Wesdome Q3 Results - Production and Bullion Inventory Build
The Company owns the Eagle River gold mining operation in Wawa, Ontario and the Kiena mining complex in Val d'Or,
HIGHLIGHTS
- Q3 production of 26,566 ounces
- Q3 sales of 20,000 ounces
- Bullion inventory rises 64% to 16,838 ounces
- Cash, bullion receivables and gold bullion at market value
September 30, 2009, grows to $36.3 million from $29.7 million at
June 30, 2009
- Q3 earnings $3.6 million or $0.04 per share
- Q3 cash flow from operations $7.3 million or $0.07 per share
- YTD earnings $19.0 million or $0.19 per share
- YTD cash flow from operations $29.1 million or $0.29 per share
- YTD production totals 75,000 ounces
- Production guidance increased to over 90,000 ounces
- YTD sales total 68,700 ounces at $1,095 per ounce or $75.2 million
Rolly Uloth, CEO, comments "We produced 26,600 ounces during the third quarter and sold 20,000 ounces. The increase in bullion inventory puts us in an advantageous position to benefit from current higher prices."
OVERALL PERFORMANCE
At
Operating costs per ounce sold in the first nine months was $628Cdn or $538US applying a 0.856 Cdn/US exchange rate.
In the first nine months, production exceeded 2008 levels by 12%, realized gold prices increased 20% and costs remained stable. For the first nine months of 2009 bullion revenue totalled
RESULTS OF OPERATIONS
Three Months Ended Sept 30 Nine Months Ended Sept 30
2009 2008 2009 2008
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Eagle River Mine
Tonnes milled 36,839 31,935 102,034 86,892
Recovered grade (g/t) 14.5 11.8 14.7 13.7
Ounces produced 17,183 12,139 48,251 38,359
Ounces sold 11,000 12,063 41,300 34,500
Bullion inventory (oz) 14,578 7,326 14,578 7,326
Bullion revenue
(thousands) 11,807 10,811 45,106 31,495
- Operating costs
(thousands) 5,722 8,147 20,622 22,182
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Mine operating profit
(loss)($m)* 6,085 2,664 24,484 9,313
Gold price realized
($Cdn/oz) 1,071 895 1,094 913
Kiena Mine Complex
Tonnes milled 87,264 62,587 212,498 191,735
Recovered grade (g/t) 3.3 5.8 3.9 4.6
Ounces produced 9,383 11,582 26,708 28,556
Ounces sold 9,000 12,400 27,400 29,900
Bullion inventory (oz) 2,260 1,865 2,260 1,865
Bullion revenue
(thousands) 9,651 11,244 30,106 27,337
- Operating costs
(thousands) 7,536 7,740 22,542 22,530
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Mine operating profit
(loss)($m)* 2,115 3,504 7,564 4,807
Gold price realized
($Cdn/oz) 1,071 905 1,097 914
Total
Production (oz) 26,566 23,721 74,959 66,915
Sales (oz) 20,000 24,463 68,700 64,400
Bullion inventory (oz) 16,838 9,191 16,838 9,191
Bullion revenue
(thousands) 21,458 22,055 75,212 58,832
- Operating costs
(thousands) 13,258 15,887 43,164 44,712
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Mine operating profit
(loss)($m)* 8,200 6,168 32,048 14,120
Gold price realized
($Cdn/oz) 1,071 902 1,095 913
* 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 third quarter, combined operations produced 26,566 ounces of gold. Revenues declined to
During the third quarter, revenue exceeded operating costs resulting in a mine operating profit, or gross margin, of
At the Eagle River mine production during the third quarter came primarily (60%) from the 808 zone. Very high grades with favourable mining conditions were encountered in the eastern portion of the 450-808 stope. Results here exceeded forecasts and we expect production from this area to again contribute the bulk of millfeed for the fourth quarter.
At the Kiena mine, production increased 38% over the second quarter. Although we remain in a lower grade phase of our mining sequence, efforts to gain efficiency through increasing throughput were successful. Throughput increased 30% over second quarter levels with a marginal increase in grade.
During the third quarter, the Kiena mine attained a safety milestone of 500,000 hours worked without a lost time accident. The significance of this achievement in terms of operational efficiency, industry recognition and work culture should not be underestimated.
Exploration activity was highlighted by some very encouraging results from surface drilling at the Dubuisson project located 3 kilometres east of the Kiena mine. Strong grades and widths were encountered in multiple zones including intersections of 26.1 gAu/tonne over 10.3 metres, 16.5 gAu/tonne over 12.3 metres and 20.8 gAu/tonne over 7.3 metres. Infill and stepout drilling is continuing with the goal of evaluating the geometry, continuity and size potential of this new find.
In Ontario, surface drilling will commence on the Pukaskwa option located 15 kilometres west of the Eagle River Mill. Surface showings discovered in 2006 demonstrate significant potential. At the Eagle River mine drilling will resume in the fourth quarter on the 811 zone which remains open at depth and to the east.
A stepwise re-evaluation of our known gold assets, in light of current gold prices, was initiated with the purpose of examining organic growth potential. Work was initiated on the Wesdome property in Val d'Or and the Mishi deposit in Wawa.
LIQUIDITY AND CAPITAL RESOURCES
At
At
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 has been partially funded by a
Production for the rest of 2009 should generate operating cash flow, even at gold prices well below those currently being realized.
OUTLOOK
2009 is clearly shaping up as another record year in terms of production and profitability. Production should easily exceed 90,000 ounces and revenues could exceed
We are excited about the fundamentals of the gold market and recent price action. We feel these positive developments will continue and that the $Cdn/$US exchange rate will eventually decline to a sustainable level for Canada's economy.
Conditions remain favourable for Canadian gold mines. Our unhedged production, bullion inventory and exploration prospects offer exemplary leverage to gold.
The directors have decided, at this point, to allocate capital to potential growth projects in lieu of a fall dividend.
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 100.2 million shares issued and outstanding and trades on the
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
(Unaudited)
Sept 30 Dec 31
2009 2008
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(in thousands)
Assets
Current
Cash and cash equivalents $ 16,232 $ 8,029
Receivables 5,302 4,205
Inventory 15,128 10,165
Marketable securities 144 44
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36,806 22,443
Restricted funds 2,626 2,303
Capital assets 9 10
Mining properties 62,728 61,294
Exploration properties 29,943 28,956
Property held for sale - 378
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$ 132,112 $ 115,384
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Liabilities
Current
Payables and accruals $ 8,070 $ 7,865
Current portion of obligations under
capital leases 1,247 1,478
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9,317 9,343
Income taxes payable 68 173
Obligations under capital leases 1,420 2,396
Convertible 7% debentures 9,356 9,413
Reclamation obligation 1,094 1,042
Future income taxes 2,091 1,292
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23,346 23,659
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Minority interest in Moss Lake Gold Mines Ltd. 862 903
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Shareholders' Equity
Capital stock 113,931 113,872
Contributed surplus 3,694 3,648
Accumulated other comprehensive loss (290) (290)
Equity component of convertible debentures 1,959 2,062
Deficit (11,390) (28,470)
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107,904 90,822
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$ 132,112 $ 115,384
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Wesdome Gold Mines Ltd.
Interim Consolidated Statements of Operations and Deficit
(Unaudited)
Three Months Ended Sept 30 Nine Months Ended Sept 30
2009 2008 2009 2008
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(in thousands, except
per share amounts)
Revenue
Gold and silver
bullion $ 21,458 $ 22,054 $ 75,212 $ 58,832
Interest and other 31 126 106 299
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21,489 22,180 75,318 59,131
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Costs and expenses
Operating costs 13,258 15,807 43,164 44,734
Amortization of
mining properties 3,387 3,317 9,248 8,554
Production royalties 264 176 832 589
Corporate and general 504 243 1,452 790
Stock compensation
expense 48 77 240 265
Interest on long-term
debt 412 392 1,203 1,148
Other interest 8 6 15 7
Amortization of
office equipment - 1 1 2
Accretion of reclamation
obligation 11 16 52 50
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17,892 20,035 56,207 56,139
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Net income before the
following 3,597 2,145 19,111 2,993
Gain on property held
for sale - - 122 -
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3,597 2,145 19,233 2,993
Future income tax
expense - - (273) -
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Net income before
minority interest 3,597 2,145 18,960 2,993
Minority interest 13 6 43 78
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Net income $ 3,610 $ 2,151 $ 19,003 $ 3,071
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Net income per
common share
Basic and diluted $ 0.04 $ 0.02 $ 0.19 $ 0.03
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Deficit, beginning
of period $ (14,993) $ (36,930) $ (28,470) $ (37,850)
Repurchase of shares (7) - (7) -
Gain on equity
component of early
repurchase of
convertible debentures - (1) 79 (1)
Net income 3,610 2,151 19,003 3,071
Dividends - - (1,995) -
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Deficit, end of period $ (11,390) $ (34,780) $ (11,390) $ (34,780)
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Wesdome Gold Mines Ltd.
Interim Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended Sept 30 Nine Months Ended Sept 30
2009 2008 2009 2008
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(in thousands)
Operating activities
Net income $ 3,610 $ 2,151 $ 19,003 $ 3,071
Amortization of
mining properties 3,387 3,317 9,248 8,554
Accretion of discount
on convertible
debentures 131 118 396 342
Gain on sale of
Moss Lake shares - - - (14)
Minority interest (13) (6) (43) (78)
Stock compensation
expense 48 77 240 265
Amortization of
office equipment - 1 1 2
Future income taxes - - 273 -
Gain on sale of
equipment 91 (95) 84 (95)
Gain on property held
for sale - - (122) -
Gain on redemption of
convertible debentures - (1) (24) (1)
Accretion of
reclamation obligation 11 16 52 49
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7,265 5,578 29,108 12,095
Net changes in non-cash
working capital 1,799 4,511 (5,822) (1,791)
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9,064 10,089 23,286 10,304
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Financing activities
Exercise of options 339 - 527 27
Funds paid to
repurchase common
shares under NCIB (24) (131) (38) (135)
Funds paid to
repurchase debentures - (87) (453) (87)
Flow-through shares
issued (4) - (9) (6)
Dividends paid - - (1,995) -
Part XII tax (96) - (96) -
Shares issued by a
subsidiary of the
company to third
parties - - - (4)
Repayment of
obligations under
capital leases (767) (353) (1,571) (1,217)
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(552) (571) (3,635) (1,422)
Net changes in
non-cash working
capital - - - 276
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(552) (571) (3,635) (1,146)
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Investing activities
Additions to mining
and exploration
properties (4,643) (4,894) (11,707) (11,205)
Proceeds on sale of
Moss Lake shares to
minority interests - - - 26
Proceeds on sale of
equipment 300 201 320 201
Proceeds on option to
sell property - - 400 567
Funds held against
standby letters of
credit (56) 287 (323) 249
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(4,399) (4,406) (11,310) (10,162)
Net changes in
non-cash working
capital 111 (211) (138) 219
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(4,288) (4,617) (11,448) (9,943)
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Increase (decrease) in
cash and cash
equivalents 4,224 4,901 8,203 (785)
Cash and cash
equivalents, beginning
of period 12,008 1,722 8,029 7,408
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Cash and cash
equivalents, end of
period $ 16,232 $ 6,623 $ 16,232 $ 6,623
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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: [email protected], Website: www.wesdome.com
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