Wesdome Announces 2020 Third Quarter Financial Results

 
Download as PDF Published on: November 3, 2020

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
  • Although exploration drilling is currently operating at a reduced capacity due to COVID-19 restrictions, three underground drills and one surface drill are in operation. One drill continues to better define and extend the down plunge extension of the Falcon 7 Zone, which now extends from surface to the 1,000 m elevation.   Recent drilling returned 314 g/t Au over 6.0 m. This drilling was completed from the 772 m elevation that was established to test the down plunge extension of the Falcon Zone. Since that time, additional mine development has been completed on 622 m elevation to allow for drilling, and is now within 50 m in the footwall of the Falcon 7 Zone.
  • With nearby development already established on the 772 and 622 m elevations, the Falcon zones have the potential to be included in future mine production and ultimately augmenting production rates in the medium term.
  • A surface fly drilling program has commenced with one drill to test regional exploration targets.”
Kiena
  • The ongoing drilling program continues to focus on definition drilling of the high grade A Zone, in order to convert inferred resources to indicated resources, in advance of an updated resource estimate later in the year and subsequent incorporation into the PFS.
  • Seven underground drills are in operation. 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 down plunge of the most recent resource estimate. The A Zone now extends down plunge in excess of 880 m.
  • In addition to the ongoing drilling, access development is currently being completed towards the A Zone on 111 Level so as 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 the necessary information to complete the ongoing Prefeasibility Study ("PFS"), expected to be completed by H1 2021.
  • Recent drilling completed from the 79 level exploration ramp has focussed on the down dip extensions of the VC zones, namely the VC1 zone. The mineralization of the VC1 zone has transitioned from a more sulphide rich mineralization found in the upper extents of the mine, to a quartz rich environment with visible gold present at depth. Drilling has extended the VC1 zone 475 m down plunge from 67 Level to 107 Level, where development and drilling are presently being completed.
  • A 10,000 m surface drilling program has commenced to test several targets located along the Marbenite Fault (within 1.5 km from Kiena Mine Complex).

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 

 

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