Wesdome Announces 2021 First Quarter Financial Results

2021-05-12 / @nasdaq

TORONTO, May 12, 2021 (GLOBE NEWSWIRE) -- Wesdome Gold Mines Ltd. (TSX: WDO) (“Wesdome” or the “Company”) today announces first quarter (“Q1 2021”) financial results. All figures are stated in Canadian dollars unless otherwise noted.

Mr. Duncan Middlemiss, President and CEO commented, “During the first quarter, a significant milestone was achieved at Kiena, with the completion of the A Zone bulk sample reconciliation which has produced 6% more gold at a feed grade of 15.7 g/t versus 14.7 g/t in the resource block model grade. Additionally, the bulk sample generated an additional $3.9 million from the sale of 1,793 ounces of gold in the quarter. Significant progress was also made towards projects that would benefit the mine re-start, such as development, mill refurbishment, shaft and other construction projects, and work at the tailing management area. The PFS is near completion and the Company intends to release the results of the PFS later in the quarter.

During the quarter a total of $14.0 million was spent on growth and capital projects (Q1 2020: $10.6 million). Consequently, free cash flow decreased compared to the same period in 2020, and the cash position remained flat quarter over quarter with $63.9 million as of March 31 (December31 2020: $63.5 million), sufficient to fund all exploration, sustaining, and growth capital projects including the potential restart of the Kiena mine

The Eagle River Underground Mine produced 53,540 tonnes at a head grade of 12.8 grams per tonne (“g/t Au”) for 21,396 ounces produced, within our expectations. Eagle River grades were slightly below the low end of our guidance, however increased throughout the quarter. The Company expects to be within guidance for the year, and remains on track to produce 92,000 – 105,000 ounces from the Eagle River Complex, plus an additional 15,000 – 25,000 from Kiena pending a restart decision.

Exploration activities at both sites ramped up during Q1 and produced very positive results. At Eagle, the Company is embarking on its’ $16M exploration campaign with 5 drills underground and 2-3 rigs on surface. Currently a regional structural compilation is underway which will aid in the understanding of the current Eagle River deposit and generate high quality mine and regional targets. As well, definition drilling at the Falcon Zone advanced rapidly, and initial sill development is expected to commence in Q2, thereby providing an opportunity to assess the gold mineralization of the Falcon Zone within volcanic rocks.

At Kiena, an exciting new discovery was made – a new high grade gold zone was discovered in the footwall of the A Zone. This drilling highlights the potential to add ounces, not only in this area but illustrates the untested potential of the entire gold system around the Kiena mine. This footwall zone will be one of the zones of focus for the continued drilling.”

The Company has performed well during the quarter despite the Covid-19 pandemic. Hygiene protocols are well implemented and the operations have been Covid free throughout. We continue to operate diligently keeping our workplaces safe for our employees, contractors, and vendors.

Key operating and financial highlights of the Q1 2021 results include:

Gold production of 22,564 ounces from the Eagle River Complex, a 10% decrease over the same period in the previous year (Q1 2020: 25,122 ounces):
- Eagle River Underground 53,540 tonnes at a head grade of 12.8 grams per tonne for 21,396 ounces produced, 13% decrease over the previous year (Q1 2020: 24,457 ounces).
- Mishi Open Pit 17,219 tonnes at a head grade of 2.5 g/t Au for 1,169 ounces produced (Q1 2020: 665 ounces).
Revenue of $46.0 million, a 19.8% decrease over the previous year (Q1 2020: $57.3 million).
Ounces sold 22,457, which includes 1,793 ounces from the Kiena bulk sample at an average sales price of $2,219/oz (Q1 2019: 26,500 ounces at an average price of $2,162/oz).
Cash margin¹ of $21.8 million, a 21.0% decrease over Q1 2020 (Q1 2020 - $27.6 million).
Operating cash flow of $22.0 million or $0.16 per share¹ as compared to $33.5 million or $0.24 per share for the same period in 2020.
Free cash flow of $0.1 million, net of an investment of $12.6 million in Kiena, or nil per share¹ (Q1 2020: free cash flow of $16.7 million or $0.12 per share).
Net income and Net income (adjusted)¹ of $7.1 million or $0.05 per share (Q1 2020: $11.5 million or $0.08 per share).
Cash position increased to $63.9 million compared to $63.5 million in the previous quarter.
Cash costs¹ of $1,076/oz or US$850/oz, a 4% decrease over the same period in 2020 (Q1 2020: $1,120/oz or US$833/oz) due to the inclusion of 1,793 lower cost ounces from the Kiena bulk sample, which was processed in Q4 2020 and sold in Q1 2020.
All-in sustaining costs (“AISC”) ¹ of $1,497/oz or US$1,182/oz, a 5% increase over the same period in 2020 (Q1 2020: $1,423/oz or US$1,058/oz), due to lower ounces sold and higher sustaining capital, which was partially offset by the inclusion of 1,793 lower cost ounces from the Kiena bulk sample, which was processed in Q4 2020 and sold in Q1 2021. This includes approximately $30/ounce in COVID-19 safety related costs.

Refer to the Company’s 2021 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 Eagle River underground ore production averaged 641 tpd in Q1 2021 due to the ventilation system upgrade, which included the development of the 640 m ramp to provide a connection with the main ramp, a new ventilation raise underground, and the installation of a second fan At the Falcon Zone, initial sill development is expected to commence in Q2, thereby providing an opportunity to assess the gold mineralization of the Falcon Zone in the volcanic rocks. The Company is continuing to explore the 311 West Zone along the western margin of the mine diorite. The zone has transitioned from the diorite into the adjacent mafic volcanics, again highlighting the potential of the volcanic rocks to host gold mineralization. Surface drilling in ongoing both east and west of the mine to follow up on anomalous values returned from regional drilling program in 2020. A comprehensive analysis of the structural geology is being completed at the mine and the surrounding volcanic rocks to aid in exploration targeting. Total metres drilled in 2021 are budgeted to range between 164,000 and 174,000 m for five underground and three surface drill rigs, including underground exploration of 60,000 - 70,000 m, underground definition drilling of 50,000 m, and surface exploration drilling 54,000 m.
Kiena	A total of 7,032 tonnes were processed from the Kiena Deep A zone bulk sample at the Kiena mill in Q4 2020. The bulk sample recovered 6% more gold than the MRE with a feed grade of 15.7 g/t versus model grade of 14.7 g/t. Total gold produced was 3,479 ounces with gold recovery in the Kiena mill of 98.2%. To date, 3,293 ounces of gold have been sold, which includes 1,500 ounces in Q4 2020 and 1,793 ounces in Q1 2021, with the remaining to be sold in Q2. A new high grade gold zone was discovered in the footwall of the A Zone. This drilling highlights the potential to add ounces not only in this area but illustrates the untested potential of the entire gold system around the Kiena mine. Recent drilling continues to expand the Kiena Deep A Zone predominantly along the lateral extensions of the zone. The high grades intersected will be included in future resource updates and are expected to add to the current resource base including Hole 6739W3: 46.2 g/t Au over 24.2 m core length (36.6 g/t Au cut, 6.7 m true width) A1 Zone. The Pre-Feasibility Study ("PFS") is progressing well, and it is expected to be completed in Q2, with a scheduled re-start decision shortly thereafter. The pre-production timeframe is forecast to be less than six months, potentially driving the Kiena Mine into commercial production in Q4 of this year. The 2021 exploration program at Kiena consists of 65,000 m of underground drilling and 42,000 m of surface drilling.

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 2021 First Quarter Financial Results Conference Call

North American Toll Free: + 1 (844) 202-7109
International Dial-In Number: +1 (703) 639-1272
Conference ID: 2264519
Webcast link: https://edge.media-server.com/mmc/p/87za7n4c

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

ABOUT WESDOME
Wesdome Gold Mines is a 100% Canadian focused Company that has had over 30 years of continuous gold mining operations in Canada. The Company’s strategy is to build an intermediate gold producer, producing 200,000+ ounces from two mines in Ontario and Quebec. The Eagle River Complex in Wawa, Ontario is currently increasing gold production from the high-grade Eagle River Underground Mine. 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 is currently completing a PFS in support of a production restart decision. The Company is in the process of divesting of its Moss Lake gold deposit, located 100 kilometres (“kms”) west of Thunder Bay, Ontario. The Company has approximately 139.4 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
		March 31,
		2021		2020
Operating data
Milling (tonnes)
Eagle River		53,540		55,874
Mishi		17,219		11,047
Throughput ²		70,759		66,921
Head grades (g/t)
Eagle River		12.8		14.0
Mishi		2.5		2.5
Recovery (%)
Eagle River		97.1		97.3
Mishi		84.8		74.8
Production (ounces)
Eagle River		21,396		24,457
Mishi		1,169		665
Total gold produced ²		22,564		25,122
Total gold sales (ounces) ³		22,457		26,500

Eagle River Complex (per ounce of gold sold) ¹
Average realized price	$	2,223	$	2,162
Cash costs		1,076		1,120
Cash margin	$	1,147	$	1,042
All-in Sustaining Costs ¹	$	1,497	$	1,423

Mine operating costs/tonne milled ¹	$	335	$	425
Average 1 USD → CAD exchange rate		1.2660		1.3449

Cash costs per ounce of gold sold (US$) ¹	$	850	$	833
All-in Sustaining Costs (US$) ¹	$	1,182	$	1,058

Financial Data
Cash margin ¹	$	21,776	$	27,619
Net income	$	7,103	$	11,513
Net income adjusted ¹	$	7,103	$	11,513
Earnings before interest, taxes, depreciation and amortization¹	$	18,662	$	25,414
Operating cash flow	$	22,033	$	33,491
Free cash flow	$	99	$	16,734
Per share data
Net income	$	0.05	$	0.08
Adjusted net income ¹	$	0.05	$	0.08
Operating cash flow¹	$	0.16	$	0.24
Free cash flow ¹	$	0.00	$	0.12

Wesdome Gold Mines Ltd.
Consolidated Statements of Financial Position
(Expressed in thousands of Canadian dollars)

	As at March 31, 2021		As at December 31, 2020
Assets
Current
Cash and cash equivalents	$	63,884	$	63,480
Receivables and prepaids		3,999		4,243
Sales tax receivable		4,773		4,731
Inventories		13,606		12,451
Non-current assets held for sale		10,326		-
Total current assets		96,588		84,905

Restricted cash		657		657
Deferred financing cost		960		827
Mineral properties, plant and equipment		132,047		128,670
Exploration properties		145,097		143,524
Total assets	$	375,349	$	358,583

Liabilities
Payables and accruals	$	25,117	$	21,123
Income and mining tax payable		4,378		3,481
Current portion of lease liabilities		6,243		5,901
Total current liabilities		35,738		30,505

Lease liabilities		5,723		5,604
Deferred income and mining tax liabilities		41,491		37,354
Decommissioning provisions		21,813		22,270
Total liabilities		104,765		95,733

Equity
Equity attributable to owners of the Company
Capital stock		180,802		179,540
Contributed surplus		5,841		6,472
Retained earnings		83,941		76,838
Total equity attributable to owners of the Company		270,584		262,850

	$	375,349	$	358,583

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
		2021			2020

Revenues	$	45,973		$	57,332
Cost of sales		(30,264	)		(37,590	)
Gross profit		15,709			19,742

Other expenses
Corporate and general		2,391			1,971
Stock-based compensation		310			404
		2,701			2,375

Operating income		13,008			17,367

Interest expense		(259	)		(324	)
Accretion of decommissioning provisions		(110	)		(125	)
Interest and other income		(303	)		364
Income before income and mining taxes		12,336			17,282

Income and mining tax expense
Current		1,096			2,270
Deferred		4,137			3,499
		5,233			5,769

Net income and total
comprehensive income	$	7,103		$	11,513

Earnings per share
Basic	$	0.05		$	0.08
Diluted	$	0.05		$	0.08

Weighted average number of common
shares (000s)
Basic		139,732			138,464
Diluted		142,617			142,024

Wesdome Gold Mines Ltd.
Consolidated Statements of Total Equity
(Expressed in thousands of Canadian dollars)


	Capital		Contributed			Retained		Total
	Stock		Surplus			Earnings		Equity

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 RSUs exercised		577		(577	)		-		-
Stock-based compensation		-		404			-		404

Balance, March 31, 2020	$	176,372	$	5,093		$	37,636	$	219,101

Balance, December 31, 2020		179,540		6,472			76,838		262,850
Net income for the period ended
March 31, 2021		-		-			7,103		7,103
Exercise of options		321		-			-		321
Value attributed to options exercised		155		(155	)		-		-
Value attributed to RSUs exercised		786		(786	)		-		-
Stock-based compensation		-		310			-		310

Balance, March 31, 2021	$	180,802	$	5,841		$	83,941	$	270,584

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

	Three Months Ended
	March 31
		2021			2020

Operating Activities
Net income		7,103			11,513
Depreciation and depletion		6,067			7,877
Stock-based compensation		310			404
Accretion of decommissioning provisions		110			125
Deferred income and mining tax expense		4,137			3,499
Amortization of deferred financing cost		106			62
Interest expense		259			324
Foreign exchange loss on lease financing		(30	)		351
		18,062			24,155
Net changes in non-cash working capital		4,170			10,656
Mining and income tax paid		(199	)		(1,320	)
Net cash from operating activities		22,033			33,491

Financing Activities
Exercise of options		321			682
Deferred financing cost		(239	)		(30	)
Repayment of borrowings		-			(3,636	)
Repayment of lease liabilities		(1,516	)		(1,057	)
Interest paid		(259	)		(324	)
Net cash used in financing activities		(1,693	)		(4,365	)

Investing Activities
Additions to mining properties		(8,519	)		(6,546	)
Additions to exploration properties		(11,899	)		(9,154	)
Net changes in non-cash working capital		482			315
Net cash used in investing activities		(19,936	)		(15,385	)

Increase (decrease) in cash and cash equivalents		404			13,741
Cash and cash equivalents - beginning of the period		63,480			35,657
Cash and cash equivalents - end of the period		63,884			49,398

Cash and cash equivalents consist of:
Cash	$	63,884		$	49,398
	$	63,884		$	49,398

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