Mr. Duncan Middlemiss reports
WESDOME ANNOUNCES 2019 FIRST QUARTER FINANCIAL RESULTS
Wesdome Gold Mines Ltd. has released its first quarter 2019 financial results.
Duncan Middlemiss, president and chief executive officer, commented: "In Q1 2019, the Eagle River underground mine delivered a head grade of 18.5 grams per tonne, versus guidance of 15.5 to 16.5 grams per tonne, primarily due to higher grades than anticipated within the 303 lens. As a result, both cash and all-in sustaining costs per ounce were at the lower end of guidance ranges. A number of other accomplishments were completed in Q1, including: increased mine development rates; a build of up a surface stockpile for both Eagle and Mishi ore for next quarter's production; and the early completion of mill improvements originally scheduled for Q2. Free cash flow for the quarter was neutral, which was within expectations. We expect to return to positive free cash flow generation in the second half of the year, when production increases and underground development rates decrease slightly. The Eagle River operation continues to fund the company's major exploration and development programs at both Eagle River and Kiena mines."
Key operating and financial highlights of the Q1 2019 results include:
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Gold production of 19,010 ounces from the Eagle River complex, a 6-per-cent increase over the same period in the previous year (Q1 2018 -- 17,948 ounces):
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Eagle River underground mine -- a total of 30,941 tonnes at a head grade of 18.5 grams per tonne gold for 17,955 ounces produced, a 9-per-cent increase over the previous year (Q1 2018 -- 16,398 ounces);
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Mishi open pit -- a total of 18,470 tonnes at a head grade of 2.2 grams per tonne gold for 1,055 ounces produced (Q1 2018 -- 1,550 ounces);
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Revenue of $32.5-million, a 24-per-cent increase over the previous year (Q1 2018 -- $26.2-million);
- A total of 18,760 ounces sold at an average sale price of $1,733 per ounce (Q1 2018 -- 15,430 ounces at an average price of $1,698 per ounce);
- Cash costs of $866 per ounce ($651 (U.S.) per ounce), a 13-per-cent decrease over the same period in 2018 (Q1 2018 -- $999 per ounce ($790 (U.S.) per ounce);
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All-in sustaining costs of $1,311 per ounce ($986 (U.S.) per ounce), a 2-per-cent decrease over the same period in 2018 (Q1 2018 -- $1,342 per ounce ($1,061 (U.S.) per ounce));
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Earned mine profit of $16.3-million, a 51-per-cent increase over Q1 2018 (Q1 2018 -- $10.8-million);
- Operating cash flow of $12.6-million, or nine cents per share, compared with $12.4-million, or nine cents per share, for the same period in 2018;
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Invested $6.6-million in exploration expenditures at the Eagle River and Kiena complexes during the quarter (Q1 2018 -- $5.0-million);
- Free cash outflow of $400,000, or nil on a per-share basis (Q1 2018 -- free cash flow of $3.2-million, or two cents per share);
- Net income of $8.1-million, or six cents per share (Q1 2018 -- $2.9-million, or two cents per share). Net income (adjusted) was $5.7-million, or four cents per share (Q1 2018 -- $2.9-million, or two cents per share);
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Cash position of $27.8-million.
Exploration highlights for Q1 2019
Eagle River:
- The mining of the 303 zone between the 844-metre level and the first sublevel above continued to confirm the continuity of the strong grades and the geometry of the mineralized zone. Exploration drilling continued on the 925 m level to prepare the 300E zone for mining and will continue to be the focus of mining development in 2019.
- Continuing development on the 1,038 m level has now extended the 7 zone over 146 m in strike length, grading 30.5 grams per tonne gold over an average true thickness of 2.61 m, and recent drilling has now confirmed that this longer strike length extends to depth over an additional 100 m to the 1,250 m level and remains open down dip. Recent drilling has now confirmed that the 7 zone extends along strike to the southeast side of a northeast-transecting diabase dike that offsets the eastern extension by approximately 20 m. This extension is a substantial addition of potential resources, compared with previous interpretations, and thus will be the focus of 2019 drilling.
- Continuing drilling and initial drift development along the 300W zone have confirmed the continuity and strike length of 145 m grading 28.8 grams per tonne gold, with a 1.8 m average width, and has extended the mineralized zone to west in excess of 50 m farther west than the previously interpreted diorite contact and remains open to the west and remains a focus for 2019 drilling.
- Exploration drilling from the 758 m level in the eastern half of the mine diorite has continued during the quarter to better define the new intersected zones that are interpreted to be parallel zones to the north of the past-producing 6 and 8 zones, and could be the possible extensions of the parallel 7 zone and 300 zone structures being mined farther to the west. Surface drilling in the volcanics to the west of the mine diorite encountered two subparallel structures, namely the Falcon 7 and Falcon 300 zones, that returned 18.5 grams per tonne gold over 5.8 m of core length. These zones are interpreted to be extensions of the 300 zone and 7 zone structures, which lie approximately 200 m to the east within the mine diorite.
Kiena:
- Since the Oct. 12 cut-off date for drill data used in the recent resource estimate released on Dec. 12, 2018, exploration drilling and definition drilling have been continuing, with five drills at the Kiena Deep A zone. Four drills are in operation on the 1,050 m level exploration ramp to complete the infill and plunge extension drilling, and a fifth drill is operating on the 670 m elevation to test the interpreted up-plunge extension of the A zone toward the VC zone area. Since Oct. 12, approximately 16,910 m in 64 holes have been added to the Kiena Deep A zone, in addition to a number of additional exploration holes within the immediate vicinity.
- The continuing definition/infill drilling has continued to confirm the overall continuity of the geometry and the high-grade gold mineralization of the Kiena Deep A zone. Drilling to date has identified a well-defined, moderate plunge of approximately 45 degrees to the southeast to the gold mineralization that occurs predominantly along the basalt-chlorite-carbonate schist boundary.
- Additionally, the continuing drilling has continued to expand the Kiena Deep A zone up and down plunge. Down plunge, the zone has been extended 60 to 100 m and shows good continuity. Up plunge, drilling has now extended the A zone over 70 to 100 m since the Dec. 12 resource estimate, extending the zone above the 1050 level.
- Drilling is now only starting to test the more vertical eastern structure/fold limb that is interpreted to be the previously named Upper Quartz zone that extends the entire plunge length of the A zone. Recent drilling along this structure returned 7.1 grams per tonne gold over 25.5 m in hole 6438A. This hole intersected visible gold in quartz veins hosted by an unit of mafic flow breccia near the vertical contact with a komatiite (named A zone extension).
- Drilling from 67 m level is continuing to test the potential up plunge of the A zone in the vicinity of the VC zone area. Limited drilling to date confirms that the basalt-schist contact associated with the A zone mineralization continues to the area of the VC zone. The hosting schist is interpreted to split into two subparallel shears on either side of a thicker portion of basalt. The recent drilling on the northeastern flank intersected VG mineralization in quartz veining at the 980 m level. Historic hole 6146 returned 6.7 grams per tonne gold over 11 m. One recent and adjacent hole, 6437, returned 6.9 grams per tonne gold over seven m. Other holes have intersected VG in quartz veins similar to the style of gold mineralization of the A zone at the 980 m level and, given this potential, is now the focus for the drilling from the 67 m and 105 m levels.
The company's 2019 underground exploration program calls for 50,000 m of drilling with five drills in preparation for an updated resource estimate at the Kiena gold deposit in the second half of this year. This information will then lead into a preliminary economic assessment.
Technical disclosure
The technical content of this release has been compiled, reviewed and approved by Marc-Andre Pelletier, PEng, chief operating officer, and Michael Michaud, PGeo, vice-president of exploration of the company. Each is a qualified person as defined in National Instrument 43-101 -- Standards of Disclosure for Mineral Projects.
Wesdome Gold Mines first quarter 2019 financial results conference call
Date: May 9, 2019, at 10 a.m. ET
North American toll-free: 1-844-202-7109
International dial-in number: 1-703-639-1272
Conference ID: 9496715
Webcast: visit the company's website
SUMMARIZED OPERATING AND FINANCIAL DATA
(in thousands of dollars, except per-share and
per-unit amounts and otherwise indicated)
Three months ended March 31,
2019 2018
Operating data
Milling (tonnes)
Eagle River 30,941 44,480
Mishi 18,470 32,846
Throughput 49,411 77,326
Head grades (g/t)
Eagle River 18.5 12.0
Mishi 2.2 1.8
Recovery (%)
Eagle River 97.6 95.4
Mishi 80.6 81.6
Production (ounces)
Eagle River 17,955 16,398
Mishi 1,055 1,550
Total gold produced 19,010 17,948
Total gold sales (ounces) 18,760 15,430
Eagle River complex (per ounce of gold sold)
Average realized price $1,733 $1,698
Cash costs 866 999
Cash margin 867 699
All-in sustaining costs 1,311 1,342
Average exchange rate (US$-Canadian$) 1.3295 1.2647
Cash costs per ounce of gold sold (US$) 651 790
All-in sustaining costs (US$) 986 1,061
Financial data
Mine profit 16,259 10,774
Net income 8,092 2,859
Net income adjusted 5,723 2,859
Operating cash flow 12,581 12,423
Free cash flow (outflow) (429) 3,216
Per-share data
Net income 0.06 0.02
Adjusted net earnings 0.04 0.02
Operating cash flow 0.09 0.09
Free cash flow (outflow) - 0.02
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(in thousands of Canadian dollars except for per share amounts)
Three months ended March 31,
2019 2018
Revenues $32,535 $26,217
Cost of sales 20,185 18,764
Gross profit 12,350 7,453
Other expenses
Corporate and general 2,008 1,077
Share-based payments 1,099 867
Kiena care and maintenance - 456
Write-off of mining equipment - 281
3,107 2,681
Operating income 9,243 4,772
Quebec exploration credits refund 2,867 -
Interest on long-term debt (112) (51)
Accretion of decommissioning provisions (115) (104)
Interest and other 294 44
Income before mining and income tax 12,177 4,661
Income and mining tax expense
Current 968 481
Deferred 3,117 1,321
4,085 1,802
Net income and total comprehensive income 8,092 2,859
Net earnings per share
Basic 0.06 0.02
Diluted 0.06 0.02
About Wesdome Gold Mines Ltd.
Wesdome has had over 30 years of continuous gold mining operations in Canada. The company is 100 per cent Canadian focused with a pipeline of projects in various stages of development. The company's strategy is to build Canada's next intermediate gold producer, producing over 200,000 ounces from two mines in Ontario and Quebec. The Eagle River complex in Wawa, Ont., is currently producing gold from two mines, the Eagle River underground mine and the Mishi open pit, from a central mill.
We seek Safe Harbor.
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