Wesdome's profits rise with gold price
TORONTO, Nov. 12 /CNW/ - Wesdome Gold Mines Ltd (WDO:TSX) ("Wesdome" or
the "Company") is pleased to report its financial and operating results from
its Canadian operations for the third quarter ended September 30, 2008 and its
year to date (YTD) results. This information should be read in conjunction
with the Company's third quarter financial statements, notes to financial
statements and Management's Discussion and Analysis.
The Company owns the Eagle River gold mining operation in Wawa, Ontario
and the Kiena Mining Complex in Val d'Or, Quebec. The Eagle River mine
commenced commercial production on January 1, 1996 and the Kiena mine on
August 1, 2006.
HIGHLIGHTS
- Quarterly gold sales average $902 per ounce - up 28% from 2007
- Quarterly Net Income rises to $2.2 million
- Quarterly Cash Flow from Operations rises to $5.6 million
- Quarterly Revenue $22.2 million - up 35% from 2007
- YTD Revenue $59.1 million - up 44% from 2007
- YTD Cash Flow from operations $12.1 million
- Costs held steady
REVENUE AND EARNINGS
During the third quarter, 2008, revenue, cash flow from operations and
earnings increased dramatically due to higher gold prices. Net income rose to
$2.2 million in the third quarter, 2008, compared to a net loss of $3.0
million in the third quarter, 2007. Likewise, cash flow from operations
increased to $5.6 million for the quarter compared to $0.5 million in 2007.
Revenue rose to $22.2 million from $16.4 million in 2007 due to higher gold
prices. Gold sales averaged $902 per ounce in the third quarter, 2008 compared
to $712 per ounce in the third quarter, 2007.
For the nine month period year to date, net income stood at $3.1 million.
Cash flows from operations totalled $12.1 million and revenue climbed to $59.1
million.
RESULTS OF OPERATIONS
Three Months Ended Nine Months Ended
Sept 30 Sept 30
2008 2007(*) 2008 2007(*)
----------------------------------------------------------
Eagle River
Mine
Tonnes milled 31,935 35,381 86,892 89,281
Recovered
grade (g/t) 11.8 8.7 13.7 11.4
Ounces
produced 12,139 9,893 38,359 32,821
Ounces
sold 12,063 11,900 34,500 27,800
Bullion
inventory
(oz) 7,326 9,886 7,326 9,886
Bullion
revenue 10,811 8,468 31,495 20,549
- Operating
+ development
costs
(thousands) 8,147 6,382 22,182 17,813
-------------------------------------------------------------------------
Mine
operating
profit (loss)
($m)(xx) 2,664 2,086 9,313 2,736
Gold price
realized
($Cdn/oz) 895 710 913 739
(*) Includes Mishi pit production of 21, 568 tonnes at 3.5 gAu/tonne for
2,402 ounces.
Kiena Mine Complex
Tonnes milled 62,587 63,281 191,735 221,744
Recovered
grade (g/t) 5.8 3.5 4.6 3.7
Ounces
produced 11,582 7,145 28,556 26,595
Ounces sold 12,400 11,100 29,900 27,200
Bullion
inventory
(oz) 1,865 2,100 1,865 2,100
Bullion
revenue 11,244 7,911 27,337 20,161
- Operating
+ development
costs
(thousands) 7,740 8,801 22,530 21,514
-------------------------------------------------------------------------
Mine
operating
profit (loss)
($m)(xx) 3,504 (890) 4,807 (1,353)
Gold price
realized
($Cdn/oz) 905 712 914 741
Total
Production
(oz) 23,721 17,038 66,915 59,416
Sales (oz) 24,463 23,000 64,400 55,000
Bullion
inventory
(oz) 9,191 11,986 9,191 11,986
Bullion
revenue 22,055 16,379 58,832 40,710
- Operating
+ development
costs
(thousands) 15,887 15,183 44,712 39,327
-------------------------------------------------------------------------
Mine
operating
profit ($m)(xx) 6,168 1,196 14,120 1,383
Gold price
realized
($Cdn/oz) 902 712 913 740
(xx) The Company has included in this report certain non-GAAP
performance measures, including mine operating profit (loss) and
operating and development costs to applicable sales. These
measures are not defined under GAAP 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 GAAP as an indicator of our
financial performance or liquidity. The Company believes that, in
addition to conventional measures prepared in accordance with
GAAP, certain investors use this information to evaluate the
Company's performance and ability to generate cash flow.
During the third quarter 2008, combined operations produced 23,721 ounces
of gold. Bullion revenues climbed to $22 million on sales of 24,433 ounces at
an average price of $902 Cdn per ounce. At September 30, 2008, gold inventory
stood at 9,191 ounces. This is carried on the balance sheet at cost. The costs
and revenue for this inventory will be recognized in the fiscal period in
which it is sold.
Revenue exceeded operating and development costs resulting in a mine
operating profit(*) of $6.2 million for the third quarter and $14.1 million for
the first nine months of 2008. In addition to direct operating costs, other
costs, including royalty payments, corporate and general and interest costs,
amounted to $0.8 million in the third quarter and $2.5 million for the first
nine months.
Costs remained relatively stable year over year in the face of general
cost inflation experienced in the mining industry. In fact, on a unit basis,
costs applicable to sales, or cash costs, decreased to $645 Cdn per ounce in
the third quarter and $694 Cdn per ounce year to date. Subsequent to the end
of the quarter, tight labour markets and input costs such as diesel and steel
have eased considerably in international markets. These trends, if sustained,
will help reduce costs further but there may be a time-lag in realizing these
reductions at the mine level.
The highlight of the quarter was continued improvement at the Kiena
operations. The recovered grade increased 40% compared to the first half of
2008 and tight cost control measures contained costs at last year's levels.
Subsequent to quarter end, a potentially significant new find located 3
kilometres east of the shaft was announced on October 14, 2008. Preliminary
drilling results included intersections of 4.45 gAu/tonne over 5.1 metres and
6.82 gAu/tonne over 7.7 metres. Drilling is continuing on this exciting
prospect with the purpose of defining its geometry and dimensions.
LIQUIDITY
At September 30, 2008, the Company had working capital of $8.3 million.
During the third quarter, capital expenditures totalled $4.9 million. In
addition, gold inventories of 9,191 ounces were carried at $6.5 million at
September 30, 2008. Their market value at September 30, 2008, was $8.6
million.
Production for the remainder of 2008 should continue to generate cash
flow, even at gold prices below those currently being realized. Exploration
expenditures will ease as the surface drilling winds down.
OUTLOOK
We forecast steady production in the upcoming quarter and expect to
comfortably exceed our 2008 production forecast of 80,000 ounces.
To date, gold sales have averaged $913 Cdn per ounce, $173 Cdn per ounce
higher than last year's average of $740 Cdn per ounce. By controlling costs,
Wesdome has demonstrated its leverage to the gold price.
Our surface exploration program has identified a brand new gold
occurrence in a previously untested part of the Val d'Or mining camp and we
are hopeful that ongoing drilling will continue to excite.
Since September, extremely volatile markets and economic conditions have
made future planning and forecasts very difficult. We believe fundamentally
that the evolving conditions are strongly supportive of much higher future
gold prices and possibly shorter term relief from the escalating cost
pressures that the industry has faced since 2004.
The recent volatility in the gold price has been buffered by equally
volatile $US/$Cdn exchange rates resulting in relative stability in the $900
Cdn per ounce range. We anticipate a strong fall/winter rally. Operations are
generating strong cash flow and we intend to proceed prudently and do not have
a current need to access very tight capital markets.
ABOUT WESDOME
Wesdome is an established Canadian gold producer with wholly-owned mining
and milling complexes located in Val d'Or, Quebec and Wawa, Ontario. It has
been producing gold continually for 20 years on an unhedged basis and to date
has produced in excess of 1.0 million ounces. The Company has 99.7 million
shares issued and outstanding and trades on the TSX Exchange under the symbol
"WDO".
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.
Wesdome Gold Mines Ltd.
Consolidated Balance Sheets
Sept 30 Dec 31
2008 2007
-------------------------------------------------------------------------
(Unaudited) (Audited)
Assets
Current
Cash and cash equivalents $ 6,539,983 $ 7,341,064
Term deposits 83,436 67,651
Inventory 6,471,762 5,529,454
Receivables 3,382,994 4,243,107
Supplies and other 2,519,908 1,735,736
Marketable securities 43,688 68,085
------------- -------------
19,041,771 18,985,097
Funds held against standby letters of
credit 2,291,443 2,541,132
Capital assets 11,182 13,155
Mining properties 60,604,374 57,790,155
Exploration properties 28,796,166 27,677,643
Property held for sale 378,105 1,078,105
------------- -------------
$111,123,041 $108,085,287
------------- -------------
------------- -------------
-------------------------------------------------------------------------
Liabilities
Current
Payables and accruals $ 9,277,658 $ 9,708,130
Current portion of obligations under
capital leases 1,435,984 1,368,749
------------- -------------
10,713,642 11,076,879
Obligations under capital leases 2,329,212 2,248,355
Convertible 7% debentures 9,293,403 9,038,002
Reclamation obligation 1,121,500 1,072,000
Future income taxes 2,710,000 1,506,000
------------- -------------
26,167,757 24,941,236
------------- -------------
Minority interest in Moss Lake Gold Mines
Ltd. 932,745 980,867
------------- -------------
Shareholders' Equity
Capital stock 113,946,066 115,276,928
Contributed surplus 3,066,737 2,789,117
Accumulated other comprehensive income (289,646) (131,915)
Equity component of convertible debentures 2,079,776 2,079,776
Deficit (34,780,394) (37,850,722)
------------- -------------
84,022,539 82,163,184
------------- -------------
$111,123,041 $108,085,287
------------- -------------
------------- -------------
-------------------------------------------------------------------------
Wesdome Gold Mines Ltd.
Interim Consolidated Statements of Operations and Deficit
(Unaudited)
-------------------------------------------------------------------------
Three Months Ended Nine Months Ended
Sept 30 Sept 30
2008 2007 2008 2007
-------------------------------------------------------------------------
Revenue
Gold and
silver
bullion $ 22,054,509 $ 16,379,930 $ 58,831,770 $ 40,710,301
Interest and
other 125,858 70,162 299,474 151,368
------------- ------------- ------------- -------------
22,180,367 16,450,092 59,131,244 40,861,669
------------- ------------- ------------- -------------
Costs and
expenses
Operating
costs 12,650,665 11,864,559 34,939,696 31,095,149
Development
costs 3,156,147 3,325,964 9,793,946 8,238,294
Amortization
of mining
properties 3,316,651 3,212,218 8,553,807 8,058,417
Production
royalties 176,247 69,574 589,114 359,549
Corporate
and general 243,084 333,332 790,002 1,184,798
Stock
compensation
expense 77,522 58,382 264,640 465,138
Debenture
issuance
costs - 44,960 - 44,960
Interest on
long-term
debt 391,975 543,209 1,148,452 823,286
Other
interest 5,871 7,425 7,489 28,686
Amortization
of office
equipment 657 748 1,973 2,244
Accretion of
reclamation
obligation 16,500 21,750 49,500 47,250
------------- ------------- ------------- -------------
20,035,319 19,482,121 56,138,619 50,347,771
------------- ------------- ------------- -------------
Net income
(loss) before
the following 2,145,048 (3,032,029) 2,992,625 (9,486,102)
Dilution gain
on Moss Lake
Gold Mines Ltd. - - - 17,504
------------- ------------- ------------- -------------
2,145,048 (3,032,029) 2,992,625 (9,468,598)
Recovery of
future income
taxes - - - 700,000
Minority
interest 6,383 11,024 78,259 34,607
------------- ------------- ------------- -------------
Net income
(loss) $ 2,151,431 $ (3,021,005) $ 3,070,884 $ (8,733,991)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net income
(loss) per
common share
Basic and
diluted $ 0.02 $ (0.03) $ 0.03 $ (0.09)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Deficit,
beginning of
period $(36,931,269) $(17,963,304) $(37,850,722) $(12,250,318)
Repurchase of
shares (556) - (556) -
Net income
(loss) 2,151,431 (3,021,005) 3,070,884 (8,733,991)
------------- ------------- ------------- -------------
Deficit, end
of period $(34,780,394) $(20,984,309) $(34,780,394) $(20,984,309)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Wesdome Gold Mines Ltd.
Interim Consolidated Statements of Comprehensive Income and Accumulated
Other Comprehensive Income
(Unaudited)
Three Months Ended Nine Months Ended
Sept 30 Sept 30
2008 2007 2008 2007
-------------------------------------------------------------------------
Net income
(loss) $ 2,151,431 $ (3,021,005) $ 3,070,884 $ (8,733,991)
Other
comprehensive
income (loss)
Change in
fair value
of available-
for-sale
marketable
securities (54,610) (46,809) (157,731) (100,000)
------------- ------------- ------------- -------------
Comprehensive
income (loss) $ 2,096,821 $ (3,067,814) $ 2,913,153 $ (8,833,991)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
-------------------------------------------------------------------------
Accumulated
other
comprehensive
loss,
beginning of
period $ (235,036) $ (53,191) $ (131,915) $ -
Other
comprehensive
income (loss) $ (54,610) $ (46,809) $ (157,731) $ (100,000)
------------- ------------- ------------- -------------
Accumulated
other
comprehensive
loss, end of
period $ (289,646) $ (100,000) $ (289,646) $ (100,000)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
-------------------------------------------------------------------------
Interim Consolidated Statements of Shareholders' Equity
(Unaudited)
Accumulated
Other
Capital Contributed Comprehensive
Stock Surplus Income (loss)
-------------------------------------------------------------------------
Balance, December 31, 2007 $115,276,928 $ 2,789,117 $ (131,915)
Net income for nine months
ended Sept 30, 2008 - - -
Tax effect of flow-through
share renunciation (1,204,000) - -
Exercise of options 27,000 - -
Value attributed to options
exercised 10,080 (10,080) -
Additional costs of 2007
flow-through shares (6,256) - -
Shares purchased under NCIB (157,686) 23,061 -
Stock based compensation - 264,639 -
Revaluation to fair value
of marketable securites - - (157,731)
------------- ------------- -------------
Balance, September 30, 2008 $113,946,066 $ 3,066,737 $ (289,646)
------------- ------------- -------------
------------- ------------- -------------
Equity
Component of Total
Convertible Shareholders'
Debenture Deficit Equity
-------------------------------------------------------------------------
Balance, December 31, 2007 $ 2,079,776 $(37,850,722) $ 82,163,184
Net income for nine months
ended Sept 30, 2008 - 3,070,884 3,070,884
Tax effect of flow-through
share renunciation - - (1,204,000)
Exercise of options - - 27,000
Value attributed to options
exercised - - -
Additional costs of 2007
flow-through shares - - (6,256)
Shares purchased under NCIB - (556) (135,181)
Stock based compensation - - 264,639
Revaluation to fair value
of marketable securites - - (157,731)
------------- ------------- -------------
Balance, September 30, 2008 $ 2,079,776 $ (34,780,394) $ 84,022,539
------------- ------------- -------------
------------- ------------- -------------
Wesdome Gold Mines Ltd.
Interim Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended Nine Months Ended
Sept 30 Sept 30
2008 2007 2008 2007
-------------------------------------------------------------------------
Increase
(decrease) in
cash and cash
equivalents
Operating
activities
Net income
(loss) $ 2,151,431 $ (3,021,005) $ 3,070,884 $ (8,733,991)
Amortiza-
tion of
mining
proper-
ties 3,316,651 3,212,218 8,553,807 8,058,417
Accretion
of
discount
on
convertible
debentures 117,504 259,971 342,964 346,628
Gain on
sale of
Moss Lake
shares - - (14,261) (17,504)
Minority
interest (6,383) (11,024) (78,259) (34,607)
Stock
compensa-
tion
expense 77,522 58,382 264,640 465,138
Amortiza-
tion of
office
equipment 657 748 1,973 2,244
Future
income
taxes - - - (700,000)
Gain on
sale of
equipment (95,178) - (95,178) -
Gain on
redemption
of 7%
convertible
debenture (814) - (814) -
Accretion of
reclamation
obligation 16,500 21,750 49,500 47,250
------------- ------------- ------------- -------------
5,577,890 521,040 12,095,256 (566,425)
Net changes
in non-cash
working
capital 4,511,059 1,151,585 (1,791,587) (3,538,956)
------------- ------------- ------------- -------------
10,088,949 1,672,625 10,303,669 (4,105,381)
------------- ------------- ------------- -------------
Financing
activities
Convertible
7%
debenture - - - 11,539,000
Common
shares and
warrants
issued, net
of costs - (44,099) - (44,099)
Loan from
Western
Québec Mines
Inc. - - - 759,447
Senior Secured
notes
repayment - (1,374,450) - (1,374,450)
Exercise of
options - 186,421 27,000 350,835
Funds paid to
repurchase
common shares
under NCIB (131,222) - (135,181) -
Funds paid to
repurchase
debenture (86,750) - (86,750) -
Flow-through
shares issued - - (6,256) -
Shares issued
by a
subsidiary
of the
company to
third parties - - (3,813) 40,000
Repayment of
obligations
under capital
leases (352,840) (864,635) (1,216,883) (1,583,515)
------------- ------------- ------------- -------------
(570,812) (2,096,763) (1,421,883) 9,687,218
Net changes
in non-cash
working
capital - 117,106 276,035 117,106
------------- ------------- ------------- -------------
(570,812) (1,979,657) (1,145,848) 9,804,324
------------- ------------- ------------- -------------
Investing
activities
Additions to
mining and
exploration
properties (4,893,943) (2,762,266) (11,205,056) (10,278,359)
Cash
acquired
upon
amalgamation - 1,188,401 - 1,188,401
Deferred
financing
costs - 44,960 - (629,438)
Additions
to capital
assets - - - (3,719)
Proceeds on
sale of
Moss Lake
shares to
minority
interests - - 25,921 -
Proceeds on
option to
sell
property - - 566,666 550,000
Proceeds on
sale of
equipment 200,950 - 200,950 -
Funds held
against
standby
letters of
credit 286,460 (17,474) 249,689 (45,525)
------------- ------------- ------------- -------------
(4,406,533) (1,546,379) (10,161,830) (9,218,640)
Net changes
in non-cash
working
capital (210,709) 2,357,687 218,713 2,357,687
------------- ------------- ------------- -------------
(4,617,242) 811,308 (9,943,117) (6,860,953)
------------- ------------- ------------- -------------
Increase
(decrease) in
cash and cash
equivalents 4,900,895 504,276 (785,296) (1,162,010)
Cash and cash
equivalents,
beginning of
period 1,722,524 3,643,965 7,408,715 5,310,251
------------- ------------- ------------- -------------
Cash and cash
equivalents,
end of period
$ 6,623,419 $ 4,148,241 $ 6,623,419 $ 4,148,241
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
For further information: Rowland Uloth, President, Donovan Pollitt,
P.Eng., VP Corporate Development, 8 King St. East, Suite 1305, Toronto, ON,
M5C-1B5, Toll Free: 1-866-4-WDO-TSX, Phone: (416) 360-3743, Fax: (416)
360-7620, Email: invest@wesdome.com, Website: www.wesdome.com
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