Wesdome Announces 2018 Third Quarter Financial Results
Wesdome Announces 2018 Third Quarter Financial Results
TORONTO, Nov. 08, 2018 -- Wesdome Gold Mines Ltd. (TSX: WDO) (“Wesdome” or the “Company”) today announces third
quarter (“Q3 2018”) financial results. All figures are stated in Canadian dollars unless otherwise noted.
Mr. Duncan Middlemiss, President and CEO, commented, “Production in Q3 2018 was positively impacted as the result of
mining the first 303 stope in September, where the muck sample head grades averaged 38.5 grams per tonne, gold (“g/t”). As
a result, production of 19,437 ounces at a head grade of 13.3 g/t was above reserve grade of 12.2 g/t at the Eagle River
Underground Mine. Accordingly, cash and all-in sustaining costs for the quarter were $815 per ounce (US$624) and $1,160
(US$888) per ounce, respectively, 20% lower than Q3 2017. With the year to date cash costs of $894 (US$695) and all-in
sustaining costs of $1,243 (US$965), on a per ounce basis, we expect to end the year with these cost metrics to be below the
lowest end of our guidance of $925 (US$720) per ounce on cash costs and $1,350 (US$1,050) per ounce on all-in sustaining
costs.”
“We attained the fourth consecutive quarter of free cash flow generation of $2.1 million ($0.02 per share) for the quarter. Eagle
River Complex operations continue to fund all exploration, development, administrative expenses, and a $23 million exploration
and development program at the Kiena Complex in Val d’Or Quebec.”
“Looking ahead to the remainder of 2018, at Eagle River, we are very well positioned to achieve our increased guidance range
of 70,000 – 75,000 ounces (54,371 year to date, Q3 2018), and beat the low end of our cost metrics guidance.”
“At Kiena, we have completed all additional drift development for exploration platforms, and added one more drill for a total of 4
drills underground. One drill is testing the potential up-plunge extension, and one drill will begin shortly testing the flattening of
the A Zone at depth. Initial resource calculation on the Kiena Deep A Zone will be released in December as planned. We view
this resource statement as a snapshot in time as further step out drilling subsequent to the data collection for the resource
estimation has provide evidence of the expansion of the resource. Additionally, the capping factor will be reassessed as the
current 34.28 g/t Au is likely inappropriate for the mineralization discovered to date within the A Zone.”
Key operating and financial highlights in Q3 2018 include:
1. Gold production of 19,795 ounces (“ozs”) from the Eagle River Complex, a 28% increase over the same period in the
previous year (Q3 2017: 15,493 ozs):
◦ Eagle River Underground – 46,777 tonnes at a head grade of 13.3 g/t for 19,437 ozs produced, a 46% increase
over the previous year (Q3 2017: 13,313 ozs).
◦ Mishi Open Pit – 4,076 tonnes at a head grade of 3.4 g/t for 358 ozs produced (Q3 2017: 2,181 ozs).
2. Revenue of $28.9 million, a 37% increase over the previous year (Q3 2017: $21.2 million).
3. Ounces sold 18,401 at an average sales price of $1,571/oz (Q3 2017: 13,069 ounces at an average price of $1,619/oz).
4. Cash costs 1 of $815/oz or US$624/oz, a 20% decrease over the same period in 2017 (Q3 2017: $1,013/oz or
US$809/oz).
5. AISC 1 of $1,160/oz or US$888/oz, a 20% decrease over the same period (Q3 2017: $1,446/oz or US$1,154/oz).
6. Earned mine profit1 of $13.9 million, a 1.8 times increase over Q3 2017 (Q3 2017 - $7.9 million).
7. Operating cash flow of $12.8 million or $0.10 per share1, a 3.6 times increase over the previous year (Q3 2017: $3.5
million or $0.03 per share).
8. Free cash flow of $2.1 million or $0.02 per share1 (Q3 2017: outflow of $6.5 million or ($0.05) per share).
9. Net income of $3.6 million or $0.03 per share (Q3 2017: $0.3 million or nil, on a per share basis). Net income
(adjusted) 1 for Q3 2018 was also $3.6 million or $0.03 per share (Q3 2017: $1.9 million or $0.01 per share).
10. Cash position of $30.7 million at September 30, 2018.
11. Refer to the Company’s Third Quarter 2018 Management Discussion and Analysis, section entitled “Non-IFRS
Performance Measures” for the reconciliation of these non-IFRS measurements to the financial statements.
1 Refer to the Company’s Third Quarter 2018 Management Discussion and Analysis, section entitled “Non-IFRS Performance
Measures” for the reconciliation of these non-IFRS measurements to the financial statements.
Exploration Highlights for Q3 2018
Eagle River
• Initial mining of the 300E Zone between the 864 and 844 metre level (“m-level”) has continued to confirm the
continuity of the strong grades and the geometry of the mineralized zone defined by drifts and the
encompassing drill holes. The 303E Zone accounts for approximately 19% of the current mineral reserves
and will continue to be the focus of mining development in Q4 2018 and into 2019.
• Mine development is being completed to provide drilling platforms on the 750 and 925 m-levels to further
define and explore extensions of the 300E and 7 zones as well as test the potential intersection of the No
Name Lake zone with the mine diorite.
• A 10,000 metre (“m”) surface drilling program has commenced with 2 drills to identify new zones along
strike and to the east of the 7 and 300 zones at upper levels of the mine that would have the potential to
positively impact the gold production from the Eagle River underground mine. In addition, a fourth
underground drill has been added to test this area at depth.
Kiena
• Drilling of the Kiena Deep - A Zone is ongoing with 4 drill rigs. Recent drilling from the exploration ramp
has continued to intersect often multiple high grade lenses comprised of shear zone hosted quartz veins,
including 177.3 g/t over 5.1 m core length (6.5 g/t cut, 5.1 m true width) in hole 6321 and 163.8 g/t over 3.0 m
core length (13.1 g/t over 2.6 m true width) in hole 6338.
• Recent drilling continued to extend the zone of mineralization down plunge to the southeast. Following the
continued success of the ongoing diamond drill program, the Company extended the current exploration
drifts by a total of 450 m.
• Recent drilling of the A Zone has identified a well-defined, moderate plunge of approximately 45 degrees to
the SE to the gold mineralization that occurs predominantly along the basalt – chlorite-carbonate schist
boundary. It is now understood that the A Zone occurs along a connecting structure between the regional
structures hosting the S50 and VC zones, respectively. Recent drilling has now extended the A zone to 600
m down plunge, and based on limited historic drilling, is interpreted to extend an additional 600 m up
plunge to intersect the VC zone. This could significantly expand the potential resource base of the A Zone
and will be the focus of drilling this year and into 2019.
• An updated mineral resource estimate is on schedule to be completed in Q4 2018.
Technical Disclosure
The technical content of this release has been compiled, reviewed and approved by Marc-André 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.
2018 Third Quarter Financial Results Conference Call:
The Company’s 2018 Third Quarter Financial Results conference call will take place on November 9, 2018 at 10:00 am. ET.
Conference details are found below.
North American Toll Free: + 1 (844) 202-7109
International Dial-In Number: +1 (703) 639-1272
Conference ID: 8497324
Webcast link: https://edge.media-server.com/m6/p/35univou
A webcast of the earnings call can also be accessed under the News and Events section of the Company’s website
(www.wesdome.com )
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,
2018 2017 2018 2017
Operating data
Milling (tonnes)
Eagle River 46,777 44,421 134,635 117,959
Mishi 4,076 38,638 62,155 114,396
Throughput 2 50,854 83,058 196,790 232,355
Head grades (g/t)
Eagle River 13.3 9.7 12.2 10.3
Mishi 3.4 2.0 2.3 1.8
Recovery (%)
Eagle River 96.9 96.1 96.2 95.9
Mishi 80.9 87.2 82.5 84.9
Production (ounces)
Eagle River 19,437 13,313 50,602 37,498
Mishi 358 2,181 3,769 5,687
Total gold produced 2 19,795 15,493 54,371 43,185
Total gold sales (ounces) 18,401 13,069 52,404 38,419
Eagle River Complex (per ounce of gold sold) 1
Average realized price $ 1,571 $ 1,619 $ 1,651 $ 1,656
Cash costs 815 1,013 894 1,137
Cash margin $ 756 $ 606 $ 757 $ 519
All-in Sustaining Costs 1 $ 1,160 $ 1,446 $ 1,243 $ 1,594
Mine operating costs/tonne milled 1 $ 283 $ 182 $ 233 $ 203
Average 1 USD → CAD exchange rate 1.307 1.2528 1.2878 1.3091
Cash costs per ounce of gold sold (US$) 1 $ 624 $ 809 $ 695 $ 869
All-in Sustaining Costs ( US$) 1 $ 888 $ 1,154 $ 965 $ 1,218
Financial Data
Mine profit 1 $ 13,898 $ 7,921 $ 39,629 $ 19,931
Net income $ 3,631 $ 296 $ 12,215 $ 1,854
Net income adjusted 1 $ 3,631 $ 1,883 $ 12,215 $ 3,441
Operating cash flow $ 12,823 $ 3,541 $ 37,668 $ 13,757
Free cash flow $ 2,137 $ (6,517) $ 7,315 $ (17,078)
Per share data
Net income $ 0.03 $ 0.00 $ 0.09 $ 0.01
Adjusted net earnings 1 $ 0.03 $ 0.01 $ 0.09 $ 0.03
Operating cash flow $ 0.10 $ 0.03 $ 0.28 $ 0.10
Free cash flow 1 $ 0.02 $ (0.05) $ 0.05 $ (0.13)
Notes
1. Refer to the Company’s Third Quarter 2018 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 (Unaudited)
(Expressed in thousands of Canadian dollars)
September
30,
2018
December
31,
2017
Assets
Current
Cash and cash equivalents $ 30,714 $ 22,092
Receivables and prepaids 1,472 3,821
Tax receivable 1,944 1,932
Inventories 7,498 5,314
Total current assets 41,628 33,159
Deferred income tax assets 308 5,450
Mining properties, plant and equipment 85,727 81,375
Exploration properties 75,725 59,929
Total assets $ 203,388 $ 179,913
Liabilities
Current
Payables and accruals $ 18,533 $ 17,003
Deferred revenue 2,329 -
Mining and income taxes payable 1,849 671
Current portion of obligations under finance leases 3,935 2,541
Total current liabilities 26,646 20,215
Obligations under finance leases 4,534 3,983
Deferred mining tax liability 7,001 6,300
Decommissioning provisions 11,505 11,192
Total liabilities 49,686 41,690
Equity
Equity attributable to owners of the Company
Capital stock 165,660 164,161
Contributed surplus 5,673 3,967
Deficit (17,631) (29,905)
Total equity attributable to owners of the Company 153,702 138,223
Total liabilities and equity $ 203,388 $ 179,913
Wesdome Gold Mines Ltd.
Interim Condensed 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,
2018 2017 2018 2017
Revenues $ 28,920 $ 21,165 $ 86,580 $ 64,513
Cost of sales 20,599 15,594 59,768 50,448
Gross profit 8,321 5,571 26,812 14,065
Other expenses
Corporate and general 1,429 909 3,922 3,695
Share-based payments 434 572 2,265 2,258
Kiena care and maintenance 353 200 1,130 767
Restructuring costs - 2,159 - 2,159
Write-off of mining equipment - - 290 -
2,216 3,840 7,607 8,879
Operating income 6,105 1,731 19,205 5,186
Interest on long-term debt (68) (58) (191) (402)
Accretion of decommissioning provisions (105) 54 (313) (196)
Interest and other 79 (30) 1,228 (63)
Income before income tax 6,011 1,697 19,929 4,525
Mining and income tax expense
Current 663 100 1,871 151
Deferred 1,717 1,301 5,843 2,520
2,380 1,401 7,714 2,671
Net income and total
comprehensive income $ 3,631 $ 296 $ 12,215 $ 1,854
Net earnings per share
Basic $ 0.03 $ 0.00 $ 0.09 $ 0.01
Diluted $ 0.03 $ 0.00 $ 0.09 $ 0.01
Weighted average number of common
shares (000s)
Basic 134,754 133,888 134,390 132,527
Diluted 137,836 135,481 135,827 134,830
Wesdome Gold Mines Ltd.
Interim Condensed Consolidated Statements of Total Equity (Unaudited)
For the nine months ended September 30, 2018
(Expressed in thousands of Canadian dollars)
Equity
Component
Capital Contributed
of
Convertible Total
Stock Surplus Debentures Deficit Equity
Balance, December 31,2016 $ 156,402 $ 2,173 $ 932 $ (32,106) $ 127,401
Net income for the nine month period ended
September 30, 2017 - - - 1,854 1,854
Conversion 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 - (40) - 40 -
Share-based payments - 2,258 - - 2,258
Balance, September 30, 2017 $ 164,161 $ 3,459 $ - $ (29,280) $ 138,340
Balance, December 31,2017 $ 164,161 $ 3,967 $ - $ (29,905) $ 138,223
Net income for the nine month period ended
September 30, 2018 - - - 12,215 12,215
Exercise of options 999 - - - 999
Value attributed to options exercised 500 (500) - - -
Value attributed to options expired - (59) - 59 -
Share-based payments - 2,265 - - 2,265
Balance, September 30, 2018 $ 165,660 $ 5,673 $ - $ (17,631) $ 153,702
Wesdome Gold Mines Ltd.
Interim Condensed Consolidated Statements of Cash Flows
(Unaudited, expressed in thousands of Canadian dollars)
Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Operating activities
Net income $ 3,631 $ 296 $ 12,215 $ 1,854
Depletion and depreciation 5,577 2,350 12,817 6,766
Share-based payments 434 572 2,265 2,258
Decommissioning provisions 105 (54) 313 196
Deferred mining and income tax expense 1,717 1,301 5,843 2,520
Interest on long-term debt 68 58 191 409
Accretion of discount on convertible debentures - - - 103
Write-off of mining properties and fixed assets - - 290 -
Loss on disposal of equipment - - - 159
11,532 4,523 33,934 14,265
Net changes in non-cash working capital 1,291 (931) 4,427 (1,357)
Mining tax received (paid) - (51) (693) 849
Net cash from operating activities 12,823 3,541 37,668 13,757
Financing activities
Repayment of convertible debentures - - - (2,091)
Exercise of options 690 55 999 1,915
Repayment of obligations under finance leases (931) (820) (2,546) (2,251)
Interest paid (68) - (191) (237)
Net cash used in financing activities (309) (765) (1,738) (2,664)
Investing activities
Additions to mining properties (4,022) (3,894) (12,011) (11,779)
Additions to exploration properties (5,733) (5,317) (15,796) (16,958)
Funds released from restricted cash - - - 6,920
Proceeds on sale of equipment - - - 90
Net changes in non-cash working capital 1,236 368 499 488
Net cash used in investing activities (8,519) (8,843) (27,308) (21,239)
Increase (decrease) in cash and cash equivalents 3,995 (6,067) 8,622 (10,146)
Cash and cash equivalents, beginning of period 26,719 22,681 22,092 26,760
Cash and cash equivalents, end of period $ 30,714 $ 16,614 $ 30,714 $ 16,614
Cash and cash equivalents consist of:
Cash $ 21,633 $ 3,095 $ 21,633 $ 3,095
Term deposits 9,081 13,519 9,081 13,519
$ 30,714 $ 16,614 $ 30,714 $ 16,614
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 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, Québec. 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 134.9 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. 29
or Lindsay Carpenter Dunlop
VP Investor Relations
416-360-3743 ext. 25
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, average realized price of gold sold; cash costs per ounce of gold sold; production
costs per tonne milled; mine profit (loss); all-in sustaining costs per ounce of gold sold; free cash flow and operating and free
cash flow per share; and net income (adjusted) and adjusted net earnings per share. 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 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.
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