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Wesdome Reports First Quarter 2024 Financial Results

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Wesdome Reports First Quarter 2024 Financial Results

 

 

 

 

 

Wesdome Gold Mines Ltd. (TSX:WDO) (OTCQX:WDOFF) announced its results for the three months ended March 31, 2024. Preliminary operating results for Q1 2024 were disclosed on April 15, 2024.

 

All amounts are expressed in Canadian dollars unless otherwise indicated.

 

Q1 2024 Highlights

 

  • Consolidated gold production was 33,322 ounces at cash costs per ounce1 of $1,517 per ounce (US$1,125) and all-in sustaining costs per ounce1 of $2,226 (US$1,650).
  • Net income increased to $10.7 million, or $0.07 per share, an increase of $11.1 million from the corresponding period in 2023.
  • Cash margin1 was $46.6 million, representing a 36% increase relative to the prior year quarter mainly due to a higher Canadian dollar realized gold price and increase in ounces sold.
  • Operating cash flow was $46.5 million, or $0.31 per share1, $41.4 million higher than the corresponding period in 2023 mainly due to the higher cash margin and an increase in cash from working capital changes.
  • Free cash flow1 of $19.5 million was $39.0 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 $169.5 million, including $48.3 million in cash and $121.2 million of undrawn availability under the Company’s revolving credit facility.

 

Anthea Bath, President and CEO, commented: “We delivered a solid first quarter on the back of higher-grade material at Eagle River, as a result of short-term positive grade reconciliation and mine sequencing relative to plan. As anticipated, in the second quarter we began processing higher grade material from Kiena Deep, which is expected to trend upwards over the balance of the year and thereby drive margin expansion.

 

Exploration underpins our success, and we continue to identify new opportunities across both mine sites to unlock value. This year’s extensive exploration program is already yielding exciting results, including the intercept of high grades near mine infrastructure at Kiena Deep and continued growth in the recently discovered Falcon 311 and 300 zones.

 

Our balance sheet continues to strengthen with meaningful improvements in both cash and total liquidity in the first quarter. We took advantage of increased cash flow in the quarter, reducing the amount outstanding on our revolving credit facility by $10 million and putting us on track to repay the remaining balance by Q3.

 

Results to date are aligned with our expectations and the team is focused on execution and delivering on full-year guidance and strategic objectives. We are well positioned to achieve higher production at declining unit costs with increased free cash flow in 2024,” added Ms. Bath.

 

Consolidated Financial and Operating Highlights

 

  Q1 2024 Q1 2023
Financial Results    
     
Revenue2 100,922   76,701  
Cost of sales 78,679   61,418  
Cash margin1 46,624   34,408  
EBITDA1 40,675   26,124  
Net income (loss) 10,708   (345)  
Net income (loss) per share 0.07   (0.00)  
Adjusted net income1 10,708   3,257  
Adjusted net income per share1 0.07   0.02  
Operating cash flow 46,502   5,120  
Operating cash flow per share1 0.31   0.04  
Net cash (used in) from financing activities (10,169)   9,688  
Net cash used in investing activities (29,452)   (22,933)  
Free cash flow1 19,448   (19,597)  
Free cash flow per share1 0.13   (0.14)  
     
Operating Results    
Gold produced (oz) 33,322   28,368  
Gold sold (oz) 35,700   30,000  
     
Average realized gold price1 ($/oz) 2,823   2,554  
Average realized gold price1 (US$/oz) 2,093   1,888  
     
Per ounce of gold sold:    
Cost of sales ($/oz) 2,204   2,047  
Cost of sales (US$/oz) 1,634   1,514  
Cash costs1 ($/oz) 1,517   1,407  
Cash costs1 (US$/oz) 1,125   1,040  
All-in sustaining costs1 ($/oz) 2,226   1,977  
All-in sustaining costs1 (US$/oz) 1,650   1,462  
     
Financial Position    
Cash 48,252   25,060  
Working capital (1,033)   (14,712)  
Total assets 636,190   618,724  
Current liabilities 86,209   93,878  
Total liabilities 194,546   198,370  
     

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

 

Eagle River Operating Results Q1 2024 Q1 2023
     
Ore milled (tonnes)    
Eagle River 51,632 48,133
Mishi 6,150
Total ore milled 51,632 54,283
     
Head grade (grams per tonne, “g/t”)    
Eagle River 15.5 13.5
Mishi 2.3
Total head grade 15.5 12.2
     
Average mill recoveries (%)    
Eagle River 97.0 96.9
Mishi 72.5
Total gold recovery 97.0 96.3
     
Gold production (ounces)    
Eagle River 24,899 20,159
Mishi 332
Total gold production 24,899 20,491
     
Gold sold (ounces)    
Eagle River 27,360 23,659
Mishi 341
Total gold sold 27,360 24,000
     
Production costs per tonne milled1 573 475
     
Costs per oz sold    
Cash margin1 ($/oz) 1,605 1,353
Cost of sales ($/oz) 1,722 1,622
Cash costs1 ($/oz) 1,227 1,192
All-in sustaining costs1 ($/oz) 1,662 1,709
     

 

During Q1 2024, Eagle River produced 24,899 ounces of gold as compared to 20,491 ounces in Q1 2023 primarily due to a 27% increase in head grade. Eagle River head grade in Q1 2024 was 15.5 g/t compared to 12.2 g/t in Q1 2023 as processing of higher-grade material drove outperformance compared to plan. Eagle River remains on track to achieve its 2024 guidance for feed grade of 12.2 to 13.4 g/t. The overall recovery increased to 97.0% from 96.3%. In Q1 2024, the mill processed 51,632 tonnes throughput from the underground mine as a standalone source of ore from Eagle River mill, as compared to 54,283 tonnes including Mishi in Q1 2023.

 

Cost of sales in Q1 2024 was 21% higher than the corresponding period in 2023 primarily due to an increase in non-cash depletion and depreciation resulting from a larger depreciable asset base, a change in inventories, an increase in the aggregate operating costs due to increased ore development metres, waste movement, improvements made to strengthen the technical and site management teams, and an increase in total maintenance expenses due to contract renewals.

 

Q1 2024 cash costs of $1,227 (US$910) per ounce of gold sold increased by 3%, or $35 per ounce of gold sold, as compared to $1,192 (US$881) in Q1 2023 primarily due to higher operating costs partially offset by an increase in ounces sold.

 

Q1 2024 AISC of $1,662 (US$1,232) per ounce of gold sold decreased by 3%, or $47 per ounce, as compared to $1,709 (US$1,264) in Q1 2023 primarily due to higher ounces sold offset by higher operating costs and sustaining capital expenditures.

 

Kiena Mine – Quebec

 

Kiena Operating Results Q1 2024 Q1 2023
     
Ore milled (tonnes) 45,344 42,324
     
Head grade (g/t) 5.9 5.9
     
Average mill recoveries (%) 98.2 97.9
     
Gold production (ounces) 8,423 7,877
     
Gold sold (ounces) 8,340 6,000
     
Production costs per tonne milled1 466 426
     
Costs per oz sold    
Cash margin1 ($/oz) 323 321
Cost of sales ($/oz) 3,774 3,736
Cash costs1 ($/oz) 2,470 2,267
All-in sustaining costs1 ($/oz) 4,078 3,048
     

 

During Q1 2024, the Kiena mine produced 8,423 ounces of gold as compared to 7,877 ounces of gold in Q1 2023 primarily due to a 7% increase in throughput. In Q1 2024, the mill processed 45,344 tonnes of throughput as compared to 42,324 tonnes in Q1 2023. The Kiena grade remained the same at 5.9 g/t in Q1 2024 and Q1 2023. Gold recovery increased slightly to 98.2% compared to 97.9% in the same period in 2023. In the second quarter we began processing higher grade material from Kiena Deep, which is expected to trend upwards over the balance of 2024.

 

Cost of sales in Q1 2024 was 40% higher than the corresponding period in 2023 primarily due to increase in non-cash depletion and depreciation resulting from a larger depreciable asset base, increase in the aggregate operating costs due to a 7% increase in throughput and increased staffing levels required to support commercial production, which was declared on December 1, 2022.

 

Q1 2024 cash costs of $2,470 (US$1,831) per ounce of gold sold increased by 9% or $203 per ounce of gold sold as compared to $2,267 (US$1,676) in Q1 2023 primarily due to a higher proportion of fixed operating expenses.

 

Q1 2024 AISC of $4,078 (US$3,023) per ounce of gold sold increased by 34% or $1,030 per ounce as compared to $3,048 (US$2,254) in Q1 2023 primarily due to a higher proportion of fixed operating expenses and higher sustaining mining exploration and development costs in 2024. AISC per ounce is expected to decrease throughout 2024 due to increased accessibility and processing of higher-grade ore.

 

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

 

Exploration Updates

 

Eagle River Underground Mine

 

Development and Drilling

 

Ongoing underground drilling of the 300 East Zone has continued to confirm the continuity of the geometry and the consistency of the high-grade mineralization down plunge. The 300 East Zone has now been extended to the 1,600 metre-level and remains open down plunge.

 

In October 2023, the Company announced the discovery of a second zone within the volcanic rocks west of the mine diorite. This new zone, namely the Falcon 311 Zone, has been delineated to extend at least 200 metres along plunge and nearly 100 metres along strike, with potential to expand to surface almost 900 metres along plunge, similar to the neighbouring Falcon 7 Zone.

 

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 visible gold. One hole returned 233.0 g/t Au over 0.4 metres. Due to warmer temperatures this winter, 5,000 metres from the surface drilling was deferred until next year, which will allow more surface structural mapping, IP and 3D modelling in the interim.

 

2024 Exploration Program Objectives

 

The Company has set out the following objectives for its 2024 exploration program at Eagle River:

 

  • Deep drilling below 300E Zone with large step-outs to provide initial indication of mineralization at depth to optimize future drilling and development, as well as convert the large inferred resource base at 300E Zone to the indicated category and subsequently into reserves.
  • Define and extend the recently discovered Falcon 311 Zone.
  • 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.
  • Expand the recently drilled 6 Zone in the eastern portion of the mine diorite.

 

Kiena

 

The Kiena Deep A Zone now extends continuously from 1,100 metres to approximately 1,800 metres below surface. More recently, drilling has been focused on the South Limb and the Footwall Zones and will continue to increase as exploration platforms become more available with the deepening of the main Kiena ramp. 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. Recent drilling of the Footwall Zone returned a reported 55.6 g/t Au over 3.5 m core length (25.7 g/t Au capped, 2.0 m true width) and from the South Limb 30.3 g/t Au over 5.8 m core length (17.7 g/t Au capped, 5.0 m true width).

 

Initial reconnaissance drilling at the Wish area, 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.

 

Surface Exploration

 

Most recently surface drilling has focused on the Presqu’île Zone located two kilometres west of the Kiena Mine. With the necessary permits secured, the excavation of an exploration ramp from surface to access the near-surface Presqu’île Zone has been underway since Q4 2023.

 

2024 Exploration Program Objectives

 

In 2024, the Company increased the exploration program at Kiena and set the following objectives:

  • Follow up on prospective areas proximal to Martin and Shawkey zones and the Wish area from the 33-level track drift where recent drilling results have intersected shearing and quartz veining with visible gold.
  • Define and extend Kiena Deep Footwall and Hanging Wall zones. Both zones have previously returned high grade results and require further definition and expansion.
  • Drill test the depth potential of the Presqu’île Zone from surface.
  • Convert existing Inferred resources at the Dubuisson Zone into the Indicated category.

 

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.

 

Posted May 9, 2024

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