As previously reported in press releases today, a fire was experienced at the Canadian Malartic Mill early this morning. Details of this event such as they are known at this time were reported earlier and will not be recapped in this press release.
Osisko Mining Corporation (the "Company" or "Osisko") (TSX:OSK)(FRANKFURT:EWX) is pleased to report that it has generated a net profit of $29.4 million ($0.08 per share) during the first quarter of 2012 versus a loss of $5.3 million in 2011 ($0.01 per share).
Mine operating profits during the first quarter totaled a record $70.5 million. The Canadian Malartic mine reached commercial production on May 19, 2011 and, accordingly, mining operations did not contribute any revenues or profit during the corresponding period of 2011.
Highlights for the quarter were as follows:
Sean Roosen, President and Chief Executive Officer of Osisko, commenting on the results: "We had record gold production of over 91,000 ounces during the quarter, despite addressing challenges as we continue to ramp up this world class mine. Canadian Malartic was the second largest gold producer in Canada in the last quarter, after Goldcorp's high-grade Red Lake Mine. We'd have likely hit our targeted production for the quarter, but we were three weeks early installing the first unit of the new secondary cone crusher, and consequently lost seven full days and five partial days of production due to the concurrent mill shutdown and startup. We continue improving our methods of extracting high grade ore from the areas around the previously mined underground stopes, despite some difficulties. We are still within the normal ramp-up time frame for a mine of this size, and issues aside, it was again a productive quarter as we generated $70.5 million from Canadian Malartic, our best quarter to date. We have recently been processing at rates of 42,000 to 46,000 tonnes per day, and hope to stabilize the circuit in this range pending the arrival of the last components of the second cone crusher. The completion of the secondary crushing facility in July should set the stage to increase throughput to design capacity of 55,000 tonnes per day in September, three months later than we'd originally planned to have this equipment available to us. Further optimizations of throughput will be pursued once this is achieved."
"The Canadian Malartic mine has been performing very well from a geological and metallurgical point of view, with very positive gold reconciliation of +11%, and excellent recoveries of over 91%. Supplier and manufacturer delivery schedules, design capacities and availability have not met our expectations, and we are now completing the work necessary to resolve these issues. We are looking forward to completing the ramp up phase of this project, and we appreciate the ongoing support and efforts of our suppliers and service providers during this difficult period in supply chain management within the mining industry.
Outlook for 2012
Full integration of the first unit of the new secondary cone crusher is progressing at a slower rate than expected following start-up and commissioning trials. Modifications have been necessary and optimization is continuing, which is expected to result in lower than anticipated production in the second quarter. Manufacturer delays in delivery of elements of the second unit of the secondary crusher are also expected to affect second and third quarter production. Management is currently reviewing production guidance in light of delays in ramp up and assessment of this morning's fire.
Steady Progress at Canadian Malartic
Operations at Canadian Malartic continue to improve during the ramp-up period. Mining activities have accelerated with the development of the pit area, which has enhanced flexibility with better mining conditions. During the quarter there were some difficulties accessing the higher grade ore. However, throughput gold grade continues to increase as more access is gained to the areas of higher grade material, and expertise develops in accessing material over open stopes. Throughput gold grade is expected to continue to increase in the rest of the year. Drilling, blasting and loading procedures are continuously evolving to augment productivity while maintaining a safe working environment.
Mining operations were affected by low availability of ancillary loading units. This will continue in the second quarter as key structural components are being replaced on two Letourneau L-1850 loaders. Osisko is working closely with the suppliers of the mining fleet to improve availability. Mining was also affected by the wet spring and wind conditions, which negatively impacted work schedules.
Production reconciles very favorably with the reserve model with an estimated gain of 11% in ounces for the tonnage mined during the quarter.
Milling throughput was affected by a seven day shutdown in March to connect the first FLSmidth XL2000. This shutdown was followed by five days of very low production while the new crusher was brought on line. Integration of the first XL2000 is continuing with the assistance of the manufacturer's representatives, but it has not performed consistently at the manufacturer throughput guidance parameters of tonnes per hour and output size. This inaugural XL2000 has required several adjustments to move towards design specifications. Osisko is awaiting the final report on the crusher performance from FLSmidth, however it is now becoming apparent that the upper design operating levels are not sustainable. Modifications to the feeding system were required and will continue over the second quarter. Frequent stops and starts have resulted in a lack of stability in the circuit, which is affecting current throughput production. The manufacturer has also experienced a delay in the fabrication of some of the components for the second XL2000, which was previously anticipated to be installed and functional at the end of the second quarter. It is now anticipated that all components of the second XL2000 will arrive on site in June and be installed and commissioned in July. A cost overrun of $13 million on the crusher installation is expected due to modifications to material handling systems and subsequent contract labour costs associated with the modifications.
In order to gain further production flexibility and increase the robustness of the grinding mill circuit, the Company has decided to add an additional pebble crusher (identical to the current pebble crusher) in the mill. This $12 million investment is expected to be in service in September.
The production statistics since commencement of commercial production on May 19, 2011 are as follows:
|Tonnes Mined (000's)|
|Tonnes Milled (000's)||2,965||2,935||3,086||1,471|
|Grade (g Au/t)||1.05||0.96||0.85||0.65|
|Gold production (oz)||91,178||79,718||73,814||27,101|
Mill operating statistics continue to show progress.
Osisko's focus for the balance of 2012 will be:
Despite operating challenges, the Canadian Malartic Mine generated an operating profit of $70.5 million, mainly from higher gold production due to a 9.4% increase in grade of the ore treated. The mine was able to improve its cash margins by US$99 per ounce (13.4%) over the previous quarter, mainly as a result of a 6.1% decrease in cash cost per ounce to US$858. The gold market continues to be strong, thereby allowing Canadian Malartic to achieve strong margins.
The mine operating statement for the production period is as follows:
(in thousands of Canadian dollars, unless otherwise noted)
|Q1 2012||Q4 2011||Q3 2011||Q2 2011|
|Gold sales (ounces)||92,400||75,100||72,100||8,300|
|Silver sales (ounces)||52,800||42,100||49,800||-|
|Net Mining Profit||70,512||39,526||38,292||1,634|
Key operating results
(in thousands of Canadian dollars, unless otherwise noted)
|Gold Production (oz)||91,178||79,718||73,814||27,101||-|
|Gold Sales (oz)||92,400||75,100||72,100||8,300||-|
|Average Sale Price (US$/oz)||1,698||1,655||1,695||1,535||-|
|Average Market Price (US$/oz)||1,691||1,688||1,702||1,526||-|
|Cash Costs per Ounce (C$/oz)||860||936||918||1,094||-|
|Cash Costs per Ounce (US$/oz)||858||914||939||1,120||-|
|Cash Margin per Ounce (US$/oz)||840||741||756||415||-|
|Mine Operating Profit||70,513||39,526||38,292||1,634||-|
|Net Earnings (loss)||29,359||37,802||9,302||(23,826||)||(5,281||)|
|Net Earnings (loss) per Share||0.08||0.10||0.02||(0.06||)||(0.01||)|
|Operating Cash Flows||78,716||39,660||49,512||14,972||(20,554||)|
|* Commercial production only.|
Net earnings amounted to $29.4 million ($0.08), a decrease of $8.4 million from the fourth quarter of 2011, however fourth quarter results included a non-recurring income tax benefit of $10.0 million.
Summary from the Company's financial position and results are as follows:
|($ Million)||March 31, 2012||December 31, 2011|
|(1) Includes Cash and Cash equivalents, Short-term investments and Restricted cash.|
Exploration and Development
The Company continues to conduct exploration work on a regional basis around the Canadian Malartic infrastructure for additional resources and reserves, and at its Hammond Reef advanced development project. At Hammond Reef, the Company is completing its drilling programs and has initiated various studies necessary for the Project Feasibility Study, which is expected to be completed in late 2012.
Osisko continues to aggressively pursue growth in its reserve and resource base, with some 106,000 meters drilled on its various projects during the quarter.
Osisko also entered into various agreements to add to its project base.
The Company will open a regional exploration office in Denver, Colorado towards the end of Q2 2012 in order to run US exploration. Mr. Sergio Cattalani has been appointed Vice President Exploration, USA to lead the efforts in the USA, and Ms. Anne Charland will assume the leadership of the Canadian exploration activities as Vice President Exploration, Canada. Dr. Charland was previously Project Manager at Hammond Reef.
Non-IFRS Financial Performance Measures
The Company has included certain non-IFRS measures including "cash cost per ounce" and "cash margin per ounce" to supplement its financial statements, which are presented in accordance with International Financial Reporting Standards ("IFRS"). Refer to the Company's Management Discussion and Analysis for the three months ended March 31, 2012.
Q1 Conference Call Information
Osisko will host a conference call on Friday, May 11th at 8:00am EDT, where senior management will discuss the financial results and provide an update of the Company's activities. Those interested in participating in the conference call should dial in at 416-981-9012 (Toronto local and international), or 1-800-909-4792 (North American toll free). An operator will direct participants to the call.
The conference call replay will be available from 1:00 p.m. EDT on May 11, 2012 until 11:59 p.m. EDT on May 26, 2012 with the following dial in number: 416-626-4100 or Toll-free 1-800-558-5253, access code 21590364.
About Osisko Mining Corporation
Osisko Mining Corporation operates the Canadian Malartic gold mine in Malartic, Quebec and is pursuing exploration on a number of properties, including the Hammond Reef Gold Project in Northern Ontario.
Mr. Luc Lessard, Eng., Senior Vice-President and Chief Operating Officer of Osisko, is the Qualified Person who has reviewed this news release and is responsible for the technical information reported herein, including verification of the data disclosed.
|Teléfono||514.735.7131 Fax: 514.933.3290|
|Dirección||Windsor Station, Suite 300 1100, avenue des Canadiens-de-Montréal P.O. Box 211 Montréal, Québec, H3B 2S2|
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