Wesdome Announces 2019 Second Quarter Financial Results

 
Download as PDF Published on: August 8, 2019

TORONTO, Aug. 08, 2019 (GLOBE NEWSWIRE) -- Wesdome Gold Mines Ltd. (TSX: WDO) (“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 MiddlemissorLindsay 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 
           

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