
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
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:
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:
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.
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