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Wesdome Announces 2019 Third Quarter Financial Results

TORONTO, Nov. 06, 2019 (GLOBE NEWSWIRE) -- Wesdome Gold Mines Ltd. (WDO.TO) (“Wesdome” or the “Company”) today announces third quarter (“Q3 2019”) financial results. All figures are stated in Canadian dollars unless otherwise noted.

Mr. Duncan Middlemiss, President and CEO commented, “In Q3, cash costs of $815 (US$618) per ounce were relatively flat over the previous quarter ($837 of US$626 per ounce). All-in sustaining costs of $1,344 (US$1,018) per ounce were higher than those incurred in Q2 ($1,220 or US$912 per ounce) due to a $4 million investment, or $168 (US$128) per ounce into the tailings management facility. This project will provide for an additional 4 years capacity at current mill feed. Despite our higher sustaining, project, and exploration expenditures during the quarter, the company was able to generate $9.2 million in free cash flow, thereby resulting in a cash position at the end of the quarter of $38.6 million.”

“Due to continued superb performance of the 303 Lens, we have increased 2019 guidance from 72,000 – 80,000 ounces to 88,000 to 93,000 ounces, with 70,356 ounces produced to the third quarter. Recent exploration results have extended the 303 Lens 300 metres down plunge where it remains open. Year to date cost of $838 (US$630) per ounce cash costs and $1,290 ($US970 per ounce AISC are both at the low end of cost guidance of $830 - $900 (US$640 - $US690) an ounce on cash costs per ounce and $1,280 - $1,350 (US$985 – 1,040) an ounce on AISC. We expect ounce production in the fourth quarter to be in the 19,000 – 22,000 range as we plan to process some of the Mishi stockpile.”

“At Kiena, we released an updated Resource Estimate in September which substantially increased the Kiena Deep A Zone grade, and indicated and inferred resource ounces. The Preliminary Economic Assessment (PEA) is well underway and we expect to complete the study in Q1 2020. We are half way completed on the 790 metre level drift to further test the up plunge of the A Zone. Once completed, we will have one drill stationed there and expect to release results in the first half of 2020.”

Key operating and financial highlights of the Q3 2019 results include:

  • Gold production of 28,910 ounces from the Eagle River Complex, a 46% increase over the same period in the previous year (Q3 2018: 19,795 ounces):
    • Eagle River Underground 39,453 tonnes at a head grade of 23.4 grams per tonne (“g/t Au”) for 28,894 ounces produced, 49% increase over the previous year (Q3 2018: 19,437 ounces).
    • Mishi Open Pit 204 tonnes at a head grade of 2.8 g/t Au for 15 ounces produced (Q3 2018: 358 ounces).
  • Revenue of $45.9 million, a 59% increase over the previous year (Q3 2018: $28.9 million).
  • Ounces sold 23,450 at an average sales price of $1,957/oz (Q3 2018: 18,401 ounces at an average price of $1,571/oz).
  • Cash costs1 of $815/oz or US$618/oz, neutral over the same period in 2018 (Q3 2018: $815/oz or US$624/oz). 
  • All-in sustaining costs (“AISC”) 1 of $1,344/oz or US$1,018/oz, a 16% increase over the same period in 2018 (Q3 2018: $1,160/oz or US$888/oz), due to the investment in the tailings management facility at the Eagle River Mine in 2019.
  • Earned mine profit1 of $26.8 million, a 93% increase over Q3 2018 (Q3 2018 - $13.9 million).
  • Operating cash flow of $27.3 million or $0.20 per share1 as compared to $12.8 million or $0.10 per share for the same period in 2018.
  • Free cash flow of $9.2 million, net of an investment of $5.9 million in Kiena, or $0.07 per share1 (Q3 2018: free cash flow of $2.1 million or $0.02 per share). 
  • Net income and Net income (adjusted)1 of $12.4 million or $0.09 per share (Q3 2018: $3.6 million or $0.03 per share). 
  • Cash position increased to $38.6 million compared to $27.4 million in the previous quarter.
  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.

Q3 2019 HIGHLIGHTS AND ACHIEVEMENTS

Operations and Financial Highlights Comparison to Q3 2018
Gold production of 28,910 ounces from the Eagle River Complex. Gold production increased by 46% (Q3 2018 – 19,795 ounces).

YTD gold production of 70,356 ounces, an increase of 29% when compared to YTD 2018 production of 54,371 ounces. 
Cash costs of $815 (US$618) per ounce of gold sold 1. Cash costs in Canadian dollars remained consistent (Q3 2018 - $815 (US$624) per ounce).
AISC 1 of $1,344 (US$1,018) per ounce. AISC increased by 16% (Q3 2018 - $1,160 (US$888) per ounce) due to $4.0 million or $168 (US$128) per ounce spent on the tailings management area (“TMA”) at Eagle River.
Earned mine profit 1 of $26.8 million. An increase of $12.9 million or 93% when compared to $13.9 million generated in Q3 2018.
Operating cash flow of $27.3 million or $0.20 per share 1. Operating cash flow at a strong level at $27.3 million for the quarter as a result of higher production and the increase in cash from working capital changes (Q3 2018 - $12.8 million or $0.10 per share).
Free cash flow of $9.2 million or $0.07 per share1. Eagle River generated free cash flow of $9.2 million for the quarter, net of an investment of $5.9 million in Kiena and $4.0 million spent on the TMA at Eagle River in the quarter.

Free cash flow in Q3 2018 was $2.1 million or $0.02 per share.
Net income attributable to shareholders of $12.4 million or $0.09 per share.

Adjusted net income1 of $12.4 million or $0.09 per share
A delivery of strong net earnings and Adjusted net earnings in the quarter as a result of strong production performance and increasing gold prices.  Net income and Adjusted net income1 for Q3 2018 was $3.6 million or $0.03 per share, respectively. 
  1. Refer to the section entitled “Non-IFRS Performance Measures” for the reconciliation of these non-IFRS measurements to the Financial Statements.

Production and Exploration Highlights
Achievements
Eagle River
  • The mining of the 303 Zone between the second up to the fourth sub-level above the 844 metre level ("m-level") continued in Q3 2019 and confirmed the continuity of the strong grades and the geometry of the mineralized zone.  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 in preparation for production in 2020. 

  • Exploration drilling continued on the 925 m-level to prepare the 303 Lens zone for mining. The 303 Lens, initially defined from the 750 m-level to 1,000 m-level has now been extended an additional 300 m down plunge to the 1,300 m-level, while continuing to illustrate above average widths and grades.

  • Ongoing drilling and initial drift development along the 311 W Zone have 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 50 m further west than the previously interpreted diorite contact and remains a focus for 2019 drilling.

  • 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 • On September 25, 2019, Wesdome announced an updated Mineral Resource Estimate including drill data as of August 6, 2019. Highlights include 
(i)  Increased Kiena Deep A Zone Indicated resources from 99,300 to 405,100 ounces
(ii)  Increased Kiena Deep A Zone Inferred resources from 241,100 ounces to 332,000 ounces
(iii)  Increased Kiena Deep A Zone Indicated resource grade from 9.95 g/t Au to 18.55 g/t Au
(iv)  Increased proportion of Indicated resources to over 50% in the A Zone (versus 30% previously in A Zone).

• 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. 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 metres. 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. This information will then lead into a Preliminary Economic Assessment expected in Q1 2020 and next steps will be determined at that juncture.

• The development of an exploration drift on 790m level started during the quarter and will be completed early in December to better explore the up plunge extension of the A Zone between the 670 m-level and 1050 m-level.

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 Third Quarter Financial Results Conference Call:

North American Toll Free: + 1 (844) 202-7109
International Dial-In Number: +1 (703) 639-1272
Conference ID:  8286736
Webcast link: https://edge.media-server.com/mmc/p/pfmyey7t

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 mid-tier 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 137.2 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     Nine Months Ended  
    September 30      September 30  
    2019   2018     2019   2018  
Operating data                    
Milling (tonnes)                    
Eagle River   39,453   46,777     99,148   134,635  
Mishi   204   4,076     37,297   62,155  
Throughput 2   39,657   50,854     136,445   196,790  
Head grades (g/t)                    
Eagle River   23.4   13.3     21.9   12.2  
Mishi   2.8   3.4     2.6   2.3  
Recovery (%)                    
Eagle River   97.6   96.9     97.2   96.2  
Mishi   85.5   80.9     83.3   82.5  
Production (ounces)                    
Eagle River   28,894   19,437     67,723   50,602  
Mishi   15   358     2,633   3,769  
Total gold produced 2   28,910   19,795     70,356   54,371  
Total gold sales (ounces)   23,450   18,401     66,323   52,404  
                     
Eagle River Complex (per ounce of gold sold) 1                    
Average realized price $ 1,957 $ 1,571   $ 1,819 $ 1,651  
Cash costs   815   815     838   894  
Cash margin $ 1,142 $ 756   $ 981 $ 757  
All-in Sustaining Costs 1 $ 1,344 $ 1,160   $ 1,290 $ 1,243  
                     
Average 1 USD → CAD exchange rate   1.3204   1.3070     1.3292   1.2878  
                     
Cash costs per ounce of gold sold (US$) 1 $ 618 $ 624   $ 630 $ 695  
All-in Sustaining Costs (US$) 1 $ 1,018 $ 888   $ 970 $ 965  
                     
Financial Data                    
Mine profit 1 $ 26,770 $ 13,898   $ 65,084 $ 39,629  
Net income $ 12,449 $ 3,631   $ 28,868 $ 12,215  
Net income adjusted 1 $ 12,449 $ 3,631   $ 26,499 $ 12,215  
Operating cash flow $ 27,275 $ 12,823   $ 55,256 $ 37,668  
Free cash flow 1 $ 9,199 $ 2,137   $ 9,925 $ 7,315  
Per share data                    
Net income $ 0.09 $ 0.03   $ 0.21 $ 0.09  
Adjusted net earnings 1 $ 0.09 $ 0.03   $ 0.19 $ 0.09  
Operating cash flow 1 $ 0.20 $ 0.10   $ 0.40 $ 0.28  
Free cash flow 1 $ 0.07 $ 0.02   $ 0.07 $ 0.05  
                     

Notes

  1. Refer to the Company’s 2019 Third 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)

      September 30, 2019     December 31, 2018  
Assets          
Current          
  Cash and cash equivalents $ 38,611   $ 27,378  
  Receivables and prepaids   2,282     548  
  Sales tax receivable   2,648     2,342  
  Inventories   14,582     8,302  
Total current assets   58,123     38,570  
             
Restricted Cash   657     -  
Deferred financing cost   1,054     -  
Mining properties, plant and equipment   106,899     89,643  
Exploration properties   98,332     81,424  
Total assets $ 265,065   $ 209,637  
             
Liabilities          
Current          
  Payables and accruals $ 22,073   $ 22,526  
  Income and mining tax payable   1,379     180  
  Borrowings   4,358     -  
  Current portion of lease liabilities   2,995     4,552  
Total current liabilities   30,805     27,258  
             
Lease liabilities   5,144     5,248  
Deferred income and mining tax liabilities   19,782     8,259  
Decommissioning provisions   16,971     11,663  
Total liabilities   72,702     52,428  
             
Equity          
Equity attributable to owners of the Company          
  Capital stock   172,184     166,387  
  Contributed surplus   6,133     5,777  
  Retained earnings (deficit)   14,046     (14,955 )
Total equity attributable to owners of the Company   192,363     157,209  
Total liabilities and equity $ 265,065   $ 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     Nine Months Ended
      September 30      September 30
      2019     2018       2019     2018  
                     
Revenues from sales $ 45,940   $ 28,920     $ 120,751   $ 86,580  
Cost of sales   25,246     20,599       72,002     59,768  
Gross profit   20,694     8,321       48,749     26,812  
                     
Other expenses                  
  Corporate and general   1,417     1,429       4,923     3,922  
  Share-based compensation   486     434       2,641     2,265  
  Kiena care and maintenance   -     353       -     1,130  
  Write-off of mining equipment   -     -       -     290  
      1,903     2,216       7,564     7,607  
                     
Operating income   18,791     6,105       41,185     19,205  
                     
Quebec exploration credits refund   -     -       2,867     -  
Interest on long-term debt   (138 )   (68 )     (364 )   (191 )
Accretion of decommissioning provisions   (64 )   (105 )     (301 )   (313 )
Interest and other   157     79       482     1,228  
Income before mining and income tax   18,746     6,011       43,869     19,929  
Income and mining tax expense                  
  Current   1,335     663       3,478     1,871  
  Deferred   4,962     1,717       11,523     5,843  
      6,297     2,380       15,001     7,714  
Net income and total comprehensive income $ 12,449   $ 3,631     $ 28,868   $ 12,215  
                     
Net earnings per share                  
  Basic $ 0.09   $ 0.03     $ 0.21   $ 0.09  
  Diluted $ 0.09   $ 0.03     $ 0.21   $ 0.09  
                     
Weighted average number of common shares (000s)                  
  Basic   137,302     134,754       136,615     134,390  
  Diluted   140,989     137,836       140,119     135,827  


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

      Capital   Contributed     Retained     Total  
      Stock   Surplus     Earnings (Deficit)     Equity  
                     
Balance, December 31, 2017 $ 164,161 $ 3,967   $ (29,905 ) $ 138,223  
Net income for the period ended                  
  September 30, 2018   -   -     12,215     12,215  
Exercise of options   999   -     -     999  
Value attributed to options exercised   500   (500 )   -     -  
Value attributed to options expired   -   (59 )   59     -  
Share-based compensation   -   2,265     -     2,265  
Balance, September 30, 2018 $ 165,660 $ 5,673   $ (17,631 ) $ 153,702  
                     
                     
Balance, December 31, 2018 $ 166,387 $ 5,777   $ (14,955 ) $ 157,209  
Net income for the period ended                  
  September 30, 2019   -   -     28,868     28,868  
Exercise of options   3,645   -     -     3,645  
Value attributed to options exercised   1,724   (1,724 )   -     -  
Value attributed to options expired   -   (133 )   133     -  
Share-based compensation   -   2,641     -     2,641  
Value attributed to DSUs redeemed   175   (175 )   -     -  
Value attributed to RSUs exercised   253   (253 )   -     -  
Balance, September 30, 2019 $ 172,184 $ 6,133   $ 14,046   $ 192,363  
                     


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

      Three Months Ended     Nine Months Ended
      September 30      September 30
      2019     2018       2019     2018  
                     
Operating activities                  
  Net income $ 12,449   $ 3,631     $ 28,868   $ 12,215  
  Depletion and depreciation   6,076     5,577       16,335     12,817  
  Share-based compensation   486     434       2,641     2,265  
  Accretion of decommission provisions   64     105       301     313  
  Deferred income and mining tax expense   4,962     1,717       11,523     5,843  
  Interest on long-term debt and other   143     68       378     191  
  Write-off of mining equipment   -     -       -     290  
      24,180     11,532       60,046     33,934  
  Net changes in non-cash working capital   4,225     1,291       (2,580 )   4,427  
  Mining tax paid   (1,130 )   -       (2,210 )   (693 )
Net cash from operating activities   27,275     12,823       55,256     37,668  
Financing activities                  
  Exercise of options   954     690       3,645     999  
  Debt issue less deferred cost   3,304     -       3,304     -  
  Repayment of lease liabilities   (1,558 )   (931 )     (4,129 )   (2,546 )
  Termination of lease arrangements   (3,952 )   -       (3,952 )   -  
  Interest paid   (138 )   (68 )     (364 )   (191 )
Net cash used in financing activities   (1,390 )   (309 )     (1,496 )   (1,738 )
Investing activities                  
  Additions to mining properties   (10,616 )   (4,022 )     (23,637 )   (12,011 )
  Additions to exploration properties   (5,872 )   (5,733 )     (16,908 )   (15,796 )
  Funds held against standby letter of credit and cash deposit   (30 )   -       (657 )   -  
  Net changes in non-cash working capital   1,849     1,236       (1,325 )   499  
Net cash used in investing activities   (14,669 )   (8,519 )     (42,527 )   (27,308 )
Increase in cash and cash equivalents   11,216     3,995       11,233     8,622  
Cash and cash equivalents, beginning of period   27,395     26,719       27,378     22,092  
Cash and cash equivalents, end of period $ 38,611   $ 30,714     $ 38,611   $ 30,714  
                     
Cash and cash equivalents consist of:                  
  Cash $ 38,611   $ 21,633     $ 38,611   $ 21,633  
  Term deposits   -     9,081       -     9,081  
    $ 38,611   $ 30,714     $ 38,611   $ 30,714  
                     

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