Wesdome Announces 2020 Second Quarter Financial Results
Wesdome Announces 2020 Second Quarter Financial Results
TORONTO, Aug. 11, 2020 -- Wesdome Gold Mines Ltd. (TSX: WDO) (“Wesdome” or the “Company”) today announces second
quarter (“Q2 2020”) financial results. All figures are stated in Canadian dollars unless otherwise noted.
Mr. Duncan Middlemiss, President and CEO commented, “During Q2, Wesdome generated operating cash flow of $30.2
million or $0.22 per share and free cash flow of $17.7 million, net of an investment of $6.0 million in Kiena, or $0.13 per share,
ending the quarter with a cash position of $66.7 million (Q1 2020: $49.4 million). Cash costs for the quarter were $882 per
ounce (US: $637) and All-in sustaining costs were $1,218 per ounce (US $879) a 21% and 14% decrease respectively over Q1
2020.
With H1 2020 total gold production of 50,264 ounces at an average grade of 15.8 grams per tonne at the Eagle River mine, the
Company is well-positioned to achieve its full year guidance range of 90,000 – 100,000 ounces at an average grade of 15 –
16.7 grams per tonne. H1 2020 cash costs of $1,009 per ounce (US$739) are above the high end of the company’s guidance
range of $875 per ounce (US$670) due to inventory adjustments in the first quarter, and reduced operational efficiencies related
to protocols implemented due to COVID-19. The Company is revising cash cost guidance for the year to $950 - $975 per
ounce (US$700 – $720). H1 2020 All-in sustaining costs of $1,327 per ounce (US$972) are within the company’s guidance
range of $1,280 - $1,350 per ounce (US $985 - $1,040) and we expect full year costs to be within this range.
The Eagle River complex was operating on reduced operations, and some work, such as exploration, mine and tailing
construction activities, that were suspended in order to facilitate enhanced physical distancing to limit the potential spread of
the COVID-19 virus, have gradually restarted in the second quarter. The initial budget for Eagle River underground exploration
was 119,000 metres, which will now be 85,000 metres. Surface exploration metres of 33,500 metres will be largely unchanged,
and we will introduce some regional exploration campaigns away from the existing mine.
At Kiena, work was shut down on March 24 in response to the Government of Quebec’s mandated closures due to the COVID-
19 virus, and resumed on May 11. Drilling activities are back to 100% capacity, and we expect to achieve our previously
guided drill metres of 80,000 metres. We expect to publish an updated resource estimate in Q4, followed by a Pre-feasibility
study. During the quarter, we also completed our Preliminary Economic Analysis (“PEA”) which delivered favourable
economics of an after-tax IRR of 102%. A summary of the PEA was released on May 27, and the full report filed on June 25.
Both reports are available on the Company’s website and on sedar.com.
Additionally, the Company wishes to announce the appointment of Raj Gill to the position of Vice President, Corporate
Development. Raj has over 11 years of experience in the mining industry and capital markets including equity research, and
most recently Director of Corporate Development at Kinross where he led and supported a range of strategic, financial and
technical initiatives. Raj will be a great asset as Wesdome continues on its trajectory of becoming an all-Canadian
intermediate gold producer.”
Key operating and financial highlights of the Q2 2020 results include:
1. Gold production of 25,142 ounces from the Eagle River Complex, a 12.1% increase over the same period in the previous
year (Q2 2019: 22,437 ounces):
-- Eagle River Underground 42,349 tonnes at a head grade of 18.1 grams per tonne (“g/t Au”) for 24,117 ounces
produced, 15.5% increase over the previous year (Q2 2019: 20,873 ounces).
-- Mishi Open Pit 13,721 tonnes at a head grade of 2.9 g/t Au for 1,026 ounces produced (Q2 2019: 1,564 ounces).
2. Revenue of $54.8 million, a 29.6% increase over Q2 2019 (Q2 2019: $42.3 million).
3. Ounces sold 23,140 at an average sales price of $2,365/oz (Q2 2019: 24,113 ounces at an average price of $1,752/oz).
4. Earned mine profit1 of $34.3 million, a 55% increase over Q2 2019 (Q2 2019 - $22.1 million).
5. Cash costs 1 of $882 (US$637) per ounce of gold sold (Q2 2019 of $837 (US$626) due to higher tonnes processed at
the mill.
6. All-in sustaining costs (“AISC”) 1 of $1,218/oz or US$879/oz, a slight decrease over the same period in 2019 (Q2 2019:
$1,220/oz or US$912/oz), due to lower sustaining capital expenditures; partially offset by lower grades and higher
tonnage processed at the Mill.
7. Operating cash flow of $30.2 million or $0.22 per share1 as compared to $15.4 million or $0.11 per share for the same
period in 2019.
8. Free cash flow of $17.7 million, net of an investment of $6.0 million in Kiena, or $0.13 per share1 (Q2 2019: free cash
flow of $1.2 million or $0.01 per share.
9. Net income of $16.1 million or $0.12 per share (Q2 2019: $8.3 million or $0.06 per share) and Net income (adjusted)1 of
$16.4 million or $0.12 per share (Q2 2019: $8.3 million or $0.06 per share).
10. Cash position increased to $66.7 million compared to $49.4 million in the previous quarter.
1 Refer to the Company’s 2020 Second 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
• With normal operations curtailed due to the COVID-19 pandemic, surface and exploration
drilling is currently operating at a reduced capacity. However, recent underground drilling from
the 772 m elevation was completed to test the down plunge extension of the Falcon Zone. It
is interpreted that the Falcon/7 Zone now extends from surface approximately 1,000 m down
plunge and is part of the up plunge extension of the 7 Zone currently being mined near the
1,000 m elevation. This is significant, as the extension of this zone is proximal to mine
infrastructure and has the potential to be included in future mine production and ultimately
augment production rates in the medium term. Additional drilling is required to better define
these zones and remains a priority in the second half of 2020.
Kiena
• The Preliminary Economic Assessment ("PEA") study was completed in Q2 2020. The PEA
demonstrates a low-cost and high margin operation, with low capital requirements and a short
payback period, while minimizing risks and maximizing shareholders' return. This PEA is
based on the Mineral Resource Estimate (“MRE”) dated September 2019 and includes only
those resources proximal to the mine infrastructure, specifically the A Zone, B Zone, S50, VC
Zones and the South Zone. An updated resource estimate is planned early in Q4 2020
followed by a pre-feasibility study (“PFS”) and a production restart decision in H1 2021.
• Diamond drilling activities at Kiena restarted on May 11th, 2020 focusing on the continuation
of converting inferred into indicated resources. This drilling has continued to confirm the
overall continuity of the geometry and the high-grade gold mineralization of the A Zone and
identified additional mineralization outside of the most recent resource estimate. The A Zone
now extends down plunge in excess of 830 m.
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 Second Quarter Financial Results Conference Call:
North American Toll Free: + 1 (844) 202-7109
International Dial-In Number: +1 (703) 639-1272
Conference ID: 9581356
Webcast link: https://edge.media-server.com/mmc/p/ord86na2
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
138.9 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
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
2020 2019 2020 2019
Operating data
Milling (tonnes)
Eagle River 42,349 28,754 98,223 59,695
Mishi 13,721 18,623 24,768 37,093
Throughput 2 56,070 47,377 122,991 96,788
Head grades (g/t)
Eagle River 18.1 23.4 15.8 20.9
Mishi 2.9 3.0 2.7 2.6
Recovery (%)
Eagle River 97.9 96.4 97.6 96.9
Mishi 79.8 85.2 77.8 83.3
Production (ounces)
Eagle River 24,117 20,873 48,574 38,828
Mishi 1,026 1,564 1,690 2,618
Total gold produced 2 25,142 22,437 50,264 41,446
Total gold sales (ounces) 23,140 24,113 49,640 42,873
Eagle River Complex (per ounce of gold sold) 1
Average realized price $ 2,365 $ 1,752 $ 2,257 $ 1,743
Cash costs 882 837 1,009 850
Cash margin $ 1,483 $ 915 $ 1,247 $ 893
All-in Sustaining Costs 1 $ 1,218 $ 1,220 $ 1,327 $ 1,260
Average 1 USD → CAD exchange rate 1.3853 1.3377 1.3651 1.3336
Cash costs per ounce of gold sold (US$) 1 $ 637 $ 626 $ 739 $ 637
All-in Sustaining Costs ( US$) 1 $ 879 $ 912 $ 972 $ 945
Financial Data
Mine profit 1 $ 34,304 $ 22,055 $ 61,923 $ 38,314
Net income $ 16,097 $ 8,327 $ 27,610 $ 16,419
Net income adjusted 1 $ 16,473 $ 8,327 $ 27,986 $ 14,050
Operating cash flow $ 30,246 $ 15,400 $ 63,675 $ 27,981
Free cash flow (outflow) 1 $ 17,691 $ 1,155 $ 34,363 $ 726
Per share data
Net income $ 0.12 $ 0.06 $ 0.20 $ 0.12
Adjusted net earnings 1 $ 0.12 $ 0.06 $ 0.20 $ 0.10
Operating cash flow 1 $ 0.22 $ 0.11 $ 0.46 $ 0.21
Free cash flow 1 $ 0.13 $ 0.01 $ 0.25 $ 0.01
Wesdome Gold Mines Ltd.
Condensed Interim Consolidated Statements of Financial Position
(Unaudited, expressed in thousands of Canadian dollars)
June 30, 2020 December 31,
2019
Assets
Current
Cash and cash equivalents $ 66,733 $ 35,657
Receivables and prepaids 1,798 1,996
Sales tax receivable 3,256 3,344
Inventories 10,517 19,667
Total current assets 82,304 60,664
Restricted cash 657 657
Deferred financing cost 1,025 988
Mineral properties, plant and equipment 121,142 116,765
Exploration properties 121,756 106,644
Total assets $ 326,884 $ 285,718
Liabilities
Current
Borrowings $ - $ 3,636
Payables and accruals 18,077 19,219
Income and mining tax payable 4,137 1,419
Current portion of lease liabilities 5,133 3,781
Total current liabilities 27,347 28,055
Lease liabilities 6,287 5,889
Deferred income and mining tax liabilities 33,723 23,829
Decommissioning provisions 21,889 21,443
Total liabilities 89,246 79,216
Equity
Equity attributable to owners of the Company
Capital stock 177,973 174,789
Contributed surplus 5,932 5,590
Retained earnings 53,733 26,123
Total equity attributable to owners of the Company 237,638 206,502
Total liabilities and equity $ 326,884 $ 285,718
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 $ 54,772 $ 42,276 $ 112,104 $ 74,811
Cost of sales (26,270) (26,571) (63,860) (46,756)
Gross profit 28,502 15,705 48,244 28,055
Other expenses
Corporate and general 1,805 1,498 3,776 3,506
Stock-based compensation 1,340 1,056 1,744 2,155
3,145 2,554 5,520 5,661
Operating income 25,357 13,151 42,724 22,394
Quebec exploration credits refund - - - 2,867
COVID-19 costs (556) - (556) -
Interest expense (284) (114) (539) (226)
Accretion of decommissioning provisions (52) (122) (177) (237)
Interest and other income (204) 31 91 325
Income before income and mining taxes 24,261 12,946 41,543 25,123
Income and mining tax expense
Current 1,769 1,175 4,039 2,143
Deferred 6,395 3,444 9,894 6,561
8,164 4,619 13,933 8,704
Net income and total
comprehensive income $ 16,097 $ 8,327 $ 27,610 $ 16,419
Earnings per share
Basic $ 0.12 $ 0.06 $ 0.20 $ 0.12
Diluted 0.11 $ 0.06 0.19 $ 0.12
Weighted average number of common
shares (000s)
Basic 138,918 136,740 138,691 136,266
Diluted 142,430 139,661 142,227 139,492
Wesdome Gold Mines Ltd.
Condensed Interim Consolidated Statements of Changes in Equity
(Unaudited, 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
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 -
Value attributed to RSUs exercised 253 (253) - -
Value attributed to DSUs exercised 175 (175) - -
Stock-based compensation - 2,155 - 2,155
Balance, June 30, 2019 $ 170,813 $ 6,106 $ 1,555 $ 178,474
Balance, December 31, 2019 $ 174,789 $ 5,590 $ 26,123 $ 206,502
Net income for the period ended
June 30, 2020 - - 27,610 27,610
Exercise of options 1,782 - - 1,782
Value attributed to options exercised 825 (825) - -
Value attributed to RSUs exercised 577 (577) - -
Stock-based compensation - 1,744 - 1,744
Balance, June 30, 2020 $ 177,973 $ 5,932 $ 53,733 $ 237,638
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,
2020 2019 2020 2019
Operating Activities
Net income $ 16,097 $ 8,327 $ 27,610 $ 16,419
Depreciation and depletion 5,802 6,350 13,679 10,259
Stock-based compensation 1,340 1,056 1,744 2,155
Accretion of decommissioning provisions 52 122 177 237
Deferred income and mining tax expense 6,395 3,444 9,894 6,561
Interest expense 284 114 539 226
Foreign exchange loss on lease financing (236) 9 184 9
29,734 19,422 53,827 35,866
Net changes in non-cash working capital 512 (2,942) 11,168 (6,805)
Mining tax paid - (1,080) (1,320) (1,080)
Net cash from operating activities 30,246 15,400 63,675 27,981
Financing Activities
Exercise of options 1,100 789 1,782 2,691
Amortization of deferred financing cost 3 - (34) -
Repayment of borrowings - - (3,636) -
Repayment of lease liabilities (1,152) (1,316) (2,209) (2,571)
Interest paid (284) (114) (539) (226)
Net cash used in financing activities (333) (641) (4,636) (106)
Investing Activities
Additions to mining properties (5,445) (6,804) (11,991) (13,021)
Additions to exploration properties (5,958) (5,498) (15,112) (11,036)
Funds held against standby letter of credit - (627) - (627)
Net changes in non-cash working capital (1,175) (2,282) (860) (3,174)
Net cash used in investing activities (12,578) (15,211) (27,963) (27,858)
Increase in cash and cash equivalents 17,335 (452) 31,076 17
Cash and cash equivalents - beginning of year 49,398 27,847 35,657 27,378
Cash and cash equivalents - end of year $ 66,733 $ 27,395 $ 66,733 $ 27,395
Cash and cash equivalents consist of:
Cash $ 66,733 $ 13,395 $ 66,733 $ 13,395
Term deposits - 14,000 - 14,000
$ 66,733 $ 27,395 $ 66,733 $ 27,395
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