Wesdome Announces 2018 First Quarter Financial Results

 
Download as PDF Published on: May 1, 2018

TORONTO, May 01, 2018 (GLOBE NEWSWIRE) -- Wesdome Gold Mines Ltd. (TSX:WDO) (“Wesdome” or the “Company”) today announces first quarter (“Q1 2018”) financial results. All figures are stated in Canadian dollars unless otherwise noted.

Mr. Duncan Middlemiss, President and CEO commented, “2018 is off to a strong start with higher underground grades and volume driving higher gold production and lower costs. Free cash flow generation of $3.2 million, or $0.02 per share after investment of $8.5 million back into the properties has allowed the company to build its cash position by nearly $4.4 million. We expect costs to continue to trend downwards in the second half of the year, when we open two new stopes in both the 303 and 7 Zones. Lower general and administrative costs are also benefitting costs on an all-in sustaining basis. During the quarter, the cash position increased from $22.1 million at the end of 2017 to $26.5 million at the end of Q1 2018.”

“Cash flows will continue to be used to aggressively drill underground at the Eagle River Underground Mine and the Kiena Complex. The objective at the Eagle River mine is to expand all three parallel Zones, with a focus on the 300 and 7 Zones, increase reserves, and diversify production areas within existing infrastructure to further increase the ratio of Eagle River Underground ore versus Mishi Open Pit ore to the mill. In Q1, this strategy began to take effect with 57% of tonnes delivered to the mill coming from the Eagle River Underground Mine versus 50% in 2017. We expect the higher ratio of Eagle River Underground ore to continue throughout 2018.”

“At Kiena, this is a year of assessment where we will be drilling 50,000 metres underground including the Kiena Deep A and Upper Quartz Zones. The objective of this year’s program is to complete a resource update on the Kiena Deep discovery and we are well underway with over 13,000 metres completed to date and we have just added a fourth underground drill.”

Key operating and financial highlights of the Q1 2018 results include:

  • Gold production of 17,949 ounces from the Eagle River Complex, a 18% increase over the same period in the previous year (Q1 2017: 15,162 ounces):
    • Eagle River Underground 44,480 tonnes at a head grade of 12.0 grams per tonne (“g/t Au”) for 16,398 ounces produced,  21% increase over the previous year (Q1 2017: 13,588 ounces).
       
    • Mishi Open Pit 32,846 tonnes at a head grade of 1.8 g/t Au for 1,550 ounces produced (Q1 2017: 1,574 ounces).
       
  • Revenue of $26.2 million, a 30% increase over the previous year (Q1 2017: $20.1 million).
     
  • Ounces sold 15,430 at an average sales price of $1,698/oz (Q1 2017: 12,320 ounces at an average price of $1,631/oz).
     
  • Cash costs1 of $999/oz or US$790/oz, a 12% decrease over the same period in 2017 (Q1 2017: $1,134/oz or US$857/oz). 
     
  • All-in sustaining costs (“AISC”) 1 of $1,342/oz or US$1,061/oz, a 17% decrease over the same period in 2017 (Q1 2017: $1,613/oz or US$1,219/oz).
     
  • Earned mine profit1 of $10.8 million, a 76% increase over Q1 2017 (Q1 2017 - $6.1 million).
     
  • Operating cash flow of $12.4 million or $0.09 per share a 190% increase over the previous year (Q1 2017: $4.3 million or $0.03 per share).
     
  • Free cash flow of $3.2 million or $0.02 per share1 (Q1 2017: outflow of $5.9 million or ($0.05) per share). 
     
  • Net income of $2.9 million or $0.02 per share (Q1 2017: $0.7 million or $0.01 per share).  Net income (adjusted)1 was $2.9 million or $0.02 per share.
     
  • Cash position of $26.5 million.

Refer to the Company’s 2018 Interim Management Discussion and Analysis for the three months ended March 31, 2018, section entitled “Non-IFRS Performance Measures” for the reconciliation of these non-IFRS measurements to the financial statements.

Exploration Highlights for Q1 2018
 
Eagle River
  • Mineral Reserves at Eagle River increased by 21% to 416,000 ounces of gold; grade increased by 32% compared to December 2016 (9.2 g/t Au to 12.2 g/t Au in 1.1 million tonnes for 416,000 ounces (2016: 344,000 ounces)).
     
  • Development drifting on 7 Zone continues to return longer than average strike lengths including a combined 23.8 g/t Au uncut (20.2 g/t Au cut) over a width of 2.1 m and a total strike length of 122.8 m from the 1022 metre level (“m-level”).
Kiena
  • The development of the Kiena Deep exploration ramp at the 1000 m-level commenced early August 2017 is now completed.
     
  • Initial drilling at Kiena Deep A Zone intersected visible gold in several drill holes within predominantly shear zone hosted quartz veins in mafic and ultramafic volcanic rocks.  Highlights include 39.6 g/t Au over 18.2 m core length (12.6 g/t Au cut) in hole 6275.
     
  • In addition, development on cross-cut level 102 and 103 northeast exposed a narrow-laminated quartz vein, named the “Prospect vein”.  Four grab samples returned 6.7, 137.9, 227.1 and 5.0 g/t Au.
     
  • 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 6.7 g/t Au uncut (6.0 g/t Au cut) over 37.6 m core length and 17.9 g/t Au uncut (16.3 g/t Au cut) over 6.0 m core length from S-50 Zone.

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 2018 First Quarter Financial Results Conference Call:

May 2, 2018 at 10:00 am ET:

North American Toll Free: + 1 (844) 202-7109
International Dial-In Number: +1 (703) 639-1272
Conference ID:   7789489
Webcast link: https://edge.media-server.com/m6/p/zpgsbyms

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
    2018   2017
Operating data        
Milling (tonnes)        
Eagle River   44,480   38,578  
Mishi   32,846   36,641  
Throughput 2   77,326   75,219  
Head grades (g/t)        
Eagle River   12.0   11.5  
Mishi   1.8   1.7  
Recovery (%)        
Eagle River   95.4   95.3  
Mishi   81.6   80.9  
Production (ounces)        
Eagle River   16,398   13,588  
Mishi   1,550   1,574  
Total gold produced 2   17,948   15,162  
Total gold sales (ounces)   15,430   12,320  
         
Eagle River Complex (per ounce of gold sold) 1        
Average realized price $ 1,698 $ 1,631  
Cash costs   999   1,134  
Cash margin $ 699 $ 497  
All-in Sustaining Costs 1 $ 1,342 $ 1,613  
         
Mine operating costs/tonne milled 1 $ 208 $ 213  
         
Average 1 USD → CAD exchange rate   1.2647   1.3236  
         
Cash costs per ounce of gold sold (US$) 1 $ 790 $ 857  
All-in Sustaining Costs (US$) 1 $ 1,061 $ 1,219  
         
Financial Data        
Mine profit 1 $ 10,774 $ 6,127  
Net income $ 2,859 $ 695  
Net income adjusted 1 $ 2,859 $ 695  
Operating cash flow $ 12,423 $ 4,318  
Free cash flow $ 3,216 $ (5,942 )
Per share data        
Net income $ 0.02 $ 0.01  
Adjusted net earnings 1 $ 0.02 $ 0.01  
Operating cash flow $ 0.09 $ 0.03  
Free cash flow 1 $ 0.02 $ (0.05 )

Notes

  1. Refer to the Company’s Interim Management Discussion and Analysis for the three months ended March 31, 2018, 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.
Consolidated Statements of Financial Position
(Expressed in thousands of Canadian dollars)
 
      March 31, 2018     December 31, 2017
Assets          
Current          
  Cash and cash equivalents $ 26,460     $ 22,092  
  Accounts receivables and prepaids   2,719       3,821  
  Tax receivable   2,095       1,932  
  Inventories   7,259       5,314  
Total current assets   38,533       33,159  
             
Deferred income tax assets   4,286       5,450  
Mining properties, plant and equipment   81,332       81,375  
Exploration properties   64,921       59,929  
Total assets $ 189,072     $ 179,913  
             
Liabilities          
Current          
  Accounts payables and accruals $ 22,133     $ 17,003  
  Mining and income taxes payable   1,152       671  
  Current portion of obligations under finance leases   2,506       2,541  
Total current liabilities   25,791       20,215  
             
Obligations under finance leases   3,359       3,983  
Deferred mining tax liability   6,457       6,300  
Decommissioning provisions   11,296       11,192  
Total liabilities   46,903       41,690  
             
Equity          
Equity attributable to owners of the Company          
  Capital stock   164,509       164,161  
  Contributed surplus   4,673       3,967  
  Deficit   (27,013 )     (29,905 )
Total equity attributable to owners of the Company   142,169       138,223  
Total liabilities and equity $ 189,072     $ 179,913  
             

 

 
Wesdome Gold Mines Ltd.
Interim Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)
(Expressed in thousands of Canadian dollars except for per share amounts)
 
      Three Months Ended
      March 31
      2018   2017 
           
Revenues $ 26,217   $ 20,100  
Cost of sales   18,764     16,118  
Gross profit   7,453     3,982  
           
Other expenses        
  Corporate and general   1,077     1,431  
  Share-based payments   867     864  
  Kiena care and maintenance   456     221  
  Write-off of mining equipment   281     -  
      2,681     2,516  
           
Operating income   4,772     1,466  
Interest on long-term debt   (51 )   (260 )
Accretion of decommissioning provisions   (104 )   (172 )
Interest and other   44     101  
Exploration credits refund       -  
Income before mining and income tax   4,661     1,135  
Mining and income tax expense        
  Current   481     -  
  Deferred   1,321     440  
      1,802     440  
Net income and total comprehensive income  $ 2,859   $ 695  
           
Net earnings per share        
  Basic $ 0.02   $ 0.01  
  Diluted $ 0.02   $ 0.01  
           
Weighted average number of common shares (000s)        
  Basic   134,132     130,658  
  Diluted   135,148     133,736  
               

 

 
Wesdome Gold Mines Ltd.
Interim Condensed Consolidated Statements of Total Equity (Unaudited)
For the three months ended March 31, 2018
(Expressed in thousands of Canadian dollars)
 
              Equity          
              Component          
      Capital   Contributed   of Convertible       Total  
      Stock   Surplus   Debentures   Deficit   Equity  
                         
Balance,December 31,2016 $ 156,402 $ 2,173   $ 932   $ (32,106 ) $ 127,401  
Net income for the period ended                      
  March 31, 2017   -   -     -     695     695  
Conversion of convertible debentures   2,075   -     (278 )   278     2,075  
Exercise of options   1,670   -     -     -     1,670  
Value attributed to options exercised   808   (808 )   -     -     -  
Value attributed to options expired   -   (13 )   -     13     -  
Share based payments   -   864     -     -     864  
Balance, March 31, 2017 $ 160,955 $ 2,216   $ 654   $ (31,120 ) $ 132,705  
                         
                         
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  
                         

 

 
Wesdome Gold Mines Ltd.
Interim Condensed Consolidated Statements of Cash Flows
(Unaudited, expressed in thousands of Canadian dollars)
           
      Three Months Ended
      March 31
      2018   2017 
           
Operating activities        
  Net income $ 2,859   $ 695  
  Depletion and depreciation   3,321     2,145  
  Deferred mining and income tax expense   1,321     440  
  Mining tax received   -     900  
  Share-based payments   867     864  
  Decommissioning provisions   104     172  
  Interest on long-term debt   51     86  
  Accretion of discount on convertible debentures   -     90  
  Write-off of mining equipment   281     -  
      8,804     5,392  
  Net changes in non-cash working capital   3,619     (1,074 )
Net cash provided by operating activities   12,423     4,318  
Financing activities        
  Exercise of options   220     1,670  
  Lease payments   (659 )   (645 )
  Interest paid   (51 )   (86 )
Net cash (used  in) provided by financing activities   (490 )   939  
Investing activities        
  Additions to mining properties   (3,556 )   (3,803 )
  Additions to exploration properties   (4,992 )   (5,788 )
  Funds released from (held against)        
  standby letters of credit   -     6,920  
  Net changes in non-cash working capital   983     247  
Net cash used in investing activities   (7,565 )   (2,424 )
Increase (decrease) in cash and cash equivalents   4,368     2,833  
Cash and cash equivalents, beginning of period   22,092     26,760  
Cash and cash equivalents, end of period $ 26,460   $ 29,593  
           
Cash and cash equivalents consist of:        
  Cash $ 17,460   $ 12,703  
  Term deposits   9,000     16,890  
    $ 26,460   $ 29,593  
           

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 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 133.9 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, average realized price of gold sold; cash costs per ounce of gold sold; production costs per tonne milled; mine profit (loss); all-in sustaining costs per ounce of gold sold; free cash flow and operating and free cash flow per share; and net income (adjusted) and adjusted net earnings per share.  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 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.