	
 
    	
Expected Volatility
    	
 
    	
Expected Dividend
   Yield
    	
 
    	
Fair Value
    	
 
    
	
May 7, 2018
    	
 
    	
2.09
    	
%
    	
4 years
    	
 
    	
35
    	
%
    	
2
    	
%
    	
$
    	
3.470
    	
 
    
	
June 7,   2017
    	
 
    	
0.87
    	
%
    	
4 years
    	
 
    	
38
    	
%
    	
1
    	
%
    	
$
    	
4.710
    	
 
    
	
March 21,   2016
    	
 
    	
0.62
    	
%
    	
4 years
    	
 
    	
40
    	
%
    	
1
    	
%
    	
$
    	
3.919
    	
 
    
	
June 30,   2015
    	
 
    	
0.87
    	
%
    	
4 years
    	
 
    	
35
    	
%
    	
1
    	
%
    	
$
    	
4.126
    	
 
    

 

Both he grant date fair value and accounting fair value for option-based awards are calculated using the Black-Scholes option pricing model. However, the share-based compensation expense included in the Corporation’s financial statements are accounted for based on vesting terms reflecting the fair value amortized for the period in accordance with International Financial Reporting Standards requirements.

(5)                   The Corporation reduced the long-term compensation of the Named Executives up to a value representing 50% of such long-term compensation they received from associate companies, as more fully described under the heading “Compensation reimbursement - Associate Companies”

(6)                   An Annual Incentive Award was paid to each Named Executive based on the assessment of achievements with respect to the 2018 Key Objectives. The amounts reflected in the table for 2017 include the cash component of the annual incentive paid in connection with the Orion Transaction completed in 2017.

 

2019 Management Information Circular

 

52

 

The following table shows the total compensation of the Corporation’s Named Executives for the relevant years, as well as the total compensation for the Named Executives as a percentage of the cash margin and as a percentage of Shareholders’ equity. For the last four years, the Corporation has been establishing its long-term asset base and it was expected that in the initial years, the ratios would be higher than established companies. The results demonstrate that the ratios have been improving.

 

	
 
    	
 
    	
Total compensation of Named
   Executives
    	
 
    	
Total compensation of Named
   Executives as percentage of Cash
   Margin(1)
    	
 
    	
Total compensation of Named
   Executives as percentage of
   Shareholders’ Equity
    	
 
    
	
Year
    	
 
    	
($)
    	
 
    	
(%)
    	
 
    	
(%)
    	
 
    
	
2018
    	
 
    	
7,035,000
    	
 
    	
5.9
    	
 
    	
0.4
    	
 
    
	
2017
    	
 
    	
10,424,000
    	
 
    	
9.6
    	
 
    	
0.6
    	
 
    
	
2016
    	
 
    	
6,533,000
    	
 
    	
10.4
    	
 
    	
0.5
    	
 
    
	
2015(2)
    	
 
    	
7,986,000
    	
 
    	
17.6
    	
 
    	
0.9
    	
 
    

 

NOTES:

(1)                   Cash margin reflects revenues less cost of sales. The 2017 amount is annualized for the assets related to the precious metals portfolio acquired from Orion for $1.1 billion on July 31, 2017.

(2)                   The 2015 total compensation information is based on the total compensation earned by the Named Executives who were disclosed in the Corporation’s 2016 management information circular for the year ended on December 31, 2015.

 

Outstanding Share-based Awards and Option-based Awards

 

The table below sets forth a summary of all awards outstanding at the end of the financial year ended December 31, 2018. All values shown in this table were calculated using the closing price of $11.97, which was the closing price of the Common Shares on the TSX on December 31, 2018.

 

	
 
    	
 
    	
Option-Based Awards
    	
 
    	
Share-Based Awards(1)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Market or
    	
 
    
	
 
    	
 
    	
Number of
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Market or
    	
 
    	
Payout Value of
    	
 
    
	
 
    	
 
    	
Securities
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Value of
    	
 
    	
Number of
    	
 
    	
Payout Value of
    	
 
    	
Vested Share-
    	
 
    
	
 
    	
 
    	
Underlying
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Unexercised In-
    	
 
    	
Shares or Units
    	
 
    	
Share-Based
    	
 
    	
Based Awards
    	
 
    
	
 
    	
 
    	
Unexercised
    	
 
    	
Option
    	
 
    	
Option Expiry
    	
 
    	
the-Money
    	
 
    	
of Shares that
    	
 
    	
Awards that
    	
 
    	
not paid out or
    	
 
    
	
 
    	
 
    	
Options
    	
 
    	
Exercise Price
    	
 
    	
Date
    	
 
    	
Options
    	
 
    	
have not Vested
    	
 
    	
have not Vested
    	
 
    	
distributed
    	
 
    
	
Name
    	
 
    	
(#)
    	
 
    	
($)
    	
 
    	
(yyyy-mm-dd)
    	
 
    	
($)
    	
 
    	
(#)
    	
 
    	
($)
    	
 
    	
($)
    	
 
    
	
Sean Roosen
    	
 
    	
30,800
    	
 
    	
12.97
    	
 
    	
2023-05-07
    	
 
    	
—
    	
 
    	
97,100
    	
(2)
    	
1,947,519
    	
 
    	
160,757
    	
 
    
	
Chair of the Board
   and Chief
   Executive Officer
    	
 
    	
82,800
    	
 
    	
16.66
    	
 
    	
2022-06-07
    	
 
    	
—
    	
 
    	
35,100
    	
(3)
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
127,600
    	
 
    	
13.38
    	
 
    	
2021-03-21
    	
 
    	
—
    	
 
    	
30,500
    	
(4)
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
121,200
    	
 
    	
15.80
    	
 
    	
2020-06-30
    	
 
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
253,400
    	
 
    	
14.90
    	
 
    	
2019-09-08
    	
 
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Bryan A. Coates
    	
 
    	
72,100
    	
 
    	
12.97
    	
 
    	
2023-05-07
    	
 
    	
—
    	
 
    	
28,900
    	
(2)
    	
1,137,150
    	
 
    	
123,662
    	
 
    
	
President
    	
 
    	
101,900
    	
 
    	
16.66
    	
 
    	
2022-06-07
    	
 
    	
—
    	
 
    	
43,200
    	
(3)
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
95,700
    	
 
    	
13.38
    	
 
    	
2021-03-21
    	
 
    	
—
    	
 
    	
22,900
    	
(4)
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
90,900
    	
 
    	
15.80
    	
 
    	
2020-06-30
    	
 
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
190,000
    	
 
    	
14.90
    	
 
    	
2019-09-08
    	
 
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Elif Lévesque
    	
 
    	
84,300
    	
 
    	
12.97
    	
 
    	
2023-05-07
    	
 
    	
—
    	
 
    	
37,200
    	
(2)
    	
973,161
    	
 
    	
86,555
    	
 
    
	
Chief Financial
   Officer and Vice President, Finance
    	
 
    	
63,600
    	
 
    	
16.66
    	
 
    	
2022-06-07
    	
 
    	
—
    	
 
    	
27,000
    	
(3)
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
71,600
    	
 
    	
13.38
    	
 
    	
2021-03-21
    	
 
    	
—
    	
 
    	
17,100
    	
(4)
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
68,000
    	
 
    	
15.80
    	
 
    	
2020-06-30
    	
 
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
126,700
    	
 
    	
14.90
    	
 
    	
2019-09-08
    	
 
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Luc Lessard
   Senior Vice President, Technical Services
    	
 
    	
72,100
    	
 
    	
12.97
    	
 
    	
2023-05-07
    	
 
    	
—
    	
 
    	
28,900
    	
(2)
    	
1,013,859
    	
 
    	
123,662
    	
 
    
	
 
    	
77,700
    	
 
    	
16.66
    	
 
    	
2022-06-07
    	
 
    	
—
    	
 
    	
32,900
    	
(3)
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
69,200
    	
 
    	
13.38
    	
 
    	
2021-03-21
    	
 
    	
—
    	
 
    	
22,900
    	
(4)
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
45,400
    	
 
    	
15.80
    	
 
    	
2020-06-30
    	
 
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
André Le Bel
    	
 
    	
69,300
    	
 
    	
12.97
    	
 
    	
2023-05-07
    	
 
    	
—
    	
 
    	
33,000
    	
(2)
    	
888,174
    	
 
    	
76,668
    	
 
    
	
Vice President, Legal Affairs and Corporate Secretary
    	
 
    	
57,600
    	
 
    	
16.66
    	
 
    	
2022-06-07
    	
 
    	
—
    	
 
    	
24,400
    	
(3)
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
70,300
    	
 
    	
13.38
    	
 
    	
2021-03-21
    	
 
    	
—
    	
 
    	
16,800
    	
(4)
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
66,700
    	
 
    	
15.80
    	
 
    	
2020-06-30
    	
 
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

NOTES:

(1)                   Pursuant to the RSU Plan, the vesting terms consist of the following terms: half (1/2) is time-based (3 years) and the remaining portion (1/2) is also timed based (3 years) and subject to performance criteria toward achievement of the Long-term objectives.

(2)                   Such RSUs to vest in 2021 pursuant to the terms listed in note (1) above.

(3)                   Such RSUs to vest in 2020 pursuant to the terms listed in note (1) above.

(4)                   Such RSUs to vest in 2019 pursuant to the terms listed in note (1) above.

 

2019 Management Information Circular

 

53

 

Incentive Plan Awards — Value Vested or Earned during the Year

 

The following table discloses the aggregate dollar value that would have been realized if the options under the option-based award had been exercised on the vesting date and the aggregate value realized upon vesting of share-based awards.

 

	
Name
    	
 
    	
Option-Based Awards — Value
   Vested during the Year
   ($)
    	
 
    	
Share-Based Awards —
   Value Vested during the year(1)
   ($)
    	
 
    	
Non-Equity Incentive Plan
   Compensation —
   Value earned during the Year(2)
   ($)
    	
 
    
	
Sean Roosen
   Chair of the Board and Chief Executive Officer
    	
 
    	
—
    	
 
    	
458,580
    	
 
    	
444,500
    	
 
    
	
Bryan A. Coates
   President
    	
 
    	
—
    	
 
    	
346,257
    	
 
    	
317,500
    	
 
    
	
Elif Levesque
   Chief Financial Officer and Vice President, Finance
    	
 
    	
—
    	
 
    	
262,406
    	
 
    	
222,300
    	
 
    
	
Luc Lessard
   Senior Vice President, Technical Services
    	
 
    	
—
    	
 
    	
346,257
    	
 
    	
247,500
    	
 
    
	
Andre Le Bel
   Vice President, Legal Affairs and Corporate Secretary
    	
 
    	
—
    	
 
    	
256,741
    	
 
    	
153,227
    	
 
    

 

NOTES:

(1)                   This amount includes the value of the Corporation’s contribution to the Employee Share Purchase Plan in relation to the participation of each Named Executive as well as the value of the RSUs granted in 2015 and which were settled at a price of $12.45 per RSU, being the closing price on the TSX on June 29, 2018.

(2)                   This amount represents the sum of the annual cash incentive. Furthermore, the amounts shown for Messrs. Lessard and Le Bel are the amounts assumed by the Corporation, net of any reimbursement received by the Corporation in connection with any annual incentive paid by associate companies to Messrs. Lessard and Le Bel for 2018.

 

Options Exercised during the Year

 

No stock options were exercised in 2018 by the Named Executives of the Corporation.

 

Security-Based Compensation Arrangements

 

Stock options granted or securities issued by the Corporation pursuant to the Corporation’s security-based compensation arrangements are governed by the following plans: the Employee Share Purchase Plan, Restricted Share Unit Plan and the Stock Option Plan.

 

The Employee Share Purchase Plan

 

The Employee Share Purchase Plan provides for the acquisition of Common Shares by Eligible Employees (as hereinafter defined) for the purpose of advancing the interests of the Corporation through the motivation, attraction and retention of employees of the Corporation and to secure for the Corporation and the Shareholders of the Corporation the benefits inherent in the ownership of Common Shares by employees of the Corporation, it being generally recognized that employees are more motivated and dedicated due to the opportunity offered to them to acquire a proprietary interest in the Corporation.

 

The Stock Option Plan

 

The purpose of the Stock Option Plan is to advance the interests of the Corporation by encouraging the officers, managers, employees and consultants of the Corporation and its subsidiaries to acquire shares in the Corporation, thereby increasing their proprietary interest in the Corporation, encouraging them to remain associated with the Corporation and its subsidiaries and furnishing them with additional incentive in their efforts on behalf of the Corporation and its subsidiaries.

 

2019 Management Information Circular

 

54

 

The Restricted Share Unit Plan

 

The purpose of the Restricted Share Unit Plan is to assist the Corporation and its subsidiaries in attracting and retaining individuals with experience and ability, to allow certain employees of the Corporation and its subsidiaries to participate in the long-term success of the Corporation and to promote a greater alignment of interests between the employees designated under this Restricted Share Unit Plan and the Shareholders of the Corporation.

 

ELIGIBILITY

 

Who is eligible to participate?

 

The Employee Share Purchase Plan

 

Participants in the Employee Share Purchase Plan are employees, including full-time and part-time salaried employees who have an employment agreement for a term of at least one year with the Corporation or with any associates of the Corporation designated by the Board of Directors of the Corporation or by the committee of the Board of Directors authorized to oversee the Employee Share Purchase Plan (the “Designated Affiliates”),  who have provided services to the Corporation or to any Designated Affiliates for at least 60 days. The Committee may elect, in its absolute discretion, to waive such 60-day period or to determine that the Employee Share Purchase Plan does not apply to any Eligible Employee.

 

The Stock Option Plan

 

Pursuant to the Stock Option Plan, options may be granted in favour of executive directors, officers, employees and consultants providing ongoing services to the Corporation and its subsidiaries. Non-executive directors are not eligible to receive options. Options currently held by Messrs. Burzynski and Gaumond were granted to them while they were employed by the Corporation, respectively as Senior Vice President, New Business Development and Senior Vice President, Northern Development. The Replacement Osisko Options, which were offered to Virginia option holders, are not part of the Osisko Stock Option Plan.

 

The Restricted Share Unit Plan

 

Pursuant to the Restricted Share Unit Plan, RSUs may be granted in favour of the executives and key employees of the Corporation or of a subsidiary. For greater certainty, non-executive members of the Board of Directors shall not participate in the Restricted Share Unit Plan.

 

TERM AND VESTING

 

What is the term and vesting schedule of options or of the securities issuable under the security-based compensation arrangements?

 

The Employee Share Purchase Plan

 

Under the Employee Share Purchase Plan, any Eligible Employee may elect to contribute money on an ongoing basis. The Corporation will deduct from the remuneration of the Eligible Employee the Eligible Employee contribution in equal installments starting on the first day of such quarter and hold these amounts in trust for the Eligible Employee. As soon as practicable following March 31, June 30, September 30 and December 31 in each calendar year, the Corporation will credit the Eligible Employee with and therefore hold in trust for the Eligible Employee an amount equal to 60% of the Eligible Employee’s contribution then held in trust by the Corporation (up to a maximum of $9,000 per year) and shall issue for the account of each Eligible Employee fully paid and non-assessable Common Shares equal in value to the aggregate contribution held in trust by the Corporation as of such date. The Corporation’s contribution will vest on December 31st of the calendar year with respect to which they have been issued. No fraction of a Common Share shall be issued to the Eligible Employees, but any unused balance of the aggregate contribution shall be held in trust for the Eligible Employee until used in accordance with the Employee Share Purchase Plan.

 

2019 Management Information Circular

 

55

 

The Employee Share Purchase Plan was initially approved by the Shareholders on June 30, 2015 and was implemented by the Corporation on October 1st, 2015.

 

The Stock Option Plan

 

The options granted under the Stock Option Plan, shall be exercised within a period of time fixed by the Board of Directors, not to exceed 7 years from the date the option is granted (the “Option Period”). The options shall vest and may be exercised during the Option Period in such manner as the Board of Directors may fix by resolution. The options which have vested may be exercised in whole or in part at any time and from time to time during the Option Period. To date, all granted options have a term of five years.

 

Upon a change of control, all outstanding options shall vest and become immediately exercisable.

 

The Restricted Share Unit Plan

 

Unless otherwise indicated by the Committee upon grant and subject to the provision on death, termination not for cause, retirement or Long-Term Disability of the Restricted Share Unit Plan, each RSU shall vest on the third (3rd) anniversary of the grant date. Furthermore, in the case of RSUs subject to performance vesting conditions, such RSUs shall also be multiplied by the performance percentage determined by the Board of Directors of the Corporation upon vesting, provided, however, that should such performance percentage exceeds 100%, then the Corporation shall be entitled to settle such exceeding amount in cash. However, the Committee may, in its entire discretion, accelerate the terms of vesting of any RSUs in circumstances deemed appropriate by the Committee.

 

Upon a change of control, all outstanding RSUs vest, irrespective of any performance vesting conditions.

 

Following the vesting date, the holder of RSUs shall receive, at the election of the Corporation on the settlement date, as applicable (i) a certificate registered in the name of the holder representing in the aggregate such number of Common Shares as the holder shall then be entitled to receive and/or (ii) a payment in the form of a cheque, or other payment method as determined by the Committee, of any cash portion then payable to the holder, in each case, less any applicable withholding taxes and other deductions required by law to be withheld by the Corporation in connection with the satisfaction of the holder’s RSUs. Once settled, the holder shall have no further entitlement in connection with such vested RSUs under the Restricted Share Unit Plan.

 

NUMBER OF SECURITIES ISSUED OR ISSUABLE

 

How many securities are authorized to be issued under the security-based compensation arrangements and what percentage of the Corporation’s shares outstanding do they represent?

 

The Employee Share Purchase Plan

 

The maximum number of Common Shares made available for the Employee Share Purchase Plan shall not exceed 0.5% of the issued and outstanding Common Shares of the Corporation at any one time.

 

Should the Corporation issue additional Common Shares in the future, the number of Common Shares issuable under the Employee Share Purchase Plan will increase accordingly. The Employee Share Purchase Plan is considered an “evergreen” plan, since the Common Shares issued under the Employee Share Purchase Plan shall be available for subsequent grants under this plan.

 

The TSX rules provide that all unallocated options, rights or other entitlements under a security based compensation arrangement, which does not have a fixed number of maximum securities issuable, must be approved every three years. The unallocated entitlements under the Employee Share Purchase Plan were submitted and ratified by the Shareholders on May 3rd, 2018.

 

2019 Management Information Circular

 

56

 

The Stock Option Plan

 

The aggregate number of Common Shares to be delivered upon the exercise of all options granted under the Stock Option Plan shall not exceed the greater of 5% of the issued and outstanding Common Shares at the time of granting of options (on a non-diluted basis) or such other number as may be approved by the TSX and the Shareholders of the Corporation from time to time.

 

If any option granted under the Stock Option Plan shall expire or terminate for any reason without having been exercised in full, the unpurchased Common Shares subject thereto shall again be available for the purpose of the Stock Option Plan.

 

As a result, should the Corporation issue additional Common Shares in the future, the number of Common Shares issuable under the Stock Option Plan will increase accordingly. The Stock Option Plan is considered an “evergreen” plan, since the Common Shares covered by options which have been exercised under the Stock Option Plan shall be available for subsequent grants under the Stock Option Plan.

 

The TSX rules provide that all unallocated options, rights or other entitlements under a security based compensation arrangement, which does not have a fixed number of maximum securities issuable, must be approved every three years. The unallocated options under the Stock Option Plan were submitted and ratified by the Shareholders on May 4, 2017.

 

The Restricted Share Unit Plan

 

The total number of Common Shares reserved and available for grant and issuance pursuant to the Restricted Share Unit Plan shall not exceed a number of Common Shares equal to 2% of the total issued and outstanding Common Shares of the Corporation at the time of granting of RSUs (on a non-diluted basis), or such other number as may be approved by the TSX and the Shareholders of the Corporation from time to time. Any increase in the issued and outstanding Common Shares will result in an increase in the number of Common Shares that may be issued pursuant to the Restricted Share Unit Plan or any other proposed or established share compensation arrangement of the Corporation.

 

The TSX rules provide that all unallocated options, rights or other entitlements under a security based compensation arrangement, which does not have a fixed number of maximum securities issuable, must be approved every three years. The unallocated entitlements under the Restricted Share Unit Plan were submitted and ratified on May 3rd, 2018.

 

Equity Compensation Plan Information

 

The following table shows, as of December 31, 2018, aggregated information for the Corporation’s compensation plans under which equity securities of the Corporation are authorized for issuance from treasury. As of December 31, 2018, 155,587,091 Common Shares were issued and outstanding.

 

	
Plan Category
    	
 
    	
Number of Common Shares to be
   Issued Upon Exercise of
   Outstanding Options or RSUs
   (#) and (% of the issued and
   outstanding Common Shares(4))
    	
 
    	
Weighted Average Exercise Price
   of Outstanding Options
   ($)
    	
 
    	
Number of Common Shares Remaining
   Available for Future Issuance Under the
   Equity Compensation Plans
   (#) and (% of the issued and
   outstanding Common Shares(4))
    	
 
    
	
Equity   Compensation Plans of the Corporation approved by the Shareholders:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
·       Employee Share Purchase Plan(1)
    	
 
    	
N/A
    	
 
    	
N/A
    	
 
    	
777,935(or 0.5%)
    	
 
    
	
·       Restricted Share Unit Plan(2)
    	
 
    	
848,759 (or 0.5%)
    	
 
    	
N/A
    	
 
    	
2,262,983 (or 1.5%)
    	
 
    
	
·       Stock Option Plan(3)
    	
 
    	
4,090,696 (or 2.6%)
    	
 
    	
14.63
    	
 
    	
3,688,659 (or 2.4%)
    	
 
    
	
Equity   Compensation Plans of the Corporation not approved by the Shareholders
    	
 
    	
N/A
    	
 
    	
N/A
    	
 
    	
N/A
    	
 
    
	
Total:
    	
 
    	
4,939,455(or 3.1%)
    	
 
    	
14.63
    	
 
    	
6,729,577 (or 4.3%)
    	
 
    

 

2019 Management Information Circular

 

57

 

NOTES:

(1)                   The aggregate number of Common Shares issuable under the Employee Share Purchase Plan shall not exceed 0.5% of the issued and outstanding Common Shares. Pursuant to the terms of the Employee Share Purchase Plan, Common Shares are issued on a quarterly basis at the weighted average closing price for the five (5) consecutive trading days prior to the end of each applicable financial quarter of the Corporation or to be purchased on the TSX at market price. Accordingly, no exercise right is applicable to this plan.

(2)                   The aggregate number of Common Shares issuable under the Restricted Share Unit Plan shall not exceed 2% of the issued and outstanding Common Shares. Pursuant to the terms of the Restricted Share Unit Plan, RSUs have a three-year vesting period and provides the right to receive a payment in the form of Common Shares, cash or a combination of Common Shares and in cash. The weighted average exercise price for RSUs is not applicable, given that the RSU settlement date is based on the closing market price of the Common Shares of the Corporation traded on the TSX on the day prior to the settlement date.

(3)                   The aggregate number of Common Shares to be delivered upon the exercise of all options granted under the Stock Option Plan shall not exceed 5% of the issued and outstanding Common Shares at the time of granting options (on a non-diluted basis).

(4)                   Percentages are rounded to the nearest decimal.

 

In 2018, the Corporation granted 886,900 options to participants under the Stock Option Plan representing 0.57% of the issued and outstanding Common Shares as of December 31, 2018 and the Corporation granted 429,262 RSUs to participants under the Restricted Share Unit Plan representing 0.28% of the issued and outstanding Common Shares as of December 31, 2018.

 

As at December 31, 2018, 4,090,696 Common Shares were issuable upon the exercise of outstanding options representing 2.63% of the issued and outstanding Common Shares of the Corporation. Such options are exercisable at exercise prices ranging from $11.92 to $17.84 per share and are due to expire at the latest on August 7, 2023.

 

INSIDER PARTICIPATION LIMIT

 

What is the maximum percentage of securities available under the security-based compensation arrangements to the Corporation’s insiders?

 

In order to comply with TSX rules:

 

(a)         the aggregate number of Commons Shares issuable to insiders, from time to time, under all security based compensation arrangements may not exceed 10% of the total number of issued and outstanding Common Shares; and

 

(b)         the number of Common Shares issued to insiders under all security based compensation arrangements during any one-year period may not exceed 10% of the total number of issued and outstanding Common Shares.

 

Accordingly, the Corporation has set the following limits for the following security based compensation plans:

 

	
Security Based Compensation Plan
    	
 
    	
Plan Limit(1)
    	
 
    
	
Employee Share   Purchase Plan
    	
 
    	
0.5
    	
%
    
	
Restricted Share   Unit Plan
    	
 
    	
2.0
    	
%
    
	
Stock Option   Plan
    	
 
    	
5.0
    	
%
    
	
Total   Plan Limit
    	
 
    	
7.5
    	
%
    

 

NOTE:

(1)                   These plan limits are calculated on the total number of issued and outstanding Common Shares of the Corporation.

 

MAXIMUM ISSUABLE TO ONE PERSON

 

What is the maximum number of securities any one person is entitled to receive under the security-based compensation arrangements and what percentage of the Corporation’s outstanding capital does this represent?

 

The Employee Share Purchase Plan

 

As per the terms of the Employee Share Purchase Plan, the Corporation contributes an amount equal to 60% of the Eligible Employee’s contribution up to a maximum of $9,000 per year (assuming an Eligible Employee contributed the maximum monthly contribution of $1,250 ($15,000 annually). Common Shares are issued on a quarterly basis at the weighted average closing price of the Corporation’s Common Share as

 

2019 Management Information Circular

 

58

 

listed on the TSX for the five (5) consecutive trading days prior to the end of each applicable financial quarter of the Corporation or be purchased on the TSX at market price.

 

The Stock Option Plan

 

The number of shares subject to an option granted to a participant under the Stock Option Plan shall be determined in the resolution of the Board of Directors and no participant shall be granted an option which exceeds 5% of the issued and outstanding Common Shares of the Corporation at the time of granting of the option.

 

The Restricted Share Unit Plan

 

The number of Common Shares that may be issued to a Participant under the Restricted Share Unit Plan cannot exceed 2% of the issued and outstanding Common Shares at the time of granting of the RSUs.

 

EXERCISE / PURCHASE PRICE

 

How is the exercise price determined under the security-based compensation arrangements?

 

The Employee Share Purchase Plan

 

The Common Shares issued under the Employee Share Purchase Plan shall be issued at the weighted average closing price of the Corporation’s Common Share as listed on the TSX for the five (5) consecutive trading days prior to the end of each applicable financial quarter of the Corporation or be purchased on the TSX at market price.

 

The Stock Option Plan

 

The exercise price of the options granted under the Stock Option Plan will be established by the Board of Directors subject to the rules of the regulatory authorities having jurisdiction over the securities of the Corporation, including the TSX. The exercise price at the time of the grant of the options shall not be less than the closing market price of the Common Shares listed on the TSX on the day prior to their grant.

 

The Restricted Share Unit Plan

 

The value of an RSU at the time of grant or at the time of settlement is equal to the closing price of the Common Shares listed on the TSX on the day prior to such grant or settlement.

 

CESSATION

 

Under what circumstances is an individual no longer entitled to participate?

 

The Employee Share Purchase Plan

 

Under the Employee Share Purchase Plan, an Eligible Employee shall automatically cease to be entitled to participate in the Employee Share Purchase Plan, upon termination of the employment of the Eligible Employee with or without cause by the Corporation or the Designated Affiliate or cessation of employment of the Eligible Employee with the Corporation or a Designated Affiliate as a result of resignation or otherwise other than retirement of the Eligible Employee after having attained a stipulated age in accordance with the Corporation’s normal retirement policy or earlier with the Corporation’s consent.

 

2019 Management Information Circular

 

59

 

The Stock Option Plan

 

If a participant to the Stock Option Plan shall cease to be an officer, manager, consultant or employee of the Corporation or a subsidiary for any reason (other than disability, retirement with the consent of the Corporation or death) the options granted to such participant may be exercised in whole or in part by the participant during a period commencing on the date of such cessation and ending 180 days thereafter or on the expiry date, whichever comes first. If a participant to the Stock Option Plan shall cease to be an officer, manager, consultant or employee of the Corporation or a subsidiary by reason of disability or retirement with the consent of the Corporation, the options granted to such participant may be exercised in whole or in part by the participant, during a period commencing on the date of such termination and ending one year thereafter or on the expiry date, whichever comes first. In the event of the death of the participant, the options previously granted to such participant shall automatically vest and may be exercised in whole or in part by the legal person representative of the participant for a period of one year or until the expiry date, whichever comes first.

 

The Restricted Share Unit Plan

 

Unless otherwise determined by the Board, the following provisions shall apply in the event that a participant ceases to be employed by the Corporation or by a subsidiary:

 

a)                           Termination for cause and voluntary resignation — If a Participant ceases to be an employee as a result of termination for cause, or as a result of a voluntary termination, effective as of the date notice is given to the participant of such termination, as of the date on which the Corporation or the subsidiary receives communication of a voluntary resignation, all outstanding RSUs shall be terminated.

 

b)                           Death, termination not for cause, retirement or long-term disability — If a participant ceases to be an employee of the Corporation or a subsidiary as a result of death, termination not for cause, retirement or long-term disability, the vesting of RSUs shall be subject to the following:

 

i.                                For each outstanding RSUs granted — Fixed Component:

 

A.       in the event the participant is not entitled to a benefits extension period, the vesting of the fixed component portion of each RSU grant will be prorated based on the number of days actually worked from the date of grant of such RSUs until the date of death, termination not for cause, retirement or long-term disability, over the number of days of the original vesting schedule set forth in relation to such grant; or

 

B.       in the event the participant is entitled to a benefits extension period, the vesting of the fixed component portion of each RSU grant will be prorated based on the sum of the number of days within the benefits extension period and those actually worked from the date of grant of such RSUs up until the date of death, termination not for cause, retirement or long-term disability, over the number of days of the original vesting schedule set forth in relation to such grant; and

 

ii.                             For each outstanding RSUs granted — Performance Vesting: the vesting of all performance based RSU grant will be prorated based on the number of days actually worked from the date of grant of such RSUs up until the date of death, termination not for cause, retirement or long term disability, over the original vesting schedule set forth in relation to such grant; the number of vested RSUs resulting from such prorated calculation will be multiplied by the performance percentage determined by the Board of Directors of the Corporation.

 

For greater clarity, a voluntary resignation will be considered as retirement if the participant has reached normal retirement age under the Corporation’s benefit plans or policies, unless the Committee decides otherwise at its sole discretion.

 

2019 Management Information Circular

 

60

 

ASSIGNABILITY AND TRANSFERABILITY

 

Can options or rights held pursuant to the security-based compensation arrangements be assigned or transferred?

 

All benefits, rights and options accruing to any participant in accordance with the terms and conditions of the Employee Share Purchase Plan, Restricted Share Unit Plan and of the Stock Option Plan shall not be transferable unless under the laws of descent and distribution or pursuant to a will. All options, RSUs and such benefits and rights may only be exercised in accordance with such plans.

 

AMENDMENT PROVISIONS

 

How are the security-based compensation arrangements amended? Is Shareholder approval required?

 

The Employee Share Purchase Plan

 

The committee authorized by the Board of Directors to oversee the Employee Share Purchase Plan has the following rights, without the approval of the Shareholders of the Corporation:

 

i)                                                       to suspend or terminate and to re-instate the Employee Share Purchase Plan;

 

ii)                                                    to make any amendment of a “housekeeping” nature, including, without limitation, amending the wording of any provision of the Employee Share Purchase Plan for the purpose of clarifying the meaning of existing provisions or to correct or supplement any provision of the Employee Share Purchase Plan that is inconsistent with any other provision of the Employee Share Purchase Plan, correcting grammatical or typographical errors and amending the definitions contained in the Employee Share Purchase Plan;

 

iii)                                                 to make any amendment to comply with the rules, policies, instruments and notices of any regulatory authority to which the Corporation is subject, including the TSX, or to otherwise comply with any applicable law or regulation;

 

iv)                                                to make any amendment to the vesting provisions of the Employee Share Purchase Plan;

 

v)                                                   to make any amendment to the provisions concerning the effect of the termination of an Eligible Employee employment or services on such Eligible Employee’s status under the Employee Share Purchase Plan;

 

vi)                                                to make any amendment to the categories of persons who are Eligible Employees; and

 

vii)                                             to make any amendment respecting the administration or implementation of the Employee Share Purchase Plan.

 

The committee authorized by the Board of Directors to oversee the Employee Share Purchase Plan, may with the approval of the Shareholders of the Corporation by ordinary resolution, make any other amendment to the Employee Share Purchase Plan not mentioned hereinabove, including, but not limited to:

 

i)                                    change the number of Common Shares issuable from treasury under the Employee Share Purchase Plan, including an increase to the fixed maximum number of Common Shares or a change from a fixed maximum number of Common Shares to a fixed maximum percentage;

 

ii)                                 any amendment to the level of the Corporation’s contribution set to an amount that is equal to 60% of the Eligible Employee’s contribution; and

 

iii)                              any amendment to the contribution mechanism relating to the Corporation’s contribution.

 

2019 Management Information Circular

 

61

 

Notwithstanding the foregoing, any amendment to the Employee Share Purchase Plan shall be subject to the receipt of all required regulatory approvals including, without limitation, the approval of the TSX.

 

The Stock Option Plan

 

The Board of Directors may, without the approval of the Shareholders of the Corporation but subject to receipt of requisite approval from the TSX, in its sole discretion make the following amendments to the Stock Option Plan:

 

i)                                         any amendment of a “housekeeping” nature;

 

ii)                                      a change to the vesting provisions of an option or the Stock Option Plan;

 

iii)                                   a change to the termination provisions of an option or the Stock Option Plan which does not entail an extension beyond the original expiry date; and

 

iv)                                  the addition of cashless exercise feature, payable in cash or securities, which provides for a full deduction of the number of underlying securities from the Stock Option Plan reserve.

 

The approval of the Board of Directors and the requisite approval from the TSX and the Shareholders shall be required for any of the following amendments to be made to the Stock Option Plan:

 

i)                                         any amendment to the number of shares issuable under the Stock Option Plan, including an increase in the fixed maximum number of shares or a change from a fixed maximum number of shares to a fixed maximum percentage;

 

ii)                                      a reduction in the exercise price of an option (for this purpose, a cancellation or termination of an option of a participant prior to its expiry for the purpose of reissuing options to the same participant with a lower exercise price shall be treated as an amendment to reduce the exercise price of an option), other than for standard anti-dilution purposes;

 

iii)                                   an increase in the maximum number of shares that may be issued to insiders within any one-year period or that are issuable to insiders at any time;

 

iv)                                  an extension of the term of any option beyond the original expiry date (except, for greater certainty, in cases of blackout period in conformity with the terms of the Stock Option Plan);

 

v)                                     any change to the definition of “Participant” included in the Stock Option Plan which would have the potential of broadening or increasing insider participation;

 

vi)                                  the addition of any form of financial assistance;

 

vii)                               any amendment to a financial assistance provision which is more favorable to optionees;

 

viii)                            the addition of a cashless exercise feature, payable in cash or securities, which does not provide for a full deduction of the number of underlying securities from the Stock Option Plan reserve;

 

ix)                                  the addition of a deferred or restricted share unit or any other provision which results in optionees receiving securities while no cash consideration is received by the Corporation;

 

x)                                     any amendment to the transferability provision of the Stock Option Plan;

 

xi)                                  any amendment that may modify or delete any of the amendment disposition requiring shareholders’ approval; and

 

2019 Management Information Circular

 

62

 

xii)                               any other amendments that may lead to significant or unreasonable dilution in the Corporation’s outstanding securities or may provide additional benefits to the participants of the Stock Option Plan, especially insiders, at the expense of the Corporation and its existing Shareholders.

 

The Restricted Share Unit Plan

 

The approval of the Board of Directors and the requisite approval from the TSX and the Shareholders of the Corporation (by simple majority vote) shall be required for any of the following amendments to be made to the Restricted Share Unit Plan:

 

(i)                                     any amendment to the number of shares issuable under the Restricted Share Unit Plan, including an increase in the fixed maximum number of shares or a change from a fixed maximum number of shares to a fixed maximum percentage;

 

(ii)                                  any change to the definition of “Participant” which would have the potential of broadening or increasing insider participation; and

 

(iii)                               any amendment that may modify or delete any of the amendment provision requiring Shareholders’ approval.

 

The Board may, without Shareholder approval but subject to receipt of requisite approval from the TSX, in its sole discretion make all other amendments to the Restricted Share Unit Plan that are not of the type contemplated in the amendment provision requiring Shareholders’ approval, including, without limitation:

 

(i)                                     amend, suspend or terminate the Restricted Share Unit Plan in whole or in part or amend the terms of RSUs credited in accordance with the Restricted Share Unit Plan. If any such amendment, suspension or termination will materially or adversely affect the rights of a participant with respect to RSUs credited to such participant, the written consent of such participant to such amendment, suspension or termination shall be obtained. Notwithstanding the foregoing, the obtaining of the written consent of any participant to an amendment, suspension or termination which materially or adversely affects the rights of such participant with respect to any credited RSUs shall not be required if such amendment, suspension or termination is required in order to comply with applicable laws, regulations, rules, orders of government or regulatory authorities or the requirements of any stock exchange on which shares of the Corporation are listed. If the Committee terminates the Restricted Share Unit Plan, RSUs previously credited to participants shall remain outstanding and in effect and be settled in due course in accordance with the terms of this Restricted Share Unit Plan (which shall continue to have effect, but only for such purposes) on the settlement date.

 

Were any amendments made to the security-based compensation arrangements in the last financial year?

 

Amendments were made to the Corporation’s Employee Share Purchase Plan and Stock Option Plan in March 2018 and ratified by the Shareholders on May 3rd, 2018, namely:

 

The Employee Share Purchase Plan

 

The Employee Share Purchase Plan was amended and ratified by the Shareholders on May 3rd, 2018. The amendments to this plan include:

 

(i)                       reducing the number of Common Shares to be issued under the Employee Share Purchase Plan from a rolling 1% to a rolling 0.5% of the issued and outstanding Common Shares of the Corporation;

 

(ii)                    submitting to Shareholders’ approval of any amendment to the level of the Corporation’s contribution as described in Section 3.4 of the Employee Share Purchase Plan; and

 

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63

 

(iii)                 submitting to Shareholders, approval of any amendment to the contribution mechanism relating to the Corporation’s contribution described in Section 3.4 of the Employee Share Purchase Plan.

 

The Stock Option Plan

 

The Stock Option Plan was amended and ratified by the Shareholders on May 3rd, 2018. The amendments to this plan included:

 

(i)                  reduce the number of Common Shares to be issued under the Stock Option Plan to a rolling 5% of the issued and outstanding Common Shares;

 

(ii)               increase the aggregate number of Common Shares issuable to insiders of the Corporation at any time, under the Stock Option Plan, or when combined with all other share compensation arrangements, provided that it cannot exceed 10% of the issued and outstanding Common Shares; and

 

(iii)            options may be exercised for Common Shares issued from treasury once the vesting criteria have been satisfied and upon payment of the exercise price. Alternatively, a participant may elect to proceed with “cashless” exercise of options, instead of paying the exercise price. In such case, the participant who chooses a “cashless” exercise will receive the number of shares equal to: (i) the difference between (Y) the difference between the cashless exercise sale price and the exercise price of the stock option, multiplied by the number of Common Shares in respect of which the stock option would otherwise be exercised upon payment of the aggregate exercise price and (Z) all applicable fees payable in connection with the cashless exercise; divided by (ii) the cashless exercise sale price. If a holder chooses a “cashless” exercise, such participant may also elect to receive the amount determined under (i) above in cash instead of receiving the number of Common Share determined under (ii) above. For the purpose hereof, “cashless exercise sale price” means the sale price received by the Corporation upon the sale of Common Shares to cover the exercise price of options that are being exercised.

 

FINANCIAL ASSISTANCE

 

Does the Corporation provide any financial assistance to participants to purchase shares under the security-based compensation arrangements?

 

The Employee Share Purchase Plan

 

Under the Employee Share Purchase Plan, the Corporation will contribute to the Eligible Employee contribution an amount equal to 60% of the Eligible Employee’s contribution cumulated at the end of each interim period of the Corporation up to a maximum of $9,000 per year.

 

The Stock Option Plan

 

There is no provision allowing financial assistance under the Stock Option Plan.

 

The Restricted Share Unit Plan

 

None applicable.

 

CHANGE OF CONTROL PROVISIONS

 

Are there any adjustment provisions under the security-based compensation arrangements? 

 

The Employee Share Purchase Plan

 

Under the Employee Share Purchase Plan, if there is a change of control of the Corporation, all unvested Common Shares held in trust for an Eligible Employee shall be immediately deliverable to the Eligible

 

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64

 

Employee. The Corporation’s contribution shall immediately be made and the Common Shares shall be issued for the then aggregate contribution based on the Current Market Value (as defined in the Employee Share Purchase Plan) of the Common Shares on the date of the change of control prior to the completion of the transaction which results in the change of control and that such Common Shares shall be immediately delivered to the Eligible Employees.

 

In addition, in the event there is any change in the Common Shares, whether by reason of a stock dividend, consolidation, subdivision, reclassification or otherwise, an appropriate adjustment shall be made by the committee authorized by the Board to oversee the Employee Share Purchase Plan in the number of Common Shares available under the Employee Share Purchase Plan. If such an adjustment shall result in a fractional Common Share, the fraction shall be disregarded. All such adjustments shall be conclusive, final and binding for all purposes of the Employee Share Purchase Plan.

 

The Stock Option Plan

 

Under the Stock Option Plan, if there is a change of control of the Corporation, all unvested options outstanding at the time of the change of control shall vest and become immediately exercisable.

 

Under the Stock Option Plan, in the event that the outstanding Common Shares are changed into or exchanged for a different number or kind of shares or other securities of the Corporation, or in the event that there is a reorganization, amalgamation, consolidation, subdivision, reclassification, dividend payable in capital stock or other change in capital stock of the Corporation, then each participant holding an option shall thereafter upon the exercise of the option granted to him, be entitled to receive, in lieu of the number of shares to which the participant was theretofore entitled upon such exercise, the kind and amount of shares or other securities or property which the participant would have been entitled to receive as a result of any such event if, on the effective date thereof, the participant had been the holder of the shares to which he was theretofore entitled upon such exercise.

 

In the event the Corporation proposes to amalgamate, merge or consolidate with any other Corporation (other than with a wholly-owned subsidiary of the Corporation) or to liquidate, dissolve or windup, or in the event an offer to purchase the shares of the Corporation or any part thereof shall be made to all Shareholders, the Corporation shall have the right, upon written notice thereof to each participant, to require the exercise of the option granted pursuant to the Stock Option Plan within the thirty (30) day period following the date of such notice and to determine that upon such thirty (30) day period, all rights of the participant to exercise same (to the extent not theretofore exercised) shall ipso facto terminate and cease to have any further force or effect whatsoever.

 

The Restricted Share Unit Plan

 

Under the Restricted Share Unit Plan, if there is a change of control of the Corporation, all outstanding RSUs vest, irrespective of any performance vesting conditions.

 

In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation, recapitalization, amalgamation, plan of arrangement, reorganization, spin-off or other distribution (other than normal cash dividends) of the Corporation’s assets to Shareholders or any other change affecting the Common Shares, such adjustments as are required to reflect such change shall be made with respect to the number of RSUs in the accounts maintained for each participant, provided that no fractional RSUs shall be issued to participants and the number of RSUs to be issued in such event shall be rounded down to the next whole number of RSUs.

 

Whenever dividends are paid on Common Shares, additional RSUs will be automatically granted to each participant who holds RSUs on the record date for such dividend. The number of such RSUs (rounded to the nearest whole RSU) to be credited as of a dividend payment date shall be determined by dividing the aggregate dividends that would have been paid to such participant if the participant’s RSUs had been Common Shares by the market value on the date on which the dividends were paid on the Common Shares. RSUs granted to a participant under the section on credits for dividends shall be subject to the same vesting as the RSUs to which they relate.

 

2019 Management Information Circular

 

65

 

BLACK-OUT PERIODS

 

Are there any blackout period provisions under the security-based compensation arrangements?

 

Under the Stock Option Plan, in the event that the term of an option expires during such period of time during which insiders are prohibited from trading in shares as provided by the Corporation’s Securities Trading Policy, as it may be implemented and amended from time to time or within 10 business days thereafter, the option shall expire on the date that is 10 business days following the Blackout Period (as defined in the Stock Option Plan). Although the Blackout Period would only cover insiders of the Corporation, the extension would apply to all participants who have options which expire during the Blackout Period.

 

PENSION PLAN BENEFITS

 

The Corporation has not adopted any retirement plan or pension plan providing for payment of benefits. 

 

TERMINATION AND CHANGE OF CONTROL BENEFITS

 

The Corporation has entered into employment agreements with its Named Executives on terms and conditions comparable to market practice for public issuers in the same industry and market and of the same size as the Corporation.

 

In the case of termination of employment initiated by the Corporation for reasons other than just cause, the Corporation will make the following severance payments to its Named Executives:

 

·                  Chair of the Board and Chief Executive Officer: 1.5 x (annual base salary level + average annualized bonus paid or declared in the last two years); and

 

·                  other Named Executives: 1.0 x (annual base salary level + average annualized bonus paid or declared in the last two years).

 

The Corporation shall also continue all of the Named Executive’s benefits for a corresponding period of time equal to one (1) year (one and a half (1.5) year for the Chair of the Board) from of the cessation of the Named Executive’s employment (the “Extended Benefits Period”). Any RSUs held by the Named Executive, as applicable, shall vest and be payable pursuant to the provisions of the RSU plan, as amended from time to time. The Named Executive shall also be entitled to exercise options vesting during Extended Benefit Period pursuant to the provisions of the Stock Option Plan.

 

In the case of termination of employment initiated by the Corporation for reasons other than just cause, including constructive dismissal, within 18 months following a Change of Control (“CoC”), the Named Executive will be entitled to the following severance payment (“CoC severance”):

 

·                  Chair of the Board and Chief Executive Officer: 2.0 x (annual base salary level + average annualized bonus paid or declared in the last two years);

·                  other Named Executives: 1.5 x (annual base salary level + average annualized bonus paid or declared in last two years); and

·                  in the event the CoC event is deemed by the Board of Directors to be “hostile”, CoC severance payments may also be made to Named Executives who voluntarily resigns within 6 months following the “hostile” CoC.

 

Upon a CoC, all unvested options and RSUs vest, irrespective of any performance conditions. The Corporation shall also continue all of the Named Executives’ benefits for a corresponding period of time equal to one and a half (1.5) year (two (2) years for the Chair of the Board).

 

In addition to any severance payment, the Named Executive will be entitled to the current year short-term incentive payment in accordance with the actual achievements for the period they were employed.

 

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66

 

Termination by the Corporation Without Cause

 

If a Named Executive is terminated by the Corporation without cause, such Named Executive will be entitled to:

 

	
 
    	
 
    	
Sean Roosen
    	
 
    	
Bryan A. Coates
    	
 
    	
Elif Lévesque
    	
 
    	
Luc Lessard
    	
 
    	
André Le Bel
    	
 
    
	
Compensation(1)
    	
 
    	
($)
    	
 
    	
($)
    	
 
    	
($)
    	
 
    	
($)
    	
 
    	
($)
    	
 
    
	
Cash   Severance
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Annual base   salary level (2)
    	
 
    	
1,050,000
    	
 
    	
500,000
    	
 
    	
350,000
    	
 
    	
500,000
    	
 
    	
310,000
    	
 
    
	
Average   Annualized Bonus(3)
    	
 
    	
1,308,375
    	
 
    	
608,750
    	
 
    	
443,650
    	
 
    	
608,750
    	
 
    	
377,450
    	
 
    
	
Unvested   Equity acceleration
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Options(4)
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
RSUs(5)
    	
 
    	
1,206,560
    	
 
    	
747,297
    	
 
    	
586,427
    	
 
    	
662,422
    	
 
    	
542,326
    	
 
    
	
Benefits
   Insurance and Others(6)
    	
 
    	
61,000
    	
 
    	
57,400
    	
 
    	
57,200
    	
 
    	
57,400
    	
 
    	
57,000
    	
 
    
	
TOTAL
    	
 
    	
3,625,935
    	
 
    	
1,913,447
    	
 
    	
1,437,277
    	
 
    	
1,828,572
    	
 
    	
1,286,776
    	
 
    

 

NOTES:

(1)                                 All amounts are calculated as at December 31, 2018; all Named Executives are entitled to one (1) time (1.5 times for Chair of the Board and Chief Executive Officer), the sum of the Named Executive’s (i) annual base salary level and (ii) average annualized bonus paid or declared in the last two years; they are also entitled to the acceleration of all unvested equity and the maintaining of most benefits for a term of 12 months (18 months for Chair of the Board and Chief Executive Officer). In addition, all Named Executives are also entitled to receive payment of any accrued unpaid vacation. Amounts reflected in the table do not take into consideration any part of the compensation assumed by an associate company of the Corporation.

(2)                                 As at December 31, 2018, the respective annual base salary level of the Named Executives was as follows: Mr. Roosen: $700,000, Mr. Coates: $500,000, Ms. Lèvesque: $350,000, Mr. Lessard: $500,000, and Mr. Le Bel: $310,000.

(3)                                 For the Named Executives, these amounts reflect one (1) time (1.5 times for the Chair of the Board and Chief Executive Officer) the average annualized bonus paid or declared in the last two years. In addition to any severance payment, the Named Executive will be entitled to the current year short-term incentive payment in accordance with the actual achievements for the period they were employed.

(4)                                 These amounts reflect the aggregate dollar value that would be realized by multiplying the number of unvested options which would vest during the Extended Benefit Period by the difference between $11.97, being the closing price of the Common Shares of the Corporation on the TSX on December 31, 2018 and the respective exercise price of such options.

(5)                                 These amounts reflect the aggregate dollar value that would be realized by multiplying the number of RSUs which would vest during the Extended Benefit Period (also taking into account achievement of all long-term objectives) by $11.97 being the closing price of the Common Shares of the Corporation on the TSX on December 31, 2018.

(6)                                 These amounts represent the dollar value of the insurance benefit of the Named Executives which would be continued for a term of 12 months (18 months for the Chair of the Board and Chief Executive Officer); benefits include group insurance (but exclude long-term disability) and outplacement benefits in an amount of $50,000 and other benefits.

 

Termination of Employment Following Change in Control

 

The Named Executive will be entitled to the following severance payment (i) if they are terminated by the Corporation for reasons other than just cause, including constructive dismissal within 18 months following a CoC, or (ii) if the Named Executives voluntary resign within 6 months following a CoC which has been deemed “hostile” by the Board of Directors of the Corporation:

 

	
Compensation(1)
    	
 
    	
Sean Roosen
   ($)
    	
 
    	
Bryan A. Coates
   ($)
    	
 
    	
Elif Lévesque
   ($)
    	
 
    	
Luc Lessard
   ($)
    	
 
    	
André Le Bel
   ($)
    	
 
    
	
Cash   Severance
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Annual base   salary level(2)
    	
 
    	
1,400,000
    	
 
    	
750,000
    	
 
    	
525,000
    	
 
    	
750,000
    	
 
    	
465,000
    	
 
    
	
Average   Annualized Bonus(3)
    	
 
    	
1,744,500
    	
 
    	
913,125
    	
 
    	
665,475
    	
 
    	
913,125
    	
 
    	
566,175
    	
 
    
	
Unvested   Equity acceleration
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Options(4)
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
RSUs(5)
    	
 
    	
1,947,519
    	
 
    	
1,137,150
    	
 
    	
973,161
    	
 
    	
1,013,859
    	
 
    	
888,174
    	
 
    
	
Benefits
   Insurance and Others(6)
    	
 
    	
64,700
    	
 
    	
61,000
    	
 
    	
60,800
    	
 
    	
61,000
    	
 
    	
60,500
    	
 
    
	
TOTAL
    	
 
    	
5,156,719
    	
 
    	
2,861,275
    	
 
    	
2,224,436
    	
 
    	
2,737,984
    	
 
    	
1,979,849
    	
 
    

 

NOTES:

(1)                                 All amounts are calculated as at December 31, 2018; all Named Executives are entitled to 1.5 time (2.0 times for Chair of the Board and Chief Executive Officer) the sum of the Named Executive’s (i) annual base salary level and (ii) average annualized bonus paid or declared in the last two years they are also entitled to the acceleration of all unvested equity and the maintaining of most benefits for a term of 18 months (24 months for the Chair of the Board and Chief Executive Officer). Amounts reflected in the table do not take into consideration any part of the compensation assumed by an associate company of the Corporation.

(2)                                 As at December 31, 2018, the respective annual base salary level of the Named Executive was as follows: Mr. Roosen: $700,000, Mr. Coates: $500,000, Ms. Lèvesque: $350,000, Mr. Lessard: $500,000, and Mr. Le Bel: $310,000.

(3)                                 For the Named Executives, these amounts reflect 1.5 times (two (2) times for the Chair of the Board and Chief Executive Officer) the average annualized bonus paid or declared in the last two years. In addition to any severance payment, the Named Executive will be entitled to the current year short-term incentive payment in accordance with the actual achievements for the period they were employed.

(4)                                 These amounts reflect the aggregate dollar value that would be realized by multiplying the number of unvested options, which would vest during the Extended Benefit Period by the difference between $11.97, being the closing price of the Common Shares of the Corporation on the TSX on December 31, 2018 and the respective exercise price of such options.

(5)                                 These amounts reflect the aggregate dollar value that would be realized by multiplying the number of RSUs (the vesting of which would be accelerated as a result of such CoC, irrespective of any performance condition) by $11.97 being the closing price of the Common Shares of the Corporation on the TSX on December 31, 2018.

(6)                                 These amounts represent the dollar value of the insurance benefit of the Named Executives which would be continued for a term of 18 months (24 months for the Chair of the Board and Chief Executive Officer); benefits include group insurance (but exclude long-term disability) and outplacement benefits in an amount of $50,000 and other benefits.

 

2019 Management Information Circular

 

67

 

Each of the Named Executives undertakes, following the date of his termination for any reason, not to solicit the Corporation’s agents, administrators, officers, directors, managers or business executives, consultants or employees and to not enter into competition with the Corporation for a period of 12 months.

 

For greater certainty and notwithstanding anything to the contrary, any payment to be made to a Named Executive as a result of a termination by the Corporation without cause or termination of employment following change in control will be adjusted to take into account the particulars of the employment situation of such Named Executive with associate companies.

 

Policy on Recovery of Incentive Compensation

 

In May 2015, the Board, following the recommendation of the Committee, adopted a written Policy on Recovery of Incentive Compensation (the “Policy” - also commonly known as a “Clawback Policy”) which will apply to the Chair of the Board and Chief Executive Officer, the President, Senior Vice Presidents and Vice Presidents (the “Executive Officers”)  of the Corporation (including former Executive Officers). While the original text of this Policy allowed the Board, in its discretion, to establish and reserve the right to recover all or portion of awards made only under the short-term incentive program (the “Annual Incentive Compensation”)  paid to an Executive Officer with respect to the most recent financial year upon the occurrence of certain events, the Policy was amended in March 2018 to allow the Board, in its discretion, to establish and reserve the right to recover all or portion of (i) an Annual Incentive Compensation and (ii) all cash based and equity based compensation awarded to the Corporation’s Executive Officers (collectively, the “Incentive Compensation”)  in direct relation to and upon the occurrence of the following which shall be deemed an event that would require a recalculation:

 

(i)                                such amount received by an Executive Officer was calculated based on, or contingent on, achieving:
 (a) certain financial results that are subsequently the subject of or affected by a restatement of all or a portion of the Corporation’s financial statements or (b) reported reserves or resources which are subsequently determined to be overstated;

 

(ii)                             an Executive Officer was involved in gross negligence, intentional misconduct or fraud that caused or
 partially resulted in such restatement, misstatement or overstatement; and

 

(iii)                          the Incentive Compensation payment received would have been lower had the financial results,
 production results or reserves and resources been properly reported.

 

The amended and revised Policy affects future awards made under the short-term and long-term incentive program. Further, Management of the Corporation will continue to monitor, in conjunction with the Committee, the evolution of regulatory framework in Canada with respect to compensation policies and ensure that the Policy is reviewed annually and is properly aligned with Shareholders’ best interests.

 

On February 13, 2019, Goldcorp Inc. announced an impairment expense of US$1.4 billion, net of income taxes, against the carrying value of the Éléonore mine, as a result of the previously announced acquisition of the company by Newmont Mining Corporation and due to the decrease in mineral reserves and resources and the reduction in the estimated fair value of Éléonore’s exploration potential. The Corporation proceeded with its own impairment testing and determined to take impairment charges of $166.3 million ($123.7 million, net of income taxes), including $148.5 million on the Éléonore NSR royalty interest ($109.1 million, net of income taxes) as detailed in its consolidated financial statements for the years ended December 31, 2018 and 2017.

 

Based on the foregoing, the Committee proceeded with a detailed analysis of the facts leading to the Corporation’s decision to take such impairment charges in order to determine whether any such fact, taken alone or in the aggregate, could be considered under the terms of the Policy, as an event that would require a recalculation of the annual incentive compensation paid to Executive Officers of the Corporation in the most recent financial year. Further to its detailed analysis, the Committee concluded that no such fact, taken alone or in the aggregate, would require a recalculation of the annual incentive compensation paid to Executive Officers of the Corporation in the most recent financial year.

 

2019 Management Information Circular

 

68

 

SECURITIES OWNERSHIP

 

Formal securities ownership guidelines (the “Guidelines”)  were assented by the Board of Directors on May 6, 2015 in order to further align the long-term interests of the Corporation’s Shareholders and that of its directors and officers. The Guidelines provide direction to non-executive directors, Named Executives and other officers of the Corporation as to the level and amounts of ownership considered satisfactory in meeting the ownership requirements. The ownership requirements can be met through the holding of Common Shares, DSUs and RSUs. The Board of Directors, following the recommendation of the Committee, approved the following method of calculation for the purpose of determining the value of securities held. As such, the holdings are based on the higher of (i) cost of the acquisition or value at the time of grant or (ii) market value at time of determination. With respect to RSUs, only the fixed component (retention based) will be used in determining the value of the holdings.

 

The following table illustrates the amounts and levels established for the minimum requirement for non-executive directors and Named Executives:

 

	
Categories
    	
 
    	
Securities Ownership Levels
   (as Multiple of Annual Base Salary Level/Retainer)
    
	
Lead Director and directors
    	
 
    	
2 Times   Basic Retainer and DSUs
    
	
Chief Executive Officer
    	
 
    	
3 Times   Annual Base Salary Level
    
	
President and Senior Vice Presidents
    	
 
    	
2.5   Times Annual Base Salary Level
    
	
Executives (other Named Executives)
    	
 
    	
2 Times   Annual Base Salary Level
    

 

Newly elected or appointed directors, newly appointed Named Executives and other executives have three years to comply with the ownership requirements starting from the date of approval of the Guidelines or from the date of election or appointment whichever comes last. Likewise, further to a salary increase, each Named Executive whose salary has been so increased shall also have three years to comply with the increased level of ownership requirements deriving from such salary increase, starting from the effective date of such increase. The following table sets out the securities ownership status of non-executive directors, Named Executives and other executives as of March 19, 2019:

 

The Securities Ownership of Directors, Named Executives and other Executives as of March 19, 2019:

 

	
 
    	
 
    	
HOLDINGS
    	
 
    	
Total Value(1)
    	
 
    	
Securities
    	
 
    	
Compliance with
   the Guidelines(3)
    	
 
    
	
Name and Position
    	
 
    	
Number of
   Common Shares
    	
 
    	
Number of
   DSUs
    	
 
    	
Number of RSUs
   (Fixed Component
   only)
    	
 
    	
($)
    	
 
    	
Ownership
   Level(2)
   ($)
    	
 
    	
Yes / No / Target
   Date
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Françoise Bertrand Director since November 24, 2014
    	
 
    	
1,200
    	
 
    	
46,213
    	
 
    	
NIL
    	
 
    	
$
    	
746,813
    	
 
    	
$
    	
320,000
    	
 
    	
Yes
    	
 
    
	
John Burzynski Director since April 30, 2014
    	
 
    	
17,294
    	
 
    	
16,809
    	
 
    	
2,620
    	
 
    	
$
    	
563,532
    	
 
    	
$
    	
320,000
    	
 
    	
Yes
    	
 
    
	
Pierre D. Chenard(4) Director since   September 11, 2017
    	
 
    	
—
    	
 
    	
18,566
    	
 
    	
—
    	
 
    	
$
    	
295,048
    	
 
    	
$
    	
320,000
    	
 
    	
No
    	
 
    
	
Christopher C. Curfman Director since May 4, 2016
    	
 
    	
5,500
    	
 
    	
29,462
    	
 
    	
—
    	
 
    	
$
    	
560,170
    	
 
    	
$
    	
320,000
    	
 
    	
Yes
    	
 
    
	
Bryan A. Coates(5) President since   April 30, 2014
    	
 
    	
128,219
    	
 
    	
NIL
    	
 
    	
59,232
    	
 
    	
$
    	
2,963,656
    	
 
    	
$
    	
1,282,500
    	
 
    	
Yes
    	
 
    
	
Joseph de la Plante(5) Vice President, Corporate   Development since June 30, 2014
    	
 
    	
8,279
    	
 
    	
NIL
    	
 
    	
29,565
    	
 
    	
$
    	
596,355
    	
 
    	
$
    	
600,000
    	
 
    	
No
   Must comply by
   January 1st,   2022
    	
 
    
	
Joanne Ferstman(3) Lead Director since   April 30, 2014
    	
 
    	
19,500
    	
 
    	
69,634
    	
 
    	
NIL
    	
 
    	
$
    	
1,401,516
    	
 
    	
$
    	
560,000
    	
 
    	
Yes
    	
 
    
	
André Gaumond(3)(4) Director   since February 17, 2015
    	
 
    	
630,634
    	
 
    	
16,809
    	
 
    	
7,110
    	
 
    	
$
    	
10,588,199
    	
 
    	
$
    	
320,000
    	
 
    	
Yes
    	
 
    
	
Pierre Labbé(3) Director since February 17, 2015
    	
 
    	
6,145
    	
 
    	
36,389
    	
 
    	
NIL
    	
 
    	
$
    	
692,291
    	
 
    	
$
    	
320,000
    	
 
    	
Yes
    	
 
    
	
André Le Bel(3) Vice President, Legal Affairs and Corporate   Secretary since February 17, 2015
    	
 
    	
40,024
    	
 
    	
NIL
    	
 
    	
44,494
    	
 
    	
$
    	
1,335,353
    	
 
    	
$
    	
636,000
    	
 
    	
Yes
    	
 
    

 

2019 Management Information Circular

 

69

 

	
 
    	
 
    	
HOLDINGS
    	
 
    	
Total Value(1)
    	
 
    	
Securities
    	
 
    	
Compliance with
   the Guidelines(3)
    	
 
    
	
Name and Position
    	
 
    	
Number of
   Common Shares
    	
 
    	
Number of
   DSUs
    	
 
    	
Number of RSUs
   (Fixed Component
   only)
    	
 
    	
($)
    	
 
    	
Ownership
   Level(2)
   ($)
    	
 
    	
Yes / No / Target
   Date
    	
 
    
	
Luc Lessard(5) Senior Vice President, Technical Services   since June 30, 2015
    	
 
    	
29,760
    	
 
    	
NIL
    	
 
    	
53,948
    	
 
    	
$
    	
1,326,649
    	
 
    	
$
    	
1,282,500
    	
 
    	
Yes
    	
 
    
	
Elif Lévesque(3) Chief Financial Officer and Vice President,   Finance since April 30, 2014
    	
 
    	
10,160
    	
 
    	
NIL
    	
 
    	
48,952
    	
 
    	
$
    	
930,525
    	
 
    	
$
    	
718,000
    	
 
    	
Yes
    	
 
    
	
Oskar Lewnowski(6) Director since July 31,   2017
    	
 
    	
—
    	
 
    	
19,680
    	
 
    	
—
    	
 
    	
$
    	
312,026
    	
 
    	
$
    	
320,000
    	
 
    	
No
   Must comply by
   July 31, 2020
    	
 
    
	
Charles E. Page Director since April 30, 2014
    	
 
    	
55,215
    	
 
    	
46,423
    	
 
    	
NIL
    	
 
    	
$
    	
1,604,270
    	
 
    	
$
    	
320,000
    	
 
    	
Yes
    	
 
    
	
Sean Roosen(7) Chair and Chief Executive Officer since   April 30, 2014
    	
 
    	
428,278
    	
 
    	
NIL
    	
 
    	
96,720
    	
 
    	
$
    	
8,275,417
    	
 
    	
$
    	
2,154,000
    	
 
    	
Yes
    	
 
    
	
Frédéric Ruel(5) Vice President, Corporate Controller Officer   since November 9, 2016
    	
 
    	
5,779
    	
 
    	
NIL
    	
 
    	
30,377
    	
 
    	
$
    	
565,664
    	
 
    	
$
    	
472,000
    	
 
    	
Yes
    	
 
    
	
François Vézina(8) Vice President, Technical   Services Officer since May 14, 2018
    	
 
    	
5,373
    	
 
    	
NIL
    	
 
    	
16,158
    	
 
    	
$
    	
333,291
    	
 
    	
$
    	
472,000
    	
 
    	
No
   Must comply by
   May 14, 2021
    	
 
    

 

NOTES:

(1)                                 As provided in the Guidelines, the value of holdings is based on the higher of: (i) the cost of acquisition or the value at the time of grant; or (ii) the market value at the time of determination of compliance with the Guidelines. Accordingly, given that the closing price on March 19, 2019 was $15.24, the value of Common Shares, DSUs and RSUs was based on the market value upon the date of grant or acquisition for the purpose of determining compliance with the Guidelines.

(2)                                 For Named Executives and other executives, the level of securities ownership is based on salaries effective as of January 1st, 2019.

(3)                                 Further to the closing by the Corporation of its $300 million offering of convertible senior unsecured debentures on November 3, 2017, the following directors, Named Executives and other executives subscribed, directly or indirectly, in said financing however, their respective investment is not taken into account in determining their compliance with the Guidelines: Joanne Ferstman: $100,000, André Gaumond: $200,000, Pierre Labbé: $25,000, Bryan A. Coates: $708,500, Elif Lévesque: $50,000, André Le Bel: $25,000, Joseph de la Plante: $25,000 and Frédéric Ruel: $50,000.

(4)                                 Messrs. Pierre Chenard and André Gaumond will not stand for re-election at this Meeting.

(5)                                 As a result of the salary increases in 2017 and 2019, each Named Executive and other executive shall now have a three-year period to comply with new securities ownership level, the three-year period ending in 2020 and 2022 respectively.

(6)                                 Mr. Oskar Lewnowski was appointed to the Board of Directors on July 31, 2017 as part of the Orion Transaction, therefore the three-year compliance period will end on July 31, 2020.

(7)                                 The value of the Common Share holding of Mr. Roosen exceeds his security ownership level.

(8)                                 Mr. François Vézina was appointed as an officer on May 14, 2018 and must comply with the Guidelines by May 14, 2021.

 

As at March 19, 2019, the aggregate value of the total number of securities held by non-executive directors, Named Executives and other executives (including only the fixed component of RSUs) represents a value of $33,090,775.

 

STATEMENT OF CORPORATE GOVERNANCE PRACTICES

 

The Corporation is committed to sound corporate governance practices. The Board of Directors has carefully considered the Corporate Governance Guidelines set forth in Policy Statement 58-201 to Corporate Governance Guidelines. A description of the Corporation’s corporate governance practices is set out below in response to the requirements of Regulation 58-101 respecting Disclosure of Corporate Governance Practices and in the form set forth in Form 58-101F1 “Corporate Governance Disclosure”.

 

Majority Voting and Director Resignation Policy for Election of Directors

 

The Majority Voting and Director Resignation Policy for uncontested director elections is in effect since April 2014 and was last amended on March 30, 2016 to reflect comments received from the TSX. Under such policy, if a nominee does not receive the affirmative vote of at least the majority of votes cast at the meeting of Shareholders, the director shall promptly tender his or her resignation for consideration by the Governance and Nomination Committee and the Board. The Governance and Nomination Committee will consider such resignation and make a recommendation to the Board of Directors. The policy is available on the Corporation’s website at www.osiskogr.com.

 

2019 Management Information Circular

 

70

 

Composition of the Board of Directors

 

As of March 19, 2018, the Board of Directors consists of a majority of independent directors given that, of the ten (10) directors currently serving on the Board of Directors, seven (7) are considered independent directors. Mr. Pierre D. Chenard, an independent director, and Mr. André Gaumond, a non-independent director, are not part of the nominees that are being proposed as directors for election by the Shareholders at the Meeting, and therefore the size of the Board of Directors will be reduced to eight (8) directors, including six (6) independent directors (75% of the Board of Directors will be independent).

 

The independence of each director is determined by the Board based on the results of independence questionnaires completed by each director annually and on other information reviewed on an ongoing basis.

 

Policy regarding Tenure on the Board of Directors

 

The Board of Directors is committed to a process of Board renewal and succession-planning for non-executive directors in order to balance the benefits of experience with the need for new perspectives to the Board while maintaining an appropriate degree of continuity and adequate opportunity for transition of Board and Board Committee roles and responsibilities. Accordingly, the Corporation adopted on March 30, 2016 a policy regarding the tenure on the Board of Directors (the “Board Tenure Policy”).

 

The Governance and Nomination Committee is responsible for recommending nominees for election to the Board and, in furtherance of such responsibility, it analyzes the competencies and skills of existing non-executive directors, oversees an annual director evaluation process, and assesses the current and future needs of the Board, including the need to comply with the Corporation’s Policy regarding the diversity of the Board of Directors (as more fully described below).

 

In order to assist the Governance and Nomination Committee and the Board in succession-planning for non-executive directors and appropriate Board renewal, the Board has adopted limits on Board tenure. Non-executive directors will not be re-nominated for election at an annual meeting after the earlier of the following has occurred:

 

(a)         such director has served 12 years following the later of (i) March 30, 2016 and (ii) the date on which the director first began serving on the Board (the “Term Limit”);  or

 

(b)         such director has reached the age of 72 years old on or before the date of the annual or special meeting of shareholders of the Corporation called in respect of the election of directors (the “Retirement Age”);

 

provided that, for greater certainty, there should be no expectation that a non-executive director will serve on the Board for the periods contemplated by the Term Limit or until such director reaches the Retirement Age (collectively the “Board Tenure Limits”).

 

Notwithstanding the foregoing, the Board Tenure Limits shall not apply to a non-executive director who has yet to be elected annually for the fifth consecutive time by the Shareholders in accordance with the Corporation’s Majority Voting and Director Resignation Policy. Once a non-executive director has been elected or re-elected for five (5) times, these Board Tenure Limits apply notwithstanding that such director has continued to receive satisfactory annual performance evaluations, has needed skills and experience and meets other Board policies or legal requirements for Board service.

 

Exceptionally, on a case-by-case basis and on the recommendation of the Governance and Nomination Committee, a non-executive director who has reached the Term Limit or the Retirement Age may be nominated to serve on the Board for up to a maximum of two (2) additional years.

 

In determining whether to make such a recommendation to the Board, the Governance and Nomination Committee shall consider the following factors, among others:

 

2019 Management Information Circular

 

71

 

(a)         the director has received positive annual performance assessments;

 

(b)         the Governance and Nomination Committee believes it is in the best interests of the Corporation that the director continues to serve on the Board; and

 

(c)          the director has been re-elected annually by the Corporation’s Shareholders in accordance with the Corporation’s Majority Voting and Director Resignation Policy.

 

Notwithstanding the foregoing, the Board retains full discretion in approving such recommendation by the Governance and Nomination Committee.

 

In addition, directors are expected to inform the Chair of the Board or the Lead Director of any major change in their principal occupation so that the Board would have the opportunity to decide the appropriateness of such director’s continuance as a member of the Board or of a Board Committee. Directors are also expected to provide the Chair of the Board or the Lead Director with information as to all boards of directors that they sit on or that they have been asked to join so as to allow the Board to determine whether it is appropriate for such director to continue to serve as a member of the Board or of a Board Committee. The Governance and Nomination Committee will apply Board nominee selection criteria, including directors’ past contributions to the Board and availability to devote sufficient time to fulfill their responsibilities, prior to recommending directors for re-election for another term. A copy of the Board Tenure Policy is available on the Corporation’s website at www.osiskogr.com.

 

Independence of Directors - Majority of Directors is Independent

 

The Board has approved independence standards that require that a majority of its directors be independent. The independence of a director is determined in accordance with Regulation 52-110 or Regulation 58-101 further to voluntary disclosure by each director. Furthermore, the Board of Directors may determine that a director has no material relationship with the Corporation, including as a partner, Shareholder or officer of an organization that has a relationship with the Corporation. A “material relationship” is a relationship which could, in the view of the Board, be reasonably expected to interfere with the exercise of a director’s independent judgment and includes an indirect material relationship. In determining whether a director is independent, the Board applies standards derived from the Canadian Securities Administrators director independence rules. The Board determines the independence of a director when it approves director nominees for inclusion in this Circular. Based on the results of independence questionnaires completed by each nominee and other information, the Board determined that six (6) of the eight (8) nominees proposed for election as directors have no material relationship with the Corporation and are, therefore, independent.

 

The following table indicates the independence status of each of the eight (8) nominees for election to the Board of Directors:

 

	
Name
    	
 
    	
Independent
    	
 
    	
Non-
   Independent
    	
 
    	
Reason for Non-Independence
    
	
Françoise Bertrand
    	
 
    	
ü
    	
 
    	
 
    	
 
    	
N/A
    
	
John Burzynski
    	
 
    	
 
    	
 
    	
ü
    	
 
    	
Senior Vice President, New Business Development of   the Corporation until August 2016
    
	
Christopher C. Curfman
    	
 
    	
ü
    	
 
    	
 
    	
 
    	
N/A
    
	
Joanne Ferstman
    	
 
    	
ü
    	
 
    	
 
    	
 
    	
N/A
    
	
Pierre Labbé
    	
 
    	
ü
    	
 
    	
 
    	
 
    	
N/A
    
	
Oskar Lewnowski
    	
 
    	
ü
    	
 
    	
 
    	
 
    	
N/A
    
	
Charles E. Page
    	
 
    	
ü
    	
 
    	
 
    	
 
    	
N/A
    
	
Sean Roosen
    	
 
    	
 
    	
 
    	
ü
    	
 
    	
Chair of the Board and Chief Executive Officer of   the Corporation
    

 

2019 Management Information Circular

 

72

 

Mr. John Burzynski is a non-independent director, given that he was an Executive Officer of the Corporation until August 2016. Mr. Roosen is also a non-independent director given his position as Chair of the Board and Chief Executive Officer.

 

Furthermore, in connection with the listing of the shares of the Corporation on the NYSE on July 6, 2016, the Corporation ensured that at least a majority of its directors satisfied the director independence requirements under Section 303A.02 of the NYSE corporate governance standards. On an annual basis, the Board of Directors reviews and determines the independence of each director for both Canadian and U.S. purposes.

 

The NYSE requires the Corporation, as a “foreign private issuer” that is not required to comply with all of the NYSE’s corporate governance standards applicable to U.S. domestic issuers, to disclose any significant ways in which its corporate governance practices differ from those followed by NYSE listed U.S. domestic issuers. Except for one practice relating to internal audit function, the differences between the Corporation’s practices and those required by the NYSE rules applicable to U.S. domestic issuers are not significant. The statement of differences can be found on the Corporation’s website at osiskogr.com/en/governance-2/osisko-practices-and-nyse-rules/.

 

Non-Independent Chair of the Board

 

The Board of Directors is led by an executive and non-independent Chair; Mr. Sean Roosen was appointed to act as Chair and serve on the Board of Directors of the Corporation in April 2014.

 

The Chair of the Board takes all reasonable measures to ensure the Board fulfills its oversight responsibilities. The Chair is responsible for the management, the development and the effective performance of the Board, and provides leadership to the Board for all aspects of the Board’s work.

 

In addition to the responsibilities applicable to all directors of the Corporation, the responsibilities of the Chair of the Board include the following: (i) presiding at all meetings of the Shareholders and of the Board; (ii) planning and organizing the activities of the Board in consultation with management including the preparation for, and the conduct of, Board meetings, as well as the quality, quantity and timeliness of the information that goes to the Board; (iii) during Board meetings, encouraging full participation and discussion by individual directors, stimulating debate, facilitating consensus, and ensuring that clarity regarding decisions is reached and duly recorded; (iv) fostering ethical and responsible decision making by the Board and its individual members; (v) providing advice, counsel and mentorship to the President and fellow members of the Board; (vi) acting as principal liaison between the directors and the President on sensitive issues; (vii) ensuring minutes of the Board meetings are available in a timely manner; (viii) ensuring committees of the Board report to the Board on their activities; (ix) assisting the Board Committees and Committee Chairs to bring important issues forward to the Board for consideration and resolution; and (x) carrying out other responsibilities at the request of the Board.

 

Independent Lead Director of the Board

 

The Board of Directors is led by a non-executive and independent Lead Director, which contributes to the Board’s ability to function independently of management of the Corporation. Ms. Joanne Ferstman was appointed to act as the Lead Director and serve on the Board of Directors of the Corporation in April 2014.

 

In addition to the responsibilities applicable to all directors of the Corporation, the responsibilities of the Lead Director of the Board include the following: (i) providing leadership to ensure that the Board functions independently of management of the Corporation and other non-independent directors; (ii) providing leadership to foster the effectiveness of the Board; (iii) working with the Chair to ensure that the appropriate committee structure is in place and assisting the Corporate Governance and Nomination Committee in making recommendations for appointment to such committees; (iv) recommending to the Chair items for consideration on the agenda for each meeting of the Board; (v) commenting to the Chair on the quality, quantity and timeliness of information provided by management to the independent directors; (vi) calling, where necessary, the holding of special meetings of the Board, outside directors or independent directors, with appropriate notice, and establishing agenda for such meetings in consultation with the other outside or independent directors, as applicable; (vii) in the absence of the Chair, chairing Board meetings, including, providing

 

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adequate time for discussion of issues, facilitating consensus, encouraging full participation and discussion by individual directors and confirming that clarity regarding decision-making is reached and accurately recorded; in addition, chairing each Board meeting at which only outside directors or independent directors are present; (viii) consulting and meeting with any or all of the independent directors, at the discretion of either party and with or without the attendance of the Chair, and representing such directors, where necessary, in discussions with management of the Corporation on corporate governance issues and other matters; (ix) working with the Chair of the Board and Chief Executive Officer and the President to ensure that the Board is provided with the resources, including external advisers and consultants to the Board as considered appropriate, to permit it to carry out its responsibilities and bringing to the attention of the Chair of the Board and Chief Executive Officer and the President any issues that are preventing the Board from being able to carry out its responsibilities; (x) conducting peer reviews through a process involving meeting with each director individually; these peer reviews will be conducted to coincide with the formal survey of board effectiveness; (xi) ensuring non-management directors discuss among themselves, without the presence of management, the Corporation’s affairs.

 

Policy regarding the diversity of the Board of Directors

 

The Corporation is committed to diversity among its Board of Directors. On March 30, 2016, the Board adopted a policy regarding the diversity of the Board of Directors (the “Diversity Policy”) relating to candidate selection based on experience and expertise to achieve effective stewardship and management.

 

In an increasingly complex global marketplace, the ability to draw on a wide range of viewpoints, backgrounds, skills, and experience is critical to the Corporation’s success. By bringing together men and women from diverse backgrounds and giving each person the opportunity to contribute their skills, experience and perspectives in an inclusive workplace, the Corporation believes that it is better able to develop solutions to challenges and deliver sustainable value for the Corporation and its stakeholders. The Corporation considers diversity to be an important attribute of a well-functioning Board, which will assist the Corporation to achieve its long-term goals.

 

The Corporation recognizes that gender diversity is a significant aspect of diversity and acknowledges the important role that women with appropriate and relevant skills and experience can play in contributing to the diversity of perspective on the Board. To ensure sound corporate governance, the Governance and Nomination Committee is guided by the following principles in recommending candidates to the Board of Directors:

 

i)                                         ensuring that the Board of Directors of the Corporation is composed of directors who possess extensive knowledge, skills and competencies, diverse points of view, and relevant expertise, enabling them to make an active, informed and positive contribution to the management of the Corporation, the conduct of its business and the orientation of its development;

 

ii)                                      seeking a balance in terms of the knowledge and competencies of directors to ensure that the Board of Directors can fulfil its role in all respects; and

 

iii)                                   to the extent practicable, seeking directors who represent different genders, ages, cultural communities, geographic areas and other characteristics of the communities in which the Corporation conducts its business.

 

The Corporation has set an objective of reaching 40% representation of women on the Board of Directors by December 2019. In order to achieve this goal, the Governance and Nomination Committee shall:

 

·                                          maintain an evergreen list of potential candidates for election to the Board of Directors which list includes parity between men and women candidates; this list shall take into account that qualified candidates may be found in a broad array of organizations;

 

·                                          periodically assess the effectiveness of the nomination process at achieving the Corporation’s diversity objectives outlined in this Policy; and

 

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·                                          in order to support the specific objective of gender diversity, considers the level of representation of women on the Board and ensures that women are included in the short list of candidates being considered for a Board position.

 

When identifying potential candidates for the Board of Directors, the Governance and Nomination Committee considers the selection criteria approved by the Board, as well as its analysis of the Board’s needs based on the above criteria. These selection criteria are reviewed periodically.

 

The Diversity Policy will be reviewed annually by the Governance and Nomination Committee to ensure it is effective in achieving its objectives. Any changes to the Diversity Policy as well as additional diversity achievements will be reported annually in the Corporation’s management information circular. A copy of the Diversity Policy is available on the Corporation’s website at www.osiskogr.com.

 

As of the date hereof, Ms. Joanne Ferstman and Ms. Françoise Bertrand represent 20% of the ten directors. However, since the Board of Directors decided, upon recommendation of the Governance and Nomination Committee, not to replace Messrs. Gaumond and Chenard, thus reducing the Board size to eight directors, the women representation on the Board will be increased to 25% following the election of the nominee directors at the Meeting. Pursuant to an investor rights agreement entered into between the Caisse and the Corporation, the Caisse retains the right to appoint one nominee to the Board of Directors of the Corporation, for so long as the Caisse, together with its affiliates, owns more than 10% of the outstanding Common Shares of the Corporation.

 

Further, the Chair and Chief Executive Officer of the Corporation has been a member of the “30% Club” since March 2017. The “30% Club” promotes gender balance on boards to encourage better leadership and governance. In addition, the “30% Club” also aims to develop a diverse pool of talent for all businesses through the efforts of its members who are committed to better gender balance at all levels of their organizations.

 

Policy regarding the diversity in corporate talent

 

The Corporation is committed to diversity among its management team. On November 9, 2016, the Board adopted a policy regarding the diversity in corporate talent (the “Management Diversity Policy”)  relating to candidate selection based on merit in order to select the best person to fulfill each position within the organization. At the same time, the Corporation recognizes that diversity is important to ensure that the profiles of its team provide the necessary range of perspectives, experience and expertise required to achieve corporate objectives.

 

In an increasingly complex global marketplace, the ability to draw on a wide range of viewpoints, backgrounds, skills, and experience is critical to the Corporation’s success. By bringing together men and women from diverse backgrounds and giving each person the opportunity to contribute their skills, experience and perspectives in an inclusive workplace, the Corporation believes that it is better able to develop solutions to challenges and deliver sustainable value for the Corporation and its stakeholders. The Corporation considers diversity to be an important attribute of a well-functioning company which will assist the Corporation to achieve its long-term goals.

 

The Corporation recognizes that gender diversity is a significant aspect of diversity and acknowledges the important role that women with appropriate and relevant skills and experience can play in contributing to the diversity of perspective on the Corporation.

 

The purpose of the Management Diversity Policy is to communicate the importance the Corporation places on the diversity within its organization.

 

The Corporation believes that diversity enriches discussion and performance of the team in the pursuit of its short and long-term corporate objectives. As part of its strategy to recruit and maintain a diversified organization, it will:

 

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·                  promote diversity within its team, with particular emphasis on gender diversity;

·                  promote the contribution of women to the success of the organization;

·                  assist in the development of women within the organization through training, inside sponsorship and outside mentoring;

·                  ensure that for every open position within the organization, at least one female be considered as a potential candidate;

·                  actively participate in internal and external initiatives to promote diversity in its industry with specific focus on gender diversity; and

·                  provide work environment that accommodates family and work life balance, while maintaining a high achievement culture.

 

The Corporation aims to have 25% of officer and Senior Management roles being held by women by 2020.

 

Senior Management will report annually to the Committee on its Gender Diversity Program, including:

 

i.                  gender distribution of employees;

ii.               corporate participation on initiatives (internal and external) to promote gender diversity; and

iii.            current trends in Diversity Programs.

 

The Corporation will also report externally on its performance in the application of Diversity Programs.

 

The Management Diversity Policy will be reviewed annually by the Governance and Nomination Committee to ensure it is effective in achieving its objectives. Any changes to the Management Diversity Policy as well as additional diversity achievements will be reported annually in the Corporation’s management information circular. A copy of the Management Diversity Policy is available on the Corporation’s website at www.osiskogr.com.

 

Currently, one woman is an executive officer of the Corporation, which represents 12.5% of the executive Management team. The same person is also part of the Named Executives, which represents 20% of the Named Executives and 33% of the C-Suite.

 

Board’s Skills Matrix

 

The Governance and Nomination Committee, together with the Board Chair, is responsible for determining the needs of the Board in the long-term and identifying new candidates to stand as nominees for election or appointment as directors.

 

The Board ensures that the skill set developed by directors, through their business expertise and experience, meets the needs of the Board.

 

The Governance and Nomination Committee reviews annually the credentials of the members of the Board. The following table exemplifies the current skills that each nominee possesses:

 

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76

 

	
 
    	
 
    	
SKILLS
    
	
Directors
    	
 
    	
Months of
   Directorship
    	
 
    	
Financial(1)
    	
 
    	
M&A(2)
    	
 
    	
Technical/
   Mining(3)
    	
 
    	
Government
   Relations(4)
    	
 
    	
International(5)
    	
 
    	
Governance(6)
    	
 
    	
Human
   Resources(7)
    	
 
    	
Sustainability(8)
    	
 
    	
Management(9)
    
	
Françoise Bertrand
   Age: 70
    	
 
    	
52
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
ü
    	
 
    	
 
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    
	
John Burzynski
   Age: 55
    	
 
    	
59
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    
	
Christopher C. Curfman
   Age: 67
    	
 
    	
35
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
 
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    
	
Joanne Ferstman
   Age: 51
    	
 
    	
59
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
 
    	
 
    	
ü
    
	
Pierre Labbé
   Age: 53
    	
 
    	
49
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
 
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
 
    	
 
    	
 
    	
 
    	
ü
    
	
Oskar Lewnowski
   Age: 53
    	
 
    	
20
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
 
    	
 
    	
ü
    
	
Charles E. Page
   Age: 67
    	
 
    	
59
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    
	
Sean Roosen
   Age: 55
    	
 
    	
59
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    	
 
    	
ü
    

 

NOTES:

(1)                  Financial: Ability to understand: (i) financial statements; (ii) financial controls and measures; (iii) capital markets; and (iv) financing options.

(2)                  Mergers and Acquisitions: Understanding of: (i) capital markets in friendly and unfriendly transactions; (ii) complexity of integration post-business continuation; and (iii) general legal requirements in M&A.

(3)                  Technical/Mining: Understanding of: (i) exploration activities; (ii) mine operations, including risks/challenges/opportunities (mining, milling); (iii) ability to have knowledge of construction/development/planning/scheduling/monitoring of construction/contract administration/forecasting; and (iv) understanding of marketing of metals.

(4)                  Government Relations: Understanding of: (i) legislative and decision-making process of governments; and (ii) experience in dealing with governments (policy-making, lobbying, etc.).

(5)                  International Experience: Consists of: (i) experience in dealing with different legislative and cultural environments; (ii) understanding foreign legislative process; and (iii) understanding opportunities and risk in non-Canadian jurisdictions.

(6)                  Governance: Understanding of (i) the requirements/process for oversight of management; (ii) various stakeholder requirements; and (iii) evolving trends with respect to governance of public companies.

(7)                  Human Resource: Ability to: (i) review management structure for large organization; (ii) develop/assess/monitor remuneration packages (salary, benefits, long-term and short-term incentives); and (iii) understand how to motivate people.

(8)                  Sustainability: Understanding of (i) environmental risks in the mining industry; (ii) government regulations with respect to environmental, health & safety; and (iii) understanding of and experience in community relations and stakeholder involvement

(9)                  Management: Ability to plan, operate and control various activities of a business.

 

Other Reporting Issuer Memberships

 

The table below sets forth the name of each nominee director of the Corporation who is currently a director of another organization that is a reporting issuer as also described under the Section entitled “Election of Directors” in this Circular.

 

Other Directorships

 

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

 

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

 

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

 

and

 

(b)

 

(i)                                     if the President or Chief Executive Officer of the Corporation, he or she sits on more than two (2) outside public company board, in addition to the Corporation; or

 

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

 

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

 

Furthermore, the Chief Executive Officer’s position description as amended in November 2015, includes that, as part of the duties of the Chief Executive Officer of the Corporation, he shall, as applicable (i) become a member of the board of directors of such associate companies or (ii) delegate such duty to an officer of the Corporation. Such associate companies with respect to which the Chief Executive Officer is a board member are, for the greater part, junior exploration companies listed on the TSX Venture Exchange, which only hold a small number of meetings per year and generally do not deal with complex operating issues. These associate companies are as follows:

 

	
Associate company and Holdings
    	
 
    	
Industry
   Classification
    	
 
    	
Market and Stock
   Symbol
    	
 
    	
Investment as at December 31, 2018
    	
 
    
	
Barkerville Gold Mines Ltd. – 32.2%

 

Equity Holdings: 162,864,251   common shares

Other Equity Holdings: 10,000,000  warrants
    	
 
    	
Mining Company
    	
 
    	
TSX-V — BGM
    	
 
    	
-               Equity Value: 

-               4% NSR royalty:   (Cariboo)
    	
 
    	
$

$
    	
65,146,000

57,500,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Osisko Mining Inc. – 16.7%

 

Equity Holdings: 42,890,269   common shares

Other Equity Holdings: 800,000   warrants
    	
 
    	
Mining Company
    	
 
    	
TSX — OSK
    	
 
    	
-               Equity Value:

-               1.5% NSR royalty:   (Windfall Lake) and 1% NSR royalty on other properties
    	
 
    	
$

$
    	
131,673,000

7,150,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Victoria Gold Corp. – 15.4%

 

Equity Holdings: 120,427,087   common shares
    	
 
    	
Mining Company
    	
 
    	
TSX-V — VIT
    	
 
    	
-               Equity Value:

-               5% NSR royalty:   (Dublin Gulch)
    	
 
    	
$

$
    	
44,558,000

98,000,000
    	
 

(1)
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total Investment by the Corporation:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
404,027,000
    	
 
    

 

NOTE:

(1) This amount includes a remaining commitment of $19.6 million.

 

The following table reflects nominee directors’ current directorships with other reporting issuers:

 

	
Nominee
    	
 
    	
Other Reporting Issuers
    	
 
    	
Industry Classification
    	
 
    	
Market and
   Stock Symbol
    	
 
    	
Board Committee Membership
    
	
Françoise Bertrand
    	
 
    	
None
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
John Burzynski
    	
 
    	
Barkerville Gold Mines Ltd.
    	
 
    	
Mining Company
    	
 
    	
TSX-V — BGM
    	
 
    	
Technical Committee
    
	
 
    	
 
    	
Osisko Metals Incorporated
    	
 
    	
Mining Company
    	
 
    	
TSX-V — OM
    	
 
    	
Compensation Committee
    
	
 
    	
 
    	
Osisko Mining Inc.
    	
 
    	
Mining Company
    	
 
    	
TSX — OSK
    	
 
    	
—
    
	
 
    	
 
    	
Major Drilling Group International Inc.
    	
 
    	
Industrial products - business services
    	
 
    	
TSX — MDI
    	
 
    	
—
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Christopher C. Curfman
    	
 
    	
None
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

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Nominee
    	
 
    	
Other Reporting Issuers
    	
 
    	
Industry Classification
    	
 
    	
Market and
   Stock Symbol
    	
 
    	
Board Committee Membership
    
	
Joanne Ferstman
    	
 
    	
Dream Unlimited Corp.
    	
 
    	
Real Estate Company
    	
 
    	
TSX — DRM
    	
 
    	
Audit Committee — Chair Organization, Design and   Culture Committee
   Leaders and Mentors Committee
    
	
 
    	
 
    	
Cogeco Communications Inc.
    	
 
    	
Communications and Media
    	
 
    	
TSX — CCA
    	
 
    	
Audit Committee — Chair Strategic Opportunities   Committee member
    
	
 
    	
 
    	
ATS Automation Tooling Systems Inc.
    	
 
    	
Industrial products - fabricating and
   engineering
    	
 
    	
TSX — ATA
    	
 
    	
Audit Committee member Governance Committee member
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Pierre Labbé
    	
 
    	
None
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Oskar Lewnowski
    	
 
    	
CannaRoyalty Corp. (doing business as Origin House)
    	
 
    	
Cannabis Products
    	
 
    	
CSE
    	
 
    	
—
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Charles E. Page
    	
 
    	
Unigold Inc.
    	
 
    	
Mining Company
    	
 
    	
TSX-V — UGD
    	
 
    	
Audit Committee
   Compensation Committee Corporate Governance and Nominating Committee   Technical Committee
    
	
 
    	
 
    	
Wesdome Gold Mines Ltd.
    	
 
    	
Mining Company
    	
 
    	
TSX-V — WDO
    	
 
    	
Chair of the board of directors Audit Committee
   Compensation and Human Resources Committee
   Technical, Safety and Sustainability Committee
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Sean Roosen
    	
 
    	
Barkerville Gold Mines Ltd. – Associate company
    	
 
    	
Mining Company
    	
 
    	
TSX-V — BGM
    	
 
    	
Chair of the board of directors
    
	
 
    	
 
    	
Osisko Mining Inc. – Associate company
    	
 
    	
Mining Company
    	
 
    	
TSX — OSK
    	
 
    	
Chair of the board of directors
    
	
 
    	
 
    	
Victoria Gold Corp. – Associate company
    	
 
    	
Mining Company
    	
 
    	
TSX-V — VIT
    	
 
    	
—
    

 

Interlocking Directorships

 

As of the date of the Circular, there are no interlocks of the independent director nominees serving on the compensation or equivalent committee or board of directors of another reporting issuer which has any executive officer or director serving on the Human Resources Committee or Board of Directors of the Corporation. However, there is an interlocking relationship with two non-independent directors: Messrs. Roosen and Burzynski whom both serve on the board of directors of Osisko Mining and Barkerville. The Board assessed the interlock and determined that there was no conflict or other concerns for the Corporation.

 

Independent Directors Meetings

 

The independent directors do not hold regularly scheduled meetings at which non-independent directors and members of Management are not in attendance. However, where deemed necessary by the independent directors, the independent directors do hold in-camera sessions exclusive of non-independent directors and members of Management, which process facilitates open and candid discussion amongst the independent directors. A private session is included in every agenda of every board and committee meeting.

 

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Record of Attendance

 

During the 2018 financial year, the Board of Directors held 11 meetings, the Audit Committee held 4 meetings, the Human Resources Committee held 5 meetings, the Governance and Nomination Committee held 4 meetings, the Sustainability Committee held 2 meeting and no meetings were held by the Investment Committee. Overall the combined director attendance at meetings of the Board and its standing Committees was 90%. A record of attendance of each director at Board and Committee meetings held for the financial year ended on December 31, 2018 is set out under heading “2018 Board and Committee Attendance Record”  of this Circular.

 

Board Mandate

 

The Corporation’s Board is responsible for approving long-term strategic plans and annual operating plans and budgets recommended by Management. The Corporation’s Board’s consideration and approval is also required for material contracts and business transactions, and all debt and equity financing transactions. The Corporation’s Board delegates to Management responsibility for meeting defined corporate objectives, implementing approved strategic and operating plans, carrying on the Corporation’s business in the ordinary course, managing the Corporation’s cash flow, evaluating new business opportunities, recruiting staff and complying with applicable regulatory requirements. The Corporation’s Board also looks to Management to provide recommendations respecting corporate objectives, long-term strategic plans and annual operating plans. The Corporation’s Board has a written mandate governing its operation, a copy of which is attached in this Circular as Schedule “A”.

 

 

Position Descriptions

 

The Board has developed written position descriptions for the Chair of the Board and the Chairs of the Board Committees, as well as one for the Lead Director and the Chief Executive Officer. Such position descriptions can be found on the Corporation’s website at www.osiskogr.com.

 

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Orientation and Continuing Education

 

To facilitate the process of the orientation of new directors and to provide easily access documentation to current directors, the Corporation has developed a Directors’ Handbook. This reference guide provides information related to:

 

i.                                          The Corporation and its activities;

ii.                                       Structure of assets (royalties, streams and offiakes);

iii.                                    Strategic plan;

iv.                                   Corporate policies;

v.                                      Information on the mining industry and royalty business;

vi.                                   Site visits

vii.                                Board and Committee Charters; and

viii.                             Information on directors and officers of the Corporation.

 

Throughout the year, the Board and Committee Members receive formal presentations by Management and external advisors, and are provided documentation from various advisors and consultants on various topics, including:

 

·                                          Mineral royalty sector;

·                                          Commodity prices;

·                                          Mining industry opportunities and risks;

·                                          Current governance issues;

·                                          Talent management;

·                                          Economic forecasts;

·                                          Mining company performance;

·                                          Reports on the Corporation by investment dealer analysts;

·                                          Feedback from institutional and retail Shareholders;

·                                          New developments in financial accounting and reporting controls;

·                                          Financial reporting and risks; and

·                                          Updates on political matters.

 

During 2018, the Corporation provided to the Board of Directors the following presentations and/or publications:

 

·                                          Dr. Murenbeeld’s Gold Forecast Projections;

·                                          RBC Global Metals and Mining 2018 Outlook;

·                                          Deloitte 2018 Global Mining Trends;

·                                          Gold Market and Industry;

·                                          World Mineral Exploration — Review and Outlook;

·                                          MiFID II — Investor Relations;

·                                          The Changing Face of a Gold Investor;

·                                          Four Trends Driving Mine Streaming this Year;

·                                          Quebec Elections 2018 — Ryan Affairs Publiques;

·                                          Gold Monitor;

·                                          Paradigm — Stock Prices;

·                                          Canaccord Genuity — 2019 Base Metals Outlook;

·                                          Ernst & Young — Top 10 Business Risks facing mining and metals in 2019; and

·                                          Global Senior Gold Producers — Merger mania is here (and will save the sector).

 

Furthermore, the Corporation is a corporate member of the Institute of Corporate Directors (“ICD”) and each member of the Board of Directors receive educational material from the ICD and may attend their conferences. The fees for attending conferences and educational sessions are reimbursable by the Corporation.

 

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Listed below are education events attended or presented by directors of the Corporation during the year:

 

	
Director
    	
 
    	
Month
    	
 
    	
Topic
    
	
John Burzynski:
    	
 
    	
 
    	
 
    	
 
    
	
Attendee
    	
 
    	
01/2018
    	
 
    	
IAS Conference
    
	
Attendee
    	
 
    	
 
    	
 
    	
Cormark Securities Conference
    
	
Speaker
    	
 
    	
02/2018
    	
 
    	
BMO Capital Markets Conference – Global Metals &   Mining
    
	
Attendee
    	
 
    	
03/2018
    	
 
    	
PDAC Conference
    
	
Speaker
    	
 
    	
04/2018
    	
 
    	
European Gold Forum in Zurich
    
	
Speaker
    	
 
    	
09/2018
    	
 
    	
2018 Precious Metals Summit (Colorado) – Hosted by   Precious Metals Summit Conferences, LLC.
    
	
Attendee
    	
 
    	
11/2018
    	
 
    	
TD Mining Conference
    
	
Attendee
    	
 
    	
 
    	
 
    	
National Bank of Canada – Global Mining and Metals   Conference
    
	
Speaker
    	
 
    	
12/2018
    	
 
    	
Scotiabank Mining Conference – Hosted by Scotiabank
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Joanne Ferstman:
    	
 
    	
 
    	
 
    	
 
    
	
Speaker
    	
 
    	
03/2018
    	
 
    	
DREAM Unlimited – Women in Leadership Panel
    
	
Speaker
    	
 
    	
06/2018
    	
 
    	
M&A in Canada – What Directors should know
    
	
Attendee
    	
 
    	
10/2018
    	
 
    	
Toronto Global Forum
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
André Gaumond:
    	
 
    	
 
    	
 
    	
 
    
	
Attendee
    	
 
    	
10/2018
    	
 
    	
Exploration Conference – Hosted by the Québec   Mineral Exploration Association
    
	
Attendee
    	
 
    	
11/2018
    	
 
    	
Québec Mining Conference – Hosted by the Ministry of   Energy and Natural Resources
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Pierre Labbé:
    	
 
    	
 
    	
 
    	
 
    
	
Attendee
    	
 
    	
01/2018
    	
 
    	
Governance – Overview of ISS Canada Policy Updates
    
	
Attendee
    	
 
    	
 
    	
 
    	
BDO Canada - Risk Management – Cybersecurity –   Managing the risks associated with digital identity and access to information
    
	
Attendee
    	
 
    	
04/2018
    	
 
    	
Governance and Strategies – Increase efficiency on   the board of directors
    
	
Attendee
    	
 
    	
 
    	
 
    	
2018 Governance Trends
    
	
Attendee
    	
 
    	
05/2018
    	
 
    	
CPA – Financial Reporting for Canadian Public   Companies
    
	
Attendee
    	
 
    	
06/2018
    	
 
    	
CPA - Performance Management – Operational   Management and Administration
    
	
Attendee
    	
 
    	
 
    	
 
    	
CPA Business cycle, finance and economy:
    
	
 
    	
 
    	
 
    	
 
    	
Financing – Sachs 4th BD&L and Investment Forum
    
	
Attendee
    	
 
    	
 
    	
 
    	
KPMG Business Conference – The Issues of Growth
    
	
Attendee
    	
 
    	
 
    	
 
    	
CPA Conference - Accounting Management and Finance   Function Optimization
    
	
Attendee
    	
 
    	
08/2018
    	
 
    	
CPA Business cycle, finance and economy – Corporate   Finance
    
	
Attendee
    	
 
    	
 
    	
 
    	
CPA – Financial Reporting for Canadian Public   Companies
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Sean Roosen:
    	
 
    	
 
    	
 
    	
 
    
	
Speaker
    	
 
    	
01/2018
    	
 
    	
Vancouver Investment Conference - Streaming/Royalty   Panel
    
	
Speaker
    	
 
    	
02/2018
    	
 
    	
Gold Stock Analyst’s 2018 Investor Day
    
	
Speaker
    	
 
    	
02/2018
    	
 
    	
BMO Capital Markets Conference – Global Metals &   Mining
    
	
Speaker
    	
 
    	
03/2018
    	
 
    	
PDAC Conference - What we have learned along the way
    
	
Speaker
    	
 
    	
04/2018
    	
 
    	
Osisko Dinner in Zurich
    
	
 
    	
 
    	
 
    	
 
    	
Gala Dinner at the Dolder in Zurich
    
	
 
    	
 
    	
 
    	
 
    	
European Gold Forum in Zurich
    
	
Speaker
    	
 
    	
05/2018
    	
 
    	
CIM Conference – Chair of the conference
    
	
 
    	
 
    	
 
    	
 
    	
Thinking Differently: A Modern Approach To Mining
    
	
 
    	
 
    	
 
    	
 
    	
Bank of America Merrill Lynch Conference -   Royalty/Streaming Panel: Where are the opportunities
    
	
Speaker
    	
 
    	
07/2018
    	
 
    	
Sprott Natural Resource Investment Conference:
    
	
 
    	
 
    	
 
    	
 
    	
- Royalty Panel
    
	
 
    	
 
    	
 
    	
 
    	
- “Who will find, finance and build the next   generation of mines”
    
	
Speaker
    	
 
    	
09/2018
    	
 
    	
Bank of America Merrill Lynch Royalty Panel Luncheon
    
	
 
    	
 
    	
 
    	
 
    	
Denver Gold Forum: The Growth-Oriented Royalty   Company Osisko Gold Royalties Corporate Presentation
    
	
Speaker
    	
 
    	
11/2018
    	
 
    	
Eurasia Dinner Event - Creating Value in the Mining   Industry
    
	
 
    	
 
    	
 
    	
 
    	
Pannel Participation: The Growth-Oriented Royalty   Company Osisko Gold Royalties Corporate Presentation
    
	
 
    	
 
    	
 
    	
 
    	
Scotiabank Mining Conference – Royalty Panel
    

 

2019 Management Information Circular

 

82

 

Ethical Business Conduct

 

The Board has adopted a Code of Ethics (the “Code of Ethics”) applicable to all of its directors, officers and employees.

 

The Code of Ethics communicates to directors, officers and employees’ standards for business conduct in the use of Osisko time, resources and assets, and identifies and clarifies proper conduct in areas of potential conflict of interest. Each director, officer and employee is provided with a copy of the Code of Ethics and is asked to sign an acknowledgement that the standards and principles of the Code of Ethics will be maintained at all times on Osisko business. The Code of Ethics is designed to deter wrongdoing and promote: (a) honest and ethical conduct; (b) compliance with laws, rules and regulations; (c) prompt internal reporting of Code of Ethics violations; and (d) accountability for adherence to the Code of Ethics. Violations from standards established in the Code of Ethics, and specifically under internal accounting controls, are reported to the Vice President, Finance and Chief Financial Officer or to the Vice President, Legal Affairs and Corporate Secretary and can be reported anonymously. The Vice President, Finance, Chief Financial Officer and the Vice President, Legal Affairs and Corporate Secretary will report to the Audit Committee who will report to the Board any reported violations at least quarterly, or more frequently depending on the specifics of the reported violation.

 

The Chair of the Board and Chief Executive Officer and the Governance and Nomination Committee are responsible for promoting a corporate culture, which supports the highest of ethical standards, encourages personal integrity and assumes social responsibility.

 

The Corporation will adopt, from time to time, policies and guidelines relating to ethics that apply to all directors, officers and employees of the Corporation. The Corporation’s Code of Ethics will be reviewed on an annual basis as well as adherence thereto.

 

The Code of Ethics is distributed to and signed by each of the Corporation’s employees when they are hired. Directors, officers and designated employees are required, on an annual basis, to declare their commitment to abide by the Corporation’s Code of Ethics. Management of the Corporation reports annually to the Governance and Nomination Committee all non-compliance statements so disclosed by directors, officers and designated employees.

 

The Corporation’s Code of Ethics provides that directors, officers and employees must avoid conflicts of interest, both real and perceived. In practice, should a director have a material interest or be otherwise in conflict of interest as regards a transaction or agreement considered by the Board, he must disclose his conflict of interest and withdraw from any discussions, assessment or decision related to the particular transaction or agreement.

 

In the event any transactions or agreements are contemplated in respect of which a director or Executive Officer has a material interest, the matter must be initially reviewed by the Audit Committee and is then submitted to the Board of Directors. The Board may implement any measures that it finds necessary in order to ensure the exercise of independent judgment. In the event a director has a material interest in any transaction or agreement, such director will abstain from voting in that regard.

 

In addition, the Board has established under the Corporation’s Internal Whistle Blowing Policy, a process for the receipt and treatment of all complaints concerning accounting, internal accounting controls, auditing or related matters submitted by any employee, including procedures for the confidential anonymous submissions by employees of concerns regarding said matters. To help in this process, the Corporation established an Ethics Line, which is a phone and Internet-based reporting system (1-844-687-8700 or ethics@osiskogr.com). All communications are forwarded directly to the Chair of the Audit Committee and to the Vice President, Legal Affairs and Corporate Secretary.

 

There has been no material change reports filed that pertain to any conduct of a director or Executive Officer that constitutes a departure from the Code of Ethics.

 

2019 Management Information Circular

 

83

 

In 2019, the Board of Directors adopted, following recommendations of the Committee, a policy on the prevention of psychological or sexual harassment in the workplace and the handling of complaints (the “Harassment Policy”). The Corporation does not tolerate nor accept any form of psychological or sexual harassment. The Harassment Policy is intended to prevent and put an end to any situation of psychological or sexual harassment in its business, including any form of discriminatory harassment. The Harassment Policy also provides for intervention measures applicable to harassment complaints filed or situations of harassment reported to the Corporation. All communications are forwarded directly to the Chair of the Committee, the Vice President, Legal Affairs and Corporate Secretary and the Chief Financial Officer and Vice President, Finance.

 

Through the above-noted methods, the Board encourages and promotes a culture of ethical business conduct. In addition, the directors, officers and employees of the Corporation are expected to act and to hold their office within the best interests of the Corporation. The Corporation expects that all directors shall act in compliance of all laws and regulations applicable to their office as director of the Corporation.

 

A copy of the Code of Ethics is available on the Corporation’s website at www.osiskogr.com.  

 

Committees of the Board

 

The Board has established five standing committees, namely: the Audit Committee, the Governance and Nomination Committee, the Human Resources Committee, the Sustainability Committee and the Investment Committee. Following is a description of the authority, responsibilities, duties and function of such committees.

 

Governance and Nomination Committee

 

The Governance and Nomination Committee is responsible for the monitoring of the Corporation’s corporate governance and nomination matters.

 

The Governance and Nomination Committee has the general mandate to (i) consider and assess all issues that may affect the Corporation in the areas of corporate governance and nomination generally; (ii) recommend actions or measures to the Board to be taken in connection with these two (2) areas; and (iii) monitor the implementation and administration of such actions or measures, or of corporate policies and guidelines adopted by regulatory authorities or the Board with respect to said two (2) areas. The Chair of the Governance and Nomination Committee is also responsible to conduct the Corporation’s outreach program toward Shareholders and stakeholders.

 

Corporate governance practices determine the process and structure used to manage and run the internal and commercial business of the Corporation with a view to preserving its financial and operational integrity, complying with all applicable rules in general and increasing its value to Shareholders.

 

As regards corporate governance matters, the Governance and Nomination Committee is responsible for establishing practices which must be followed and should be in line with corporate governance rules and guidelines in effect from time to time as adopted by relevant authorities. The Governance and Nomination Committee is also responsible for recommending to the Board new candidates for director and to assist the Board in the assessment of the performance of senior officers, of the Board and its committees and of individual directors.

 

The Governance and Nomination Committee met four (4) times during the most recently completed financial year. Since May 3rd, 2018, the Governance and Nomination Committee is composed of the following three (3) independent directors:

 

2019 Management Information Circular

 

84

 

 

Work Performed by the Governance and Nomination Committee

 

The following summarizes the work highlights performed by the Governance and Nomination Committee in 2018 and beginning of 2019:

 

·                  reviewed and recommended approval by the Board of Directors of the 2018 management information circular;

·                  reviewed the 2018 Shareholder voting rights results;

·                  reviewed and approved the Board assessment questionnaire and assessment process;

·                  reviewed Management’s practices in maintaining open and transparent communications with the Board;

·                  reviewed the skills matrix of the members of the Board;

·                  reviewed the Corporation’s disclosure on regulatory filings to assess any potential conflict and related party transactions;

·                  reviewed the directors’ 2018 and 2019 education program;

·                  performed and reviewed the 2018-2019 Shareholder outreach program;

·                  reviewed the position descriptions of the Chair of the Board, the Lead Director and the Committee Chair;

·                  reviewed the position description of the Chief Executive Officer;

·                  reviewed the Charter of the Governance and Nomination Committee;

·                  reviewed and approved the Governance and Nomination Committee Annual Work Program;

·                  reviewed the Charter of the Board of Directors;

·                  reviewed and recommended to the Board to approve changes to the Code of Ethics;

·                  reviewed the Majority Voting and Director Resignation Policy, the Securities Trading Policy, the Diversity Policy, the Policy regarding Tenure on the Board of Directors and the Policy regarding the diversity in corporate talent;

·                  reviewed the Board self-assessment and evaluation;

·                  reviewed the list of directorship of public companies held by members of Management of the Corporation as representative of the Corporation;

·                  reviewed the Corporation’s governance practices;

·                  reviewed the Board composition;

·                  reviewed the evergreen list of candidates for election to the Board and recommended a “short list” of candidates;

·                  through an ongoing Shareholders outreach program on governance, the Chair of the Governance and Nomination Committee and Management met with and solicited input from Shareholders to receive feedback on governance and strategic issues; and

·                  reviewed and recommended approval by the Board of Directors of the 2019 Circular.

 

2019 Management Information Circular

 

85

 

Audit Committee

 

The Audit Committee meets regularly in order to assist the Board of Directors in fulfilling its oversight responsibilities with respect to the following: (i) in its oversight of the Corporation’s accounting and financial reporting principles and policies and internal audit controls and procedures; (ii) in its oversight of the integrity and transparency of the Corporation’s financial statements and the independent audit thereof; (iii) in selecting, evaluating and, where deemed appropriate, replacing the external auditors; (iv) in evaluating the independence of the external auditors; (v) in its oversight of the Corporation’s risk identification, assessment and management program; and (vi) in the Corporation’s compliance with legal and regulatory requirements in respect of the above.

 

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

 

The Board has adopted the Audit Committee Charter, mandating the role of the Audit Committee in supporting the Board in meeting its responsibilities to Shareholders.

 

The Audit Committee met four (4) times during the most recently completed financial year. Since May 3rd, 2018, the Audit Committee is composed of the following four (4) independent directors:

 

 

Work Performed by the Audit Committee

 

The following summarizes the work highlights performed by the Audit Committee in 2018 and beginning of 2019:

 

·                  reviewed the Audit Committee Charter;

·                  reviewed and approved the Audit Committee Annual Work Program;

·                  reviewed Management’s report on the Corporation’s Risk Evaluation Review for the year 2018 with quarterly updates;

·                  reviewed and approved the Corporation’s auditors’ Audit Plan;

·                  reviewed the Corporation’s internal audit function;

 

2019 Management Information Circular

 

86

 

·                  reviewed and recommended approval by the Board of Directors of proposed changes to the Corporation’s Investment Policy and Disclosure Policy;

·                  reviewed the Corporation’s Delegation of Authority Policy;

·                  reviewed the Corporation’s financial group review for development and succession planning;

·                  reviewed policy on procedures for approval of audit and non-audit services by external auditor;

·                  reviewed the Corporation’s review process in determining related party transactions;

·                  reviewed and recommended approval by the Board of Directors of the consolidated financial statements, management’s discussion and analysis and press releases for the period ended December 31, 2017 and 2018;

·                  reviewed and recommended approval by the Board of Directors of the quarterly financial statements, management’s discussion and analysis and press releases related thereto;

·                  monitored compliance requirements with the Securities and Exchange Commission and the New York Stock Exchange;

·                  considered and recommended to the Board of Directors the appointment of the auditors of the Corporation;

·                  reviewed the efficiency of the Audit Committee;

·                  reviewed the Corporation’s internal controls and compliance certifications on a quarterly basis;

·                  reviewed and approved audit and non-audit work fees;

·                  reviewed the Corporation’s report on cash management;

·                  reviewed the Corporation’s Information Technology related activities;

·                  reviewed the Corporation’s insurance coverage;

·                  reviewed the Corporation’s tax matters;

·                  reviewed the Corporation’s accounting policies;

·                  reviewed documentation provided by Management on continuing education;

·                  reviewed and monitored whistle blowing and litigation matters; and

·                  met (in camera) with the Auditors of the Corporation on a quarterly basis.

 

Additional reference is made to the Section entitled “Audit Committee” of the Corporation’s Annual Information Form (“AIF”) that contains the information required by section 5.1 of Form 52-110F1 of Regulation 52-110. The Corporation’s AIF is available on SEDAR at www.sedar.com and on EDGAR at www.sec.qov, and a copy of same will be provided free of charge, upon request, to any Shareholder of the Corporation.

 

Human Resources Committee

 

The Committee is responsible for approving compensation objectives and the specific compensation programs for policies and practices of the Corporation on matters of remuneration, succession planning, human resources recruitment, development, retention and performance evaluations, which policies are developed and implemented in conformity with the Corporation’s objectives with the view to attracting and retaining the best qualified management and employees. The Committee is responsible for recommending, monitoring and reviewing compensation programs for senior executives. It is also responsible to oversee treatment of complaints received pursuant to the Policy on the prevention of psychological or sexual harassment in the workplace and the handling of complaints.

 

The Human Resources Committee met five (5) times during the most recently completed financial year. Since May 3rd, 2018, the Human Resources Committee is composed of four (4) independent directors:

 

 

2019 Management Information Circular

 

87

 

The work performed by the Committee is disclosed under heading “Work Performed by the Human Resources Committee” of this Circular.

 

Sustainability Committee

 

The Sustainability Committee is responsible for overseeing various aspects of the activities of the Corporation in respect of the work environment (occupational health and safety), the human environment (corporate social responsibility matters), the physical environment (environmental matters), and socially responsible investing.

 

The Committee has the general mandate (i) to consider and evaluate all aspects of the Corporation’s occupational health and safety, corporate social responsibility, environmental matters and socially responsible investing; (ii) to recommend to the Board the steps to be taken in connection with these four (4) areas of activity; and (iii) to oversee the implementation and administration of corporate policies and guidelines adopted by regulatory authorities and the Board with respect to occupation health and safety, corporate social responsibility, environmental matters and socially responsible investing.

 

The Sustainability Committee held a meeting during the most recently completed financial year. Since May 3rd, 2018, the Sustainability Committee is composed of four (4) directors, two (2) of whom are independent:

 

 

Work Performed by the Sustainability Committee

 

The following summarizes the work highlights performed by the Sustainability Committee in 2018:

 

·                       reviewed Management’s undertakings in sustainable development;

·                       reviewed the Corporation’s donations, involvement in the Canadian mineral industry education and sponsorships;

·                       reviewed the Corporation’s 2018 and 2019 Sustainability Program;

·                       reviewed the composition of the Sustainability Committee;

·                       reviewed the Sustainability Committee Charter;

·                       reviewed and approved the Sustainability Committee Annual Work Program;

·                       reviewed the Corporation’s efforts to guide companies operating projects and mines where it has a direct investment;

·                       reviewed the Corporation’s relationship with government authorities and the various communities;

·                       reviewed the Corporation’s undertakings in supporting health and economic development;

·                       reviewed the Corporation’s training and development initiatives with employees and the development of women within the rankings of the organization and within the associate companies;

·                       reviewed Management’s proposed framework for the monitoring of activities in associate companies, royalties and stream operations.

 

2019 Management Information Circular

 

88

 

Investment Committee

 

The Investment Committee is responsible for reviewing and approving investments between $20 and $50 million in royalties, streams or offtakes. The Investment Committee was formed further to the Orion Transaction to eliminate the potential for conflicts of interest regarding investment opportunities.

 

The Investment Committee has the general mandate to: (i) evaluate and approve investments in royalties, streams and off-takes within the investment range of $20 million to $50 million; (ii) monitor the investment opportunities identified by Management within the range of investment; (iii) review annually its Charter and evaluation its effectiveness in fulfilling this mandate; and (iv) perform such other duties as may from time to time be assigned to the Investment Committee by the Board of Directors. This mandate excludes the review and approval of investments with related parties.

 

As a result of its recent formation, the Investment Committee did not hold any meetings during the most recently completed financial year. The Investment Committee is composed of three (3) directors, one (1) of whom is independent:

 

 

Nomination of Directors

 

In consultation with the Chair of the Board, the Governance and Nomination Committee annually reviews the competencies and skills the members of the Board should possess as well as the skills, areas of expertise, background, independence and qualifications credentials of nominees for election or re-election as members of the Board of Directors. If vacancies occur on the Board, the Governance and Nomination Committee would recommend nominees to the Board, consider their qualifications, the validity of the credentials underlying each nomination, and, for nominees who are already directors of the Corporation, an evaluation of their effectiveness and performance as members of the Board of Directors, including their attendance at Board and Committee meetings. The use of a skills matrix is also an additional tool in recommending nominees to the Board of Directors. The Board’s current skills matrix is set out under heading “Board’s Skills Matrix” of this Circular.

 

The Governance and Nomination Committee maintains a list of potential director candidates for planned and unforeseen vacancies through an evergreen diversified list, which is comprised of a parity between men and women.

 

Assessment

 

Following the implementation of a formal procedure for assessing the performance of the Board and its Committee members in November 2014, a detailed questionnaire is distributed annually to each member of the Board in order to enable individual directors to provide feedback on the effectiveness of the Board and its standing Committees as well as the contribution of each member. In addition, the results of the questionnaires are compiled by the Vice President, Legal Affairs and Corporate Secretary and sent to the Lead Director as well as the Chair of the Governance and Nomination Committee. As part of the assessment process review, each Board member will assess the performance of the respective Committees of the Board. The results of such are compiled by the Vice President, Legal Affairs and Corporate Secretary and sent to the Lead Director as well as to the Chair of the Governance and Nomination Committee. Thereafter, the Lead Director contacts every director and conducts open and confidential one-on-one meetings to discuss the results and any issues

 

2019 Management Information Circular

 

89

 

arising from the performance assessments. Following the evaluation process, the compiled results are provided to the members of the Governance and Nomination Committee and the members of the Board for discussion at the year-end meetings.

 

The Governance and Nomination Committee assesses the operation of the Board and its standing Committees, the adequacy of information given to directors, communication between the Board and Management, the Board size and overall skills. The Governance and Nomination Committee also recommends changes to the Board in order to enhance its performance based on the survey feedback.

 

Succession Planning

 

The Committee regularly meets the Management of the Corporation. During these meetings, the members of the Committee have the opportunity to evaluate potential successors to senior Management. In addition, the Committee monitors training and development of programs of Management.

 

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

 

Since the commencement of the Corporation’s most recently completed financial year, no director or executive officer of Osisko, or Shareholder who beneficially owns, or controls or directs, directly or indirectly, more than 10% of the outstanding Common Shares, or any known associates or affiliates of such persons, has or has had any material interest, direct or indirect, in any transaction or in any proposed transaction that has materially affected or is reasonably expected to materially affect the Corporation.

 

INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS

 

There is no indebtedness outstanding with any current or former director, executive officer or employee of the Corporation or its subsidiaries which is owing to the Corporation or its subsidiaries, or which is owing to another entity which indebtedness is the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Corporation or its subsidiaries, entered into in connection with a purchase of securities or otherwise.

 

LIABILITY INSURANCE

 

The Corporation subscribes to liability insurance for the benefit of its directors and officers to cover them against certain liabilities contracted by them in such capacity. For the most recently completed financial year, this insurance provided for a coverage limit of US$100 million per loss and policy year and the premium paid by the Corporation amounted to US$491,028 on an annualized basis. When the Corporation is authorized or required to indemnify an insured, a deductible of US$500,000 to US$1 million applies. The policy contains standard industry exclusions.

 

APPOINTMENT AND REMUNERATION OF AUDITORS

 

The Board of Directors and the Audit Committee of the Corporation recommend that Shareholders vote for the appointment of PricewaterhouseCoopers LLP a partnership of chartered professional accountants (“PWC”), as independent auditor of the Corporation for the fiscal year ending December 31, 2019 and to authorize the directors to establish their remuneration. PWC was originally appointed on April 30, 2014.

 

Unless the form of proxy states otherwise, or if the right to vote is not exercised for the appointment of the auditors, the persons named in the enclosed form of proxy intend to VOTE FOR the re-appointment of PWC, Chartered Professional Accountants, as independent auditor of the Corporation and for the directors to fix their remuneration. The persons whose name appears in the attached form of proxy intend to VOTE FOR the re-appointment of PWC, Chartered Professional Accountants, as independent auditor of the Corporation and for the authorization given to directors to fix their remuneration.

 

2019 Management Information Circular

 

90

 

The following table illustrates in detail the components of the fees incurred in 2018 and in 2017:

 

	
Year
    	
 
    	
Audit Fees(1)
    ($)
    	
 
    	
Audit Related Fees(2)
   ($)
    	
 
    	
Tax Fees(3)
   ($)
    	
 
    	
All Other Fees
   ($)
    	
 
    
	
December 31, 2018
    	
 
    	
598,803
    	
 
    	
—
    	
 
    	
69,144
    	
 
    	
—
    	
 
    
	
December 31, 2017
    	
 
    	
1,017,480
    	
 
    	
112,047
    	
 
    	
397,685
    	
 
    	
—
    	
 
    

 

NOTES:

(1)                   Audit fees were higher in 2017 primarily due to 2017 being the first year of receiving the auditor’s opinion on the Corporation’s internal control over financial reporting, the acquisition of the Orion precious metals portfolio of assets for $1.1 billion and the services rendered in relation to the management information circular dated June 29, 2017, the issuance of convertible debentures and the services rendered in relation to the short-form prospectus dated October 27, 2017. In 2018 and 2017, the audit fees also include services rendered in connection with the audit of the Corporation’s annual consolidated financial statements and annual audit fee for a separate audit opinion of a subsidiary of the Corporation.

(2)                   Audit related fees for 2017 included primarily due diligence services pertaining to business combinations.

(3)                   Tax fees are related to tax compliance, tax planning and tax advice services for the preparation of corporate tax returns and for proposed transactions, mainly the Orion Transaction for 2017.

 

APPROVAL OF THE AMENDED DEFERRED SHARE UNIT PLAN

 

On March 21, 2019, the Board of Directors approved amendments to the Corporation’s DSU Plan, which now provides for the right to receive upon settlement a payment either in the form of Common Shares, cash or a combination of Common Shares and in cash (the “Amended DSU Plan”).

 

As of the date of this Circular, no Common Shares have been issued under the Amended DSU Plan. The Board does not intend to issue any Common Shares under such plan until such time as the necessary regulatory and stock exchange approvals have been obtained. A copy of the Amended DSU Plan, as described herein, is available on the Corporation’s website at http://www.osiskogr.com/en/2019-agm/.

 

As a result of the proposed amendments, only non-executive directors of the Corporation or a subsidiary will be entitled to participate to the Amended DSU Plan.

 

Summary of the Amended DSU Plan

 

Who is eligible to participate?

 

Pursuant to the Amended DSU Plan a non-executive director of the Board of Directors of the Corporation or a subsidiary is eligible to participate under the Amended DSU Plan (the “Participant”).

 

What is the term and vesting schedule of DSUs or of the securities issuable under the Amended DSU Plan?

 

Unless otherwise indicated by the Committee upon grant and subject to the provision on termination of service of the Amended DSU Plan, (i) the DSUs granted to a Participant in accordance with such Participant’s election to receive all or a portion of the Participant’s annual remuneration as director in DSUs, shall vest immediately upon such grant and (ii) the DSUs granted to a Participant as an annual grant shall vest, unless otherwise provided upon such grant, one day prior to the Corporation’s next annual meeting of shareholders. Notwithstanding the foregoing, the Committee may, in its entire discretion, accelerate the terms of vesting of any DSUs in circumstances deemed appropriate by the Human Resources Committee.

 

Upon a change of control, all unvested DSUs become vested at the time of the Change of Control, irrespective of any vesting conditions.

 

At any time after the termination of service of a Participant to whom DSUs have been granted, and which have vested, but no later than the last business day in December of the first calendar year commencing after such termination, on a date chosen by such Participant (the “Settlement Date”), the Corporation shall pay to the Participant or his or her legal representative the value of such Participant’s vested DSUs, in cash or in Common Shares of the Corporation or a combination of cash and Common Shares.

 

2019 Management Information Circular

 

91

 

Should the Corporation chose to pay the Participant in cash, such Participant will receive an amount equal to the number of DSUs vested to his or her account as of that date multiplied by the market value of one (1) Common Share on the Settlement Date, the whole subject to withholding taxes. Should the Corporation chose to issue Common Shares in payment of the DSUs to a Participant, such Participant will receive such number of Common Shares equivalent to the number of DSUs vested to his or her account as of that date, subject to withholding taxes. A Participant shall not be entitled to require payment of any amount on account of DSUs credited to such Participant’s account prior to his or her termination.

 

How many securities are authorized to be issued under the Amended DSU Plan and what percentage of the Corporation’s shares outstanding do they represent?

 

The total number of Common Shares reserved and available for issuance pursuant to this Amended DSU Plan shall not exceed a number of Common Shares equal to 0.5% of the total issued and outstanding Common Shares of the Corporation on the Settlement Date (on a non-diluted basis), or such other number as may be approved by the TSX and the Shareholders of the Corporation from time to time. Any increase in the issued and outstanding Common Shares will result in an increase in the number of Common Shares that may be issued pursuant to this Amended DSU Plan or any other proposed or established share compensation arrangement of the Corporation.

 

The TSX rules provide that all unallocated options, rights or other entitlements under a security based compensation arrangement, which does not have a fixed number of maximum securities issuable, must be approved every three years.

 

The number of Common Shares of the Corporation reserved for issuance under Osisko’s Long-Term Incentive Plans cannot exceed, in the aggregate, eight percent (8%) of the issued and outstanding Common Shares of the Corporation.

 

What is the maximum percentage of securities available under the Amended DSU Plan to the Corporation’s insiders?

 

The aggregate number of Commons Shares issued to insiders of the Corporation within any one-year period, and issuable to insiders of the Corporation at any time, under the Amended DSU Plan or when combined with all other share compensation arrangements, cannot exceed 10% of the issued and outstanding Common Shares.

 

What is the maximum number of securities any one person is entitled to receive under the Amended DSU Plan and what percentage of the Corporation’s outstanding capital does this represent?

 

The number of Common Shares that may be issued to a Participant under the Amended DSU Plan cannot exceeds 0.5% of the issued and outstanding Common Shares at the time of settlement of the DSUs.

 

How is the issue price determined under the Amended DSU Plan?

 

The issue price pursuant to the Amended DSU Plan is determined based on the closing market price of the Common Shares of the Corporation traded on the TSX on the day prior to the Date of Grant.

 

Under what circumstances is an individual no longer entitled to participate?

 

Unless otherwise determined by the Board, the following provisions shall apply in the event that a Participant’s service with the Corporation or a subsidiary be terminated:

 

Termination of service. Upon (i) resignation of a Participant as member of the Board, (ii) dismissal of a Participant as member of the Board, (iii) decision of a Participant not to stand for re-election as member of the Board (iv) non proposal of a Participant for re-election as member of the Board (v) death of a Participant, or (vi) the Long-Term Disability (as such term is defined in the Amended DSU Plan) of a Participant, all vested

 

2019 Management Information Circular

 

92

 

DSUs awarded to such Participant on the date of termination shall be paid to such Participant, in accordance with the terms of the Amended DSU Plan and the letter of grant.

 

Death. Upon death of a Participant, no transfer of DSUs by the Participant by will or by laws of succession shall be effective to bind the Corporation unless the Corporation has been furnished with written notice thereof, together with a copy of any will or such other evidence as the Corporation may deem necessary or desirable to establish the validity of the transfer.

 

Change of Control — If a Change of Control takes place, all unvested Deferred Share Units become vested at the time of the Change of Control.

 

Can rights held pursuant to the Amended DSU Plan be assigned or transferred?

 

The rights and interests of a Participant in respect of the Amended DSU Plan are not transferable or assignable other than by will or the laws of succession to the legal representative of the Participant.

 

How is the Amended DSU Plan amended? Is Shareholder approval required?

 

a)             The approval of the Board of Directors and the requisite approval from the TSX and the Shareholders of the Corporation (by simple majority vote) shall be required for any of the following amendments to be made to the Amended DSU Plan:

 

(iv)                              any amendment to the number of shares issuable under the plan, including an increase in the fixed maximum number of shares or a change from a fixed maximum number of shares to a fixed maximum percentage;

 

(v)                                 any change to the definition of “Participant” which would have the potential of broadening or increasing insider participation; and

 

(vi)                              any amendment that may modify or delete any of the amendment provision requiring Shareholders’ approval.

 

b)             The Board may, without Shareholder approval but subject to receipt of requisite approval from the TSX, in its sole discretion make all other amendments to the Amended DSU Plan that are not of the type contemplated in the amendment provision requiring Shareholders’ approval, including, without limitation:

 

(i)                                     amend, suspend or terminate the Amended DSU Plan in whole or in part or amend the terms of DSUs credited in accordance with the plan. If any such amendment, suspension or termination will materially or adversely affect the rights of a Participant with respect to DSUs credited to such Participant, the written consent of such Participant to such amendment, suspension or termination shall be obtained. Notwithstanding the foregoing, the obtaining of the written consent of any Participant to an amendment, suspension or termination which materially or adversely affects the rights of such Participant with respect to any credited DSUs shall not be required if such amendment, suspension or termination is required in order to comply with applicable laws, regulations, rules, orders of government or regulatory authorities or the requirements of any stock exchange on which shares of the Corporation are listed. If the Committee terminates the Amended DSU Plan, DSUs previously credited to Participants shall remain outstanding and in effect and be settled in due course in accordance with the terms of the Amended DSU Plan (which shall continue to have effect, but only for such purposes) on the settlement date.

 

Does the Corporation provide any financial assistance to participants to purchase shares under the Amended DSU Plan?

 

No.

 

2019 Management Information Circular

 

93

 

Are there any adjustment provisions under the Amended DSU Plan?

 

In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation, recapitalization, amalgamation, plan of arrangement, reorganization, spin-off or other distribution (other than normal cash dividends) of the Corporation’s assets to Shareholders or any other change affecting the Common Shares, such adjustments as are required to reflect such change shall be made with respect to the number of DSUs in the accounts maintained for each Participant, provided that no fractional DSUs shall be issued to Participants and the number of DSUs to be issued in such event shall be rounded down to the next whole number of DSUs.

 

Whenever dividends are paid on Common Shares, additional DSUs will be automatically granted to each participant who holds DSUs on the record date for such dividend. The number of such DSUs (rounded to the nearest whole DSU) to be credited as of a dividend payment date shall be determined by dividing the aggregate dividends that would have been paid to such Participant if the Participant’s DSUs had been Common Shares by the market value on the date on which the dividends were paid on the Common Shares. DSUs granted to a Participant under the section on credits for dividends shall be subject to the same vesting as the DSUs to which they relate.

 

Ordinary Resolution —Adoption of the Amended DSU Plan

 

At the Meeting, Shareholders will be asked to consider an ordinary resolution, as set forth below, to approve the adoption of the Amended DSU Plan described above.

 

The TSX requires that the resolution adopting the Amended DSU Plan be approved by a majority of the votes cast, by proxy or in person. In addition to Shareholders’ approval, the Amended DSU Plan is subject to regulatory approval. Upon ratification by Shareholders, a copy of the Amended DSU Plan will be filed on SEDAR.

 

“BE IT RESOLVED AS AN ORDINARY RESOLUTION THAT:

 

1.                                      The Amended DSU Plan of the Corporation is hereby approved, confirmed and ratified;

 

2.                                      All unallocated DSUs under the Amended DSU Plan be and are hereby approved until May 1, 2022, which is the date that is three years from the date of the Meeting at which Shareholders’ approval is being sought; and

 

3.                                      Any director or officer of the Corporation be and is hereby authorized and directed, for and on behalf of the Corporation, to do, or cause to be done, all such acts and things, execute and deliver, or cause to be delivered, such other documents, agreements, certificates and statements, as any such director and officer may, in their discretion, determine to be necessary or desirable in order to give full effect to the intent and purpose of these resolutions, the authority for the execution of such documents, agreements, certificates and statements and the doing of such other acts or things to be conclusively evidenced thereby.”

 

Accordingly, the Board of Directors and Management are recommending that the Shareholders VOTE FOR the approval of the said resolution that requires an affirmative vote of the majority of the votes cast at the Meeting in order to be adopted. Unless contrary instructions are indicated on the proxy form or the voting instruction card, the persons designated in the accompanying form of proxy or voting instructions card intend to VOTE FOR the approval of the resolution.

 

2019 Management Information Circular

 

94

 

ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

The Board of Directors believes that the compensation program must be competitive within the industry, provide a strong incentive to its Named Executives to achieve the Corporation’s goals and ensure that interests of Management and the Corporation’s Shareholders are aligned. A detailed discussion of the Corporation’s executive compensation is more fully described under the heading “Statement of Executive Compensation — Compensation Discussion and Analysis” in this Circular. Under such section, you will find discussions on the Corporation’s executive compensation philosophy, objectives, policies and practices and provides information on the key elements of the executive compensation program of the Corporation.

 

Advisory Resolution on Executive Compensation Approach

 

“BE IT RESOLVED, AS AN ADVISORY RESOLUTION THAT:

 

1.                                      On an advisory basis and not to diminish the role and responsibilities of the Board of Directors of the Corporation, the Shareholders accept the approach to executive compensation disclosed in the Corporation’s Circular dated March 21, 2019 delivered in advance of the Meeting;

 

2.                                      As this in an advisory vote, the Board of Directors of the Corporation and the Committee will not be bound by the results of the vote. However, the Board of Directors of the Corporation will take the results into account, together with feedback received from Shareholders, when considering its approach to executive compensation in the future; and

 

3.                                      Results of the vote will be disclosed in the report of voting results.”

 

The Board of Directors of the Corporation recommends that Shareholders indicate their support for the Corporation’s approach to executive compensation disclosed in the Circular by VOTING FOR the Advisory Resolution on Executive Compensation Approach. The persons whose names appear in the attached form of proxy intend to VOTE FOR the Advisory Resolution on Executive Compensation Approach.

 

SHAREHOLDER PROPOSALS FOR THE 2020 ANNUAL MEETING

 

The final date for submitting Shareholder proposals to the Corporation for the next annual meeting of the Shareholders is December 20, 2019.

 

ADDITIONAL INFORMATION

 

Additional information relating to the Corporation is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Financial information is provided in the Corporation’s financial statements and Management’s Discussion and Analysis for the year ended December 31, 2018 a copy of which may be obtained upon request from the Corporate Secretary, 1100, Avenue des Canadiens-de-Montréal, Suite 300, Montréal, Québec, H3B 2S2. The Corporation may require the payment of a reasonable charge when the request is made by someone other than a Shareholder.

 

2019 Management Information Circular

 

95

 

CONTACTING OSISKO’S BOARD OF DIRECTORS

 

Shareholders, employees and other interested parties may communicate directly with the Board by:

 

	
1. Writing to:
    	
 
    	
Chair of the Board or
    
	
 
    	
 
    	
Lead Director of the Board 
    Osisko Gold Royalties Ltd
    
	
 
    	
 
    	
1100 Avenue des Canadiens-de-Montréal
    
	
 
    	
 
    	
Suite 300
    
	
 
    	
 
    	
Montréal, Québec, H3B 2S2
    
	
 
    	
 
    	
 
    
	
2. Calling:
    	
 
    	
514-940-0670
    
	
 
    	
 
    	
 
    
	
3. Emailing:
    	
 
    	
Chair-Board@osiskobr.com or 
   Lead-Director@osiskobr.com
    

 

APPROVAL

 

The Board of Directors of the Corporation has approved the contents of the Circular and its sending to the Shareholders.

 

Montréal, Québec, March 21, 2019.

 

	
 
    	
OSISKO GOLD ROYALTIES LTD
    
	
Per:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ André Le Bel
    
	
 
    	
André Le Bel
    
	
 
    	
Vice President,   Legal Affairs and Corporate Secretary
    

 

2019 Management Information Circular

 

96

 

OSISKO GOLD ROYALTIES LTD

 

SCHEDULE “A”

 

BOARD OF DIRECTORS CHARTER

 

I.                                        OVERALL ROLE AND RESPONSIBILITY

 

The Board of Directors (the “Board”)  of Osisko Gold Royalties Ltd (the “Corporation”) is elected by the Corporation’s shareholders to supervise the management of the business and affairs of the Corporation.

 

The Board monitors the manner in which the Corporation conducts its business as well as the senior Management responsible for the day-to-day operations of the Corporation. It sets the Corporation’s policies, assesses their implementation by Management and reviews the results.

 

The prime stewardship responsibility of the Boward is to ensure the viability of the Corporation and to ensure that it is managed in the best interest of its shareholders as a whole while taking into account the interests of other stakeholders.

 

The Board’s main expectations of the Corporation’s Management are to protect the Corporation’s interests and ensure the long-term growth of shareholder value.

 

II.           MEMBERSHIP AND QUORUM

 

The Board shall be composed of a minimum of 3 and a maximum of 15 members. The Board shall also be constituted with a majority of individuals who qualify as independent directors, as per the standards of independence established in the Regulation 58-101 respecting Disclosure of Corporate Governance Practices.

 

The quorum at any meeting of the Board is a majority of directors in office.

 

III.      STRUCTURE AND OPERATIONS

 

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

 

IV.       DUTIES AND RESPONSIBILITIES OF THE BOARD

 

In addition to statutory responsibilities, the Board, either directly or through one of its committees, assumes responsibility for:

 

(a)                            satisfying itself, to the extent feasible, as to the integrity of the Chief Executive Officer (“CEO”) and other senior officers, and that the CEO and other senior officers maintain a culture of integrity throughout the Corporation;

 

(b)                            ensuring that the Corporation is operated so as to preserve its financial integrity and in accordance with policies approved by the Board;

 

(c)                             ensuring, through the Governance and Nomination Committee, that appropriate structures and procedures are in place so that the Board and its committees can function independently of management and in accordance with sound corporate governance practices;

 

2019 Management Information Circular

 

97

 

(d)                            reviewing and approving key policy statements developed by management on various issues such as ethics, regulatory compliance and communications with shareholders, other stakeholders and the general public;

 

(e)                             adopting a strategic planning process and thereafter reviewing and, where appropriate, approving,  annually, a strategic plan and a budget which takes into account, among other things, the opportunities and risks of the business (all of which are developed at first by management), and monitoring the Corporation’s performance with reference to the adopted budget and strategic plan;

 

(f)                              identifying the principal risks of the Corporation’s business and ensuring the implementation of appropriate controls, measures and systems to manage these risks;

 

(g)                             appointing the CEO and the President, setting forth the position description, as well as planning for the succession of the CEO and the President with the recommendation of the Governance and Nomination Committee and the Human Resources Committee respectively;

 

(h)                            evaluating the performance and reviewing the compensation of the CEO and the President with the Human Resources Committee, and ensuring that such compensation is competitive and measured according to appropriate benchmarks which reward contribution to shareholder value;

 

(i)                                appointing, training, evaluating and monitoring officers as well as planning for their succession with the recommendations of the Governance and Nomination Committee; determining management compensation with the recommendations of the Governance and Nomination Committee and the Human Resources Committee, respectively and ensuring that such compensation is competitive and measured according to appropriate industry benchmarks;

 

(j)                               overseeing,  through the Audit Committee, the quality and integrity of the Corporation’s accounting and financial reporting systems, and disclosure controls and procedures;

 

(k)                            ensuring,  through the Audit Committee, the integrity of the Corporation’s internal controls and management information systems;

 

(I)                              overseeing,  through the Audit Committee, the process for evaluating the adequacy of internal control structures and procedures of financial reporting, and satisfy itself as to the adequacy of such process;

 

(m)                        advising management on critical and sensitive issues;

 

(n)                            ensuring that the Board’s expectations of management are understood, that all appropriate matters come before the Board in a timely and effective manner and that the Board is kept informed of shareholder feedback;

 

(o)                            conducting annually, through the Governance and Nomination Committee, a review of Board practices and the Board’s and committees’ performance (including director’s individual contributions), to ascertain that the Board, its committees and the directors are capable of carrying out and do carry out their roles effectively;

 

(p)                            ensuring with the Human Resources Committee, the adequacy and form of the compensation of non- executive directors taking into account the responsibilities and risks involved in being an effective director;

 

(q)                            determining,  with the Governance and Nomination Committee, in light of the opportunities and risks facing the Corporation, what competencies, skills and personal qualities the Board should seek in recruiting new Board members, and the appropriate size of the Board to facilitate effective decision- making;

 

(r)                               determining,  annually, with the Governance and Nomination Committee, the independence of each member of the Board as such term is defined by applicable laws and regulations including, rules and guidelines of stock exchanges to which the Corporation is subject;

 

2019 Management Information Circular

 

98

 

(s)                              setting forth,  with the recommendation of the Governance and Nomination Committee, the position description for the Chair of the Board and the Chair of the committees of the Board;

 

(t)                               determining annually, with the Audit Committee, if each member of the Audit Committee is “financially literate” as such terms are defined under applicable laws and regulations including rules and guidelines of stock exchanges to which the Corporation is subject;

 

(u)                            selecting,  upon the recommendation of the Governance and Nomination Committee, nominees for election as directors;

 

(v)                            selecting the Chair of the Board;

 

(w)                          selecting the Lead Director of the Board and ensure the director appointed as Lead Director is and remains independent;

 

(x)                            ensuring,  through the Governance and Nomination Committee, that new directors have a good understanding of their role and responsibilities and of the contribution expected of them (including as regards attendance at, and preparation for, meetings), and that they are provided with adequate education and orientation as regards the Corporation, its business and activities;

 

(y)                            approving unbudgeted capital expenditures, or significant divestiture, as well as acquisitions where environmental or other liabilities exist and which could result in significant exposure to the Corporation;

 

(z)                             approving major investments in metals streaming transactions, royalties and shares of publicly traded companies;

 

(aa)                     reviewing  alternate strategies in response to any possible takeover bid in order to maximize value for shareholders;

 

(bb)                     discussing and developing the Corporation’s approach to corporate governance issues in general, with the involvement of the Governance and Nomination Committee;

 

(cc)                       reviewing and approving,  with the involvement of the Disclosure Committee, the content of the principal communications by the Corporation to its shareholders and the public, such as quarterly and annual financial statements and management’s discussion and analysis, annual information form, information circulars, prospectuses and other similar documents which may be issued and distributed, provided that the quarterly and annual financial statements and related management’s discussion and analysis and earnings press releases and any other public disclosure document containing financial information may be reviewed and approved by the Audit Committee instead of the Board;

 

(dd)                     ensuring ethical behavior and compliance with laws;

 

(ee)                       monitoring,  directly or through one of its committees, compliance with all codes of ethics; and

 

(ff)                         consider the means by which stakeholders can communicate with the members of the Board (including independent directors).

 

Directors are expected to make reasonable efforts to attend all Board meetings and to review materials distributed to them in advance of Board meetings.

 

V. CHARTER

 

The Governance and Nomination Committee shall periodically review this Charter and recommend appropriate changes to the Board.

 

This Charter was approved and ratified by the Board of Directors on June 30, 2014 with effect as of April 30, 2014 and was last amended November 9, 2016.

 

2019 Management Information Circular

 

99

 

ANY QUESTIONS AND REQUESTS FOR ASSISTANCE
 MAY BE DIRECTED TO THE PROXY SOLICITOR AGENT:

 

 

North America Toll Free
 1-877-452-7184

 

Collect Calls Outside North America
 1-416-304-0211

 

Email: assistance@laurelhill.comExhibit 4.5

 

 

OSISKO GOLD ROYALTIES LTD

 

 

Unaudited Condensed Interim
 Consolidated Financial Statements

 

For the three months
 ended
 March 31, 2019

 

 

Osisko Gold Royalties Ltd

Consolidated Balance Sheets 
 (Unaudited)

(tabular amounts expressed in thousands of Canadian dollars)

 

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

 

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

 

2

 

Osisko Gold Royalties Ltd

Consolidated Statements of Income (Loss)

For the three months ended March 31, 2019 and 2018 
 (Unaudited)

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

 

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

 

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

 

3

 

Osisko Gold Royalties Ltd

Consolidated Statements of Comprehensive Income (Loss) 
 For the three months ended March 31, 2019 and 2018 
 (Unaudited)

(tabular amounts expressed in thousands of Canadian dollars)

 

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

 

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

 

4

 

Osisko Gold Royalties Ltd

Consolidated Statements of Cash Flows

For the three months ended March 31, 2019 and 2018
 (Unaudited)

(tabular amounts expressed in thousands of Canadian dollars)

 

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

 

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

 

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

 

5

 

Osisko Gold Royalties Ltd

Consolidated Statements of Changes in Equity 

For the three months ended March 31, 2019

(Unaudited)

(tabular amounts expressed in thousands of Canadian dollars)

 

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

 

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

 

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

 

6

 

Osisko Gold Royalties Ltd

Consolidated Statements of Changes in Equity 

For the three months ended March 31, 2018

(Unaudited)

(tabular amounts expressed in thousands of Canadian dollars)

 

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

 

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

 

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

 

7

 

Osisko Gold Royalties Ltd

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended March 31, 2019 and 2018

(Unaudited)

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

 

1.              Nature of activities

 

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

 

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

 

2.              Basis of presentation

 

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

 

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

 

3.              New accounting standard

 

IFRS 16, Leases

 

In January 2016, the IASB issued IFRS 16, Leases (“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 start of the lease and incurring a financing obligation corresponding to the lease payments to be made over time. Accordingly, for lessees, IFRS 16 eliminates the classification of leases as either operating leases or finance leases as was required by IAS 17 and, instead, introduces a single lessee accounting model.

 

Applying that model, a lessee is required to recognize:

 

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

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

 

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

 

8

 

Osisko Gold Royalties Ltd

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended March 31, 2019 and 2018

(Unaudited)

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

 

3.              New  accounting standards  (continued)

 

IFRS 16,  Leases (continued)

 

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

 

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

 

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

 

Accounting  policy  -  Leases

 

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

 

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

 

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

 

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

 

4.              Cash

 

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

 

9

 

Osisko Gold Royalties Ltd

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended March 31, 2019 and 2018

(Unaudited)

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

 

5.              Investments in associates

 

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

 

6.              Other investments

 

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

 

10

 

Osisko Gold Royalties Ltd

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended March 31, 2019 and 2018

(Unaudited)

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

 

6.              Other investments (continued)

 

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

 

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

 

7.              Royalty, stream and other interests

 

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

 

11

 

Osisko Gold Royalties Ltd

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended March 31, 2019 and 2018

(Unaudited)

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

 

7.              Royalty, stream and other interests (continued)

 

Main acquisitions — 2019

 

Home 5 property — silver stream (Falco Resources Ltd.)

 

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

 

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

 

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

 

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

 

Impairment — 2019

 

Renard mine diamond stream (Stornoway Diamond Corporation)

 

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

 

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

 

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

 

12

 

Osisko Gold Royalties Ltd

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended March 31, 2019 and 2018

(Unaudited)

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

 

7.              Royalty, stream and other interests (continued)

 

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

 

13

 

Osisko Gold Royalties Ltd

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended March 31, 2019 and 2018

(Unaudited)

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

 

8.              Provisions

 

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

 

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

 

9.              Long-term debt 

 

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

 

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

 

14

 

Osisko Gold Royalties Ltd

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended March 31, 2019 and 2018

(Unaudited)

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

 

9.              Long-term debt (continued)

 

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

 

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

 

(i)             Convertible debenture (2016)

 

In February 2016, the Company issued a senior non-guaranteed convertible debenture of $50.0 million to Ressources Quebec, a wholly-owned subsidiary of Investissement Quebec. 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 Quebec will be entitled, at its option, to convert the debenture into common shares of the Company at a price of $19.08 at any time during the term of the debenture.

 

(ii)          Convertible debentures (2017)

 

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

 

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

 

(iii)       Revolving credit facility

 

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

 

15

 

Osisko Gold Royalties Ltd

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended March 31, 2019 and 2018

(Unaudited)

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

 

9.              Long-term debt (continued)

 

(iii)       Revolving credit facility (continued)

 

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

 

10.       Share capital and warrants 

 

Normal Course Issuer Bid

 

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

 

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

 

Dividends

 

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

 

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

 

Warrants

 

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

 

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

 

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

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

16

 

Osisko Gold Royalties Ltd

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended March 31, 2019 and 2018

(Unaudited)

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

 

11.       Share-based compensation

 

Share options

 

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

 

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

 

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

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

 

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

 

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

 

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

 

17

 

Osisko Gold Royalties Ltd

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended March 31, 2019 and 2018

(Unaudited)

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

 

11.       Share-based compensation (continued)

 

Share options — Fair value

 

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

 

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

 

Deferred and restricted share units

 

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

 

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

 

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

 

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

 

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

 

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

 

18

 

Osisko Gold Royalties Ltd

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended March 31, 2019 and 2018

(Unaudited)

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

 

11.       Share-based compensation (continued)

 

Deferred and restricted share units (continued)

 

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

 

12.       Additional information on the consolidated statements of income (loss)

 

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

 

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

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

 

19

 

Osisko Gold Royalties Ltd

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Unaudited)

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

 

13.   Net earnings (loss) per share

 

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

 

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

 

14.    Additional information on the consolidated statements of cash flows

 

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

 

20

 

Osisko Gold Royalties Ltd

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Unaudited)

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

 

15.    Fair value of financial instruments

 

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

 

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

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

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

 

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

 

	
 
    	
 
    	
December   31, 2018
    	
 
    
	
 
    	
 
    	
Level 1
    	
 
    	
Level 2
    	
 
    	
Level 3
    	
 
    	
Total
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Recurring measurements
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Financial assets at fair value through profit or loss(i)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Warrants on equity   securities
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Publicly traded mining   exploration and development companies
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Precious metals
    	
 
    	
—
    	
 
    	
—
    	
 
    	
3,322
    	
 
    	
3,322
    	
 
    
	
Other minerals, oil and gas
    	
 
    	
—
    	
 
    	
—
    	
 
    	
26
    	
 
    	
26
    	
 
    
	
Financial assets at fair value through other comprehensive   income (loss)(i)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Equity securities
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Private mining exploration   and development companies — precious metals
    	
 
    	
—
    	
 
    	
—
    	
 
    	
56,252
    	
 
    	
56,252
    	
 
    
	
Publicly traded mining   exploration and development companies
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Precious metals
    	
 
    	
35,544
    	
 
    	
—
    	
 
    	
—
    	
 
    	
35,544
    	
 
    
	
Other minerals, oil and gas
    	
 
    	
12,259
    	
 
    	
—
    	
 
    	
—
    	
 
    	
12,259
    	
 
    
	
 
    	
 
    	
47,803
    	
 
    	
—
    	
 
    	
59,600
    	
 
    	
107,403
    	
 
    

 

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

 

21

 

Osisko Gold Royalties Ltd

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Unaudited)

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

 

15.    Fair value of financial instruments (continued)

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Foreign exchange contracts

 

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

 

Financial instruments not measured at fair value on the balance sheet

 

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

 

22

 

Osisko Gold Royalties Ltd

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Unaudited)

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

 

15.    Fair value of financial instruments (continued)

 

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

 

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

 

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

 

16.    Segment disclosure

 

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

 

Geographic revenues

 

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

 

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

 

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

 

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

 

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

 

23

 

Osisko Gold Royalties Ltd

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Unaudited)

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

 

16.    Segment disclosure (continued)

 

Royalty, stream and other interests, net

 

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

 

	
 
    	
 
    	
North
   America(i)
    	
 
    	
South
   America
    	
 
    	
Australia
    	
 
    	
Africa
    	
 
    	
Asia
    	
 
    	
Europe
    	
 
    	
Total
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    	
$
    	
 
    
	
March 31,   2019
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Royalties
    	
 
    	
651,110
    	
 
    	
26,984
    	
 
    	
9,994
    	
 
    	
11,760
    	
 
    	
—
    	
 
    	
15,215
    	
 
    	
715,063
    	
 
    
	
Streams
    	
 
    	
251,114
    	
 
    	
176,355
    	
 
    	
3,158
    	
 
    	
—
    	
 
    	
83,794
    	
 
    	
64,022
    	
 
    	
578,443
    	
 
    
	
Offtakes
    	
 
    	
56,270
    	
 
    	
—
    	
 
    	
8,722
    	
 
    	
—
    	
 
    	
32,801
    	
 
    	
—
    	
 
    	
97,793
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
958,494
    	
 
    	
203,339
    	
 
    	
21,874
    	
 
    	
11,760
    	
 
    	
116,595
    	
 
    	
79,237
    	
 
    	
1,391,299
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
December 31,   2018
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Royalties
    	
 
    	
643,193
    	
 
    	
27,133
    	
 
    	
10,002
    	
 
    	
12,180
    	
 
    	
—
    	
 
    	
15,215
    	
 
    	
707,723
    	
 
    
	
Streams
    	
 
    	
269,257
    	
 
    	
181,681
    	
 
    	
3,524
    	
 
    	
—
    	
 
    	
85,544
    	
 
    	
66,404
    	
 
    	
606,410
    	
 
    
	
Offtakes
    	
 
    	
58,145
    	
 
    	
—
    	
 
    	
8,904
    	
 
    	
—
    	
 
    	
33,486
    	
 
    	
—
    	
 
    	
100,535
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
970,595
    	
 
    	
208,814
    	
 
    	
22,430
    	
 
    	
12,180
    	
 
    	
119,030
    	
 
    	
81,619
    	
 
    	
1,414,668
    	
 
    

 

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

 

17.    Related party transactions

 

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

 

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

 

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

 

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

 

24

 

Osisko Gold Royalties Ltd

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2019 and 2018

(Unaudited)

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

 

17.    Related party transactions (continued)

 

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

 

Additional transactions with related parties are described under Note 7.

 

18.    Subsequent event

 

Dividends

 

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

 

25

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