Wesdome Gold Mines Ltd. - Reports Q3 Financial Results

TORONTO, Nov. 15 /CNW/ - Wesdome Gold Mines Ltd (WDO: TSX) ("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, 2010. 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, 2010 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.

The Company owns the Eagle River gold mining operation in Wawa, Ontario and the Kiena mine complex in Val d\'Or, Quebec. The Eagle River mine commenced commercial production on January 1, 1996, and the Kiena mine on August 1, 2006.


The third quarter 2010 highlights are as follows:

- Production of 15,131 ounces
- Revenues of $20.7 million on sales of 16,000 ounces at $1,295 per ounce
- Cash flow from operations of $3.8 million or $0.04 per share
- Bullion inventory of 10,394 ounces or $14.0 million marked to market as at September 30, 2010

Donovan Pollitt, President & CEO comments "The third quarter involved a net investment in drilling and new project development. It is becoming clear at this point in the year that these judicious investments will pay dividends with increased year end reserves and a production growth profile moving forwards."


OVERALL PERFORMANCE

As at September 30, 2010, the Company had working capital of $31.9 million. During the first nine months of 2010, cash flow from operations totalled $14.0 million; $14.9 million of capital investments in exploration, development and mining equipment were made and $2.0 million in dividends were paid. Net income for the nine month period ended September 30, 2010, was $2.0 million with most of this earned in the first quarter.

Both mines are currently producing from low grade areas in their mining sequences. We are aggressively developing new zones, upgrading our mining fleet, advancing growth projects and drilling.


RESULTS OF OPERATIONS

  	Three Months Ended Sept 30 	Nine Months Ended Sept 30
  	2010 	 2009 	 2010 	 2009
Eagle River Mine 	  	  	  	 
  	Tonnes milled 	 42,886 	 36,839 	 116,273 	 102,034
  	Recovered grade (g/t) 	 6.3 	 14.5 	 7.1 	 14.7
  	Production (oz) 	 8,620 	 17,183 	 26,708 	 48,251
  	Sales (oz) 	 8,000 	 11,000 	 30,000 	 41,300
  	Bullion inventory (oz) 	 8,789 	 14,578 	 8,789 	 14,578
  	Bullion revenue ($thousands) 	 10,375 	11,807 	 36,677 	 45,106
  	Operating costs ($thousands) 	 6,920 	5,722 	 23,941 	 20,622
  	Mine operating profit ($thousands) *  	3,450 	 6,085 	 12,736 	24,484
  	Gold price realized ($Cdn/oz) 	 1,295 	 1,071 	 1,221 	 1,094
  	  	  	  	 
Kiena Mine Complex 	  	  	  	 
  	Tonnes milled 	 67,044 	87,264 	 200,776 	 212,498
  	Recovered grade (g/t) 	 3.0 	 3.3 	 3.2 	 3.9
  	Production (oz) 	 6,511 	 9,383 	 20,654 	 26,708
  	Sales (oz) 	 8,000 	9,000 	 21,000 	 27,400
  	Bullion inventory (oz) 	 1,605 	 2,260 	 1,605 	2,260
  	Bullion revenue ($thousands)  	10,381 	 9,651 	 26,072 	30,106
  	Operating costs ($thousands) 	 9,170 	7,536 	 21,858 	22,542
  	Mine operating profit ($thousands) * 	 1,211 	 2,115 	 4,214 	 7,564
  	Gold price realized ($Cdn/oz)  	1,295 	 1,071 	 1,239 	1,097
  	  	  	  	 
Total 	  	  	  	 
  	Production (oz) 	 15,131 	 26,566 	 47,362 	74,959
  	Sales (oz) 	 16,000 	 20,000 	 51,000 	68,700
  	Bullion inventory (oz) 	 10,394 	16,838 	 10,394 	16,838
  	Bullion revenue ($thousands) 	 20,756 	21,458 	 62,749 	75,212
  	Operating costs ($thousands) 	 16,090 	 13,258 	 45,799 	 43,164
  	Mine operating profit ($thousands) * 	 4,666 	8,200 	 16,950 	32,048
  	Gold price realized ($Cdn/oz)  	1,295 	1,071 	1,228 	 1,095

* The Company has included in this report certain non-GAAP performance measures, including mine operating profit and operating costs to applicable sales. These measures are not defined under GAAP and therefore should not be considered in isolation or as an alternative to or more meaningful than, net income (loss) or cash flow from operating activities as determined in accordance with GAAP as an indicator of our financial performance or liquidity. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use this information to evaluate the Company\'s performance and ability to generate cash flow.

During the third quarter, combined operations produced 15,131 ounces of gold and 16,000 ounces were sold at an average price of $1,295 per ounce. Bullion inventory at September 30, 2010, stood at 10,394 ounces which is carried at cost. The costs and revenues for this inventory will be recognized in the financial statements in the fiscal period in which it is sold.

In the third quarter, bullion revenue exceeded operating costs resulting in a mine operating profit, or gross margin, of $4.6 million. In addition to these direct operating costs, other costs, including royalty payments, corporate and general costs and interest costs, totalled $1.1 million. Eagle River Mine and Kiena Mine contributed $3.4 million and $1.2 million to the mine operating profit, respectively.

At the Eagle River mine, mining occurred in lower grade areas. We are currently developing the high grade 811 Zone and expect production grades to improve in the subsequent periods. The mine produced 8,620 ounces of gold from 42,886 tonnes milled at an average recovered grade of 6.3 gAu/tonne.

At the Kiena mining complex we worked efficiently through a low grade sequence. For the third quarter, Kiena produced 6,511 ounces of gold from 67,044 tonnes milled at an average recovered grade of 3.0 gAu/tonne.

The Company is undertaking an aggressive exploration, development and evaluation program this year with the goal of increasing reserves and growing production. At the Kiena mining complex drifting towards the new Dubuisson discovery on the 330 metre level advanced on schedule. Infill drilling enhanced potential to replace and increase reserves.

At Eagle River, definition drilling continues to exhibit high grades and continuity in the 811 Zone between depths of 500 and 800 metres (see press release dated September 20, 2010).

Highlights of the drilling include the following consecutive holes drilled on section 9375E:

- EU-374 70.14 gAu/tonne over 1.97 metres true width
- EU-375 45.12 gAu/tonne over 1.92 metres true width
- EU-376 37.03 gAu/tonne over 2.75 metres true width
- EU-377 38.77 gAu/tonne over 5.82 metres true width
- EU-378 43.55 gAu/tonne over 4.90 metres true width

This year\'s drilling clearly demonstrates much higher grades than previously indicated. This should have a positive impact on our year-end reserve estimates.

Resource modelling at the Mishi Project continues to demonstrate potential that exceeds expectations. A new resource estimate tallied Measured Resources of 280,900 tonnes at 2.46 gAu/tonne and Indicated Resources of 5,455,300 tonnes at 2.37 gAu/tonne for a total of 438,000 ounces of contained gold (see press release dated July 12, 2010). The independent "Qualified Persons" for this National Instrument 43-101 compliant Mineral Resource estimate are Carl Pelletier, PGeo and Karine Brosseau, P.Eng. of Innovexplo Inc. (For full details please reference the Technical Report dated August 25, 2010 available at www.sedar.com). Ninety percent of this total falls within an open pit scenario above a depth of 110 metres. A pre-feasibility study on a starter pit scenario is well advanced. This project offers excellent potential for expansion in a step-wise manner with little capital at risk.

Subsequent to the end of the third quarter at Eagle River we experienced a main transformer failure. Work is in progress to remedy this issue. Currently we do not anticipate losing any milling days and have sufficient stockpiles to cover any deferred mine output.


LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2010 the Company had working capital of $31.9 million, compared to $35.2 million at December 31, 2009. During the third quarter, 2010, capital expenditures totalled $6.0 million compared to $4.6 million in the third quarter, 2009.

The Company\'s inventory includes 10,394 ounces of gold bullion, a decrease from 11,263 ounces at the end of the second quarter, a liquid asset with a market value of $14.0 million on September 30, 2010.

The Company believes that it has sufficient capital resources to cover its obligations, capital and operating costs going forward. On April 30, 2010, the Company paid a dividend of $0.02 per share.

Production planned in 2010 should generate operating cash flow, even at gold prices well below those currently being realized.


OUTLOOK

We are currently forecasting 65,000 - 70,000 ounces of production in 2010. Although we may come in about 5% under initial estimates, our gold sales prices are over 20% higher.

It remains a year of development and judicious capital investments in low risk growth projects surrounding our existing infrastructure. Both the Mishi project and Dubuisson Zone projects advanced on schedule.

These projects, plus aggressive development of higher grade portions of the mines, put us in a strong position looking forward.


ABOUT WESDOME

Wesdome is an established Canadian gold producer with wholly-owned mining and milling complexes located in Wawa, Ontario and Val d\'Or, Québec. Wesdome has been producing gold continually for 20 years on an unhedged basis and to date has produced in excess of 1.0 million ounces. The Company has 101.1 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.


Wesdome Gold Mines Ltd.
Consolidated Balance Sheets
(Unaudited)

  	September 30 	 December 31
  	2010 	 2009
(in thousands) 	  	 
Assets 	  	 
Current 	  	 
  	Cash and cash equivalents 	 $   21,538 	$   23,702
  	Receivables  	 3,427 	  4,022
  	Inventory 	  16,002 	  14,624
  	Marketable securities 	  -  	 211
  	Future income taxes 	  1,199 	  1,199
  	42,166 	  43,758
  	  	 
Restricted funds 	  2,460 	  2,588
Future income taxes 	  1,645 	  2,245
Capital assets 	  - 	  9
Mining properties 	  70,715 	  64,637
Exploration properties 	  30,681 	  30,018
  	$  147,667 	 $  143,255
  	  	 
Liabilities 	  	 
Current 	  	 
  	Payables and accruals 	 $     8,816 	 $     7,322
  	Current portion of obligations under capital leases 	  1,426 	 1,240
  	10,242 	  8,562
  	  	 
Income taxes payable  	 82 	  82
Obligations under capital leases  	 1,998 	  1,108
Convertible 7% debentures 	  9,916 	 9,483
Asset retirement obligation  	 1,351 	  1,324
  	23,589 	  20,559
  	  	 
Minority interest in Moss Lake Gold Mines Ltd.  	 749 	  857
  	  	 
Shareholders\' Equity 	  	 
Capital stock 	  115,652 	  114,567
Contributed surplus  	 3,946 	  3,770
Accumulated other comprehensive loss 	  - 	  (222)
Equity component of convertible debentures  	 1,970 	  1,970
Retained earnings 	  1,761 	  1,754
  	123,329 	  121,839
  	$  147,667 	$  143,255

Wesdome Gold Mines Ltd.
Interim Consolidated Statements of Income and Comprehensive Income
(Unaudited)

Three Months Ended Sept 30 Nine Months Ended Sept 30
2010 2009 2010 2009
(in thousands, except per share amounts)
Revenue
Gold and silver bullion $ 20,756 $ 21,458 $ 62,749 $ 75,212
Interest and other 113 31 394 106
20,869 21,489 63,143 75,318
Costs and expenses
Operating costs 16,090 13,258 45,799 43,164
Amortization of mining properties 3,828 3,387 10,380 9,248
Production royalties 225 264 650 832
Corporate and general 446 504 1,722 1,452
Stock compensation expense 323 48 488 240
Interest on long-term debt 405 412 1,194 1,203
Other interest - 8 - 15
Amortization of capital assets - - 9 1
Accretion of asset retirement obligation 9 11 27 52
21,326 17,892 60,269 56,207
Net income (loss) before the following (666) 3,597 2,512 19,111
Gain on property held for sale - - - 122
Loss on sale of marketable securities (Note 8) (209) - (362) -
Net income (loss) before income tax and minority interest (666) 3,597 2,512 19,233

Income tax
Future - - (600) (273)
Net income (loss) before minority interest (666) 3,597 1,912 18,960
Minority interest 82 13 108 43
Net income (loss) (584) 3,610 2,020 19,003

Other comprehensive loss:
Realized loss on the sale of marketable securities 118 - 222 -
Change in fair value of marketable securities 76 - - -
Comprehensive income (loss) $ (390) $ 3,610 $ 2,242 $ 19,003

Net income (loss) per common share
Basic and diluted $ (0.00) $ 0.04 $ 0.02 $ 0.19


Wesdome Gold Mines Ltd.
Interim Consolidated Statements of Cash Flows
(Unaudited)

Three Months Ended Sept 30 Nine Months Ended Sept 30
2010 2009 2010 2009
(in thousands)

Operating activities
Net income (loss) $ (584) $ 3,610 $ 2,020 $ 19,003
Amortization of mining properties 3,828 3,387 10,380 9,248
Accretion of discount on convertible debentures 149 131 433 396
Minority interest (82) (13) (108) (43)
Stock compensation expense 323 48 488 240
Amortization of capital assets - - 9 1
Future income taxes - - 600 273
Gain on sale of equipment (95) 91 (225) 84
Gain on property held for sale - - - (122)
Loss on sale of marketable securities 209 - 362 -
Gain on redemption of convertible debentures - - - (24)
Accretion of reclamation asset obligation 9 11 27 52
3,757 7,265 13,986 29,108
Net changes in non-cash working capital 2,943 1,799 615 (5,822)
6,700 9,064 14,601 23,286

Financing activities
Exercise of options 218 339 800 527
Funds paid to repurchase common shares under NCIB - (24) - (38)
Funds paid to repurchase debentures - - - (453)
Share issuance costs - (100) (27) (105)
Dividends paid - - (2,013) (1,995)
Repayment of obligations under capital leases (399) (767) (1,162) (1,571)
(181) (552) (2,402) (3,635)

Investing activities
Additions to mining and exploration properties (5,952) (4,643) (14,892) (11,707)
Proceeds on sale of equipment 78 300 234 320
Proceeds on sale of marketable securities 38 - 71 -
Proceeds on property held for sale - - - 400
Funds held against standby letters of credit 40 (56) 128 (323)
(5,796) (4,399) (14,459) (11,310)
Net changes in non-cash working capital 104 111 96 (138)
(5,692) (4,288) (14,363) (11,448)
Increase (decrease) in cash and cash equivalents 827 4,224 (2,164) 8,203
Cash and cash equivalents, beginning of period 20,711 12,008 23,702 8,029
Cash and cash equivalents, end of period $ 21,538 $ 16,232 $ 21,538 $ 16,232



For further information:

For further information, please contact:
Donovan Pollitt, P.Eng., CFA
President and CEO
or
Shelly John
Manager, Investor Relations

8 King St. East, Suite 1305
Toronto, ON, M5C 1B5
Toll Free: 1-866-4-WDO-TSX
Phone: 416-360-3743, Fax: 416-360-7620
Email: invest@wesdome.com, Website: www.wesdome.com