MONTREAL, Sep 14, 2020 (GLOBE NEWSWIRE) – Osisko Gold Royalties Ltd (the Company or Osisko) (OU: TSX & NYSE) is pleased to announce that following a comprehensive review of operations and the establishment of a detailed restart plan, the Renard Diamond Mine, operated by Stornoway Diamonds Canada Inc. (Stornoway), will restart operations in September 2020.
The detailed plan approved by the Stornoway board of directors and its shareholders includes cost reductions of more than $ 30 million over the next 16 months of operations, with the expected impact of significantly reducing the all-inclusive cost of production . As a result of this cost reduction plan, current Stornoway shareholders have committed to reinvest up to $ 30 million (up to $ 7.5 million for Osisko) in a senior secured working capital facility. This additional commitment will provide the financial flexibility necessary for Stornoway to continue to operate in a difficult diamond market. No initial drawdown is expected from the facility at this time, as Stornoway currently has $ 10 million in cash as well as approximately 332,000 unsold carats in inventory that it plans to sell later in 2020.
The diamond market continues to be difficult, however, structural barriers to diamond sales are easing and increased demand has improved the prices observed for specific products.
Sean Roosen, President and CEO of Osisko, commenting on the announcement, the Stornoway team has demonstrated its ability to operate the Renard mine efficiently and the near term cost reductions will further help improve profitability. We believe the Renard mine is of significant value given the scarcity of diamond mines in the world and the approximately $ 1 billion in well-built infrastructure. We look forward to our partners at Stornoway bringing Renard back to production.
Osisko owns a 9.6% diamond flow on the Renard mine and also became a 35.1% shareholder following the offer transaction with creditors which was concluded in November 2019. As part of the of the new commitment, the shareholders and the streamers have agreed to continue to defer payments on their respective instruments until April 2022. Payments may be made before that date if Stornoway’s financial situation permits.
About Osisko Gold Royalties Ltd
Osisko Gold Royalties Ltd is an Americas-focused precious metals intermediary company that began operations in June 2014. Osisko has a North American-focused portfolio of more than 135 precious metal royalties, flows and levies . Osiskos’ portfolio is based on its fundamental asset, a 5% net smelter royalty on the Canadian Malartic mine, which is the largest gold mine in Canada. Osisko also owns the Cariboo gold project in Canada as well as a portfolio of public resource companies, including a 14.7% interest in Osisko Mining Inc., a 17.9% interest in Osisko Metals Incorporated and a stake of 18.3% in Falco Resources Ltd.
Osiskos head office is located at 1100 avenue des Canadiens-de-Montral, suite 300, Montreal, Qubec, H3B 2S2.
|For more information, please contact Osisko Gold Royalties Ltd:|
Phone. (514) 940-0670
Certain statements contained in this press release may be deemed to be conveyedforward-looking statements within the meaning of applicable Canadian and US securities laws. These beforeforward-looking statements, by their nature, require Osisko to make certain assumptions and necessarily involve known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forecasts.forward-looking statements. Forwardforward-looking statements are not guarantees of performance. Words such as may, will, would, might, expect, believe, plan, anticipate, intend, estimate, continue, or negative or comparable terminology, as well as terms commonly used in the future and at conditional, are intended to identifyforward-looking statements. Information contained in forwardforward-looking statements are based on certain material assumptions that have been applied in drawing a conclusion or making a forecast or projection, including management’s perceptions regarding historical trends, current market conditions and expected future developments, successful implementation of the cost reduction plan and its impact on production costs, that the additional financial commitment will provide the necessary financial flexibility for Stornoway to continue its operations and that no initial levy will be required at this time, that the Renard mine will be profitable and that shareholders and streamers will continue to defer payments under their respective instruments, as well as other considerations deemed appropriate in the circumstances. Osisko considers its assumptions to be reasonable based on the information currently available, but cautions the reader that their assumptions regarding future events, many of which are beyond Osisko’s control, may ultimately prove to be incorrect as they are subject to risks and uncertainties that affect Osisko and its business. These risks and uncertainties include, among others, uncertainties relating to the diamond markets, the ability of Stornoway to proceed with sales of diamonds in Europe on terms that satisfy it, all the conditions for the successful implementation of the plan. cost reduction will be gathered and the responses of the governments concerned to the COVID-19 epidemic and the effectiveness of those responses.
For more information on these and other factors and assumptions underlying theforward-looking statements made in this press release, see the section entitled Risk Factors in Osisko’s most recent annual information form filed with the canadian securities commissions and available electronically under the Osiskos Issuer Profile on SEDAR at www .sedar.com and in the United States. Securities and Exchange Commission and available electronically under the Osiskos Issuer Profile on EDGAR at www.sec.gov. The frontThe forward-looking statements made herein reflect Osiskos’ expectations as of the date of this press release and are subject to change after this date. Osisko disclaims any intention or obligation to update or revise anyforward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
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