Wesdome Q3 Results - Production and Bullion Inventory Build

TORONTO, Nov. 12 /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 third quarter ended September 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

    
    -   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 September 30, 2009, the Company had working capital of $27.5 million. During the first nine months of 2009, revenue exceeded operating costs by $32.0 million and $10.0 million was invested in exploration and development, $0.8 million on the acquisition of exploration properties and $1.1 million in capital equipment. Cash flow from operations totalled $29.1 million before working capital adjustments and net income was $19.0 million or $0.19 per share in the first nine months of 2009.

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 $75.2 million with 68,700 ounces of gold sold at an average price of Cdn$1,095 per ounce.

RESULTS OF OPERATIONS

    
                       Three Months Ended Sept 30  Nine Months Ended Sept 30
                                2009         2008          2009         2008
                       ------------------------------------------------------
    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
    -------------------------------------------------------------------------

      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
    -------------------------------------------------------------------------

      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
    -------------------------------------------------------------------------

      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 $21.5 million on sales of 20,000 ounces at an average realized price of $1,071 per ounce compared to revenues of $22.0 million on sales of 24,463 ounces at a price of $902 per ounce in the third quarter 2008. At September 30, 2009, gold inventory increased to 16,838 ounces from 10,272 ounces at June 30, 2009, which is carried on the balance sheet at cost. The revenue and costs for this inventory will be recognized in the fiscal period in which it is sold.

During the third quarter, revenue exceeded operating costs resulting in a mine operating profit, or gross margin, of $8.2 million. In addition to the direct operating costs of $13.3 million, other costs, including royalties, corporate and general costs and interest costs amounted to $1.2 million.

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 September 30, 2009, the Company had working capital of $27.5 million, an increase of $14.4 million from year-end 2008. During the third quarter, capital expenditures totalled $4.6 million, compared to $4.9 million in 2008.

At September 30, 2009, the Company had 16,838 ounces of gold inventory carried at a cost of $12.3 million. The market value at September 30, 2009, was $17.9 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 has been partially funded by a December 22, 2008, private placement of 1.5 million flow-through shares for gross proceeds of $1.7 million.

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 $100 million.

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 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
    (Unaudited)

                                                        Sept 30       Dec 31
                                                           2009         2008
    -------------------------------------------------------------------------
    (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
    -------------------------------------------------------------------------
                                                         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
    -------------------------------------------------------------------------

                                                      $ 132,112    $ 115,384
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
    Current
      Payables and accruals                           $   8,070    $   7,865
      Current portion of obligations under
       capital leases                                     1,247        1,478
    -------------------------------------------------------------------------
                                                          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
    -------------------------------------------------------------------------
                                                         23,346       23,659
    -------------------------------------------------------------------------

    Minority interest in Moss Lake Gold Mines Ltd.          862          903
    -------------------------------------------------------------------------

    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)
    -------------------------------------------------------------------------
                                                        107,904       90,822
    -------------------------------------------------------------------------

                                                      $ 132,112    $ 115,384
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    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
    -------------------------------------------------------------------------
    (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
    -------------------------------------------------------------------------
                              21,489       22,180        75,318       59,131
    -------------------------------------------------------------------------

    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
    -------------------------------------------------------------------------
                              17,892       20,035        56,207       56,139
    -------------------------------------------------------------------------

    Net income before the
     following                 3,597        2,145        19,111        2,993
    Gain on property held
     for sale                      -            -           122            -
    -------------------------------------------------------------------------
                               3,597        2,145        19,233        2,993
    Future income tax
     expense                       -            -          (273)           -
    -------------------------------------------------------------------------
    Net income before
     minority interest         3,597        2,145        18,960        2,993
    Minority interest             13            6            43           78
    -------------------------------------------------------------------------
    Net income             $   3,610    $   2,151     $  19,003    $   3,071
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net income per
     common share
      Basic and diluted    $    0.04    $    0.02     $    0.19    $    0.03
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    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)           -
    -------------------------------------------------------------------------
    Deficit, end of period $ (11,390)   $ (34,780)    $ (11,390)   $ (34,780)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    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
    -------------------------------------------------------------------------
    (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
    -------------------------------------------------------------------------
                               7,265        5,578        29,108       12,095
      Net changes in non-cash
       working capital         1,799        4,511        (5,822)      (1,791)
    -------------------------------------------------------------------------
                               9,064       10,089        23,286       10,304
    -------------------------------------------------------------------------
    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)
    -------------------------------------------------------------------------
                                (552)        (571)       (3,635)      (1,422)
      Net changes in
       non-cash working
       capital                     -            -             -          276
    -------------------------------------------------------------------------
                                (552)        (571)       (3,635)      (1,146)
    -------------------------------------------------------------------------
    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
    -------------------------------------------------------------------------
                              (4,399)      (4,406)      (11,310)     (10,162)
      Net changes in
       non-cash working
       capital                   111         (211)         (138)         219
    -------------------------------------------------------------------------
                              (4,288)      (4,617)      (11,448)      (9,943)
    -------------------------------------------------------------------------
    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
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end of
     period                $  16,232    $   6,623     $  16,232    $   6,623
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

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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