Wesdome Gold Mines Ltd. (TSX:WDO) (OTCQX:WDOFF) announced its results for the three and six months ended June 30, 2024 and for the three and six months ended June 30, 2023. Preliminary operating results for Q2 2024 and H1 2024 were disclosed on July 9, 2024. Management will host a conference call tomorrow, Thursday, August 15 at 10:00 a.m. Eastern Time to discuss this quarter’s results.

All amounts are expressed in Canadian dollars unless otherwise indicated

Q2 2024 Highlights

• Consolidated gold production was 44,035 ounces at cash costs per ounce¹ of $1,286 (US$940) and all-in sustaining costs per ounce¹ of $1,977 (US$1,445).
• Net income increased to $29.1 million, or $0.19 per share, an increase of $34.1 million from the corresponding quarter in 2023 and $18.4 million from the first quarter of 2024.
• Cash margin¹ increased to $76.2 million or by more than 2.5 times relative to the prior year quarter mainly due to an increase in ounces sold, a higher average realized gold price and lower cash costs.
• Operating cash flow was $57.1 million, or $0.38 per share¹, $43.1 million higher than the corresponding period in 2023 mainly due to the higher cash margin.
• Free cash flow¹ of $28.4 million was $33.7 million higher than the corresponding period in 2023 mainly due to higher operating cash flow partially offset by an increase in capital expenditures.
• Available liquidity of $200.7 million includes $50.7 million in cash and $150.0 million of undrawn capacity available under the Company’s revolving credit facility.

Anthea Bath, President and CEO, commented: “The second quarter marked a breakthrough with records set in terms of safety, production, and free cash flow, which allowed for the repayment of the remaining balance on our revolving credit facility. Our company is now well positioned as a Canadian growth platform with two high-grade profitable mines and a debt-free balance sheet.

“The highlight of the quarter, and a milestone for Wesdome, was the mining and processing of high-grade Kiena Deep ore from the 129-level horizon at Kiena. The step-change increase in production substantially reduced the site’s all-in sustaining costs by over 60% relative to the first quarter, putting Kiena on track to achieve its annual guidance. At Eagle River, steady development rates together with positive grade reconciliation position our long-running Ontario operation to deliver on its targets.

“With both operations running well, we are focused on strategic initiatives that will fully leverage the spare capacity of our processing infrastructure and position Wesdome for long-term sustainable growth. By executing Wesdome’s largest self-funded exploration program and advancing the Presqu’île ramp, we are validating our commitment to enhancing our organic growth pipeline at both assets. Complementing ongoing exploration success, we expect to create additional value through continued optimization of our mine plans and cost management.

“Based on strong performance from our operations through the first half of 2024, we are confident we will deliver on our full-year production and cost guidance.”

Consolidated Financial and Operating Highlights

_Notes:
¹   _{Refer to the section in this press release entitled “Non-IFRS Performance Measures” for the reconciliation of these non-IFRS measurements to the financial statements.}
²   _{Revenues include insignificant amounts from the sale of by-product silver.}

Eagle River – Ontario

During Q2 2024, Eagle River produced 19,272 ounces of gold as compared to 22,845 ounces in Q2 2023 primarily due to a 19% decrease in throughput in part due to a maintenance shutdown during the last week of June which drove lower tonnage. For the first six months of 2024, driven by a 15% increase in head grade, Eagle River produced 44,171 ounces of gold as compared to 43,336 ounces in H1 2023, which included the processing of the Mishi stockpile. Eagle River head grade in H1 2024 was 13.6 g/t compared to 11.8 g/t in H1 2023.

In Q2 2024, Eagle River generated $55.9 million in revenue from the sale of 17,500 ounces of gold compared to $59.1 million from the sale of 22,500 ounces in Q2 2023. Revenue decreased by 5% compared to Q2 2023 primarily due to lower ounces sold partially offset by a higher average realized Canadian dollar gold price.

In H1 2024 Eagle River generated $133.4 million in revenue from the sale of 44,860 ounces of gold as compared to $120.2 million from the sale of 46,500 ounces in H1 2023. Revenue increased by 11% compared to H1 2023 due to the higher average realized Canadian dollar gold price partially offset by lower ounces sold.

Cost of sales in Q2 2024 was $39.8 million, a decrease of 16%, compared to the corresponding period in 2023 primarily due to a $6.0 million increase in inventory levels and a $2.9 million decrease in depreciation expense driven by a 19% decrease in throughput. Cost of sales H1 2024 was higher by 1% compared to H1 2023.

In Q2 2024, cash costs per ounce of gold sold were $1,695 (US$1,239), an increase of 11%, compared to $1,526 (US$1,136) in Q2 2023 primarily due to a decrease in ounces sold. Cash costs per ounce of gold sold in H1 2024 were $1,410 (US$1,038), an increase of 4%, compared to $1,353 (US$1,004) in H1 2023, primarily due to lower ounces sold.

In Q2 2024, AISC per ounce of gold sold were $2,545 (US$1,860), a 26% increase, compared to $2,019 (US$1,504) in Q2 2023, primarily due to lower ounces sold and higher sustaining capital expenditures. AISC per ounce of gold sold in H1 2024 were $2,006 (US$1,477), an increase of 8%, compared to $1,859 (US$1,380) in H1 2023, primarily due to lower ounces sold and higher operating costs and sustaining capital expenditures.

In 2024, Eagle River is expected to produce 80,000 to 90,000 ounces, with production in the second half of the year expected to be similar to the first half of the year, at cash costs per ounce of $1,275 to $1,425 and AISC per ounce of $2,050 to $2,250 (US$1,550 to US$1,700). Eagle River’s 2024 anticipated gold production is in-line with the prior year, as contribution of tonnes and ounces is expected to shift away from 720F Falcon Zone and towards 300 Zone at depth.

Kiena Mine – Quebec

During Q2 2024, the Kiena mine produced 24,763 ounces of gold as compared to 8,147 ounces in Q2 2023 primarily due to a 170% increase in head grade due to the ramp-up in mining of high-grade Kiena Deep ore from the 129-level horizon in mid-April and an 11% increase in throughput. Kiena’s head grade increased to 13.5 g/t in Q2 2024 from 5.0 g/t in Q2 2023. Gold recovery increased to 99.0% from 97.7% in the corresponding period in 2023. In Q2 2024, the mill processed 57,669 tonnes throughput as compared to 51,824 tonnes in Q2 2023.

In H1 2024, Kiena produced 33,186 ounces of gold as compared to 16,024 ounces in H1 2023 primarily due to an 88% increase in head grade and a 9% increase in throughput. Head grade at Kiena increased to 10.1 g/t in H1 2024 from 5.4 g/t in H1 2023. The rate of gold recovery increased to 98.8% from 97.8% in the corresponding period in 2023. In H1 2024, the mill processed throughput of 103,013 tonnes compared to 94,148 tonnes in H1 2023. In the second quarter Kiena began processing higher grade material from the new 129-level horizon of Kiena Deep, which is expected to continue over the balance of 2024.

In Q2 2024, Kiena generated $71.8 million in revenue from the sale of 22,500 ounces of gold as compared to $25.4 million from the sale of 9,500 ounces in Q2 2023. Revenue increased by 182% compared to Q2 2023 due to higher ounces sold and a higher average realized Canadian dollar gold price. In H1 2024, Kiena increased revenue to $95.1 million from the sale of 30,840 ounces of gold, an increase of 132% compared to $40.9 million in revenue from the sale of 15,500 ounces in H1 2023. Revenue in H1 2024 increased due to higher ounces sold and a higher average realized Canadian dollar gold price.

Cost of sales in Q2 2024 was $34.2 million, a decrease of 7% over the corresponding period in 2023 primarily due to a $2.9 million decrease in inventory levels and a $2.8 million decrease in non-cash depletion and depreciation resulting from an increase in inventories partially offset by a $3.2 million increase in mine operating costs, which was due to 11% higher throughput. Cost of sales in H1 2024 was $65.7 million, 11% higher than the corresponding period in 2023 primarily due to an increase in the aggregate mine operating costs as a result of a 9% increase in throughput.

Cash costs per ounce of gold sold in Q2 2024 were $967 (US$707), a decrease of 57% compared to $2,257 (US$1,681) in Q2 2023 primarily due to a 137% increase in ounces sold. Cash costs per ounce of gold sold in H1 2024 decreased by 39% to $1,374 (US$1,011) compared to $2,261 (US$1,677) in H1 2023 primarily due to a 99% increase in ounces sold partially offset by higher aggregate mine operating expenses due to increased throughput.

AISC per ounce of gold sold decreased by 44% in Q2 2024 to $1,536 (US$1,123) from $2,755 (US$2,052) in Q2 2023 primarily due to an increase in ounces sold partially offset by an increase in sustaining capital expenditures. AISC per ounce of gold sold decreased by 22% in H1 2024 to $2,223 (US$1,636) from $2,868 (US$2,128) in H1 2023 primarily due to a 99% increase in ounces sold partially offset by an increase in sustaining capital expenditures.

Kiena’s 2024 guidance is for 80,000 to 90,000 ounces with production expected to be backend-weighted in the second half of the year, at cash costs per ounce of $875 to $975 and AISC per ounce of $1,475 to $1,625 (US$1,100 to US$1,225). Higher annual production levels reflect a declining production contribution from the Martin Zone relative to higher grade ore from the Kiena Deep 129-level horizon. Overall development performance subsequent to quarter end has met internal expectations, with higher grade ore expected to continue to be processed in the second half of the year.

Exploration Updates

Development and Drilling

This year’s exploration program at Eagle River is prioritizing the expansion of the existing resource base of known zones and identifying targets near existing infrastructure. Eagle River’s budget for underground exploration is nearly $10 million and includes expansion, infill and delineation drilling.

Recent drilling results at Eagle River underscore the prospectivity across this asset, particularly as the high grade 6 Central Zone continues to expand down-plunge to the east, and the continuity and extension potential of the Falcon 311 and 300 zones is now being confirmed in follow-up drilling.

The 6 Central Zone, discovered in 2023, is located close to existing infrastructure and at relatively shallower depths of 600 to 750 metres. The 6 Central Zone has been delineated 180 metres in plunge and 145 metres on strike based on a 3D model completed in 2023. Drill results to date have been promising, extending the zone down-plunge by 150 metres to the east and 100 metres along strike. Recent drilling returned 93.7g/t Au over 3.0 m core length (59.7g/t Au capped, 2.6 m true width), including 339.4 g/t Au uncut over 0.4 m core length.

Based on drilling to date, the Falcon 311 Zone has been delineated to extend at least 250 metres along plunge and nearly 115 metres along strike. Drilling continues to confirm the potential for the zone to expand down plunge and potentially extend to surface, similar to the adjacent Falcon 7 Zone discovered in 2019. One hole returned 33.0 g/t Au over 5.0 m core length (31.8 g/t Au capped, 3.5 m true width).

With development platforms recently installed at the 1201-level, underground drilling has focused on infill drilling and to test areas down-plunge of 300 Zone that were not previously accessible. Recent infill drilling returned 39.7 g/t Au over 8.7 m core length (32.5g/t Au capped, 6.6 m true width), including 275.1 g/t Au uncut over 0.3 m core length.

Surface Exploration

Initial surface drilling within the volcanic rocks 150 metres east and down dip of the previously mined 2 Zone intersected altered volcanic rocks with quartz veining and VG. One previously drilled hole returned 233.0 g/t Au over 0.4 metres. Current drilling is designed to test volcanic rocks east of the mine diorite having similar potential to the Falcon zones previously discovered west of the mine diorite proximal to the historic 2 Zone.

Kiena

Development and Drilling

Over the past several years, underground drilling has been focused on exploration to test sectors proximal to the Kiena Deep A Zones, which now extends continuously from 1,100 m to approximately 2,000 m below surface and remains open at depth. As part of this exploration focus, early success discovered the Footwall Zones. Then in 2022, exploration confirmed the presence of the South limb in the folded Kiena Deep A Zone at depth, and also intersected two new zones in the hanging wall basalt. These new basalt zones all occur below an observed bend or steepening in the plunge of the Kiena Deep A Zone.

As the main ramp at Kiena Deep progresses towards the 136-level by year end, additional drill platforms are being established to facilitate drilling in previously discovered but not fully explored zones. Initial drilling at both the Footwall and South Limb zones is being used to better define the high-grade mineralization with a view to converting existing Inferred Resources to the Indicated category. Drilling is also expected to continue to build upon our early success and aim to expand and extend the known size of these zones. Growth in resource inventory in these areas has the potential to increase ounces per vertical metre and thereby provide opportunities for operational flexibility and increasing production from each level. Additional drill platforms at depth will also provide an opportunity to test the previously discovered Hanging Wall Zone in the Basalt as well as follow up on areas northeast of Kiena Deep for a parallel structure.

The Wish area has remained underexplored until 2024. Initial reconnaissance drilling in 2024 approximately one kilometre east of the Kiena mine from the existing 33-level development has intersected narrow, high grade gold mineralization from quartz veining within a horizon of competent basalt, in contact with sheared ultramafic rocks. These results, combined with historic hole 4344 (65.5 g/t Au over 1.0 m core length), have identified gold mineralization proximal to the contact over 300 metres along strike. Follow-up drilling is ongoing in this area to provide an initial assessment of the size and potential continuity of the mineralization. Furthermore, as 33 level development is currently being rehabilitated further east of this zone, we expect to have more optimal drilling platforms available from the eastern side of the interpreted zone in the second half of 2024.

Currently, we are seeing immediate returns from this stepped-up effort at Kiena, with results that are not only expanding and defining existing zones at Kiena Deep, but also identifying potentially significant gold mineralization in historically underexplored areas like the Wish area from the 33-level. Kiena’s budget for underground exploration is nearly $10 million and includes expansion, infill and delineation drilling.

Surface Exploration Drilling

The excavation of an exploration ramp from surface to access the near-surface Presqu’île Zone has been underway since Q4 2023. Drilling is expected to commence in the coming months to identify additional zones of mineralization that could be mined with the Presqu’île ramp development. Barge drilling at Dubuisson commenced in July 2024.

Management and Board Changes

The Company announces changes to its management and board composition. Frédéric Mercier-Langevin will be stepping down as Chief Operating Officer effective September 30, 2024 for personal reasons. In addition, independent director and audit committee chair Charles Main has indicated he will be retiring from the industry and has stepped down from the Board as of the end of day today.

Ms. Bath commented, “I have had the pleasure of working with both Fred and Charles for just over a year, and their experience and expertise will be truly missed.

“Under Fred’s leadership, we recorded marked improvements in safety performance while delivering on our operational commitments and guidance. During his tenure, Fred also developed a strong technical team, which is well positioned to execute on our strategic plans.

“Charles has been a highly respected member of our board since 2017, bringing with him decades of invaluable expertise in industry, accounting, tax, and finance. His deep knowledge and strategic insights have been crucial in guiding the company through a significant period of growth and transformation. We greatly appreciate his dedication and the pivotal role he has played in our continued success.

“On behalf of the Board and everyone at Wesdome, I would like to express our gratitude to Fred and Charles for their many contributions to Wesdome and wish each of you all the best in the future.”

With respect to both roles, the Company is conducting a search for qualified candidates to ensure the continued adherence to Wesdome’s standards of operational excellence and financial discipline.

About Wesdome

Wesdome is a Canadian-focused gold producer with two high grade underground assets, the Eagle River mine in Ontario and the Kiena mine in Quebec. The Company’s primary goal is to responsibly leverage this operating platform and high-quality brownfield and greenfield exploration pipeline to build Canada’s next intermediate gold producer.