Wesdome earns $7.8 million in Q2



    TORONTO, Aug. 11 /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 second quarter ended June 30,
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

    -   Q2 earnings $7.8 million or $0.08 per share
    -   Q2 cash flow from operations $11.6 million or $0.12 per share
    -   H1 earnings $15.4 million or $0.16 per share
    -   H1 cash flow from operations $21.8 million or $0.22 per share
    -   H1 production totals 48,393 ounces
    -   H1 sales total 48,700 ounces at $1,102 per ounce or $53.8 million
    -   Production guidance increased
    -   Cash, bullion receivables and gold bullion at market value June 30,
        2009, rose to $29.7 million
    

    Rolly Uloth, CEO comments "We are generating earnings and cash flow per
share comparable to much larger producers and believe this will be recognized
in the marketplace. The accumulation of significant free cash flow over the
last 12 months presents us with many options looking forward."

    OVERALL PERFORMANCE

    At June 30, 2009, the Company had working capital of $24.9 million.
During the first half of 2009, revenue exceeded cash operating costs by $23.8
million and $5.0 million was invested in exploration and development, $0.8
million on the acquisition of exploration properties and $0.9 million in
capital equipment. Cash flow from operations totalled $21.8 million before
working capital adjustments and net income was $15.4 million or $0.16 per
share in the first half of 2009. Earnings and cash flow were about equal in
the first and second quarters of 2009.
    The cash cost per ounce in the first half was $614Cdn or $506US applying
a 0.825Cdn/US exchange rate.
    In the first half, production exceeded 2008 levels by 12%, realized gold
prices increased 20% and costs remained stable. For the first half of 2009
bullion revenue totalled $53.8 million with 48,700 ounces of gold sold at an
average price of $1,102Cdn per ounce.

    
    RESULTS OF OPERATIONS

                        Three Months Ended June 30  Six Months Ended June 30
                                 2009         2008         2009         2008
                         ----------------------------------------------------
    Eagle River Mine

      Tonnes milled            32,908       25,588       65,195       54,957
      Recovered grade (g/t)      13.4         16.6         14.8         14.8
      Ounces produced          14,183       13,662       31,068       26,220
      Ounces sold              19,000       13,600       30,300       22,437
      Bullion inventory (oz)    8,395        7,250        8,395        7,250

      Bullion revenue
       (thousands)             20,459       12,419       33,299       20,684
      - Operating (thousands)   8,397        8,777       14,900       14,045
    -------------------------------------------------------------------------
      Mine operating profit
       (loss)($m)(*)           12,062        3,642       18,399        6,639
      Gold price realized
       ($Cdn/oz)                1,075          913        1,098          922

    Kiena Mine Complex

      Tonnes milled            67,216       65,831      125,234      129,148
      Recovered grade (g/t)       3.1          4.3          4.3          4.1
      Ounces produced           6,776        9,129       17,325       16,974
      Ounces sold               9,000        9,000       18,400       17,500
      Bullion inventory (oz)    1,877        2,683        1,877        2,683

      Bullion revenue
       (thousands)              9,744        8,209       20,455       16,093
      - Operating (thousands)   9,243        7,502       15,006       14,790
    -------------------------------------------------------------------------
      Mine operating profit
       (loss)($m)(*)              501          707        5,449        1,303
      Gold price realized
       ($Cdn/oz)                1,079          912        1,110          921

    Total

      Production (oz)          20,959       22,791       48,393       43,194
      Sales (oz)               28,000       22,600       48,700       39,937
      Bullion inventory (oz)   10,272        9,933       10,272        9,933

      Bullion revenue
       (thousands)             30,203       20,628       53,754       36,777
      - Operating (thousands)  17,640       16,279       29,906       28,835
    -------------------------------------------------------------------------
      Mine operating profit
       ($m)(*)                 12,563        4,349       23,848        7,942
      Gold price realized
       ($Cdn/oz)                1,076          913        1,102          921

    (*) 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 second quarter, combined operations produced 20,959 ounces of
gold. Revenues climbed to $30.2 million on sales of 28,000 ounces at an
average realized price of $1,076 per ounce. At June 30, 2009, gold inventory
was 10,272 ounces, which 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.
    During the second quarter, revenue exceeded operating costs resulting in
a mine operating profit, or gross margin, of $12.6 million. In addition to the
direct operating costs of $17.6 million, other costs, including royalties,
corporate and general costs and interest costs amounted to $1.3 million.
    Eagle River exceeded expectations as the 811 zone produced more high
grade tonnes than planned. At June 30, 2009, underground broken ore and
surface stockpiles exceeded 21,000 tonnes containing an estimated 8,000 ounces
of gold.
    At the Kiena mine, higher than expected dilution in the North zone had a
negative impact on grade. The Company will work its way through this low grade
and expects contributions from the VC and Schist zones to start helping
halfway through the third quarter.
    External conditions remain favourable for 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.
    Exploration activity is increasing at both mines and exploration projects
as the summer/fall season is upon us. The purpose of the drilling is twofold:

    
    1)  to replace/increase reserves; and
    2)  to provide our engineers and shareholders with a longer term view of
        the potential of our mines
    

    Early results are encouraging as the high grade 811 zone at the Eagle
River mine has been shown to extend at least 300 metres (1,000 feet) below our
deepest level. Drill 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. The zone
remains open at depth and to the east. Underground drilling at Kiena was
highlighted by some very strong intersections in the Schist zone, including
7.15 gAu/tonne over 4.70 metres, 16.13 gAu/tonne over 3.50 metres and 201.87
gAu/tonne over 3.20 metres. Results have prompted us to immediately develop
this high grade zone to provide a sweetener to blend with lower grade material
in the current mining sequence. Surface drilling has started at the Dubuisson
discovery located three kilometres east of the Kiena shaft. The Company hopes
to demonstrate continuity and size through infill and stepout drilling.

    LIQUIDITY AND CAPITAL RE

SOURCES At June 30, 2009, the Company had working capital of $24.9 million, an increase of $11.8 million from year-end 2008. During the second quarter, capital expenditures totalled $4.8 million, included $0.8 million for the acquisition of exploration properties. In the second quarter, 2008, capital expenditures totalled $4.0 million. At June 30, 2009, the Company had 10,272 ounces of gold inventory carried at a cost of $9.5 million. The market value at June 30, 2009, was $11.2 million. The Company believes it has sufficient capital resources to cover its operating and capital cost requirements in 2009. The Company is undertaking an aggressive exploration program which will partially be funded by a December 22, 2008, private placement of 1.5 million flow-through shares for gross proceeds of $1.7 million. Production planned in 2009 should generate operating cash flow, even at gold prices well below those currently being realized. OUTLOOK For 2009, we forecasted approximately 75,000 ounces of production. We are now increasing our forecast to 80,000 ounces based on the very strong first half performance. 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, 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 99.9 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 June 30 December 31 2009 2008 ------------------------------------------------------------------------- (in thousands) (Unaudited) (Audited) Assets Current Cash and cash equivalents $ 12,008 $ 8,029 Receivables 9,611 4,205 Inventory 12,135 10,165 Marketable securities 144 44 ------------------------------------------------------------------------- 33,898 22,443 Restricted funds 2,569 2,303 Capital assets 9 10 Mining properties 61,974 61,294 Exploration properties 29,834 28,956 Property held for sale - 378 ------------------------------------------------------------------------- $ 128,284 $ 115,384 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities Current Payables and accruals $ 7,441 $ 7,865 Current portion of obligations under capital leases 1,522 1,478 ------------------------------------------------------------------------- 8,963 9,343 Income taxes payable 103 173 Obligations under capital leases 1,912 2,396 Convertible 7% debentures 9,225 9,413 Reclamation obligation 1,083 1,042 Future income taxes 2,091 1,292 ------------------------------------------------------------------------- 23,377 23,659 ------------------------------------------------------------------------- Minority interest in Moss Lake Gold Mines Ltd. 876 903 ------------------------------------------------------------------------- Shareholders' Equity Capital stock 113,586 113,872 Contributed surplus 3,769 3,648 Accumulated other comprehensive loss (290) (290) Equity component of convertible debentures 1,959 2,062 Deficit (14,993) (28,470) ------------------------------------------------------------------------- 104,031 90,822 ------------------------------------------------------------------------- $ 128,284 $ 115,384 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Wesdome Gold Mines Ltd. Interim Consolidated Statements of Operations and Deficit (Unaudited) Three Months Ended June 30 Six Months Ended June 30 2009 2008 2009 2008 ------------------------------------------------------------------------- (in thousands, except per share amounts) Revenue Gold and silver bullion $ 30,167 $ 20,629 $ 53,754 $ 36,777 Interest and other 42 85 75 174 ------------------------------------------------------------------------- 30,209 20,714 53,829 36,951 ------------------------------------------------------------------------- Costs and expenses Operating costs 17,640 16,148 29,906 28,927 Amortization of mining properties 3,494 2,915 5,861 5,237 Production royalties 228 214 568 413 Corporate and general 518 246 948 547 Stock compensation expense 137 96 192 187 Interest on long-term debt 399 381 791 756 Other interest - 1 7 2 Amortization of office equipment - 1 1 1 Accretion of reclamation obligation 20 16 41 33 ------------------------------------------------------------------------- 22,436 20,018 38,315 36,103 ------------------------------------------------------------------------- Net income before the following 7,773 696 15,514 848 Gain on property held for sale - - 122 - ------------------------------------------------------------------------- 7,773 696 15,636 847 Future income tax - - 273 - ------------------------------------------------------------------------- Net income before minority interest 7,773 696 15,363 847 Minority interest 44 67 30 72 ------------------------------------------------------------------------- Net income $ 7,817 $ 763 $ 15,393 $ 919 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net income per common share Basic and diluted $ 0.08 $ 0.01 $ 0.16 $ 0.01 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Deficit, beginning of period $ (22,810) $ (37,694) $ (28,470) $ (37,851) Gain on equity component of early repurchase of convertible debentures - - 79 - Net income 7,817 763 15,393 920 Dividends - - (1,995) - ------------------------------------------------------------------------- Deficit, end of period $ (14,993) $ (36,931) $ (14,993) $ (36,931) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Wesdome Gold Mines Ltd. Interim Consolidated Statements of Cash Flows (Unaudited) Three Months Ended June 30 Six Months Ended June 30 2009 2008 2009 2008 ------------------------------------------------------------------------- (in thousands) Operating activities Net income $ 7,817 $ 763 $ 15,393 $ 919 Amortization of mining properties 3,494 2,915 5,861 5,237 Accretion of discount on convertible debentures 139 115 265 226 Gain on sale of Moss Lake shares - 3 - (14) Minority interest (44) (66) (30) (72) Stock compensation expense 137 96 192 187 Amortization of office equipment 1 1 1 1 Future income taxes - - 273 - Gain on sale of equipment (7) - (7) - Gain on property held for sale - - (122) - Gain on redemption of convertible debentures - - (24) - Accretion of reclamation obligation 19 16 41 33 ------------------------------------------------------------------------- 11,556 3,843 21,843 6,517 Net changes in non-cash working capital 1,458 (2,148) (7,621) (6,302) ------------------------------------------------------------------------- 13,014 1,695 14,222 215 ------------------------------------------------------------------------- Financing activities Exercise of options 139 - 188 27 Funds paid to repurchase common shares under NCIB - (4) (14) (4) Funds paid to repurchase debentures (7) - (453) - Flow-through shares issued - (6) (5) (6) Dividends paid (1,995) - (1,995) - Shares issued by a subsidiary of the company to third parties - (4) - (4) Repayment of obligations under capital leases (408) (442) (804) (864) ------------------------------------------------------------------------- (2,271) (456) (3,083) (851) Net changes in non-cash working capital - - - 276 ------------------------------------------------------------------------- (2,271) (456) (3,083) (575) ------------------------------------------------------------------------- Investing activities Additions to mining and exploration properties (4,786) (3,965) (7,064) (6,311) Proceeds on sale of Moss Lake shares to minority interests - - - 26 Proceeds on sale of equipment 20 - 20 - Proceeds on option to sell property - - 400 567 Funds held against standby letters of credit 239 (13) (267) (37) ------------------------------------------------------------------------- (4,527) (3,978) (6,911) (5,755) Net changes in non-cash working capital (158) 426 (249) 429 ------------------------------------------------------------------------- (4,685) (3,552) (7,160) (5,326) ------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents 6,058 (2,313) 3,979 (5,686) Cash and cash equivalents, beginning of period 5,950 4,036 8,029 7,409 ------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 12,008 $ 1,723 $ 12,008 $ 1,723 ------------------------------------------------------------------------- -------------------------------------------------------------------------

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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