WESDOME EARNS $0.02 PER SHARE IN Q1
TORONTO, June 14, 2011 /CNW/ --
TORONTO, June 14, 2011 /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
first quarter ended March 31, 2011. This information should be read in
conjunction with the Company's interim unaudited financial statements
and Management's Discussion and Analysis for the first quarter ended
March 31, 2011 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 and operates the Eagle River gold mining operations in
Wawa, Ontario and the Kiena mine complex in Val d'Or, Quebec. It is
developing the Mishi project in Wawa and the Dubuisson project in Val
d'Or. The Eagle River mine commenced commercial production January 1,
1996 and the Kiena mine on August 1, 2006.
The first quarter of 2011 highlights are as follows:
-- Production of 14,229 ounces
-- Earnings of $2.5 million or $0.02 per share
-- Revenues of $23.5 million on sales of 17,000 ounces at $1,384
per ounce
-- Cash flow from operations of $7.4 million or $0.07 per share
-- Bullion inventory of 10,135 ounces or $14.2 million marked to
market as at March 31, 2011
Donovan Pollitt, President & CEO comments 'It's a big development year
at both mines. We expect production to pick up in the second half of
the year as some larger stopes come online. This major development
phase will increase production and grades from 2012 onwards'.
OVERALL PERFORMANCE
At March 31, 2011, the Company had $29.3 million in working capital and
10,135 ounces of refined gold bullion in inventory. From an operating
viewpoint, revenue exceeded operating costs by $8.9 million and $3.8
million in capital costs were incurred. Cash flow from operations
totalled $7.4 million and net income was $2.5 million, or $0.02 per
share.
Both mining operations produced greater volumes of lower grade ore
compared to last year's first quarter. The cost per tonne milled
remained at $128 per tonne, while the realized gold price increased 20%
to $1,384 per ounce. The operating cost per ounce increased to $864
per ounce due to lower ore grades this quarter.
External factors which influenced results in this quarter were winter
conditions which increase energy consumption and surface maintenance
costs, unfavourable strength of the $Cdn/$US exchange rate, continued
tightness in the skilled labour market and inflating energy and
consumables costs.
RESULTS OF OPERATIONS
Three months ended March 31 2011 2010
Eagle River Mine
Tonnes milled 43,627 34,116
Recovered grade (g/t) 5.6 9.0
Production (oz) 7,787 9,899
Sales (oz) 9,000 12,000
Bullion inventory (oz) 7,580 9,980
Bullion revenue ($thousands) 12,481 13,856
Operating costs ($thousands) 5,802 7,835
Mine operating profit ($thousands) * 6,679 6,021
Gold price realized ($Cdn/oz) 1,384 1,155
Kiena Mine Complex
Tonnes milled 70,997 65,660
Recovered grade (g/t) 2.8 3.1
Production (oz) 6,442 6,460
Sales (oz) 8,000 5,000
Bullion inventory (oz) 2,555 3,411
Bullion revenue ($thousands) 11,113 5,720
Operating costs ($thousands) 8,882 5,262
Mine operating profit ($thousands) * 2,231 458
Gold price realized ($Cdn/oz) 1,385 1,144
Total
Production (oz) 14,229 16,359
Sales (oz) 17,000 17,000
Bullion inventory (oz) 10,135 13,391
Bullion revenue ($thousands) 23,594 19,577
Operating costs ($thousands) 14,684 13,098
Mine operating profit ($thousands) (*) 8,910 6,479
Gold price realized ($Cdn/oz) 1,384 1,152
*( )The Company has included in this report certain non-IFRS performance
measures, including mine operating profit and operating costs to
applicable sales. These measures are not defined under IFRS 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 IFRS as an indicator of our
financial performance or liquidity. The Company believes that, in
addition to conventional measures prepared in accordance with IFRS,
certain investors use this information to evaluate the Company's
performance and ability to generate cash flow.
During the first quarter, combined operations produced 14,229 ounces of
gold and 17,000 ounces were sold at an average price of $1,384 per
ounce. Bullion inventory at March 31, 2011, stood at 10,135 ounces
which is carried at cost. The costs and revenues for this inventory
will be recognized when it is sold.
Gold sales exceeded operating costs resulting in a mine operating
profit, or gross margin, of $8.9 million. In addition to these direct
operating costs, other costs, including royalty payments, corporate and
development costs and interest costs totalled $2.5 million.
At Eagle River, mining focused on low grade stopes and salvage work
while the new decline advanced towards the high grade 811 Zone. A
larger volume of lower grade ore, including stockpiles, was produced.
The mine produced 7,787 ounces of gold from 43,627 tonnes milled at an
average recovered grade of 5.6 gAu/tonne. We expect this to continue
with grades picking up in the second half of the year.
At the Kiena mine, larger volumes of lower grade ore generated the same
level of production as last year. The mine produced 6,442 ounces of
gold from 70,997 tonnes milled at an average recovered grade of 2.8
gAu/tonne. During the first quarter, the operation surpassed a major
safety milestone of one million hours worked without a lost-time
accident.
Kiena is currently encountering tricky mining conditions in two small
stopes. This will dampen second quarter production. As our larger
stopes come online, we expect production to increase in the second half
of the year.
Both mining operations are in major development phases to access and
develop future production areas. These efforts will increase
production and grades from 2012 onwards.
Project Development
The Mishi project is being developed for an initial 5-year plan. This
surface mining operation is located 2.0 kilometres from the Eagle River
Mill and is expected to produce at about 1,000 ounces per month over
this time frame. There is significant potential to increase this
projected mine life and drilling is currently underway on the immediate
extensions of the deposit. We are awaiting approval of our closure
plan amendment from the provincial government. This is required to
break ground and precise timing remains somewhat unpredictable. We
hope to generate initial millfeed in the fourth quarter.
The exploration drift to the Dubuisson project in Val d'Or advanced 150
metres. We will be moving in a drill to test depth and western
extensions. Access to the zone will be planned from the drilling
information.
Exploration
Exploration work is focused on delineating known mineralization in
proximity to existing infrastructure. At Eagle River we will be in
position to start drilling the depth extension of the 811 Zone to over
1,000 metres in the fourth quarter.
At Kiena, seasonal surface drilling from a barge on Lac De Montigny will
take place from mid-June until freeze-up. We are targeting the
Northwest and Martin Zones which are in range of existing
infrastructure.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2011, the Company had working capital of $29.3 million,
compared to $28.8 million at December 31, 2010. During the first
quarter, 2011, capital expenditures totalled $3.8 million compared to
$4.5 million in the first quarter, 2010.
The Company's inventory includes 10,135 ounces of gold bullion, a liquid
asset with a market value of $14.2 million on March 31, 2011.
The Company believes it has sufficient capital resources to cover its
obligations, capital and operating costs going forward. On March 28,
2011, the Company declared a dividend of $0.02 per share paid on April
29, 2011.
Production planned in 2011 should generate operating cash flow, even at
gold prices well below those currently being realized.
OUTLOOK
Our production outlook remains cautious due to pending permit approvals
for the Mishi Project and tightness in the mining/development sequence
at Kiena. We are developing the 388 Zone at Kiena - a new mining area
which appears higher grade, which should commence production in the
second half of 2011.
With this in mind, we view 60,000 to 65,000 ounces for 2011 as a
realistic target at this time. Considering operating costs in the
first quarter were about $15 million and we realized $1,500 per ounce
(current prices) for our sales, 2011 should still be a good year for
the Company. This will carry us into 2012 which promises to be a very
strong year for production, with higher grades at Eagle River and a
full year of production at Mishi.
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 22 years on an
unhedged basis and to date has produced in excess of 1.2 million
ounces. The Company has 101.9 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.
Interim Consolidated Statement of Financial Position
(Unaudited, expressed in thousands of Canadian dollars, except share
amounts)
March 31 December 31 January 1
2011 2010 2010
Assets
Current
Cash and cash equivalents $ 25,740 $ 22,806 $ 23,702
Receivables 6,699 7,442 4,022
Inventory 16,299 14,077 14,638
Marketable securities - - 211
48,738 44,325 42,573
Restricted funds 2,524 2,420 2,588
Deferred income taxes 137 1,780 3,356
Capital assets - - 9
Mining properties and equipment 79,740 77,687 65,115
Exploration properties 30,785 30,762 30,018
$ 161,924 $ 156,974 $ 143,659
Liabilities
Current
Payables and accruals $ 14,646 $ 12,938 $ 7,322
Mining taxes 1,624 1,317 -
Current portion of obligations under
finance leases 1,177 1,262 1,240
Dividends payable 2,038 - -
19,485 15,517 8,562
Income taxes payable 58 58 82
Obligations under finance leases 1,478 1,735 1,108
Convertible 7% debentures 10,230 10,072 9,483
Provisions 1,687 1,576 1,517
32,938 28,958 20,752
Equity
Equity attributable to owners of the
parent
Capital stock 120,682 120,220 118,570
Contributed surplus 4,320 4,235 4,205
Accumulated other comprehensive loss - - (222)
Equity component of convertible
debentures 1,970 1,970 1,970
Retained earnings (deficit) 1,312 853 (2,473)
128,284 127,277 122,050
Non-controlling interest 702 740 857
Total equity 128,986 128,018 122,907
$ 161,924 $ 156,974 $ 143,659
Wesdome Gold Mines Ltd.
Interim Consolidated Statements of Income and Comprehensive Income
(Unaudited, expressed in thousands of Canadian dollars, except share
amounts)
Three Months Ended March 31 2011 2010
Operating revenues
Gold and silver bullion $ 23,594 $ 19,577
Operating expenses
Mining and processing 14,684 13,098
Depletion of mining properties 1,868 2,257
Production royalties 210 223
Corporate and general 728 698
Share based compensation 217 107
Amortization of capital assets - 1
17,707 16,384
Income from operations 5,887 3,193
Interest and other income 103 34
Interest on long term debt (389) (371)
Other interest (1,182) -
Accretion of decommissioning liability (15) (11)
Income before income tax 4,404 2,845
Income tax
Current 307 233
Deferred 1,643 894
1,950 1,127
Net income 2,454 1,718
Other comprehensive income:
Change in fair value of available-for-sale
marketable securities - (40)
Total comprehensive income $ 2,454 $ 1,678
Profit attributable to:
Non-controlling interest $ (43) $ (15)
Owners of the Company 2,497 1,733
$ 2,454 $ 1,718
Total comprehensive income attributable to:
Non-controlling interest $ (43) $ (15)
Owners of the Company 2,497 1,693
$ 2,454 $ 1,678
Earnings & comprehensive earnings per share
Basic 0.02 0.02
Diluted 0.02 0.02
Wesdome Gold Mines Ltd.
Interim Consolidated Statements of Cash Flows
(Unaudited, expressed in thousands of Canadian dollars, except share
amounts)
Three Months Ended March 31 2011 2010
Operating activities
Net income $ 2,454 $ 1,718
Depletion of mining properties 1,868 2,257
Accretion of discount on convertible debentures 158 139
Interest paid 1,009 232
Share based compensation 217 107
Amortization of capital assets - 1
Deferred income taxes 1,643 894
Accretion of decommissioning liability 15 11
7,364 5,359
Net changes in non-cash working capital 128 (1,457)
7,492 3,902
Financing activities
Exercise of options 325 327
Shares issued by a subsidiary of the company to
third parties 10 -
Interest paid (1,009) (232)
Share issuance costs - (27)
Repayment of obligations under finance leases (342) (308)
(1,016) (240)
Investing activities
Additions to mining and exploration properties (3,846) (4,016)
Proceeds on sale of equipment - 51
Funds held against standby letters of credit (104) 48
(3,950) (3,917)
Net changes in non-cash working capital 408 (471)
(3,542) (4,388)
Increase (decrease) in cash and cash equivalents 2,934 (726)
Cash and cash equivalents, beginning of period 22,806 23,702
Cash and cash equivalents, end of period $ 25,740 $ 22,976
Cash and cash equivalents consist of:
Cash $ 20,831 $ 17,974
Term deposit (1.0%, 2010: 0.73%) 4,909 5,002
$ 25,740 $ 22,976
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| Donovan Pollitt, P.Eng., CFA | or | George Mannard, P.Geo. |
| President & CEO | Vice President, Exploration | |
| 416-360-3743 ext 25 | 416-360-3743 ext 22 | |
| 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 | ||