Wesdome Announces 2019 Third Quarter Financial Results

 
Download as PDF Published on: November 6, 2019

TORONTO, Nov. 06, 2019 (GLOBE NEWSWIRE) -- Wesdome Gold Mines Ltd. (TSX: WDO) (“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 HighlightsComparison 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 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  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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