Western Goldfields Announces 2009 Outlook and Fourth Quarter Production Update for the Mesquite Mine
Jan. 19, 2009 05:15 PM
, /PRNewswire-FirstCall/ - Western Goldfields Inc. ("Western Goldfields"or the "Company") (TSX:WGI, NYSE Alternext:WGW) is pleased to announceits 2009 outlook and fourth quarter production update for the MesquiteMine. All amounts are expressed in dollars unless otherwise indicated.
- Gold production for 2009 is expected to be in the range of 140,000 to
150,000 ounces, a significant increase over 2008
- Gold production is expected to range from 33,000 to 38,000 ounces in
each of the first three quarters before increasing to 38,000 to
43,000 ounces in the fourth quarter
- Gold production for the fourth quarter and full year 2008 totaled
30,465 and 110,412 ounces, respectively
- The Company reduced its debt by $17.7 million to $68.6 million at
December 31, 2008
2009 Full Year Guidance
-----------------------
The Company today announces its 2009 guidance for Western Goldfields' Mesquite Mine in . In 2009, the Company expects to incur in operating costs to place and process approximately 155,000recoverable ounces of gold on the leach pad, resulting in a cost perrecoverable ounce placed(1) of per ouncefor the year. At the end of 2008, Western Goldfields had approximately55,000 recoverable ounces of inventory on the leach pad which isestimated to increase to approximately 65,000 ounces at the end of2009. Due to the timing of leach pad recoveries and the impact ofinventory adjustments, the Company forecasts production and sales to bebetween 140,000 and 150,000 ounces at cost of sales per ounce(2) of . As higher cost leach pad gold inventory at is planned to be replaced by lower cost inventory at , the planned cost of sales(3) for 2009 includes approximately from the expected reduction in the value of leach pad gold inventory.These costs were included in work in process inventory at and therefore do not affect 2009 operating cash flow. Operating cash flow is expected to be for 2009 assuming a gold price of per ounce. Western Goldfields expects production and sales to growagain in 2010 to approximately 175,000 ounces with total operatingcosts remaining similar to 2009 at , thus reducing the cost of sales per ounce(2) in 2010 to approximately .
"Weare very excited as we move into 2009; our increased production andcash flow generation will allow us to continue to de-lever our balancesheet and better position us to pursue the strategic growthopportunities that lie before us," said, Chairman.
2009 Quarterly Guidance
-----------------------
While total operating costs are expected to remain consistent on a quarterly basis from ,higher stripping ratios and lower grades result in lower ounces placedand lower production in the first three quarters of 2009. Approximately50% of the recoverable ounces placed in 2009 are forecast to be placedin the fourth quarter. Production in each of the first three quartersis expected to be 33,000 to 38,000 ounces before increasing to 38,000to 43,000 ounces in the fourth quarter. The cost of sales per ounce(2)in the first three quarters of the year are forecast to be and include approximately per quarter of costs from the expected reduction in the value of leachpad gold inventory quarter to quarter. The fourth quarter cost of salesper ounce(2) are expected decline to and include approximately a reduction to cost of sales(3) from the expected increase in the valueof leach pad gold inventory during the fourth quarter. The inventoryrelated costs do not impact the Company's cash flow in the respectivequarters.
Fuel Price Assumption
---------------------
The 2009 cost of sales(3) forecast assumes a diesel price of per gallon for the 50% of Mesquite's 2009 diesel requirement that is currently unhedged; per gallon corresponds to the current price paid for diesel atMesquite. Diesel represents approximately 20% of Mesquite's annualoperating cost. Cost of sales per ounce(2) is impacted by changes indiesel price as approximately 50% of Mesquite's annual dieselconsumption remains unhedged. Every per gallon movement in diesel price now results in an approximate per ounce change in cost of sales per ounce(2).
2008 Fourth Quarter and Full Year Production Results
----------------------------------------------------
The Company also announces its 2008 unaudited fourth quarterand full year production results. During the fourth quarter and fullyear 2008, Western Goldfields sold 30,625 and 110,880 ounces,respectively. Gold production was 30,465 and 110,412 ounces during thefourth quarter and full year, respectively. The Company realizedaverage gold prices of and perounce during the fourth quarter and full year, respectively. Unauditedcost of sales per ounce(2) for the fourth quarter were with unaudited cost of sales per ounce(2) for the full year of .
Fourth Quarter 2008 Full Year 2008
------------------- --------------
Ounces Sold 30,625 110,880
Ounces Produced 30,465 110,412
Cost of Sales per ounce(2) $515 $508
Average realized gold price $799 per ounce $855 per ounce
The Company will provide a complete statement of its 2008 production and
cost of sales(2) as part of its fourth quarter and year-end 2008 financial
results, which are expected to be released on March 6, 2009.
Liquidity and Capital Resources
-------------------------------
Western Goldfields repaid of its outstanding debt at the end of 2008 leaving outstanding under the credit facility. At the end of 2008, the Company had cash of , including of restricted cash. As Mesquite's capital program is completed, theCompany expects nominal sustaining capital requirements going forward.Western Goldfields forecasts approximately in capital spending in 2009 and only annually thereafter. Western Goldfields intends to continue usingMesquite's cash flow to de-lever the balance sheet and pursuedisciplined growth opportunities.
(1) Cost per recoverable ounce placed is defined as total operating
costs divided by the number of recoverable ounces placed on the leach
pad.
(2) Cost of sales per ounce is defined as cost of sales as per the
Company's financial statements divided by the number of ounces sold.
(3) Cost of sales is defined as mine operating costs, including changes
in leach pad inventory, plus royalties. Cost of sales does not
include non-cash amortization and accretion expense.
Note: (1) is a Non-GAAP measure that does not have anystandardized meaning prescribed under U.S. GAAP, and therefore they maynot be comparable to similar measures employed by other companies. Thedata is intended to provide additional information which will allowstatement readers to assess the future cash flow generation ability ofthe Company and should not be considered in isolation or as asubstitute for measures of performance prepared in accordance with U.S.GAAP.
Western Goldfields Inc.
-----------------------
Western Goldfields Inc. is a gold production and exploration company with a focus on precious metal mining opportunities in . The Mesquite Mine, currently the Company's sole asset, was brought into production in ,and the Company's focus is now on achieving the anticipated rate ofproduction and completing planned improvements to the property. TheCompany has 2.8 million ounces in Proven and Probable Reserves asoutlined in more detail in its latest annual report on Form 10K filedon www.sedar.com. WesternGoldfields common shares trade on the Toronto Stock Exchange under thesymbol WGI, and on the NYSE Alternext under the symbol WGW. For furtherdetails, please visit www.westerngoldfields.com.
Mr.,P.Geo., Vice President of Mine Development, Western Goldfields Inc., isthe qualified person under National Instrument 43-101 who supervisedthe preparation of the technical information contained in this newsrelease. Mr. Hanson is an officer of the Company.
Forward-Looking Information
---------------------------
Certain statements contained in this news release andsubsequent oral statements made by and on behalf of the Company maycontain forward-looking information within the meaning of the UnitedStates Private Securities Litigation Reform Act of 1995 and similarCanadian securities law. Such forward-looking statements are identifiedby words such as "intends", "anticipates", "believes", "expects","plans" and include, without limitation, statements regarding theCompany's plan of business operations, production and cost estimates,receipt of working capital, anticipated revenues, timing of therecovery of gold and capital and operating expenditures. Theseforward-looking statements are based on the best estimates ofmanagement at the time such statements are made. Expected productionresults and cost of sales (including without limitation, statementsmade with respect to future production and costs contemplated by ourmine plan) are based in part on current and historical production andcost data factoring certain assumptions with respect to future metalprices, costs and availability of supplies and labour and otherparameters. There can be no assurance that such statements will proveto be accurate; actual results and future events could differmaterially from such statements. Factors that could cause actualresults to differ materially include, among others, variations in metalprices and/or cost of supplies, possible variations in ore grade orrecovery rates, failure of plant, equipment or processes to operate asanticipated, accidents, labour disputes, as well as those set forth inthe Company's Annual Report on Form 10-KSB for the year ended filed with the U.S. Securities and Exchange Commission and with SEDAR,under the caption "Risk Factors" as well as other filings made by theCompany with securities regulatory authorities. Most of these factorsare outside the control of the Company. Investors are cautioned not toput undue reliance on forward-looking statements. Except as otherwiserequired by applicable securities statutes or regulations, the Companydisclaims any intent or obligation to update publicly theseforward-looking statements, whether as a result of new information,future events or otherwise.
SOURCE Western Goldfields Inc.
Published Jan. 19, 2009
Copyright © 2009 SYS-CON Media. All Rights Reserved.
https://au.sys-con.com/node/813381