Wesdome Announces 2021 Second Quarter Financial Results Kiena Mill Successfully Restarted

 
Download as PDF Published on: August 11, 2021

TORONTO, Aug. 11, 2021 (GLOBE NEWSWIRE) -- Wesdome Gold Mines Ltd. (TSX: WDO) (“Wesdome” or the “Company”) today announces second quarter (“Q2 2021”) financial results. All figures are stated in Canadian dollars unless otherwise noted.

Mr. Duncan Middlemiss, President and CEO commented, “Strong gold production in the second quarter of 30,375 ounces drove significant improvement in cost performance. Cash costs of $814 per ounce (US$663) and AISC of $1,240 (US$1,009), a decrease of 24% and 17% respectively over Q1 2021. H1 2021 production of 52,939 ounces, and cash costs of US$745 per ounce and AISC of US$1,085 per ounce has us well positioned to deliver on both our production and cost guidance for the year at Eagle River Mine Complex (92,000 – 105,000 ounces at cash costs of US$680 – 770 and AISC of US$980 – 1,090). Cash margins also improved quarter on quarter with $40.1 million earned in Q2 compared to $21.8 million in Q1. Cash position increased to $67.8 million compared to $63.9 million in the previous quarter.

During Q2, there were some one-time non-cash items which impacted net income. After announcing a restart of operations at Kiena on May 26, we recorded an impairment reversal charge of $58.6 million pre-tax ($36.3 million after-tax), as well, we had an after-tax gain on the disposal of the Moss Lake mineral properties of $34.5 million. Consequently, net income was $87.8 million, or $0.63 per share. Net income adjusted for these one-off items was $17.0 million, or $0.12 per share.

As a result of the above items and also due to a higher capital spending rate at Kiena, free cash outflow for the quarter was $9.1 million. A total of $24.1M was spent at Kiena in Q2 in preparation for the production restart that was approved by the Board of Directors of the Company late in May. This decision was based on the positive outcome of the independent Pre-Feasibility Study published earlier this year. The investment includes $13.7 of mine development and restart costs, $7.2M on mobile and fixed equipment purchases, including headframe bin repairs and hoist system upgrades. As a result of the preparatory work the mill was restarted on July 12, and has been successfully processing S50 ore since then. As well, work is underway to prepare the A Zone for its first production stope starting in August, slightly ahead of schedule. In addition, $3.2M was spent in surface and underground exploration, which has confirmed the discovery of the new footwall zone in the Kiena Deep.”

Key operating and financial highlights of the Q2 2021 results include:

  • Gold production of 30,375 ounces from the Eagle River Complex, a 21% increase over the same period in the previous year (Q2 2020: 25,142 ounces):
    • Eagle River Underground 63,057 tonnes at a head grade of 15.1 grams per tonne for 29,836 ounces produced, 24% increase over the previous year (Q2 2020: 24,117 ounces).
    • Mishi Open Pit 9,347 tonnes at a head grade of 2.4 g/t Au for 539 ounces produced (Q2 2020: 1,026 ounces).
  • Revenue of $63.9 million, a 17% increase over the previous year (Q2 2020: $54.8 million).
  • Ounces sold were 28,500 at an average sales price of $2,239/oz (Q2 2020: 23,140 ounces at an average price of $2,365/oz).
  • Cash margin1 of $40.6 million, a 18.0% increase over Q2 2020 (Q2 2020 - $34.3 million).
  • Operating cash flow of $26.9 million or $0.19 per share1 as compared to $30.3 million or $0.22 per share for the same period in 2020.
  • Free cash outflow of $9.1 million, net of an investment of $24.1 million in Kiena, or ($0.07) per share1 (Q2 2020: free cash flow of $17.8 million or $0.13 per share).
  • Net income of $87.8 million or $0.63 per share (Q2 2020: $16.1 million or $0.12 per share) and Net income (adjusted)1 of $17.0 million or $0.12 per share (Q2 2020: $16.1 million or $0.12 per share).
  • Cash position increased to $67.8 million compared to $63.9 million in the previous quarter.
  • Cash costs1 of $814/oz or US$663/oz, an 8% decrease over the same period in 2020 (Q2 2020: $882/oz or US$637/oz).
  • All-in sustaining costs (“AISC”) 1 of $1,240/oz or US$1,009/oz, a 2% increase over the same period in 2020 (Q2 2020: $1,218/oz or US$879/oz), due to higher sustaining capital, corporate and general expenses and lease payments, which was partially offset by a 23% increase in ounces sold.
  1. Refer to the Company’s 2021 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
  • The Eagle River underground ore production increased to 693 tpd in Q2 2021 due to the ventilation system upgrade that occurred in the previous quarter, 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 on surface. Operational efficiencies have also contributed positively.
  • Definition drilling and initial sill development continues at the Falcon Zone, which will provide an opportunity to assess the gold mineralization of the Falcon Zone in the volcanic rocks. The Company is continuing to develop and 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, similar to that observed at the neighbouring Falcon 7 zone.
  • Surface drilling is ongoing both east and west of the mine to follow up on anomalous values returned from regional drilling program in 2020.
Kiena
  • The Preliminary Feasibility Study (“PFS”) was completed in Q2 2021 and based on the positive results the operations will restart in H2 2021. Mineral reserves are over 1.5M tonnes at a head grade of 11.89 g/t for a total of 602,000 ounces. Remaining mineral resources (exclusive of mineral reserves) for the Kiena Complex total 0.6M tonnes grading 7.6 g/t Au totaling 156,500 ounces of gold and remaining inferred resources totaling 3.4 million tonnes grading 5.9 g/t Au for 649, 200 ounces.
  • The reconciliation of the A zone bulk sample that was processed in Q4 2020 recovered 6% more gold than the MRE with a feed grade of 15.7 g/t Au versus model grade of 14.7 g/t Au. Total gold produced from the 7,032 tonnes milled was 3,479 ounces with gold recovery in the Kiena mill of 98.2%
  • The new Footwall Zone was initially announced in March of this year. To date, the Footwall Zone is defined by new intersections of gold mineralization located within a 50 metre (‘m’) wide corridor adjacent to the footwall of A2 Zone. The Footwall Zone corridor remains open laterally and down plunge. The location of new gold intercepts in recent holes suggest that the Footwall Zone extends over 300 m along plunge. The deepest hole returned 41.2 g/t Au (uncapped) over 51.2 m core length.
  • The discovery of the high-grade Footwall Zone could have significant positive impacts on the resources, the ounces per vertical metre, and the overall project economics. 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 continuing drilling.
  • Ongoing drilling also continues to better define and 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. Hole 6750 returned 122.1 g/t Au over 7.5 m core length (26.7 g/t Au capped, 4.7 m true width).
  • Surface drilling is ongoing with a 42,000 m drilling program. These initial targets are located along the Marbenite Fault (within 1.5 km from Kiena Mine Complex).
  • Wesdome purchased the Tarmac Gold Property from Globex Mining Enterprises. The Property consists of 6 claims covering 94 hectares located entirely within Wesdome’s Kiena Mine Complex and less than 2 kilometers northeast of the Kiena underground mine, all located beneath Lac De Montigny.

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 Second Quarter Financial Results Conference Call

North American Toll Free: + 1 (844) 202-7109
International Dial-In Number: +1 (703) 639-1272
Conference ID: 9491665
Webcast link: https://edge.media-server.com/mmc/p/xxgwkhek
The webcast can also be accessed under the News and Events section of the Company’s website (www.wesdome.com)

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

ABOUT WESDOME
Wesdome is 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 Québec. The Eagle River Underground Mine in Wawa, Ontario is currently producing gold at a rate of 92,000 – 105,000 ounces per year. Wesdome is actively exploring its brownfields asset, the Kiena Complex in Val d’Or, Québec. The Kiena Complex is a fully permitted former mine with a 930-metre shaft and 2,000 tonne-per-day mill, and a restart of operations was announced on May 26, 2021. The Company has completed a PFS in support of the production restart decision. The Company also retains meaningful exposure to the Moss Lake gold deposit, located 100 kilometres west of Thunder Bay, Ontario through its equity position in Goldshore Resources Inc. The Company has approximately 140.0 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 EndedSix Months Ended 
  June 30, June 30, 
  2021  2020  2021  2020 
Operating data          
Milling (tonnes)          
Eagle River 63,057  42,349  116,596  98,223 
Mishi 9,347  13,721  26,567  24,768 
Throughput 2 72,404  56,070  143,163  122,991 
Head grades (g/t)          
Eagle River 15.1  18.1  14.1  15.8 
Mishi 2.4  2.9  2.4  2.7 
Recovery (%)          
Eagle River 97.4  97.9  97.3  97.6 
Mishi 76.1  79.8  81.9  77.8 
Production (ounces)          
Eagle River 29,836  24,117  51,232  48,574 
Mishi 539  1,026  1,707  1,690 
Total gold produced 2 30,375  25,142  52,939  50,264 
Total gold sales (ounces) 28,500  23,140  50,957  49,640 
           
Eagle River Complex (per ounce of gold sold) 1        
Average realized price$2,239 $2,365 $2,232 $2,257 
Cash costs 814  882  930  1,009 
Cash margin$1,425 $1,483 $1,302 $1,248 
All-in Sustaining Costs 1$1,240 $1,218 $1,353 $1,327 
           
Mine operating costs/tonne milled 1$324 $331 $330 $383 
           
Average 1 USD → CAD exchange rate 1.2282  1.3853  1.247  1.3651 
           
Cash costs per ounce of gold sold (US$) 1$663 $637 $745 $739 
All-in Sustaining Costs (US$) 1$1,009 $879 $1,085 $972 
           
Financial Data          
Cash margin 1$40,590 $34,304 $62,366 $61,923 
Net income$87,807 $16,097 $94,910 $27,610 
Net income adjusted 1$17,028 $16,097 $24,131 $27,610 
Earnings before interest, taxes, depreciation and amortization 1$32,812 $30,347 $51,474 $55,761 
Operating cash flow$26,875 $30,348 $48,908 $63,839 
Free cash flow$(9,131)$17,793 $(9,032)$34,527 
Per share data          
Net income$0.63 $0.12 $0.68 $0.20 
Adjusted net income 1$0.12 $0.12 $0.17 $0.20 
Operating cash flow 1$0.19 $0.22 $0.35 $0.46 
Free cash flow 1$(0.07)$0.13 $(0.06)$0.25 
           

 

  1. Refer to the Company’s 2021 Second 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.

Consolidated Statements of Financial Position
(Expressed in thousands of Canadian dollars)

    
  As at June
30, 2021
 As at December
31, 2020
Assets   
Current   
Cash and cash equivalents$ 67,799 $63,480
Receivables and prepaids 10,997  8,974
Share consideration receivable 4,882  -
Inventories 16,761  12,451
Total current assets 100,439  84,905
    
Restricted cash 657  657
Deferred financing costs 938  827
Mining properties, plant and equipment 193,641  128,670
Mines under development 151,651  -
Exploration properties 15,202  143,524
Share consideration receivable 13,265  -
Investment in associate 19,466  -
Total assets$ 495,259 $358,583
    
Liabilities    
Current   
Payables and accruals$ 23,088 $21,123
Income and mining tax payable 3,466  3,481
Current portion of lease liabilities 6,744  5,901
Total current liabilities 33,298  30,505
    
Lease liabilities 6,465  5,604
Deferred income and mining tax liabilities 73,198  37,354
Decommissioning provisions 21,794  22,270
Total liabilities 134,755  95,733
    
Equity   
Equity attributable to owners of the Company   
Capital stock 182,144  179,540
Contributed surplus 6,612  6,472
Retained earnings 171,748  76,838
Total equity attributable to owners of the Company 360,504  262,850
 $ 495,259 $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  Six Months Ended
 June 30,  June 30,
  2021   2020   2021   2020 
        
Revenues$ 63,881  $54,772  $ 109,854  $112,104 
Cost of sales (29,774)  (26,826)  (60,038)  (64,416)
Gross profit 34,107   27,946   49,816   47,688 
        
Other expenses       
Corporate and general 2,841   1,805   5,232   3,776 
Stock-based compensation 1,203   1,340   1,513   1,744 
Reversal of impairment charges (58,563)  -   (58,563)  - 
Write-down of exploration properties 3,113   -   3,113   - 
  (51,406)  3,145   (48,705)  5,520 
        
Operating income  85,513   24,801   98,521   42,168 
        
Gain on sale of Moss Lake exploration properties 39,143   -   39,143   - 
Interest expense (271)  (284)  (530)  (539)
Accretion of decommissioning provisions (124)  (52)  (234)  (177)
Share of loss of associate (89)  -   (89)  - 
Fair value adjustment on share consideration receivable (8)  -   (8)  - 
Other income (expenses) (400)  (204)  (703)  91 
Income before income and mining taxes 123,764   24,261   136,100   41,543 
        
Income and mining tax expense       
Current 4,250   1,769   5,346   4,039 
Deferred 31,707   6,395   35,844   9,894 
  35,957   8,164   41,190   13,933 
        
Net income and total       
comprehensive income$ 87,807  $16,097  $ 94,910  $27,610 
        
Earnings per share       
Basic$ 0.63  $0.12  $ 0.68  $0.20 
Diluted$ 0.62  $0.11  $ 0.67  $0.19 
        
Weighted average number of common       
shares (000s)       
Basic 139,754   138,918   139,587   138,691 
Diluted 142,630   142,430   142,454   142,227 
        

 


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         
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 
          
          
Balance, December 31, 2020$ 179,540  $ 6,472  $ 76,838  $ 262,850 
Net income for the period ended         
June 30, 2021 -   -   94,910   94,910 
Exercise of options 1,231   -   -   1,231 
Value attributed to options exercised 587   (587)  -   - 
Value attributed to RSUs exercised 786   (786)  -   - 
Stock-based compensation -   1,513   -   1,513 
Balance, June 30, 2021$ 182,144  $ 6,612  $ 171,748  $ 360,504 
          


Wesdome Gold Mines Ltd.

Consolidated Statements of Cash Flows
(Unaudited, expressed in thousands of Canadian dollars)

    
 Three months ended June 30, Six months ended June 30,
  2021   2020   2021   2020 
        
Operating Activities       
Net income$ 87,807  $16,097  $ 94,910  $27,610 
Depreciation and depletion 6,483   5,802   12,550   13,679 
Stock-based compensation 1,203   1,340   1,513   1,744 
Accretion of decommissioning provisions 124   52   234   177 
Deferred income and mining tax expense 31,707   6,395   35,844   9,894 
Amortization of deferred financing cost 119   102   224   164 
Interest expense 271   284   530   539 
Reversal of impairment charges (58,563)  -   (58,563)  - 
Gain on sale of Moss Lake exploration properties (39,143)  -   (39,143)  - 
Write down of exploration properties 3,113   -   3,113   - 
Share of loss of associate 89   -   89   - 
Fair value adjustment on share consideration 8   -   8   - 
receivable       
Foreign exchange loss (gain) on lease financing (50)  (236)  (79)  184 
  33,168   29,836   51,230   53,991 
Net changes in non-cash working capital (1,131)  512   3,039   11,168 
Mining and income tax paid (5,162)  -   (5,361)  (1,320)
Net cash from operating activities 26,875   30,348   48,908   63,839 
        
Financing Activities       
Exercise of options 910   1,100   1,231   1,782 
Deferred financing costs (95)  (99)  (334)  (198)
Repayment of borrowings -   -   -   (3,636)
Repayment of lease liabilities (1,884)  (1,152)  (3,400)  (2,209)
Interest paid (271)  (284)  (530)  (539)
Net cash used in financing activities (1,340)  (435)  (3,033)  (4,800)
        
Investing Activities       
Additions to mining properties (10,050)  (5,445)  (17,873)  (11,991)
Additions to mines under development (12,704)  -   (13,400)  - 
Additions to exploration properties (11,368)  (5,958)  (23,267)  (15,112)
Cash proceeds on sale of Moss Lake, net 11,762   -   11,762   - 
of transaction costs       
Net changes in non-cash working capital 740   (1,175)  1,222   (860)
Net cash used in investing activities (21,620)  (12,578)  (41,556)  (27,963)
        
Increase in cash and cash equivalents 3,915   17,335   4,319   31,076 
Cash and cash equivalents - beginning of the period 63,884   49,398   63,480   35,657 
Cash and cash equivalents - end of the period$ 67,799  $66,733  $ 67,799  $66,733 
        
Cash and cash equivalents consist of:       
Cash$ 67,799  $66,733  $ 67,799  $66,733 
Term deposits -   -   -   - 
 $ 67,799  $66,733  $ 67,799  $66,733 

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