Wesdome Announces Strong Second Quarter Results



    TORONTO, Aug. 11 /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 second quarter ended June 30th, 2008 and its
year to date (YTD) results. This information should be read in conjunction
with the Company's second quarter financial statements, notes to financial
statements and Management's Discussion and Analysis.

    
    HIGHLIGHTS

    -  Quarterly revenue increased 80% from Q2 2007 to Q2 2008
    -  YTD Revenue increased 52% from 2007 to 2008
    -  Quarterly Cash Flow from Operations increased 280% from Q2 2007 to Q2
       2008
    -  YTD Cash Flow from Operations increased from -$1.1M in 2007 to $6.5M
       in 2008
    

    REVENUE AND EARNINGS

    Wesdome generated record revenues of $20.7 million for the second
quarter, 2008, compared to $11.5 million in the second quarter of 2007. YTD
Revenue increased to $37.0 million from $24.4 million in 2007. Quarterly gold
sales averaged $913 per ounce compared to $753 per ounce in 2007. YTD realized
gold prices averaged $921 per ounce compared to $760 per ounce in 2007.
    Cash Flow from Operations was $3.8 million ($0.04 per share) and Net
Income for the quarter was $0.76 million ($0.01 per share) compared to a loss
of $1.3 million (-$0.01 per share) in the second quarter of 2007. YTD Cash
Flow from Operations was $6.5 million ($0.07 per share) compared to negative
cash flows of $1.1 million (-$0.01 per share) in 2007 and YTD Net Income
increased to $0.92 million ($0.01 per share) compared to a Net Loss of $5.71
million in 2007 (-$0.06 per share).

    RESULTS OF OPERATIONS

    During the second quarter 2008, combined operations produced 22,791
ounces of gold. Bullion revenue climbed to $20.6 million on sales of 22,600
ounces at an average price of $913Cdn per ounce. In addition to the ounces
sold, gold inventory grew to 9,933 ounces from 9,742 ounces at the end of the
first quarter, which is carried on the balance sheet at a cost of $7.9 million
as of June 30, 2008. Their market value at June 30, 2008, was $9.4 million.
    Revenue exceeded operating and development costs resulting in a mine
operating profit(*) of $4.3 million for the second quarter and $7.9 million for
the first half of 2008. In addition to direct operating costs, other costs,
including royalty payments, corporate and general and interest costs, amounted
to $0.73 million in the second quarter and $1.49 million for the first half.
    Investing in mining and exploration properties (Capex) for the six months
totalled $6.3 million which includes $0.94 million funded and spent by
subsidiary Moss Lake Gold Mines Ltd. This represents a decrease from the $7.5
million invested during the first half, 2007.
    The Eagle River mine continued to exceed expectations with recovered
grades rising 25% over those experienced in the first quarter.
    At Kiena, recovered grades increased 10% compared to the first quarter
and are expected to increase further in the third quarter as higher grade ore
becomes available.
    Severe spring break-up conditions at Eagle River resulted in flooding of
the access road and some mill infrastructure although ongoing production was
not impaired.

    
    RESULTS OF OPERATIONS

                      Three Months Ended June 30    Six Months Ended June 30
                              2008          2007          2008          2007
                      -------------------------------------------------------
    Eagle River Mine

    Tonnes milled           25,588        23,200        54,957        53,900
      Recovered grade
       (g/t)                  16.6          19.5          14.8          13.2
      Ounces produced       13,662        14,544        26,220        22,928
      Ounces sold           13,600         5,400        22,437        15,900
      Bullion inventory
       (oz)                  7,250        11,893         7,250        11,893

      Bullion revenue       12,419         4,040        20,684        12,081
      - Operating +
       development costs
       (thousands)           8,777         3,103        14,045        11,431
    -------------------------------------------------------------------------

    Mine operating profit
     (loss) ($m) (*)         3,642           937         6,639           650
    Gold price realized
     ($Cdn/oz)                 913           748           922           760

    Kiena Mine Complex

      Tonnes milled         65,831        87,000       129,148       158,400
      Recovered grade
       (g/t)                   4.3           3.9           4.1           3.8
      Ounces produced        9,129        11,011        16,974        19,451
      Ounces sold            9,000         9,800        17,500        16,100
      Bullion inventory
       (oz)                  2,683         6,057         2,683         6,057

      Bullion revenue        8,209         7,413        16,093        12,250
      - Operating +
       development costs
       (thousands)           7,502         6,659        14,790        12,713
    -------------------------------------------------------------------------

      Mine operating profit
       (loss) ($m) (*)         707           754         1,303          (463)
      Gold price realized
       ($Cdn/oz)               912           756           921           761

    Total

      Production (oz)       22,791        25,555        43,194        42,379
      Sales (oz)            22,600        15,200        39,937        32,000
      Bullion inventory
       (oz)                  9,933        17,950         9,933        17,950

      Bullion revenue       20,628        11,453        36,777        24,331
      - Operating +
       development costs
       (thousands)          16,279         9,762        28,835        24,144
    -------------------------------------------------------------------------

      Mine operating profit
       ($m) (*)              4,349         1,691         7,942           187
      Gold price realized
       ($Cdn/oz)               913           753           921           760

    (*) 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.
    

    CORPORATE OVERVIEW

    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 January 1st, 1996 and the Kiena mine August 1,
2006.
    On June 26th, 2008 the Wesdome Group achieved a major milestone: having
poured 1 million ounces of gold. The Wesdome Group has been producing gold
since 1987. The Wesdome Group has put five gold mines into production and
assembled strategic property and mining infrastructure in Val d'Or, Quebec and
Wawa, Ontario
    At June 30, 2008, the Company had working capital of $7.9 million. During
the second quarter, production, grades, revenues, operating profits, cash flow
from operations and earnings increased compared to the first quarter, 2008.
Cash flows from operations for six months were $6.5 million and $6.3 million
was invested in mining and exploration properties.

    OUTLOOK

    We now expect production to exceed our 2008 forecast of 80,000 ounces. We
are currently about 8% ahead of the pace. We expect some higher grades to
kick-in at Kiena in the third quarter. Grades at Eagle River continue to
surprise, exceeding reserve grades. We hope this continues.
    To date gold sales have averaged $921Cdn per ounce or $161Cdn per ounce
more than they did in 2007. Each $10 movement in the gold price accrues $0.8
million to the bottom line.
    Fundamentals have never looked more bullish for the gold price. The price
has held up very well in the summer months and we anticipate a strong fall
rally.
    Since early June, we have had two surface drills working on the lake in
Val d'Or. This program will test targets generated from an exhaustive
compilation program initiated in 2005. The goal of the program is to identify
new mineralized systems within the range of existing infrastructure.

    Wesdome Gold Mines Ltd. is an established Canadian gold producer with
mining operations and development projects in Wawa, Ontario and Val d'Or,
Quebec. The Company has 99.8 million shares issued 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

                                                       June 30        Dec 31
                                                          2008          2007
    -------------------------------------------------------------------------
                                                    (Unaudited)     (Audited)
    Assets
    Current
      Cash and cash equivalents                   $  1,644,826  $  7,341,064
      Term deposits                                     77,698        67,651
      Inventory                                      7,935,225     5,529,454
      Receivables                                    7,217,537     4,243,107
      Supplies and other                             2,097,436     1,735,736
      Marketable securities                             98,298        68,085
                                                  ------------- -------------
                                                    19,071,020    18,985,097

    Funds held against standby letters of credit     2,577,903     2,541,132
    Capital assets                                      11,839        13,155
    Mining properties                               58,946,515    57,790,155
    Exploration properties                          28,637,149    27,677,643
    Property held for sale                             378,105     1,078,105
                                                  ------------- -------------

                                                  $109,622,531  $108,085,287
                                                  ------------- -------------
                                                  ------------- -------------

    -------------------------------------------------------------------------

    Liabilities
    Current
      Payables and accruals                       $  9,852,841  $  9,708,130
      Current portion of obligations under
       capital leases                                1,351,492     1,368,749
                                                  ------------- -------------
                                                    11,204,333    11,076,879

    Obligations under capital leases                 2,423,892     2,248,355
    Convertible 7% debentures                        9,263,462     9,038,002
    Reclamation obligation                           1,105,000     1,072,000
    Future income taxes                              2,710,000     1,506,000
                                                  ------------- -------------
                                                    26,706,687    24,941,236
                                                  ------------- -------------

    Minority interest in Moss Lake Gold Mines Ltd.     936,426       980,867
                                                  ------------- -------------

    Shareholders' Equity
    Capital stock                                  114,099,792   115,276,928
    Contributed surplus                              2,966,155     2,789,117
    Accumulated other comprehensive income            (235,036)     (131,915)
    Equity component of convertible debentures       2,079,776     2,079,776
    Deficit                                        (36,931,269)  (37,850,722)
                                                  ------------- -------------
                                                    81,979,418    82,163,184
                                                  ------------- -------------

                                                  $109,622,531  $108,085,287
                                                  ------------- -------------
                                                  ------------- -------------

    -------------------------------------------------------------------------



    Wesdome Gold Mines Ltd.
    Interim Consolidated Statements of Operations and Deficit
    (Unaudited)
    -------------------------------------------------------------------------
                      Three Months Ended June 30    Six Months Ended June 30
                              2008          2007          2008          2007
    -------------------------------------------------------------------------

    Revenue
      Gold and silver
       bullion        $ 20,628,932  $ 11,452,764  $ 36,777,261  $ 24,330,371
      Interest and
       other                85,252        51,592       173,617        81,206
                      ------------- ------------- ------------- -------------
                        20,714,184    11,504,356    36,950,878    24,411,577
                      ------------- ------------- ------------- -------------

    Costs and expenses
      Operating costs   12,297,934     7,934,733    22,289,032    19,230,590
      Development costs  3,849,698     1,826,134     6,637,799     4,912,330
      Amortization of
       mining
       properties        2,914,955     2,117,107     5,237,156     4,846,199
      Production
       royalties           213,980       190,899       412,867       289,975
      Corporate and
       general             245,972       395,360       546,917       851,466
      Stock compensation
       expense              96,333       119,203       187,118       406,756
      Interest on
       long-term debt      381,361       226,518       756,477       280,077
      Other interest           364        14,460         1,619        21,261
      Amortization of
       office equipment        658           748         1,316         1,496
      Accretion of
       reclamation
       obligation           16,500        12,750        33,000        25,500
                      ------------- ------------- ------------- -------------
                        20,017,755    12,837,912    36,103,301    30,865,650
                      ------------- ------------- ------------- -------------

    Net income (loss)
     before the
     following             696,429    (1,333,556)      847,577    (6,454,073)
    Dilution gain on
     Moss Lake Gold
     Mines Ltd.                  -        17,504             -        17,504
                      ------------- ------------- ------------- -------------
                           696,429    (1,316,052)      847,577    (6,436,569)

    Recovery of future
     income taxes                -             -             -       700,000

    Minority interest       66,686         4,374        71,876        23,583
                      ------------- ------------- ------------- -------------

    Net income (loss) $    763,115  $ (1,311,678) $    919,453  $ (5,712,986)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

    Net income (loss)
     per common share
      Basic and
       diluted        $       0.01  $      (0.01) $       0.01  $      (0.06)
                      ------------- ------------- ------------- -------------


    Deficit, beginning
     of period        $(37,694,384) $(16,651,626) $(37,850,722) $(12,250,318)

    Net income (loss)      763,115    (1,311,678)      919,453    (5,712,986)
                      ------------- ------------- ------------- -------------

    Deficit, end of
     period           $(36,931,269) $(17,963,304) $(36,931,269) $(17,963,304)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

    -------------------------------------------------------------------------



    Wesdome Gold Mines Ltd.
    Interim Consolidated Statements of Comprehensive Income and Accumulated
    Other Comprehensive Income
    (Unaudited)

                      Three Months Ended June 30    Six Months Ended June 30
                              2008          2007          2008          2007
    -------------------------------------------------------------------------

    Net income (loss) $    763,115  $ (1,311,678) $    919,453  $ (5,712,986)

    Other comprehensive
     income (loss)
      Change in fair
       value of
       available-for-
       sale marketable
       securities          (76,454)        6,383      (103,121)      (53,191)
                      ------------- ------------- ------------- -------------

    Comprehensive
     income (loss)    $    686,661  $ (1,305,295) $    816,332  $ (5,766,177)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

    -------------------------------------------------------------------------

    Accumulated other
     comprehensive
     loss, beginning
     of period        $   (158,582) $    (59,574) $   (131,915) $          -

    Other
     comprehensive
     income (loss)    $    (76,454) $      6,383  $   (103,121) $    (53,191)
                      ------------- ------------- ------------- -------------

    Accumulated other
     comprehensive
     loss, end of
     period           $   (235,036) $    (53,191) $   (235,036) $    (53,191)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

    -------------------------------------------------------------------------


    Interim Consolidated Statements of Shareholders' Equity
    (Unaudited)

                                     Accumulated        Equity
                                           Other  Component of
                           Capital   Contributed Comprehensive   Convertible
                             Stock       Surplus  Income (loss)    Debenture
    -------------------------------------------------------------------------

    Balance, December
     31, 2007         $115,276,928  $  2,789,117  $   (131,915) $  2,079,776
    Net income for
     six months ended
     June 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             (3,960)            -             -             -
    Stock based
     compensation                -       187,118             -             -
    Revaluation to
     fair value of
     marketable
     securites                   -             -      (103,121)            -
                      ------------- ------------- ------------- -------------

    Balance, June 30,
     2008             $114,099,792  $  2,966,155  $   (235,036) $  2,079,776
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------


                             Total  Shareholders'
                           Deficit        Equity
    ---------------------------------------------
    Balance, December
     31, 2007         $(37,850,722) $ 82,163,184
    Net income for
     six months ended
     June 30, 2008         919,453       919,453
    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                  -        (3,960)
    Stock based
     compensation                -       187,118
    Revaluation to
     fair value of
     marketable
     securites                   -      (103,121)
                      ------------- -------------

    Balance, June 30,
     2008             $(36,931,269) $ 81,979,418
                      ------------- -------------
                      ------------- -------------



    Wesdome Gold Mines Ltd.
    Interim Consolidated Statements of Cash Flows
    (Unaudited)

                      Three Months Ended June 30    Six Months Ended June 30
                              2008          2007          2008          2007
    -------------------------------------------------------------------------

    Increase (decrease)
     in cash and cash
     equivalents

    Operating
     activities
      Net income
       (loss)         $    763,115  $ (1,311,678) $    919,453  $ (5,712,986)
      Amortization of
       mining
       properties        2,914,955     2,117,107     5,237,156     4,846,199
      Accretion of
       discount on
       convertible
       debentures          115,287        86,657       225,460        86,657
      Gain on sale of
       Moss Lake shares      2,974       (17,504)      (14,261)      (17,504)
      Minority interest    (66,686)       (4,374)      (71,876)      (23,583)
      Stock compensation
       expense              96,333       119,204       187,118       406,756
      Amortization of
       office equipment        658           748         1,316         1,496
      Future income taxes        -             -             -      (700,000)
      Accretion of
       reclamation
       obligation           16,500        12,750        33,000        25,500
                      ------------- ------------- ------------- -------------
                         3,843,136     1,002,910     6,517,366    (1,087,465)
    Net changes in
     non-cash working
     capital            (2,147,839)   (5,292,585)   (6,302,646)   (4,837,350)
                      ------------- ------------- ------------- -------------
                         1,695,297    (4,289,675)      214,720    (5,924,815)
                      ------------- ------------- ------------- -------------

    Financing activities
      Convertible 7%
       debenture                 -    11,539,000             -    11,539,000
      Loan from Western
       Québec Mines Inc.         -       759,447             -       759,447
      Exercise of options        -        99,999        27,000       164,414
      Funds paid to
       repurchase common
       shares under NCIB    (3,960)            -        (3,960)            -
      Flow-through shares
       issued               (6,256)            -        (6,256)            -
      Shares issued by a
       subsidiary of the
       company to third
       parties              (3,813)       40,000        (3,813)       40,000
      Marketable
       securities                -         6,383             -       146,809
      Repayment of
       obligations under
       capital leases     (441,635)     (385,892)     (864,043)     (718,880)
                      ------------- ------------- ------------- -------------
                          (455,664)   12,058,937      (851,072)   11,930,790

    Net changes in
     non-cash working
     capital                     -             -       276,035             -
                      ------------- ------------- ------------- -------------
                          (455,664)   12,058,937      (575,037)   11,930,790
                      ------------- ------------- ------------- -------------

    Investing activities
      Additions to
       mining and
       exploration
       properties       (3,964,749)   (3,703,536)   (6,311,112)   (7,516,093)
      Deferred
       financing costs           -      (674,398)            -      (674,398)
      Additions to
       capital assets            -        (1,186)            -        (3,719)
      Proceeds on sale
       of Moss Lake
       shares to
       minority interests        -             -        25,921             -
      Proceeds on option
       to sell property          -             -       566,666       550,000
      Funds held against
       standby letters
       of credit           (13,386)      (28,051)      (36,771)      (28,051)
                      ------------- ------------- ------------- -------------
                        (3,978,135)   (4,407,171)   (5,755,296)   (7,672,261)
      Net changes in
       non-cash working
       capital             426,160             -       429,422             -
                      ------------- ------------- ------------- -------------
                        (3,551,975)   (4,407,171)   (5,325,874)   (7,672,261)
                      ------------- ------------- ------------- -------------

    Decrease in cash
     and cash
     equivalents        (2,312,342)   (7,159,882)   (5,686,191)   10,978,414

    Cash and cash
     equivalents,
     beginning of
     period              4,034,866    18,298,511     7,408,715       160,215
                      ------------- ------------- ------------- -------------

    Cash and cash
     equivalents, end
     of period        $  1,722,524  $ 11,138,629  $  1,722,524  $ 11,138,629
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

    -------------------------------------------------------------------------
    





For further information:

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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