August 4, 2017
| Mr. Craig Arakawa |
| Accounting Branch Chief |
| Office of Beverages, Apparel and Mining |
| Securities and Exchange Commission |
| 100 F Street, N.E. |
| Washington, D.C. 20549 |
| Re: | Osisko Gold Royalties Ltd. |
| Form 40-F for the Year Ended December 31, 2016 | |
| Filed March 27, 2017 | |
| File No. 001-37814 |
Dear Mr. Arakawa,
This letter responds to the staff’s comments set forth in the July 21, 2017 letter regarding the above-referenced Form 40-F. For your convenience, the staff’s comments are included below in bold font followed by our responses.
Form 40-F for the Year Ended December 31, 2016
Exhibit 99.2
Financial Statements
Notes to the Consolidated Financial Statements
4. Significant Accounting Policies
(k) Royalty Interests, page 15
Staff Comment No. 1
We note your accounting policy disclosure states that you mayinclude a portion of resources expected to be converted intoreserves in the unit-of production calculation for determining thedepletion of your producing royalty interests. To enhance ourunderstanding of your accounting policy, please: |
• | Tell us the percentage and amount of measured, indicated andinferred resources that you include in the portion of resourcesexpected to be converted as reserves. |
Response: For the producing royalty interests, the aggregate underlying proven and probable reserves (P&P), measured and indicated resources (M&I) and inferred resources (I) and those included in the depletion base are based on National Instrument 43- 101,Standards of Disclosure for Mineral Projectsreports and other information published, filed and/or provided by the owner or operator of the property or the mine regarding the reserves and resources. The following table outlines the aggregate resource ounces for the producing royalty interests subject to depletion as at December 31, 2016: |
| Measured and Indicated Resources | Inferred Resources | |
| Total ounces | 1,001,685 | 3,118,045 |
| Total ounces used for depletion base | 500,843 | – |
| Weighted average percentage expected to be converted as P&P and used for depletion base | 50% | – |
No inferred resources are considered in the resources expected to be converted into reserves for purposes of the calculation of depletion. The following table outlines the amount of depletion expense recorded for the producing royalty interests with and without the inclusion of M&I for the year ended December 31, 2016: |
| For the year ended December 31, 2016 | |
| Depletion expense with the inclusion of the portion of M&I estimated to be converted in P&P | $11,291,000 |
| Depletion expense without the inclusion of M&I | $11,948,000 |
| Difference ($) | $657,000 |
| Difference (%) | 5.5% |
• | Tell us how you determine whether a resource is reasonablyexpected to be converted to proven and probable reserves.Please provide us with your history of converting resources intoproven and probable reserves. If inferred resources have beenincluded, please also separately address your history ofconverting inferred resources into reserves. |
|
|
Response: | |
|
|
Osisko Gold Royalties Ltd was formed following the friendly acquisition of Osisko Mining Corporation by Agnico Eagle Mines Limited and Yamana Gold Inc. and commenced active operations on June 16, 2014. As such, we have a limited history of converting resources into proven and probable reserves as a royalty company. Therefore, the inclusion of a portion of M&I in the depletion calculation depends on the type, location and characteristics of the deposit. At each reporting period, we review whether M&I are reasonably expected to be converted to P&P. The analysis is performed for each royalty interest and is based on National Instrument 43-101,Standards of Disclosurefor Mineral Projectsreports and other information published, filed and/or provided by the owner or operator of the property or the mine regarding the P&P and M&I. Ultimately, the inclusion of a portion of M&I is judgmental and reflects our best estimate of the useful life of our producing royalty interests based on our knowledge of the mining industry and of our assets. Finally, as illustrated in the table above, total M&I ounces used for depletion base does not have a significant impact on our annual depletion expense. | |
|
|
No inferred resources are considered in the resources expected to be converted into reserves for purposes of the calculation of depletion. | |
|
|
• | Tell us the number of years of historical data that you have usedto estimate your projected rates of converting resources toproven and probable reserves and discuss whether this historicaldata is indicative of future conversion rates. |
|
|
Response: The period on which the analysis is performed will depend on the information available as well as the mine stage (historical period of operations, geological attributes). For our producing royalty interests, the historical data used varies between three to five years except for the new mines for which the period is shorter, but in which case we may consider data from a similar deposit. As indicated above, we have a limited history of converting resources into proven and probable reserves as a royalty company. However, the historical data available combined with other information used to determine the percentage expected to be converted as P&P is indicative of future conversion rates as per our judgement. |
| • | If inferred resources have been included, please tell us your basisfor their inclusion given that the tonnage, grade and mineralcontent can typically only be estimated with a low level ofconfidence and explain to us how you compensated for this lowerconfidence level. |
| |
Response: No inferred resources are considered in the resources expected to be converted into reserves for purposes of the calculation of depletion. | |
| |
| • | Provide us the amount of depletion expense for each producingroyalty interest with and without the inclusion of inferredresources in the denominator for the year ended December 31,2016 and the most recently reported 2017 interim period. |
| |
Response: No inferred resources are included for purposes of the calculation of the depletion expense. |
If you have any questions regarding our responses, please do not hesitate to contact the undersigned at (514) 940-0670.
| Sincerely, | ||
| Osisko Gold Royalties Ltd | ||
| /s/Elif Lévesque | ||
| Elif Lévesque | ||
| Chief Financial Officer | ||
| Cc: | Paul, Weiss, Rifkind, Wharton & Garrison LLP | |
| PricewaterhouseCoopers LLP | ||
