Wesdome Announces 2021 First Quarter Financial Results

 
Download as PDF Published on: May 12, 2021

TORONTO, May 12, 2021 (GLOBE NEWSWIRE) -- Wesdome Gold Mines Ltd. (TSX: WDO) (“Wesdome” or the “Company”) today announces first quarter (“Q1 2021”) financial results. All figures are stated in Canadian dollars unless otherwise noted.

Mr. Duncan Middlemiss, President and CEO commented, “During the first quarter, a significant milestone was achieved at Kiena, with the completion of the A Zone bulk sample reconciliation which has produced 6% more gold at a feed grade of 15.7 g/t versus 14.7 g/t in the resource block model grade. Additionally, the bulk sample generated an additional $3.9 million from the sale of 1,793 ounces of gold in the quarter. Significant progress was also made towards projects that would benefit the mine re-start, such as development, mill refurbishment, shaft and other construction projects, and work at the tailing management area. The PFS is near completion and the Company intends to release the results of the PFS later in the quarter.

During the quarter a total of $14.0 million was spent on growth and capital projects (Q1 2020: $10.6 million). Consequently, free cash flow decreased compared to the same period in 2020, and the cash position remained flat quarter over quarter with $63.9 million as of March 31 (December31 2020: $63.5 million), sufficient to fund all exploration, sustaining, and growth capital projects including the potential restart of the Kiena mine

The Eagle River Underground Mine produced 53,540 tonnes at a head grade of 12.8 grams per tonne (“g/t Au”) for 21,396 ounces produced, within our expectations. Eagle River grades were slightly below the low end of our guidance, however increased throughout the quarter. The Company expects to be within guidance for the year, and remains on track to produce 92,000 – 105,000 ounces from the Eagle River Complex, plus an additional 15,000 – 25,000 from Kiena pending a restart decision.

Exploration activities at both sites ramped up during Q1 and produced very positive results. At Eagle, the Company is embarking on its’ $16M exploration campaign with 5 drills underground and 2-3 rigs on surface. Currently a regional structural compilation is underway which will aid in the understanding of the current Eagle River deposit and generate high quality mine and regional targets. As well, definition drilling at the Falcon Zone advanced rapidly, and initial sill development is expected to commence in Q2, thereby providing an opportunity to assess the gold mineralization of the Falcon Zone within volcanic rocks.

At Kiena, an exciting new discovery was made – a new high grade gold zone was discovered in the footwall of the A Zone. This drilling highlights the potential to add ounces, not only in this area but illustrates the untested potential of the entire gold system around the Kiena mine. This footwall zone will be one of the zones of focus for the continued drilling.”

The Company has performed well during the quarter despite the Covid-19 pandemic. Hygiene protocols are well implemented and the operations have been Covid free throughout. We continue to operate diligently keeping our workplaces safe for our employees, contractors, and vendors.

Key operating and financial highlights of the Q1 2021 results include:

  • Gold production of 22,564 ounces from the Eagle River Complex, a 10% decrease over the same period in the previous year (Q1 2020: 25,122 ounces):
    • Eagle River Underground 53,540 tonnes at a head grade of 12.8 grams per tonne for 21,396 ounces produced, 13% decrease over the previous year (Q1 2020: 24,457 ounces).
    • Mishi Open Pit 17,219 tonnes at a head grade of 2.5 g/t Au for 1,169 ounces produced (Q1 2020: 665 ounces).
  • Revenue of $46.0 million, a 19.8% decrease over the previous year (Q1 2020: $57.3 million).
  • Ounces sold 22,457, which includes 1,793 ounces from the Kiena bulk sample at an average sales price of $2,219/oz (Q1 2019: 26,500 ounces at an average price of $2,162/oz).
  • Cash margin1 of $21.8 million, a 21.0% decrease over Q1 2020 (Q1 2020 - $27.6 million).
  • Operating cash flow of $22.0 million or $0.16 per share1 as compared to $33.5 million or $0.24 per share for the same period in 2020.
  • Free cash flow of $0.1 million, net of an investment of $12.6 million in Kiena, or nil per share1 (Q1 2020: free cash flow of $16.7 million or $0.12 per share).  
  • Net income and Net income (adjusted)1 of $7.1 million or $0.05 per share (Q1 2020: $11.5 million or $0.08 per share).  
  • Cash position increased to $63.9 million compared to $63.5 million in the previous quarter.
  • Cash costs1 of $1,076/oz or US$850/oz, a 4% decrease over the same period in 2020 (Q1 2020: $1,120/oz or US$833/oz) due to the inclusion of 1,793 lower cost ounces from the Kiena bulk sample, which was processed in Q4 2020 and sold in Q1 2020.
  • All-in sustaining costs (“AISC”) 1 of $1,497/oz or US$1,182/oz, a 5% increase over the same period in 2020 (Q1 2020: $1,423/oz or US$1,058/oz), due to lower ounces sold and higher sustaining capital, which was partially offset by the inclusion of 1,793 lower cost ounces from the Kiena bulk sample, which was processed in Q4 2020 and sold in Q1 2021. This includes approximately $30/ounce in COVID-19 safety related costs.
  1. Refer to the Company’s 2021 First 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
  • The Eagle River underground ore production averaged 641 tpd in Q1 2021 due to the ventilation system upgrade, which included the development of the 640 m ramp to provide a connection with the main ramp, a new ventilation raise underground, and the installation of a second fan
  • At the Falcon Zone, initial sill development is expected to commence in Q2, thereby providing an opportunity to assess the gold mineralization of the Falcon Zone in the volcanic rocks. The Company is continuing to explore the 311 West Zone along the western margin of the mine diorite. The zone has transitioned from the diorite into the adjacent mafic volcanics, again highlighting the potential of the volcanic rocks to host gold mineralization.
  • Surface drilling in ongoing both east and west of the mine to follow up on anomalous values returned from regional drilling program in 2020.
  • A comprehensive analysis of the structural geology is being completed at the mine and the surrounding volcanic rocks to aid in exploration targeting.
  • Total metres drilled in 2021 are budgeted to range between 164,000 and 174,000 m for five underground and three surface drill rigs, including underground exploration of 60,000 - 70,000 m, underground definition drilling of 50,000 m, and surface exploration drilling 54,000 m.
Kiena
  • A total of 7,032 tonnes were processed from the Kiena Deep A zone bulk sample at the Kiena mill in Q4 2020. The bulk sample recovered 6% more gold than the MRE with a feed grade of 15.7 g/t versus model grade of 14.7 g/t. Total gold produced was 3,479 ounces with gold recovery in the Kiena mill of 98.2%. To date, 3,293 ounces of gold have been sold, which includes 1,500 ounces in Q4 2020 and 1,793 ounces in Q1 2021, with the remaining to be sold in Q2.
  • A new high grade gold zone was discovered in the footwall of the A Zone. This drilling highlights the potential to add ounces not only in this area but illustrates the untested potential of the entire gold system around the Kiena mine.
  • Recent drilling continues to expand the Kiena Deep A Zone predominantly along the lateral extensions of the zone. The high grades intersected will be included in future resource updates and are expected to add to the current resource base including Hole 6739W3: 46.2 g/t Au over 24.2 m core length (36.6 g/t Au cut, 6.7 m true width) A1 Zone.
  • The Pre-Feasibility Study ("PFS") is progressing well, and it is expected to be completed in Q2, with a scheduled re-start decision shortly thereafter. The pre-production timeframe is forecast to be less than six months, potentially driving the Kiena Mine into commercial production in Q4 of this year.
  • The 2021 exploration program at Kiena consists of 65,000 m of underground drilling and 42,000 m of surface drilling.

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 2021 First Quarter Financial Results Conference Call

North American Toll Free: + 1 (844) 202-7109
International Dial-In Number: +1 (703) 639-1272
Conference ID: 2264519
Webcast link: https://edge.media-server.com/mmc/p/87za7n4c

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

ABOUT WESDOME
Wesdome Gold Mines is a 100% Canadian focused Company that has had over 30 years of continuous gold mining operations in Canada.  The Company’s strategy is to build an intermediate gold producer, producing 200,000+ ounces from two mines in Ontario and Quebec. The Eagle River Complex in Wawa, Ontario is currently increasing gold production from the high-grade Eagle River Underground Mine.  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 is currently completing a PFS in support of a production restart decision. The Company is in the process of divesting of its Moss Lake gold deposit, located 100 kilometres (“kms”) west of Thunder Bay, Ontario. The Company has approximately 139.4 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
  March 31,
  2021 2020
Operating data    
Milling (tonnes)    
Eagle River 53,540 55,874
Mishi 17,219 11,047
Throughput 2 70,759 66,921
Head grades (g/t)    
Eagle River 12.8 14.0
Mishi 2.5 2.5
Recovery (%)    
Eagle River 97.1 97.3
Mishi 84.8 74.8
Production (ounces)    
Eagle River 21,396 24,457
Mishi 1,169 665
Total gold produced 2 22,564 25,122
Total gold sales (ounces) 3 22,457 26,500
     
Eagle River Complex (per ounce of gold sold) 1  
Average realized price$2,223$2,162
Cash costs 1,076 1,120
Cash margin$1,147$1,042
All-in Sustaining Costs 1$1,497$1,423
     
Mine operating costs/tonne milled 1$335$425
Average 1 USD → CAD exchange rate 1.2660 1.3449
     
Cash costs per ounce of gold sold (US$) 1$850$833
All-in Sustaining Costs (US$) 1$1,182$1,058
     
Financial Data    
Cash margin 1$21,776$27,619
Net income$7,103$11,513
Net income adjusted 1$7,103$11,513
Earnings before interest, taxes, depreciation and amortization 1$18,662$25,414
Operating cash flow$22,033$33,491
Free cash flow$99$16,734
Per share data    
Net income$0.05$0.08
Adjusted net income 1$0.05$0.08
Operating cash flow 1$0.16$0.24
Free cash flow 1$0.00$0.12
     

 

Wesdome Gold Mines Ltd.
Consolidated Statements of Financial Position
(Expressed in thousands of Canadian dollars)

    As at March 31, 2021  As at December 31, 2020 
Assets      
Current      
Cash and cash equivalents  $ 63,884 $63,480 
Receivables and prepaids   3,999  4,243 
Sales tax receivable   4,773  4,731 
Inventories   13,606  12,451 
Non-current assets held for sale   10,326  - 
Total current assets   96,588  84,905 
       
Restricted cash   657  657 
Deferred financing cost   960  827 
Mineral properties, plant and equipment   132,047  128,670 
Exploration properties   145,097  143,524 
Total assets  $ 375,349 $358,583 
       
Liabilities       
Payables and accruals  $ 25,117 $21,123 
Income and mining tax payable   4,378  3,481 
Current portion of lease liabilities   6,243  5,901 
Total current liabilities   35,738  30,505 
       
Lease liabilities   5,723  5,604 
Deferred income and mining tax liabilities   41,491  37,354 
Decommissioning provisions   21,813  22,270 
Total liabilities   104,765  95,733 
       
Equity      
Equity attributable to owners of the Company      
Capital stock   180,802  179,540 
Contributed surplus   5,841  6,472 
Retained earnings   83,941  76,838 
Total equity attributable to owners of the Company   270,584  262,850 
       
   $ 375,349 $358,583 

 

Wesdome Gold Mines Ltd.
Consolidated Statements of Income (loss) and Comprehensive Income (loss)
(Expressed in thousands of Canadian dollars except for per share amounts)

   Three Months Ended 
   March 31 
    2021   2020  
       
Revenues  $ 45,973  $57,332  
Cost of sales   (30,264)  (37,590) 
Gross profit   15,709   19,742  
       
Other expenses      
Corporate and general   2,391   1,971  
Stock-based compensation   310   404  
    2,701   2,375  
       
Operating income    13,008   17,367  
       
Interest expense   (259)  (324) 
Accretion of decommissioning provisions   (110)  (125) 
Interest and other income   (303)  364  
Income before income and mining taxes   12,336   17,282  
       
Income and mining tax expense      
Current   1,096   2,270  
Deferred   4,137   3,499  
    5,233   5,769  
       
Net income and total      
comprehensive income  $ 7,103  $11,513  
       
Earnings per share      
Basic  $ 0.05  $0.08  
Diluted  $ 0.05  $0.08  
       
Weighted average number of common      
shares (000s)      
Basic   139,732   138,464  
Diluted   142,617   142,024  
       

 

Wesdome Gold Mines Ltd.
Consolidated Statements of Total Equity
(Expressed in thousands of Canadian dollars)

           
   Capital Contributed Retained Total 
   Stock Surplus Earnings Equity 
           
Balance, December 31, 2019  $174,789 $5,590  $26,123 $206,502 
Net income for the period ended          
March 31, 2020   -  -   11,513  11,513 
Exercise of options   682  -   -  682 
Value attributed to options exercised   324  (324)  -  - 
Value attributed to RSUs exercised   577  (577)  -  - 
Stock-based compensation   -  404   -  404 
           
Balance, March 31, 2020  $176,372 $5,093  $37,636 $219,101 
           
Balance, December 31, 2020   179,540  6,472   76,838  262,850 
Net income for the period ended          
March 31, 2021   -  -   7,103  7,103 
Exercise of options   321  -   -  321 
Value attributed to options exercised   155  (155)  -  - 
Value attributed to RSUs exercised   786  (786)  -  - 
Stock-based compensation   -  310   -  310 
           
Balance, March 31, 2021  $ 180,802 $ 5,841  $ 83,941 $ 270,584 
           

 

Wesdome Gold Mines Ltd.
Consolidated Statements of Cash Flows
(Unaudited, expressed in thousands of Canadian dollars)

   Three Months Ended  
   March 31 
    2021   2020  
       
Operating Activities      
Net income   7,103   11,513  
Depreciation and depletion   6,067   7,877  
Stock-based compensation   310   404  
Accretion of decommissioning provisions   110   125  
Deferred income and mining tax expense   4,137   3,499  
Amortization of deferred financing cost   106   62  
Interest expense   259   324  
Foreign exchange loss on lease financing   (30)  351  
    18,062   24,155  
Net changes in non-cash working capital   4,170   10,656  
Mining and income tax paid   (199)  (1,320) 
Net cash from operating activities   22,033   33,491  
       
Financing Activities      
Exercise of options   321   682  
Deferred financing cost   (239)  (30) 
Repayment of borrowings   -   (3,636) 
Repayment of lease liabilities   (1,516)  (1,057) 
Interest paid   (259)  (324) 
Net cash used in financing activities   (1,693)  (4,365) 
       
Investing Activities      
Additions to mining properties   (8,519)  (6,546) 
Additions to exploration properties   (11,899)  (9,154) 
Net changes in non-cash working capital   482   315  
Net cash used in investing activities   (19,936)  (15,385) 
       
Increase (decrease) in cash and cash equivalents  404   13,741  
Cash and cash equivalents - beginning of the period   63,480   35,657  
Cash and cash equivalents - end of the period   63,884   49,398  
       
Cash and cash equivalents consist of:      
Cash  $ 63,884  $49,398  
   $ 63,884  $49,398  
       

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