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Wesdome Announces 2021 Third Quarter Financial Results

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Wesdome Announces 2021 Third Quarter Financial Results

 

 

 

 

 

Kiena Progresses Towards Commercial Production

 

 

Wesdome Gold Mines Ltd. (TSX: WDO) announces third quarter financial results. All figures are stated in Canadian dollars unless otherwise noted.

 

Achievements for Q3 include:

 

  • Eagle River Complex production of 23,833 ounces Au and YTD production of 76,773 ounces Au sets up well for achieving mid to high end of 2021 guidance (92,000 ounces Au – 105,000 ounces Au)
  • Kiena pre commercial production of 5,511 ounces ramping up as planned. Good progress made on Tailings Management Facility enhancements, Paste Fill Plant construction, and mobile equipment procurement advancing this asset towards commercial production status
  • The company remains well funded with $69.5 M of cash on hand which allows for organically funding the Kiena restart and aggressive company wide exploration program

 

Mr. Duncan Middlemiss, President and CEO commented, “During the quarter, the Company completed a significant milestone with the successful restart of the Kiena mill, the commencement of underground mining, and the increase in mine construction activities associated with the mine restart. The restart at Kiena has been entirely internally funded, with no debt or dilution to the Company. We produced 5,511 pre-commercial production ounces, and expect 2021’s total production from the asset to be within guidance range of 15,000 – 25,000 ounces. As expected, due to initial start up focused on the lower grade S50 zone, located closest to existing development, Kiena cash costs of $1,844 (US$1,463 per ounce) and AISC of $1,891 (US$1,501) per ounce, are not reflective of the asset long term. We expect to be in full commercial production at this asset in Q2 2022. As we continue to ramp up our production, we continue to expect costs to trend downward.

 

At Eagle, cash costs of $987 (US$783) per ounce and AISC of $1,451 (US$1,152) per ounce were within our guidance range. Operating cash flows were $33.9 million or $0.24 per, and cash margin was $35.3 million. Free cash outflow of $9.1 million was incurred, net of an investment of a $41.1 million investment into the operations, including $27.5 million at Kiena. Year to date, production at Eagle River of 76,773 ounces, leaves us very well positioned to meet the mid to high point of our guidance range of 92,000 ounces – 105,000 ounces.

 

With the higher costs realized in Q3 from the Kiena start up, year to date combined cash costs of $983 (US$785) per ounce and AISC cost of $1,406 ($US1,123) are slightly above our US cost guidance range of $900 – $1,000 (US$680 – $770) per ounce for cash costs and $1,300 – $1,450 (US$980 – $1090) per ounce AISC. The Kiena costs are pre-commercial production and we expect to achieve full year production guidance. We expect reductions in unit costs as Kiena comes progresses towards commercial production, expected mid next year.

 

Q3 2021 was a very successful quarter in terms of achieving our stated corporate goals. We now are on the path to having our second operating high-grade underground gold mine, de-risking the Company’s single asset producer status, and bringing us that much closer to our objective of becoming Canada’s next intermediate gold producer.”

 

The Company also announces today the resignation of Marc-Andre Pelletier, Chief Operating Officer, effective January 15, 2022. Marc will be pursuing another opportunity in a more senior role, a natural progression in his career trajectory. We wish to sincerely thank him for his extensive contributions to the Company, and his key role in the reopening of the Kiena mine, and wish him all the best in his new endeavour.”

 

Key operating and financial highlights of the Q3 2021 results include:

 

  • Gold production of 29,344 ounces, which includes 5,511 Kiena pre-commercial ounces, is a 47% increase over the same period in the previous year (Q3 2020: 20,008 ounces):
    • Eagle River Underground 56,003 tonnes at a head grade of 13.4 grams per tonne for 23,621 ounces produced, 22% increase over the previous year (Q3 2020: 19,319 ounces).
    • Mishi Open Pit 3,727 tonnes at a head grade of 2.3 g/t Au for 212 ounces produced (Q3 2020: 689 ounces).
    • Kiena 30,470 tonnes at a head grade of 5.8 grams per tonne for 5,511 pre-commercial ounces produced.
  • Revenue of $67.5 million, a 23% increase over the previous year (Q3 2020: $55.0 million).
  • Ounces sold were 30,000 at an average sales price of $2,249/oz (Q3 2020: 21,700 ounces at an average price of $2,532/oz).
  • Cash margin1 of $35.3 million, a 10.0% increase over Q3 2020 (Q3 2020 – $32.1 million).
  • Operating cash flows increased by 33% to $33.9 million or $0.24 per share1 as compared to $25.6 million or $0.18 per share for the same period in 2020.
  • Free cash outflow of $9.1 million, net of an investment of $27.5 million in Kiena, or ($0.06) per share1 (Q3 2020: free cash flow of $3.3 million or $0.02 per share).
  • Net income of $15.3 million or $0.11 per share (Q3 2020: $14.6 million or $0.10 per share) and Net income (adjusted)1 of $18.3 million or $0.13 per share (Q3 2020: $14.6 million or $0.10 per share).
  • Cash position increased to $69.5 million compared to $67.8 million in the previous quarter.
  • Cash costs1 of $1,072/oz or US$851/oz, a 2% increase over the same period in 2020 (Q3 2020: $1,052/oz or US$790/oz) due to the inclusion of the higher cost Kiena pre-commercial ounces ($1,844 (US$1,463) per ounce), which increased the cash cost per ounce sold by $85 (US$67) per ounce;
  • All-in sustaining costs (“AISC”) 1 increased by 7% to $1,495/oz or US$1,186/oz (Q3 2020 – $1,395 (US$1,047) per ounce) due to the inclusion of the higher cost Kiena pre-commercial ounces ($1,891 (US$1,501) per ounce), which increased the AISC per ounce sold by $44 (US$35), combined with higher sustaining capital, corporate and general expenses and lease payments.
1 Refer to the Company’s 2021 Third Quarter Management Discussion and Analysis, section entitled “Non-IFRS Performance Measures” for the reconciliation of these non-IFRS measurements to the financial statements. 

 

 

 

Production and
Exploration Highlights
Achievements
Eagle River
  • Q3 2021 Eagle River production increased by 22% from Q3 2020 to 23,621 ounces of gold, due to a 25% increase in total throughput; offset partially by a 3% decrease in head grade. Head grade at Eagle River in Q3 2021 averaged 13.4 g/t.
  • Q3 2021 Cash cost of $987 (US$783) per ounce of gold sold1 decreased by 6% or $66 from Q3 2020 primarily due to a 24% increase in ounces sold.
  • Q3 2021 AISC of $1,451 (US$1,152) per ounce of gold sold1 increased by 6% or $56 from Q3 2020 primarily due to higher mine development and infrastructure spending; partially offset by a 24% increase in ounces sold.
  • Generated $34.2 million in cash margin in Q3 2021 compared to $32.1 million in the same period in 2020, despite the average realized Canadian gold price being 11% lower at $2,249/oz (Q3 2020 – $2,532/oz).
  • The Eagle River underground ore processed was slightly lower in Q3 2021 due to two weeks of scheduled downtime for the installation of a new cone crusher and the annual mill maintenance. Production in Q4 is expected to increase to 650 tpd as no project maintenance downtime is planned. Ventilation improvements continue at depth, which has increased the air flow in the deepest section of the ramp area. Production from the Falcon Zone started late in Q3 and will continue in Q4, providing a new high-grade area.   Initial sill development has been completed on the Falcon 7 zone on the 622 and 635 levels in support of the current mining. Chip sampling and test holes taken on these two horizons during the initial development confirms earlier exploration drill results by returning high gold grades over continuous strike length. 622 level chip sampling yielded 54.3 grams of gold per tonne (g/t Au) (uncapped) and 37.9 g/t Au (capped at 125 g/t Au) over an average thickness of 2.1 metres (m) over a continuous strike length of 75.6 m. Also, 635 level chip sampling yielded 67.3 g/t Au (uncapped) and 34.3 g/t Au (capped) over an average thickness of 1.9 m over 61.0 m. Additionally the Company is continuing to develop and explore the 311 West Zone along the western margin of the mine diorite. The zone has transitioned from the diorite into the adjacent mafic volcanics, again highlighting the potential of the volcanic rocks to host gold mineralization, similar to that observed at the neighbouring Falcon 7 zone.
  • Additional underground exploration is ongoing further to the east of the current mining areas, in the east-central area of the mine, to test for parallel zones north of the historic 8 and 6 zones. A comprehensive structural study has been completed and is being utilized to assist the exploration targeting.
  • Surface drilling is ongoing with 2 drills both east and west of the mine to follow up on anomalous values returned from the regional drilling program in 2020.
Kiena
  • During Q3 2021, operations at the Kiena Mine commenced, producing 5,511 ounces from the lower grade S-50 zone. The mill start-up in July went according to plan with no major issues. Mine operations were halted for 18 days in September for upgrading of the hoist system which has now been completed. Progress on the paste fill plant and tailings management area construction is on schedule. All key mobile equipment has been ordered and we have already received four underground haulage trucks with the remainder of the equipment scheduled to arrive by Q2 of 2022.
  • Total throughput was 30,470 tonnes or 331 tpd and the head grade averaged 5.8 g/t.
  • Generated $1.1 million in cash margin despite the high cash costs of $1,844 per ounce of gold sold1 due to low pre-commercial production levels.
  • Late in Q3, first stope production began at the higher grade A Zone, and this is expected to increase significantly in the coming quarters. The reconciliation of the A zone bulk sample that was processed in Q4 2020 recovered 6% more gold than the MRE with a feed grade of 15.7 g/t Au versus model grade of 14.7 g/t Au. Total gold produced from the 7,032 tonnes milled was 3,479 ounces with gold recovery in the Kiena mill of 98.2%.
  • The new Footwall Zone was initially announced in March of this year. To date, the Footwall Zone is defined by new intersections of gold mineralization located within a 50 metre wide corridor adjacent to the footwall of A2 Zone. The Footwall Zone corridor remains open laterally and down plunge. The location of new gold intercepts in recent holes suggest that the Footwall Zone extends over 300 m along plunge. The deepest hole returned 41.2 g/t Au (uncapped) over 51.2 m core length.
  • Ongoing drilling also continues to better define and expand the Kiena Deep A Zone predominantly along the lateral extensions of the zone. The high grades intersected will be included in future resource updates. One hole returned 132.1 g/t Au over 7.4 m core length (27.6 g/t Au capped, 3.9 m true width) A Zone.
  • Initial surface drilling has focused on the Presqu’ile and Shawkey areas located northwest and southeast of the Kiena Mine, respectively. Since July 2021, two drills on barges have been testing the continuity of some gold anomalies in the Jacola Formation which host the Kiena mine. Recent drilling at Presqu’ìle zones returned 1515.0 g/t Au over 0.5 m core length.
  • Wesdome finalized the purchase of the Tarmac Gold Property from Globex Mining Enterprises. The Property consists of 6 claims covering 94 hectares located entirely within Wesdome’s Kiena Mine Complex and less than 2 kilometers northeast of the Kiena underground mine, all located beneath Lac De Montigny.

 

 

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.

 

ABOUT WESDOME

Wesdome is Canadian focused with two producing underground gold mines.  The Company’s strategy is to build Canada’s next intermediate gold producer, producing 200,000+ ounces from two mines in Ontario and Québec.  The Eagle River Underground Mine in Wawa, Ontario is currently producing gold at a rate of 92,000 – 105,000 ounces per year.    The Kiena Complex is a fully permitted mine with a 930-metre shaft and 2,000 tonne-per-day mill, and a restart of operations was announced on May 26, 2021.  The Company has completed a PFS in support of the production restart decision. Wesdome is actively exploring both underground and on surface within the mine area and more regionally at both the Eagle River and Kiena Complex. The Company also retains meaningful exposure to the Moss Lake gold deposit, located 100 kilometres west of Thunder Bay, Ontario through its equity position in Goldshore Resources Inc. The Company has approximately 140.0 million shares issued and outstanding.

 

 

Wesdome Gold Mines Ltd.
Summarized Operating and Financial Data
(Unaudited, expressed in thousands of Canadian dollars, except per share and per unit amounts and otherwise indicated)

 

                 
                 
    Three Months Ended Nine Months Ended
    September 30,   September 30,
    2021   2020   2021   2020
Operating data                
Milling (tonnes)                
Eagle River   56,003   44,667   172,600   142,890
Mishi   3,727   11,533   30,293   36,301
Kiena   30,470   0   30,470   0
Throughput 2   90,200   56,200   233,363   179,191
Head grades (g/t)                
Eagle River   13.4   13.8   13.8   15.1
Mishi   2.3   2.5   2.4   2.7
Kiena   5.8   0.0   5.8   0.0
Recovery (%)                
Eagle River   97.9   97.7   97.5   97.6
Mishi   78.0   74.7   81.4   77.8
Kiena   97.9   0.0   97.9   0.0
                 
Production (ounces)                
Eagle River   23,621   19,319   74,853   67,893
Mishi   212   689   1,920   2,379
Kiena   5,511   0   5,511   0
Total gold produced 2   29,344   20,008   82,284   70,272
Total gold sales (ounces) 4   30,000   21,700   80,957   71,340
                 
Eagle River Complex (per ounce of gold sold) 1                
Average realized price $ 2,254 $ 2,532 $ 2,240 $ 2,341
Cash costs   987   1,052   966   1,022
Cash margin $ 1,267 $ 1,480 $ 1,274 $ 1,319
All-in Sustaining Costs 1 $ 1,451 $ 1,395 $ 1,413 $ 1,348
                 
Mine operating costs/tonne milled 1 $ 388 $ 389 $ 347 $ 385
                 
Average 1 USD → CAD exchange rate   1.2600   1.3321   1.2513   1.3541
                 
Cash costs per ounce of gold sold (US$1 $ 783 $ 790 $ 772 $ 755
All-in Sustaining Costs (US$1 $ 1,152 $ 1,047 $ 1,129 $ 995
                 
Kiena Mine (per ounce of gold sold) 1                
Average realized price $ 2,210 $ 0 $ 2,210 $ 0
Cash costs 3   1,844   0   1,243   0
Cash margin $ 366 $ 0 $ 967 $ 0
All-in Sustaining Costs 1, 3 $ 1,891 $ 0 $ 1,288 $ 0
                 
Mine operating costs/tonne milled 1 $ 335 $ 0 $ 335 $ 0
                 
Average 1 USD → CAD exchange rate   1.2600   1.3321   1.2513   1.3541
                 
Cash costs per ounce of gold sold (US$1 $ 1,463 $ 0 $ 993 $ 0
All-in Sustaining Costs (US$1 $ 1,501 $ 0 $ 1,029 $ 0
                 
Financial Data                
Cash margin 1 $ 35,306 $ 32,116 $ 97,672 $ 94,039
Net income $ 15,344 $ 14,614 $ 110,254 $ 42,224
Net income adjusted 1 $ 18,266 $ 14,614 $ 44,467 $ 42,224
Earnings before interest, taxes, depreciation and amortization 1 $ 32,828 $ 28,564 $ 84,302 $ 84,325
Operating cash flow $ 33,890 $ 25,560 $ 82,798 $ 89,399
Free cash flow $ (9,087) $ 3,295 $ (18,119) $ 37,822
Per share data                
Net income $ 0.11 $ 0.10 $ 0.79 $ 0.30
Adjusted net income 1 $ 0.13 $ 0.10 $ 0.32 $ 0.30
Operating cash flow 1 $ 0.24 $ 0.18 $ 0.59 $ 0.64
Free cash flow 1 $ (0.06) $ 0.02 $ (0.13) $ 0.27

 

1 Refer to the Company’s 2021 Third Quarter Management Discussion and Analysis, section entitled “Non-IFRS Performance Measures” for the reconciliation of these non-IFRS measurements to the financial statements.
2 Totals for tonnage and gold ounces information may not add due to rounding.
3 YTD 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.
4 YTD 2021 includes 1,793 ounces of gold from the Kiena bulk sample, which was processed in Q4 2020.
   

 

Wesdome Gold Mines Ltd.
Consolidated Statements of Financial Position
(Unaudited, expressed in thousands of Canadian dollars)

 

         
     As at September
30, 2021
  As at December
31, 2020
Assets        
Current        
Cash and cash equivalents   $                69,473   $              63,480
Receivables and prepaids   12,690   8,974
Share consideration receivable   4,930  
Inventories   17,780   12,451
Total current assets   104,873   84,905
         
Restricted cash   657   657
Deferred financing costs   840   827
Mining properties, plant and equipment   203,053   128,670
Mines under development   179,029  
Exploration properties   10,826   143,524
Share consideration receivable   13,585  
Investment in associate   19,451  
Total assets   $              532,314   $            358,583
         
Liabilities         
Current        
Payables and accruals   $                38,823   $              21,123
Income and mining tax payable   3,961   3,481
Current portion of lease liabilities   6,466   5,901
Total current liabilities   49,250   30,505
         
Lease liabilities   7,753   5,604
Deferred income and mining tax liabilities   75,259   37,354
Decommissioning provisions   21,832   22,270
Total liabilities   154,094   95,733
         
Equity        
Equity attributable to owners of the Company        
Capital stock   184,849   179,540
Contributed surplus   6,279   6,472
Retained earnings   187,092   76,838
Total equity attributable to owners of the Company   378,220   262,850
    $              532,314   $            358,583
             

 

 

 

Wesdome Gold Mines Ltd.
Consolidated Statements of Income and Comprehensive Income
(Expressed in thousands of Canadian dollars except for per share amounts)

 

                 
    Three Months Ended    Nine Months Ended 
    September 30,    September 30, 
    2021   2020   2021   2020
                 
Revenues   $         67,548   $        55,000   $        177,402   $       167,104
Cost of sales   (39,636)   (30,487)   (99,674)   (94,903)
Gross profit   27,912   24,513   77,728   72,201
                 
Other expenses                
Corporate and general   2,565   1,371   7,797   5,147
Stock-based compensation   558   518   2,071   2,262
Reversal of impairment charges    –      (58,563)  
Gain on disposal of mining equipment   (3)     (3)  
Impairment charge on exploration properties   4,394     7,507  
    7,514   1,889   (41,191)   7,409
                 
Operating income    20,398   22,624   118,919   64,792
                 
Gain on sale of Moss Lake exploration properties    –      39,143  
Interest expense   (325)   (263)   (855)   (802)
Accretion of decommissioning provisions   (176)   (88)   (410)   (265)
Share of loss of associate   (15)     (104)  
Fair value adjustment on share consideration
receivable
  368     360  
Other income (expenses)   464   (294)   (239)   (203)
Income before income and mining taxes   20,714   21,979   156,814   63,522
                 
Income and mining tax expense                
Current   3,309   2,195   8,655   6,234
Deferred   2,061   5,170   37,905   15,064
    5,370   7,365   46,560   21,298
                 
Net income and total                
  comprehensive income   $         15,344   $        14,614   $        110,254   $        42,224
                 
Earnings per share                
Basic   $             0.11   $            0.10   $             0.79     $            0.30
Diluted   $             0.11   $            0.10   $             0.77     $            0.30
                 
Weighted average number of common                
  shares (000s)                
Basic   140,432   139,308   139,872   138,898
Diluted   143,069   142,969   142,653   142,478
                 

 

 

 

Wesdome Gold Mines Ltd.
Consolidated Statements of Total Equity
(Unaudited, expressed in thousands of Canadian dollars)

 

                 
    Capital   Contributed   Retained   Total
    Stock   Surplus   Earnings   Equity
                 
Balance, December 31, 2019   $        174,789   $           5,590   $          26,123   $            206,502
Net income for the period ended                
September 30, 2020       42,224   42,224
Exercise of options   2,405       2,405
Value attributed to options exercised   1,103   (1,103)    
Value attributed to RSUs exercised   577   (577)    
Stock-based compensation     2,262     2,262
Balance, September 30, 2020   $        178,874   $           6,172   $          68,347   $            253,393
                 
                 
Balance, December 31, 2020   $         179,540   $            6,472   $           76,838   $             262,850
Net income for the period ended                
September 30, 2021    –     –    110,254   110,254
Exercise of options   3,045    –     –    3,045
Value attributed to options exercised   1,478   (1,478)    –     – 
Value attributed to RSUs exercised   786   (786)    –     – 
Stock-based compensation    –    2,071    –    2,071
Balance, September 30, 2021   $         184,849   $            6,279   $         187,092   $             378,220
                         

 

 

 

Wesdome Gold Mines Ltd.
Consolidated Statements of Cash Flows
(Unaudited, expressed in thousands of Canadian dollars)

 

    Three months ended
September 30,
  Nine months ended
September 30,
    2021   2020   2021   2020
                 
Operating Activities                
Net income   $            15,344   $           14,614   $          110,254   $           42,224
Depreciation and depletion   7,395   6,322   19,945   20,001
Stock-based compensation   558   518   2,071   2,262
Accretion of decommissioning provisions   176   88   410   265
Deferred income and mining tax expense   2,061   5,170   37,905   15,064
Amortization of deferred financing cost   104   98   328   269
Interest expense   325   263   855   802
Reversal of impairment charges    –      (58,563)  
Gain on sale of Moss Lake exploration properties    –      (39,143)  
Impairment charge on exploration properties   4,394     7,507  
Gain on disposal of mining equipment   (3)     (3)  
Share of loss of associate   15     104  
Fair value adjustment on share consideration   (368)     (360)  
receivable                
Foreign exchange loss (gain) on lease financing   64   (83)   (15)   94
    30,065   26,990   81,295   80,981
Net changes in non-cash working capital   6,638   2,139   9,677   13,307
Mining and income tax paid   (2,813)   (3,569)   (8,174)   (4,889)
Net cash from operating activities   33,890   25,560   82,798   89,399
                 
Financing Activities                
Exercise of options   1,814   623   3,045   2,405
Deferred financing costs   (5)     (339)   (198)
Repayment of borrowings    –       –    (3,636)
Repayment of lease liabilities   (1,877)   (1,322)   (5,277)   (3,531)
Interest paid   (325)   (263)   (855)   (802)
Net cash used in financing activities   (393)   (962)   (3,426)   (5,762)
                 
Investing Activities                
Additions to mining properties   (12,620)   (6,981)   (30,492)   (18,972)
Additions to mines under development   (27,481)     (40,882)  
Additions to exploration properties    –    (13,962)   (23,267)   (29,074)
Purchase of exploration property   (1,000)     (1,000)  
Cash proceeds on sale of Moss Lake, net    –      11,762  
of transaction costs                
Proceeds on disposal of mining assets   73     73  
Net changes in non-cash working capital   9,205   3,125   10,427   2,265
Net cash used in investing activities   (31,823)   (17,818)   (73,379)   (45,781)
                 
Increase in cash and cash equivalents   1,674   6,780   5,993   37,856
Cash and cash equivalents – beginning of the period   67,799   66,733   63,480   35,657
Cash and cash equivalents – end of the period   $            69,473   $           73,513   $            69,473   $           73,513
                 
Cash and cash equivalents consist of:                
Cash   $            69,473   $           73,513   $            69,473   $           73,513
    $            69,473   $           73,513   $            69,473   $           73,513
                 

 

Posted November 11, 2021

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Metallica Metals Corp. (CSE:MM) (OTC:MTALF) (FWB:SY7P) is ple... READ MORE

November 25, 2021

We acknowledge the [financial] support of the Government of Canada.

Government of Canada Supported
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