Wesdome Announces 2020 Second Quarter Financial Results

TORONTO, Aug. 11, 2020 (GLOBE NEWSWIRE) — Wesdome Gold Mines Ltd. (TSX: WDO) (“Wesdome” or the “Company”) today announces second quarter (“Q2 2020”) financial results. All figures are stated in Canadian dollars unless otherwise noted.

Mr. Duncan Middlemiss, President and CEO commented, “During Q2, Wesdome generated operating cash flow of $30.2 million or $0.22 per share and free cash flow of $17.7 million, net of an investment of $6.0 million in Kiena, or $0.13 per share, ending the quarter with a cash position of $66.7 million (Q1 2020: $49.4 million). Cash costs for the quarter were $882 per ounce (US: $637) and All-in sustaining costs were $1,218 per ounce (US $879) a 21% and 14% decrease respectively over Q1 2020.

With H1 2020 total gold production of 50,264 ounces at an average grade of 15.8 grams per tonne at the Eagle River mine, the Company is well-positioned to achieve its full year guidance range of 90,000 – 100,000 ounces at an average grade of 15 – 16.7 grams per tonne.  H1 2020 cash costs of $1,009 per ounce (US$739) are above the high end of the company’s guidance range of $875 per ounce (US$670) due to inventory adjustments in the first quarter, and reduced operational efficiencies related to protocols implemented due to COVID-19.  The Company is revising cash cost guidance for the year to $950 – $975 per ounce (US$700 – $720). H1 2020 All-in sustaining costs of $1,327 per ounce (US$972) are within the company’s guidance range of $1,280 – $1,350 per ounce (US $985 – $1,040) and we expect full year costs to be within this range.

The Eagle River complex was operating on reduced operations, and some work, such as exploration, mine and tailing construction activities, that were suspended in order to facilitate enhanced physical distancing to limit the potential spread of the COVID-19 virus, have gradually restarted in the second quarter. The initial budget for Eagle River underground exploration was 119,000 metres, which will now be 85,000 metres. Surface exploration metres of 33,500 metres will be largely unchanged, and we will introduce some regional exploration campaigns away from the existing mine.

At Kiena, work was shut down on March 24 in response to the Government of Quebec’s mandated closures due to the COVID-19 virus, and resumed on May 11. Drilling activities are back to 100% capacity, and we expect to achieve our previously guided drill metres of 80,000 metres. We expect to publish an updated resource estimate in Q4, followed by a Pre-feasibility study. During the quarter, we also completed our Preliminary Economic Analysis (“PEA”) which delivered favourable economics of an after-tax IRR of 102%. A summary of the PEA was released on May 27, and the full report filed on June 25. Both reports are available on the Company’s website and on sedar.com.

Additionally, the Company wishes to announce the appointment of Raj Gill to the position of Vice President, Corporate Development. Raj has over 11 years of experience in the mining industry and capital markets including equity research, and most recently Director of Corporate Development at Kinross where he led and supported a range of strategic, financial and technical initiatives. Raj will be a great asset as Wesdome continues on its trajectory of becoming an all-Canadian intermediate gold producer.”

Key operating and financial highlights of the Q2 2020 results include:

  • Gold production of 25,142 ounces from the Eagle River Complex, a 12.1% increase over the same period in the previous year (Q2 2019: 22,437 ounces):
    — Eagle River Underground 42,349 tonnes at a head grade of 18.1 grams per tonne (“g/t Au”) for 24,117 ounces produced, 15.5% increase over the previous year (Q2 2019: 20,873 ounces).
    — Mishi Open Pit 13,721 tonnes at a head grade of 2.9 g/t Au for 1,026 ounces produced (Q2 2019: 1,564 ounces).
  • Revenue of $54.8 million, a 29.6% increase over Q2 2019 (Q2 2019: $42.3 million).
  • Ounces sold 23,140 at an average sales price of $2,365/oz (Q2 2019: 24,113 ounces at an average price of $1,752/oz).
  • Earned mine profit1 of $34.3 million, a 55% increase over Q2 2019 (Q2 2019 – $22.1 million).
  • Cash costs 1 of $882 (US$637) per ounce of gold sold (Q2 2019 of $837 (US$626) due to higher tonnes processed at the mill.
  • All-in sustaining costs (“AISC”) 1 of $1,218/oz or US$879/oz, a slight decrease over the same period in 2019 (Q2 2019: $1,220/oz or US$912/oz), due to lower sustaining capital expenditures; partially offset by lower grades and higher tonnage processed at the Mill.
  • Operating cash flow of $30.2 million or $0.22 per share1 as compared to $15.4 million or $0.11 per share for the same period in 2019.
  • Free cash flow of $17.7 million, net of an investment of $6.0 million in Kiena, or $0.13 per share1 (Q2 2019: free cash flow of $1.2 million or $0.01 per share. 
  • Net income of $16.1 million or $0.12 per share (Q2 2019: $8.3 million or $0.06 per share) and Net income (adjusted)1 of $16.4 million or $0.12 per share (Q2 2019: $8.3 million or $0.06 per share). 
  • Cash position increased to $66.7 million compared to $49.4 million in the previous quarter.

1 Refer to the Company’s 2020 Second 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
  • With normal operations curtailed due to the COVID-19 pandemic, surface and exploration drilling is currently operating at a reduced capacity. However, recent underground drilling from the 772 m elevation was completed to test the down plunge extension of the Falcon Zone.  It is interpreted that the Falcon/7 Zone now extends from surface approximately 1,000 m down plunge and is part of the up plunge extension of the 7 Zone currently being mined near the 1,000 m elevation. This is significant, as the extension of this zone is proximal to mine infrastructure and has the potential to be included in future mine production and ultimately augment production rates in the medium term. Additional drilling is required to better define these zones and remains a priority in the second half of 2020. 
Kiena
  • The Preliminary Economic Assessment (“PEA”) study was completed in Q2 2020. The PEA demonstrates a low-cost and high margin operation, with low capital requirements and a short payback period, while minimizing risks and maximizing shareholders’ return. This PEA is based on the Mineral Resource Estimate (“MRE”) dated September 2019 and includes only those resources proximal to the mine infrastructure, specifically the A Zone, B Zone, S50, VC Zones and the South Zone.  An updated resource estimate is planned early in Q4 2020 followed by a pre-feasibility study (“PFS”) and a production restart decision in H1 2021.
  • Diamond drilling activities at Kiena restarted on May 11th, 2020 focusing on the continuation of converting inferred into indicated resources. This drilling has continued to confirm the overall continuity of the geometry and the high-grade gold mineralization of the A Zone and identified additional mineralization outside of the most recent resource estimate. The A Zone now extends down plunge in excess of 830 m.
   

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 2020 Second Quarter Financial Results Conference Call:

North American Toll Free: + 1 (844) 202-7109
International Dial-In Number: +1 (703) 639-1272
Conference ID:  9581356
Webcast link: https://edge.media-server.com/mmc/p/ord86na2

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 138.9 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     Six Months Ended  
    June 30     June 30  
    2020   2019     2020   2019  
Operating data                    
Milling (tonnes)                    
Eagle River   42,349   28,754     98,223   59,695  
Mishi   13,721   18,623     24,768   37,093  
Throughput 2   56,070   47,377     122,991   96,788  
Head grades (g/t)                    
Eagle River   18.1   23.4     15.8   20.9  
Mishi   2.9   3.0     2.7   2.6  
Recovery (%)                    
Eagle River   97.9   96.4     97.6   96.9  
Mishi   79.8   85.2     77.8   83.3  
Production (ounces)                    
Eagle River   24,117   20,873     48,574   38,828  
Mishi   1,026   1,564     1,690   2,618  
Total gold produced 2   25,142   22,437     50,264   41,446  
Total gold sales (ounces)   23,140   24,113     49,640   42,873  
                     
Eagle River Complex (per ounce of gold sold) 1                    
Average realized price $ 2,365 $ 1,752   $ 2,257 $ 1,743  
Cash costs   882   837     1,009   850  
Cash margin $ 1,483 $ 915   $ 1,247 $ 893  
All-in Sustaining Costs 1 $ 1,218 $ 1,220   $ 1,327 $ 1,260  
                     
Average 1 USD → CAD exchange rate   1.3853   1.3377     1.3651   1.3336  
                     
Cash costs per ounce of gold sold (US$) 1 $ 637 $ 626   $ 739 $ 637  
All-in Sustaining Costs (US$) 1 $ 879 $ 912   $ 972 $ 945  
                     
Financial Data                    
Mine profit 1 $ 34,304 $ 22,055   $ 61,923 $ 38,314  
Net income $ 16,097 $ 8,327   $ 27,610 $ 16,419  
Net income adjusted 1 $ 16,473 $ 8,327   $ 27,986 $ 14,050  
Operating cash flow $ 30,246 $ 15,400   $ 63,675 $ 27,981  
Free cash flow (outflow) 1 $ 17,691 $ 1,155   $ 34,363 $ 726  
Per share data                    
Net income $ 0.12 $ 0.06   $ 0.20 $ 0.12  
Adjusted net earnings 1 $ 0.12 $ 0.06   $ 0.20 $ 0.10  
Operating cash flow 1 $ 0.22 $ 0.11   $ 0.46 $ 0.21  
Free cash flow 1 $ 0.13 $ 0.01   $ 0.25 $ 0.01  
                     

 

 


Wesdome Gold Mines Ltd.

Condensed Interim Consolidated Statements of Financial Position
(Unaudited, expressed in thousands of Canadian dollars)

    June 30, 2020   December 31, 2019
Assets        
Current        
Cash and cash equivalents   $ 66,733   $ 35,657
Receivables and prepaids     1,798     1,996
Sales tax receivable     3,256     3,344
Inventories     10,517     19,667
Total current assets     82,304     60,664
         
Restricted cash     657     657
Deferred financing cost     1,025     988
Mineral properties, plant and equipment     121,142     116,765
Exploration properties     121,756     106,644
Total assets   $ 326,884   $ 285,718
         
Liabilities        
Current        
Borrowings   $   $ 3,636
Payables and accruals     18,077     19,219
Income and mining tax payable     4,137     1,419
Current portion of lease liabilities     5,133     3,781
Total current liabilities     27,347     28,055
         
Lease liabilities     6,287     5,889
Deferred income and mining tax liabilities     33,723     23,829
Decommissioning provisions     21,889     21,443
Total liabilities     89,246     79,216
         
Equity        
Equity attributable to owners of the Company        
Capital stock     177,973     174,789
Contributed surplus     5,932     5,590
Retained earnings     53,733     26,123
Total equity attributable to owners of the Company     237,638     206,502
Total liabilities and equity   $ 326,884   $ 285,718
         


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   $ 54,772     $ 42,276       $ 112,104     $ 74,811  
Cost of sales     (26,270 )     (26,571 )       (63,860 )     (46,756 )
Gross profit     28,502       15,705         48,244       28,055  
                   
Other expenses                  
Corporate and general     1,805       1,498         3,776       3,506  
Stock-based compensation     1,340       1,056         1,744       2,155  
                   
      3,145       2,554         5,520       5,661  
                   
Operating income     25,357       13,151         42,724       22,394  
                   
Quebec exploration credits refund                         2,867  
COVID-19 costs     (556 )             (556 )      
Interest expense     (284 )     (114 )       (539 )     (226 )
Accretion of decommissioning provisions     (52 )     (122 )       (177 )     (237 )
Interest and other income     (204 )     31         91       325  
Income before income and mining taxes     24,261       12,946         41,543       25,123  
                   
Income and mining tax expense                  
Current     1,769       1,175         4,039       2,143  
Deferred     6,395       3,444         9,894       6,561  
      8,164       4,619         13,933       8,704  
                   
Net income and total                  
  comprehensive income   $ 16,097     $ 8,327       $ 27,610     $ 16,419  
                   
Earnings per share                  
Basic   $ 0.12     $ 0.06       $ 0.20     $ 0.12  
Diluted     0.11     $ 0.06         0.19     $ 0.12  
                   
Weighted average number of common                  
  shares (000s)                  
Basic     138,918       136,740         138,691       136,266  
Diluted     142,430       139,661         142,227       139,492  
                                   

Wesdome Gold Mines Ltd.
Condensed Interim Consolidated Statements of Changes in Equity
(Unaudited, expressed in thousands of Canadian dollars)

            Retained    
    Capital   Contributed Earnings/ Total
    Stock   Surplus   (Deficit)   Equity
                 
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    
Value attributed to RSUs exercised     253     (253 )        
Value attributed to DSUs exercised     175     (175 )        
Stock-based compensation         2,155           2,155
                 
Balance, June 30, 2019   $ 170,813   $ 6,106     $ 1,555   $ 178,474
                 
                 
Balance, December 31, 2019   $ 174,789   $ 5,590     $ 26,123   $ 206,502
Net income for the period ended                
June 30, 2020               27,610     27,610
Exercise of options     1,782               1,782
Value attributed to options exercised     825     (825 )        
Value attributed to RSUs exercised     577     (577 )        
Stock-based compensation         1,744           1,744
                 
Balance, June 30, 2020   $ 177,973   $ 5,932     $ 53,733   $ 237,638
                 


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,
      2020       2019       2020       2019  
                 
Operating Activities                
Net income   $ 16,097     $ 8,327     $ 27,610     $ 16,419  
Depreciation and depletion     5,802       6,350       13,679       10,259  
Stock-based compensation     1,340       1,056       1,744       2,155  
Accretion of decommissioning provisions     52       122       177       237  
Deferred income and mining tax expense     6,395       3,444       9,894       6,561  
Interest expense     284       114       539       226  
Foreign exchange loss on lease financing     (236 )     9       184       9  
      29,734       19,422       53,827       35,866  
Net changes in non-cash working capital   512       (2,942 )     11,168       (6,805 )
Mining tax paid           (1,080 )     (1,320 )     (1,080 )
Net cash from operating activities     30,246       15,400       63,675       27,981  
                 
Financing Activities                
Exercise of options     1,100       789       1,782       2,691  
Amortization of deferred financing cost   3             (34 )      
Repayment of borrowings                 (3,636 )      
Repayment of lease liabilities     (1,152 )     (1,316 )     (2,209 )     (2,571 )
Interest paid     (284 )     (114 )     (539 )     (226 )
Net cash used in financing activities     (333 )     (641 )     (4,636 )     (106 )
                 
Investing Activities                
Additions to mining properties     (5,445 )     (6,804 )     (11,991 )     (13,021 )
Additions to exploration properties     (5,958 )     (5,498 )     (15,112 )     (11,036 )
Funds held against standby letter of credit         (627 )           (627 )
Net changes in non-cash working capital   (1,175 )     (2,282 )     (860 )     (3,174 )
Net cash used in investing activities     (12,578 )     (15,211 )     (27,963 )     (27,858 )
                 
Increase in cash and cash equivalents     17,335       (452 )     31,076       17  
Cash and cash equivalents – beginning of year   49,398       27,847       35,657       27,378  
Cash and cash equivalents – end of year   $ 66,733     $ 27,395     $ 66,733     $ 27,395  
                 
Cash and cash equivalents consist of:                
Cash   $ 66,733     $ 13,395     $ 66,733     $ 13,395  
Term deposits           14,000             14,000  
    $ 66,733     $ 27,395     $ 66,733     $ 27,395  

PDF available: http://ml.globenewswire.com/Resource/Download/00469150-212f-4e01-bcdd-d64e1680087a

 

 

 

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