Wesdome Announces 2020 First Quarter Financial Results; Generates $16.7 Million in Free Cash Flow
Wesdome Announces 2020 First Quarter Financial Results; Generates $16.7
Million in Free Cash Flow
TORONTO, May 05, 2020 -- Wesdome Gold Mines Ltd. (TSX: WDO) (“Wesdome” or the “Company”) today announces first
quarter (“Q1 2020”) financial results. All figures are stated in Canadian dollars unless otherwise noted.
Mr. Duncan Middlemiss, President and CEO commented, “In Q1, mill availability improved to 89%, resulting in 55,874 tonnes
milled at a head grade of 14.0 grams per tonne (“g/t Au”) for 24,457 ounces produced, 36% increase over the previous year (Q1
2019: 17,955 ounces) at the Eagle River Underground Mine. With our strong production and favourable gold price, the
company was able to generate $16.7 million in free cash flow, thereby resulting in a cash position at the end of the quarter of
$49.4 million. Cash costs of $1,120 (US$833) and all-in sustaining costs of $1,423 (US$1,058) per ounce increased over Q1
2019 ($866 or US$651 per ounce) and ($1,311 or US$986 per ounce) because of lower grades and the decision to accelerate
the processing of the stockpiles in response to the uncertainty surrounding the impact of COVID-19.
The Eagle River mine is in reduced operations mode due to management of COVID-19. As a result, and because of
accelerated mining of the stockpile, we expect slightly lower production in Q2, but we are maintaining annual guidance of
90,000 – 100,000 ounces and operating cost guidance of $800 – $875 (US$615 – $670) and AISC guidance of $1,280 - $1350
(US$985 - $1,040) per ounce. As a result of the uncertainty related to COVID-19, it is likely that we will not drill our planned
237,000 metres this year. Further impacts are likely and an update on our progress, along with a revised capex forecast, will
be provided as more details become available.
At Kiena, a definitive restart date has not been provided by the Government, but May 11, 2020 is a possibility. We will resume
all drilling and development as soon as the Government allows exploration to commence, and the preliminary economic
assessment will be published later this month.
On behalf of management and the board of directors, I would like to thank all our employees for their efforts and cooperation
with new protocols and procedures during these unprecedented times.”
Key operating and financial highlights of the Q1 2020 results include:
1. Gold production of 25,122 ounces from the Eagle River Complex, a 32% increase over the same period in the previous
year (Q1 2019: 19,010 ounces):
◦ Eagle River Underground 55,874 tonnes at a head grade of 14.0 grams per tonne (“g/t Au”) for 24,457 ounces
produced, 36% increase over the previous year (Q1 2019: 17,955 ounces).
◦ Mishi Open Pit 11,047 tonnes at a head grade of 2.5 g/t Au for 665 ounces produced (Q1 2019: 1,055 ounces).
2. Revenue of $57.3 million, a 76% increase over the previous year (Q1 2019: $32.5 million).
3. Ounces sold 26,500 at an average sales price of $2,162/oz (Q1 2019: 18,760 ounces at an average price of $1,733/oz).
4. Earned mine profit1 of $27.6 million, a 70% increase over Q1 2019 (Q1 2019 - $16.3 million).
5. Operating cash flow of $33.4 million or $0.24 per share1 as compared to $12.6 million or $0.09 per share for the same
period in 2019.
6. Free cash flow of $16.7 million, net of an investment of $9.2 million in Kiena, or $0.12 per share1 (Q1 2019: free cash
outflow flow of ($0.4 million or nil per share).
7. Net income of $11.5 million or $0.08 per share (Q1 2019: $8.1 million or $0.06 per share) and Net income (adjusted)1 of
$11.5 million or $0.08 per share (Q1 2019: $5.7 million or $0.04 per share).
8. Cash position increased to $49.4 million compared to $35.7 million in the previous quarter.
9. Cash costs 1 of $1,120/oz or US$833/oz, a 29% increase over the same period in 2019 (Q1 2019: $866/oz or
US$651/oz) due to the lower head grade and the decrease in the stockpile levels.
10. All-in sustaining costs (“AISC”) 1 of $1,423/oz or US$1,058/oz, a 9% increase over the same period in 2019 (Q1 2019:
$1,311/oz or US$986/oz), due to the lower head grade and the decrease in stockpile levels.
1. Refer to the Company’s 2020 First 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 mineral resources and reserves for the Eagle River Complex were recently updated and can be
summarized as follows:
• Increased Eagle River reserves by 36% net of 91,066 ounces of depletion. Mineral Reserves at
Eagle River of 550,000 contained gold ounces (1,186,000 tonnes at 14.4 g/t Au, an increase of 20%
in grade), of which 72% is located in the high grade 300 Zone.
• Mishi Pit reserves slightly decreased compared to 2018 at 10,500 contained ounces (116,000
tonnes at 2.8 g/t Au)
• Increased Eagle River Measured and Indicated Resources (exclusive of reserves) by 258%, or 3.6
times over 2018. Measured & Indicated Mineral Resources (exclusive of reserves) at Eagle River
increased to 111,000 contained gold ounces (380,000 tonnes at 9.0 g/t Au).
• Inferred resources (exclusive of reserves) at Eagle River and Mishi remain the same at 159,000 and
212,000 contained ounces respectively.
• Ongoing extension and definition drilling of the 300 East Zones, and in particular the 303 Lens, has
continued to return high grade gold intersections. Initially defined from the 750 m-level to 1,000 m-
level, this zone has now been extended an additional 300 m down plunge to the 1,300 m-level.
• Surface drilling continues to extend and better define the Falcon Zones, located in volcanic rocks
approximately 200 m west of the mine diorite. Surface drilling has continued to expand the zone of
mineralization to a depth of 4400 m elevation (i.e. 600 vertical m below surface) and over a strike of
200 m.
• In order to better test the down plunge extension of the Falcon Zone, a drill rig has been positioned
underground on the 772 m elevation. Initial drilling from underground has intersected visible gold
mineralization in quartz veining approximately 70 m down plunge of the Falcon Zone. Given the
steep easterly plunge defined by the recent drilling, it is interpreted that the Falcon 7 Zone now
extends an additional 500 m down plunge and is the up plunge extension of the 7 Zone currently
being mined near the 1,000 m elevation.
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).
• Current operational suspension in Quebec due to the COVID-19 pandemic will challenge the
Company in achieving it’s full 2020 exploration program.
• Prior to the COVID-19 suspension, seven underground drills were in operation completing the infill
and up and down plunge extension drilling of the Kiena Deep A Zone. This drilling has continued to
confirm the overall continuity of the geometry and the high-grade gold mineralization of the Kiena
Deep A Zone and identify additional mineralization outside of the most recent resource estimate.
Recent drilling has extended the gold mineralization of the A Zone an additional 100 m down plunge
and now extends a total in excess of 830 m.
• The 79 Level Ramp was completed in early 2020. It provides optimal drill platforms for testing the up
-plunge extension of the Kiena Deep A Zone between the 670 m-level and the 1050 m-level and will
serve as a haulage drift for any future production from this area as it accesses the main shaft level
dump pocket. Two of the seven drills are drilling the potential up plunge extension of the Kiena Deep
A Zone. Previous limited drilling into the up-plunge area from 67 Level returned a number of good
intersections that require follow up. Based on recent drilling from 67 Level, it is interpreted that the
VC zones are folded as they extend down plunge to connect with the Kiena Deep A Zone.
• In addition, a total of 172m of advance was achieved in the main ramp, below the 1050m elevation,
reaching the 109 Level at the end of the quarter.
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 2020 First Quarter Financial Results Conference Call:
North American Toll Free: + 1 (844) 202-7109
International Dial-In Number: +1 (703) 639-1272
Conference ID: 2377817
Webcast link: https://edge.media-server.com/mmc/p/a94d2d3n
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
138.5 million shares issued and outstanding and trades on the Toronto Stock Exchange under the symbol “WDO”.
For further information, please contact:
Duncan Middlemiss orLindsay 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
March 31
2020 2019
Operating data
Milling (tonnes)
Eagle River 55,874 30,941
Mishi 11,047 18,470
Throughput 2 66,922 49,411
Head grades (g/t)
Eagle River 14.0 18.5
Mishi 2.5 2.2
Recovery (%)
Eagle River 97.3 97.6
Mishi 74.8 80.6
Production (ounces)
Eagle River 24,457 17,955
Mishi 665 1,055
Total gold produced 2 25,122 19,010
Total gold sales (ounces) 26,500 18,760
Eagle River Complex (per ounce of gold sold) 1
Average realized price $ 2,162 $ 1,733
Cash costs 1,120 866
Cash margin $ 1,042 $ 867
All-in Sustaining Costs 1 $ 1,423 $ 1,311
Average 1 USD → CAD exchange rate 1.3449 1.3295
Cash costs per ounce of gold sold (US$) 1 $ 833 $ 651
All-in Sustaining Costs ( US$) 1 $ 1,058 $ 986
Financial Data
Mine profit 1 $ 27,619 $ 16,259
Net income $ 11,513 $ 8,092
Net income adjusted 1 $ 11,513 $ 5,723
Operating cash flow $ 33,429 $ 12,581
Free cash flow (outflow) 1 $ 16,672 $ (429)
Per share data
Net income $ 0.08 $ 0.06
Adjusted net earnings 1 $ 0.08 $ 0.04
Operating cash flow $ 0.24 $ 0.09
Free cash flow (outflow) 1 $ 0.12 $ -
Wesdome Gold Mines Ltd.
Consolidated Statements of Financial Position
(Expressed in thousands of Canadian dollars)
March 31,
2020 December
31, 2019
Assets
Current
Cash and cash equivalents $ 49,398 $ 35,657
Receivables and prepaids 1,897 1,996
Sales tax receivable 3,538 3,344
Inventories 11,321 19,667
Total current assets 66,154 60,664
Restricted Cash 657 657
Deferred financing cost 952 988
Mining properties, plant and equipment 118,272 116,765
Exploration properties 115,798 106,644
Total assets $ 301,833 $ 285,718
Liabilities
Current
Borrowings $ - $ 3,636
Payables and accruals 21,289 19,219
Income and mining tax payable 2,367 1,419
Current portion of lease liabilities 4,527 3,781
Total current liabilities 28,183 28,055
Lease liabilities 6,258 5,889
Deferred income and mining tax liabilities 27,329 23,829
Decommissioning provisions 20,962 21,443
Total liabilities 82,732 79,216
Equity
Equity attributable to owners of the Company
Capital stock 176,372 174,789
Contributed surplus 5,093 5,590
Retained earnings 37,636 26,123
Total equity attributable to owners of the Company 219,101 206,502
Total liabilities and equity $ 301,833 $ 285,718
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
March 31
2020 2019
Revenues $ 57,332 $ 32,535
Cost of sales (37,590) (20,185)
Gross profit 19,742 12,350
Other expenses
Corporate and general 1,971 2,008
Stock-based compensation 404 1,099
2,375 3,107
Operating income 17,367 9,243
Quebec exploration credits refund - 2,867
Interest expense (324) (112)
Accretion of decommissioning provisions (125) (115)
Interest and other income 364 294
Income before mining and income tax 17,282 12,177
Income and mining tax expense
Current 2,270 968
Deferred 3,499 3,117
5,769 4,085
Net income and total comprehensive income $ 11,513 $ 8,092
Net earnings per share
Basic $ 0.08 $ 0.06
Diluted $ 0.08 $ 0.06
Weighted average number of common shares (000s)
Basic 138,464 135,788
Diluted 142,024 139,550
Wesdome Gold Mines Ltd.
Consolidated Statements of Total Equity
(Expressed in thousands of Canadian dollars)
Retained
Capital Contributed Earnings/ Total
Stock Surplus (Deficit) Equity
Balance, December 31,2018 $ 166,387 5,777 (14,955) 157,209
Net income for the period ended
March 31, 2019 - - 8,092 8,092
Exercise of options 1,902 - - 1,902
Value attributed to options exercised 933 (933) - -
Value attributed to options expired - (59) 59 -
Value attributed to RSUs exercised 253 (253) - -
Stock-based compensation - 1,099 - 1,099
Balance, March 31, 2019 $ 169,475 $ 5,631 $ (6,804) $ 168,302
Balance, December 31,2019 $ 174,789 5,590 26,123 206,502
Net income for the period ended
March 31, 2020 - - 11,513 11,513
Exercise of options 682 - - 682
Value attributed to options exercised 324 (324) - -
Value attributed to RSU exercised 577 (577) - -
Stock-based compensation - 404 - 404
Balance, March 31, 2020 $ 176,372 $ 5,093 $ 37,636 $ 219,101
Wesdome Gold Mines Ltd.
Consolidated Statements of Cash Flows
(Unaudited, expressed in thousands of Canadian dollars)
Three Months Ended
March 31
2020 2019
Operating activities
Net income $ 11,513 $ 8,092
Depletion and depreciation 7,877 3,909
Stock-based compensation 404 1,099
Accretion of decommission provisions 125 115
Deferred income and mining tax expense 3,499 3,117
Interest expense 324 112
Foreign exchange loss on lease financing 351 -
24,093 16,444
Net changes in non-cash working capital 10,656 (3,863)
Mining tax paid (1,320) -
Net cash from operating activities 33,429 12,581
Financing activities
Exercise of options 682 1,902
Amortization of deferred financing cost 32 -
Repayment of borrowings (3,636) -
Payments of lease liabilities (1,057) (1,255)
Interest paid (324) (112)
Net cash from (used in) provided by financing activities (4,303) 535
Investing activities
Additions to mining properties (6,546) (6,217)
Additions to exploration properties (9,154) (5,538)
Net changes in non-cash working capital 315 (892)
Net cash used in investing activities (15,385) (12,647)
Increase in cash and cash equivalents 13,741 469
Cash and cash equivalents, beginning of period 35,657 27,378
Cash and cash equivalents, end of period $ 49,398 $ 27,847
Cash and cash equivalents consist of:
Cash $ 49,398 $ 17,847
Term deposits - 10,000
$ 49,398 $ 27,847
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