Wesdome earns $0.02 per share in Q1

TORONTO, May 17 /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, 2010. This information should be read in conjunction with the Company's interim unaudited financial statements and Management's Discussion and Analysis for the first quarter ended March 31, 2010 which will be available for viewing on the Company's website at www.wesdome.com and on SEDAR (www.sedar.com). 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.

    The first quarter of 2010 highlights are as follows:

    -   Production of 16,359 ounces
    -   Earnings of $2.3 million or $0.02 per share
    -   Revenues of $19.6 million on sales of 17,000 ounces at $1,152 per
    -   Cash flow from operations of $5.7 million or $0.06 per share
    -   Bullion inventory of 13,391 ounces or $15 million marked to market as
        at March 31, 2010

Donovan Pollitt, President & CEO comments "I am pleased that we have come through our forecasted lowest grade quarter of the year with modest earnings and relatively strong cash flow from operations. We look forward to stronger production in subsequent quarters and intend to add value through extensive drilling and development of our wholly-owned properties in 2010".


At March 31, 2010, the Company had working capital of $37.0 million. From an operating viewpoint, revenue exceeded operating costs by $6.8 million, and incurred $4.5 million in capital costs including exploration, development and equipment. Cash flow from operations totalled $5.7 million and net income was $2.3 million or $0.02 per share.

Both mining operations were producing from lower grade areas in their mining sequences during the first quarter and, therefore, cash cost per ounce rose to $753Cdn per ounce from $619Cdn per ounce in the fourth quarter of 2009. Considering this slow start to the year, we are pleased with the financial results.

External factors which influenced results were a 20% increase in the $Cdn/$US exchange rate and a mild winter resulting in more favourable energy costs and consumption levels.


    Three months ended March 31                            2010         2009

    Eagle River Mine

      Tonnes milled                                      34,116       32,287
      Recovered grade (g/t)                                 9.0         16.3
      Production (oz)                                     9,899       16,885
      Sales (oz)                                         12,000       11,300
      Bullion inventory (oz)                              9,980       13,212

      Bullion revenue ($thousands)                       13,857       12,840
      Operating costs ($thousands)                        7,571        5,763
      Mine operating profit ($thousands)*               6,286        7,077
      Gold price realized ($Cdn/oz)                       1,155        1,136

    Kiena Mine Complex

      Tonnes milled                                      65,660       58,018
      Recovered grade (g/t)                                 3.1          5.7
      Production (oz)                                     6,460       10,549
      Sales (oz)                                          5,000        9,400
      Bullion inventory (oz)                              3,411        4,101

      Bullion revenue ($thousands)                        5,720       10,711
      Operating costs ($thousands)                        5,225        6,503
      Mine operating profit ($thousands)*                 495        4,208
      Gold price realized ($Cdn/oz)                       1,144        1,139


      Production (oz)                                    16,359       27,434
      Sales (oz)                                         17,000       20,700
      Bullion inventory (oz)                             13,391       17,313

      Bullion revenue ($thousands)                       19,577       23,551
      Operating costs ($thousands)                       12,796       12,266
      Mine operating profit ($thousands)*               6,781       11,285
      Gold price realized ($Cdn/oz)                       1,152        1,138

    * The Company has included in this report certain non-GAAP performance
        measures, including mine operating profit 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 16,359 ounces of gold and 17,000 ounces were sold at an average price of $1,152 per ounce. Bullion inventory at March 31, 2010, stood at 13,391 ounces which is carried at cost. The costs and revenues for this inventory will be recognized in the financial statements in the fiscal period in which it is sold.

Gold sales exceeded operating costs resulting in a mine operating profit, or gross margin, of $6.8 million. In addition to these direct operating costs, other costs, including royalty payments, corporate and general costs and interest costs, totalled $1.3 million. Tight management of discretionary expenditures continues.

At the Eagle River mine, mining occurred in lower grade areas. We are currently developing the high grade 811 Zone and expect a greater contribution from this area towards the end of the second quarter. The mine produced 9,899 ounces of gold from 34,116 tonnes milled at an average recovered grade of 9.0 gAu/tonne.

At the Kiena mining complex we worked our way through a very low grade sequence and are happy to see grades finally improving. In April 2010, millheads averaged over 5.0 gAu/tonne. For the first quarter, Kiena produced 6,460 ounces of gold from 65,660 tonnes milled at an average recovered grade of 3.1 gAu/tonne.

The Company is undertaking an aggressive exploration, development and evaluation program this year with the goal of increasing reserves and growing production. At the Kiena mining complex we announced the decision to develop the Dubuisson discovery via a drift on the 330 metre level as well as some very encouraging drilling results which suggest the S50 Zone may be opening up at depth. Although drilling remains widely-spaced at this point, results, including 20.66 gAu/tonne over 10.3 metres and 12.31 gAu/tonne over 12.8 metres, are very encouraging (see press release dated March 29, 2010).

In Ontario, drilling concentrated on definition work on the 811 Zone with results confirming expectations to date. A key development ramp to access the 811 Zone at depth progressed putting us in position to start drilling the central portion of the mine. This area has never been drilled and holds considerable promise. It is situated below 500 metres depth and along projections of previously mined areas.

Evaluation of the Mishi project continues and with current gold prices we see potential for renewed open pit mining to provide significant, low cost production growth. A 43-101 resource estimate and preliminary feasibility study is advancing.


At March 31, 2010 the Company had working capital of $37.0 million, compared to $35.2 million at December 31, 2009. During the first quarter, 2010, capital expenditures totalled $4.5 million compared to $2.6 million in the first quarter, 2009.

The Company's inventory includes 13,391 ounces of gold bullion, a decrease from 14,032 ounces at year-end, a liquid asset with a market value of $15.1 million on March 31, 2010.

The Company believes that it has sufficient capital resources to cover its obligations, capital and operating costs going forward. On April 5, 2010, subsequent to the end of the first quarter, the Company declared a dividend of $0.02 per share payable April 30, 2010.

Production planned in 2010 should generate operating cash flow, even at gold prices well below those currently being realized.


We continue to forecast 70,000 ounces production in 2010. We feel that results will improve sequentially as our weakest budgeted quarter is behind us.

Exploration activity will increase as the summer field season comes and we are hopeful continued success on this front, coupled with results from Mishi studies and Dubuisson development, will demonstrate the potential of our assets to the marketplace.

Fundamental conditions have never been more favourable for the gold market. We feel that our leverage to gold prices has been clearly demonstrated over the last few years and are working towards demonstrating the growth potential of our assets.


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 100.7 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

                                                       March 31  December 31
                                                           2010         2009
    (in thousands)

      Cash and cash equivalents                       $  22,976    $  23,702
      Receivables                                         4,528        4,022
      Inventory                                          18,166       14,624
      Marketable securities                                 171          211
      Future income taxes                                 1,199        1,199
                                                         47,040       43,758

    Restricted funds                                      2,540        2,588
    Future income taxes                                   1,645        2,245
    Capital assets                                            8            9
    Mining properties                                    65,515       64,637
    Exploration properties                               30,433       30,018

                                                      $ 147,181    $ 143,255

      Payables and accruals                           $   8,772    $   7,322
      Current portion of obligations
       under capital leases                               1,246        1,240
                                                         10,018        8,562

    Income taxes payable                                     82           82
    Obligations under capital leases                        794        1,108
    Convertible 7% debentures                             9,622        9,483
    Asset retirement obligation                           1,333        1,324
                                                         21,849       20,559

    Minority interest in Moss Lake Gold Mines Ltd.          842          857

    Shareholders' Equity
    Capital stock                                       114,999      114,567
    Contributed surplus                                   3,745        3,770
    Accumulated other comprehensive loss                   (262)        (222)
    Equity component of convertible debentures            1,970        1,970
    Retained earnings                                     4,038        1,754
                                                        124,490      121,839

                                                      $ 147,181    $ 143,255

    Wesdome Gold Mines Ltd.
    Interim Consolidated Statements of Income and Comprehensive Income

    Three Months Ended March 31                            2010         2009
    (in thousands, except net income per common share)

      Gold and silver bullion                         $  19,577    $  23,587
      Interest and other                                    136           33
                                                         19,713       23,620

    Costs and expenses
      Operating costs                                    12,796       12,266
      Amortization of mining properties                   2,639        2,367
      Production royalties                                  223          340
      Corporate and general                                 698          437
      Stock based compensation expense                      107           55
      Interest on long term debt                            371          392
      Amortization of capital assets                          1            1
      Accretion of asset retirement obligation                9           21
                                                         16,844       15,879

    Net income before the following                       2,869        7,741
    Gain on property held for sale                            -          122
    Net income before income tax and minority
     interest                                             2,869        7,863
    Income tax
      Future                                                600          273
    Net income before minority interest                   2,269        7,590
    Minority interest                                        15          (14)
    Net income                                        $   2,284    $   7,576

    Other comprehensive loss:
      Change in fair value of available-for-sale
       marketable securities                                (40)           -
    Comprehensive income                              $   2,244    $   7,576

    Net income per common share
      Basic and diluted                               $    0.02    $    0.08

    Wesdome Gold Mines Ltd.
    Interim Consolidated Statements of Cash Flows

    Three Months Ended March 31                            2010         2009
    (in thousands)

    Operating activities
      Net income                                      $   2,284    $   7,576
      Amortization of mining properties                   2,639        2,367
      Accretion of discount on convertible debentures       139          126
      Gain on sale of equipment                            (102)           -
      Minority interest                                     (15)          14
      Stock based compensation expense                      107           55
      Amortization of capital assets                          1            -
      Future income taxes                                   600          273
      Gain on property held for sale                          -         (122)
      Gain on redemption of convertible debentures            -          (24)
      Accretion of reclamation asset obligation               9           22
                                                          5,662       10,287
      Net changes in non-cash working capital            (2,127)      (9,079)
                                                          3,535        1,208

    Financing activities
      Exercise of options                                   327           49
      Funds paid to repurchase common shares under NCIB       -          (14)
      Funds paid to repurchase debentures                     -         (446)
      Share issuance costs                                  (27)          (5)
      Repayment of obligations under capital leases        (308)        (396)
                                                             (8)        (812)

    Investing activities
      Additions to mining and exploration properties     (3,966)      (2,278)
      Proceeds on sale of equipment                         136            -
      Proceeds on property held for sale                      -          400
      Funds held against standby letters of credit           48         (506)
                                                         (3,782)      (2,384)
      Net changes in non-cash working capital              (471)         (91)
                                                         (4,253)      (2,475)
    Decrease in cash and cash equivalents                  (726)      (2,079)
    Cash and cash equivalents, beginning of period       23,702        8,029

    Cash and cash equivalents, end of period          $  22,976    $   5,950

For further information: For further information: Donovan Pollitt, P.Eng., President and CEO or Shelly John, Manager, Investor Relations, 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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