Q1 2021 Wesdome Gold Mines Ltd Earnings Call

Good morning, and welcome to West Zone Gold mines first quarter financial results Conference call.

And then I'll hand, it over to Heather.

A relaxed and to begin today.

Excellent. Thanks, operator, and good morning, everyone. Thanks for joining us today.

Before we begin we'd like to take this opportunity to remind everyone that during this call we will discuss our business outlook and make forward looking statements.

These comments are based on our predictions and expectations as of today.

Actual events or results could cause outcomes to differ materially due to a number of risks and uncertainties, including those mentioned and the detailed cautionary note contained in yesterday's press release and and the company's management discussion and analysis dated May 12, 2021, both documents are available on our website and on SEDAR.

Please be advised that this morning, we refiled the Q1 interim financial statements and order to reclassify and entry that impacts cash flow from operations and cash used and investment activity.

Correction does not impact our cash balance at the end of the quarter.

This was an isolated transcription error and the financial statements only and these figures were correctly reported and both the press release and the MD&A, we apologize for any inconvenience.

Please note that all figures discussed on this call are in Canadian dollars unless otherwise stated.

Slides used for this presentation and a recording of this call will be posted on the company's website and.

Now it's over to Lindsay Dunlop VP of Investor Relations.

Great. Thanks, Heather and good morning, everyone here with US today, we have dumped and middle Miss President and CEO.

Good morning.

Scott Gilbert Chief Financial Officer.

Hello, everybody.

Marc Andre tell Jay Chief operating officer.

Hello, just one country.

Mike Michelle Vice President exploration.

Good morning.

And Raj Gill Vice President corporate development.

Morning.

Yes.

We will begin today with an operational review from Marc Andre followed by a financial review from Scott, then and exploration update for Mike and finally, Duncan will conclude with a summary and outlook Mark. Please go ahead.

Thanks Nancy.

And we started to see the benefits of the ventilation upgrades at igo and Q1.

Commission, the second pressure fan and I'm sorry.

And to add another haulage graph at the bottom of the mine.

Mill throughput and began to increase and we are on track for bridge.

From the tons per day this year.

And as we ended the quarter for their surplus for for the 4300 zone.

Head grade of 12.8 grams per ton or slightly lower than budget.

At the beginning of the Dear you to stope sequencing and lower grade ore in the underground and surface.

Great.

Increased during the quarter and will continue through the year as we are preparing and useful from the high grade two and squeeze them.

We are also getting things.

And the ore at the bulk and zone.

Significant milestone.

Because that will open and additional workplace.

So buying stope production from the bottom of the mine.

This will allow us to reach our medium term objectives.

And the mill to capacity excuse me for the high agree ego underground.

So that and me she was mined out for plan in Q4, 'twenty and owned and stockpile ore will be processed this year.

Also.

In Q1, we sold 1793 ounces from the refining of the keys and deep bulk simple or that was processed last year.

We recover 6% mogul compared to their original drop from other great.

And then an exciting accomplishment and obviously and then for.

As we Derisk the company from single assets purchasing volume two two producing high grade gold mines company.

And we cannot wait to release the PFS result.

This quarter.

Chris will now take over and provide a review of the financials.

Thanks Mark.

So 20664 ounces of gold and an average realized price of 2000 and $223 per ounce to generate $46 million of revenue from the Eagle River complex.

We generated $22 million and operating cash flow.

We spent $24 million on capital, which includes $12 6 million of Akita and $2 2 million on growth capital and Eagle River.

The cash balance remains at $64 million and.

Net income was $7 1 million or five cents per share.

Earnings should be higher and the rest of the year due to a planned increase in production.

The cash cost was $1076 per ounce.

And the a S C.

1400, and $97 per ounce, which were higher than guidance due to lower gold production and higher costs for development.

Equipment fleet and surface infrastructure.

Some of which are one time expenditures for.

And we're tracking to achieve guidance.

Now to make for a review of exploration.

Thanks Scott.

Exploration drilling within the Eagle River mine continues to expand the known zones of gold mineralization, including the high grade 300 East zone that has now been extended to the 1400 meter level.

Also definition drilling continues at the Falcons zone and initial sill development is expected to commence in Q2, thereby providing an exciting opportunity for the first time to assess the Goldman amortization in the volcanic rocks and.

Additionally, we are continuing to develop and explore the 311 and west zone, along the western margin of the mine diary and someone has transitioned from the diary into the adjacent mafic rocks again, highlighting the potential of the volcanic rocks to whole school dimerization round.

Brownfields exploration remains a priority for the next several years.

Meanwhile, surface drilling is ongoing both east and west of the mine to follow up on a normal was values returned from regional drilling completed in 2020 and independent comprehensive analysis of the structural geology is being completed to aid this exploration in total in excess of 150000 meters.

Drilling are planned for this year.

And keno, what a great quarter with seven drill holes that have continued to provide spectacular exploration results in March we announced and very exciting new discovery within 50 meters.

The footwall of the zone.

For the first time more optimal drilling platforms improved drilling practices and the use of drilling wedge is permitted the drills to effectively penetrate the footwall area and resulted in the discovery of at least two new zones of high grade gold and amortization, one vault returned 11.9 grams.

Per ton over 22 meters and correlate.

Although it's early days this discovery of additional high grade could have a very significant positive impact on the resource base as well as the ounces per vertical meter up the a zone and the overall project economics.

And it's drilling highlights the potential to add ounces not only in this area.

Illustrates the untested potential of the entire gold system around and keep in mind. Obviously this area remains a major focus for this year's drilling and there are three rigs currently dedicated to further proving and potential new zone.

In addition to this new discovery.

We are also focused for drilling on expansion not only at the a and B C zone, but other perspective targets within the mine area.

Part of this exploration focus for initial drilling has successfully expanded the size of several known mineralized zones at the zone for instance, one hole returned 46.2 grams per ton gold over 24 meters of poorly for around seven four for around 37 grams per ton gold over seven years true width.

This is not and the current resource space.

Continued drilling in this area is expected to contribute ounces to any future resource updates we have many explore targets for the best this year and have in place and aggressive program in excess of 65000 meters of underground drilling to test these targets.

We are excited to start exploration on the under explored zone, which is interpreted as the down plunge extension of the previously mined zone.

The 2021 surface exploration program and she is consistent 42000 meters and is ongoing to test regional targets from surface.

Overall and exciting year with expected good news flow bogie rush.

Thanks, Mike.

We're on track to close Moss Lake transaction and Q2.

The $57 million and headline value, we expect to receive at closing 12, and five nine and cash and a 30% equity stake worth approximately $20 million pre listing cold shores initial marketing and very well received and we're confident that Westfield and shareholders will benefit alongside gold sure shareholders and the team aggressively explores the land package and.

It takes some months like resource over to you Duncan.

Alright, Thanks Raj.

In summary, and has been and active start to the year with many positive developments, mainly exciting exploration and progress made towards a quick restart.

Tina.

We completed the reconciliation of the E zone bulk sample, which has produced 6% more gold at a feed grade of 15.7 grams per tonne versus $14 seven grams, which was predicted and the resource block model.

We also made significant strides towards the completion of the PSS and are on track to release the results along with a restart decision later this quarter.

This is a very exciting time and the company's future and by the end of the year. We expect to have two high agree underground gold mines, producing and Canada each on their way to producing over 100000 ounces per year and on our way to realizing our goal of becoming candidates next mid tier gold producer.

And Eagle, we continued to make operational and efficiency improvements to increase daily tonnage rates. Despite the challenges of operating and the pandemic.

And the first quarter the mine generated healthy operating cash flow.

Majority of which was reinvested at keno.

Free cash flow generation will improve in the coming quarters as grade increases at Eagle and as we get set to produce and sell initial ounces from keener based on a positive restart decision.

With cash of $64 million, we're fully funded for all our exploration and development programs. This year.

We will also get a top up of $12 $5 million into the treasury when the Moss Lake transaction closes later this quarter.

The company has performed very well despite the challenges of the global pandemic.

I would like to thank all employees and stakeholders for their diligence and commitment to safety.

At this time I would also like to invite all shareholders about our upcoming annual General meeting held on June 1st at 10, a M eastern time.

Due to this current stay at home order and Toronto, the meeting will be conducted virtually once again this year.

Please preregister using the length available on our website.

Well now open the call up for question and answer session. Operator. Please go ahead.

Thank you at this time, if you would like to ask a question. Please press star and wanting a telephone keypad.

Again that is star wanting your telephone keypad.

Your first question comes from the line of George topping from Industrial Alliance. Your line is open.

Great. Thank you Duncan or Mark under a thing for this one on the on the Falcon can you update us on your expectations on the time line to bring that into production for when you expect the force stope.

And the drilling and development.

At the end of the when do you expect to see some production from them.

Yeah, I'll, let mark take that George.

Okay.

Good morning, George This is mark.

And you know we've been very active this year as they cannot find too soon to get prepared for everybody stocks are we.

We think that we are.

When you we can bring debt the mine into production and within that within three months following the.

The falloff decision and not bad.

And restart.

I think George was talking about the Falcon zone renal church.

So and yes, yes, and no fault zone and I apologize for that okay.

Okay. So actually we are its and yet this quarter and that we're going to be developing and off George So we're getting very close for that.

Very good and.

And if I can add on that like what we see for the remaining of the year as we we.

And curious on the production coming from the popcorn and accounts in the third quarter of this year.

Alright.

Slow buildup a few hundred tonnes.

Yeah, I'd say less and less than 10000 ton. This year is that the key thing for other thoughts on zone is if the debt.

And then we have about 900 meters of development in the budget this year and we're basically setting up.

And the production for 2020 two from the Polygon zone.

Great.

And we cannot run pulp and getting closer.

Starting with Q4, and you look better visibility on what you might be looking forward and 'twenty 2020, two 2020 three in terms of the production.

So have you changed have you changed anything from the technical report.

From the P. A GA I guess, you're referring to certainly theres. Some some changes I will have to say that there are overall positive in terms of the the ramp up.

I don't want to get into particulars of course until we releases, but I think that we're quite satisfied with how our cana is moving in.

No, we just stress and I look at you know the discovery and the footwall that debt.

We've been able to do.

Generation and some other interesting targets down there. So really we really have the view that our ounces per vertical meter are really likely to you know increase over that sort of base load of the resource that we had.

Set down in December 2020, right. So yeah.

And then just last last question moving 100 overdose.

Everybody's talking about inflation and all the steel and all the thought but I'm more concerned about underground wages.

And you're finding it difficult to get people to come and work at.

And the wages that we used to be.

And you know it is competitive George there is no doubt about it. The Val d'or is is really one of the probably the hottest areas and Canada, probably North America and in terms of mining activity.

What we're seeing right now is kind of a and over demand for diamond drills and Diamond drillers.

And that remains I would say probably the number one.

Aspect of this right now definitely.

I've been able to.

Kind of fulfill our our manpower needs so far from and underground mining perspective again, we're very fortunate to be raised and the center of the Abitibi there because there is.

Great sort of talent pool to draw from but it is it is getting more competitive there's no doubt about it and you know.

And it does sort of remind me of 2005, six and seven when we answered. This this phase you know what other whether its a super cycle, but theres certainly is a you know a broad demand for for commodities and that so.

Got it okay. Thanks, everyone.

Thanks George.

The next question comes from the line of Andrew and they get checks from BMO capital markets. Your line is open.

And just one quick question.

Hum.

D P eight for last year for <unk>.

Relative relatively nominal capex.

And you guys are diligently, giving us the update on how you're making progress through advancing.

And can you give us any guidance on how much of that $35 million you may have.

Ready and spent.

Or will have spent within other time you you're in a position to start this.

Did you have and official restart to sit and sorry.

Yeah, Yeah, exactly I mean, as you know Andrew I mean are you know.

Officially our exploration advanced exploration activities continue through this period.

We're not.

It set up for I'd say commercial production, but obviously some other things that we've been doing certainly does pair.

Well to us getting into commercial production rather quickly so.

And in terms of some of the things that we've been able to do like really the focus this year, so far as the tailings management facility.

Continued underground development.

And the ramp development of course being key of course.

And as it is the majority of the Haynesville is beneath us.

And so.

Essentially those are the activities in terms of what we've been able to accomplish through what you would've seen for the $35 million I don't have a number for that right now, but we are progressing along the lines of the advanced exploration, but I think that we can quickly pivot to commercial production.

And and in the subsequent quarter almost so we will be set up and obviously with us having access for bulk.

You know.

Sample area.

It really is sort of the the basis for I'd say, a restart right there and the new zone. So we're in good shape.

But to state the obvious there's there's no risk of.

And our indication on your part that.

This number is going up.

And if anything and decreasing that number is that fair.

As we've been spending along yeah, I mean, there's a couple of them.

Likely scope changes, Andrew but now we're quite comfortable with with where we stand on that right now.

Thank you very much congratulations from quarter.

Thanks.

This concludes today's conference call you may now disconnect.

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