TORONTO (miningweekly.com) – Despite a disappointing fourth quarter as a result of blasting difficulties at its flagship mine, Canada’s Osisko Mining on Thursday reported net profit rose by 333% for 2012, in what was the first full year of production since commercial production was declared on May 19, 2011.

During 2012, Osisko generated net earnings of $78.4-million or 20c a share, compared with net earnings of $18-million or 5c a share in the previous year.

For the fourth quarter ended December 31, the company generated net earnings of $9.6-million or 2c a share, 75% lower when compared with the net earnings of $37.8-million or 10c a share recorded in the same quarter a year earlier.

The company reported revenues of $191-million from the sale of 111 104 oz of gold and 74 100 oz of silver in the quarter. This was an increase of nearly 50% on the same period a year earlier.

Earnings from mine operations for the fourth quarter totalled $68.1-million, an increase of 72% when compared with $39.5-million in the same quarter of 2011. For the year, Canadian Malartic generated earnings from mine operations of $239.7-million compared with $79.5-million in 2011.

"Despite the various challenges that we faced, we generated cash from mine operations of $305.6-million, which clearly demonstrates the strength of Canadian Malartic. The past year had its challenges as we continued ramping up Canadian Malartic to its nameplate capacity.

“In the fourth quarter we were affected by delays in executing a major blast over old underground mine workings which reduced our operating flexibility and impacted our mining plan. We anticipate Canadian Malartic will generate improved and strong cash flow once the ramp-up phase is completed later this year," CEO Sean Roosen said on Thursday.

The company said fourth-quarter production was affected by changes to the mining plan caused by a delay of about 60 days in executing a 940 000 t blast over previously mined underground stopes, blasting constraints and access to the North pit wall. The delay restricted access to a number of areas and the mine was forced to lay off contractors and reduced the use of the mining fleet.

During this period, lower-grade material was processed from the available stockpile. Production was also affected by several mill shutdowns to modify crushing and conveying systems and the installation of the second pebble crusher.

Osisko produced 101 544 oz of gold during the quarter at an average cash cost of $903/oz. For the full year, the company produced 388 478 oz at an average cash cost of $909/oz for the year.

As a result of the modifications and commissioning of the precrushing circuit and the second pebble-crushing unit, the company expects mill throughput to stabilize this year.

Full-year gold production is estimated at between 485 000 oz and 510 000 oz and owing to the company gaining access to higher-grade material in the second half of the year, it is expected that gold output would be higher in the second semester. Cash costs are estimated between $780/oz and $825/oz, which would be a 9% to 14% cost reduction from 2012.

Following the C$550-million acquisition of Queenston Mining on December 28, the company has assumed the leadership of the Upper Beaver advanced exploration programme. It is also focused on integrating the Queenston Exploration group into Osisko.

The company intends to invest $50-million in exploration on its projects in the Americas, including $42-million that would be capitalised.