Western Goldfields Announces 2007 Year-End Results



    
    -  Measured and Indicated resources (inclusive of reserves) increased by
       400,000 ounces to 4.3 million ounces of gold
    -  Initial gold production achieved and startup capital expenditures on
       budget
    -  Year end cash balance of $51.4 million
    

    TORONTO, March 10 /CNW/ - Western Goldfields Inc. (TSX:WGI, AMEX:  WGW)
today announced financial results for the year ended December 31, 2007. The
Company's financial statements were prepared in accordance with accounting
principles generally accepted in the United States (US GAAP). Dollar amounts
are expressed in US dollars unless otherwise stated.
    "In 2007 we completed the first phase of Western Goldfields' strategic
plan," said Mr. Randall Oliphant, Chairman, Western Goldfields. "We brought
the Mesquite Mine into production three months ahead of schedule and on
budget. The Company will now focus on the next phase of our strategic plan,
which is to use the Mesquite Mine as a platform for growth as we identify
other opportunities in North America."

    
    During the year ended December 31, 2007, the Company:

    -  Reactivated mining operations and commenced gold production from new
       ore at Mesquite three months ahead of the Feasibility Study schedule
    -  Completed two equity financings for net proceeds of $92.6 million
    -  Arranged a term loan facility for $105.0 million to finance the
       project
    -  Executed a major capital expenditure and construction program
    -  Built a strong management team and hired and trained personnel for
       resumed mining operations
    -  Increased the Proven and Probable reserves at Mesquite by 10%
    

    "The strength of our management team in financing and development is our
key asset," said Mr. Oliphant. "We intend to build on our record of value
creation for our shareholders in 2008 and beyond."

    Financial Results
    -----------------
    The Company's net loss to common shareholders for the year ended
December 31, 2007, was $50.3 million, or $0.43 per share, compared with
$11.6 million, or $0.18 per share, for the year ended December 31, 2006. The
net loss for 2007 includes a non-cash after-tax loss of $35.9 million arising
from the mark-to-market of contracts for the forward sale of gold which were
taken out as a requirement of our term loan facility. Results for 2007, as
compared with 2006, were impacted by the reduction in gold ounces sold from
13,210 ounces to 6,889 ounces, as less residual gold was extracted from the
leach pads. This lower production was partially offset by a 14% increase in
the average selling price per ounce from $595 to $677, reflecting the
continuation of strong gold market prices.

    Liquidity and Capital Resources
    -------------------------------
    At December 31, 2007 the Company's cash balance was $51.4 million, of
which restricted cash was $7.5 million, and working capital was $46.2 million.
In addition, unutilized credit facilities were $28.6 million, of which
$10.9 million is available for the Mesquite expansion project and
$17.7 million is available for general corporate purposes. On February 7, 2008
an additional $2.7 million was drawn under the credit facility, leaving
$8.2 million available for the Mesquite expansion and $17.7 for general
corporate purposes. This represents a significant improvement in the Company's
financial position since December 31, 2006 when it reported cash of
$5.5 million and working capital of $4.6 million. During 2007 liquidity was
also improved through the conversion of warrants and the exercise of stock
options, for proceeds of $5.6 million.

    Current Mineral Resources and Reserves
    --------------------------------------
    Proven and Probable reserves at December 31, 2007 are estimated to be
2.76 million ounces (March 2007 - 2.77 million ounces). The reserves were
calculated using an assumed gold price of $500 per ounce. The modest decrease
in reserves since March 2007 is a result of mining depletion as the Company
commenced mining and stacking of new ore on the leach pad during the fourth
quarter of 2007.
    Measured and Indicated resources (inclusive of mineral reserves) at
December 31, 2007 increased to 4.3 million ounces of gold from 3.9 million
ounces (March 2007). Approximately half of the increase is attributable to
additional diamond drill results which have been added to the resource model
and the balance is due to an increase in the gold price assumption used in
computing the resource estimates. The gold price assumption increased from
$600 per ounce to $650 per ounce.

    2008 Outlook
    ------------
    During 2008, the Mesquite Mine will ramp up production as the operation
continues with waste rock mining, exposing the ore zones and mining of the
oxide reserves. Based on the mining schedule, the leaching curve and solution
inventory, Mesquite is expected to produce between 10,000 - 13,000 ounces of
gold in the first quarter at cost of sales exceeding $1,000 per ounce(1).
Second quarter production will increase to between 40,000 - 50,000 ounces of
gold at cost of sales less than $300 per ounce(1), and full year's production
for 2008 is expected to be between 155,000 - 165,000 ounces of gold.
    Forecasted cost of sales per ounce for the full year 2008 will rise to
between $410 - $430 compared to previous estimates of $355 - $365(1). The
increase to forecasted cost of sales per ounce is due to additional labour and
fuel costs associated with adding a fourth crew of truck operators. The
additional crew will ensure adequate waste removal to offset the effect of
lower than modeled truck speeds for waste and ore hauls. The reduced speeds
are a result of the type of tires currently available in the marketplace. The
Company expects to procure better performing radial tires for 2009 which will
result in increased truck speeds for its haul trucks, allowing Mesquite to
return to originally anticipated production rates and cost of sales.
Production for 2009 is forecast between 150,000 - 160,000 ounces of gold at a
cost of sales of $360 - $370 per ounce(1), in line with original forecasts.
    Cost of sales for 2008 is also impacted by an increase in inventory
adjustment compared to 2007. The Company's year-end gold inventory in the
leach pad was computed at net realizable value less the estimated cost to
process and sell the gold ounces. The effect of the charge on 2008 cost of
sales per ounce(1), which will diminish in the future as steady state
production is achieved, is approximately $25 - $30.

    
    (1) Cost of sales per ounce is a non-GAAP measure and is defined as cost
        of sales as per the Company's financial statements (mine operating
        costs plus royalties) divided by the number of ounces sold.
    

    Western Goldfields Inc.
    -----------------------
    Western Goldfields Inc. is a gold producer and exploration company with a
focus on precious metal mining opportunities in North America. The Mesquite
Mine, currently the Company's sole asset, was brought into production in
January 2008, and the Company's focus is now on achieving the anticipated rate
of production and completing planned improvements to the property. Western
Goldfields common shares trade on the Toronto Stock Exchange under the symbol
WGI, and on the American Stock Exchange under the symbol WGW. For further
details, please visit www.westerngoldfields.com.

    Forward-Looking Information
    ---------------------------
    Certain statements contained in this news release and subsequent oral
statements made by and on behalf of the Company may contain forward-looking
information within the meaning of the United States Private Securities
Litigation Reform Act of 1995 and similar Canadian legislation. Such
forward-looking statements are identified by words such as "intends",
"anticipates", "believes", "expects", "plans" and "hopes" and include, without
limitation, statements regarding the Company's plan of business operations,
timing and costs to recommence commercial production, economic viability of
the Mesquite Mine, production and cost estimates, financing options, including
entering into a debt financing arrangement, and the consequences thereof,
potential contractual arrangements, receipt of working capital, anticipated
revenues, exercise of outstanding warrants, and capital and operating
expenditures. These forward-looking statements are based on the best estimates
of management at the time such statements are made. There can be no assurance
that such statements will prove to be accurate; actual results and future
events could differ materially from such statements. Factors that could cause
actual results to differ materially include, among others, those set forth in
the Company's Annual Report on Form 10-KSB for the year ended December 31,
2006 filed with the U.S. Securities and Exchange Commission, under the
caption, "Risk Factors". Most of these factors are outside the control of the
Company. Investors are cautioned not to put undue reliance on forward-looking
statements. Except as otherwise required by applicable securities statutes or
regulation, the Company disclaims any intent or obligation to update publicly
these forward-looking statements, whether as a result of new information,
future events or otherwise.

    Cautionary Note to U.S. Investors Concerning Estimates of Measured,
    -------------------------------------------------------------------
    Indicated and Inferred Resources
    --------------------------------

    This press release uses the terms "measured", "indicated" and/or
"inferred" mineral resources. United States investors are advised that while
such terms are recognized by Canadian regulations, the United States
Securities and Exchange Commission does not recognize them. United States
investors are cautioned not to assume that all or any part of mineral
resources will ever be converted into mineral reserves. Inferred mineral
resources have a great amount of uncertainty as to their existence, and as to
their economic and legal feasibility. It cannot be assumed that all or any
part of an inferred mineral resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of inferred mineral resources may
not form the basis of feasibility or other economic studies. United States
investors are cautioned not to assume that all or any part of an inferred
mineral resource exists, or is economically or legally mineable.

    The technical information contained in this press release has been
prepared under the supervision of Wes Hanson P. Geo, a qualified person under
NI 43-101. Mr. Hanson is an officer of Western Goldfields.


    
                           WESTERN GOLDFIELDS INC.
                         CONSOLIDATED BALANCE SHEETS
                              (In U.S. dollars)

                                                  December 31,   December 31,
                                                      2007           2006

    ASSETS
      CURRENT ASSETS
        Cash and cash equivalent                $  43,870,426  $   5,502,535
        Restricted Cash                             7,500,000              -
        Receivables                                   298,036        223,507
        Inventories                                11,200,789        511,663
        Prepaid expenses                              887,485        841,636
                                                -------------- --------------
          TOTAL CURRENT ASSETS                     63,756,736      7,079,341
                                                -------------- --------------

      Property, plant, and equipment, net of
       accumulated amortization                    77,951,155      4,328,512
      Construction in progress                     21,863,561      2,880,775
      Investments - reclamation and remediation     8,660,584      6,337,006
      Long-term deposits                              347,543        329,146
      Long-term prepaid expenses                    1,554,941      1,009,555
      Deferred debt issuance costs                  3,227,410        250,000
      Deferred income tax assets                   37,133,460              -
                                                -------------- --------------
        TOTAL OTHER ASSETS                        150,738,654     15,134,994
                                                -------------- --------------

    TOTAL ASSETS                                $ 214,495,390  $  22,214,335
                                                -------------- --------------
                                                -------------- --------------

    LIABILITIES & STOCKHOLDERS' EQUITY
      CURRENT LIABILITIES
        Accounts payable                        $   5,318,738  $   1,694,245
        Accrued expenses                            1,540,711        835,740
        Accrued payroll                             1,561,848              -
        Current portion of mark-to-market loss
         on gold hedging contracts                  1,935,306              -
        Accrued interest                              359,698              -
        Current portion of loan payable             6,881,612              -
                                                -------------- --------------
          TOTAL CURRENT LIABILITIES                17,597,913      2,529,985
                                                -------------- --------------

      LONG-TERM LIABILITIES
        Mark-to-market loss on gold
         hedging contracts                         56,965,940              -
        Loan payable                               69,580,745              -
        Reclamation and remediation liabilities     5,061,143      4,805,473
                                                -------------- --------------

          TOTAL LIABILITIES                       149,205,741      7,335,458
                                                -------------- --------------

      COMMITMENTS AND CONTINGENCIES                         -              -

      STOCKHOLDERS' EQUITY
        Common stock, of no par value, unlimited
         shares authorized; 135,049,685 and
         78,452,876 shares issued and outstanding,
         respectively                             133,725,314     32,884,798
        Stock options and warrants                  7,551,031      7,674,270
        Accumulated deficit                       (75,986,696)   (25,678,233)
        Accumulated other comprehensive income              -         (1,958)
                                                -------------- --------------
          TOTAL STOCKHOLDERS' EQUITY               65,289,649     14,878,877
                                                -------------- --------------

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $ 214,495,390  $  22,214,335
                                                -------------- --------------
                                                -------------- --------------


                           WESTERN GOLDFIELDS INC.
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                           AND COMPREHENSIVE LOSS
                              (In U.S. dollars)

                                            Year Ended December 31,
                                 --------------------------------------------
                                       2007           2006           2005
                                 -------------- -------------- --------------

    REVENUES
      Revenues from gold sales   $   4,665,890  $   7,859,214    $ 9,798,150
                                 -------------- -------------- --------------

    COST OF GOODS SOLD
      Mine operating costs          19,099,461      9,265,699      8,784,115
      Amortization and accretion     4,241,789      1,352,034      1,599,098
      Royalties                        192,116        302,693        774,065
      Reclamation cost recovery        (21,940)    (1,459,859)      (543,964)
                                 -------------- -------------- --------------
                                    23,511,426      9,460,567     10,613,314
                                 -------------- -------------- --------------

    GROSS LOSS                     (18,845,536)    (1,601,353)      (815,164)
                                 -------------- -------------- --------------

    EXPENSES
      General and administrative     5,809,160      4,261,067      1,653,268
      Stock based compensation       2,561,050      3,209,285        518,316
      Severance costs payable in
       common shares                         -        547,200              -
      Exploration                      794,770      1,220,892        220,755
                                 -------------- -------------- --------------
                                     9,164,980      9,238,444      2,392,339
                                 -------------- -------------- --------------

    OPERATING LOSS                 (28,010,516)   (10,839,797)    (3,207,503)
                                 -------------- -------------- --------------

    OTHER INCOME (EXPENSE)
      Interest income                1,975,588        391,824        173,479
      Interest expense              (1,101,931)       (20,434)      (348,959)
      Agency and commitment fees      (760,883)             -              -
      Amortization of deferred
       debt issuance costs            (342,402)             -              -
      Unrealized loss on
       mark-to-market of gold
       forward sales contracts     (58,901,246)             -              -
      Gain on extinguishment
       of debt                               -        142,949              -
      Loss on foreign
       currency exchange              (342,973)       (13,970)             -
      Gain (Loss) on sale of assets     42,440        (18,837)        42,734
      Expenses of Romarco
       merger termination                    -     (1,225,000)             -
                                 -------------- -------------- --------------
                                   (59,431,407)      (743,468)      (132,746)
                                 -------------- -------------- --------------

    LOSS BEFORE INCOME TAXES       (87,441,923)   (11,583,265)    (3,340,249)

    INCOME TAX RECOVERY             37,133,460              -              -
                                 -------------- -------------- --------------

    NET LOSS                       (50,308,463)   (11,583,265)    (3,340,249)

    PREFERRED STOCK DIVIDENDS                -        (16,979)    (1,734,375)
                                 -------------- -------------- --------------

    NET LOSS TO COMMON
     STOCKHOLDERS                  (50,308,463)   (11,600,244)    (5,074,624)

    OTHER COMPREHENSIVE INCOME
      Foreign currency
       translation adjustment                -         (1,958)             -
      Change in market value
       of securities                         -              -          8,600
      Forward sales derivative
       mark-to-market                        -              -        678,867
                                 -------------- -------------- --------------

    NET COMPREHENSIVE LOSS       $ (50,308,463) $ (11,585,223)  $ (2,652,782)
                                 -------------- -------------- --------------
                                 -------------- -------------- --------------

    BASIC AND DILUTED NET
     LOSS PER SHARE              $       (0.43) $       (0.18)  $      (0.13)
                                 -------------- -------------- --------------
                                 -------------- -------------- --------------

    WEIGHTED AVERAGE NUMBER OF
     COMMON SHARES OUTSTANDING     116,903,752     63,664,614     38,942,158
                                 -------------- -------------- --------------
                                 -------------- -------------- --------------


                           WESTERN GOLDFIELDS INC.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In U.S. dollars)

                                           Year Ended December 31,
                                 --------------------------------------------
                                       2007           2006           2005
                                 -------------- -------------- --------------

    CASH FLOWS FROM OPERATING
     ACTIVITIES
      Net loss                   $ (50,308,463) $ (11,583,265)  $ (3,340,249)
      Adjustments to reconcile
       net loss to net cash
       provided (used) by
       operating activities:
      Items not affecting cash:
        Amortization                 3,925,395      1,087,517      1,021,909
        Amortization of deferred
         debt issuance costs           342,402              -        208,501
        Accretion expense              337,176        269,574        381,540
        Deferred income taxes      (37,133,460)             -              -
        Reclamation cost recovery      (21,940)    (1,459,860)      (543,964)
        Reclamation costs incurred    (148,416)      (200,811)             -
        Gain on sale of assets
         and investments               (42,440)        18,836        (42,734)
        Interest net of reimbursed
         costs - reclamation and
         remediation                  (233,484)       (88,786)      (158,648)
        Common stock issued for
         exploration assets and
         services                            -        136,500        166,462
        Common stock issued in
         respect of severance
         agreements                          -        547,200              -
        Stock based compensation     2,561,050      3,209,285        518,315
        Mark-to-market loss on gold
         hedging contracts          58,901,246              -              -
        Warrants issued for
         services of consultant              -        233,000              -
        Cost of extending expiry
         date of warrants                    -              -         39,204
        Changes in assets and
         liabilities:
        Decrease (increase) in:
          Accounts receivable          (74,529)      (213,327)         2,777
          Inventories              (10,689,126)       393,684        668,902
          Prepaid expenses and
           deposits                   (609,632)      (391,484)       241,824
        Increase (decrease) in:
          Accounts payable           2,155,809        885,280        147,922
          Accrued expenses           2,101,164       (110,166)       (45,548)
          Accrued interest expense     359,698        (48,695)         8,695

                                 -------------- -------------- --------------
    Net cash provided (used) by
     operating activities          (28,577,550)    (7,315,518)      (725,092)
                                 -------------- -------------- --------------

    CASH FLOWS FROM INVESTING
     ACTIVITIES
      Purchase of property &
       equipment, including
       construction in progress    (94,610,737)    (3,444,353)       (10,853)
      Increase in reclamation and
       remediation investment       (2,090,094)             -              -
      Proceeds from sale of
       investments                           -              -         47,734
      Purchase of assets                     -              -        (24,366)
      Proceeds from sale of assets      97,500              -         25,000
      Restricted cash               (7,500,000)             -              -
                                 -------------- -------------- --------------
    Net cash provided (used) by
     investing activities         (104,103,331)    (3,444,353)        37,515
                                 -------------- -------------- --------------

    CASH FLOWS FROM FINANCING
     ACTIVITIES
      Proceeds from loan
       payable - Romarco                     -              -        705,186
      Term loan
       advances (repayments)        76,462,357     (2,205,186)    (1,500,000)
      Deferred debt issuance costs  (3,569,812)             -              -
      Common stock issued for cash  92,607,665      4,012,000              -
      Warrants issued for cash               -      1,988,000              -
      Exercise of options to
       purchase common stock         1,040,509        632,750              -
      Exercise of warrants to
       purchase common stock         4,508,053     11,833,809              -
      Preferred stock dividends              -        (51,354)             -
                                 -------------- -------------- --------------
    Net cash provided (used) by
     financing activities          171,048,772     16,210,019       (794,815)
                                 -------------- -------------- --------------

    Change in cash                  38,367,891      5,450,148     (1,482,392)

    Cash, beginning of period        5,502,535         52,387      1,534,778
                                 -------------- -------------- --------------

    Cash, end of period          $  43,870,426  $   5,502,535  $      52,387
                                 -------------- -------------- --------------
                                 -------------- -------------- --------------

    SUPPLEMENTAL CASH FLOW
     DISCLOSURES:
      Interest paid
       (received), net           $    (873,657) $      69,130  $     162,419
                                 -------------- -------------- --------------
                                 -------------- -------------- --------------

    NON-CASH FINANCING AND
     INVESTING ACTIVITIES:
      Stock, options and
       warrants issued for
       services                  $   2,575,417  $   4,125,985  $     684,777
      Equipment purchases
       included in accounts
       payable                   $   1,886,297  $           -  $           -



               MESQUITE MINE - MINERAL RE

SOURCES AND RESERVES December 31, 2007 ------------------------------------------------------------------------- Mineral Resources Inclusive of Reserves ------------------------------------------------------------------------- Class Category Tons Grade Contained (x 1,000) (Au oz / T) (Au ozs) ------------------------------------------------------------------------- Measured Oxide 97,513 0.016 1,533,449 Non oxide 21,136 0.024 503,000 ------------------------------------------------------------------------- Measured Subtotal 118,649 0.017 2,036,449 ------------------------------------------------------------------------- Indicated Oxide 101,626 0.014 1,380,551 Non oxide 40,258 0.021 865,000 ------------------------------------------------------------------------- Indicated Subtotal 141,884 0.016 2,245,551 ------------------------------------------------------------------------- Measured & Indicated Total 260,532 0.016 4,282,000 ------------------------------------------------------------------------- Inferred Oxide 4,958 0.013 Non oxide 4,798 0.022 ------------------------------------------------------------------------- Inferred Subtotal 9,756 0.018 ------------------------------------------------------------------------- Mineral Reserves ------------------------------------------------------------------------- Proven Oxide 97,513 0.016 1,533,449 Non oxide 16,429 0.023 386,000 ------------------------------------------------------------------------- Proven Subtotal 113,942 0.017 1,919,449 ------------------------------------------------------------------------- Probable Oxide 38,000 0.017 660,000 Non oxide 7,914 0.022 176,000 ------------------------------------------------------------------------- Probable Subtotal 45,914 0.018 836,000 ------------------------------------------------------------------------- Proven & Probable Total 159,856 0.017 2,755,449 ------------------------------------------------------------------------- Inferred Oxide 4,958 0.013 Non oxide 1,000 0.020 ------------------------------------------------------------------------- Inferred Subtotal 5,958 0.015 ------------------------------------------------------------------------- Mineral Resources Exclusive of Reserves ------------------------------------------------------------------------- Measured Oxide 0 0.000 0 Non oxide 4,707 0.025 117,000 ------------------------------------------------------------------------- Measured Subtotal 4,707 0.025 117,000 ------------------------------------------------------------------------- Indicated Oxide 63,626 0.011 720,551 Non oxide 32,344 0.021 689,000 ------------------------------------------------------------------------- Indicated Subtotal 95,970 0.015 1,409,551 ------------------------------------------------------------------------- Measured & Indicated Total 100,676 0.015 1,526,551 ------------------------------------------------------------------------- Inferred Oxide 0 0.000 Non oxide 3,798 0.023 ------------------------------------------------------------------------- Inferred Subtotal 3,798 0.023 ------------------------------------------------------------------------- 1. The Company's mineral reserves are estimated using appropriate cut-off grades at an assumed gold price of US$500 per ounce and projected process recoveries, operating costs and life of mine plans which include allowances for dilution and mining recovery. 2. The Company's mineral reserves are consistent with the definitions established by Industry Guide 7, administered by the U.S. Securities and Exchange Commission. 3. The Company's mineral resources are estimated using appropriate cut off grades at an assumed gold price of US$650 per ounce and projected process recoveries, operating costs and life of mine plans which include allowances for dilution and mining recovery. 4. The Company's mineral resources and mineral reserves are classified in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum's (CIM) "Standards on Mineral Resources and Reserves, Definitions and Guidelines". 5. Cautionary note to U.S. investors concerning Measured, Indicated and Inferred mineral resources: These terms are required by the CIM's "Standards on Mineral Resources and Reserves, Definitions and Guidelines". U.S. Investors are cautioned not to assume that all or any part of the stated mineral resources will be converted into reserves. 6. The Company's mineral resource and reserve estimates were prepared under the supervision of Mr. W. Hanson, P.Geo., Vice-President of Mine Development, Western Goldfields Inc. %CIK: 0001394186

For further information:

For further information: please visit www.westerngoldfields.com, or
contact: Raymond Threlkeld, President and CEO, (416) 324-6005,
rthrelkeld@westerngoldfields.com; Brian Penny, Chief Financial Officer, (416)
324-6002, bpenny@westerngoldfields.com; Julie Taylor Pantziris, Director,
Regulatory Affairs and Investor Relations, (416) 324-6015,
jtaylor@westerngoldfields.com

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WESTERN GOLDFIELDS INC.

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