Wesdome Announces 2019 Third Quarter Financial Results

 

TORONTO, Nov. 06, 2019 (GLOBE NEWSWIRE) -- 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:

• 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).
• Revenue of $45.9 million, a 59% increase over the previous year (Q3 2018: $28.9 million).
• 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).
• Cash costs¹ of $815/oz or US$618/oz, neutral over the same period in 2018 (Q3 2018: $815/oz or US$624/oz). 
• 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.
• Earned mine profit¹ of $26.8 million, a 93% increase over Q3 2018 (Q3 2018 - $13.9 million).
• 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.
• 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). 
• 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). 
• 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 income1 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
duncan.middlemiss@wesdome.com		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.

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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