Wesdome Announces 2019 Second Quarter Financial Results
Wesdome Announces 2019 Second Quarter Financial Results
TORONTO, Aug. 08, 2019 -- Wesdome Gold Mines Ltd. (TSX: WDO) (“Wesdome” or the “Company”) today announces second
quarter (“Q2 2019”) financial results. All figures are stated in Canadian dollars unless otherwise noted.
Mr. Duncan Middlemiss, President and CEO commented, “In Q2, the Eagle River operations generated $6.7 million in free
cash flow, of which $5.5 million was reinvested into the Kiena Complex. Cash and all-in sustaining costs were lower than the
previous quarter, with all-in sustaining costs of $1,220 per ounce (US$912) lower than our guidance range $1,280 - $1,350
(US$985 - $1,040). During the quarter, we launched an additional capital project pertaining to our Eagle River tailings facility.
This project will cost approximately $6.5 million in capital, of which $1.5 million has been spent, and will ensure the Company
is well positioned for the future. The Company guided 72,000 – 80,000 ounces of production for the year and with 41,446
ounces produced in the first half of the year, we are on track to exceed the top end of our guidance range.”
“At Kiena, we continue to infill drill the Kiena Deep discovery, where the continuity of high grade mineralization continues to be
confirmed within the A Zone. We expect to publish an updated resource the second half of this year followed by a PEA in early
2020 outlining our next steps for the project.”
Key operating and financial highlights of the Q2 2019 results include:
• Gold production of 22,437 ounces from the Eagle River Complex, a 35% increase over the same period in the previous
year (Q2 2018: 16,628 ounces):
◦ Eagle River Underground 28,754 tonnes at a head grade of 23.4 grams per tonne (“g/t Au”) for 20,873 ounces
produced, 41% increase over the previous year (Q2 2018: 14,767 ounces).
◦ Mishi Open Pit 18,623 tonnes at a head grade of 3.0 g/t Au for 1,564 ounces produced (Q2 2018: 1,860 ounces).
• Revenue of $42.3 million, a 34% increase over the previous year (Q2 2018: $31.4 million).
• Ounces sold 24,113 at an average sales price of $1,752/oz (Q2 2018: 18,573 ounces at an average price of $1,692/oz).
• Cash costs 1 of $837/oz or US$626/oz, a 6% decrease over the same period in 2018 (Q2 2018: $886/oz or US$686/oz).
• All-in sustaining costs (“AISC”) 1 of $1,220/oz or US$912/oz, a 2% decrease over the same period in 2018 (Q2 2018:
$1,242/oz or US$962/oz).
• Earned mine profit1 of $22.1 million, a 47% increase over Q2 2018 (Q2 2018 - $15.0 million).
• Operating cash flow of $15.4 million or $0.11 per share1 as compared to $12.4 million or $0.09 per share for the same
period in 2018.
• Invested $6.0 million in exploration expenditures at Eagle River and Kiena Complexes during the quarter (Q2 2018 -
$5.1 million)
• Free cash flow of $1.2 million, net of an investment of $5.5 million in Kiena, or $0.01 per share1 (Q2 2018: free cash flow
of $2.0 million or $0.01 per share).
• Net income and Net income (adjusted)1 of $8.3 million or $0.06 per share (Q2 2018: $5.7 million or $0.04 per share).
• Cash position of $27.4 million.
1. Refer to the Company’s 2019 Second Quarter 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 Q2 2019
Eagle River
• The mining of the 303 Zone between the first and the second sub-level above the 844 metre level ("m-level") continued in
Q2 2019 and confirmed the continuity of the strong grades and the geometry of the mineralized zone. The development
of the remainder of the 300 Zone in that area will take place once the 303 zone is completed. A new mining horizon in
the 303 Zone is being developed between the 884 m-level and the 925 m-level. The development work is scheduled in
Q4 this year. Exploration drilling continued on the 925 m-level to prepare the 300E zone for mining.
• Recent development and drilling have continued to expand the 7 East Zone along strike and down plunge to the
southeast side of a northeast transecting diabase dyke that offsets the eastern extension approximately 20 m. This
extension is a substantial addition of potential resources compared to previous interpretations, and thus will be an
ongoing focus of 2019 drilling.
• Ongoing drilling and initial drift development along the 311 W Zone has confirmed the continuity and strike length of 145
m grading 28.8 g/t Au with a 1.8 m average width and has extended the mineralized zone in excess of 50 m further
west than the previously interpreted diorite contact and remains open and therefore a focus for 2019 drilling.
• Exploration drilling from the 758 m-level in the eastern half of the mine diorite has continued during the quarter to better
define the new intersected zones that is interpreted to be parallel zones north of the past producing 6 and 8 zones and
could be the possible extensions of the parallel 7 Zone and 300 Zone structures being mined further to the west.
• Surface drilling in the volcanics to the west of the mine diorite encountered the Falcon 7 and Falcon 300 zones, with
one drill hole returning 18.5 g/t Au over 5.8 m core length. These zones are interpreted to be extensions of the 300 and
7 zone structures which lie approximately 200 m to the east within the mine diorite.
Kiena
• Four drills continue to operate on the 1050 m-level exploration ramp completing the infill and immediate plunge
extension drilling of the Kiena Deep A Zone in preparation for an updated resource estimate expected in H2 2019. The
A Zone remains open at depth and one drill is dedicated to testing this prospective area. The ongoing definition drilling
has continued to confirm the overall continuity of the geometry and the high-grade gold mineralization of the Kiena Deep
A Zone that now extends over 700 m along plunge. Meanwhile a 5th drill is located on the 670 m-level and continues to
return high grade intersections along the interpreted-up plunge extension of the Kiena Deep A Zone towards the VC
zone area with one hole returning 31.1 g/t Au over 5.1 m. It is now interpreted that A Zone is folded as it extends up
plunge to intersect the VC6 zone.
• Our 2019 underground exploration program calls for 50,000 m of drilling in preparation for an updated resource estimate
near the end of Q3. This information will then lead into a Preliminary Economic Assessment expected in Q1 2020 and
next steps will be determined at that juncture.
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 2019 Second Quarter Financial Results Conference Call:
August 9, 2019 at 10:00 am ET:
North American Toll Free: + 1 (844) 202-7109
International Dial-In Number: +1 (703) 639-1272
Conference ID: 2699395
Webcast link: https://edge.media-server.com/mmc/p/37aef2h5
Webcast can also be accessed under the News and Events section of the Company’s website (www.wesdome.com )
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
137.0 million shares issued and outstanding and trades on the Toronto Stock Exchange under the symbol “WDO”.
For further information, please contact:
Duncan Middlemiss or Lindsay Carpenter Dunlop
President and CEO VP Investor Relations
416-360-3743 ext. 2029 416-360-3743 ext. 2025
[email protected] [email protected]
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 Six Months Ended
June 30 June 30
2019 2018 2019 2018
Operating data
Milling (tonnes)
Eagle River 28,754 43,378 59,695 87,858
Mishi 18,623 25,233 37,093 58,079
Throughput 2 47,377 68,610 96,788 145,937
Head grades (g/t)
Eagle River 23.4 11.0 20.9 11.5
Mishi 3.0 2.7 2.6 2.2
Recovery (%)
Eagle River 96.4 96.2 96.9 95.8
Mishi 85.2 83.6 83.3 82.7
Production (ounces)
Eagle River 20,873 14,767 38,828 31,166
Mishi 1,564 1,860 2,618 3,411
Total gold produced 2 22,437 16,628 41,446 34,576
Total gold sales (ounces) 24,113 18,573 42,873 34,003
Eagle River Complex (per ounce of gold sold) 1
Average realized price $ 1,752$ 1,692 $ 1,743$ 1,694
Cash costs 837 886 850 937
Cash margin $ 915$ 806 $ 893$ 757
All-in Sustaining Costs 1 $ 1,220$ 1,242 $ 1,260$ 1,288
Average 1 USD → CAD exchange rate 1.3377 1.2911 1.3336 1.2781
Cash costs per ounce of gold sold (US$) 1 $ 626$ 686 $ 637$ 733
All-in Sustaining Costs ( US$) 1 $ 912$ 962 $ 945$ 1,007
Financial Data
Mine profit 1 $ 22,055 $ 14,957 $ 38,314 $ 25,731
Net income $ 8,327 $ 5,725 $ 16,419 $ 8,584
Net income adjusted 1 $ 8,327 $ 5,725 $ 14,050 $ 8,584
Operating cash flow $ 15,400 $ 12,422 $ 27,981 $ 24,845
Free cash flow (outflow) 1 $ 1,155 $ 1,962 $ 726 $ 5,178
Per share data
Net income $ 0.06 $ 0.04 $ 0.12 $ 0.06
Adjusted net earnings 1 $ 0.06 $ 0.04 $ 0.10 $ 0.06
Operating cash flow 1 $ 0.11 $ 0.09 $ 0.21 $ 0.19
Free cash flow (outflow) 1 $ 0.01 $ 0.01 $ 0.01 $ 0.04
Wesdome Gold Mines Ltd.
Condensed Interim Consolidated Statements of Financial Position
(Unaudited, expressed in thousands of Canadian dollars)
June 30,
2019
December
31, 2018
Assets
Current
Cash and cash equivalents $ 27,395 $ 27,378
Receivables and prepaids 2,110 548
Sales tax receivable 6,882 2,342
Inventories 12,604 8,302
Total current assets 48,991 38,570
Restricted Cash 627 -
Mining properties, plant and equipment 96,521 89,643
Exploration properties 92,460 81,424
Total assets $ 238,599 $ 209,637
Liabilities
Current
Payables and accruals $ 20,604 $ 22,526
Income and mining tax payable 1,174 180
Current portion of lease liabilities 6,667 4,552
Total current liabilities 28,445 27,258
Lease liabilities 3,486 5,248
Deferred income and mining tax liabilities 14,819 8,259
Decommissioning provisions 13,375 11,663
Total liabilities 60,125 52,428
Equity
Equity attributable to owners of the Company
Capital stock 170,813 166,387
Contributed surplus 6,106 5,777
Retained earnings (deficit) 1,555 (14,955)
Total equity attributable to owners of the Company 178,474 157,209
Total liabilities and equity $ 238,599 $ 209,637
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 Six Months Ended
June 30 June 30
2019 2018 2019 2018
Revenues $ 42,276 $ 31,443 $ 74,811 $ 57,660
Cost of sales 26,571 20,405 46,756 39,169
Gross profit 15,705 11,038 28,055 18,491
Other expenses
Corporate and general 1,498 1,416 3,506 2,493
Share-based payments 1,056 964 2,155 1,831
Kiena care and maintenance - 321 - 777
Write-off of mining equipment - 9 - 290
2,554 2,710 5,661 5,391
Operating income 13,151 8,328 22,394 13,100
Quebec exploration credits refund - - 2,867 -
Interest on long-term debt (114) (72) (226) (123)
Accretion of decommissioning provisions (122) (104) (237) (208)
Interest and other 31 1,105 325 1,149
Income before mining and income tax 12,946 9,257 25,123 13,918
Income and mining tax expense
Current 1,175 727 2,143 1,208
Deferred 3,444 2,805 6,561 4,126
4,619 3,532 8,704 5,334
Net income and total comprehensive income $ 8,327 $ 5,725 $ 16,419 $ 8,584
Net earnings per share
Basic $ 0.06 $ 0.04 $ 0.12 $ 0.06
Diluted $ 0.06 $ 0.04 $ 0.12 $ 0.06
Weighted average number of common shares (000s)
Basic 136,740 134,276 136,266 134,204
Diluted 139,661 135,646 139,492 135,340
Wesdome Gold Mines Ltd.
Condensed Interim Consolidated Statements of Changes in Equity
(Unaudited, expressed in thousands of Canadian dollars)
Capital Contributed Accumulated Total
Stock Surplus
Income
(Deficit) Equity
Balance,December 31,2017 $ 164,161$ 3,967 $ (29,905) $ 138,223
Net income for the period ended
June 30, 2018 - - 8,584 8,584
Exercise of options 309 - - 309
Value attributed to options exercised 179 (179) - -
Value attributed to options expired - (33) 33 -
Share based payments - 1,831 - 1,831
Balance, June 30, 2018 $ 164,649$ 5,586 $ (21,288) $ 148,947
Balance,December 31,2018 $ 166,387$ 5,777 $ (14,955) $ 157,209
Net income for the period ended
June 30, 2019 - - 16,419 16,419
Exercise of options 2,691 - - 2,691
Value attributed to options exercised 1,307 (1,307) - -
Value attributed to options expired - (91) 91 -
Share-based payments - 2,155 - 2,155
Value attributed to DSU redeemed 175 (175) - -
Value attributed to RSU exercised 253 (253) - -
Balance, March 31, 2019 $ 170,813 $ 6,106 $ 1,555 $ 178,474
Wesdome Gold Mines Ltd.
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited, expressed in thousands of Canadian dollars)
Three Months Ended Six Months Ended
June 30 June 30
2019 2018 2019 2018
Operating activities
Net income $ 8,327 $ 5,725 $ 16,419 $ 8,584
Depletion and depreciation 6,350 3,919 10,259 7,240
Share based payments 1,056 964 2,155 1,831
Accretion of decommission provisions 122 104 237 208
Deferred income and mining tax expense 3,444 2,805 6,561 4,126
Interest on long-term debt and other 123 72 235 123
Write-off of mining equipment - 9 - 290
19,422 13,598 35,866 22,402
Net changes in non-cash working capital (2,942) (483) (6,805) 3,136
Mining tax paid (1,080) (693) (1,080) (693)
Net cash from operating activities 15,400 12,422 27,981 24,845
Financing activities
Exercise of options 789 89 2,691 309
Payments of lease liabilities (1,316) (956) (2,571) (1,615)
Interest paid (114) (72) (226) (123)
Net cash used in financing activities (641) (939) (106) (1,429)
Investing activities
Additions to mining properties (6,804) (4,433) (13,021) (7,989)
Additions to exploration properties (5,498) (5,071) (11,036) (10,063)
Funds held against standby letter of credit and cash deposit (627) - (627) -
Net changes in non-cash working capital (2,282) (1,720) (3,174) (737)
Net cash used in investing activities (15,211) (11,224) (27,858) (18,789)
Increase in cash and cash equivalents (452) 259 17 4,627
Cash and cash equivalents, beginning of period 27,847 26,460 27,378 22,092
Cash and cash equivalents, end of period $ 27,395 $ 26,719 $ 27,395 $ 26,719
Cash and cash equivalents consist of:
Cash $ 13,395 $ 17,677 $ 13,395 $ 17,677
Term deposits 14,000 9,042 14,000 9,042
$ 27,395 $ 26,719 $ 27,395 $ 26,719
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