Wesdome reports third quarter operating and financial results

TORONTO, Nov. 7, 2013 /CNW/ - Wesdome Gold Mines Ltd. (TSX: WDO) ("Wesdome" or the "Company") is pleased to report its unaudited financial and operating results from its Canadian operations for the third quarter ended September 30, 2013. This information should be read in conjunction with the Company's interim unaudited financial statements and Management's Discussion and Analysis for the third quarter ended September 30, 2013 which will be available for viewing on the Company's website at www.wesdome.com and on SEDAR (www.sedar.com). All figures are in Canadian dollars unless otherwise specified.

HIGHLIGHTS

• New Board and Management
• Higher cost Kiena operations placed on care and maintenance
• Windarra tuck-in acquisition completed
• Mill refurbishment advances
• Production interruption due to lightning strike
• One-time costs generate small loss
• Very strong start to fourth quarter with more than 6,000 ounces production in October
• Two new gold zones identified at Eagle River as drilling activity intensifies

Rolly Uloth, President & CEO comments "We are investing to secure the future in a modest stepwise fashion that is internally financed. We are establishing the infrastructure to optimally extract value from our resources over the longterm. Our assets and people have demonstrated resilience when gold prices dropped in the past and we consider it a luxury not to be dependent on tapping equity markets when sentiment is fragile."

OVERALL PERFORMANCE

The Company owns and operates the Eagle River Mine Complex in Wawa, Ontario and the Kiena Mine Complex in Val-d'Or, Quebec. On January 1, 2012, the Mishi mine in Wawa commenced commercial production. The Eagle River and Mishi Mines feed a common mill and are referred to as the Eagle River Complex. The Eagle River mine has been in continuous production since commercial production commenced January 1, 1996. It has produced 946,210 ounces to date. The Kiena mine was purchased by the Company in 2003. It restarted commercial production on August 1, 2006. It was previously in production from 1982 - 2002. To date the Kiena Mine has produced 1,757,475 ounces of gold.

On March 7, 2013, the Company announced the suspension of mining at Kiena. On June 30, 2013, mining activities ceased. Focusing efforts on our best grade mine will increase margins and reduce overall costs and risks. Kiena remains an outstanding infrastructure and exploration asset that would benefit from sustained higher gold prices.

At September 30, 2013, the Company had $9.8 million in working capital, and 5,977 ounces of gold in inventory. The inventory is carried at cost and is recorded as mining and processing costs in the fiscal period in which it is sold. For the first nine months of the year, revenue exceeded mining and processing costs attributable to sales by $9.6 million, $7.7 million in capital costs were incurred and cash flow from operations totalled $5.7 million.

In the third quarter, gold production totalled 8,765 ounces. For the first nine months of the year production was 37,033 ounces. Production costs averaged $1,236 per ounce for the nine month period, including 7,770 ounces from Kiena at a cost of $1,715 per ounce and 29,263 ounces at $1,108 per ounce from the Eagle River Complex.

On the corporate level, the board of directors and management was reconfigured to address shareholders' desires. We welcome back Rolly Uloth as President and CEO. Also, an important consolidation of assets in the Mishi area was completed with the amalgamation of Windarra Minerals Ltd. Completed upon the issuance of 4 million shares, this transaction clears the path for exploring and developing the Mishi area to its full potential. We welcome Windarra shareholders to the fold.

2013 third quarter production was affected by a lightning strike which took out our main electrical transformer on September 1, 2013. Mining and milling operations were restricted for most of the month and stabilized in October. We have bounced back nicely with production in October 2013, of 6,000 ounces, or about three quarters of the third quarter's total.

RESULTS OF OPERATIONS

RECONCILIATION OF PRODUCTION COSTS TO MINING & PROCESSING COSTS (Cost of Sales)

During the third quarter, bullion sales exceeded mining and processing costs attributable to sales by $2.3 million. In addition to these direct operating costs, additional cash costs, including royalty payments, corporate and general costs and interest payments amounted to $3.2 million.

These additional cash costs are unusually high and involve many one-time type costs incurred in this quarter. These include officer severance, board expenses and legal costs associated with reconfiguring the board and management; professional fees associated with the Windarra amalgamation; settlement of outstanding Eagle River labour issues; and, many one-time labour and related costs associated with winding down mining operations and placing Kiena on care and maintenance. In fact, these special costs, amounting to $1.7 million, account for the bulk of the third quarter's loss. We expect such costs to return to normal in subsequent quarters. To help with these costs, Kiena sold used mining equipment to third parties for $0.5 million and provided Eagle River with significant, useful equipment, materials and parts.

At the Eagle River Complex, all ore treated during the quarter came from the Eagle River Mine. A total of 8,608 ounces of gold were recovered from 34.066 tonnes milled at a recovered grade of 7.9 gAu/tonne. Milling operations in August reached their annual best at 600 tonnes per day prior to a September 1, 2013, lightning strike which knocked out power for most of September.

The Eagle River milling operations are undergoing a progressive overhaul and are currently showing signs of improvement. Key items for the filtration circuit were ordered and delivery is expected near year-end. Installation and commissioning are scheduled for the first quarter, 2014. In addition, the Company is advancing permitting work for a new longterm tailings management solution. The combination of these systems upgrades and improvements will result in significant, progressive costs savings and throughput increases starting in the fourth quarter, 2013. One step at a time.

We expect strong grades from Eagle River in the fourth quarter and resumption of milling of Mishi ore from our considerable stockpiles at the mill.

Diamond drilling at Eagle River generated some pleasant surprises, most notably the recognition of two new parallel structures while drilling the 811 Zone at depth with individual intersections of 26.85 gAu/tonne over 3.45 metres true width in the new 7 Zone and 21.73 gAu/tonne over 2.42 metres true width in the new 300 Zone. The 811 Zone has now been traced to 1,200 metres depth with an intersection of 78.43 gAu/tonne over a true width of 1.73 metres. The deepest development to date in the mine is an ore drift on the 765 metre level in the 811 Zone which averaged 36.61 gAu/tonne (with high assays cut to 140 gAu/tonne) over an average width of 2.13 metres along a length of 142 metres. For more details please reference our Press Release dated August 19, 2013, available at www.wesdome.com. Drilling continues with two rigs in the western and central portions of the mine.

At Kiena production ceased June 30, 2013. Nominal production of 157 ounces was recorded in the third quarter and we expect to recover about 200 ounces more from the refining of carbons. Mining equipment was sold for $0.5 million and suitable equipment, parts and materials have been sent to Eagle River. The mine and mill have been placed on care and maintenance. Transitional costs and labour issues have largely been dealt with during the third quarter, 2013.

The Mishi stockpile remains at 84,232 tonnes grading about 2.5 gAu/tonne. We plan to mill ore from the stockpile for about one month in the fourth quarter. The pit remains dewatered and ready to recommence, probably next spring. Fieldwork for the proposed new tailings management facility advanced as did the integration of data from adjacent lands received with the Windarra acquisition. We are planning a surface drilling campaign for the winter. It will provide condemnation drilling and definition drilling for a potential west pit extension.

We are now fully focused on our best performing assets with a clear and modest capital investment program which should yield returns over the short, medium and long term.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2013, the Company had working capital of $9.8 million compared to $13.9 million at December 31, 2012. During the first nine months of 2013, capital expenditures totalled $7.7 million compared to $7.6 million in 2012. Capital expenditures were concentrated in minesite development, mine and mill infrastructure.

The Company traditionally maintains an inventory of gold. At September 30, 2013, this asset consisted of 5,977 ounces of gold with a market value of $8.2 million at $1,369 Cdn/ounce (closing price September 30, 2013). The gold inventory is carried at the lower of cost or market, in this case at $7.9 million or about $1,319 per ounce. This cost includes $155 per ounce of depreciation. The costs of this inventory are recognized in the fiscal period in which the gold is sold based on a first-in, first-out inventory basis. Accordingly, recognized costs presented in quarterly and annual financial statements include a component of costs incurred in previous periods.

Additionally, the Mishi ore stockpile at the mill, which totals 84,232 tonnes, is carried in inventory at a cost of $3.9 million or $46.39 per tonne.

On May 24, 2012, the Company completed a $7,021,000 placement of unsubordinated convertible debentures. The term is 5 years bearing interest at 7% per annum payable semi-annually and convertible into common shares at $2.50 per common share. The net proceeds of $6,821,000, along with cash at hand, were used to redeem existing convertible debentures in the amount of $10,931,000 that matured on May 31, 2012. This resulted in the Company paying down $4.1 million in debt, reducing interest costs going forward.

Management believes we have sufficient liquidity to carry out our mining, development and exploration programs and at this time prefers not to dilute shareholders' interest with equity issues. The Kiena mining suspension will improve our financial position and improve return on capital.

With current gold prices, operations are capable of generating good operating cash flow, as they have in the past.

OUTLOOK

The third quarter saw many changes on a corporate and management level. A stepwise strategy for progressive milling upgrades and expansion has been resolved and will continue to demonstrate progress. For two successive quarters, unpredictable weather events interrupted production significantly. We are now targeting about 50,000 ounces this year despite these setbacks.

Drilling at Eagle River has accelerated as new drill stations have opened up. Early results are very encouraging with parallel zones emerging and the high grade 811 Zone traced significantly to depth. We have more reason than ever to be very optimistic about the long term. We are confident the capital investment schedule to assure the future is on track, realizable and internally fundable.

ABOUT WESDOME

Wesdome is in its 26^th year of continuous mining operations in Canada. It currently has two producing gold mines in Wawa, Ontario and owns the Kiena Complex in Val d'Or, Québec. The Company has 105.8 million shares issued and outstanding and trades on the Toronto Stock Exchange under the symbol "WDO".

This news release contains "forward-looking information" which may include, but is not limited to, statements with respect to the future financial or operating performance of the Company and its projects. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements contained herein are made as of the date of this press release and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The Company undertakes no obligation to update forward-looking statements if circumstances, management's estimates or opinions should change, except as required by securities legislation. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements.

SOURCE Wesdome Gold Mines Ltd.