Osisko Development : Consolidated Financial Statements and MD&A for the years ended December 31, 2023 and 2022

OSISKO DEVELOPMENT CORP.

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Consolidated Financial Statements

For the years ended

December 31, 2023 and 2022

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Osisko Development Corp.

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial position of Osisko Development Corp. and its subsidiaries (together, the Company) as of December 31, 2023 and 2022, and the related consolidated statements of loss, comprehensive loss, changes in equity and cash flows for the years then ended, including the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board.

Substantial Doubt About the Company's Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the working capital position as at December 31, 2023 will not be sufficient to meet the Company's obligations, commitments and forecasted expenditures up to the year ending December 31, 2024 and has stated that these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

PricewaterhouseCoopers LLP

1250 René-Lévesque Boulevard West, Suite 2500, Montréal, Quebec, Canada H3B 4Y1 T.: [phone], F.: [phone], Fax to mail: [e-mail]

"PwC" refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/PricewaterhouseCoopers LLP

Montréal, Canada

March 28, 2024

We have served as the Company's auditor since 2020.

Osisko Development Corp.

Consolidated Statements of Financial Position

As at December 31, 2023 and 2022

(tabular amounts expressed in thousands of Canadian dollars)

		Notes	2023	2022
		$			$
Assets
Current assets
Cash and cash equivalents		6		43,455		105,944
Restricted cash				2,424			-
Amounts receivable	7		3,952		11,046
Inventories	8		7,203		17,641
Other current assets				5,307		6,621
				62,341			141,252
Assets classified as held for sale	11		5,369			-
				67,710			141,252
Non-current assets
Investments in associates	9		13,034		8,833
Other investments	9		19,393		33,819
Mining interests	10		451,695		580,479
Property, plant and equipment	11		97,285		111,696
Exploration and evaluation		12		70,135		55,126
Other assets	13		44,628			36,994
				763,880		968,199
Liabilities
Current liabilities
Accounts payable and accrued liabilities	14		25,379		31,106
Lease liabilities				1,049		1,208
Current portion of long-term debt	15		11,821		4,663
Deferred consideration and contingent payments	16		3,307		3,386
Contract liability	17		21		941
Environmental rehabilitation provision	18		4,204		9,738
				45,781			51,042
Non-current liabilities
Lease liabilities				624		962
Long-term debt	15		5,102		12,256
Deferred consideration and contingent payments		16		10,545		13,252
Contract liability	17		31,700		54,252
Environmental rehabilitation provision	18		72,525		66,032
Warrant liability	19		11,552		16,395
Deferred income taxes	22		-		23,574
Other non-current liabilities				863			-
				178,692		237,765
Equity
Share capital				1,080,049		1,032,786
Warrants				11,859		1,573
Contributed surplus				18,722		12,857
Accumulated other comprehensive income (loss)				(14,529)		7,166
Deficit				(510,913)			(323,948)
				585,188		730,434
				763,880			968,199
Going concern (Note 1)
Subsequent event (Note 34)
APPROVED ON BEHALF OF THE BOARD
(signed) Sean Roosen, Director				(signed) Charles Page, Director

The notes are an integral part of these consolidated financial statements

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Osisko Development Corp.

Consolidated Statements of Loss

For the years ended December 31, 2023 and 2022

(tabular amounts expressed in thousands of Canadian dollars, except per share amounts)

	Notes	2023	2022
	$		$
Revenues		31,625	64,046
Operating expenses
Cost of sales	23	(32,292)	(56,643)
Other operating costs	23	(28,560)	(64,355)
General and administrative	24	(40,070)	(36,837)
Exploration and evaluation, net of tax credits		(1,769)	(515)
Impairment of assets	10,11,17	(138,371)	(140,000)
Operating loss		(209,437)		(234,304)
Finance costs	16,17,18	(13,378)	(5,761)
Share of loss of associates	9	(599)	(641)
Change in fair value of warrant liability	19	4,535	25,008
Other income, net	25	14,489		24,944
Income (loss) before income taxes		(204,390)	(190,754)
Income tax recovery (expense)		22,517	(1,706)
Net loss		(181,873)		(192,460)
Basic and diluted net loss per share	26	(2.21)	(3.02)
Weighted average number of shares outstanding - basic and diluted	26	82,465,447	63,797,504

The notes are an integral part of these consolidated financial statements

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Osisko Development Corp.

Consolidated Statements of Comprehensive Loss

For the years ended December 31, 2023 and 2022

(tabular amounts expressed in thousands of Canadian dollars)

		2023	2022
		$			$
Net loss	(181,873)	(192,460)
Other comprehensive income (loss)
Items that will not be reclassified to the consolidated statements of loss
Changes in fair value of financial assets at fair value through comprehensive income	(10,171)
(loss)		(1,849)
Income tax effect	1,010	(38)
Share of other comprehensive loss of associates	-	(294)
Items that may be reclassified to the consolidated statements of loss
Currency translation adjustments	(14,060)	14,058
Other comprehensive income (loss)	(23,221)			11,877
Comprehensive loss		(205,094)		(180,583)

The notes are an integral part of these consolidated financial statements

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Osisko Development Corp.

Consolidated Statements of Cash Flows

For the years ended December 31, 2023 and 2022

(tabular amounts expressed in thousands of Canadian dollars)

	Notes	2023	2022
	$			$
Operating activities
Net loss			(181,873)			(192,460)
Adjustments for:
Share-based compensation	23,24		7,856			7,437
Depreciation	23,24		11,525			11,570
Finance costs	16,17,18		13,378			5,761
Gain on disposal of investments	9		-			(11,854)
Share of loss of associates	9		599			641
Change in fair value of financial assets and liabilities at fair value through profit and loss	9		14			480
Change in fair value of warrant liability	19		(4,535)			(25,008)
Unrealized foreign exchange loss (gain)			(9,855)			-
Deferred income tax expense (recovery)			(22,644)			1,706
Impairment of assets	10,11		171,974			140,000
Premium on flow-through shares			-			(914)
Cumulative catch-up adjustment on contract liability	17		(34,581)			(4,362)
Proceeds from Contract liability	17		(1,326)			26,112
Other			3,861			4,055
Environmental rehabilitation obligations reimbursed (paid)			(2,933)			(3,409)
Net cash flows used in operating activities before changes in non-cash working capital items			(48,540)			(40,245)
Changes in non-cash working capital items	28		4,755			(10,013)
Net cash flows used in operating activities			(43,785)			(50,258)
Investing activities
Additions to mining interests			(37,631)			(47,955)
Additions to property, plant and equipment			(17,522)			(29,409)
Additions to exploration and evaluation expenses			(17,121)			(8,917)
Proceeds on disposals of investments	9		4,241			22,585
Cash payments on deferred consideration and contingent payments	16		(334)			-
Acquisition of restricted cash			(2,424)			-
Acquisition of other investments			-			(212)
Acquisition of Tintic, net of cash acquired			-			(67,431)
Reclamation deposit			4,197			(13,371)
Other			533			(1,207)
Net cash flows used in investing activities			(66,061)			(145,917)
Financing activities
Proceeds from equity financings			51,756			255,492
Other issuance of common shares			140			368
Share issue expense			(3,489)			(7,299)
Capital payments on lease liabilities			(1,226)			(6,945)
Long-term debt and capital leases	15		6,644			17,772
Repayment of long-term debt	15		(5,675)			(4,860)
Withholding taxes on settlement of restricted units			(361)			-
Net cash flows provided by financing activities			47,789			254,528
Increase (decrease) in cash and cash equivalents before impact of exchange rate			(62,057)			58,353
Effects of exchange rate changes on cash and cash equivalents			(432)			14,184
Increase (decrease) in cash and cash equivalents			(62,489)			72,537
Cash and cash equivalents - Beginning of year			105,944			33,407
Cash and cash equivalents - end of year			43,455			105,944

Additional information on the consolidated statements of cash flows is presented in Note 28.

The notes are an integral part of these consolidated financial statements

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Osisko Development Corp.

Consolidated Statements of Changes in Equity

For the year ended December 31, 2023

(tabular amounts expressed in thousands of Canadian dollars except number of shares)

		Number of										Accumulated
		common										other
		shares	Share						Contributed			comprehensive
	Notes	outstanding	capital			Warrants			surplus			income (loss)			Deficit	Total
				($)			($)			($)			($)			($)			($)
Balance - January 1, 2023	20	75,629,849		1,032,786	1,573	12,857	7,166	(323,948)			730,434
Net loss		-	-			-			-			-	(181,873)			(181,873)
Other comprehensive loss, net		-		-			-			-		(23,221)			-		(23,221)
Comprehensive loss		-	-			-			-	(23,221)	(181,873)			(205,094)
Transfer of realized loss on financial assets at fair value		-	-			-			-	1,526	(1,526)			-
through other comprehensive loss, net of taxes
Bought deal financing	20	7,841,850		45,545	6,211			-			-			-	51,756
Shares issued for the settlement of Deferred consideration	16	454,026		2,986			-			-			-			-	2,986
Shares issued to Williams Lake First Nation	20	60,000		292			-			-			-			-	292
Share issue expense	20	-	(2,988)	(408)			-			-			-	(3,396)
Change in fair value related to warrants modification	20	-	-	4,483			-			-	(4,483)			-
Share-based compensation
-Share options		-	-			-	4,175			-			-	4,175
-Restricted and deferred share units		-	-			-	4,023			-			-	4,023
Shares issued - employee share purchase plan		67,640		354			-			-			-			-	354
Share issued from RSU/DSU settlement		48,875		1,074			-		(2,333)			-		917			(342)
Balance - December 31, 2023		84,102,240		1,080,049		11,859		18,722		(14,529)		(510,913)			585,188

As at December 31, 2023, accumulated other comprehensive income (loss) comprises items that will not be recycled to the consolidated statements of income or loss amounting to $2.3 million and items that may be recycled to the consolidated statements of income (loss) amounting to $(16.8) million.

The notes are an integral part of these consolidated financial statements

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Osisko Development Corp.

Consolidated Statements of Changes in Equity

For the year ended December 31, 2022

(tabular amounts expressed in thousands of Canadian dollars, except number of shares)

		Number of										Accumulated
		common										other
		shares	Share						Contributed			comprehensive
	Notes	Outstanding(i)	capital			Warrants			surplus			income (loss)			Deficit			Total
				($)			($)			($)			($)			($)			($)
Balance - January 1, 2022	20	44,400,854		714,373			-	6,436	6,764	(143,371)	584,202
Net loss		-	-			-			-			-	(192,460)	(192,460)
Other comprehensive loss		-		-			-			-		11,877			-		11,877
Comprehensive loss		-	-			-			-	11,877	(192,460)	(180,583)
Transfer of realized loss on financial assets at fair
value through other comprehensive income, net
of taxes		-	-			-			-	(11,475)	11,475			-
Private placements:Brokered	20	7,752,917		101,873	1,628			-			-			-	103,501
Private placements:Non-Brokered	20	11,363,933		112,150			-			-			-			-	112,150
Share-issue costs		-	(6,243)	(55)			-			-			-	(6,298)
Share-based compensation
-Share options		-	-			-	3,426			-			-	3,426
-Restricted and deferred share units		-	-			-	4,315			-			-	4,315
Shares issued - employee share purchase plan		35,045		368			-			-			-			-	368
Shares issued on Acquisition of Tintic		12,049,449		109,657			-			-			-			-	109,657
Share issued from RSU/DSU settlement		27,651		608			-	(1,320)			-	408	(304)
Balance - December 31, 2022		75,629,849		1,032,786			1,573			12,857			7,166			(323,948)			730,434

1. The common shares outstanding presented have been adjusted to reflect the effect of the 3:1 share consolidation that took place on May 4, 2022. Common share, warrants and per share amounts have been adjusted for the 3:1 share consolidation unless otherwise noted.

As at December 31, 2022, accumulated other comprehensive income (loss) comprises items that will not be recycled to the consolidated statements of income or loss amounting to $16.3 million and items that may be recycled to the consolidated statements of income (loss) amounting to $(9.2) million.

The notes are an integral part of these consolidated financial statements

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Osisko Development Corp.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

(tabular amounts expressed in thousands of Canadian dollars, except number of shares and per share amounts)

1. Nature of operations and going concern

Osisko Development Corp. ("Osisko Development" or the "Company") is a mineral exploration and development company focused on the acquisition, exploration and development of precious metals resource properties in North America. Osisko Development is focused on exploring and developing its mining assets, including the Cariboo Gold Project in British Columbia, the San Antonio gold project in Mexico and the Trixie test mine in the USA.

The Company's registered and business address is 1100, avenue des Canadiens-de-Montréal, suite 300, Montreal, Québec and is constituted under the Canada Business Corporations Act. The common shares of Osisko Development trade under the symbol ODV on the TSX Venture Exchange ("TSX-V") and on the New York Stock Exchange ("NYSE"). As at December 31, 2023, the former parent Company, Osisko Gold Royalties ("OGR") held an interest of 39.7% in Osisko Development (compared to 44.1% as at December 31, 2022). Effective September 30, 2022, following certain changes made to OGR's investment agreement with Osisko Development, OGR no longer controls Osisko Development.

These consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business as they come due. In assessing whether the going concern assumption is appropriate, Management takes into account all available information about the future, which is at least, but not limited to twelve months from the end of the reporting year. As at December 31, 2023, the Company's working capital was $21.9 million, which included cash and cash equivalent balance of $43.5 million. The Company also has an accumulated deficit of $510.9 million and incurred a loss of $181.9 million for the year ended December 31, 2023.

The working capital position as at December 31, 2023 will not be sufficient to meet the Company's obligations, commitments and forecasted expenditures up to the year ending December 31, 2024. Management is aware, in making its assessment, of material uncertainties related to events and conditions that may cast a substantial doubt upon the Company's ability to continue as a going concern as described in the preceding paragraph, and accordingly, the appropriateness of the use of accounting principles applicable to a going concern. These consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities, expenses and financial position classifications that would be necessary if the going concern assumption was not appropriate. These adjustments could be material.

The Company's ability to continue future operations and fund its planned activities is dependent on Management's ability to secure additional financing in the future, which may be completed in several ways including, but not limited to, a combination of selling additional investments from its portfolio, project debt finance, offtake or royalty financing and other capital market alternatives. Failure to secure future financings may impact and/or curtail the planned activities for the Company, which may include, but are not limited to, the suspension of certain development activities and the disposal of certain investments to generate liquidity. While Management has been successful in securing financing in the past, there can be no assurance that it will be able to do so in the future or that these sources of funding or initiatives will be available to the Company or that they will be available on terms which are acceptable to the Company. If Management is unable to obtain new funding, the Company may be unable to continue its operations, and amounts realized for assets might be less than the amounts reflected in these consolidated financial statements.

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