rapport de gestion 30-09-2008

8/14/2019 Rapport de Gestion 30-09-2008

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OSISKO MINING CORPORATION(a development stage company)

. . . . . . . . . . . . . . . . . . Management's Discussion and Analysis For the nine months ended

September 30, 2008


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Introduction

The following management discussion and analysis (MD&A) of the consolidatedoperations and financial position of Osisko Mining Corporation (Osisko or theCompany) for the period ended September 30, 2008, should be read in conjunctionwith the Companys unaudited interim consolidated financial statements for the periodended September 30, 2008 and the Companys audited consolidated financialstatements for the year ended December 31, 2007. The consolidated financialstatements have been prepared in accordance with Canadian generally acceptedaccounting principles. The reporting currency for the Company is in Canadian dollars.The information included in this MD&A is as of November 6, 2008.

On May 8, 2008, the shareholders of the Company approved a name change of OsiskoExploration Lte to Osisko Mining Corporation, effective June 13, 2008.

Caution Regarding Forward Looking Statements

Statements contained in this document that are not historical facts are regarded asforward-looking statements. These statements may involve risk, uncertainties and otherfactors that could cause actual results to differ materially from those expressed orimplied by such forward-looking statements. Factors that could cause such differences,without being limited to the following, include: volatility and sensitivity to market metalprices; impact of change in foreign currency exchange rates and interest rates;unexpected variations in geological conditions of a property or erroneous geologicaldata; environmental risks including increased regulatory constraints; unexpectedadverse mining conditions; adverse political conditions; ability to relocate a portion of theresidents of Malartic, and changes in government regulations and policies. Although theCompany believes that the assumptions reflected in the forward-looking statements arereasonable, undue reliance should not be placed on these statements, which only applyas of the date of this document.

Third Quarter Highlights

Issuance of Measured and Indicated Mineral Resource calculation for CanadianMalartic deposit 7.7 million ounces

Initiation of house relocation program in Malartic Environmental Impact Assessment Study filed with the Quebec Government Completion of $12.25 million flow-through financing Received construction mining fleet

Business and Summary of Activities

The Company, incorporated under the Canada Business Corporations Act, is in thebusiness of acquiring and exploring mineral properties with the objective of discoveringand developing ore deposits. The Companys corporate objectives are currently focusedon developing the Canadian Malartic Project located in Malartic, Qubec. The Companyhas published a Preliminary Assessment Study on the Project on March 31, 2008, based


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on an inferred 43-101 compliant gold mineral resource of 8.4 million ounces establishedand released in July 2007. The entire Preliminary Assessment Study is available onwww.sedar.com and on the Companys corporate website www.osisko.com.

Following an extensive drilling program, the Company mandated Micon InternationalLimited to compile a NI 43-101 compliant measured and indicated resource calculationon the Canadian Malartic Project. Micon estimated a measured and indicated resourceof 7.7 million ounces of gold. The report will be the foundation for the Feasibility Study,which is expected to be released in late 2008.


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Resource Calculation

Following the completion of the 30 x 30 metre definition drilling program on the CanadianMalartic Project during the second quarter, the Company mandated Micon InternationalLimited Micon to estimate a NI 43-101-compliant Measured and Indicated mineralresource (M&I) on the deposit, the results of which were released on September 8,2008.

Based on a lower cut-off grade of 0.36 g/t Au, Micon estimated a global M&I resource of7.69 million ounces of gold with an additional 720,000 ounces in the Inferred category.The tables below summarize results of the estimates using different lower cut-off grades:

Global mineral resource estimates, variable lower cut-off grades

Measured(M)

Indicated(I) Total M&I

Cut-off

(g/t)

Tonnes

(M)

Grade

(g/t)

Oz

(M)

Tonnes

(M)

Grade

(g/t)

Oz

(M)

Tonnes

(M)

Grade

(g/t)

Oz

(M)0.30 4.94 1.25 0.20 263.18 0.93 7.87 268.12 0.94 8.070.36 4.83 1.27 0.20 227.42 1.02 7.49 232.25 1.03 7.690.40 4.75 1.28 0.20 208.14 1.08 7.26 212.89 1.09 7.450.50 4.42 1.34 0.19 170.01 1.23 6.71 174.44 1.23 6.900.60 4.08 1.41 0.18 141.96 1.36 6.21 146.04 1.36 6.400.70 3.60 1.51 0.17 121.86 1.48 5.80 125.46 1.48 5.970.80 3.20 1.61 0.16 106.74 1.58 5.43 109.94 1.58 5.600.90 2.89 1.69 0.16 94.95 1.67 5.11 97.84 1.67 5.271.00 2.66 1.75 0.15 85.69 1.75 4.83 88.35 1.75 4.98

InferredCut-off

(g/t)Tonnes

(M)Grade

(g/t)Oz(M)

0.30 50.16 0.53 0.850.36 37.44 0.60 0.720.40 31.14 0.64 0.640.50 20.02 0.75 0.480.60 12.52 0.87 0.350.70 6.99 1.04 0.230.80 4.92 1.17 0.180.90 3.35 1.32 0.141.00 2.49 1.45 0.12

Micon, in collaboration with G Mining Services Inc. of Montreal, also estimated an in-pitM&I mineral resource within a Whittle-optimized pit shell using a base case gold price ofUS$775 per ounce, details with variable in-pit lower cut-off grades of which are shown inthe following tables:


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Mineral resource estimates within US$775 Whittle pit shell, variable lowercut-off grades

Measured(M)

Indicated(I) Total M&I

StripRatio

Cut-off(g/t) Tonnes(M) Grade(g/t) Oz(M) Tonnes(M) Grade(g/t) Oz(M) Tonnes(M) Grade(g/t) Oz(M) Waste/Ore

0.30 4.63 1.27 0.19 192.15 1.04 6.43 196.78 1.05 6.62 1.430.36 4.54 1.29 0.19 173.71 1.12 6.23 178.25 1.12 6.42 1.690.40 4.47 1.31 0.19 163.38 1.16 6.11 167.85 1.17 6.29 1.850.50 4.16 1.37 0.18 140.52 1.28 5.78 144.68 1.28 5.96 2.310.60 3.84 1.44 0.18 120.81 1.40 5.43 124.66 1.40 5.61 2.840.70 3.40 1.54 0.17 105.96 1.50 5.12 109.36 1.50 5.29 3.380.80 3.04 1.63 0.16 94.20 1.60 4.84 97.24 1.60 5.00 3.930.90 2.79 1.70 0.15 84.57 1.68 4.57 87.36 1.68 4.73 4.481.00 2.58 1.76 0.15 76.95 1.75 4.34 79.52 1.76 4.49 5.02

InferredCut-off

(g/t)Tonnes

(M)Grade

(g/t)Oz(M)

0.30 5.80 0.74 0.140.36 5.03 0.81 0.130.40 4.63 0.84 0.120.50 3.70 0.94 0.11

0.60 2.75 1.08 0.100.70 1.95 1.26 0.080.80 1.60 1.37 0.070.90 1.32 1.48 0.061.00 1.08 1.59 0.06

Based on an updated ore-based cost of US$6.38 per tonne, the corresponding in-pit cut-off grade for the base case US$775/oz Whittle shell is 0.36 g/t gold, giving an in-pit M&Imineral resource of 6.42 million ounces gold with an undiluted grade of 1.12g/t Au.

This mineral resource calculation will serve as the basis for the Feasibility Study which isexpected to be completed in the fourth quarter of 2008. The entire NI 43-101 TechnicalReport on the mineral resource estimate is available on www.sedar.com and on theCompanys corporate website www.osisko.com.


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Drilling Program

During the third quarter, the Company continued to pursue aggressively its definitionprogram on the South Barnat Zone, which has yielded to date very positive results. Theaim of this program is to identify new mineral resources at a higher grade which wouldenhance the economics of the Canadian Malartic Project. The Company is also pursuingexploration/definition drilling on various other targets which could potentially enhance theeconomics of the Project, especially on the Jeffrey Zone on the Malartic CHL option withGolden Valley Mines. Some 48,805 metres of drilling were completed in the quarter asfollows:

THIRD QUARTER YEAR-TO-DATE

No. of holes Metres No. of holes MetresCanadian Malartic 18 3,690 261 64,142South Barnat 161 36,010 270 57,953

Regional Exploration - - 38 11,214Malartic CHL 40 8,168 75 14,570Condemnation 5 937 168 25,873Total 224 48,805 812 173,752

For the remainder of 2008, the Company intends to complete a minimum 30,000 metreexploration/definition program on various targets of the Malartic properties, whichcomplements the roughly 174,000 metres drilled as of the end of the third quarter on theCanadian Malartic Project. This program is one of the most aggressive amongst goldcompanies and is being funded from the proceeds of flow-through financings completedin July 2007 ($25 million) and September 2008 ($12.25 million).


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The following summarizes the exploration expenditures to date on various projects:

Property

As atDecember 31,

2007Exploration

expendituresTax credits and

mining duties

As atSeptember 30,

2008($000) ($000) ($000) ($000)

CANADA

CANADIAN MALARTIC 21,844 23,676 (7,388) 38,132Drilling 14,015 Geology & Geophysics 1,956 Assaying 2,494 Sampling 1,715 Line cutting/Drill pad prep. 466 Surveying 147 Resources calculation 218 Management fees 1,128 Logistics 1,228 Stock-based compensation 78

Amortization 231

CADILLAC 259 6 (2) 263Geology & Geophysics 6

MALARTIC CHL 565 1,354 (440) 1,479Drilling 1,169 Geology & Geophysics 45 Assaying 15 Sampling 55 Line cutting/Drill pad prep 1Surveying 6 Management fees 63

EAST AMPHI 265 217 (70) 412Drilling 165

Geology & Geophysics 7 Assaying 23 Sampling 10 Management fees 10 Logistics 2

BRAZIL

CASTELLO 319 86 - 405 23,252 25,339 (7,900) 40,691

The Company is currently reviewing various strategic alternatives with respect toCastello Exploration Project located in Brazil.


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Feasibility Study

During the quarter, the Senior Technical Staff continued to compile the necessary datato complete the feasibility study for the Canadian Malartic Project. The study to datecontemplates an open pit mining operation with a conventional cyanidation goldprocessing plant with a throughput capacity of 55,000 tonnes per day. To minimize theenvironmental impact of the operations, the Company plans to use thickened tailingstechnology to be stocked on the existing East-Malartic tailings disposal site owned bythe Quebec Government. Preliminary indications are that the Project would employapproximately 400 individuals, while creating up to 900 jobs during the constructionperiod.

Building on the initial orders placed in 2006 for a large 38 foot diameter SAG mill, andtwo 24 foot ball mills, the Company has continued to select equipment and placeconditional commitments for approximately $300 million to date.

The feasibility study is scheduled to be released late in the fourth quarter of 2008.

Environmental Impact Study

A significant milestone was reached on September 4, 2008, when the Company filed itsEnvironmental Impact Assessment Study (Study) with Quebec Governments Ministredu Dveloppement durable, de lEnvironnement et des Parcs (MDDEP).

The Study concludes that given the chosen site for mining infrastructure, the selectedtechnology, and the open communication with the various stakeholders, the CanadianMalartic project would have a minimal impact on the environment and the population andwell within acceptable industrial norms. Moreover, Osisko has demonstrated with itswork to date that it is a major partner in the responsible development of Malartic and itssurrounding area. The Study also underscores significant spin-offs the project wouldhave on the local and regional economy.

Osisko remains committed to providing the population of Malartic with thorough andtransparent information on the evolution of the Canadian Malartic project. With this goalin mind, the Company has made the Study available at various locations in Malartic, aswell as on its corporate website www.osisko.com.

The Study is being reviewed by Qubec governmental authorities to establishcompliance with MDDEP guidelines. During this time and until the Study is declaredadmissible by the MDDEP, Osisko will answer any questions received from thegovernment and provide additional information as requested. The BAPE public hearing

process will start following the MDDEPs review of the Study, leading to a report that willbe submitted for approval to members of the Qubec Government Cabinet. TheCompany anticipates that the permitting process will be completed in the first semesterof 2009.


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Community Relocation

Following an extensive consultation program with the citizens of Malartic in cooperationwith the Town of Malartic, the Company has aggressively pursued the development ofthe new subdivision to relocate the southern sector of Malartic to allow access to theCanadian Malartic deposit. Several milestones were achieved during the periodincluding: Continued development of the infrastructures for the new subdivision; Initiation of the relocation of the housing units on July 9, 2008. To date, some

60 single and multi-unit dwellings have been relocated; Continued design and engineering of the five institutional buildings; Official launching of the construction of the new elementary school (cole des

Explorateurs), the day care centre and the adult education centre. The commitmentfor this work is approximately $25 million and will provide the citizens of Malartic withmodern educational facilities for many years to come.

The overall relocation program calls for 205 homes to be relocated. The Company haspurchased 76 homes under the relocation program from owners who did not wish to berelocated to the new area.

Site Activities

The Company received the delivery of its construction mining equipment consisting of:

Five articulated truck CAT 740 (40 tonnes)One grader CAT 14 MOne loader CAT 980 HOne loader CAT IT62HTwo tractors CAT D6TOne compactor CAT CS56

Activities have begun for on-site road construction and borrow pit preparation to assist inclosure of the East-Malartic tailings area.

During the quarter, the Company has also accepted the delivery of some long-lead itemcomponents including SAG mill components.

Malartic Community Relations

The Company maintains active communication program in Malartic. The programprovides the Company with a platform to communicate various project initiatives,including the relocation program and to receive feedback from the population.

The Company and the Community Consultative Group held several meetings since thebeginning of the year including three general public meetings to outline progress resultsfrom the various studies compiled as part of the Environmental Impact AssessmentStudy and to provide project updates.


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As part of its engagement to improve the quality of life in Malartic, the Companyestablished a sustainability fund, Fonds Essor Malartic Osisko (FEMO) during the firstquarter. The Company has committed 300,000 common shares of the Company andentered into a commitment to contribute $150,000 per annum during the operations ofthe Canadian Malartic Project. The FEMO is managed by a Board of Directorscomprised of seven members, including two representatives from Osisko, onerepresentative from the Malartic Town Council, one from the Chamber of Commerce ofMalartic and three additional members. The Board is responsible for allocating thefinancial support to various community groups. To date, the Foundation has approvedseveral projects, including 1) a computerization program for the students and teachers atthe local high school; 2) in cooperation with several other partners, an automatedcontact program for elderly citizens living on their own; and 3) scholarships at theregional university (Universit du Qubec en Abitibi-Tmiscamingue). These projectsdemonstrate Osiskos commitment to be an active member of its host community andstriving for the improvement of quality in life of its residents.

Project Outlook

The Company is progressing aggressively towards the development of the Project. Itshould be noted that in order to achieve this, several milestones need to be achievedincluding:

Preparation of a positive Feasibility Study; Securing the necessary environmental authorizations following public hearings; and Obtaining the necessary financing to develop the Project.

During the quarter, the Company invested $36.6 million on the Project (Y.T.D.

$82.7 million).


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Quarterly Information

The selected quarterly information for the past eight financial quarters is outlined below:

(In thousands of dollars 2008 2007 2006Except amounts per share) Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4

$ $ $ $ $ $ $ $

Cash (1) 138,620 154,764 163,148 182,078 79,878 69,295 86,693 12,

Working Capital 123,376 137,974 167,408 183,476 83,799 64,806 89,250 15

Total Assets 315,072 290,933 267,703 264,394 137,087 115,516 109,403 31,

Shareholders Equity 268,176 255,133 253,964 252,538 132,689 109,260 105,450 2

Net Income (Loss) (127) (1,016) 4,687 (1,827) (5,372) (3,887) (706) (5,

Net Earnings (Loss) perShare(2) (0.01) (0.01) 0.03 (0.01) (0.04) (0.03) (0.01) (0

Weighted Average SharesOutstanding (000s) 162,017 161,423 160,423 138,351 134,828 130,588 123,088 112

Diluted (000s) 162,017 161,423 169,421 138,351 134,828 130,588 123,088 11Share Price ($/Share)

- High 4.95 4.96 6.56 7.24 6.30 6.62 6.67 5

- Low 1.86 3.59 4.75 4.70 4.06 4.95 4.67 2

- Close 3.45 4.32 4.95 5.90 5.45 5.50 5.14 5

Price of Gold (averageUS$) 872 896 927 786 680 667 650 6

Closing Exchange Rate(US$/Can$) 1.0642 1.0197 1.0265 0.9913 0.9948 1.0654 1.1546 1.1

(1) Includes cash and cash equivalents, short-term investments, restricted cash, and cash collateral investments.(2) The diluted net earnings (loss) per share are equal to the basic net earnings (loss) per share.

The major variances in cash, working capital, total assets and shareholders equity aremainly attributable to equity placements, funding of investment in exploration andequipment acquisitions, as well as administrative expenses. As the Company is indevelopment stage, the Company does not generate operating revenue. It sole source ofrevenue is the interest earned on cash resources.


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Third Quarter Results

(In thousands of dollars)Three-Month

EndedSeptember 30,

2008

Three-MonthEnded

September 30,2007

Nine-MonthEnded

September 30,2008

Nine-MonthEnded

September 30,2007

Salary & fringe benefits 771 322 1,925 1,091General & administrative 496 226 1,700 1,247Stock-based compensation 569 3,723 1,306 5,051Investor relations & corporate

development 478 685 1,382 1,446Amortization of property,

plant & equipment 52 31 152 65

Loss before the followingitems

(2,366) (4,987) (6,465) (8,900)

Interest Income 1,005 919 3,804 2,226Foreign exchange gain (loss) 1,234 (1,304) 1,729 (3,291)Income (loss) before income

taxes (127) (5,372) (932) (9,965)Future income tax recovery - - 4,476 -Net income (loss) for the

period (127) (5,372) 3,544 (9,965)

The loss for the quarter was lower than the comparative period last year due to:

i) Lower stock based compensation costs, as the prior years costs, reflectsignificant grants to new senior management recruits;

ii) An unrealized gain on US cash balances held following the weakening of theCanadian dollar against the US dollar. In the corresponding period of 2007, theCanadian dollar had strengthened.

For the year-to-date, the major variances from year-to-year are as follows:

i) Higher salaries due to additional staff recruited to manage the growth of theCompany;

ii) Lower stock-based compensation with less options being granted to corporateadministrative personnel and directors;

iii) Higher interest revenues due to higher cash balances following equity issue inthe second half of 2007, and loan proceeds of $20 million;

iv) Foreign exchange gain due to the strengthening of the Canadian dollar againstthe US currency; and


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v) The recognition of future benefit of $4.5 million from the renunciation of theincome tax benefits in March 2008 to the subscribers of the $25 million flow-through financing in July 2007.

Liquidity and Capital ResourcesAs the Company has no operating cash flows, Osisko relies on raising capital throughequity and debt to fund the exploration, development and corporate administrativeactivities. The Company maintains an active investor relations program to gain access tocapital markets through:

i) Presentations to current and prospective shareholders;ii) Participation in institutional and retail mining investment conferencesiii) Corporate advertising in print and electronic media; andiv) Maintenance of a corporate website.

The Company believes that a strong program, positive exploration results andfavourable general market conditions reduce its cost of capital.

On May 12, 2008, the Company closed its previously announced agreement withSolidarity Fund QFL (the Fund) for a $20 million unsecured debt financing having aseven-year term. The debt will carry 9.5% interest, payable in shares or cash prior tocommercial production and in cash thereafter. Principal will be repaid in a minimum of48 equal monthly installments commencing on the earlier of commercial production ofthe Canadian Malartic Project or 36 months from closing. The Company also granted theFund 1,100,000 warrants exercisable within 60 months at a price of $7.46. TheCompany may accelerate the exercise of warrants if Osiskos shares trade at asignificant premium to the exercise price during the term of the warrants. Prior to theissuance of a Feasibility Study on the Canadian Malartic Project, the Company may berequired to provide security over cash assets of up to $21 million in the event of materialadverse changes in the affairs of the Company.

On April 23, 2008, the Company completed a capital lease facility with CaterpillarFinancial Services Limited for an amount up to US$83 million available in two tranches.The Company made an initial drawdown on the facility for an amount of US$4.6 millionon July 8, 2008 to acquire an initial fleet of construction mobile equipment. The lease isrepayable in 60 monthly installments from drawdown and the Company intends toexercise its purchase option at the end of the lease.

On September 30, 2008, the Company completed a private placement of 2,916,725flow-through shares at a price of $4.20 per share for $12.25 million. The shares wereissued at 42% premium to market on the date of the commitment of the transaction. Theflow-through shares, under which the Company transfers to the subscribers the incometax benefit from eligible exploration outlays, provide the Company with access to lowercost capital to fund its exploration programs.


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During the period, the Company received a $7.4 million incentive payment from theQuebec Government related to the 2007 exploration campaign.

During the quarter, the Company received $0.2 million (year-to-date $1.2 million) for theexercise of options and warrants.

On August 8, 2008, 735,000 share purchase warrants expired without being exercised.As at September 30, 2008, the Company cash resources, short-term investments,restricted cash and cash collateral investments amount to $138.6 million (2007 -$182.1 million) and are summarized below:

(In thousands of dollars) September 30, 2008 December 31, 2007Cash and cash equivalents 105,512 108,133

Short-term investments - 55,000

Cash collateral investments

Current 11,408 17,592

Non-current 7,258 1,353

Restricted cash

Current 14,442 -

138,620 182,078

The cash collateral investments are held in US denominated guaranteed certificates andare pledged against the letters of credit guaranteeing the purchase of long-lead deliveryequipment.

The restricted cash is pledged as security against letters of credit issued to HewittEquipment Limited as a deposit for the mobile equipment purchase.

The short-term investments are liquidities held in guaranteed investment certificates at amajor Canadian bank with a term of greater than 90 days until maturity. The Companydoes not hold any investments in asset-backed commercial paper with any financialinstitutions.

During the recent months, significant turmoil in the financial markets has resulted in anerosion of the availability of funds for project development. Osisko is discussing withvarious potential financial partners to maintain the development of the Project inaccordance with its original schedule. The Company is well positioned to continue itsprograms; however the Company is also reviewing its commitments in the event of aprolong crisis in the financial markets.


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Investing Activities

The investments of the Company are summarized as follows:

(In thousands of dollars) Third Quarter Year-to-Date

Mineral properties and deferred expenditures 20,021 51,784Property, plant and equipment 16,621 30,963Sub-total 36,642 82,747Less:Receipt of tax credit 7,396 7,396Reduction in short-term investments - 55,000Net changes in cash collateral accounts 6,766 1,238Net changes in restricted cash accounts (912) (13,935)Proceeds on disposal of property, plant andequipment - 1,675

Net cash utilized in investing 23,392 31,373

In November 2007, the Company completed a private placement of 19,250,000 specialwarrants for gross proceeds of $125 million. Subsequently, the Company completed aprospectus to qualify the distribution of 19,250,000 common shares and 9,265,000common share purchase warrants upon the automatic exercise of the special warrantson December 28, 2007. In accordance with the disclosure in the prospectus, the tablebelow outlines the use of proceeds against the plan outlined:

(In thousands of dollars) Proposed Useof Proceeds

Outlaysto Date

Relocation program 40,000 25,347Equipment(1) 40,000 32,477Feasibility & engineering studies 5,000 6,788Detailed engineering 8,000 1,182Construction of tailings impoundment

and water retention basins 8,000 1,436Mine site preparation 10,000 -Working capital 7,031 50,801Total 118,031 118,031(1) Includes restricted cash to guarantee orders


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Related Party Transactions

The Company has carried out transactions with related parties in the normal course ofbusiness. The transactions are described in note 15 to the financial statements, with themain transactions being:

i. Payment of office rent to a company controlled by an officer $99,000 (2007 -$99,000);

ii. Rental costs of $69,000 (2007 - nil) with respect to an office shared with asignificant shareholder.

Outlook for 2008

The Company will continue to pursue aggressively the advancement of the CanadianMalartic Project by:

i. Completing the Feasibility Study and the Environmental Impact Assessment ofthe Project;ii. Progressing on the relocation of the Southern sector of the Town of Malartic;iii. Initiating the public hearing with the Government and other stakeholders (BAPE);iv. Submitting permit applications for the Project;v. Committing to equipment purchases; andvi. Securing the necessary financing to fund the development of the Project.

In addition, the Company will pursue regional exploration program with the objective ofenhancing the economics of the Canadian Malartic Project.


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Critical Accounting Estimates

The Companys interim consolidated financial statements have been prepared assumingthe Company will continue on a going-concern basis. The Company has incurred lossessince inception, and the ability of the Company to continue as a going concern dependsupon its ability to develop profitable mining operations and to continue to raise adequatefinancing. The Company has financed its capital requirements by issuing common stockand other equity securities.

Critical accounting estimates used in the preparation of the interim consolidated financialstatements include the Companys estimate of the useful life of assets for amortizationpurposes, the valuation of mining assets, future income tax and valuation of stock-basedcompensation and warrants. These estimates involve considerable judgment and are,or could be, affected by significant factors that are out of the Companys control.

The Companys recoverability of its recorded value of its mining properties andassociated deferred expenditures is based on market conditions for metals, underlyingmineral resources associated with the properties and future costs that may be requiredfor ultimate realization through mining operations or by sale. The Company follows thepractice of capitalizing all costs related to acquisition, exploration and development ofmineral properties until such time as mineral properties are put into commercialproduction, sold or abandoned. If commercial production commences, these capitalizedcosts will be amortized on a unit-of-production basis. If the mineral properties or projectsare abandoned, the related capitalized costs are written-off. On an ongoing basis, theCompany evaluates each property and project on results to date to determine the natureof exploration, other assessment and development work that is warranted in the future.If there is little prospect of future work on a property or project being carried out within athree year period from completion of previous activities, the deferred expendituresrelated to that property or project are written off or written down to the estimated amountrecoverable unless there is persuasive evidence that an impairment allowance is notrequired. The amounts shown for mineral properties and for mineral property evaluationcosts represent costs incurred to date less write-downs, if appropriate, and are notintended to reflect present or future values.

The factors affecting stock-based compensation include estimates of when stock optionsand compensation warrants might be exercised and the stock price volatility. The timingfor exercise of options is out of the Companys control and will depend upon a variety offactors including the market value of the Companys shares and financial objectives ofthe stock-based instrument holders. The Company used historical data to determinevolatility in accordance with the Black-Scholes model; however, the future volatility isuncertain and the model has its limitations.

New Accounting Standards

(I) Accounting Standards newly adopted

On January 1, 2008, the Company adopted new accounting standards related to generalstandard of financial statement presentation, capital disclosure and financial instrumentsthat were issued by the Canadian Institute of Chartered Accountants (CICA). The newCICA standards are as follows:


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Section 1400,General Standard of Financial Statement Presentation

This section specifies requirements to assess an entitys ability to continue as a goingconcern and disclose any material uncertainties that cast doubt on its ability to continueas a going concern. The Company disclosure reflects such assessment.

Section 1535,Capital Disclosures

This section specifies the disclosure of information that enables users of an entitysfinancial statements to evaluate its objectives, policies and processes for managingcapital such as qualitative information about its objectives, policies and processes formanaging capital, summary quantitative data about what the entity manages as capital,whether it has complied with any capital requirements and, if it has not complied, theconsequences of non-compliance. Disclosure requirements pertaining to this section arecontained in note 11 to the financial statements.

Section 3862,Financial Instruments - Disclosures Section 3863,Financial Instruments - Presentation

These sections replace Section 3861, Financial Instruments Disclosure and Presentation , revising and enhancing disclosure requirements while carrying forward itspresentation requirements. These new sections place increased emphasis on disclosureabout the nature and extent of risk arising from financial instruments and how the entitymanages those risks. Disclosure requirements pertaining to this section are contained innote 18 to the financial statements.

(II) New Accounting Pronouncements

Conversion to International Financial Reporting StandardsOn February 13, 2008, the Accounting Standards Board announced that publiclyaccountable entities will be required to prepare financial statements in accordance withInternational Financial Reporting Standards (IFRS) for interim and annual financialstatements for fiscal years beginning on or after January 1, 2011. The Company willassess the impact of the conversion on the consolidated financial statements anddisclosures and develop a conversion implementation plan.


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Share Data

Capital structure as at November 6, 2008

Common shares issued and outstanding:166,027,845

Common share purchase warrants outstanding:17,130,000

Expiry DateNumber

of Warrants Exercise Price$

November 2008 2,000,000 4.25May 2009 4,405,000 2.00November 2009 9,625,000 7.90May 2013 1,100,000 7.46

17,130,000

Options outstanding:10,828,100

Expiry DateNumber

of Options Exercise Price$

December 2008 800,000 0.16March 2009 550,000 1.60September 2009 200,000 0.10November 2009 2,198,100 3.125May 2010 70,000 5.325July 2010 600,000 5.50September 2010 600,000 5.46May 2012 1,000,000 5.325September 2012 1,725,000 5.46May 2013 320,000 4.18September 2013 2,765,000 2.20

10,828,100

The Company is listed on the TSX Exchange (symbol OSK) and on the FrankfurtDeutsche Boerse in Germany (symbol EWX).

On October 17, 2008, Osisko announced that the Toronto Stock Exchange (the "TSX")has accepted the Company's notice of intention to make a normal course issuer bid.Under the terms of the normal course issuer bid, Osisko may acquire up to 11,669,526of its common shares, representing approximately 10% of the public float of Osisko as ofOctober 15, 2008.


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As at November 6, 2008, the Company had purchased 91,000 common shares at anaverage price of $1.93.

On November 4, 2008, the Company issued 489,927 common shares to Solidarity FundQFL as a semi-annual payment of interest on the $20 million unsecured loan.

Risks and Uncertainties

The Company is an exploration and development company that operates in an industrythat is dependent on a number of factors that include environmental, legal and politicalrisks, the existence of economically recoverable reserves, and the ability of theCompany to obtain necessary financing to complete development and future profitableproduction or the proceeds of disposition thereof. An investment in the Company'scommon shares is highly speculative and subject to a number of risks and uncertainties.An investor should carefully consider the risks described below and the other informationfiled with the Canadian securities regulators before investing in the Company's commonshares. If any of the following risks occur, or if others occur, the Company's business,operating results and financial condition could be seriously harmed and investors maylose a significant proportion of their investment.

The following discussion reviews a number of important risks which managementbelieves could impact the Companys business. There are other risks, not identifiedbelow, which currently, or may in the future, exist in the Companys operatingenvironment.

Financial risk

The Company is in its exploration and development stage and has no history ofprofitability. The Company has not yet determined whether its properties contain orereserves that are economically recoverable, and there can be no assurance that theoperations of the Company will be profitable in the future. If the current exploration anddevelopment programs are successful, additional funds will be required for furtherexploration and development work in order to define an economic ore body or to bringany such ore body to production. The only source of future funds available to theCompany is through the sale of additional equity capital or by borrowing the funds. Thereis no assurance that such funding will be available to the Company. Furthermore, even ifsuch financing is successfully completed, there can be no assurance that it will beobtained on terms favourable to the Company or provide the Company with sufficientfunds to meet its objectives, which may adversely affect the Companys business andfinancial condition.

Risk linked with industry conditions

Mineral exploration and development is extremely competitive and involves a highdegree of risk. The Company must compete with a number of other companies that havegreater technical and financial resources. It involves many risks which even acombination of experience, knowledge and careful evaluation may not be able toovercome. Most exploration programs do not result in the discovery of significantmineralization and any mineralization discovered may not be of sufficient quantity orquality to be profitably mined. Commercial viability of exploiting any deposits


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encountered depends on a number of factors including infrastructure, commodity prices,energy costs, inflation, interest rates, financial market conditions, potential litigation,availability of qualified labour and governmental regulations, in particular those inrelation to price, taxes, royalties, land use, governmental involvement in the project,importation and exportation duties. Although substantial benefits may be derived fromthe discovery of a major mineralized deposit, no assurance can be given that mineralswill be discovered of sufficient quantity, quality, size and grade on any of the Companysexploration properties to justify commercial operations nor that any exploration propertywill be brought into production.

Risk linked to the community of Malartic

The Companys principal asset, the Canadian Malartic gold deposit, is located adjacentto the community of Malartic. Commercial open-pit production of the deposit will requirenot only the collaboration and support of the town council and residents of Malartic, butwill also require relocation of a portion of the town. Although the Company has taken allpossible measures to ensure majority community support for the project, there is noguarantee that the Company will obtain the social contract necessary for commercialproduction of the deposit.Risk linked with government regulation

The Companys activities entail compliance with the applicable legislation or reviewprocesses and the obtaining of land use and other permits, and similar authorizations offuture overall mining operations are subject to the constraints contained in suchlegislation. The Company believes that it is in compliance in all material respects withsuch existing laws. Changing government regulations may, however, have an adverseeffect on the Company.

Environmental risk

All phases of the Companys operations are and will be subject to federal, provincial andlocal environmental regulation in the various jurisdictions in which the Companyoperates. These regulations mandate, among other things, the maintenance of air andwater quality standards, land use standards and land reclamation. They also set forthlimitations on the generation, transportation, storage and disposal of solid, liquid andhazardous waste. Environmental legislation is evolving in a manner which will require, incertain jurisdictions, stricter standards and enforcement, increased fines and penaltiesfor non-compliance, more stringent environmental assessments of proposed projectsand a heightened degree of responsibility for companies and their officers, directors andemployees. No certainty exists that future changes in environmental regulation, if any,will not adversely affect the Companys operations. Environmental hazards may exist on

the Companys properties which are unknown to management at present and whichhave been caused by previous owners or operators of the properties.

Failure to comply with applicable laws, regulations and permitting requirements mayresult in enforcement actions, including orders issued by regulatory or judicial authoritiescausing operations to cease or be curtailed, and may include corrective measuresrequiring capital expenditures, installation of additional equipment, or remedial actions.Parties engaged in mining operations or in the exploration or development of mineralproperties may be required to compensate those suffering loss or damage by reason of


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the activities and may have civil or criminal fines or penalties imposed for violations ofapplicable laws or regulations.

In order to reduce environmental risks related to its exploration activities, the Companyhas a policy to outsource all exploration activities to outside independent consulting firmsthat manage all aspects of the exploration programs on behalf of the Company and thatcontractually assume responsibility for all environmental and land use matters.

Insurance risk

The Companys insurance will not cover all the potential risks associated with a miningcompanys operations. Moreover, insurance against risks such as environmentalpollution or other hazards as a result of production is not generally available to theCompany or to other companies in the mining industry on acceptable terms. TheCompany might also become subject to liability for pollution or other hazards which maynot be insured against or which we may elect not to insure against because of highpremium costs. Losses from these events may cause the Company to incur significantcosts that could have a material adverse effect upon its financial condition and results ofoperations.Risk on the uncertainty of title

Although the Company has obtained title opinions with respect to its properties and hastaken all possible measures to ensure proper title to its properties, including filing ofnecessary documents and payment of rents to local regulatory authorities, there is noguarantee that the title to any of its properties will not be challenged. Third parties may,unbeknownst to the Company, have valid claims underlying portions of the Companysinterests.

Risk linked to conflict of interest

Certain directors and officers of the Company may also serve as directors and/or officersof other public and private companies and devote a portion of their time to manage otherbusiness interests. Furthermore, certain directors and officers of the Company may alsoserve as directors of other companies involved in mineral exploration and development.Consequently, the possibility of conflict of interest exists at several levels.

To the extent that such other companies may participate in ventures in which theCompany is also participating, or participate in business transactions with the Company,such directors and officers may have a conflict of interest in negotiating and reaching anagreement with respect to the extent of each companys participation. Canadian law andCompany policy require the directors and officers of the Company to act honestly, in

good faith, and in the best interests of the Company and its shareholders. However, inconflict of interest situations, our directors and officers may owe the same duty toanother company and will need to balance the competing obligations and liabilities oftheir actions, or declare and refrain from voting on any matters in which such directorshave a conflict of interest. There is, however, no guarantee that the Companys interestswill receive priority in all cases.


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Disclosure Controls

The Chief Executive Officer (CEO), and the Chief Financial Officer (CFO) of theCompany are responsible for establishing and maintaining the Companys disclosurecontrols and procedures, including adherence to the Disclosure Policy adopted by theCompany. The Disclosure Policy requires all staff to keep senior management fullyapprised of all material information affecting the Company so that they may evaluate anddiscuss this information and determine the appropriateness and timing for public release.The CEO and CFO evaluated the effectiveness of the Companys disclosure controlsand procedures as required by Multilateral Instrument 52-109 issued by the CanadianSecurities Administrators. They concluded that as of September 30, 2008, theCompanys design and operation of its disclosure controls and procedures were effectivein providing reasonable assurance that material information regarding this report, andthe interim consolidated financial statements and other disclosures was made known tothem on a timely basis.

Internal Controls over Financial Reporting

The Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) are alsoresponsible for the design of internal controls over financial reporting (ICFR). Thefundamental issue is ensuring all transactions are properly authorized and identified andentered into a well designed, robust and clearly understood accounting system on atimely basis to minimize risk of inaccuracy, failure to fairly reflect transactions, failure tofairly record transactions necessary to present financial statements in accordance withgenerally Canadian accepted accounting principles, unauthorized receipts andexpenditures, or the inability to provide assurance that unauthorized acquisitions ordispositions of assets can be detected. The relatively small size of the company makesthe identification and authorization process relatively efficient and a process forreviewing ICFR has been developed. To the extent possible given the Companys smallsize, the internal control procedures provide for separation of duties for receiving,approving, coding and handling of invoices, entering transactions into the accounts,writing checks and wire requests and also require two signers on all payments.

As of September 30, 2008, the CEO and CFO concluded that no material weaknessesexisted in the design of the ICFR.

Additional Information and Continuous Disclosure

Additional information relating to the Company is available through regular filings ofdocumentation that can be found on the SEDAR website atwww.sedar.comor on the

Companys website atwww.osisko.com.

(Signed) Sean Roosen Sean RoosenPresident and Chief Executive Officer

November 6, 2008

(Signed) Bryan A. Coates Bryan A. CoatesVice President Finance and Chief Financial Officer


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Corporate Information

Osisko Mining Corporation 2140, Saint-Mathieu StreetMontreal, Qubec, Canada H3H 2J4Tl.: (514) 735-7131Fax: (514) 933-3290Email: [email protected] Web site: www.osisko.com

Directors and Officers

Victor H. Bradley, Chairman of the BoardSean Roosen, President, CEO and DirectorRobert Wares, Executive Vice President, COO and DirectorStaph Leavenworth Bakali, Director

Andr J. Douchane, Director Norman Storm, DirectorSerge Vzina, DirectorJohn Burzynski, Vice President Corporate DevelopmentBryan A. Coates, Vice President Finance, CFOJean-Sbastien David, Vice President Sustainable DevelopmentLuc Lessard, Vice President Engineering and ConstructionAndr Le Bel, Vice President Legal Affairs and Corporate Secretary

Legal CounselLavery de Billy, Montreal

AuditorsPricewaterhouseCoopers, LLP, Montreal

Transfer AgentTrust CIBC Mellon, Montreal

Exchange listings

TSX Exchange - OSKDeutsche Boerse - EWX

rapport de gestion 30-09-2008

Documents