Wesdome Announces 2019 Second Quarter Financial Results
TORONTO, Aug. 08, 2019 -- Wesdome Gold Mines Ltd. (TSX: WDO) (“Wesdome” or the “Company”) today announces second quarter (“Q2 2019”) financial results. All figures are stated in Canadian dollars unless otherwise noted.
Mr. Duncan Middlemiss, President and CEO commented, “In Q2, the Eagle River operations generated $6.7 million in free cash flow, of which $5.5 million was reinvested into the Kiena Complex. Cash and all-in sustaining costs were lower than the previous quarter, with all-in sustaining costs of $1,220 per ounce (US$912) lower than our guidance range $1,280 - $1,350 (US$985 - $1,040). During the quarter, we launched an additional capital project pertaining to our Eagle River tailings facility. This project will cost approximately $6.5 million in capital, of which $1.5 million has been spent, and will ensure the Company is well positioned for the future. The Company guided 72,000 – 80,000 ounces of production for the year and with 41,446 ounces produced in the first half of the year, we are on track to exceed the top end of our guidance range.”
“At Kiena, we continue to infill drill the Kiena Deep discovery, where the continuity of high grade mineralization continues to be confirmed within the A Zone. We expect to publish an updated resource the second half of this year followed by a PEA in early 2020 outlining our next steps for the project.”
Key operating and financial highlights of the Q2 2019 results include:
- Gold production of 22,437 ounces from the Eagle River Complex, a 35% increase over the same period in the previous year (Q2 2018: 16,628 ounces):
◦Eagle River Underground 28,754 tonnes at a head grade of 23.4 grams per tonne (“g/t Au”) for 20,873 ounces produced, 41% increase over the previous year (Q2 2018: 14,767 ounces).
◦Mishi Open Pit 18,623 tonnes at a head grade of 3.0 g/t Au for 1,564 ounces produced (Q2 2018: 1,860 ounces).
- Revenue of $42.3 million, a 34% increase over the previous year (Q2 2018: $31.4 million).
- Ounces sold 24,113 at an average sales price of $1,752/oz (Q2 2018: 18,573 ounces at an average price of $1,692/oz).
- Cash costs1 of $837/oz or US$626/oz, a 6% decrease over the same period in 2018 (Q2 2018: $886/oz or US$686/oz).
- All-in sustaining costs (“AISC”) 1 of $1,220/oz or US$912/oz, a 2% decrease over the same period in 2018 (Q2 2018: $1,242/oz or US$962/oz).
- Earned mine profit1 of $22.1 million, a 47% increase over Q2 2018 (Q2 2018 - $15.0 million).
- Operating cash flow of $15.4 million or $0.11 per share1 as compared to $12.4 million or $0.09 per share for the same period in 2018.
- Invested $6.0 million in exploration expenditures at Eagle River and Kiena Complexes during the quarter (Q2 2018 - $5.1 million)
- Free cash flow of $1.2 million, net of an investment of $5.5 million in Kiena, or $0.01 per share1 (Q2 2018: free cash flow of $2.0 million or $0.01 per share).
- Net income and Net income (adjusted)1 of $8.3 million or $0.06 per share (Q2 2018: $5.7 million or $0.04 per share).
- Cash position of $27.4 million.
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.
Exploration Highlights for Q2 2019
Eagle River
- The mining of the 303 Zone between the first and the second sub-level above the 844 metre level ("m-level") continued in Q2 2019 and confirmed the continuity of the strong grades and the geometry of the mineralized zone. The development of the remainder of the 300 Zone in that area will take place once the 303 zone is completed. 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. Exploration drilling continued on the 925 m-level to prepare the 300E zone for mining.
- Recent development and drilling have continued to expand the 7 East Zone along strike and down plunge 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 an ongoing focus of 2019 drilling.
- Ongoing drilling and initial drift development along the 311 W 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 in excess of 50 m further west than the previously interpreted diorite contact and remains open and therefore 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 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
- 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 in preparation for an updated resource estimate expected in H2 2019. The A Zone remains open at depth and one drill is dedicated to testing this prospective area. The ongoing definition drilling has continued to confirm the overall continuity of the geometry and the high-grade gold mineralization of the Kiena Deep A Zone that now extends over 700 m along plunge. 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 m. 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 in preparation for an updated resource estimate near the end of Q3. This information will then lead into a Preliminary Economic Assessment expected in Q1 2020 and next steps will be determined at that juncture.
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 Second Quarter Financial Results Conference Call:
August 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: 2699395 Webcast link: https://edge.media-server.com/mmc/p/37aef2h5
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 137.0 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 [email protected] [email protected]
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
2019 2018 2019 2018
Operating data
Milling (tonnes)
| Eagle River | 28,754 | 43,378 | 59,695 | 87,858 |
| Mishi | 18,623 | 25,233 | 37,093 | 58,079 |
| Throughput2 | 47,377 | 68,610 | 96,788 | 145,937 |
Head grades (g/t)
Eagle River 23.4 11.0 20.9 11.5 Mishi 3.0 2.7 2.6 2.2
Recovery (%)
Eagle River 96.4 96.2 96.9 95.8 Mishi 85.2 83.6 83.3 82.7 Production (ounces)
| Eagle River | 20,873 | 14,767 | 38,828 | 31,166 |
| Mishi | 1,564 | 1,860 | 2,618 | 3,411 |
| Total gold produced 2 | 22,437 | 16,628 | 41,446 | 34,576 |
| Total gold sales(ounces) | 24,113 | 18,573 | 42,873 | 34,003 |
Eagle River Complex (per ounce of gold sold) 1
| $ | 1,752$ | 1,692 $ | 1,743$ | ||
|---|---|---|---|---|---|
| Cash costs | 837 | 886 | 850 | 937 | |
| Cash margin | $ | 915 $ | 806 $ | 893 $ | 757 |
| All-in Sustaining Costs1 | $ | 1,220$ | 1,242 $ | 1,260$ | 1,288 |
| Average 1 USD → CAD exchange rate | 1.3377 | 1.2911 | 1.3336 | 1.2781 | |
| $ | 626 $ | 637 $ | |||
| Cash costs per ounce of gold sold (US$)1 | 686 $ | 733 | |||
| $ | 912 $ | 945 $ | |||
| All-in Sustaining Costs (US$)1 | 962 $ | 1,007 |
Average realized price 1,694
Financial Data
| Mine profit1 | $ | 22,055$ | 14,957 $ | 38,314$ | 25,731 |
| Net income | $ | 8,327$ | 5,725 $ | 16,419$ | 8,584 |
| Net income adjusted1 | $ | 8,327$ | 5,725 $ | 14,050$ | 8,584 |
| Operating cash flow | $ | 15,400$ | 12,422 $ | 27,981$ | 24,845 |
| Free cash flow (outflow)1 | $ | 1,155$ | 1,962 $ | 726 $ | 5,178 |
Per share data Net income $ 0.06 $ 0.04 $ 0.12 $ 0.06 Adjusted net earnings 1 0.04 $ 0.06
$ 0.06 $ 0.10 $
Operating cash flow 1 0.09 $ 0.19
$ 0.11 $ 0.21 $
Free cash flow (outflow) 1 $ 0.01 $ 0.01 $ 0.01 $ 0.04
Wesdome Gold Mines Ltd.
Condensed Interim Consolidated Statements of Financial Position
(Unaudited, expressed in thousands of Canadian dollars)
June 30, December 2019 31, 2018
Assets
Current Cash and cash equivalents $ 27,395 $ 27,378 Receivables and prepaids 548
2,110
| Sales tax receivable | 6,882 | 2,342 | |
| Inventories | 12,604 | 8,302 | |
| Total current assets | 48,991 | 38,570 | |
| Restricted Cash | 627 | - | |
| Mining properties, plant and equipment | 96,521 | 89,643 | |
| Exploration properties | 92,460 | 81,424 | |
| Total assets | $ 238,599 $ | 209,637 |
Liabilities
Current
| Payables and accruals | $ 20,604 $ | 22,526 | |
| Income and mining tax payable | 1,174 | 180 | |
| Current portion of lease liabilities | 6,667 | 4,552 | |
| Total current liabilities | 28,445 | 27,258 | |
| Lease liabilities | 3,486 | 5,248 | |
| Deferred income and mining tax liabilities | 14,819 | 8,259 | |
| Decommissioning provisions | 13,375 | 11,663 | |
| Total liabilities | 60,125 | 52,428 |
Equity
Equity attributable to owners of the Company
| Capital stock | 170,813 | 166,387 | |
| Contributed surplus | 6,106 | 5,777 | |
| Retained earnings (deficit) | 1,555 | (14,955) | |
| Total equity attributable to owners of the Company | 178,474 | 157,209 | |
| Total liabilities and equity | $ 238,599 $ | 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 Six Months Ended June 30 June 30
2019 2018 2019 2018
Revenues $ 42,276 $ 31,443 $ 74,811 $ 57,660 39,169 Cost of sales 26,571 20,405 46,756 Gross profit 15,705 11,038 28,055 18,491
Other expenses
| Corporate and general | 1,498 | 1,416 | 3,506 | 2,493 |
| Share-based payments | 1,056 | 964 | 2,155 | 1,831 |
| Kiena care and maintenance | - | 321 | - | 777 |
| Write-off of mining equipment | - | 9 | - | 290 |
| 2,554 | 2,710 | 5,661 | 5,391 | |
| Operating income | 13,151 | 8,328 | 22,394 | 13,100 |
| Quebec exploration credits refund | - | - | 2,867 | - |
| Interest on long-term debt | (114) | (72) | (226) | (123) |
| Accretion of decommissioning provisions | (122) | (104) | (237) | (208) |
| Interest and other | 31 | 1,105 | 325 | 1,149 |
| Income before mining and income tax | 12,946 | 9,257 | 25,123 | 13,918 |
Income and mining tax expense Current 1,175 727 2,143 1,208 Deferred 3,444 2,805 6,561 4,126 5,334 4,619 3,532 8,704 Net income and total comprehensive income $ 8,327 $ 5,725 $ 16,419 $ 8,584
Net earnings per share
Basic $ 0.06 $ 0.04 $ 0.12 $ 0.06 Diluted $ 0.06 $ 0.12 $ 0.06 0.04 $
Weighted average number of common shares (000s)
Basic 136,740 134,276 136,266 134,204 Diluted 139,661 135,646 139,492 135,340
Wesdome Gold Mines Ltd.
Condensed Interim Consolidated Statements of Changes in Equity
(Unaudited, expressed in thousands of Canadian dollars)
Capital Contributed Accumulated Total Income Stock Surplus (Deficit) Equity
Balance,December 31,2017 $ 164,161 $ 3,967 $ (29,905) $ 138,223 Net income for the period ended
| June 30, 2018 | - | - | 8,584 | 8,584 | |||||
| Exercise of options | 309 | - | - | 309 | |||||
| Value attributed to options exercised | 179 | (179) | - | - | |||||
| Value attributed to options expired | - | (33) | 33 | - | |||||
| Share based payments | - | 1,831 | - | 1,831 | |||||
| Balance, June 30, 2018 | $ | 164,649$ | 5,586 $ | (21,288) $ | 148,947 | ||||
| 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 | - | ||
| Share-based payments | - | 2,155 | - | 2,155 | ||
| Value attributed to DSU redeemed | 175 | (175) | - | - | ||
| Value attributed to RSU exercised | 253 | (253) | - | - | ||
| Balance, March 31, 2019 | $ 170,813$ | 6,106 $ | 1,555 $ | 178,474 |
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
2019 2018 2019 2018
Operating activities
| Net income | $ 8,327 $ | 5,725 $ | 16,419 $ | 8,584 |
| Depletion and depreciation | 6,350 | 3,919 | 10,259 | 7,240 |
| Share based payments | 1,056 | 964 | 2,155 | 1,831 |
| Accretion of decommission provisions | 122 | 104 | 237 | 208 |
| Deferred income and mining tax expense | 3,444 | 2,805 | 6,561 | 4,126 |
| Interest on long-term debt and other | 123 | 72 | 235 | 123 |
| Write-off of mining equipment | - | 9 | - | 290 |
| 19,422 | 13,598 | 35,866 | 22,402 | |
| Net changes in non-cash working capital | (2,942) | (483) | (6,805) | 3,136 |
| Mining tax paid | (1,080) | (693) | (1,080) | (693) |
| Net cash from operating activities | 15,400 | 12,422 | 27,981 | 24,845 |
Financing activities
| Exercise of options | 789 | 89 | 2,691 | 309 |
| Payments of lease liabilities | (1,316) | (956) | (2,571) | (1,615) |
| Interest paid | (114) | (72) | (226) | (123) |
| Net cash used in financing activities | (641) | (939) | (106) | (1,429) |
Investing activities
| Additions to mining properties | (6,804) | (4,433) | (13,021) | (7,989) |
| Additions to exploration properties | (5,498) | (5,071) | (11,036) | (10,063) |
| Funds held against standby letter of credit and cash deposit | (627) | - | (627) | - |
| Net changes in non-cash working capital | (2,282) | (1,720) | (3,174) | (737) |
| Net cash used in investing activities | (15,211) | (11,224) | (27,858) | (18,789) |
| Increase in cash and cash equivalents | (452) | 259 | 17 | 4,627 |
Cash and cash equivalents, beginning of period 22,092 27,847 26,460 27,378 Cash and cash equivalents, end of period $ 27,395 $ 26,719 $ 27,395 $ 26,719
Cash and cash equivalents consist of:
| Cash | $ | 13,395 $ | 17,677 $ | 13,395 $ | 17,677 |
| Term deposits | 14,000 | 9,042 | 14,000 | 9,042 | |
| $ | 27,395 $ | 26,719 $ | 27,395 $ | 26,719 |
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