Wesdome Announces 2020 Second Quarter Financial Results

 
Download as PDF Published on: August 11, 2020

TORONTO, Aug. 11, 2020 (GLOBE NEWSWIRE) -- Wesdome Gold Mines Ltd. (TSX: WDO) (“Wesdome” or the “Company”) today announces second quarter (“Q2 2020”) financial results. All figures are stated in Canadian dollars unless otherwise noted.

Mr. Duncan Middlemiss, President and CEO commented, “During Q2, Wesdome generated operating cash flow of $30.2 million or $0.22 per share and free cash flow of $17.7 million, net of an investment of $6.0 million in Kiena, or $0.13 per share, ending the quarter with a cash position of $66.7 million (Q1 2020: $49.4 million). Cash costs for the quarter were $882 per ounce (US: $637) and All-in sustaining costs were $1,218 per ounce (US $879) a 21% and 14% decrease respectively over Q1 2020.

With H1 2020 total gold production of 50,264 ounces at an average grade of 15.8 grams per tonne at the Eagle River 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 grams per tonne.  H1 2020 cash costs of $1,009 per ounce (US$739) are above the high end of the company’s guidance range of $875 per ounce (US$670) due to inventory adjustments in the first quarter, and reduced operational efficiencies related to protocols implemented due to COVID-19.  The Company is revising cash cost guidance for the year to $950 - $975 per ounce (US$700 – $720). H1 2020 All-in sustaining costs of $1,327 per ounce (US$972) are within the company’s guidance range of $1,280 - $1,350 per ounce (US $985 - $1,040) and we expect full year costs to be within this range.

The Eagle River complex was operating on reduced operations, and some work, such as exploration, mine and tailing construction activities, that were suspended in order to facilitate enhanced physical distancing to limit the potential spread of the COVID-19 virus, have gradually restarted in the second quarter. The initial budget for Eagle River underground exploration was 119,000 metres, which will now be 85,000 metres. Surface exploration metres of 33,500 metres will be largely unchanged, and we will introduce some regional exploration campaigns away from the existing mine.

At Kiena, work was shut down on March 24 in response to the Government of Quebec’s mandated closures due to the COVID-19 virus, and resumed on May 11. Drilling activities are back to 100% capacity, and we expect to achieve our previously guided drill metres of 80,000 metres. We expect to publish an updated resource estimate in Q4, followed by a Pre-feasibility study. During the quarter, we also completed our Preliminary Economic Analysis (“PEA”) which delivered favourable economics of an after-tax IRR of 102%. A summary of the PEA was released on May 27, and the full report filed on June 25. Both reports are available on the Company’s website and on sedar.com.

Additionally, the Company wishes to announce the appointment of Raj Gill to the position of Vice President, Corporate Development. Raj has over 11 years of experience in the mining industry and capital markets including equity research, and most recently Director of Corporate Development at Kinross where he led and supported a range of strategic, financial and technical initiatives. Raj will be a great asset as Wesdome continues on its trajectory of becoming an all-Canadian intermediate gold producer.”

Key operating and financial highlights of the Q2 2020 results include:

  • Gold production of 25,142 ounces from the Eagle River Complex, a 12.1% increase over the same period in the previous year (Q2 2019: 22,437 ounces):
    -- Eagle River Underground 42,349 tonnes at a head grade of 18.1 grams per tonne (“g/t Au”) for 24,117 ounces produced, 15.5% increase over the previous year (Q2 2019: 20,873 ounces).
    -- Mishi Open Pit 13,721 tonnes at a head grade of 2.9 g/t Au for 1,026 ounces produced (Q2 2019: 1,564 ounces).
  • Revenue of $54.8 million, a 29.6% increase over Q2 2019 (Q2 2019: $42.3 million).
  • Ounces sold 23,140 at an average sales price of $2,365/oz (Q2 2019: 24,113 ounces at an average price of $1,752/oz).
  • Earned mine profit1 of $34.3 million, a 55% increase over Q2 2019 (Q2 2019 - $22.1 million).
  • Cash costs 1 of $882 (US$637) per ounce of gold sold (Q2 2019 of $837 (US$626) due to higher tonnes processed at the mill.
  • All-in sustaining costs (“AISC”) 1 of $1,218/oz or US$879/oz, a slight decrease over the same period in 2019 (Q2 2019: $1,220/oz or US$912/oz), due to lower sustaining capital expenditures; partially offset by lower grades and higher tonnage processed at the Mill.
  • Operating cash flow of $30.2 million or $0.22 per share1 as compared to $15.4 million or $0.11 per share for the same period in 2019.
  • Free cash flow of $17.7 million, net of an investment of $6.0 million in Kiena, or $0.13 per share1 (Q2 2019: free cash flow of $1.2 million or $0.01 per share. 
  • Net income of $16.1 million or $0.12 per share (Q2 2019: $8.3 million or $0.06 per share) and Net income (adjusted)1 of $16.4 million or $0.12 per share (Q2 2019: $8.3 million or $0.06 per share). 
  • Cash position increased to $66.7 million compared to $49.4 million in the previous quarter.

1 Refer to the Company’s 2020 Second 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
  • With normal operations curtailed due to the COVID-19 pandemic, surface and exploration drilling is currently operating at a reduced capacity. However, recent underground drilling from the 772 m elevation was completed to test the down plunge extension of the Falcon Zone.  It is interpreted that the Falcon/7 Zone now extends from surface approximately 1,000 m down plunge and is part of the up plunge extension of the 7 Zone currently being mined near the 1,000 m elevation. This is significant, as the extension of this zone is proximal to mine infrastructure and has the potential to be included in future mine production and ultimately augment production rates in the medium term. Additional drilling is required to better define these zones and remains a priority in the second half of 2020. 
Kiena
  • The Preliminary Economic Assessment ("PEA") study was completed in Q2 2020. The PEA demonstrates a low-cost and high margin operation, with low capital requirements and a short payback period, while minimizing risks and maximizing shareholders\' return. This PEA is based on the Mineral Resource Estimate (“MRE”) dated September 2019 and includes only those resources proximal to the mine infrastructure, specifically the A Zone, B Zone, S50, VC Zones and the South Zone.  An updated resource estimate is planned early in Q4 2020 followed by a pre-feasibility study (“PFS”) and a production restart decision in H1 2021.

  • Diamond drilling activities at Kiena restarted on May 11th, 2020 focusing on the continuation of converting inferred into indicated resources. This drilling has continued to confirm the overall continuity of the geometry and the high-grade gold mineralization of the A Zone and identified additional mineralization outside of the most recent resource estimate. The A Zone now extends down plunge in excess of 830 m.
  

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 Second Quarter Financial Results Conference Call:

North American Toll Free: + 1 (844) 202-7109
International Dial-In Number: +1 (703) 639-1272
Conference ID:  9581356
Webcast link: https://edge.media-server.com/mmc/p/ord86na2

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 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 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 
  2020 2019  2020 2019 
Operating data          
Milling (tonnes)          
Eagle River 42,349 28,754  98,223 59,695 
Mishi 13,721 18,623  24,768 37,093 
Throughput 2 56,070 47,377  122,991 96,788 
Head grades (g/t)          
Eagle River 18.1 23.4  15.8 20.9 
Mishi 2.9 3.0  2.7 2.6 
Recovery (%)          
Eagle River 97.9 96.4  97.6 96.9 
Mishi 79.8 85.2  77.8 83.3 
Production (ounces)          
Eagle River 24,117 20,873  48,574 38,828 
Mishi 1,026 1,564  1,690 2,618 
Total gold produced 2 25,142 22,437  50,264 41,446 
Total gold sales (ounces) 23,140 24,113  49,640 42,873 
           
Eagle River Complex (per ounce of gold sold) 1          
Average realized price$2,365$1,752 $2,257$1,743 
Cash costs 882 837  1,009 850 
Cash margin$1,483$915 $1,247$893 
All-in Sustaining Costs 1$1,218$1,220 $1,327$1,260 
           
Average 1 USD → CAD exchange rate 1.3853 1.3377  1.3651 1.3336 
           
Cash costs per ounce of gold sold (US$) 1$637$626 $739$637 
All-in Sustaining Costs (US$) 1$879$912 $972$945 
           
Financial Data          
Mine profit 1$34,304$22,055 $61,923$38,314 
Net income$16,097$8,327 $27,610$16,419 
Net income adjusted 1$16,473$8,327 $27,986$14,050 
Operating cash flow$30,246$15,400 $63,675$27,981 
Free cash flow (outflow) 1$17,691$1,155 $34,363$726 
Per share data          
Net income$0.12$0.06 $0.20$0.12 
Adjusted net earnings 1$0.12$0.06 $0.20$0.10 
Operating cash flow 1$0.22$0.11 $0.46$0.21 
Free cash flow 1$0.13$0.01 $0.25$0.01 
           

 

 


Wesdome Gold Mines Ltd.

Condensed Interim Consolidated Statements of Financial Position
(Unaudited, expressed in thousands of Canadian dollars)

  June 30, 2020 December 31, 2019
Assets    
Current    
Cash and cash equivalents $ 66,733 $35,657
Receivables and prepaids  1,798  1,996
Sales tax receivable  3,256  3,344
Inventories  10,517  19,667
Total current assets  82,304  60,664
     
Restricted cash  657  657
Deferred financing cost  1,025  988
Mineral properties, plant and equipment  121,142  116,765
Exploration properties  121,756  106,644
Total assets $ 326,884 $285,718
     
Liabilities     
Current    
Borrowings $ - $3,636
Payables and accruals  18,077  19,219
Income and mining tax payable  4,137  1,419
Current portion of lease liabilities  5,133  3,781
Total current liabilities  27,347  28,055
     
Lease liabilities  6,287  5,889
Deferred income and mining tax liabilities  33,723  23,829
Decommissioning provisions  21,889  21,443
Total liabilities  89,246  79,216
     
Equity    
Equity attributable to owners of the Company    
Capital stock  177,973  174,789
Contributed surplus  5,932  5,590
Retained earnings  53,733  26,123
Total equity attributable to owners of the Company  237,638  206,502
Total liabilities and equity $ 326,884 $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  Six Months Ended
  June 30  June 30
   2019   2018    2019   2018 
          
Revenues $ 54,772  $42,276   $ 112,104  $74,811 
Cost of sales  (26,270)  (26,571)   (63,860)  (46,756)
Gross profit  28,502   15,705    48,244   28,055 
          
Other expenses         
Corporate and general  1,805   1,498    3,776   3,506 
Stock-based compensation  1,340   1,056    1,744   2,155 
          
   3,145   2,554    5,520   5,661 
          
Operating income   25,357   13,151    42,724   22,394 
          
Quebec exploration credits refund  -   -    -   2,867 
COVID-19 costs  (556)  -    (556)  - 
Interest expense  (284)  (114)   (539)  (226)
Accretion of decommissioning provisions  (52)  (122)   (177)  (237)
Interest and other income  (204)  31    91   325 
Income before income and mining taxes  24,261   12,946    41,543   25,123 
          
Income and mining tax expense         
Current  1,769   1,175    4,039   2,143 
Deferred  6,395   3,444    9,894   6,561 
   8,164   4,619    13,933   8,704 
          
Net income and total         
  comprehensive income $ 16,097  $8,327   $ 27,610  $16,419 
          
Earnings per share         
Basic $ 0.12  $0.06   $ 0.20  $0.12 
Diluted  0.11  $0.06    0.19  $0.12 
          
Weighted average number of common         
  shares (000s)         
Basic  138,918   136,740    138,691   136,266 
Diluted  142,430   139,661    142,227   139,492 
                  

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

      Retained  
  Capital ContributedEarnings/Total
  Stock Surplus (Deficit) Equity
         
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  -
Value attributed to RSUs exercised  253  (253)  -  -
Value attributed to DSUs exercised  175  (175)  -  -
Stock-based compensation  -  2,155   -  2,155
         
Balance, June 30, 2019 $170,813 $6,106  $1,555 $178,474
         
         
Balance, December 31, 2019 $ 174,789 $ 5,590  $ 26,123 $ 206,502
Net income for the period ended        
June 30, 2020  -  -   27,610  27,610
Exercise of options  1,782  -   -  1,782
Value attributed to options exercised  825  (825)  -  -
Value attributed to RSUs exercised  577  (577)  -  -
Stock-based compensation  -  1,744   -  1,744
         
Balance, June 30, 2020 $ 177,973 $ 5,932  $ 53,733 $ 237,638
         


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,
   2020   2019   2020   2019 
         
Operating Activities        
Net income $ 16,097  $8,327  $ 27,610  $16,419 
Depreciation and depletion  5,802   6,350   13,679   10,259 
Stock-based compensation  1,340   1,056   1,744   2,155 
Accretion of decommissioning provisions  52   122   177   237 
Deferred income and mining tax expense  6,395   3,444   9,894   6,561 
Interest expense  284   114   539   226 
Foreign exchange loss on lease financing  (236)  9   184   9 
   29,734   19,422   53,827   35,866 
Net changes in non-cash working capital 512   (2,942)  11,168   (6,805)
Mining tax paid  -   (1,080)  (1,320)  (1,080)
Net cash from operating activities  30,246   15,400   63,675   27,981 
         
Financing Activities        
Exercise of options  1,100   789   1,782   2,691 
Amortization of deferred financing cost 3   -   (34)  - 
Repayment of borrowings  -   -   (3,636)  - 
Repayment of lease liabilities  (1,152)  (1,316)  (2,209)  (2,571)
Interest paid  (284)  (114)  (539)  (226)
Net cash used in financing activities  (333)  (641)  (4,636)  (106)
         
Investing Activities        
Additions to mining properties  (5,445)  (6,804)  (11,991)  (13,021)
Additions to exploration properties  (5,958)  (5,498)  (15,112)  (11,036)
Funds held against standby letter of credit -   (627)  -   (627)
Net changes in non-cash working capital (1,175)  (2,282)  (860)  (3,174)
Net cash used in investing activities  (12,578)  (15,211)  (27,963)  (27,858)
         
Increase in cash and cash equivalents  17,335   (452)  31,076   17 
Cash and cash equivalents - beginning of year 49,398   27,847   35,657   27,378 
Cash and cash equivalents - end of year $ 66,733  $27,395  $ 66,733  $27,395 
         
Cash and cash equivalents consist of:        
Cash $ 66,733  $13,395  $ 66,733  $13,395 
Term deposits  -   14,000   -   14,000 
  $ 66,733  $27,395  $ 66,733  $27,395 

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