OSISKO MINING INC. Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
Presented in Canadian dollars
March 4, 2024
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The accompanying consolidated financial statements of Osisko Mining Inc. ("Osisko" or the "Corporation") were prepared by management in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards"). Management is responsible for ensuring that these consolidated financial statements, which include amounts based upon estimates and judgments, are consistent with other information and operating data contained in the annual financial review and reflect Osisko's business transactions and financial position.
Management is also responsible for the information disclosed in Osisko's management's discussion and analysis including responsibility for the existence of appropriate information systems, procedures, and controls to ensure that the information used internally by management and disclosed externally is complete and reliable in all material respects.
In addition, management is responsible for establishing and maintaining an adequate system of internal control over financial reporting. The internal control system includes a code of conduct and ethics, which is communicated to all levels in the organization and requires all employees to maintain high standards in their conduct of the corporation's affairs. Such systems are designed to provide reasonable assurance that the financial information is relevant, reliable, and accurate and that Osisko's assets are appropriately accounted for and adequately safeguarded.
The Board of Directors is responsible for reviewing and approving the consolidated financial statements and for ensuring that management fulfills its financial reporting responsibilities. The Board of Directors meets with management as well as with the independent auditors to review the internal controls over the financial reporting process, the consolidated financial statements and the auditors' report. An Audit Committee assists the Board of Directors in fulfilling this responsibility. The Audit Committee meets with management to review the internal controls over the financial reporting process, the consolidated financial statements and the auditors' report. The Audit Committee also reviews Osisko's management's discussion and analysis to ensure that the financial information reported therein is consistent with the information presented in the consolidated financial statements. The Audit Committee reports its findings to the Board of Directors for its consideration in approving the consolidated financial statements for issuance to the shareholders.
Management recognizes its responsibility for conducting Osisko's affairs in compliance with established financial standards, and applicable laws and regulations, and for maintaining proper standards of conduct for its activities.
(Signed) "John Burzynski" | (Signed) "Blair Zaritsky" |
Executive Chairman and Chief Executive Officer | Chief Financial Officer |
Independent auditor's report
To the Shareholders of Osisko Mining Inc.
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Osisko Mining Inc. and its subsidiary (together, the Corporation) as at December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).
What we have audited
The Corporation's consolidated financial statements comprise:
- the consolidated statements of financial position as at December 31, 2023 and 2022;
- the consolidated statements of comprehensive (income)/loss for the years then ended;
- the consolidated statements of changes in equity for the years then ended;
- the consolidated statements of cash flows for the years then ended; and
- the notes to the consolidated financial statements, comprising material accounting policy information and other explanatory information.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Corporation in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.
PricewaterhouseCoopers LLP
PwC Tower, 18 York Street, Suite 2500, Toronto, Ontario, Canada M5J 0B2
T: +1 416 863 1133, F: +1 416 365 8215, ca_toronto_18_york_fax@pwc.com
"PwC" refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2023. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
Fair value assessments of the long-term receivable as a result of the investment in the Windfall Mining Group Joint venture
Refer to note 2 - Basis of preparation, note 3 - Material accounting policies, note 8 - Investment in joint venture and note 20 - Long-term receivables and advances to the consolidated financial statements.
On May 2, 2023, the Corporation entered into a 50/50 joint venture which includes the Windfall Project with an affiliate of Gold Fields Limited (Gold Fields). The joint venture was formed as a partnership called "Windfall Mining Group". Gold Fields acquired 50% of the partnership interest. The consideration consists of an initial cash payment of $300 million upon signing and an additional payment of $300 million which is payable to Osisko on successful issuance of the applicable permits authorizing the construction, operation and mining of the Windfall Project (the Maturity date). Management, with the support of their environmental specialist, estimated the Maturity date to be between the fourth quarter of 2024 and the first quarter of 2025. This additional payment was initially recorded as a long-term receivable at its fair value of $258 million and was valued at $274 million as at December 31, 2023.
As the receivable is non-recourse and the receivable cash flows vary based upon permitting, the receivable cash flows do not vary solely due to payments of principal and interest. Accordingly, the receivable is accounted for on a recurring basis at
How our audit addressed the key audit matter
Our approach to addressing the matter included the following procedures, among others:
- Tested how management estimated the fair value of the long-term receivable at inception and as at December 31, 2023, which included the following:
- Evaluated the appropriateness of the discounted cash flow method used in the valuations.
-
Evaluated the reasonableness of the Maturity date by assessing the timing of the issuance of the applicable permits considering:
o written agreements between the parties related to the sale,
o public statements by the Corporation, o applicable regulations,
o available public commentary, and
o information prepared by the environmental specialist.
- Reviewed the disclosures, including the sensitivity analysis, made in the consolidated financial statements with regard to the fair value assessments.
Key audit matter | How our audit addressed the key audit matter |
Fair Value Through Profit and Loss. Management used the discounted cash flow method in determining the fair value of the long-term receivable. The valuation of the long-term receivable requires management to apply critical judgment and to develop assumptions related to the discount rate and Maturity date.
We considered this a key audit matter due to the significance of the long-term receivable balance and the critical judgment applied by management when estimating the fair value of the long-term receivable, which includes the determination of the Maturity date. This resulted in a high degree of auditor judgment, subjectivity and effort in performing procedures related to the valuation of the long- term receivable on initial recognition and as at December 31, 2023.
Other information
Management is responsible for the other information. The other information comprises the Management's Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Corporation's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Corporation or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Corporation's financial reporting process.
Auditor's responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Corporation's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor's report. However, future events or conditions may cause the Corporation to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Corporation to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor's report is Marelize Barber.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants, Licensed Public Accountants
Toronto, Ontario
March 4, 2024
Table of Contents
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | 9 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (INCOME)/LOSS | 10 | |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | 11 | |
CONSOLIDATED STATEMENTS OF CASH FLOWS | 12 | |
NOTES TO FINANCIAL STATEMENTS | ||
1) | Reporting entity | 13 |
2) | Basis of presentation | 13 |
3) | Material accounting policies | 16 |
4) | Changes in IFRS accounting policies and future accounting pronouncements | 22 |
5) | Tax recoverable | 22 |
6) | Marketable securities | 22 |
7) | Investment in associate | 23 |
8) Investment in joint venture …….…………………………………………………………………………………. 24
9) Property, plant and equipment | 26 |
10) Exploration and evaluation assets | 27 |
11) Lease liabilities. ……………………………………………………………………………………………….… 28
12) | Deferred share unit and restricted share unit plans | 28 |
13) | Convertible debenture | 29 |
14) | Asset retirement obligation | 31 |
15) | Income taxes | 31 |
16) | Capital and other components of equity | 32 |
17) | Expenses | 35 |
18) | Related party transactions | 35 |
19) | Other receivables | 36 |
20) | Long-term receivables and advances | 36 |
21) | Capital risk factors | 37 |
22) | Financial instruments | 37 |
23) | Commitments | 39 |
24) | Subsequent events | 39 |
Consolidated Statements of Financial Position
(Tabular amounts express in thousands of Canadian dollars)
December 31, | December 31, | |||
As at | 2023 | 2022 | ||
Assets | ||||
Current assets | ||||
Cash and cash equivalents | $ | 340,188 | $ | 62,904 |
Restricted cash | 1,100 | 1,100 | ||
Other receivables (note 19) | 10,460 | 29,298 | ||
Tax recoverable (note 5) | 1,427 | 41,257 | ||
Marketable securities (note 6) | 18,031 | 15,679 | ||
Other assets | 659 | 2,785 | ||
Total current assets | 371,865 | 153,023 | ||
Non-current assets | ||||
Long-term receivables and advances (note 8 and 20) | 277,225 | 6,000 | ||
Investment in associate (note 7) | 36,095 | 39,878 | ||
Investment in joint venture (note 8) | 528,789 | - | ||
Property, plant and equipment (note 9) | 889 | 36,032 | ||
Exploration and evaluation assets (note 10) | 7,250 | 730,403 | ||
Total non-current assets | 850,248 | 812,313 | ||
Total assets | $ | 1,222,113 | $ | 965,336 |
Liabilities | ||||
Current liabilities | ||||
Accounts payable and accrued liabilities | $ | 8,114 | $ | 27,596 |
Current lease liabilities | 263 | 385 | ||
Total current liabilities | 8,377 | 27,981 | ||
Non-current liabilities | ||||
Flow-through premium liability (note 16(a)) | 10,254 | - | ||
Non-current lease liabilities | 726 | 989 | ||
Share-based payment liability (note 12) | 13,857 | 20,271 | ||
Convertible debenture (note 13) | 124,796 | 102,124 | ||
Asset retirement obligation (note 14) | - | 7,941 | ||
Deferred tax liability (note 15) | 68,647 | 105,796 | ||
Total non-current liabilities | 218,280 | 237,121 | ||
Total liabilities | 226,657 | 265,102 | ||
Equity | ||||
Share capital (note 16(a)) | 938,032 | 869,597 | ||
Contributed surplus (note 16(d)) | 68,767 | 68,171 | ||
Warrants (note 16(e)) | 9,865 | - | ||
Equity component of convertible debenture (note 13) | 15,852 | 15,852 | ||
Accumulated other comprehensive (loss)/income | (6,429) | 629 | ||
Accumulated deficit | (30,631) | (254,015) | ||
Total equity attributed to equity owners of the Corporation | 995,456 | 700,234 | ||
Total liabilities and equity | $ | 1,222,113 | $ | 965,336 |
The accompanying notes are an integral part of these consolidated financial statements.
Commitments (note 23)
Subsequent events (note 24)
On behalf of the Board:
(Signed) "Keith McKay" | (Signed) "John Burzynski" |
Keith McKay, Director | John Burzynski, Executive Chairman |
9
Consolidated Statements of Comprehensive (Income)/Loss
(Tabular amounts express in thousands of Canadian dollars, except per share and share amounts)
December 31, | December 31, | |||
For the year ended | 2023 | 2022 | ||
Expenses/(income) | $ | 14,450 | $ | 15,932 |
Compensation expense (note 17 and 18) | ||||
General and administration expenses (note 17 and 18) | 7,449 | 4,940 | ||
General exploration expenses | 20 | 20 | ||
Flow-through premium income (note 16(a)) | (4,798) | (8,037) | ||
Loss from marketable securities (note 6 and 17) | 4,730 | 4,765 | ||
Fair value loss/(gain) on convertible debenture (note 13) | 13,069 | (29,730) | ||
Gain on sale of investment in joint venture (note 8) | (209,982) | - | ||
Loss from disposition of property, plant and equipment (note 9) | 10 | 829 | ||
Other expense/(income) | 704 | (193) | ||
Operating income | (174,348) | (11,474) | ||
Finance income (note 20) | (30,367) | (3,628) | ||
Finance expense | 7,702 | 8,413 | ||
Net finance (income)/expense | (22,665) | 4,785 | ||
Share of loss of associate (note 7) | 7,283 | 2,685 | ||
Share of income of joint venture (note 8) | (580) | - | ||
Income before tax | (190,310) | (4,004) | ||
Deferred income tax (recovery)/expense (note 15) | (33,074) | 9,844 | ||
Net (income)/loss | $ | (223,384) | $ | 5,840 |
Change in fair value of convertible debenture attributable to the change in | 9,603 | (856) | ||
credit risk (note 13) | ||||
Income tax effect | (2,545) | 227 | ||
Other comprehensive loss/(income) | 7,058 | (629) | ||
Comprehensive (income)/loss | $ | (216,326) | $ | 5,211 |
Basic (earnings)/loss per share (note 16(b)) | $ | (0.60) | $ | 0.02 |
Weighted average number of shares (note 16(b)) | 372,991,245 | 348,125,896 | ||
Diluted (earnings)/loss per share (note 16(c)) | $ | (0.59) | $ | 0.02 |
Diluted weighted average number of shares (note 16(c)) | 380,900,165 | 348,125,896 |
The accompanying notes are an integral part of these consolidated financial statements.
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Osisko Mining Inc. published this content on 04 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 March 2024 18:20:05 UTC.
