Q2 results outResults largely known once quarterly production was realized but
nice free cash flow and
cash in bank. Setting up for something.
TORONTO, Aug. 11, 2020 (GLOBE NEWSWIRE) -- Wesdome Gold Mines Ltd. (TSX: WDO) (“Wesdome” or the “Company”) today announces second quarter (“Q2 2020”) financial results. All figures are stated in Canadian dollars unless otherwise noted.
Mr. Duncan Middlemiss, President and CEO commented, “During Q2, Wesdome generated operating cash flow of $30.2 million or $0.22 per share and free cash flow of $17.7 million, net of an investment of $6.0 million in Kiena, or $0.13 per share, ending the quarter with a cash position of $66.7 million (Q1 2020: $49.4 million). Cash costs for the quarter were $882 per ounce (US: $637) and All-in sustaining costs were $1,218 per ounce (US $879) a 21% and 14% decrease respectively over Q1 2020.
With H1 2020 total gold production of 50,264 ounces at an average grade of 15.8 grams per tonne at the Eagle River mine, the Company is well-positioned to achieve its full year guidance range of 90,000 – 100,000 ounces at an average grade of 15 – 16.7 grams per tonne. H1 2020 cash costs of $1,009 per ounce (US$739) are above the high end of the company’s guidance range of $875 per ounce (US$670) due to inventory adjustments in the first quarter, and reduced operational efficiencies related to protocols implemented due to COVID-19. The Company is revising cash cost guidance for the year to $950 - $975 per ounce (US$700 – $720). H1 2020 All-in sustaining costs of $1,327 per ounce (US$972) are within the company’s guidance range of $1,280 - $1,350 per ounce (US $985 - $1,040) and we expect full year costs to be within this range.
The Eagle River complex was operating on reduced operations, and some work, such as exploration, mine and tailing construction activities, that were suspended in order to facilitate enhanced physical distancing to limit the potential spread of the COVID-19 virus, have gradually restarted in the second quarter. The initial budget for Eagle River underground exploration was 119,000 metres, which will now be 85,000 metres. Surface exploration metres of 33,500 metres will be largely unchanged, and we will introduce some regional exploration campaigns away from the existing mine.
At Kiena, work was shut down on March 24 in response to the Government of Quebec’s mandated closures due to the COVID-19 virus, and resumed on May 11. Drilling activities are back to 100% capacity, and we expect to achieve our previously guided drill metres of 80,000 metres. We expect to publish an updated resource estimate in Q4, followed by a Pre-feasibility study. During the quarter, we also completed our Preliminary Economic Analysis (“PEA”) which delivered favourable economics of an after-tax IRR of 102%. A summary of the PEA was released on May 27, and the full report filed on June 25. Both reports are available on the Company’s website and on sedar.com.
Additionally, the Company wishes to announce the appointment of Raj Gill to the position of Vice President, Corporate Development. Raj has over 11 years of experience in the mining industry and capital markets including equity research, and most recently Director of Corporate Development at Kinross where he led and supported a range of strategic, financial and technical initiatives. Raj will be a great asset as Wesdome continues on its trajectory of becoming an all-Canadian intermediate gold producer.”
Key operating and financial highlights of the Q2 2020 results include:
- Gold production of 25,142 ounces from the Eagle River Complex, a 12.1% increase over the same period in the previous year (Q2 2019: 22,437 ounces):
-- Eagle River Underground 42,349 tonnes at a head grade of 18.1 grams per tonne (“g/t Au”) for 24,117 ounces produced, 15.5% increase over the previous year (Q2 2019: 20,873 ounces).
-- Mishi Open Pit 13,721 tonnes at a head grade of 2.9 g/t Au for 1,026 ounces produced (Q2 2019: 1,564 ounces). - Revenue of $54.8 million, a 29.6% increase over Q2 2019 (Q2 2019: $42.3 million).
- Ounces sold 23,140 at an average sales price of $2,365/oz (Q2 2019: 24,113 ounces at an average price of $1,752/oz).
- Earned mine profit1 of $34.3 million, a 55% increase over Q2 2019 (Q2 2019 - $22.1 million).
- Cash costs 1 of $882 (US$637) per ounce of gold sold (Q2 2019 of $837 (US$626) due to higher tonnes processed at the mill.
- All-in sustaining costs (“AISC”) 1 of $1,218/oz or US$879/oz, a slight decrease over the same period in 2019 (Q2 2019: $1,220/oz or US$912/oz), due to lower sustaining capital expenditures; partially offset by lower grades and higher tonnage processed at the Mill.
- Operating cash flow of $30.2 million or $0.22 per share1 as compared to $15.4 million or $0.11 per share for the same period in 2019.
- Free cash flow of $17.7 million, net of an investment of $6.0 million in Kiena, or $0.13 per share1 (Q2 2019: free cash flow of $1.2 million or $0.01 per share.
- Net income of $16.1 million or $0.12 per share (Q2 2019: $8.3 million or $0.06 per share) and Net income (adjusted)1 of $16.4 million or $0.12 per share (Q2 2019: $8.3 million or $0.06 per share).
- Cash position increased to $66.7 million compared to $49.4 million in the previous quarter.
1 Refer to the Company’s 2020 Second Quarter Management Discussion and Analysis, section entitled “Non-IFRS Performance Measures” for the reconciliation of these non-IFRS measurements to the financial statements.
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Production and Exploration Highlights | Achievements |
| Eagle River | - With normal operations curtailed due to the COVID-19 pandemic, surface and exploration drilling is currently operating at a reduced capacity. However, recent underground drilling from the 772 m elevation was completed to test the down plunge extension of the Falcon Zone. It is interpreted that the Falcon/7 Zone now extends from surface approximately 1,000 m down plunge and is part of the up plunge extension of the 7 Zone currently being mined near the 1,000 m elevation. This is significant, as the extension of this zone is proximal to mine infrastructure and has the potential to be included in future mine production and ultimately augment production rates in the medium term. Additional drilling is required to better define these zones and remains a priority in the second half of 2020.
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| Kiena | - The Preliminary Economic Assessment ("PEA") study was completed in Q2 2020. The PEA demonstrates a low-cost and high margin operation, with low capital requirements and a short payback period, while minimizing risks and maximizing shareholders\' return. This PEA is based on the Mineral Resource Estimate (“MRE”) dated September 2019 and includes only those resources proximal to the mine infrastructure, specifically the A Zone, B Zone, S50, VC Zones and the South Zone. An updated resource estimate is planned early in Q4 2020 followed by a pre-feasibility study (“PFS”) and a production restart decision in H1 2021.
- Diamond drilling activities at Kiena restarted on May 11th, 2020 focusing on the continuation of converting inferred into indicated resources. This drilling has continued to confirm the overall continuity of the geometry and the high-grade gold mineralization of the A Zone and identified additional mineralization outside of the most recent resource estimate. The A Zone now extends down plunge in excess of 830 m.
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Technical Disclosure
The technical content of this release has been compiled, reviewed and approved by Marc-Andre Pelletier, P. Eng, Chief Operating Officer, and Michael Michaud, P.Geo., Vice President, Exploration of the Company and each a "Qualified Person" as defined in National Instrument 43-101 -Standards of Disclosure for Mineral Projects.
Cautionary Note to United States Investors Concerning Estimates of Reserves and Resources
The mineral reserve and resource estimates reported in this news release were prepared in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) as required by Canadian securities regulatory authorities. The United States Securities and Exchange Commission (the “SEC”) applies different standards in order to classify and report mineralization. This news release uses the terms “measured”, “indicated” and “inferred” mineral resources, as required by NI 43-101. Readers are advised that although such terms are recognized and required by Canadian securities regulations, the SEC does not recognize such terms. Canadian standards differ significantly from the requirements of the SEC. Readers are cautioned not to assume that any part or all of the mineral deposits in these categories constitute or will ever be converted into mineral reserves. In addition, “inferred” mineral resources have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource exists, is economically or legally mineable or will ever be upgraded to a higher category of mineral resource.
Wesdome Gold Mines 2020 Second Quarter Financial Results Conference Call:
North American Toll Free: + 1 (844) 202-7109
International Dial-In Number: +1 (703) 639-1272
Conference ID: 9581356
Webcast link: https://edge.media-server.com/mmc/p/ord86na2
Webcast can also be accessed under the News and Events section of the Company’s website (www.wesdome.com)