Wesdome Announces Second Quarter Financial Results

Aug 3, 2017 @ 09:18

Wesdome Gold Mines Ltd. today announces second quarter 2017 financial results.

Mr. Duncan Middlemiss, President and CEO commented, “Over the last year, the operations team has been focused on increasing mined gold grades and developed stope inventory consistently quarter over quarter. The first half of 2017 demonstrates that this work is starting to take effect. Average head grades in the first half of 2017 at the Eagle River Underground Mine were 10.7 grams per tonne, versus 6.6 grams per tonne in the first half of 2016. This has been achieved by opening up additional production areas, and increased discipline of the application of quality tonnes, not quantity tonnes. As a result, operating cost per ounce have decreased to CAD$1,153 per ounce in H1 2017 compared to CAD$1,419 per ounce on H1 2016. As a result, operating cash flow has significantly improved to CAD$10.6 M in H1 2017 versus CAD$2.1 M in H1 2016. Moving forward, we are focused on reducing unit costs on an all-in basis.  Completion of a ventilation raise this year will improve the workplaces and increase productivity by allowing for additional production areas, further reducing unit costs and increasing production.”

“At Kiena, the contractor has been mobilizing in preparation for ramp development commencing in early August. We expect to be back to drilling the Kiena Deep discovery by September or October 2017. In the meantime, 2 drills will be drilling other prospective targets underground. These include the VC and S50 zones, both of which are located close to existing production infrastructure.”

 2017 SECOND QUARTER HIGHLIGHTS

• Gold production of 12,529 ounces (Q2 2016: 12,147) increased slightly due to higher grades at the Eagle River Mine with lower tonnes milled

• Eagle River Mine underground production of 10,597 ounces (Q2 2016: 10,210) at a head grade of 9.8 grams per tonne (“g/t”) (Q2 2016: 7.5) with a mill recovery of 96.3% (Q2 2016: 93.4%) from 34,960 tonnes milled (Q2 2016: 45,305)

• Mishi Open Pit mine production of 1,932 ounces (Q2 2016: 1,937) at a head grade of 1.8 g/t (Q2 2016: 2.1) with a mill recovery of 83.1% (Q2 2016: 85.5%) from 39,117 tonnes milled (2016: 34,006)

• 2017 Guidance remains at 52,000 – 58,000 ounces
• Total mill throughput of 74,077 tonnes (Q2 2016: 79,311) averaging 814 tonnes per calendar day (“tpd”) (Q2 2016: 872) was lower due partly to scheduled Hydro One system maintenance and upgrades
• Revenue of $23.2 million (Q2 2016: $18.4 million) on gold sales of 13,030 ounces (Q2 2016: 11,265) at an average realized price of $1,715 or US$1,274 per ounce (Q2 2016: $1,637 or US $1,271)
• Mine operating profit¹ of $7.1 million (Q2 2016: $4.5 million) increased compared to the comparative quarter due to higher sales and slightly higher production
• Net income of $0.9 million (Q2 2016: $1.8 million), or $0.01 per share (Q2 2016: $0.01)
• Operating cash flow of $5.3 million (Q2 2016: $4.9 million), or $0.04¹ per share (Q2 2016: $0.04 increased due to higher sales
• Free cash flow¹ of $(4.7) million compared to Q2 2016 of $(2.1) million. The increased negative outflow in Q2 2017 is due to the heightened combined exploration activities at Eagle River, Kiena and Moss Lake. Q2 2017 exploration was $5.9 million compared to only $1.6 million in Q2 2016
• Production cash costs per ounce¹ were $1,270 or US$945 (Q2 2016: $1,188 or US$922)
• All-in sustaining costs per ounce (“AISC”)¹ on a production basis of $1,770 or US$1,316 (Q2 2016: $1,687 or US$1,309), an increase of 5% over Q2 2016 due to higher production costs relating to additional stope development, and higher corporate and general expenses. Increased stope development in Q2 2017 has led to an additional 20,000 tonnes of developed reserves inventory as at June 30, 2017
• Convertible debentures of $7.0 million were fully retired at maturity through $4.9 million conversion into common shares of the Company and $2.1 million cash repayment
• Cash and cash equivalents of $22.7 million; 3,557 ounces gold in process at market price of $5.7 million; working capital of $17.8 million as at June 30, 2017

2017 Second Quarter Exploration and Corporate Development Highlights

• At the Eagle River Underground mine, initial development completed on the 844 metre level of the 300E Zones. The combined strike length of the subzones is 173.70 m with a weighted average width of 2.85 m and cut and uncut gold grades of 22.62 g Au/tonne and 34.79 g Au/tonne, respectively.
• Drilling at Mishi Open Pit extends deposit 700 m westwards
• Significant progress made on the Kiena exploration ramp. CMAC-Thyssen Mining has been selected as the contractor, and equipment has been mobilized in preparation for ramp development commencing in early August
• Board of Directors strengthened with the appointment of two experienced mining industry professionals, Charles (Chuck) Main and Warwick Morley-Jepson

Financial Results – Three and Six Months 2017 and 2016
	Three Months ended June 30					Six Months ended June 30
	2017		2016			2017		2016
(in $000, except per share amounts)
Revenue	23,248		18,447			43,348		31,731
Mine operating profit 1	7,132		4,493			13,687		3,388
Net income (loss)	863		1,837			1,558		(1,463	)
Net income (loss) adjusted1	1,313		409			2,229		(2,445	)
Basic net income (loss) per share	0.01		0.01			0.01		(0.01	)
Basic net income (loss) per share adjusted 1	0.01		0.00			0.02		(0.02	)
Cash flows from operating activities	5,250		4,885			10,642		2,099
Cash flows from operating activities adjusted 1	5,700		3,457			11,313		1,117
Free cash flow 1	(4,685	)	(2,147	)		(8,884	)	(9,337	)
Cash and cash equivalents	22,681		26,802			22,681		26,802
Working capital	17,815		16,598			17,815		16,598

 

Operational Results – Three and Six Months 2017 and 2016
	Three Months ended June 30			Six Months ended June 30
	2017	2016		2017	2016
Eagle tonnes milled	34,960	45,305		73,538	85,144
Mishi tonnes milled	39,117	34,006		75,758	70,293
Total tonnes milled	74,077	79,311		149,296	155,437
Eagle grade (g/t)	9.8	7.5		10.7	6.6
Mishi grade (g/t)	1.8	2.1		1.8	2.0
Eagle River Mine mill recovery (%)	96.3	93.4		95.7	91.2
Mishi Mine mill recovery (%)	83.1	85.5		82.1	84.6
Eagle recovered grade (g/t)	9.4	7.0		10.2	6.0
Mishi recovered grade (g/t)	1.5	1.8		1.4	1.7
Eagle ounces produced	10,597	10,210		24,185	16,464
Mishi ounces produced	1,932	1,937		3,506	3,719
Total ounces produced	12,529	12,147		27,691	20,183
Ounces sold	13,030	11,265		25,350	19,365
Average realized price (CAD$/oz) *	1,715	1,637		1,674	1,639
Average realized price (US$/oz) *	1,274	1,271		1,254	1,231
Production cash costs (CAD$/oz) *	1,270	1,188		1,153	1,419
Production cash costs/oz (US$/oz)	945	922		864	1,066
All-in-sustaining costs (CAD$/oz)*	1,770	1,687		1,608	1,982
All-in-sustaining costs (US$/oz) *	1,316	1,309		1,204	1,489
Average 1 USD to CAD exchange rate	1.3449	1.2886		1.3351	1.3307

Note:

1. Refer to the section entitled “Non-IFRS Performance Measures”  in the Q2 2017 Management’s Discussion and Analysis for the reconciliation of these non-IFRS measurements to the Financial Statements.