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Wesdome Announces 2019 First Quarter Financial Results

TORONTO, May 08, 2019 (GLOBE NEWSWIRE) -- Wesdome Gold Mines Ltd. (WDO.TO) (“Wesdome” or the “Company”) today announces first quarter (“Q1 2019”) financial results. All figures are stated in Canadian dollars unless otherwise noted.

“Mr. Duncan Middlemiss, President and CEO commented, “In Q1 2019, the Eagle River underground mine delivered a head grade of 18.5 grams per tonne, versus guidance of 15.5 – 16.5 grams per tonne, primarily due to higher grades than anticipated within the 303 lens. As a result, both cash and all-in sustaining costs per ounce were at the lower end of guidance ranges. A number of other accomplishments were completed in Q1 including increased mine development rates, a build of up a surface stockpile for both Eagle and Mishi ore for next quarter’s production, and the early completion of mill improvements originally scheduled for Q2. Free cash flow for the quarter was neutral, which was within expectations. We expect to return to positive free cash flow generation in the second half of the year when production increases and underground development rates decrease slightly. The Eagle River operation continues to fund the company’s major exploration and development programs at both Eagle River and Kiena mines.”

Key operating and financial highlights of the Q1 2019 results include:

  • Gold production of 19,010 ounces from the Eagle River Complex, a 6% increase over the same period in the previous year (Q1 2018: 17,948 ounces):
    • Eagle River Underground 30,941 tonnes at a head grade of 18.5 grams per tonne (“g/t Au”) for 17,955 ounces produced, 9% increase over the previous year (Q1 2018: 16,398 ounces).
    • Mishi Open Pit 18,470 tonnes at a head grade of 2.2 g/t Au for 1,055 ounces produced (Q1 2018: 1,550 ounces).
  • Revenue of $32.5 million, a 24% increase over the previous year (Q1 2018: $26.2 million).
  • Ounces sold 18,760 at an average sales price of $1,733/oz (Q1 2018: 15,430 ounces at an average price of $1,698/oz).
  • Cash costs1 of $866/oz or US$651/oz, a 13% decrease over the same period in 2018 (Q1 2018: $999/oz or US$790/oz).
  • All-in sustaining costs (“AISC”) 1 of $1,311/oz or US$986/oz, a 2% decrease over the same period in 2018 (Q1 2018: $1,342/oz or US$1,061/oz).
  • Earned mine profit1 of $16.3 million, a 51% increase over Q1 2018 (Q1 2018 - $10.8 million).
  • Operating cash flow of $12.6 million or $0.09 per share1 as compared to $12.4 million or $0.09 per share for the same period in 2018.
  • Invested $6.6 million in exploration expenditures at Eagle River and Kiena Complexes during the quarter (Q1 2018 - $5.0 million)
  • Free cash outflow of $0.4 million or nil, on a per share1 basis (Q1 2018: free cash flow of $3.2 million or $0.02 per share).
  • Net income of $8.1 million or $0.06 per share (Q1 2018: $2.9 million or $0.02 per share).  Net income (adjusted) 1 was $5.7 million or $0.04 per share (Q1 2018: $2.9 million or $0.02 per share).
  • Cash position of $27.8 million.

1  Refer to the Company’s 2019 First Quarter Management Discussion and Analysis, section entitled “Non-IFRS Performance Measures” for the reconciliation of these non-IFRS measurements to the financial statements.

Exploration Highlights for Q1 2019
 
Eagle River
  • The mining of the 303 Zone between the 844 metre level (“m-level”) and the first sub-level above continued to confirm the continuity of the strong grades and the geometry of the mineralized zone.  Exploration drilling continued on the 925 m-level to prepare the 300E zone for mining and will continue to be the focus of mining development in 2019.

  • Ongoing development on 1,038 metre level (“m-level”) has now extended 7 Zone over 146 m in strike length and grading 30.5 g/t Au over an average true thickness of 2.61 m and recent drilling has now confirmed that this longer strike length extends to depth over an addition 100 m to the 1,250 m-level and remains open down dip. Recent drilling has now confirmed that the 7 Zone extends along strike to the southeast side of a northeast transecting diabase dyke that offsets the eastern extension approximately 20 m. This extension is a substantial addition of potential resources compared to previous interpretations, and thus will be the focus of 2019 drilling.

  • Ongoing drilling and initial drift development along the 300W Zone has confirmed the continuity and strike length of 145 m grading 28.8 g/t Au with a 1.8 m average width and has extended the mineralized zone to west in excess of 50 m further west than the previously interpreted diorite contact and remains open to the west and remains a focus for 2019 drilling.

  • Exploration drilling from the 758 m-level in the eastern half of the mine diorite has continued during the quarter to better define the new intersected Zones that is interpreted to be parallel zones north of the past producing 6 and 8 zones and could be the possible extensions of the parallel 7 Zone and 300 Zone structures being mined further to the west.  Surface drilling in the volcanics to the west of the mine diorite encountered two sub-parallel structures, namely Falcon 7 and Falcon 300 zones, that returned 18.5 g/t Au over 5.8 m core length.  These zones are interpreted to be extensions of the 300 and 7 zone structures which lie approximately 200 m to the east within the mine diorite. 
Kiena
  • Since the October 12th cut-off date for drill data used in the recent resource estimate released on December 12, 2018, exploration and definition drilling has been ongoing with 5 drills at the Kiena Deep A Zone.  Four drills are in operation on the 1,050 m-level exploration ramp completing the infill and plunge extension drilling, and a 5th drill is operating on the 670 m elevation to test the interpreted up plunge extension of the A Zone towards the VC zone area.  Since October 12th, approximately 16,910 m in 64 holes have been added to the Kiena Deep A Zone, in addition to a number of additional exploration holes within the immediate vicinity.

  • The ongoing definition/infill drilling has continued to confirm the overall continuity of the geometry and the high grade gold mineralization of the Kiena Deep A Zone.  Drilling to date has identified a well-defined, moderate plunge of approximately 45 degrees to the SE to the gold mineralization that occurs predominantly along the basalt – chlorite-carbonate schist boundary.

  • Additionally, the ongoing drilling has continued to expand the Kiena Deep A Zone up and down plunge.  Down plunge, the zone has been extended 60-100 m and shows good continuity.  Up plunge, drilling has now extended the A zone over 70-100 m since the December 12th resource estimate extending zone above the 1050 level.

  • Also, drilling is now only starting to test the more vertical, eastern structure/fold limb that is interpreted to be the previously named Upper Quartz Zone that extends the entire plunge length of the A Zone.  Recent drilling along this structure returned 7.1 g/t Au over 25.5 m in Hole 6438A.  This hole intersected VG in quartz veins hosted by an unit of mafic flow breccia near the vertical contact with a komatiite, named A Zone Extension.

  • Drilling from 67 level is continuing to test the potential up plunge of the A Zone in the vicinity of the VC zone area.  Limited drilling to date confirms that the basalt – schist contact associated with the A zone mineralization continues to the area of the VC zone.  The hosting schist is interpreted to split into 2 subparallel shears on either side of a thicker portion of basalt.  The recent drilling on the northeastern flank intersected VG mineralization in quartz veining at the 980 metre level.  Historic hole 6146 returned 6.7 g/t Au over 11.0 m.  One adjacent recent hole, 6437, returned 6.9 g/t Au over 7.0 m.  Other holes have intersected VG in quartz veins similar to the style of gold mineralization of the A Zone at the 980 m-level and given this potential, is now the focus for the drilling from 67 and 105 levels.
Our 2019 underground exploration program calls for 50,000 m of drilling with 5 drills in preparation for an updated resource estimate at the Kiena gold deposit in the second half of this year.  This information will then lead into a Preliminary Economic Assessment.
 

Technical Disclosure

The technical content of this release has been compiled, reviewed and approved by Marc-Andre Pelletier, P. Eng, Chief Operating Officer, and Michael Michaud, P.Geo., Vice President, Exploration of the Company and each a "Qualified Person" as defined in National Instrument 43-101 -Standards of Disclosure for Mineral Projects.

Cautionary Note to United States Investors Concerning Estimates of Reserves and Resources

The mineral reserve and resource estimates reported in this news release were prepared in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) as required by Canadian securities regulatory authorities. The United States Securities and Exchange Commission (the “SEC”) applies different standards in order to classify and report mineralization. This news release uses the terms “measured”, “indicated” and “inferred” mineral resources, as required by NI 43-101. Readers are advised that although such terms are recognized and required by Canadian securities regulations, the SEC does not recognize such terms. Canadian standards differ significantly from the requirements of the SEC. Readers are cautioned not to assume that any part or all of the mineral deposits in these categories constitute or will ever be converted into mineral reserves. In addition, “inferred” mineral resources have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource exists, is economically or legally mineable or will ever be upgraded to a higher category of mineral resource.

Wesdome Gold Mines 2019 First Quarter Financial Results Conference Call:

May 9, 2019 at 10:00 am ET:

North American Toll Free: + 1 (844) 202-7109
International Dial-In Number: +1 (703) 639-1272
Conference ID:   9496715
Webcast link: https://edge.media-server.com/m6/p/evgw6ovv

Webcast can also be accessed under the News and Events section of the Company’s website (www.wesdome.com

 

Wesdome Gold Mines Ltd.
Summarized Operating and Financial Data
(Unaudited, expressed in thousands of Canadian dollars, except per share and per unit amounts and otherwise indicated)

           
    Three Months Ended  
    March 31  
    2019   2018  
Operating data          
Milling (tonnes)          
Eagle River   30,941     44,480  
Mishi   18,470     32,846  
Throughput 2   49,411     77,326  
Head grades (g/t)          
Eagle River   18.5     12.0  
Mishi   2.2     1.8  
Recovery (%)          
Eagle River   97.6     95.4  
Mishi   80.6     81.6  
Production (ounces)          
Eagle River   17,955     16,398  
Mishi   1,055     1,550  
Total gold produced 2   19,010     17,948  
Total gold sales (ounces)   18,760     15,430  
           
Eagle River Complex (per ounce of gold sold) 1          
Average realized price $ 1,733   $ 1,698  
Cash costs   866     999  
Cash margin $ 867   $ 699  
All-in Sustaining Costs 1 $ 1,311   $ 1,342  
           
Average 1 USD → CAD exchange rate   1.3295     1.2647  
           
Cash costs per ounce of gold sold (US$) 1 $ 651   $ 790  
All-in Sustaining Costs (US$) 1 $ 986   $ 1,061  
           
Financial Data          
Mine profit 1 $ 16,259   $ 10,774  
Net income  $ 8,092   $ 2,859  
Net income adjusted 1 $ 5,723   $ 2,859  
Operating cash flow $ 12,581   $ 12,423  
Free cash flow (outflow) 1 $ (429 ) $ 3,216  
Per share data          
Net income $ 0.06   $ 0.02  
Adjusted net earnings 1 $ 0.04   $ 0.02  
Operating cash flow  $ 0.09   $ 0.09  
Free cash flow (outflow) 1 $ -   $ 0.02  
           

Notes

  1. Refer to the Company’s 2019 First Quarter Management Discussion and Analysis, section entitled “Non-IFRS Performance Measures” for the reconciliation of these non-IFRS measurements to the financial statements..
  2. Totals for tonnage and gold ounces information may not add due to rounding.

 

Wesdome Gold Mines Ltd.
Condensed Interim Consolidated Statements of Financial Position
(Unaudited, expressed in thousands of Canadian dollars)

               
      As of
March 31,
2019
    As of
December 31,
2018
 
Assets            
Current            
  Cash and cash equivalents $ 27,847     $ 27,378    
  Receivables and prepaids   1,351       548    
  Sales tax receivable   4,058       2,342    
  Inventories   11,977       8,302    
Total current assets   45,233       38,570    
               
Mining properties, plant and equipment   93,545       89,643    
Exploration properties   86,962       81,424    
Total assets $ 225,740     $ 209,637    
               
Liabilities            
Current            
  Payables and accruals $ 22,175     $ 22,526    
  Income and mining tax payable   1,149       180    
  Current portion of lease liabilities   5,153       4,552    
Total current liabilities   28,477       27,258    
               
Lease liabilities   5,718       5,248    
Deferred income and mining tax liabilities   11,375       8,259    
Decommissioning provisions   11,868       11,663    
Total liabilities   57,438       52,428    
               
Equity            
Equity attributable to owners of the Company            
  Capital stock   169,475       166,387    
  Contributed surplus   5,631       5,777    
  Deficit   (6,804 )     (14,955 )  
Total equity attributable to owners of the Company   168,302       157,209    
Total liabilities and equity $ 225,740     $ 209,637    
               

 

Wesdome Gold Mines Ltd.
Condensed Interim Consolidated Statements of Income and Comprehensive Income
(Unaudited, expressed in thousands of Canadian dollars except for per share amounts)

           
      Three Months Ended
      March 31
      2019   2018
           
Revenues $ 32,535   $ 26,217  
Cost of sales   20,185     18,764  
Gross profit   12,350     7,453  
           
Other expenses        
  Corporate and general   2,008     1,077  
  Share-based payments   1,099     867  
  Kiena care and maintenance   -     456  
  Write-off of mining equipment   -     281  
      3,107     2,681  
           
Operating income   9,243     4,772  
           
Quebec exploration credits refund   2,867     -  
Interest on long-term debt   (112 )   (51 )
Accretion of decommissioning provisions   (115 )   (104 )
Interest and other   294     44  
Income before mining and income tax   12,177     4,661  
Income and mining tax expense        
  Current   968     481  
  Deferred   3,117     1,321  
      4,085     1,802  
Net income and total comprehensive income  $ 8,092   $ 2,859  
           
Net earnings per share        
  Basic $ 0.06   $ 0.02  
  Diluted $ 0.06   $ 0.02  
           
Weighted average number of common shares (000s)        
  Basic   135,788     134,132  
  Diluted   139,550     135,148  

 

Wesdome Gold Mines Ltd.
Condensed Interim Consolidated Statements of Changes in Equity
(Unaudited, expressed in thousands of Canadian dollars)

                     
      Capital   Contributed       Total  
      Stock   Surplus   Deficit   Equity  
                     
Balance,December 31,2017 $ 164,161 $ 3,967   $ (29,905 ) $ 138,223  
Net income for the period ended                  
  March 31, 2018   -   -     2,859     2,859  
Exercise of options   220   -     -     220  
Value attributed to options exercised   128   (128 )   -     -  
Value attributed to options expired   -   (33 )   33     -  
Share based payments   -   867     -     867  
Balance, March 31, 2018 $ 164,509 $ 4,673   $ (27,013 ) $ 142,169  
                     
                     
Balance,December 31,2018 $ 166,387 $ 5,777   $ (14,955 ) $ 157,209  
Net income for the period ended                  
  March 31, 2019   -   -     8,092     8,092  
Exercise of options   1,902   -     -     1,902  
Value attributed to options exercised   933   (933 )   -     -  
Value attributed to options expired   -   (59 )   59     -  
Share-based payments   -   1,099     -     1,099  
Value attributed to RSU exercised   253   (253 )   -     -  
Balance, March 31, 2019 $ 169,475 $ 5,631   $ (6,804 ) $ 168,302  
                     

 

Wesdome Gold Mines Ltd.
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited, expressed in thousands of Canadian dollars)

           
      Three Months Ended
      March 31
      2019   2018
           
Operating activities        
  Net income $ 8,092   $ 2,859  
  Depletion and depreciation   3,909     3,321  
  Share based payments   1,099     867  
  Accretion of decommission provisions   115     104  
  Deferred income and mining tax expense   3,117     1,321  
  Interest on long-term debt   112     51  
  Write-off of mining equipment   -     281  
      16,444     8,804  
  Net changes in non-cash working capital   (3,863 )   3,619  
Net cash from operating activities   12,581     12,423  
Financing activities        
  Exercise of options   1,902     220  
  Payments of lease liabilities   (1,255 )   (659 )
  Interest paid   (112 )   (51 )
Net cash from (used  in) provided by financing activities   535     (490 )
Investing activities        
  Additions to mining properties   (6,217 )   (3,556 )
  Additions to exploration properties   (5,538 )   (4,992 )
  Net changes in non-cash working capital   (892 )   983  
Net cash used in investing activities   (12,647 )   (7,565 )
Increase in cash and cash equivalents   469     4,368  
Cash and cash equivalents, beginning of period   27,378     22,092  
Cash and cash equivalents, end of period $ 27,847   $ 26,460  
           
Cash and cash equivalents consist of:        
  Cash $ 17,847   $ 17,460  
  Term deposits   10,000     9,000  
    $ 27,847   $ 26,460  

 

ABOUT WESDOME
Wesdome Gold Mines has had over 30 years of continuous gold mining operations in Canada.  The Company is 100% Canadian focused with a pipeline of projects in various stages of development.  The Company’s strategy is to build Canada’s next intermediate gold producer, producing 200,000+ ounces from two mines in Ontario and Quebec.  The Eagle River Complex in Wawa, Ontario is currently producing gold from two mines, the Eagle River Underground Mine and the Mishi Open pit, from a central mill.  Wesdome is actively exploring its brownfields asset, the Kiena Complex in Val d’Or, Quebec.  The Kiena Complex is a fully permitted former mine with a 930-metre shaft and 2,000 tonne-per-day mill.  The Company has further upside at its Moss Lake gold deposit, located 100 kilometres west of Thunder Bay, Ontario.  The Company has approximately 136.4 million shares issued and outstanding and trades on the Toronto Stock Exchange under the symbol “WDO”.

For further information, please contact:

Duncan Middlemiss 
President and CEO 
416-360-3743  ext. 2029  duncan.middlemiss@wesdome.com
or Lindsay Carpenter Dunlop
VP Investor Relations
416-360-3743  ext. 2025
lindsay.dunlop@wesdome.com
     
220 Bay St, Suite 1200
Toronto, ON, M5J 2W4
Toll Free: 1-866-4-WDO-TSX
Phone: 416-360-3743, Fax: 416-360-7620
Website: www.wesdome.com
   


This news release contains “forward-looking information” which may include, but is not limited to, statements with respect to the future financial or operating performance of the Company and its projects. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or variations (including negative variations) of such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements contained herein are made as of the date of this press release and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The Company undertakes no obligation to update forward-looking statements if circumstances, management’s estimates or opinions should change, except as required by securities legislation. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements.
The Company has included in this news release certain non-IFRS performance measures, including, but not limited to, mine operating profit, mining and processing costs and cash costs. Cash costs per ounce reflect actual mine operating costs incurred during the fiscal period divided by the number of ounces produced.  These measures are not defined under IFRS and therefore should not be considered in isolation or as an alternative to or more meaningful than, net income (loss) or cash flow from operating activities as determined in accordance with IFRS as an indicator of our financial performance or liquidity. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company's performance and ability to generate cash flow.

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