WDO.TO · 2019-11-06 12:00:00

Wesdome Announces 2019 Third Quarter Financial Results

Financials

TORONTO, Nov. 06, 2019 -- Wesdome Gold Mines Ltd. (TSX: WDO) (“Wesdome” or the “Company”) today announces third

quarter (“Q3 2019”) financial results. All figures are stated in Canadian dollars unless otherwise noted.

Mr. Duncan Middlemiss, President and CEO commented, “In Q3, cash costs of $815 (US$618) per ounce were relatively flat

over the previous quarter ($837 of US$626 per ounce). All-in sustaining costs of $1,344 (US$1,018) per ounce were higher than

those incurred in Q2 ($1,220 or US$912 per ounce) due to a $4 million investment, or $168 (US$128) per ounce into the

tailings management facility. This project will provide for an additional 4 years capacity at current mill feed. Despite our higher

sustaining, project, and exploration expenditures during the quarter, the company was able to generate $9.2 million in free

cash flow, thereby resulting in a cash position at the end of the quarter of $38.6 million.”

“Due to continued superb performance of the 303 Lens, we have increased 2019 guidance from 72,000 – 80,000 ounces to

88,000 to 93,000 ounces, with 70,356 ounces produced to the third quarter. Recent exploration results have extended the 303

Lens 300 metres down plunge where it remains open. Year to date cost of $838 (US$630) per ounce cash costs and $1,290

($US970 per ounce AISC are both at the low end of cost guidance of $830 - $900 (US$640 - $US690) an ounce on cash costs

per ounce and $1,280 - $1,350 (US$985 – 1,040) an ounce on AISC. We expect ounce production in the fourth quarter to be in

the 19,000 – 22,000 range as we plan to process some of the Mishi stockpile.”

“At Kiena, we released an updated Resource Estimate in September which substantially increased the Kiena Deep A Zone

grade, and indicated and inferred resource ounces. The Preliminary Economic Assessment (PEA) is well underway and we

expect to complete the study in Q1 2020. We are half way completed on the 790 metre level drift to further test the up plunge

of the A Zone. Once completed, we will have one drill stationed there and expect to release results in the first half of 2020.”

Key operating and financial highlights of the Q3 2019 results include:

1. Gold production of 28,910 ounces from the Eagle River Complex, a 46% increase over the same period in the previous

year (Q3 2018: 19,795 ounces):

◦ Eagle River Underground 39,453 tonnes at a head grade of 23.4 grams per tonne (“g/t Au”) for 28,894 ounces

produced, 49% increase over the previous year (Q3 2018: 19,437 ounces).

◦ Mishi Open Pit 204 tonnes at a head grade of 2.8 g/t Au for 15 ounces produced (Q3 2018: 358 ounces).

2. Revenue of $45.9 million, a 59% increase over the previous year (Q3 2018: $28.9 million).

3. Ounces sold 23,450 at an average sales price of $1,957/oz (Q3 2018: 18,401 ounces at an average price of $1,571/oz).

4. Cash costs 1 of $815/oz or US$618/oz, neutral over the same period in 2018 (Q3 2018: $815/oz or US$624/oz).

5. All-in sustaining costs (“AISC”) 1 of $1,344/oz or US$1,018/oz, a 16% increase over the same period in 2018 (Q3 2018:

$1,160/oz or US$888/oz), due to the investment in the tailings management facility at the Eagle River Mine in 2019.

6. Earned mine profit1 of $26.8 million, a 93% increase over Q3 2018 (Q3 2018 - $13.9 million).

7. Operating cash flow of $27.3 million or $0.20 per share1 as compared to $12.8 million or $0.10 per share for the same

period in 2018.

8. Free cash flow of $9.2 million, net of an investment of $5.9 million in Kiena, or $0.07 per share1 (Q3 2018: free cash flow

of $2.1 million or $0.02 per share).

9. Net income and Net income (adjusted)1 of $12.4 million or $0.09 per share (Q3 2018: $3.6 million or $0.03 per share).

10. Cash position increased to $38.6 million compared to $27.4 million in the previous quarter.

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.

Q3 2019 HIGHLIGHTS AND ACHIEVEMENTS

Operations and Financial Highlights Comparison to Q3 2018

Gold production of 28,910 ounces from the Eagle River Complex. Gold production increased by 46% (Q3 2018 –

19,795 ounces).

YTD gold production of 70,356 ounces, an

increase of 29% when compared to YTD 2018

production of 54,371 ounces.

Cash costs of $815 (US$618) per ounce of gold sold 1. Cash costs in Canadian dollars remained

consistent (Q3 2018 - $815 (US$624) per

ounce).

AISC 1 of $1,344 (US$1,018) per ounce. AISC increased by 16% (Q3 2018 - $1,160

(US$888) per ounce) due to $4.0 million or

$168 (US$128) per ounce spent on the tailings

management area (“TMA”) at Eagle River.

Earned mine profit 1 of $26.8 million. An increase of $12.9 million or 93% when

compared to $13.9 million generated in Q3

2018.

Operating cash flow of $27.3 million or $0.20 per share 1. Operating cash flow at a strong level at $27.3

million for the quarter as a result of higher

production and the increase in cash from

working capital changes (Q3 2018 - $12.8

million or $0.10 per share).

Free cash flow of $9.2 million or $0.07 per share1. Eagle River generated free cash flow of $9.2

million for the quarter, net of an investment of

$5.9 million in Kiena and $4.0 million spent on

the TMA at Eagle River in the quarter.

Free cash flow in Q3 2018 was $2.1 million or

$0.02 per share.

Net income attributable to shareholders of $12.4 million or $0.09

per share.

Adjusted net income 1 of $12.4 million or $0.09 per share

A delivery of strong net earnings and Adjusted

net earnings in the quarter as a result of strong

production performance and increasing gold

prices. Net income and Adjusted net income1

for Q3 2018 was $3.6 million or $0.03 per

share, respectively.

1. Refer to the 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 mining of the 303 Zone between the second up to the fourth sub-level above

the 844 metre level ("m-level") continued in Q3 2019 and confirmed the continuity

of the strong grades and the geometry of the mineralized zone. 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 in preparation for

production in 2020.

• Exploration drilling continued on the 925 m-level to prepare the 303 Lens zone for

mining. The 303 Lens, initially defined from the 750 m-level to 1,000 m-level has

now been extended an additional 300 m down plunge to the 1,300 m-level, while

continuing to illustrate above average widths and grades.

• Ongoing drilling and initial drift development along the 311 W Zone have

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 50 m further west than

the previously interpreted diorite contact and remains a focus for 2019 drilling.

• 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 • On September 25, 2019, Wesdome announced an updated Mineral Resource

Estimate including drill data as of August 6, 2019. Highlights include

(i) Increased Kiena Deep A Zone Indicated resources from 99,300 to 405,100 ounces

(ii) Increased Kiena Deep A Zone Inferred resources from 241,100 ounces to 332,000

ounces

(iii) Increased Kiena Deep A Zone Indicated resource grade from 9.95 g/t Au to 18.55

g/t Au

(iv) Increased proportion of Indicated resources to over 50% in the A Zone (versus 30%

previously in A Zone).

• 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. 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 metres. 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. This

information will then lead into a Preliminary Economic Assessment expected in Q1

2020 and next steps will be determined at that juncture.

• The development of an exploration drift on 790m level started during the quarter and

will be completed early in December to better explore the up plunge extension of the A

Zone between the 670 m-level and 1050 m-level.

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 Third Quarter Financial Results Conference Call:

North American Toll Free: + 1 (844) 202-7109

International Dial-In Number: +1 (703) 639-1272

Conference ID: 8286736

Webcast link: https://edge.media-server.com/mmc/p/pfmyey7t

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 mid-tier 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

137.2 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 Nine Months Ended

September 30 September 30

2019 2018 2019 2018

Operating data

Milling (tonnes)

Eagle River 39,453 46,777 99,148 134,635

Mishi 204 4,076 37,297 62,155

Throughput 2 39,657 50,854 136,445 196,790

Head grades (g/t)

Eagle River 23.4 13.3 21.9 12.2

Mishi 2.8 3.4 2.6 2.3

Recovery (%)

Eagle River 97.6 96.9 97.2 96.2

Mishi 85.5 80.9 83.3 82.5

Production (ounces)

Eagle River 28,894 19,437 67,723 50,602

Mishi 15 358 2,633 3,769

Total gold produced 2 28,910 19,795 70,356 54,371

Total gold sales (ounces) 23,450 18,401 66,323 52,404

Eagle River Complex (per ounce of gold sold) 1

Average realized price $ 1,957$ 1,571 $ 1,819$ 1,651

Cash costs 815 815 838 894

Cash margin $ 1,142$ 756 $ 981$ 757

All-in Sustaining Costs 1 $ 1,344$ 1,160 $ 1,290$ 1,243

Average 1 USD → CAD exchange rate 1.3204 1.3070 1.3292 1.2878

Cash costs per ounce of gold sold (US$) 1 $ 618$ 624 $ 630$ 695

All-in Sustaining Costs ( US$) 1 $ 1,018$ 888 $ 970$ 965

Financial Data

Mine profit 1 $ 26,770$ 13,898 $ 65,084$ 39,629

Net income $ 12,449$ 3,631 $ 28,868$ 12,215

Net income adjusted 1 $ 12,449$ 3,631 $ 26,499$ 12,215

Operating cash flow $ 27,275$ 12,823 $ 55,256$ 37,668

Free cash flow 1 $ 9,199$ 2,137 $ 9,925$ 7,315

Per share data

Net income $ 0.09$ 0.03 $ 0.21$ 0.09

Adjusted net earnings 1 $ 0.09$ 0.03 $ 0.19$ 0.09

Operating cash flow 1 $ 0.20$ 0.10 $ 0.40$ 0.28

Free cash flow 1 $ 0.07$ 0.02 $ 0.07$ 0.05

Notes

1. Refer to the Company’s 2019 Third 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.

Condensed Interim Consolidated Statements of Financial Position

(Unaudited, expressed in thousands of Canadian dollars)

September 30,

2019 December 31,

2018

Assets

Current

Cash and cash equivalents $ 38,611 $ 27,378

Receivables and prepaids 2,282 548

Sales tax receivable 2,648 2,342

Inventories 14,582 8,302

Total current assets 58,123 38,570

Restricted Cash 657 -

Deferred financing cost 1,054 -

Mining properties, plant and equipment 106,899 89,643

Exploration properties 98,332 81,424

Total assets $ 265,065 $ 209,637

Liabilities

Current

Payables and accruals $ 22,073 $ 22,526

Income and mining tax payable 1,379 180

Borrowings 4,358 -

Current portion of lease liabilities 2,995 4,552

Total current liabilities 30,805 27,258

Lease liabilities 5,144 5,248

Deferred income and mining tax liabilities 19,782 8,259

Decommissioning provisions 16,971 11,663

Total liabilities 72,702 52,428

Equity

Equity attributable to owners of the Company

Capital stock 172,184 166,387

Contributed surplus 6,133 5,777

Retained earnings (deficit) 14,046 (14,955)

Total equity attributable to owners of the Company 192,363 157,209

Total liabilities and equity $ 265,065 $ 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 Nine Months Ended

September 30 September 30

2019 2018 2019 2018

Revenues from sales $ 45,940 $ 28,920 $ 120,751 $ 86,580

Cost of sales 25,246 20,599 72,002 59,768

Gross profit 20,694 8,321 48,749 26,812

Other expenses

Corporate and general 1,417 1,429 4,923 3,922

Share-based compensation 486 434 2,641 2,265

Kiena care and maintenance - 353 - 1,130

Write-off of mining equipment - - - 290

1,903 2,216 7,564 7,607

Operating income 18,791 6,105 41,185 19,205

Quebec exploration credits refund - - 2,867 -

Interest on long-term debt (138) (68) (364) (191)

Accretion of decommissioning provisions (64) (105) (301) (313)

Interest and other 157 79 482 1,228

Income before mining and income tax 18,746 6,011 43,869 19,929

Income and mining tax expense

Current 1,335 663 3,478 1,871

Deferred 4,962 1,717 11,523 5,843

6,297 2,380 15,001 7,714

Net income and total comprehensive income $ 12,449 $ 3,631 $ 28,868 $ 12,215

Net earnings per share

Basic $ 0.09 $ 0.03 $ 0.21 $ 0.09

Diluted $ 0.09 $ 0.03 $ 0.21 $ 0.09

Weighted average number of common shares (000s)

Basic 137,302 134,754 136,615 134,390

Diluted 140,989 137,836 140,119 135,827

Wesdome Gold Mines Ltd.

Condensed Interim Consolidated Statements of Changes in Equity

(Unaudited, expressed in thousands of Canadian dollars)

Capital Contributed Retained Total

Stock Surplus Earnings

(Deficit) Equity

Balance, December 31, 2017 $ 164,161$ 3,967 $ (29,905) $ 138,223

Net income for the 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 compensation - 2,265 - 2,265

Balance, September 30, 2018 $ 165,660$ 5,673 $ (17,631) $ 153,702

Balance, December 31, 2018 $ 166,387$ 5,777 $ (14,955) $ 157,209

Net income for the period ended

September 30, 2019 - - 28,868 28,868

Exercise of options 3,645 - - 3,645

Value attributed to options exercised 1,724 (1,724) - -

Value attributed to options expired - (133) 133 -

Share-based compensation - 2,641 - 2,641

Value attributed to DSUs redeemed 175 (175) - -

Value attributed to RSUs exercised 253 (253) - -

Balance, September 30, 2019 $ 172,184$ 6,133 $ 14,046 $ 192,363

Wesdome Gold Mines Ltd.

Condensed Interim Consolidated Statements of Cash Flows

(Unaudited, expressed in thousands of Canadian dollars)

Three Months Ended Nine Months Ended

September 30 September 30

2019 2018 2019 2018

Operating activities

Net income $ 12,449 $ 3,631 $ 28,868 $ 12,215

Depletion and depreciation 6,076 5,577 16,335 12,817

Share-based compensation 486 434 2,641 2,265

Accretion of decommission provisions 64 105 301 313

Deferred income and mining tax expense 4,962 1,717 11,523 5,843

Interest on long-term debt and other 143 68 378 191

Write-off of mining equipment - - - 290

24,180 11,532 60,046 33,934

Net changes in non-cash working capital 4,225 1,291 (2,580) 4,427

Mining tax paid (1,130) - (2,210) (693)

Net cash from operating activities 27,275 12,823 55,256 37,668

Financing activities

Exercise of options 954 690 3,645 999

Debt issue less deferred cost 3,304 - 3,304 -

Repayment of lease liabilities (1,558) (931) (4,129) (2,546)

Termination of lease arrangements (3,952) - (3,952) -

Interest paid (138) (68) (364) (191)

Net cash used in financing activities (1,390) (309) (1,496) (1,738)

Investing activities

Additions to mining properties (10,616) (4,022) (23,637) (12,011)

Additions to exploration properties (5,872) (5,733) (16,908) (15,796)

Funds held against standby letter of credit and cash deposit (30) - (657) -

Net changes in non-cash working capital 1,849 1,236 (1,325) 499

Net cash used in investing activities (14,669) (8,519) (42,527) (27,308)

Increase in cash and cash equivalents 11,216 3,995 11,233 8,622

Cash and cash equivalents, beginning of period 27,395 26,719 27,378 22,092

Cash and cash equivalents, end of period $ 38,611 $ 30,714 $ 38,611 $ 30,714

Cash and cash equivalents consist of:

Cash $ 38,611 $ 21,633 $ 38,611 $ 21,633

Term deposits - 9,081 - 9,081

$ 38,611 $ 30,714 $ 38,611 $ 30,714

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