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Wesdome Announces 2020 Third Quarter Financial Results

Wesdome Gold Mines
·18 min read

TORONTO, Nov. 03, 2020 (GLOBE NEWSWIRE) -- Wesdome Gold Mines Ltd. (TSX: WDO) (“Wesdome” or the “Company”) today announces third quarter (“Q3 2020”) financial results. All figures are stated in Canadian dollars unless otherwise noted.

Mr. Duncan Middlemiss, President and CEO commented, “During Q3, Wesdome generated operating cash flow of $25.5 million or $0.18 per share and free cash flow of $3.2 million, (net of an investment of $13.9 million in Kiena), or $0.02 per share, ending the quarter with a cash position of $73.5 million (Q2 2020: $66.7 million). Cash costs for the quarter were $1,052 per ounce (US: $790) and All-in sustaining costs were $1,395 per ounce (US $1,047). Both of these unit costs are currently above the high end of our full year guidance, however we believe the AISC will decrease to the upper end of full year guidance ($1350/ounce). Free cash flow was impacted by investments in the tailings, hoist and ventilation upgrades at Eagle River. A total of $2.8 million was spent on these projects during the quarter in order to advance future underground production to over 600 tonnes per day. In particular the hoist upgrade was longer in duration than originally planned thereby causing significant hoisting delays within the quarter. The upgraded hoist has since been successfully commissioned and is performing well. The ventilation upgrade construction work will continue into Q4 with the installation of a second fresh air fan on surface that will provide additional haulage capacity underground. The fan will be commissioned early in Q1 2021. During Q3 the company was able to significantly invest in Eagle upgrades and the advancement of Kiena, compared to Q2 which was much more affected by the pandemic.

With YTD 2020 total gold production of 70,272 ounces at an average grade of 15.1 grams per tonne (“g/t Au”) at the Eagle River Underground Mine, the Company is well-positioned to achieve its full year guidance range of 90,000 – 100,000 ounces at an average grade of 15 – 16.7 g/t Au.

At Kiena, full drilling and development capacity resumed in June. We are now currently operating seven underground drills, with the focus on converting inferred resources to the indicated category. We expect to publish an updated resource estimate in Q4 2020. We are also advancing development on the 111 metre level in order to position the Company to take a bulk sample. Future bulk sampling on the A Zone will provide an opportunity to assess the geological block model and rock quality characteristics and will provide additional information to complete the ongoing Prefeasibility Study ("PFS"), expected to be completed by H1 2021.”

Key operating and financial highlights of the Q3 2020 results include:

  • Gold production of 20,008 ounces from the Eagle River Complex, a 30.8% decrease over the same period in the previous year (Q3 2019: 28,910 ounces) due to lower grades and the impact of COVID-19:

    • Eagle River Underground 44,667 tonnes at a head grade of 13.8 g/t Au for 19,319 ounces produced, 33.1% decrease over the previous year (Q3 2019: 28,894 ounces).

    • Mishi Open Pit 11,533 tonnes at a head grade of 2.5 g/t Au for 689 ounces produced (Q3 2019: 15 ounces).

  • Revenue of $55.0 million, a 19.7% increase over Q3 2019 (Q3 2019: $45.9 million).

  • Ounces sold 21,700 at an average sales price of $2,532/oz (Q3 2019: 23,450 ounces at an average price of $1,957/oz).

  • Earned mine profit1 of $32.1 million, a 20.0% increase over Q3 2019 (Q3 2019 - $26.8 million).

  • Cash costs 1 of $1,052 (US$790) per ounce of gold sold (Q3 2019 of $815 (US$618) due to less ounces sold and the impact of COVID-19.

  • All-in sustaining costs (“AISC”) 1 of $1,395/oz or US$1,047/oz, a 3.8% increase over the same period in 2019 (Q3 2019: $1,344/oz or US$1,018/oz), due to lower ounces sold; partially offset by lower sustaining capital expenditures.

  • Operating cash flow of $25.5 million or $0.18 per share1 as compared to $27.3 million or $0.20 per share for the same period in 2019.

  • Free cash flow of $3.2 million, net of an investment of $13.9 million in Kiena, or $0.02 per share1 (Q3 2019: free cash flow of $9.2 million or $0.07 per share.

  • Net income of $14.6 million or $0.10 per share (Q3 2019: $12.4 million or $0.09 per share) and Net income (adjusted)1 of $15.5 million or $0.11 per share (Q3 2019: $12.4 million or $0.09 per share).

  • Cash position increased to $73.5 million compared to $66.7 million in the previous quarter.

  1. Refer to the Company’s 2020 Third Quarter Management Discussion and Analysis, 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

Kiena

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 2020 Third Quarter Financial Results Conference Call:
November 4, 10:00 am ET. Participants are encouraged to dial in 15 minutes in advance.

North American Toll Free: + 1 (844) 202-7109
International Dial-In Number: +1 (703) 639-1272
Conference ID: 3377048
Webcast link: https://edge.media-server.com/mmc/p/yxzv5em9

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

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 138.9 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.

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

2020

2019

2020

2019

Operating data

Milling (tonnes)

Eagle River

44,667

39,453

142,890

99,148

Mishi

11,533

204

36,301

37,297

Throughput 2

56,200

39,657

179,191

136,445

Head grades (g/t)

Eagle River

13.8

23.4

15.1

21.9

Mishi

2.5

2.8

2.7

2.6

Recovery (%)

Eagle River

97.7

97.6

97.6

97.2

Mishi

74.7

85.5

77.8

83.3

Production (ounces)

Eagle River

19,319

28,894

67,893

67,723

Mishi

689

15

2,379

2,633

Total gold produced 2

20,008

28,910

70,272

70,356

Total gold sales (ounces)

21,700

23,450

71,340

66,323

Eagle River Complex (per ounce of gold sold) 1

Average realized price

$

2,532

$

1,957

$

2,341

$

1,819

Cash costs

1,052

815

1,022

838

Cash margin

$

1,480

$

1,142

$

1,318

$

981

All-in Sustaining Costs 1

$

1,395

$

1,344

$

1,348

$

1,290

Average 1 USD → CAD exchange rate

1.3321

1.3204

1.3541

1.3292

Cash costs per ounce of gold sold (US$) 1

$

790

$

618

$

755

$

630

All-in Sustaining Costs (US$) 1

$

1,047

$

1,018

$

995

$

970

Financial Data

Mine profit 1

$

32,116

$

26,770

$

94,039

$

65,084

Net income

$

14,614

$

12,449

$

42,224

$

28,868

Net income adjusted 1

$

15,484

$

12,449

$

43,470

$

26,499

Operating cash flow

$

25,465

$

27,275

$

89,140

$

55,256

Free cash flow (outflow) 1

$

3,200

$

9,199

$

37,563

$

9,925

Per share data

Net income

$

0.10

$

0.09

$

0.30

$

0.21

Adjusted net earnings 1

$

0.11

$

0.09

$

0.31

$

0.19

Operating cash flow 1

$

0.18

$

0.20

$

0.64

$

0.40

Free cash flow 1

$

0.02

$

0.07

$

0.27

$

0.08


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

September 30,
2020

December 31,
2019

Assets

Current

Cash and cash equivalents

$

73,513

$

35,657

Receivables and prepaids

2,993

1,996

Sales tax receivable

5,467

3,344

Inventories

9,280

19,667

Total current assets

91,253

60,664

Restricted cash

657

657

Deferred financing cost

926

988

Mineral properties, plant and equipment

123,845

116,765

Exploration properties

135,718

106,644

Total assets

$

352,399

$

285,718

Liabilities

Current

Borrowings

$

-

$

3,636

Payables and accruals

23,646

19,219

Income and mining tax payable

2,763

1,419

Current portion of lease liabilities

5,607

3,781

Total current liabilities

32,016

28,055

Lease liabilities

5,916

5,889

Deferred income and mining tax liabilities

38,893

23,829

Decommissioning provisions

22,181

21,443

Total liabilities

99,006

79,216

Equity

Equity attributable to owners of the Company

Capital stock

178,874

174,789

Contributed surplus

6,172

5,590

Retained earnings

68,347

26,123

Total equity attributable to owners of the Company

253,393

206,502

$

352,399

$

285,718


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,

2020

2019

2020

2019

Revenues

$

55,000

$

45,940

$

167,104

$

120,751

Cost of sales

(29,206

)

(25,246

)

(93,066

)

(72,002

)

Gross profit

25,794

20,694

74,038

48,749

Other expenses

Corporate and general

1,371

1,417

5,147

4,923

Stock-based compensation

518

486

2,262

2,641

COVID-19 costs

1,281

-

1,837

-

3,170

1,903

9,246

7,564

Operating income

22,624

18,791

64,792

41,185

Quebec exploration credits refund

-

-

-

2,867

Interest expense

(263

)

(138

)

(802

)

(364

)

Accretion of decommissioning provisions

(88

)

(64

)

(265

)

(301

)

Interest and other income

(294

)

157

(203

)

482

Income before income and mining taxes

21,979

18,746

63,522

43,869

Income and mining tax expense

Current

2,195

1,335

6,234

3,478

Deferred

5,170

4,962

15,064

11,523

7,365

6,297

21,298

15,001

Net income and total

comprehensive income

$

14,614

$

12,449

$

42,224

$

28,868

Earnings per share

Basic

$

0.10

$

0.09

$

0.30

$

0.21

Diluted

$

0.10

$

0.09

$

0.30

$

0.21

Weighted average number of common

shares (000s)

Basic

139,308

137,302

138,898

136,615

Diluted

142,969

140,989

142,478

140,119

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

Retained

Capital

Contributed

Earnings/

Total

Stock

Surplus

(Deficit)

Equity

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

-

Value attributed to RSUs exercised

253

(253

)

-

-

Value attributed to DSUs exercised

175

(175

)

-

-

Stock-based compensation

-

2,641

-

2,641

Balance, September 30, 2019

$

172,184

$

6,133

$

14,046

$

192,363

Balance, December 31, 2019

$

174,789

$

5,590

$

26,123

$

206,502

Net income for the period ended

June 30, 2020

-

-

42,224

42,224

Exercise of options

2,405

-

-

2,405

Value attributed to options exercised

1,103

(1,103

)

-

-

Value attributed to options expired

-

-

-

-

Value attributed to DSUs redeemed

0

-

-

-

Value attributed to RSUs exercised

577

(577

)

-

-

Stock-based compensation

-

2,262

-

2,262

Balance, September 30, 2020

$

178,874

$

6,172

$

68,347

$

253,393


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,

2020

2019

2020

2019

Operating Activities

Net income

$

14,614

$

12,449

$

42,224

$

28,868

Depreciation and depletion

6,322

6,076

20,001

16,335

Stock-based compensation

518

486

2,262

2,641

Accretion of decommissioning provisions

88

64

265

301

Deferred income and mining tax expense

5,170

4,962

15,064

11,523

Interest expense

263

143

802

378

Write-down of mining equipment

-

-

-

-

Foreign exchange loss on lease financing

(80

)

-

104

-

26,895

24,180

80,722

60,046

Net changes in non-cash working capital

2,139

4,225

13,307

(2,580

)

Mining tax paid

(3,569

)

(1,130

)

(4,889

)

(2,210

)

Net cash from operating activities

25,465

27,275

89,140

55,256

Financing Activities

Exercise of options

623

954

2,405

3,645

Amortization of deferred financing cost

95

-

61

-

Debt issue less deferred cost

-

3,304

-

3,304

Repayment of borrowings

-

-

(3,636

)

-

Repayment of lease liabilities

(1,322

)

(1,558

)

(3,531

)

(4,129

)

Termination of lease arrangements

-

(3,952

)

-

(3,952

)

Interest paid

(263

)

(138

)

(802

)

(364

)

Net cash used in financing activities

(867

)

(1,390

)

(5,503

)

(1,496

)

Investing Activities

Additions to mining properties

(6,981

)

(10,616

)

(18,972

)

(23,637

)

Additions to exploration properties

(13,962

)

(5,872

)

(29,074

)

(16,908

)

Funds held against standby letter of credit

-

(30

)

-

(657

)

Net changes in non-cash working capital

3,125

1,849

2,265

(1,325

)

Net cash used in investing activities

(17,818

)

(14,669

)

(45,781

)

(42,527

)

Increase in cash and cash equivalents

6,780

11,216

37,856

11,233

Cash and cash equivalents - beginning of period

66,733

27,395

35,657

27,378

Cash and cash equivalents - end of period

$

73,513

$

38,611

$

73,513

$

38,611

Cash and cash equivalents consist of:

Cash

$

73,513

$

38,611

$

73,513

$

38,611

$

73,513

$

38,611

$

73,513

$

38,611

PDF available: http://ml.globenewswire.com/Resource/Download/3cb6c120-9169-45a9-b75a-89da505cf2c9