Wesdome Announces 2017 Fourth Quarter and Full Year Financial Results  

 
Download as PDF Published on: March 21, 2018

TORONTO, March 21, 2018 (GLOBE NEWSWIRE) -- Wesdome Gold Mines Ltd. (TSX:WDO) (“Wesdome” or the “Company”) today announces fourth quarter (“Q4 2017”) and full year 2017 financial results. All figures are stated in Canadian dollars unless otherwise noted.

Mr. Duncan Middlemiss, President and CEO commented, “Our 2017 results exhibit several operational and financial improvements at Wesdome. We slightly exceeded the upper end of our production guidance, mined significantly higher head grades, improved profits, and met the mid-point for our cash cost and all-in sustaining cost guidance. Looking ahead, we expect this trend to continue with 2018 costs to decrease a further 10% and gold production to increase by approximately 10% to 62,000 – 68,000 ounces as per our guidance.”

“In 2018 at the Eagle River Complex, we are committing all exploration efforts to the Eagle River Underground Mine, where reserves currently stand at 416,000 ounces at 12.2 grams per tonne. A main goal of this program is to identify additional mineralization along the eastern extension of the 300 and 7 zone parallel structures, located to the north and parallel to the main 8 zone, to create additional workplaces and thereby realize our objective of providing additional high grade ore to the mill. We are beginning a higher grade mining cycle at this operation that should continue for the foreseeable future.”

“At Kiena, the exploration ramp is nearing completion and last week we resumed drilling, with two drills on the higher grade Zone A and Upper Quartz Zone of the Kiena Deep discovery. A third drill is expected to be added in April to this area. The plan at Kiena this year is to complete 50,000 metres of underground drilling, in order to be in a position to generate a potential resource calculation on the Kiena Deep discovery. This will determine timing and next steps at this asset.”   

Key operating and financial highlights of the full year 2017 results include:

• Gold production of 58,980 ounces from the Eagle River Complex,  a 24% increase over the previous year (2016: 47,737 ounces):

  • Eagle River Underground 157,250 tonnes at a head grade of 10.6 grams per tonne (“g/t Au”) for 50,996 ounces produced, a 27% increase over the previous year (2016: 40,252 ounces).
  • Mishi Open Pit 152,591 tonnes at a head grade of 2.0 g/t Au for 7,985 ounces produced, a 7% increase over the previous year (2016: 7,485 ounces).

• Revenue of $96.1 million, a 14% increase over the previous year (2016: $84.0 million).

• Ounces sold 57,770 at an average sales price of $1,643/oz (2016: 48,680 ounces at an average price of $1,676/oz).

• Cash costs1 of $1,097/oz or US$845/oz, a 10% decrease over the previous year (2016: $1,218/oz or US$919/oz). 

• All-in sustaining costs (“AISC”) 1 of $1,489/oz or US$1,146/oz, a 12% decrease over the previous year (2016: $1,681/oz or US$1,268/oz).

• Earned mine profit1 of $31.5 million, a 41% increase over the previous year (2016 - $22.3 million).

• Operating cash flow of $27.2 million or $0.20 per share a 21% increase over the previous year (2016: $22.4 million or $0.18 per share).

• Free cash outflow of $9.3 million or ($0.07) per share1 (2016: outflow of $4.2 million or ($0.03) per share). 

• Net income of $1.3 million or $0.01 per share (2016: $7.8 million or $0.06 per share).  Net income (adjusted) 1 before a one-time deferred mining tax adjustment of $3.9 million and a non-recurring $2.2 million restructuring cost was $6.8 million or $0.05 per share.

• Cash position of $22.1 million.

• Wesdome been approved by the Ontario Ministry of Northern Development and Mines (“MNDM”) for an entry into the Northern Industrial Electricity Rate (“NIER”) program.  Upon acceptance by MNDM, the Company is qualified for a retroactive electricity cost rebate to the extent of approximately $1.0 million for the period of April 1, 2017 and up to December 31, 2017.

• Mineral Reserves at the Eagle River Underground Mine of 416,000 contained gold ounces (1.1 million tonnes at 12.2 g/t Au) (2016 1.2 million tonnes at 9.2 g/t Au for 344,000 ounces).

             
Key operating and financial highlights of Q4 2017 results include:

• Eagle River Complex gold production of 15,797 ounces (2016: 11,887 ozs).

•19,351 gold ounces sold (2016: 13,490 ozs).

• Cash costs1 of $1,019/oz (US$801/oz) (2016: $1,215/oz or US$911/oz). 

• AISC1 of $1,284/oz or US$1,010/oz (Q4 2106: $1,631/oz or US$1,222/oz).

• Earned mine profit1 of $11.6 million (Q4 2016: $5.9 million).

• Operating cash flow of $13.5 million or $0.10 per share1 (Q4 2016: $7.7 million or $0.06 per share).

• Free cash flow generation of $5.7 million or $0.04 per share 1 (Q4 2016: out flow of $2.2 million or ($0.02) per share).

• Net loss of $0.6 million or nil, on a per share basis.  Net income (adjusted)1 before the one-time mining tax adjustment was $3.4 million or $0.03 per share.

  1. Refer to the Company’s 2017 Annual Management Discussion and Analysis on pages 26 – 31, entitled “Non-IFRS Performance Measures” for the reconciliation of these non-IFRS measurements to the financial statements.
Exploration & Corporate Development Highlights for 2017
 
Eagle River
  • At Eagle River, continued drilling has now traced the 300E structure from 750 metres (“m”) depth to 1,000 m depth and remains open up and down plunge.  Drilling highlights include 51.93 g/t Au (23.18 g/t Au cut) over 11.96 m true width.
  • Development to date on the 300E Zone has identified seven subzones on the 844-metre level (“m-level”).  The combined ore strike length of the subzones are 173.7 m with a weighted average width of 2.85 m and cut and uncut gold grades of 22.62 g/t Au and 34.79 g/t Au, respectively. 
  • Continued drilling to explore the 300W Zone has now traced the mineralization 300 m up-plunge and remains open to the west and up-plunge.  Highlights include 41.99 g/t Au cut over 2.72 m true width.
  • Resource definition drilling at Mishi completed in 2017 returned positive results from two areas located 600 m and 1,700 m west of the existing open pit mining operations.  Wesdome is currently assessing these occurrences and building them into a long-term growth scenario for mining at Mishi.
 
Kiena
  • Development of the Kiena Deep exploration ramp continued with 878 linear metres completed to date and is expected to be completed by the end of March 2018. Early results from Kiena Deep B zone indicate moderate to locally higher gold grades obtained with occasional visible gold observed.  Results include 34.37 g/t Au uncut (24.16 g/t cut) over 4.5 m core length (1.6 m true width) in hole 6186.
  • As the ramp development is continuing, one drill has been actively drilling several auxiliary targets near existing underground development including the S-50 and VC zone sectors and has returned encouraging results, including 6.68 g/t Au uncut (6.02 g/t Au cut) over 37.6 m core length and 17.89 g/t Au uncut (16.3 g/t Au cut) over 6.0 m core length from S-50 zone.
  • Ramping is expected to be completed in March and will enable the Company to drill the higher grade Kiena Deep A zone shortly thereafter.
  
Moss Lake
  • Drilling at Moss Lake was completed along the strike of the existing resources to significantly extend mineralization over an additional strike length of 4.5 kilometres.  The project has been kept on care and maintenance since the fall of 2017 to allow the geological team to focus its attention on the Eagle River Complex and the Kiena gold deposits.
  
Corporate
  • The appointment of two former mining executives as directors and a new management team in mid-year to steer the Company to increase production and profitability.

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 2017 Fourth Quarter and Full Year Financial Results Conference Call:

North American Toll Free: + 1 (844) 202-7109
International Dial-In Number: +1 (703) 639-1272
Conference ID:   8836599
Webcast link: https://edge.media-server.com/m6/p/cjgs5kz3

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     Years Ended
    December 31,     December 31,
   2017    2016    2017    2016
Operating data                      
Milling (tonnes)                          
Eagle River   39,291       42,607     157,250     170,369
Mishi   38,197     30,714     152,591     138,668
Throughput 2   77,488     73,321     309,841     309,037
                       
Head grades (g/t)                      
Eagle River   11.3     8.2     10.6     7.9
Mishi   2.3     1.6     2.0     2.0
Recovery (%)                      
Eagle River   94.3     94.6     95.0     93.5
Mishi   81.4     81.6     83.0     85.4
Production (ounces)                      
Eagle River   13,499     10,595     50,996     40,252
Mishi   2,298     1,292     7,985     7,485
Total gold produced 2   15,797     11,887     58,980     47,737
Total gold sales (ounces)   19,351     13,490     57,770     48,680
                       
Eagle River Complex (per ounce of gold sold) 1          
Average realized price $ 1,618   $ 1,655   $ 1,643   $ 1,676
Cash costs   1,019     1,215     1,097     1,218
Cash margin $ 599   $ 440   $ 546   $ 458
All-in Sustaining Costs 1 $ 1,284   $ 1,631   $ 1,489   $ 1,681
                       
Mine operating costs/tonne milled 1 $ 206   $ 206   $ 204   $ 184
Average 1 USD → CAD exchange rate 1.2712     1.3344     1.2986     1.3253
Cash costs per ounce of gold sold (US$) 1 $ 801   $ 911   $ 845   $ 919
All-in Sustaining Costs (US$) 1 $ 1,010   $ 1,222   $ 1,146   $ 1,268
                       
Financial Data  
Mine profit 1 $ 11,606   $ 5,931   $ 31,537   $ 22,293
Net income (loss)  $ (567)   $ 1,600   $ 1,287   $ 7,786
Net income (loss) adjusted 1 $ 3,357   $ 1,600   $ 6,798   $ 6,789
Operating cash flow $ 13,468   $ 7,663   $ 27,225   $ 22,424
Free cash flow $ 5,655   $ (2,169)   $ (9,344)   $ (4,211)
Per share data                      
  Net income (loss) $ 0.00   $ 0.01   $ 0.01   $ 0.06
  Adjusted net earnings 1 $ 0.03   $ 0.01   $ 0.05   $ 0.05
  Operating cash flow  $ 0.10   $ 0.06   $ 0.20   $ 0.18
  Free cash flow 1 $ 0.04   $ (0.02)   $ (0.07)   $ (0.03)

 Notes

  1. Refer to the Company’s 2017 Annual Management Discussion and Analysis on pages 26 – 31, 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.
Consolidated Statements of Financial Position
(Expressed in thousands of Canadian dollars) 
    As of   As of 
    December 31, 2017   December 31, 2016 
           
Assets          
Current          
Cash and cash equivalents $ 22,092   $ 26,760
Receivables and prepaids   3,821     776
Tax receivable   1,932     2,906
Inventories   5,314     5,929
Total current assets   33,159     36,371
   
Restricted funds   -     6,920
Deferred income tax assets   5,450     7,009
Mining properties, plant and equipment   81,375     74,241
Exploration properties   59,929     38,373
Total assets $ 179,913   $ 162,914
           
Liabilities  
Current  
Payables and accruals $ 17,003   $ 11,831
Mining and income taxes payable   671     -
Current portion of obligations under finance leases   2,541     2,079
Convertible debentures   -     6,900
Total current liabilities   20,215     20,810
   
Obligations under finance leases   3,983     4,223
Deferred mining tax liability   6,300     -
Decommissioning provisions   11,192     10,480
Total liabilities   41,690     35,513
   
Equity  
Equity attributable to owners of the Company  
Capital stock   164,161     156,402
Contributed surplus   3,967     2,173
Equity component of convertible debentures   -     932
Deficit   (29,905)     (32,106)
Total equity attributable to owners of the Company   138,223     127,401
Total liabilities and equity $ 179,913   $ 162,914
           

 

 
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     Years Ended
  December 31,     December 31,
   2017    2016    2017    2016
                       
Revenues $ 31,544   $ 22,166   $ 96,057   $ 84,031
Cost of sales   23,780     18,188     74,228     66,360
Gross profit   7,764     3,978     21,829     17,671
                       
Other expenses                      
Corporate and general   1,248     1,278     4,943     4,777
Share based payments   520     781     2,778     1,734
Kiena care and maintenance   329     695     1,096     2,245
Restructuring costs   -     -     2,159     686
Write-down of  mining equipment   316     -     316     -
    2,413     2,754     11,292     9,442
                       
Operating income   5,351     1,224     10,537     8,229
Interest on long-term debt   (60)     (264)     (462)     (1,030)
Accretion of decommissioning provisions   (14)     78     (210)     20
Interest and other   (4)     (34)     (67)     17
Exploration credits refund   -     -     -     2,620
Income before income tax   5,273     1,004     9,798     9,856
Mining and income tax (expense) recovery                      
Current   (571)     900     (722)     900
Deferred   (5,269)     (304)     (7,789)     (2,970)
    (5,840)     596     (8,511)     (2,070)
                       
Net income (loss) and total comprehensive income (loss) $ (567)   $ 1,600   $ 1,287   $ 7,786
                       
Net earnings (loss) per share    
Basic $ 0.00   $ 0.01   $ 0.01   $ 0.06
Diluted $ 0.00   $ 0.01   $ 0.01   $ 0.06
                       
Weighted average number of common shares (000s)                      
Basic   133,889     130,205     132,871     126,158
Diluted   135,058     132,732     134,927     128,086
                       

 

                             
Wesdome Gold Mines Ltd.
Consolidated Statements of Total Equity
(Expressed in thousands of Canadian dollars) 
   
                Equity            
                Component            
    Capital     Contributed     of Convertible           Total
    Stock     Surplus     Debentures     Deficit     Equity
                             
Balance, December 31, 2015 $ 137,126   $ 1,729   $ 932   $ (40,289)   $ 99,498
Net income for the year ended December 31, 2016   -     -     -     7,786     7,786
Exercise of options   1,356     -     -     -     1,356
Value attributed to options exercised   893     (893   -     -     -
Value attributed to options expired   -     (397   -     397     -
Share based payments   -     1,734     -     -     1,734
Shares issued to acquire Moss Lake area properties   750     -     -     -     750
Shares issued under prospectus   17,267     -     -     -     17,267
Share issue cost, net of tax   (990)     -     -     -     (990)
Balance, December 31, 2016 $ 156,402   $ 2,173   $ 932   $ (32,106)   $ 127,401
                             
Net income for the year ended December 31, 2017   -     -     -     1,287     1,287
Conversion/maturity of convertible debentures   4,912     -     (932)     932     4,912
Exercise of options   1,915     -     -     -     1,915
Value attributed to options exercised   932     (932)     -     -     -
Value attributed to options expired   -     (52)     -     52     -
Tax related to share issue cost   -     -     -     (70)     (70)
Share based payments   -     2,778     -     -     2,778
Balance, December 31, 2017 $ 164,161   $ 3,967   $ -   $ (29,905)   $ 138,223

 

                       
                       
Wesdome Gold Mines Ltd.
Consolidated Statements of Cash Flows
(Unaudited, expressed in thousands of Canadian dollars) 
   
  Three Months Ended   Years Ended
  December 31,   December 31,
    2017     2016     2017     2016
                       
Operating activities                      
Net income (loss) $ (567)   $ 1,600   $ 1,287   $ 7,786
Depletion and depreciation   3,842     1,798     10,608     7,067
Deferred mining and income tax expense   5,269     304     7,789     2,970
Mining tax received   -     (900)     900     (900)
Share based payments   520     781     2,778     1,734
Decommissioning provisions   14     (78)     210     (20)
Interest on long-term debt   (50)     176     359     692
Accretion of discount on convertible debentures   -     88     103     338
Loss on disposal of equipment   55     184     214     260
Write-down of mining equipment   316     -     316     -
    9,399     3,953     24,564     19,927
Net changes in non-cash working capital   4,069     3,710     2,661     2,497
Funds provided by operating activities   13,468     7,663     27,225     22,424
Financing activities                      
Repayment of convertible debentures   -     -     (2,091)     -
Exercise of options   -     257     1,915     1,356
Finance lease payments   (674)     (554)     (2,753)     (1,914)
Interest paid   (60)     (299)     (469)     (692)
Shares issued under prospectus, net of issue cost   -     -     -     16,017
Funds (used) provided by financing activities   (734)     (596)     (3,398)     14,767
Investing activities                      
Additions to mining properties   (3,241)     (4,034)     (15,020)     (18,150)
Additions to exploration properties   (4,598)     (4,677)     (21,556)     (10,214)
Funds released from (held against) standby letters of credit   -     -     6,920     (4,385)
Proceeds on sale of exploration properties   -     -     -     7,000
Proceeds on sale of equipment   -     26     90     69
Net changes in non-cash working capital   583     (613)     1,071     (175)
Funds used by investing activities   (7,256)     (9,298)     (28,495)     (25,855)
Increase (decrease) in cash and cash equivalents   5,478     (2,231)     (4,668)     11,336
Cash and cash equivalents, beginning of period   16,614     28,991     26,760     15,424
Cash and cash equivalents, end of period $ 22,092   $ 26,760   $ 22,092   $ 26,760
                       
Cash and cash equivalents consist of:                      
Cash $ 13,092   $ 8,999   $ 13,092   $ 8,999
Term deposits   9,000     17,761     9,000     17,761
  $ 22,092   $ 26,760   $ 22,092   $ 26,760
                       

ABOUT WESDOME

Wesdome Gold Mines is in its 31st year of continuous gold mining operations in Canada. The Company is 100% Canadian focused with a pipeline of projects in various stages of development. The Eagle River Complex near 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 Company has further upside at its Moss Lake gold deposit, located 100 kilometres west of Thunder Bay, Ontario. The Company has approximately 134 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. 29
dmiddlemiss@wesdome.com

or

Lindsay Carpenter Dunlop
VP Investor Relations
416-360-3743   ext. 25
ldunlop@wesdome.com

8 King St. East, Suite 811
Toronto, ON, M5C 1B5
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.