Wesdome Announces Positive Pre-Feasibility Study and Restart Decision for the Kiena Mine in Val d’Or, Quebec; IRR of 98%
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PRESS
RELEASE
May 26, 2021
TSX:WDO
Wesdome Announces Positive Pre-Feasibility Study and Restart Decision for
the Kiena Mine in Val d’Or, Quebec; IRR of 98%
Toronto, Ontario – May 26, 2021 – Wesdome Gold Mines Ltd. (TSX:WDO) (“Wesdome” or the
“Company”) is pleased to announce positive results from the independent Pre -Feasibility Study (“PFS”)
prepared in accordance with the requirements of National Instrument 43 -101 – Standards of Disclosure for
Mineral Projects (“NI 43-101”) at its 100% owned Kiena Complex in Val d’Or, Quebec. Based on the results
of the PFS, the Board of Directors of the Company has made a restart decision for the Kiena Complex ,
commencing immediately.
Highlights of the PFS are outlined below. All figures are in Canadian dollars unless otherwise stated:
• After-tax NPV5% of $367 million at US$1,600 per ounce gold, increasing to an after -tax NPV5% of
$491 million at US$1,900 per ounce gold using US$/CAD$ exchange rate of 1.32
• Internal Rate of Return of 98% and after tax payback period of 2.7 years
• Average annual gold production of approximately 84,000 oz per year, with peak production over
115,000 oz in 2025; over 100,000 oz per year run rate expected in 2024
• LOM average cash costs of $502 /oz (US$380/oz) and all-in sustaining costs (“AISC”) of $894/oz
(US$676/oz)
• Life of mine capital of $230 million ($68 million spent in 2021) fully funded by existing liquidity and
operating cash flows
• Average annual free cash flow (2022 -2027) of $85.5 million at US$1,600 pe r ounce gold or $109.5
million at US$1,900 per ounce gold
• Reserve mine life of approximately 7 years represented based on Indicated Mineral Resources as at
October 2020 (average grade 11.9 grams per tonne)
• Production activities will utilize using existing mine infrastructure such as the shaft and the existing
2,000 tonne per day mill, which was successfully restarted for the bulk sample, thereby allowing for
low costs and short time period to restart the mine
Mr. Duncan Middlemiss, President and CEO commented, “We are excited to be moving ahead with the
Kiena re-start, less than five years following the discovery of the Kiena Deep A Zone. This transformational
project continues to present compelling economics and represents a strong step toward Wesdome becoming
a diversified mid-tier producer. We now expect to see initial production from Kiena as early as Q3 2021. To
that end, we will maintain our previously released guidance of 15,000 – 25,000 ounces at Kiena until later in
the year, when we will reassess based upon start up performance.
Compared to the Preliminary Economic Assessment dated June 17 , 2020 (“PEA”), higher capital and
operating costs reflect modest changes in project scope. The increases are primarily related to the addition
of a paste backfill plant, water treatment facility, work at the tailings management area, as well as ventilation
and power upgrades, ultimately allowing for increased production and a longer mine life as we delineate
additional resources at depth and across the Kiena property. The significant infrastructure in place allows for
a low capex, high return project.
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Subsequent to the September 18, 2020 diamond drilling cut off date for resources included in this PFS and
despite the challenges presented as a result of the ongoing COVID-19 pandemic, 41,780 meters of
exploration drilling represented by 143 diamond drill holes have been completed in the Kiena Deep Zone ,
effective April 12, 2021 demonstrating the potential to add more ounces per vertical met re and potentially
enhance economics through higher annual output over a longer mine life. This is evidenced in particular by
the recent Footwall Zone discovery and intersection of hole 6760W1 at 41.2g/t over 51.2m which is
interpreted as a 300 metre down plunge extension of the initial discovery (see March 23rd and May 19th,
2021 releases). As such, the PFS represents a dated snapshot in time and we strongly believe in the potential
of the Kiena Deep Zone becoming a much more substantial deposit.”
Overview
The Kiena Complex is in the Province of Quebec in the Abitibi-Temiscamingue administrative region within
the limits of the municipality of Val d’Or and 100 km east of Rouyn-Noranda. It lies to the northwest of the
urban centre of Val d’Or and covers 7,047 ha. The Project includes the 2,000 tpd mill and tailings facilities
of the Kiena mine, nine shafts including the 930 metre ( “m”) Kiena hoisting shaft, related underground
workings from past producers and exploration projects, and various surface facilities . Other than the
exploration activities and underground exploration develop ment, the principal infrastructure of the Project
has been under care and maintenance since mid-2013. Past production from 1981 – 2013 was 12.5M tonnes
at 4.5 g/t Au for 1.75 M ounces produced. The Kiena Deep A Zone was first intersected in December 2007
and is localized within the Marbenite Fault (“MF”) deformation corridor and is divided into three main lenses
and a fourth smaller lens.
The June 2020 PEA had demonstrated a low-cost, high margin operation with low capital requirements with
a short payback period. The PEA was based on the Mineral Resource Estimate (“MRE”) dated September
2019. Consequently, the Company decided to begin a definition diamond drilling program to convert the
inferred resources into indicated resources. The updated mineral reso urce estimate was used as a basis for
the PFS.
Mineral Resources
The 2020 mineral resource model with a drill database closeout date of September 18, 2020 (issued on
December 15, 2020 ) was used as the base for the PFS. Drilling efforts converted a large portion of the
existing A Zone’s inferred resources to indicated resources despite the lower than planned drill metres due
to the operational disruptions attributed to the COVID-19 restrictions. A decision by the company was taken
in May 2020 to focus 100% on inferred to indicated resource conversion within the A Zone, as the ability to
drill metres had become challenged with the pandemic.
Table 1: Indicated and Inferred Kiena Mine Complex Mineral Resource Estimate per area
(exclusive of mineral reserves)
Area
Indicated Inferred
Tonnes
Gold Grade
(g/t)
Gold
Ounces Tonnes
Gold Grade
(g/t)
Gold
Ounces
Kiena Deep 281,400 11.65 105,400 311,200 11.22 112,200
S50 69,300 3.82 8,500 99,300 3.72 11,900
VC 137,700 4.79 21,200 169,500 5.30 28,600
ZB - - - 74,000 4.10 9,800
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South Zones 63,200 4.15 8,400 226,800 3.85 28,000
Presquile - - - 255,600 6.70 55,100
Dubuisson - - - 744,600 6.70 160,200
Martin 92,100 4.38 13,000 108,200 4.28 14,900
North West - - - 285,800 4.00 37,100
Wesdome* - - - 1,129,400 5.30 191,400
Total 643,700 7.56 156,500 3,404,400 5.94 649,200
* Wesdome at 3.6 g/t Au cut-off
Notes to Table 1:
(1) The independent qualified persons for the 2020 MRE, as defined by National Instrument (“NI”) 43 -101 guidelines, are
Pierre-Luc Richard, P. Geo., and Charlotte Athurion, P. Geo., both of BBA Inc.
(2) These mineral resources are not mineral reserves as they do not have demonstrated economic viability.
(3) These mineral resources are exclusive of mineral reserves.
(4) The mineral resource estimate follows CIM definitions (2014) for mineral resources.
(5) Results are presented in situ and undiluted and considered to have reasonable prospects for economic extraction, below a
100 m crown pillar.
(6) The resources include 46 zones with a minimum true thickness of 3.0 m (2.4 m for Wesdome zones) using the grade of the
adjacent material when assayed or a value of zero when not assayed. High-grade capping varies from 20 to 265 g/t Au (when
required) and was applied to composited assay grades for interpolation using an Ordinary Kriging interpolation method (ID2
for Dubuisson zones 1220 and 1230) based on 1.0 m composite and block size of 5 m x 5 m x 5 m, with bulk density values
of 2.8 (g/cm 3). A three -step capping strategy was appl ied, where capping value decreased as interpolation search distance
increased, in order to restrict high -grade impact at greater distance. Indicated resources are manually defined and encloses
areas where drill spacing is generally less than 30 m, blocks a re informed by a minimum of three drillholes, and reasonable
geological and grade continuity is shown.
(7) The estimate is reported for potential underground scenario at cut-off grades of 2.8 g/t Au (>40 degree dip) and 3.6 g/t Au
(<40 degree dip, Wesdome zone s only). The cut -off grades were calculated using a gold price of US$1,450 per ounce, a
USD/CAD exchange rate of 1.32 (resulting in C$1,914 per ounce gold price); mining cost C$100/t (>40 degree dip); C$150/t
(<40 degree dip); processing cost C$40/t; G&A C$25/t.
(8) The number of metric tonnes and ounces were rounded to the nearest hundred and the metal contents are presented in troy
ounces (tonne x grade/31.10348). Rounding may result in apparent summation differences between tonnes, grades and
contained metals content.
The QPs are not aware of any known environmental, permitting, legal, title -related, taxation, socio-political or marketing issues,
or any other relevant issues not reported in this Technical Report that could materially affect the mineral resou rce estimate
Mining
Future production mining will utilize the long hole stope method and development will be advanced utilizing
conventional drilling and blasting methods. Daily ore production commences at 4 13tonnes per day (tpd )
increasing to over 920 tpd. Detailed mine design and economic analysis have demonstrated the technical
viability and economic feasibility of the Kiena Deep A Zone, S50 and Martin Zones. Although included in
the PEA, South and VC Zones are not included in the PFS as they are currently un economic. A larger
resource base is required to bring those mineral resources into mineral reserves. Stope mining sequence in
the A Zone consists of mining blocks containing five sublevels each mined bottom up fr om the A2 lens
towards the A lens.
The overall strategy is to maximize throughput from the high grade Kiena Deep A Zone and to augment the
production from the other zones. Ore will be hauled by trucks to the hoisting shaft ore passes already
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established in the mine. Paste backfill will be utilised in the Kiena Deep A Zone in order to optimize stope
cycle, mineability and maximize throughput. The total ore mined by Zone is presented in Table 2.
Mineral Reserves
Table 2: Probable Mineral Reserves estimate by mineralized zone
Zone
Diluted Ore
Mined Tonnes
Diluted Gold
Grade
Mined Gold
Ounces
(t) (Au g/t) (Au oz)
Martin 92,200 4.00 11,900
S50 95,100 4.12 12,600
Kiena Deep 1,387,100 12.95 577,300
Total 1,574,400 11.89 601,800
Notes to Table 2:
1. CIM Definitions Standards on Mineral Resource and Reserves (2014) were followed.
2. Underground Mineral Reserves are diluted tonnes and grades; the reference point is the mill feed at the primary
crusher.
3. Cut-off grade considers a gold price of C$1,914 per ounce (US$1,450 per ounce at 1.32 Exchange Rate USD to
CAD) for mine design purposes, a 97% metallurgical processing recovery for both the S50 & Martin Zones and
98.5% for the Kiena Deep Zone, life of mine operating cost of C$122.92/t mining, C$28.25/t processing,
C$36.53/t General and Administration. An incremental cut-off grade excluding the mine operating cost was not
considered for lateral drift development required through mineralization and would present opportunity to increase
the Mineral Reserve estimate.
4. A minimum mining width of 3.0 m, and minimum footwall angle of 45° was used in the creation of all mineral
reserve solids. Longitudinal long hole stoping is the predominant method considered for production minin g. The
life of mine mining recovery factor is 90% and combined planned and unplanned dilution factor is 27%.
5. A bulk density of 2.8 t/mᶾ was used for both ore and waste rock.
6. The application to expand the mining concession to include Martin Zone is being pursued by Wesdome. Martin
Zone is scheduled to begin development and production mining in 2024 to provide time for the permitting process
to be approved.
7. Diluted ore tonnes and gold ounces were rounded to the nearest hundred. Numbers may not add due to
rounding.
Milling
Metallurgical test work undertaken by Base Metallurgical Laboratories Ltd. in Kamloops, British Columbia
has demonstrated the current cyanidation and carbon -in-pulp (CIP) mill circuit is well suited to maximize
the gold recovery averaging 98.5% for Kiena Deep ore. Wesdome has processed 7,032 tonnes of the Kiena
Deep ore in December 2020 and the reconciled recovery was in the predicted range. A mill recovery rate of
97% was used for other zones.
Gold Production
The production plan is based on a mill start -up in the second half of 2021. Each zone was reviewed, and a
composite mining rate developed in tonnes per day (tpd) that accounts for sill development and the mining
activities (drill, blast, muck and backfill). Over the life of mine (LOM), a total of 592,113 oz of gold (payable)
(average annual: 83,574 oz) will be produced.
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Gold Production by Year
PFS Economics Assessment
On an after-tax basis, the base case financial model resulted in an IRR of 98% (PEA: 102%) and an NPV of
$366.6M (PEA $416.1M) using a 5% discount rate with a Gold Price of US$1, 600/oz at a CAD/USD
exchange rate of $1.32. The after-tax payback period after start of operations is 2.7 years.
The cash costs and all -in sustaining costs (AISC) over the LOM are US$ 380 and US$ 676/oz, respectively
(PEA: US$374/oz and US$ 512/oz) at an exchange rate of US$1.00:C$1.32.
Table 3: PFS Summary (reported in C$, unless otherwise indicated)
Description Unit Value (PFS)
Total Tonnes Mined Mt 1.6
Average Diluted Gold Grade g/t 11.9
Total Gold Contained oz 601,653
Overall Gold Recovery % 98.4
Total Gold Payable oz 592,113
Mine Life years 7
Average Annual Gold Produced Au oz per year 83,574
Life of Mine Operating Costs
Mining $/t milled 113.79
Paste Plant $/t milled 5.58
Processing, Lab & Tailings Management $/t milled 28.25
Water Treatment $/t milled 3.55
General and Administration $/t milled 36.53
Total Operating Costs $/t milled 187.71
Total Capital $M 230
Site Restoration Cost $M 2
0
50
100
150
200
250
300
350
400
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2021 2022 2023 2024 2025 2026 2027 2028
Tonnes Milled ('000t)
Gold Production (oz)
Gold Production (oz) Tonnes Milled ('000 t)
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All-in Sustaining Costs ("AISC") US$/oz 676
Economic Profile
Long Term Gold Price US$/oz 1,600
Exchange Rate USD:CAD 1.32
Discount Rate % 5
Total LOM NSR Revenue $M 1,250
Total LOM Operating Costs $M 296
Total LOM Pre-tax Cash Flow $M 723
LOM Royalties $M -
LOM Mining Taxes $M 78
LOM Income Taxes $M 174
Total LOM After-tax Free Cash Flow $M 471
Pre-tax Summary
Pre-tax NPV5% $M 569
Pre-tax IRR % 135
Pre-tax Payback (after start of operations) year 2.2
After-tax Summary
After-tax NPV5% $M 367
After-tax IRR % 98
After-tax Payback (after start of operations) year 2.7
Table 4: Project Capital Cost Summary
Cost Area Unit
Administration and Services 3.8
Mine 130.3
Processing Plant 2.4
Tailings Storage Facility, Backfill Plant & Water Management 53.4
Owner's Costs 2.7
Project Indirect Costs 14.7
Contingency 22.5
Total 229.8
Site Reclamation and Closure 2.0
Total 231.8
Life of mine capital costs for the Kiena Gold Project are estimated to be $229.8M including allowances for
indirect costs and contingency of $19.4M and $22.5M respectively. A contingency of 26% was applied where
required for an overall blended rate of 11% . The level of engineering and design completed for the PFS
places the capital estimate to an accuracy of +/- 25%.
Mine sustaining costs of $ 130.2M consist of underground development, equipment purchases , ventilation
upgrades and construction work including the underground distribution system for paste backfill.
Upgrades at the tailing’s facility will allow the expansion of the existing facility and consequently minimize
the impact on the environment. Total expenditure is estimated at $20.4M. Also, a new water treatment facility
has been included for the effluent discharge ($23.3M).
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Surface infrastructure includes paste plant for a total of $9.6M.
The average operating cost over the 7-year mine life is estimated to be $187.71/t milled Operating cost
between 2024-2027 averages $163.94/t as production peaks in 2025.
Table 5: Operating Costs
Item Unit Life of Mine 2024-2027
Mining & Paste $/t milled 119.38 106.65
Processing, Lab & Tailings Management $/t milled 28.25 25.96
Water Treatment $/t milled 3.55 2.83
General and Administration $/t milled 36.53 28.50
Total $/t milled 187.71 163.94
Opportunities
• Potential to add additional reserves and resources (over 40,000 metres drilled since last drill cut off
date)
• Positive grade reconciliation
• Reduced sand consumption at the paste backfill plant and maximize tailings material sent
underground
• Lower costs for water treatment facility
Table 6: Sensitivity
NPV sensitivity results (after-tax) for metal price and exchange rate variations
Description Unit
Gold Price US$/oz $1,200 $1,300 $1,400 $1,500 $1,600 $1,700 $1,800 $1,900 $2,000
Pre-tax NPV5% $M 312 377 441 505 569 633 698 762 826
Post-tax NPV5% $M 197 239 282 324 367 408 449 491 533
Pre-Tax IRR 67% 81% 97% 115% 135% 158% 186% 218% 257%
After-Tax IRR 50% 60% 72% 84% 98% 112% 127% 144% 163%
Pre-Tax Payback Years 3.3 3.1 2.7 2.5 2.2 2.1 1.9 1.7 1.5
After-Tax Payback Years 3.6 3.4 3.1 2.9 2.7 2.5 2.3 2.2 2.0
Description Unit
Exchange Rate
USD:
CAD $1.00 $0.90 $0.85 $0.80 $0.76 $0.70 $0.65 $0.60 $0.55
Pre-tax NPV5% $M 319 406 456 514 569 652 738 837 955
Post-tax NPV5% $M 202 258 293 330 367 420 476 540 617
Pre-Tax IRR 68% 88% 101% 118% 135% 166% 205% 265% 367%
After-Tax IRR 51% 65% 75% 86% 98% 116% 137% 167% 211%
Pre-Tax Payback Years 3.3 2.9 2.7 2.4 2.2 2.0 1.7 1.5 1.3
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After-Tax Payback Years 3.6 3.3 3.1 2.9 2.7 2.4 2.2 2.0 1.7
A conference call to discuss these results will be held on May 27 at 10:00 am ET. Wesdome invites
participants to join the call using the following details:
Wesdome Gold Mines Kiena Pre-Feasibility Study Teach-In:
North American Toll Free: (844) 202-7109
International Dial-In Number: (703) 639-1272
Conference ID: 3153756
Webcast link: https://edge.media-server.com/mmc/p/wkk3rxfd
The full technical report will be published on SEDAR and the Company’s website within 45 days of this
announcement.
QUALIFIED PERSONS
The Pre-Feasibility Study Analysis production scenario is based on Indicated mineral resources only from
the 2020 Mineral Resource Estimate (MRE) issued on December 15th, 2020.
The block model mineral resource estimate, proximal to Kiena Mine Development, was prepared by
Karine Brousseau P.Eng. (OIQ #121871), Senior Engineer – Mineral Resources of the Company and a
"Qualified Person" as defined in NI 43-101. The mineral resource estimate has been reviewed and audited
by BBA Consulting, Toronto, Ontario. Pierre-Luc Richard P. Geo (OGQ #1119) and Charlotte Athurion
P.Geo. (OGQ #1784) of BBA Consulting, are "Qualified Persons" for the resource estimate as defined in
NI-43-101 and are considered to be “independent” of Wesdome for purposes of NI 43-101.
The full technical report, which is being prepared in accordance with National Instrument 43-101 -
Standards of Disclosure for Mineral Projects (“NI 43-101”) will be available on SEDAR (www.sedar.com)
under the Company’s issuer profile within 45 days from this news release. The effective date of the current
Pre-Feasibility Study is April 12, 2021.
The PFS was prepared by the following Qualified Persons under NI 43-101, each of whom is independent
of the Company under NI 43-101, who have reviewed, verified, and approved the scientific and technical
data for which they have responsibility contained in this news release pertaining to the PFS.
Qualified Person Company Scope of Responsibility
Charlotte Athurion, P. Geo.
Pierre-Luc Richard, P. Geo.
BBA Inc. Geology and mineral resource estimation
Navin Gangadin, P. Eng. BBA Inc. Surface infrastructure, estimate integration, financial
model, overall NI 43-101 integration
Michael Stochmal, P. Eng. BBA Inc. Mineral reserve estimation, mine planning, mining
infrastructure
Frank Palkovits, P. Eng. Mine Paste Ltd. Paste backfill
Pierre Roy, P. Eng. Soutex Inc. Processing and water treatment
Sheila Daniel, P. Geo. Wood Canada Ltd. Environmental