Wesdome earns $0.08 per share in Q1



    TORONTO, May 13 /CNW/ - Wesdome Gold Mines Ltd (WDO: TSX) ("Wesdome" or
the "Company") is pleased to report its unaudited financial and operating
results from its Canadian operations for the first quarter ended March 31,
2009. This information should be read in conjunction with the Company's annual
financial statements, notes to the financial statements and Management's
Discussion and Analysis. All figures are in Canadian dollars unless otherwise
specified.
    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

    -   Production totals 27,434 ounces
    -   Earnings rise to $7.6 million or $0.08 per share
    -   Revenues rise to $23.6 million on sales of 20,700 ounces at $1,138
        per ounce
    -   Cash flow from operations rise to $10.3 million or $0.10 per share
    -   Free cash flow after capital spending of $7.7 million
    -   Bullion inventory rises to 17,313 ounces or $20 million mark to
        market at March 31, 2009
    

    Rolly Uloth, CEO comments "Strong grades, rising prices and declining
costs are a good formula. Our miners are doing a great job; hopefully the
market will recognize our hard work and future potential".

    OVERALL PERFORMANCE

    At March 31, 2009, the Company had working capital of $18.2 million. From
an operating viewpoint, revenue exceeded cash operating costs by $11.3 million
and $2.6 million was invested in capital costs. Cash flow from operations
totalled $10.3 million and net income was $7.6 million or $0.08 per share.
    The cash cost per ounce was $592Cdn or $474US applying a 0.80 Cdn/US
exchange rate.
    Production exceeded forecasts at both mines with positive surprises in
both grade and tonnage. Already strong gold prices increased with sales
averaging $1,138 Cdn per ounce.

    
    RESULTS OF OPERATIONS

    Three months ended March 31                                 2009    2008
    -------------------------------------------------------------------------
    Eagle River Mine

      Tonnes milled                                           32,287  29,369
      Recovered grade (g/t)                                     16.3    13.3
      Ounces produced                                         16,885  12,558
      Ounces sold                                             11,300   8,837
      Bullion inventory (oz)                                  13,212   7,188
      Bullion revenue                                         12,840   8,264
      - Operating costs (thousands)                            6,503   5,268
    -------------------------------------------------------------------------
      Mine operating profit (loss) ($m)(*)                     6,337   2,996
      Gold price realized ($Cdn/oz)                            1,136     935

    Kiena Mine Complex

      Tonnes milled                                           58,018  63,317
      Recovered grade (g/t)                                      5.7     3.9
      Ounces produced                                         10,549   7,845
      Ounces sold                                              9,400   8,500
      Bullion inventory (oz)                                   4,101   2,554

      Bullion revenue                                         10,711   7,884
      - Operating costs (thousands)                            5,763   7,502
    -------------------------------------------------------------------------
      Mine operating profit (loss) ($m)(*)                     4,948     382
      Gold price realized ($Cdn/oz)                            1,139     928

    Total

      Production (oz)                                         27,434  20,403
      Sales (oz)                                              20,700  17,337
      Bullion inventory (oz)                                  17,313   9,742

      Bullion revenue                                         23,551  16,148
      - Operating costs (thousands)                           12,266  12,770
    -------------------------------------------------------------------------
      Operating profit (loss) ($m)(*)                         11,285   3,378
      Gold price realized ($Cdn/oz)                            1,138     931

    (*) The Company has included in this report certain non-GAAP performance
        measures, including mine operating profit (loss) and operating 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 first quarter, combined operations produced 27,434 ounces of
gold. Revenues climbed to $23.6 million on sales of 20,700 ounces at an
average realized price of $1,138 per ounce. In addition to the ounces sold,
gold inventory grew to 17,313 ounces, which is carried on the balance sheet at
the lower of cost or net realizable value. The costs and revenue for this
inventory will be recognized in the fiscal period in which it is sold.
    Revenue exceeded operating costs resulting in a mine operating profit, or
gross margin, of $11.3 million. In addition to the direct operating costs of
$12.3 million, other costs, including royalties, corporate and general costs
and interest costs amounted to $1.17 million. Operating costs declined $0.54
million or 4% compared to the first quarter 2008 while revenue increased 45%.
    At Eagle River both grades and tonnage exceeded expectations. More ore
than expected and higher grades than expected were realized from the 811 zone.
Because of this, higher than expected grades are spilling over into the second
quarter.
    At the Kiena mine initial production from the North zone - B lens yielded
higher than expected grade and we are hopeful this will continue as mining
proceeds.
    External conditions continue to favour Canadian gold producers.
Favourable exchange rates and a marked easing in labour markets, service
industry markets, energy costs and commodity-based input costs are all
combining to increase margins. The first quarter is seasonally the most costly
involving increased energy consumption and snow removal costs.
    During the first quarter drilling activity at both mines focussed on
definition drilling. Having completed this necessary work, exploration
drilling activity is now accelerating. Early success at Eagle River was
announced subsequent to the end of the first quarter on April 20, 2009.
Initial deep drilling has traced the 811 zone to at least 1,000 feet (300
metres) below existing workings. Drilling results included 42.37 gAu/tonne
over 2.26 metres, 19.81 gAu/tonne over 2.34 metres and 55.52 gAu/tonne over
2.34 metres on three adjacent sections. The zone remains open and drilling
continues. Drilling contract costs have decreased appreciably since 2008.

    LIQUIDITY AND CAPITAL RE

SOURCES At March 31, 2009, the Company had working capital of $18.2 million, an increase of $5.1 million from year-end 2008. During the first quarter, capital expenditures totalled $2.6 million. In the first quarter, 2008, capital expenditures totalled $2.3 million. At March 31, 2009, the Company had 17,313 ounces of gold inventory carried at a cost of $11.3 million. The market value at March 31, 2009, was $20.0 million. The Company believes it has sufficient capital resources to cover its operating and capital cost requirements in 2009. The Company also intends to undertake an aggressive exploration program in 2009 which will partially be funded by a December 22, 2008, private placement of 1.5 million flow-through shares for gross proceeds of $1.725 million. Production planned in 2009 should generate operating cash flow, even at gold prices well below those currently being realized. OUTLOOK For 2009, we forecast approximately 75,000 ounces of production. We are now likely to exceed our forecast based on the very strong first quarter performance and high grades at Eagle River spilling over into the second quarter. The mining sequence has not changed and we continue to forecast lower grades in the second half of the year. We continue to expect that lower input costs and increased mill throughput will help offset the lower grades. Our ambitious exploration and development programs at both mines are accelerating and early results are very encouraging. We aim to provide longer term clarity on resource potential near existing infrastructure and prove up the potential of the exciting new Dubuisson discovery in Val d'Or. Economic conditions have never been more favourable for Canadian gold mines. Our unhedged philosophy, growing bullion inventory and exploration potential serve to maximize leverage to gold prices. ABOUT WESDOME Wesdome is an established Canadian gold producer with wholly-owned mining and milling complexes located in Wawa, Ontario and Val d'Or, Québec. Wesdome 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 Toronto Stock 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 Mar 31 Dec 31 2009 2008 ------------------------------------------------------------------------- (in thousands) (Unaudited) (Audited) Assets Current Cash and cash equivalents $ 5,950 $ 8,029 Receivables 9,725 4,205 Inventory 13,981 10,165 Marketable securities 144 44 ------------------------------------------------------------------------- 29,800 22,443 Restricted funds 2,809 2,303 Capital assets 10 10 Mining properties 61,515 61,294 Exploration properties 29,009 28,956 Property held for sale - 378 ------------------------------------------------------------------------- $ 123,143 $ 115,384 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities Current Payables and accruals $ 8,065 $ 7,865 Dividends payable 1,995 - Current portion of obligations under capital leases 1,535 1,478 ------------------------------------------------------------------------- 11,595 9,343 Income taxes payable 138 173 Obligations under capital leases 2,307 2,396 Convertible 7% debentures 9,093 9,413 Reclamation obligation 1,064 1,042 Future income taxes 2,091 1,292 ------------------------------------------------------------------------- 26,288 23,659 ------------------------------------------------------------------------- Minority interest in Moss Lake Gold Mines Ltd. 917 903 ------------------------------------------------------------------------- Shareholders' Equity Capital stock 113,391 113,872 Contributed surplus 3,688 3,648 Accumulated other comprehensive loss (290) (290) Equity component of convertible debentures 1,959 2,062 Deficit (22,810) (28,470) ------------------------------------------------------------------------- 95,938 90,822 ------------------------------------------------------------------------- $ 123,143 $ 115,384 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Wesdome Gold Mines Ltd. Interim Consolidated Statements of Operations and Deficit (Unaudited) Three Months Ended March 31 2009 2008 ------------------------------------------------------------------------- (in thousands, except net income per common share) Revenue Gold and silver bullion $ 23,587 $ 16,148 Interest and other 33 88 ------------------------------------------------------------------------- 23,620 16,236 ------------------------------------------------------------------------- Costs and expenses Operating costs 12,266 12,778 Amortization of mining properties 2,367 2,322 Production royalties 340 199 Corporate and general 430 301 Stock based compensation expense 55 91 Interest on long term debt 392 375 Other interest 7 1 Amortization of office equipment 1 1 Accretion of reclamation obligation 21 16 ------------------------------------------------------------------------- 15,879 16,084 ------------------------------------------------------------------------- Net income before the following 7,741 152 Gain on property held for sale 122 - ------------------------------------------------------------------------- Net income before income tax and minority interest 7,863 152 Income tax (recovery) Current - - Future 273 - ------------------------------------------------------------------------- 273 - ------------------------------------------------------------------------- Net income before minority interest 7,590 152 Minority interest (14) 5 ------------------------------------------------------------------------- Net income $ 7,576 $ 157 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net income per common share Basic and diluted $ 0.08 $ 0.00 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Deficit, beginning of period $ (28,470) $ (37,851) Gain on equity component of early repurchase of convertible debentures 79 - Net income 7,576 157 Dividends declared (1,995) - ------------------------------------------------------------------------- Deficit, end of period $ (22,810) $ (37,694) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Wesdome Gold Mines Ltd. Interim Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31 2009 2008 ------------------------------------------------------------------------- (in thousands) Operating activities Net income $ 7,576 $ 156 Amortization of mining properties 2,367 2,322 Accretion of discount on convertible debentures 126 110 Gain on sale of Moss Lake shares - (17) Minority interest 14 (5) Stock based compensation expense 55 91 Amortization of office equipment - 1 Future income taxes 273 - Gain on property held for sale (122) - Gain on redemption of convertible debentures (24) - Accretion of reclamation obligation 22 16 ------------------------------------------------------------------------- 10,287 2,674 Net changes in non-cash working capital (9,079) (4,155) ------------------------------------------------------------------------- 1,208 (1,481) ------------------------------------------------------------------------- Financing activities Exercise of options 49 27 Funds paid to repurchase common shares under NCIB (14) - Funds paid to repurchase debentures (446) - Additional costs of 2008 flow-through shares issued (5) - Repayment of obligations under capital leases (396) (422) ------------------------------------------------------------------------- (812) (395) Net changes in non-cash working capital - 276 ------------------------------------------------------------------------- (812) (119) ------------------------------------------------------------------------- Investing activities Additions to mining and exploration properties (2,278) (2,346) Proceeds on sale of Moss Lake shares to minority interests - 26 Proceeds on option to sell property 400 566 Funds held against standby letters of credit (506) (23) ------------------------------------------------------------------------- (2,384) (1,777) Net changes in non-cash working capital (91) 3 ------------------------------------------------------------------------- (2,475) (1,774) ------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (2,079) (3,374) Cash and cash equivalents, beginning of period 8,029 7,409 ------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 5,950 $ 4,035 ------------------------------------------------------------------------- -------------------------------------------------------------------------

For further information:

For further information: Rowland Uloth, President, or 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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