U.S. Markets open in 3 hrs 14 mins

Wesdome Announces 2019 Second Quarter Financial Results

TORONTO, Aug. 08, 2019 (GLOBE NEWSWIRE) -- Wesdome Gold Mines Ltd. (WDO.TO) (“Wesdome” or the “Company”) today announces second quarter (“Q2 2019”) financial results. All figures are stated in Canadian dollars unless otherwise noted.

Mr. Duncan Middlemiss, President and CEO commented, “In Q2, the Eagle River operations generated $6.7 million in free cash flow, of which $5.5 million was reinvested into the Kiena Complex. Cash and all-in sustaining costs were lower than the previous quarter, with all-in sustaining costs of $1,220 per ounce (US$912) lower than our guidance range $1,280 - $1,350 (US$985 - $1,040). During the quarter, we launched an additional capital project pertaining to our Eagle River tailings facility. This project will cost approximately $6.5 million in capital, of which $1.5 million has been spent, and will ensure the Company is well positioned for the future.  The Company guided 72,000 – 80,000 ounces of production for the year and with 41,446 ounces produced in the first half of the year, we are on track to exceed the top end of our guidance range.”

“At Kiena, we continue to infill drill the Kiena Deep discovery, where the continuity of high grade mineralization continues to be confirmed within the A Zone. We expect to publish an updated resource the second half of this year followed by a PEA in early 2020 outlining our next steps for the project.”

Key operating and financial highlights of the Q2 2019 results include:

  • Gold production of 22,437 ounces from the Eagle River Complex, a 35% increase over the same period in the previous year (Q2 2018: 16,628 ounces):
    • Eagle River Underground 28,754 tonnes at a head grade of 23.4 grams per tonne (“g/t Au”) for 20,873 ounces produced, 41% increase over the previous year (Q2 2018: 14,767 ounces).
    • Mishi Open Pit 18,623 tonnes at a head grade of 3.0 g/t Au for 1,564 ounces produced (Q2 2018: 1,860 ounces).
  • Revenue of $42.3 million, a 34% increase over the previous year (Q2 2018: $31.4 million).
  • Ounces sold 24,113 at an average sales price of $1,752/oz (Q2 2018: 18,573 ounces at an average price of $1,692/oz).
  • Cash costs1 of $837/oz or US$626/oz, a 6% decrease over the same period in 2018 (Q2 2018: $886/oz or US$686/oz). 
  • All-in sustaining costs (“AISC”) 1 of $1,220/oz or US$912/oz, a 2% decrease over the same period in 2018 (Q2 2018: $1,242/oz or US$962/oz).
  • Earned mine profit1 of $22.1 million, a 47% increase over Q2 2018 (Q2 2018 - $15.0 million).
  • Operating cash flow of $15.4 million or $0.11 per share1 as compared to $12.4 million or $0.09 per share for the same period in 2018.
  • Invested $6.0 million in exploration expenditures at Eagle River and Kiena Complexes during the quarter (Q2 2018 - $5.1 million)
  • Free cash flow of $1.2 million, net of an investment of $5.5 million in Kiena, or $0.01 per share1 (Q2 2018: free cash flow of $2.0 million or $0.01 per share). 
  • Net income and Net income (adjusted)1 of $8.3 million or $0.06 per share (Q2 2018: $5.7 million or $0.04 per share). 
  • Cash position of $27.4 million.
  1. Refer to the Company’s 2019 Second 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 Q2 2019

Eagle River

  • The mining of the 303 Zone between the first and the second sub-level above the 844 metre level ("m-level") continued in Q2 2019 and confirmed the continuity of the strong grades and the geometry of the mineralized zone. The development of the remainder of the 300 Zone in that area will take place once the 303 zone is completed. A new mining horizon in the 303 Zone is being developed between the 884 m-level and the 925 m-level. The development work is scheduled in Q4 this year. Exploration drilling continued on the 925 m-level to prepare the 300E zone for mining.

  • Recent development and drilling have continued to expand the 7 East Zone along strike and down plunge 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 an ongoing focus of 2019 drilling.

  • Ongoing drilling and initial drift development along the 311 W 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 in excess of 50 m further west than the previously interpreted diorite contact and remains open and therefore 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 the Falcon 7 and Falcon 300 zones, with one drill hole returning 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

  • Four drills continue to operate on the 1050 m-level exploration ramp completing the infill and immediate plunge extension drilling of the Kiena Deep A Zone in preparation for an updated resource estimate expected in H2 2019. The A Zone remains open at depth and one drill is dedicated to testing this prospective area. The ongoing definition drilling has continued to confirm the overall continuity of the geometry and the high-grade gold mineralization of the Kiena Deep A Zone that now extends over 700 m along plunge. Meanwhile a 5th drill is located on the 670 m-level and continues to return high grade intersections along the interpreted-up plunge extension of the Kiena Deep A Zone towards the VC zone area with one hole returning 31.1 g/t Au over 5.1 m. It is now interpreted that A Zone is folded as it extends up plunge to intersect the VC6 zone.

  • Our 2019 underground exploration program calls for 50,000 m of drilling in preparation for an updated resource estimate near the end of Q3. This information will then lead into a Preliminary Economic Assessment expected in Q1 2020 and next steps will be determined at that juncture.

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 Second Quarter Financial Results Conference Call:

August 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:   2699395
Webcast link: https://edge.media-server.com/mmc/p/37aef2h5

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

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 137.0 million shares issued and outstanding and trades on the Toronto Stock Exchange under the symbol “WDO”.

For further information, please contact:

Duncan Middlemiss or Lindsay Carpenter Dunlop
President and CEO   VP Investor Relations
416-360-3743  ext. 2029   416-360-3743  ext. 2025
duncan.middlemiss@wesdome.com   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.

 

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     Six Months Ended  
    June 30     June 30  
    2019   2018     2019   2018  
Operating data                    
Milling (tonnes)                    
Eagle River   28,754   43,378     59,695   87,858  
Mishi   18,623   25,233     37,093   58,079  
Throughput 2   47,377   68,610     96,788   145,937  
Head grades (g/t)                    
Eagle River   23.4   11.0     20.9   11.5  
Mishi   3.0   2.7     2.6   2.2  
Recovery (%)                    
Eagle River   96.4   96.2     96.9   95.8  
Mishi   85.2   83.6     83.3   82.7  
Production (ounces)                    
Eagle River   20,873   14,767     38,828   31,166  
Mishi   1,564   1,860     2,618   3,411  
Total gold produced 2   22,437   16,628     41,446   34,576  
Total gold sales (ounces)   24,113   18,573     42,873   34,003  
                     
Eagle River Complex (per ounce of gold sold) 1                    
Average realized price $ 1,752 $ 1,692   $ 1,743 $ 1,694  
Cash costs   837   886     850   937  
Cash margin $ 915 $ 806   $ 893 $ 757  
All-in Sustaining Costs 1 $ 1,220 $ 1,242   $ 1,260 $ 1,288  
                     
Average 1 USD → CAD exchange rate   1.3377   1.2911     1.3336   1.2781  
                     
Cash costs per ounce of gold sold (US$) 1 $ 626 $ 686   $ 637 $ 733  
All-in Sustaining Costs (US$) 1 $ 912 $ 962   $ 945 $ 1,007  
                     
Financial Data                    
Mine profit 1 $ 22,055 $ 14,957   $ 38,314 $ 25,731  
Net income  $ 8,327 $ 5,725   $ 16,419 $ 8,584  
Net income adjusted 1 $ 8,327 $ 5,725   $ 14,050 $ 8,584  
Operating cash flow $ 15,400 $ 12,422   $ 27,981 $ 24,845  
Free cash flow (outflow) 1 $ 1,155 $ 1,962   $ 726 $ 5,178  
Per share data                    
  Net income $ 0.06 $ 0.04   $ 0.12 $ 0.06  
  Adjusted net earnings 1 $ 0.06 $ 0.04   $ 0.10 $ 0.06  
  Operating cash flow 1  $ 0.11 $ 0.09   $ 0.21 $ 0.19  
  Free cash flow (outflow) 1 $ 0.01 $ 0.01   $ 0.01 $ 0.04  
                     

 

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

               
      June 30, 2019     December 31, 2018  
Assets            
Current            
  Cash and cash equivalents $ 27,395   $ 27,378    
  Receivables and prepaids   2,110     548    
  Sales tax receivable   6,882     2,342    
  Inventories   12,604     8,302    
Total current assets   48,991     38,570    
               
Restricted Cash   627     -    
Mining properties, plant and equipment   96,521     89,643    
Exploration properties   92,460     81,424    
Total assets $ 238,599   $ 209,637    
               
Liabilities            
Current            
  Payables and accruals $ 20,604   $ 22,526    
  Income and mining tax payable   1,174     180    
  Current portion of lease liabilities    6,667     4,552    
Total current liabilities   28,445     27,258    
               
Lease liabilities   3,486     5,248    
Deferred income and mining tax liabilities   14,819     8,259    
Decommissioning provisions   13,375     11,663    
Total liabilities   60,125     52,428    
               
Equity            
Equity attributable to owners of the Company            
  Capital stock   170,813     166,387    
  Contributed surplus   6,106     5,777    
  Retained earnings (deficit)   1,555     (14,955 )  
Total equity attributable to owners of the Company   178,474     157,209    
Total liabilities and equity $ 238,599   $ 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     Six Months Ended
      June 30     June 30
      2019     2018       2019     2018  
                     
Revenues $ 42,276   $ 31,443     $ 74,811   $ 57,660  
Cost of sales   26,571     20,405       46,756     39,169  
Gross profit   15,705     11,038       28,055     18,491  
                     
Other expenses                  
  Corporate and general   1,498     1,416       3,506     2,493  
  Share-based payments   1,056     964       2,155     1,831  
  Kiena care and maintenance   -     321       -     777  
  Write-off of mining equipment   -     9       -     290  
      2,554     2,710       5,661     5,391  
                     
Operating income   13,151     8,328       22,394     13,100  
                     
Quebec exploration credits refund   -     -       2,867     -  
Interest on long-term debt   (114 )   (72 )     (226 )   (123 )
Accretion of decommissioning provisions   (122 )   (104 )     (237 )   (208 )
Interest and other   31     1,105       325     1,149  
Income before mining and income tax   12,946     9,257       25,123     13,918  
Income and mining tax expense                  
  Current   1,175     727       2,143     1,208  
  Deferred   3,444     2,805       6,561     4,126  
      4,619     3,532       8,704     5,334  
Net income and total comprehensive income  $ 8,327   $ 5,725     $ 16,419   $ 8,584  
                     
Net earnings per share                  
  Basic $ 0.06   $ 0.04     $ 0.12   $ 0.06  
  Diluted $ 0.06   $ 0.04     $ 0.12   $ 0.06  
                     
Weighted average number of common shares (000s)                  
  Basic   136,740     134,276       136,266     134,204  
  Diluted   139,661     135,646       139,492     135,340  

 

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

                     
      Capital   Contributed   Accumulated   Total  
      Stock   Surplus   Income (Deficit)   Equity  
                     
Balance,December 31,2017 $ 164,161 $ 3,967   $ (29,905 ) $ 138,223  
Net income for the period ended                  
  June 30, 2018   -   -     8,584     8,584  
Exercise of options   309   -     -     309  
Value attributed to options exercised   179   (179 )   -     -  
Value attributed to options expired   -   (33 )   33     -  
Share based payments   -   1,831     -     1,831  
Balance, June 30, 2018 $ 164,649 $ 5,586   $ (21,288 ) $ 148,947  
                     
                     
Balance,December 31,2018 $ 166,387 $ 5,777   $ (14,955 ) $ 157,209  
Net income for the period ended                  
  June 30, 2019   -   -     16,419     16,419  
Exercise of options   2,691   -     -     2,691  
Value attributed to options exercised   1,307   (1,307 )   -     -  
Value attributed to options expired   -   (91 )   91     -  
Share-based payments   -   2,155     -     2,155  
Value attributed to DSU redeemed   175   (175 )   -     -  
Value attributed to RSU exercised   253   (253 )   -     -  
Balance, March 31, 2019 $ 170,813 $ 6,106   $ 1,555   $ 178,474  
                     

 

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

                     
      Three Months Ended     Six Months Ended
      June 30     June 30
      2019     2018       2019     2018  
                     
Operating activities                  
  Net income $ 8,327   $ 5,725     $ 16,419   $ 8,584  
  Depletion and depreciation   6,350     3,919       10,259     7,240  
  Share based payments   1,056     964       2,155     1,831  
  Accretion of decommission provisions   122     104       237     208  
  Deferred income and mining tax expense   3,444     2,805       6,561     4,126  
  Interest on long-term debt and other   123     72       235     123  
  Write-off of mining equipment   -     9       -     290  
      19,422     13,598       35,866     22,402  
  Net changes in non-cash working capital   (2,942 )   (483 )     (6,805 )   3,136  
  Mining tax paid   (1,080 )   (693 )     (1,080 )   (693 )
Net cash from operating activities   15,400     12,422       27,981     24,845  
Financing activities                  
  Exercise of options   789     89       2,691     309  
  Payments of lease liabilities   (1,316 )   (956 )     (2,571 )   (1,615 )
  Interest paid   (114 )   (72 )     (226 )   (123 )
Net cash used  in financing activities   (641 )   (939 )     (106 )   (1,429 )
Investing activities                  
  Additions to mining properties   (6,804 )   (4,433 )     (13,021 )   (7,989 )
  Additions to exploration properties   (5,498 )   (5,071 )     (11,036 )   (10,063 )
  Funds held against standby letter of credit and cash deposit   (627 )   -       (627 )   -  
  Net changes in non-cash working capital   (2,282 )   (1,720 )     (3,174 )   (737 )
Net cash used in investing activities   (15,211 )   (11,224 )     (27,858 )   (18,789 )
Increase in cash and cash equivalents   (452 )   259       17     4,627  
Cash and cash equivalents, beginning of period   27,847     26,460       27,378     22,092  
Cash and cash equivalents, end of period $ 27,395   $ 26,719     $ 27,395   $ 26,719  
                     
Cash and cash equivalents consist of:                  
  Cash $ 13,395   $ 17,677     $ 13,395   $ 17,677  
  Term deposits   14,000     9,042       14,000     9,042  
    $ 27,395   $ 26,719     $ 27,395   $ 26,719  
                     

PDF available: http://ml.globenewswire.com/Resource/Download/ed8d0e73-be6f-49b0-9a73-0616d6fc9b4c