Wesdome Announces 2019 First Quarter Financial Results

2019-05-08 / @nasdaq

TORONTO, May 08, 2019 (GLOBE NEWSWIRE) -- Wesdome Gold Mines Ltd. (TSX: WDO) (“Wesdome” or the “Company”) today announces first quarter (“Q1 2019”) financial results. All figures are stated in Canadian dollars unless otherwise noted.

“Mr. Duncan Middlemiss, President and CEO commented, “In Q1 2019, the Eagle River underground mine delivered a head grade of 18.5 grams per tonne, versus guidance of 15.5 – 16.5 grams per tonne, primarily due to higher grades than anticipated within the 303 lens. As a result, both cash and all-in sustaining costs per ounce were at the lower end of guidance ranges. A number of other accomplishments were completed in Q1 including increased mine development rates, a build of up a surface stockpile for both Eagle and Mishi ore for next quarter’s production, and the early completion of mill improvements originally scheduled for Q2. Free cash flow for the quarter was neutral, which was within expectations. We expect to return to positive free cash flow generation in the second half of the year when production increases and underground development rates decrease slightly. The Eagle River operation continues to fund the company’s major exploration and development programs at both Eagle River and Kiena mines.”

Key operating and financial highlights of the Q1 2019 results include:

Gold production of 19,010 ounces from the Eagle River Complex, a 6% increase over the same period in the previous year (Q1 2018: 17,948 ounces):
- Eagle River Underground 30,941 tonnes at a head grade of 18.5 grams per tonne (“g/t Au”) for 17,955 ounces produced, 9% increase over the previous year (Q1 2018: 16,398 ounces).
- Mishi Open Pit 18,470 tonnes at a head grade of 2.2 g/t Au for 1,055 ounces produced (Q1 2018: 1,550 ounces).
Revenue of $32.5 million, a 24% increase over the previous year (Q1 2018: $26.2 million).
Ounces sold 18,760 at an average sales price of $1,733/oz (Q1 2018: 15,430 ounces at an average price of $1,698/oz).
Cash costs¹ of $866/oz or US$651/oz, a 13% decrease over the same period in 2018 (Q1 2018: $999/oz or US$790/oz).
All-in sustaining costs (“AISC”) ¹ of $1,311/oz or US$986/oz, a 2% decrease over the same period in 2018 (Q1 2018: $1,342/oz or US$1,061/oz).
Earned mine profit¹ of $16.3 million, a 51% increase over Q1 2018 (Q1 2018 - $10.8 million).
Operating cash flow of $12.6 million or $0.09 per share¹as compared to $12.4 million or $0.09 per share for the same period in 2018.
Invested $6.6 million in exploration expenditures at Eagle River and Kiena Complexes during the quarter (Q1 2018 - $5.0 million)
Free cash outflow of $0.4 million or nil, on a per share¹ basis (Q1 2018: free cash flow of $3.2 million or $0.02 per share).
Net income of $8.1 million or $0.06 per share (Q1 2018: $2.9 million or $0.02 per share). Net income (adjusted) ¹ was $5.7 million or $0.04 per share (Q1 2018: $2.9 million or $0.02 per share).
Cash position of $27.8 million.

^{1 Refer to the Company’s 2019 First 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 Q1 2019

Eagle River

The mining of the 303 Zone between the 844 metre level (“m-level”) and the first sub-level above continued to confirm the continuity of the strong grades and the geometry of the mineralized zone. Exploration drilling continued on the 925 m-level to prepare the 300E zone for mining and will continue to be the focus of mining development in 2019.
Ongoing development on 1,038 metre level (“m-level”) has now extended 7 Zone over 146 m in strike length and grading 30.5 g/t Au over an average true thickness of 2.61 m and recent drilling has now confirmed that this longer strike length extends to depth over an addition 100 m to the 1,250 m-level and remains open down dip. Recent drilling has now confirmed that the 7 Zone extends along strike 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 the focus of 2019 drilling.
Ongoing drilling and initial drift development along the 300W 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 to west in excess of 50 m further west than the previously interpreted diorite contact and remains open to the west and remains 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 two sub-parallel structures, namely Falcon 7 and Falcon 300 zones, that returned 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

Since the October 12th cut-off date for drill data used in the recent resource estimate released on December 12, 2018, exploration and definition drilling has been ongoing with 5 drills at the Kiena Deep A Zone. Four drills are in operation on the 1,050 m-level exploration ramp completing the infill and plunge extension drilling, and a 5th drill is operating on the 670 m elevation to test the interpreted up plunge extension of the A Zone towards the VC zone area. Since October 12th, approximately 16,910 m in 64 holes have been added to the Kiena Deep A Zone, in addition to a number of additional exploration holes within the immediate vicinity.
The ongoing definition/infill drilling has continued to confirm the overall continuity of the geometry and the high grade gold mineralization of the Kiena Deep A Zone. Drilling to date has identified a well-defined, moderate plunge of approximately 45 degrees to the SE to the gold mineralization that occurs predominantly along the basalt – chlorite-carbonate schist boundary.
Additionally, the ongoing drilling has continued to expand the Kiena Deep A Zone up and down plunge. Down plunge, the zone has been extended 60-100 m and shows good continuity. Up plunge, drilling has now extended the A zone over 70-100 m since the December 12th resource estimate extending zone above the 1050 level.
Also, drilling is now only starting to test the more vertical, eastern structure/fold limb that is interpreted to be the previously named Upper Quartz Zone that extends the entire plunge length of the A Zone. Recent drilling along this structure returned 7.1 g/t Au over 25.5 m in Hole 6438A. This hole intersected VG in quartz veins hosted by an unit of mafic flow breccia near the vertical contact with a komatiite, named A Zone Extension.
Drilling from 67 level is continuing to test the potential up plunge of the A Zone in the vicinity of the VC zone area. Limited drilling to date confirms that the basalt – schist contact associated with the A zone mineralization continues to the area of the VC zone. The hosting schist is interpreted to split into 2 subparallel shears on either side of a thicker portion of basalt. The recent drilling on the northeastern flank intersected VG mineralization in quartz veining at the 980 metre level. Historic hole 6146 returned 6.7 g/t Au over 11.0 m. One adjacent recent hole, 6437, returned 6.9 g/t Au over 7.0 m. Other holes have intersected VG in quartz veins similar to the style of gold mineralization of the A Zone at the 980 m-level and given this potential, is now the focus for the drilling from 67 and 105 levels.

Our 2019 underground exploration program calls for 50,000 m of drilling with 5 drills in preparation for an updated resource estimate at the Kiena gold deposit in the second half of this year. This information will then lead into a Preliminary Economic Assessment.

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 First Quarter Financial Results Conference Call:

May 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: 9496715
Webcast link: https://edge.media-server.com/m6/p/evgw6ovv

Webcast can also be accessed under the News and Events section of the Company’s website (www.wesdome.com)

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
		2019			2018
Operating data
Milling (tonnes)
Eagle River		30,941			44,480
Mishi		18,470			32,846
Throughput ²		49,411			77,326
Head grades (g/t)
Eagle River		18.5			12.0
Mishi		2.2			1.8
Recovery (%)
Eagle River		97.6			95.4
Mishi		80.6			81.6
Production (ounces)
Eagle River		17,955			16,398
Mishi		1,055			1,550
Total gold produced ²		19,010			17,948
Total gold sales (ounces)		18,760			15,430

Eagle River Complex (per ounce of gold sold) ¹
Average realized price	$	1,733		$	1,698
Cash costs		866			999
Cash margin	$	867		$	699
All-in Sustaining Costs ¹	$	1,311		$	1,342

Average 1 USD → CAD exchange rate		1.3295			1.2647

Cash costs per ounce of gold sold (*US$*) ¹	$	651		$	790
All-in Sustaining Costs (*US$*) ¹	$	986		$	1,061

Financial Data
Mine profit ¹	$	16,259		$	10,774
Net income	$	8,092		$	2,859
Net income adjusted ¹	$	5,723		$	2,859
Operating cash flow	$	12,581		$	12,423
Free cash flow (outflow) ¹	$	(429	)	$	3,216
Per share data
Net income	$	0.06		$	0.02
Adjusted net earnings ¹	$	0.04		$	0.02
Operating cash flow	$	0.09		$	0.09
Free cash flow (outflow) ¹	$	-		$	0.02

Notes

Refer to the Company’s 2019 First Quarter Management Discussion and Analysis, section entitled “Non-IFRS Performance Measures” for the reconciliation of these non-IFRS measurements to the financial statements..
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)


			As of March 31, 2019			As of December 31, 2018
Assets
Current
	Cash and cash equivalents	$	27,847		$	27,378
	Receivables and prepaids		1,351			548
	Sales tax receivable		4,058			2,342
	Inventories		11,977			8,302
Total current assets			45,233			38,570

Mining properties, plant and equipment			93,545			89,643
Exploration properties			86,962			81,424
Total assets		$	225,740		$	209,637

Liabilities
Current
	Payables and accruals	$	22,175		$	22,526
	Income and mining tax payable		1,149			180
	Current portion of lease liabilities		5,153			4,552
Total current liabilities			28,477			27,258

Lease liabilities			5,718			5,248
Deferred income and mining tax liabilities			11,375			8,259
Decommissioning provisions			11,868			11,663
Total liabilities			57,438			52,428

Equity
Equity attributable to owners of the Company
	Capital stock		169,475			166,387
	Contributed surplus		5,631			5,777
	Deficit		(6,804	)		(14,955	)
Total equity attributable to owners of the Company			168,302			157,209
Total liabilities and equity		$	225,740		$	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
			March 31
			2019			2018

Revenues		$	32,535		$	26,217
Cost of sales			20,185			18,764
Gross profit			12,350			7,453

Other expenses
	Corporate and general		2,008			1,077
	Share-based payments		1,099			867
	Kiena care and maintenance		-			456
	Write-off of mining equipment		-			281
			3,107			2,681

Operating income			9,243			4,772

Quebec exploration credits refund			2,867			-
Interest on long-term debt			(112	)		(51	)
Accretion of decommissioning provisions			(115	)		(104	)
Interest and other			294			44
Income before mining and income tax			12,177			4,661
Income and mining tax expense
	Current		968			481
	Deferred		3,117			1,321
			4,085			1,802
Net income and total comprehensive income		$	8,092		$	2,859

Net earnings per share
	Basic	$	0.06		$	0.02
	Diluted	$	0.06		$	0.02

Weighted average number of common shares (000s)
	Basic		135,788			134,132
	Diluted		139,550			135,148

Wesdome Gold Mines Ltd.
Condensed Interim Consolidated Statements of Changes in Equity
(Unaudited, expressed in thousands of Canadian dollars)


			Capital		Contributed						Total
			Stock		Surplus			Deficit			Equity

Balance,December 31,2017		$	164,161	$	3,967		$	(29,905	)	$	138,223
Net income for the period ended
	March 31, 2018		-		-			2,859			2,859
Exercise of options			220		-			-			220
Value attributed to options exercised			128		(128	)		-			-
Value attributed to options expired			-		(33	)		33			-
Share based payments			-		867			-			867
Balance, March 31, 2018		$	164,509	$	4,673		$	(27,013	)	$	142,169


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			-
Share-based payments			-		1,099			-			1,099
Value attributed to RSU exercised			253		(253	)		-			-
Balance, March 31, 2019		$	169,475	$	5,631		$	(6,804	)	$	168,302

Wesdome Gold Mines Ltd.
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited, expressed in thousands of Canadian dollars)


			Three Months Ended
			March 31
			2019			2018

Operating activities
	Net income	$	8,092		$	2,859
	Depletion and depreciation		3,909			3,321
	Share based payments		1,099			867
	Accretion of decommission provisions		115			104
	Deferred income and mining tax expense		3,117			1,321
	Interest on long-term debt		112			51
	Write-off of mining equipment		-			281
			16,444			8,804
	Net changes in non-cash working capital		(3,863	)		3,619
Net cash from operating activities			12,581			12,423
Financing activities
	Exercise of options		1,902			220
	Payments of lease liabilities		(1,255	)		(659	)
	Interest paid		(112	)		(51	)
Net cash from (used in) provided by financing activities			535			(490	)
Investing activities
	Additions to mining properties		(6,217	)		(3,556	)
	Additions to exploration properties		(5,538	)		(4,992	)
	Net changes in non-cash working capital		(892	)		983
Net cash used in investing activities			(12,647	)		(7,565	)
Increase in cash and cash equivalents			469			4,368
Cash and cash equivalents, beginning of period			27,378			22,092
Cash and cash equivalents, end of period		$	27,847		$	26,460

Cash and cash equivalents consist of:
	Cash	$	17,847		$	17,460
	Term deposits		10,000			9,000
		$	27,847		$	26,460

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 136.4 million shares issued and outstanding and trades on the Toronto Stock Exchange under the symbol “WDO”.

For further information, please contact:

Duncan Middlemiss President and CEO 416-360-3743 ext. 2029 duncan.middlemiss@wesdome.com	or	Lindsay Carpenter Dunlop VP Investor Relations 416-360-3743 ext. 2025 lindsay.dunlop@wesdome.com

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.

PDF Available: http://ml.globenewswire.com/Resource/Download/0ddc876a-2b9a-4f62-97b1-e6264e14b5d5