Wesdome Gold Mines Ltd WDOFF

Q1 numbers are out

[loonietunes]

 

Wesdome Gold earns $7.05-million in Q1

 

2022-05-11 17:18 ET - News Release

 

Mr. Duncan Middlemiss reports

WESDOME ANNOUNCES 2022 FIRST QUARTER RESULTS AND APPOINTMENT OF CHIEF OPERATING OFFICER

Wesdome Gold Mines Ltd. has released its first quarter (Q1 2022) financial results. All figures are stated in Canadian dollars unless otherwise noted.

Duncan Middlemiss, President and CEO commented, "In Q1, with combined production of 25,611 ounces we increased cash flow from operations by 36%, and cash margins by 39% over the same period last year, ending the quarter with $52.5 million in cash. This is sufficient to fund our final year of elevated growth capex as we finish projects related to the ramp up at Kiena, such as the fleet purchase, tailings dam, and paste fill plant construction.

It was a challenging quarter due to the unpredictable supply chain, inflationary pressures seen across the industry, as well as the Omicron variant surge which impacted work force availability. Q1 production at Kiena was impacted by the unscheduled downtime of the underground crusher (since rectified) and the delay in the delivery of underground mobile equipment, which was received at the end of the quarter. Ground conditions within the Kiena Deep A Zone, specifically the schist and komatiite rock types which are in the foot wall of the zone, are challenging as expected. We look forward to the completion of the paste fill plant (now expected to be commissioned in the summer) in order to speed up our production cycle and mitigate delays.

While the Kiena restart is generally progressing as planned, the aforementioned challenges have impacted various aspects of the project to date. The addition of paste fill capabilities in Q3 will have significant production benefits. Wesdome is very fortunate to have commenced this start up activity in June of 2021, as most major components critical to commercial restart of operations have now been received at site.

Combined cash costs for the quarter of $1,295 per ounce (US $1,023) and AISC costs of $1,695 per ounce (US$1,339) were higher than the upper end of full-year guidance ranges due to planned lower production (the low for 2022)) and increased corporate and general expenses. A more detailed breakdown of costs for each operation is provided in the table below. Free cash outflow was $6.8 million, net of an investment of $28.4 million in Kiena, or ($0.05) per share. The Company expects to return to positive free cash flow status in the second half of the year as production ramps up and growth capital spending is significantly reduced.

At Eagle, we are continuing to open up additional stopes in the high-grade Falcon Zone, with the mine plan calling for higher production in the second half of the year.

Executive Appointments

Subsequent to quarter-end, the Company is pleased to announce two new executive management updates. Frederic Mercier-Langevin has been appointed as Chief Operating Officer, effective June 15, 2022.

Frederic brings over 17 years of project execution and operational experience with Agnico Eagle Mines Limited. Most recently, Mr. Langevin served as General Manager of Agnico Eagle's Meliadine mine in Nunavut, which produced 391,687 koz Au in 2021 from both underground and open pit operations. Prior to his role at Meliadine, Mr. Langevin held roles of increasing responsibility, including overseeing the execution of the Goldex project and Lapa Mine in Val d'or, Quebec where he was eventually appointed General Manager. He is bilingual in English and French and holds a Bachelor of Science degree in Mining Engineering and a M.Sc. in Mining Engineering (Rock Mechanics) from Laval University.

The Company also announces that Joanna Miller has been promoted to the position of Vice President, Sustainability and Environment (previously Director Sustainability).

Joanna is an experienced sustainability strategist with over 15 years experience in the mining industry in consulting, site-based and corporate roles, managing external affairs, Indigenous relations, ESG reporting and social & environmental risk. She joined Wesdome in 2020 as the Director of Sustainability & Environment, having previously spent 6 years with Centerra Gold and Thompson Creek Metals in British Columbia. Prior to her work in the mining industry, Joanna managed engagement and investment campaigns for clients including Scotiabank, Hyundai and Loblaws. She holds a Bachelor of Arts from Queen's University and has completed certification programs in Indigenous law and environmental management. Joanna is the current Vice-Chair of the Ontario Mining Association's Indigenous Relations Committee.

"Frederic's experience in Canadian gold mining operations, and the Abitibi region specifically will be a tremendous asset to our team, as we ramp up Kiena to commercial production. Joanna, who has been working with us for the last eighteen months in a director role, has significantly improved our ESG disclosure and performance, and brings a wealth of knowledge and experience to this role."

Key operating and financial highlights of the Q1 2022 results include:

 

• -- Gold production of 25,611 ounces, including 5,112 Kiena pre-commercial ounces, is a 13% increase over the same period of the previous year (Q1 2021: 22,565 ounces):
  • == Eagle River Underground milled 53,217 tonnes at a head grade of 11.6 grams per tonne for 19,334 ounces produced, a 10% decrease over the same period in the previous year (Q1 2021: 21,396 ounces).
  • == Mishi Open Pit milled 11,873 tonnes at a head grade of 3.6 grams per tonne for 1,165 ounces produced (2021: 1,169 ounces).
  • == Kiena milled 21,162 tonnes at a head grade of 7.7 grams per tonne for 5,112 pre-commercial ounces produced.
• -- Revenue2 of $66.7 million, a 45% increase over the same period of the previous year (Q1 2021: $46.0 million).
• -- Ounces sold3 were 28,000 at an average sales price of $2,379/oz (Q1 2021: 20,664 ounces at an average price of $2,223/oz). -- Cash margin1 ,2 ,4 of $30.3 million, a 39% increase over the same period of the previous year (Q1 2021: $21.8 million).
• -- Operating cash flows2 ,4 increased by 36% to $29.9 million or $0.21 per share1 as compared to $22.0 million or $0.16 per share for the same period in 2021.
• -- Free cash outflow of $6.8 million, net of an investment of $28.4 million in Kiena, or ($0.05) per share1 (Q1 2021: free cash inflow of $0.1 million or $nil per share).
• --Net income2 ,4 and Adjusted net income attributable to shareholders of $7.1 million or $0.05 per share (Q1 2021: $7.1 million or $0.05 per share).
• -- Cash position at the end of the quarter of $52.5 million.
• -- Cash costs1 , 4,5 of $1,295/oz or US$1,023/oz, a 20% increase over the same period in 2021 (Q1 2020: $1,076/oz or US$850/oz);
• -- AISC1 , 5 increased by 13% to $1,695/oz or US$1,339/oz (Q1 2021: $1,497 or US$1,182 per ounce) due to lower ounces sold and increased corporate and general expenses.
  • == Refer to the Company's 2021 Annual Management Discussion and Analysis section entitled "Non-IFRS Performance Measures" for the reconciliation of these non-IFRS measurements to the consolidated financial statements
  • . == Q1 2021 excludes $3.9 million of revenue from the Kiena bulk sample, which was processed in Q4 2020 and sold in Q1 2021. The incidental revenue was credited against the cost of the Kiena exploration asset.
  • == Q1 2021 excludes 1,793 ounces from the Kiena bulk sample, which was processed in Q4 2020 and sold in Q1 2021.
  • == Includes a $0.4 million charge for product inventory costs from the sale of 1,793 ounces of gold from the Kiena bulk sample, which was processed in Q4 2020 and sold in Q1 2021.
  • == In determining the Cash cost per ounce and AISC per ounce, the total ounces sold includes 1,793 ounces of gold from the Kiena bulk sample, which was processed in Q4 2020 and sold in Q1 2021.

 

Production and Exploration Highlights

Achievements

Eagle River Complex

 

• Q1 2022 Eagle River underground ore production decreased by 10% from Q1 2021 to 19,334 ounces of gold due to a planned decrease in head grade. Head grade at Eagle River in Q1 2022 averaged 11.6 g/t, which exceeded the plan, but is slightly below the 2022 grade guidance of 12.1 - 13.4 g/t Au as expected.
• Q1 2022 cash cost of $1,262 (US$997) per ounce of gold sold1 increased by 10% or $113 from Q1 2021 due to a 9% decrease in ounces sold. Despite inflationary pressure and pandemic related impacts, the overall aggregate cash costs remained consistent with Q1 2021.
• Q1 2022 AISC of $1,771 (US$1,399) per ounce of gold sold1 increased by 9% or $164 from Q1 2021 due to a 9% decrease in ounces sold.
• Generated a cash margin in Q1 2022 of $21.3 million compared to $22.2 million in Q1 2021 due to the 9% decrease in ounces sold; partially offset by an 8% higher average realized Canadian gold price of $2,396/oz (Q1 2021 - $2,223/oz).
• Definition drilling is focused at the Falcon Zone and 300 E Zone. A record Inferred Resource inventory provides a platform for potential increase Reserve replacement for 2022.
• Underground exploration is focused on extending the high grade 300 E and Falcon zones and targeting parallel zones in the volcanic rocks. Additionally, drilling is planned at the recently discovered North Contact zone.
• Surface drilling is ongoing with 2 drills both east and west of the mine to follow up on encouraging values returned from the regional drilling program in 2021.

 

Kiena

 

• Generated $9.0 million in cash margin despite the high cash costs of $1,364 per ounce of gold sold1 due to planned low pre-commercial production levels.
• Q1 2022 cash cost of $1,364 (US$1,023) per ounce of gold sold1 and AISC of $1,541 (US$1,217) per ounce of gold sold1.
• Kiena Deep continues to show potential to add additional ounces in the resource base and additional ounces are planned for conversion to reserves with 2022 drilling, particularly at the Footwall Zone where an inferred resource has been defined.
• Additionally, underground drills have been moved onto the 33 level to test historic zones and encouraging drill results further to the east along strike from the Kiena mine.
• Initial surface drilling has focused on the Presqu'ile and Shawkey areas located northwest and southeast of the Kiena Mine, respectively.
• Surface drilling is ongoing and will be accelerated once the ice has melted utilizing the two barges at site. Planned drilling is concentrated around the Shawkey and newly discovered Bourgo zone.

 

Technical Disclosure

The technical content of this release has been compiled, reviewed and approved by Jacqueline Wheeler, P. Eng, Director, Corporate Development and Technical Projects 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 2022 First Quarter Financial Results Conference Call

North American Toll Free: + 1 [phone]

International Dial-In Number: [phone]

Conference ID: 9471808

Webcast link: https://edge.media-server.com/mmc/p/xgum6kaa

The webcast can also be accessed under the News and Events section of the Company's website ( www.wesdome.com )

COVID-19

The health and safety of our employees, contractors, vendors, and consultants is the Company's top priority. In response to the COVID-19 outbreak, Wesdome has adopted all public health guidelines regarding safety measures and protocols at all of its mine operations and corporate office. These protocols are still in place at all sites despite the loosening of some provincial public health guidelines. In addition, our internal COVID-19 Taskforce continues to monitor developments and implement policies and programs intended to protect those who are engaged in business with the Company.

Through care and planning, to date the Company has successfully maintained operations; however, there can be no assurance that this will continue despite the Company's best efforts, with the emergence of new, highly contagious variants such as Omicron. To date, the Company has been impacted by this most recent variant outbreak, with employees at both operations and corporate office becoming infected, which may negatively impact our ability to maintain projected timelines and objectives. Consequently, the Company's actual future production and production guidance is subject to higher levels of risk than usual. The Company is continuing to monitor the situation closely and will provide updates as they become available.

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