Wesdome Announces 2017 Fourth Quarter and Full Year Financial Results
TORONTO, March 21, 2018 -- Wesdome Gold Mines Ltd. (TSX:WDO) (“Wesdome” or the “Company”) today announces fourth quarter (“Q4 2017”) and full year 2017 financial results. All figures are stated in Canadian dollars unless otherwise noted.
Mr. Duncan Middlemiss, President and CEO commented, “Our 2017 results exhibit several operational and financial improvements at Wesdome. We slightly exceeded the upper end of our production guidance, mined significantly higher head grades, improved profits, and met the mid-point for our cash cost and all-in sustaining cost guidance. Looking ahead, we expect this trend to continue with 2018 costs to decrease a further 10% and gold production to increase by approximately 10% to 62,000 – 68,000 ounces as per our guidance.”
“In 2018 at the Eagle River Complex, we are committing all exploration efforts to the Eagle River Underground Mine, where reserves currently stand at 416,000 ounces at 12.2 grams per tonne. A main goal of this program is to identify additional mineralization along the eastern extension of the 300 and 7 zone parallel structures, located to the north and parallel to the main 8 zone, to create additional workplaces and thereby realize our objective of providing additional high grade ore to the mill. We are beginning a higher grade mining cycle at this operation that should continue for the foreseeable future.”
“At Kiena, the exploration ramp is nearing completion and last week we resumed drilling, with two drills on the higher grade Zone A and Upper Quartz Zone of the Kiena Deep discovery. A third drill is expected to be added in April to this area. The plan at Kiena this year is to complete 50,000 metres of underground drilling, in order to be in a position to generate a potential resource calculation on the Kiena Deep discovery. This will determine timing and next steps at this asset.”
Key operating and financial highlights of the full year 2017 results include:
- Gold production of 58,980 ounces from the Eagle River Complex, a 24% increase over the previous year (2016: 47,737
ounces):
◦Eagle River Underground 157,250 tonnes at a head grade of 10.6 grams per tonne (“g/t Au”) for 50,996 ounces produced, a 27% increase over the previous year (2016: 40,252 ounces).
◦Mishi Open Pit 152,591 tonnes at a head grade of 2.0 g/t Au for 7,985 ounces produced, a 7% increase over the previous year (2016: 7,485 ounces).
- Revenue of $96.1 million, a 14% increase over the previous year (2016: $84.0 million).
- Ounces sold 57,770 at an average sales price of $1,643/oz (2016: 48,680 ounces at an average price of $1,676/oz).
- Cash costs1 of $1,097/oz or US$845/oz, a 10% decrease over the previous year (2016: $1,218/oz or US$919/oz).
- All-in sustaining costs (“AISC”) 1 of $1,489/oz or US$1,146/oz, a 12% decrease over the previous year (2016: $1,681/oz or
US$1,268/oz).
- Earned mine profit1 of $31.5 million, a 41% increase over the previous year (2016 - $22.3 million).
- Operating cash flow of $27.2 million or $0.20 per share1 a 21% increase over the previous year (2016: $22.4 million or $0.18
per share).
- Free cash outflow of $9.3 million or ($0.07) per share1 (2016: outflow of $4.2 million or ($0.03) per share).
- Net income of $1.3 million or $0.01 per share (2016: $7.8 million or $0.06 per share). Net income (adjusted) 1 before a one-
time deferred mining tax adjustment of $3.9 million and a non-recurring $2.2 million restructuring cost was $6.8 million or $0.05 per share.
- Cash position of $22.1 million.
- Wesdome been approved by the Ontario Ministry of Northern Development and Mines (“MNDM”) for an entry into the Northern
Industrial Electricity Rate (“NIER”) program. Upon acceptance by MNDM, the Company is qualified for a retroactive electricity cost rebate to the extent of approximately $1.0 million for the period of April 1, 2017 and up to December 31, 2017.
- Mineral Reserves at the Eagle River Underground Mine of 416,000 contained gold ounces (1.1 million tonnes at 12.2 g/t Au)
(2016 1.2 million tonnes at 9.2 g/t Au for 344,000 ounces).
Key operating and financial highlights of Q4 2017 results include:
- Eagle River Complex gold production of 15,797 ounces (2016: 11,887 ozs).
•19,351 gold ounces sold (2016: 13,490 ozs).
- Cash costs1 of $1,019/oz (US$801/oz) (2016: $1,215/oz or US$911/oz).
- AISC1 of $1,284/oz or US$1,010/oz (Q4 2106: $1,631/oz or US$1,222/oz).
- Earned mine profit1 of $11.6 million (Q4 2016: $5.9 million).
- Operating cash flow of $13.5 million or $0.10 per share1 (Q4 2016: $7.7 million or $0.06 per share).
- Free cash flow generation of $5.7 million or $0.04 per share 1 (Q4 2016: out flow of $2.2 million or ($0.02) per share).
- Net loss of $0.6 million or nil, on a per share basis. Net income (adjusted)1 before the one-time mining tax adjustment was
$3.4 million or $0.03 per share.
1. Refer to the Company’s 2017 Annual Management Discussion and Analysis on pages 26 – 31, entitled “Non-IFRS Performance Measures” for the reconciliation of these non-IFRS measurements to the financial statements.
Exploration & Corporate Development Highlights for 2017
Eagle River
- At Eagle River, continued drilling has now traced the 300E structure from 750 metres (“m”) depth to 1,000 m
depth and remains open up and down plunge. Drilling highlights include 51.93 g/t Au (23.18 g/t Au cut) over 11.96 m true width.
- Development to date on the 300E Zone has identified seven subzones on the 844-metre level (“m-level”).
The combined ore strike length of the subzones are 173.7 m with a weighted average width of 2.85 m and cut and uncut gold grades of 22.62 g/t Au and 34.79 g/t Au, respectively.
- Continued drilling to explore the 300W Zone has now traced the mineralization 300 m up-plunge and
remains open to the west and up-plunge. Highlights include 41.99 g/t Au cut over 2.72 m true width.
- Resource definition drilling at Mishi completed in 2017 returned positive results from two areas located 600
m and 1,700 m west of the existing open pit mining operations. Wesdome is currently assessing these occurrences and building them into a long-term growth scenario for mining at Mishi.
Kiena
- Development of the Kiena Deep exploration ramp continued with 878 linear metres completed to date and
is expected to be completed by the end of March 2018. Early results from Kiena Deep B zone indicate moderate to locally higher gold grades obtained with occasional visible gold observed. Results include 34.37 g/t Au uncut (24.16 g/t cut) over 4.5 m core length (1.6 m true width) in hole 6186.
- As the ramp development is continuing, one drill has been actively drilling several auxiliary targets near
existing underground development including the S-50 and VC zone sectors and has returned encouraging results, including 6.68 g/t Au uncut (6.02 g/t Au cut) over 37.6 m core length and 17.89 g/t Au uncut (16.3 g/t Au cut) over 6.0 m core length from S-50 zone.
- Ramping is expected to be completed in March and will enable the Company to drill the higher grade
Kiena Deep A zone shortly thereafter.
Moss Lake
- Drilling at Moss Lake was completed along the strike of the existing resources to significantly extend
mineralization over an additional strike length of 4.5 kilometres. The project has been kept on care and maintenance since the fall of 2017 to allow the geological team to focus its attention on the Eagle River Complex and the Kiena gold deposits.
Corporate
- The appointment of two former mining executives as directors and a new management team in mid-year to
steer the Company to increase production and profitability.
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 2017 Fourth Quarter and Full Year Financial Results Conference Call:
North American Toll Free: + 1 (844) 202-7109 International Dial-In Number: +1 (703) 639-1272 Conference ID: 8836599 Webcast link: https://edge.media-server.com/m6/p/cjgs5kz3
Webcast can also be accessed under the News and Events section of the Company’s website (www.wesdome.com)
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 Years Ended December 31, December 31, 2017 2016 2017 2016
Operating data
Milling (tonnes)
Eagle River 39,291 42,607 157,250 170,369 38,197 30,714 152,591 138,668 Mishi Throughput 2 77,488 73,321 309,841 309,037
Head grades (g/t)
Eagle River 11.3 8.2 10.6 7.9 Mishi 2.3 1.6 2.0 2.0
Recovery (%)
Eagle River 94.3 94.6 95.0 93.5 Mishi 81.4 81.6 83.0 85.4 Production (ounces)
| Eagle River | 13,499 | 10,595 | 50,996 | 40,252 |
| Mishi | 2,298 | 1,292 | 7,985 | 7,485 |
| 15,797 | 11,887 | 58,980 | 47,737 |
Total gold produced 2 Total gold sales (ounces) 19,351 13,490 57,770 48,680
Eagle River Complex (per ounce of gold sold) 1
| Average realized price | $ | 1,618 | $ | 1,655 | $ | 1,643 | $ | 1,676 |
| Cash costs | 1,019 | 1,215 | 1,097 | 1,218 | ||||
| Cash margin | $ | 599 | $ | 440 | $ | 546 | $ | 458 |
| $ | 1,284 | 1,631 | 1,489 | 1,681 | ||||
| All-in Sustaining Costs1 | $ | $ | $ |
| $ | 206 | 206 | 204 | 184 | ||||
| Mine operating costs/tonne milled1 | $ | $ | $ | |||||
| Average 1 USD → CAD exchange rate | 1.2712 | 1.3344 | 1.2986 | 1.3253 | ||||
| $ | 801 | 911 | 845 | 919 | ||||
| Cash costs per ounce of gold sold (US$)1 | $ | $ | $ | |||||
| $ | 1,010 | 1,222 | 1,146 | 1,268 | ||||
| All-in Sustaining Costs (US$)1 | $ | $ | $ |
Financial Data
| $ | 11,606 | 5,931 | 31,537 | 22,293 | ||||
| Mine profit1 | $ | $ | $ | |||||
| $ | (567) | 1,600 | 1,287 | 7,786 | ||||
| Net income (loss) | $ | $ | $ | |||||
| Net income (loss) adjusted1 | $ | 3,357 | $ | 1,600 | $ | 6,798 | $ | 6,789 |
| $ | 13,468 | 7,663 | 27,225 | 22,424 | ||||
| Operating cash flow | $ | $ | $ | |||||
| $ | 5,655 | (2,169) | (9,344) | (4,211) | ||||
| Free cash flow | $ | $ | $ |
Per share data
| Net income (loss) | $ | 0.00 | $ | 0.01 | $ | 0.01 | $ | 0.06 |
| $ | 0.03 | 0.01 | 0.05 | 0.05 | ||||
| Adjusted net earnings1 | $ | $ | $ | |||||
| Operating cash flow | $ | 0.10 | $ | 0.06 | $ | 0.20 | $ | 0.18 |
| Free cash flow1 | $ | 0.04 | $ | (0.02) | $ | (0.07) | $ | (0.03) |
Notes
1. Refer to the Company’s 2017 Annual Management Discussion and Analysis on pages 26 – 31, 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.
Consolidated Statements of Financial Position
(Expressed in thousands of Canadian dollars)
As of As of December 31, 2017 December 31, 2016
Assets
Current
| Cash and cash equivalents | $ 22,092 $ | 26,760 | |
| Receivables and prepaids | 3,821 | 776 | |
| Tax receivable | 1,932 | 2,906 | |
| Inventories | 5,314 | 5,929 | |
| Total current assets | 33,159 | 36,371 | |
| Restricted funds | - | 6,920 | |
| Deferred income tax assets | 5,450 | 7,009 | |
| Mining properties, plant and equipment | 81,375 | 74,241 | |
| Exploration properties | 59,929 | 38,373 | |
| Total assets | $ 179,913 $ | 162,914 |
Liabilities
Current
| Payables and accruals | $ 17,003 $ | 11,831 | |
| Mining and income taxes payable | 671 | - | |
| Current portion of obligations under finance leases | 2,541 | 2,079 | |
| Convertible debentures | - | 6,900 | |
| Total current liabilities | 20,215 | 20,810 | |
| Obligations under finance leases | 3,983 | 4,223 | |
| Deferred mining tax liability | 6,300 | - | |
| Decommissioning provisions | 11,192 | 10,480 | |
| Total liabilities | 41,690 | 35,513 |
Equity
Equity attributable to owners of the Company
| Capital stock | 164,161 | 156,402 | |
| Contributed surplus | 3,967 | 2,173 | |
| Equity component of convertible debentures | - | 932 | |
| Deficit | (29,905) | (32,106) | |
| Total equity attributable to owners of the Company | 138,223 | 127,401 | |
| Total liabilities and equity | $ 179,913 $ | 162,914 |
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 Years Ended December 31, December 31,
| 2017 | 2016 | 2017 | 2016 | |
| Revenues | $ 31,544 | $ 22,166 | $ 96,057 | $ 84,031 |
| Cost of sales | 23,780 | 18,188 | 74,228 | 66,360 |
| 7,764 | 3,978 | 21,829 | 17,671 |
Gross profit
Other expenses
| Corporate and general | 1,248 | 1,278 | 4,943 | 4,777 | |
| Share based payments | 520 | 781 | 2,778 | 1,734 | |
| Kiena care and maintenance | 329 | 695 | 1,096 | 2,245 | |
| Restructuring costs | - | - | 2,159 | 686 | |
| Write-down of mining equipment | 316 | - | 316 | - | |
| 2,413 | 2,754 | 11,292 | 9,442 | ||
| Operating income | 5,351 | 1,224 | 10,537 | 8,229 | |
| Interest on long-term debt | (60) | (264) | (462) | (1,030) | |
| Accretion of decommissioning provisions | (14) | 78 | (210) | 20 | |
| Interest and other | (4) | (34) | (67) | 17 | |
| Exploration credits refund | - | - | - | 2,620 | |
| Income before income tax | 5,273 | 1,004 | 9,798 | 9,856 |
Mining and income tax (expense) recovery
| Current | (571) | 900 | (722) | 900 |
| Deferred | (5,269) | (304) | (7,789) | (2,970) |
| (5,840) | 596 | (8,511) | (2,070) | |
| $ (567) | $ 1,600 | $ 1,287 | $ 7,786 |
Net income (loss) and total comprehensive income (loss)
Net earnings (loss) per share
Basic $ 0.00 $ 0.01 $ 0.01 $ 0.06 Diluted $ 0.00 $ 0.01 $ 0.01 $ 0.06
Weighted average number of common shares (000s)
Basic 133,889 130,205 132,871 126,158 Diluted 135,058 132,732 134,927 128,086
Wesdome Gold Mines Ltd.
Consolidated Statements of Total Equity
(Expressed in thousands of Canadian dollars)
Equity Component Capital Contributed of Convertible Total
| Stock | Deficit | Equity | |||||
|---|---|---|---|---|---|---|---|
| Balance, December 31, 2015 | $ 137,126 $ | 1,729 $ | 932 $ (40,289) $ 99,498 | ||||
| Net income for the year ended December 31, 2016 | - | - | - | 7,786 | 7,786 | ||
| Exercise of options | 1,356 | - | - | - | 1,356 | ||
| Value attributed to options exercised | 893 | (893) | - | - | - | ||
| Value attributed to options expired | - | (397) | - | 397 | - | ||
| Share based payments | - | 1,734 | - | - | 1,734 | ||
| Shares issued to acquire Moss Lake area properties | 750 | - | - | - | 750 | ||
| Shares issued under prospectus | 17,267 | - | - | - | 17,267 | ||
| Share issue cost, net of tax | (990) | - | - | - | (990) | ||
| Balance, December 31, 2016 | $ 156,402 $ | 2,173 $ | 932 $ (32,106) $ 127,401 | ||||
| Net income for the year ended December 31, 2017 | - | - | - | 1,287 | 1,287 | ||
| Conversion/maturity of convertible debentures | 4,912 | - | (932) | 932 | 4,912 | ||
| Exercise of options | 1,915 | - | - | - | 1,915 | ||
| Value attributed to options exercised | 932 | (932) | - | - | - | ||
| Value attributed to options expired | - | (52) | - | 52 | - | ||
| Tax related to share issue cost | - | - | - | (70) | (70) | ||
| Share based payments | - | 2,778 | - | - | 2,778 | ||
| Balance, December 31, 2017 | $ 164,161 $ | 3,967 $ | - $ (29,905) $ 138,223 |
Surplus Debentures
Wesdome Gold Mines Ltd.
Consolidated Statements of Cash Flows
(Unaudited, expressed in thousands of Canadian dollars)
Three Months Ended Years Ended December 31, December 31, 2017 2016 2017 2016
Operating activities
| $ (567) $ | 1,600 $ | 1,287 $ | ||
|---|---|---|---|---|
| Depletion and depreciation | 3,842 | 1,798 | 10,608 | 7,067 |
| Deferred mining and income tax expense | 5,269 | 304 | 7,789 | 2,970 |
| Mining tax received | - | (900) | 900 | (900) |
| Share based payments | 520 | 781 | 2,778 | 1,734 |
| Decommissioning provisions | 14 | (78) | 210 | (20) |
| Interest on long-term debt | (50) | 176 | 359 | 692 |
| Accretion of discount on convertible debentures | - | 88 | 103 | 338 |
| Loss on disposal of equipment | 55 | 184 | 214 | 260 |
| Write-down of mining equipment | 316 | - | 316 | - |
| 9,399 | 3,953 | 24,564 | 19,927 | |
| Net changes in non-cash working capital | 4,069 | 3,710 | 2,661 | 2,497 |
| Funds provided by operating activities | 13,468 | 7,663 | 27,225 | 22,424 |
Net income (loss) 7,786
Financing activities
Repayment of convertible debentures - - (2,091) - Exercise of options - 257 1,915 1,356
| Finance lease payments | (674) | (554) | (2,753) | (1,914) |
| Interest paid | (60) | (299) | (469) | (692) |
| Shares issued under prospectus, net of issue cost | - | - | - | 16,017 |
| Funds (used) provided by financing activities | (734) | (596) | (3,398) | 14,767 |
Investing activities
| Additions to mining properties | (3,241) | (4,034) | (15,020) | (18,150) | |||
| Additions to exploration properties | (4,598) | (4,677) | (21,556) | (10,214) | |||
| Funds released from (held against) standby letters of credit | - | - | 6,920 | (4,385) | |||
| Proceeds on sale of exploration properties | - | - | - | 7,000 | |||
| Proceeds on sale of equipment | - | 26 | 90 | 69 |
| Net changes in non-cash working capital | 583 | (613) | 1,071 | |
| Funds used by investing activities | (7,256) | (9,298) | (28,495) | (25,855) |
| Increase (decrease) in cash and cash equivalents | 5,478 | (2,231) | (4,668) | 11,336 |
| Cash and cash equivalents, beginning of period | 16,614 | 28,991 | 26,760 | 15,424 |
(175)
$ 26,760 Cash and cash equivalents, end of period 22,092 $ 26,760 $ 22,092 $
Cash and cash equivalents consist of:
| Cash | $ | 13,092 $ | 8,999 $ | 13,092 $ | 8,999 |
| Term deposits | 9,000 | 17,761 | 9,000 | 17,761 | |
| $ | 22,092 $ | 26,760 $ | 22,092 $ | 26,760 |
ABOUT WESDOME
Wesdome Gold Mines is in its 31st year of continuous gold mining operations in Canada. The Company is 100% Canadian focused with a pipeline of projects in various stages of development. The Eagle River Complex near 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 Company has further upside at its Moss Lake gold deposit, located 100 kilometres west of Thunder Bay, Ontario. The Company has approximately 134 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. 29 [email protected]
or
Lindsay Carpenter Dunlop VP Investor Relations 416-360-3743 ext. 25 [email protected]
8 King St. East, Suite 811 Toronto, ON, M5C 1B5 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.