Q2 2021 Wesdome Gold Mines Ltd Earnings Call

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Good morning, and welcome to West Elm Goldmine second quarter financial results Conference call.

Now I'll hand, the call over to Heather Laxton to begin today's call.

Great. 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 in the detailed cautionary note contained in yesterday's press release.

And in the company's management discussion and analysis dated August 11th 2021, both documents are available on our website and on SEDAR.

Please note that all figures discussed on this call are in Canadian dollars, unless otherwise stated the 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 Dunlap, Vice President of Investor Relations.

Thanks, Heather here with US. This morning, we have Dunkin' Middlemiss, President and CEO. Good morning, Scott Gilbert Chief Financial Officer, Hello, everybody, Marc Hedrick L. J Chief operating Officer Hello. This is Mark Mike Michelle Vice President of exploration and Raj Gill, Vice President corporate development and good morning.

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

Thanks Nancy.

Strong gold production of 30375 ounces at 39% improvement over Q1, driven by an 18% increase in both gold grades and in total tons mill during the quarter.

Total H one production.

52900 ounces leaves us in a very good position to achieve the upper half of our guidance of 90 to 205000 ounces.

The Eagle mine continues to benefit from previous benefit each other work and other mine improvements with didi or teenagers averaging around 650 tonnes per day in the first half of the year.

Production rates would be slightly below in the second half as we had to climb mill shutdowns scheduled in both Q3 and Q4.

So that's the reason, we anticipate slightly lower production in H two.

The development in the newly discovered <unk> zone is ongoing and we expect to start production activities. There later in the third quarter.

This zone will bring to igo and other high grade mining fund.

These are great nearly 20 grams per tonne.

Yes.

The pre feasibility study at Keno was completed and published late in Q2.

Highlights on this slide and using conservative reserves and resource estimates and gold price assumptions. This project demonstrates our 98% IRR.

Uh huh.

No there are lots of activities ongoing in preparation of a restart.

The recruitment process is ongoing as planned with about 100 wisdom employees hired to date.

Production successfully started in the S E T zone late in the second quarter with the first production blast since the closure of the mine in 2013.

Meaning a par insurance I've resumed in July with no major issues.

Mine development is not compete us on the 112 meters level in the a zone and production activities are ongoing.

We continue to provide production and exploration updates as they become available.

Passing it on to Scott for the financial review.

Thanks, Mark cash.

Cash cost and AFC per ounce of gold sold in Q2 were $840, an ounce and $240 per ounce, a decrease of 24% and 17% respectively over Q1 <unk>.

<unk> 2021 cash cost of 930 per ounce and <unk> of <unk>.

<unk> 56 per ounce are within guidance and we expect to be within our cost guidance range for the rest of the year.

During Q2, there were some one time noncash items, which impacted net income after announcing the restart of operations at Keener on May 26, we recorded an impairment reversal charge of $58.6 million pre tax or <unk> $36.3 million after tax as well.

We had an after tax gain on the disposal of newmont speak mineral properties of $34.5 million. Consequently, net income was $87.8 million or <unk> 63 per share after giving effect to these one time adjustments.

Net income adjusted is $17 million or <unk> 12 per share.

Free cash flow for the quarter was $9.1 million total capital expenditures incurred in Q2, 2021 with $34.1 million with $24.1 million spent at keno and preparation of the production restart our ending cash balance was $67.8 million over to you Mike. Thank you.

Got it.

At Eagle River initial sill development is continuing at the <unk> zone and to date has confirmed the high grade nature of this zone and the continuity defined by the exploration drilling.

We continue to be very excited by development and drilling results at the Falcons zone and expect to release results shortly.

The company is also continuing to develop and explore the 311 West zone, along the western margin of the mind irate.

As shown has transitioned from the die right into the adjacent mafic volcanic.

Again, highlighting the potential of the volcanic rocks to host gold mineralization similar to that observed at the neighboring cell <unk> zone.

Although we experienced some challenges with staffing of drills, we have successfully expanded a number of our known zones, particularly the high grade 300 East zone.

In addition surface drilling is ongoing both east and west of the mine to follow up on enormous values returned from regional drilling.

Completed in 2020 and also at targets recently identified by our structural analysis of the mine and the surrounding property.

At Cana drilling continues towards return exciting results.

In March we announced a very exciting new discovery on the Footwall zone in May we released the second set of high grade drill results, which included one of our most impressive holes at Cana, returning 41 grams per ton gold over 51 meters.

The Footwall zone is a 50 meter wide corridor of parallel zones of gold mineralization adjacent to the footwall of the <unk> zone.

The Footwall zone extends over 300 meters, along PON plunge and remains open laterally and down plunge.

The discovery of the high grade Footwall zone could have significant positive impacts on the resources the ounces per vertical meter and also the overall project economics. This drilling highlights the potential to add ounces not only in this area, but illustrates the untested potential of the entire gold system around the key newmont.

Also ongoing drilling continues to better defined and expand laterally makena deep as zone resource, which was used in their recent PFS study. One of these expansion holds returning 122 grams per tonne over seven five meters of core length.

Which will be included in future resource updates.

We have a strong pipeline of targets to drill this year, both from underground and from surface, including the under explored diesel which is interpreted as the down plunge extension of the previously mined at <unk> zone.

Surface barge drilling has commenced with two drills to test many underexploited targets along trend from Makena mine and results from all of this drilling will be released in the near future.

Finally, west Dome recently purchased the <unk> property from <unk> enterprises.

The purchase of these claims help to consolidate our land package and provides additional exploration potential based on the existence, a number of historic drill intersections.

Over to you Duncan Thanks, Mike.

The results of the first half of the year have us well positioned to achieve our guidance had Eagle river on both production and costs.

We expect slightly lower production in the second half with Q4 seeing higher production in Q3 as.

As we move towards 100% production from the Eagle River mine annual production of 100000 ounces as very achievable going forward.

The goldcorp transaction involving our sale of the Moss Lake asset also closed during the quarter.

And in addition to the $12.5 million in cash the company received a 30% equity stake worth approximately $20 million pre listing.

<unk> commenced trading on June 4th under the symbol G. S. H R.

The second half of the year will be a very exciting time for the company as we begin production at the Cana mine the.

The mill has been started successfully and mining has begun from the <unk> zone.

At the same time development work is ongoing and the high grade zone, and we should have our first production from this area next month.

Our Cana guidance for the year is 15 to 25000 ounces not included in the 92% to 105000 ounces of Eagle and.

And we will evaluate after Q3, whether there are opportunities to increase guidance estimates were.

We are fully funded for the construction and commercial restarted kina.

With a combined production of 107 to 127000 ounces. This year, we are well on our way to achieving our stated goal of becoming Canada's next mid tier gold producer with two high grade underground mines in operation.

This is a significant milestone, which both de risk the company from a single asset producer and allows us the opportunity to potentially double our annual production output.

I would like to extend my thanks to all employees and stakeholders, who have helped us to begin to realize this vision.

Another step forward as of today as our listing on the <unk> market in the United States. We believe this will enhance our liquidity and visibility in the U S and broaden our shareholder base shares are now trading under the symbol W. D O S F.

I will now hand, the call back over to the operator for the Q&A session.

Thank you to ask a question you on mute.

One on your telephone.

Jay Your question touched upon key.

These standby will be compile the Q&A roster.

And our first question comes from Don Demarco with National Bank Finance Your line is open.

Thank you operator, and good morning, Duncan and team hope everyone's doing well congratulations on the surprise getting keying up and running sooner than expected, it's great to see.

Question on book now.

You.

What throughput are you running it at just maybe if you can share any more information about throughput.

This low grade material from the <unk> 50.

And is this throwing off any production and whatever.

Modest production that might be coming off would this be included in the 15 to 25 K preliminary guidance.

Okay.

Good morning, Don This is mark.

So as.

As we mentioned during the call I mean, we started with a success fee in the month of July.

<unk> has been around $40.40 tons.

Tons per hour.

So.

We did have fewer days over 1000 tonnes per day actually so so.

Let me start off.

And going very well.

The mill is on the Port III schedule.

It was basically stated in the PFS. So we've processing for days and we're doing maintenance work.

On the last days of the week, so thats basically what we planned for meaning time for the remainder of the year.

<unk> I mean, that's for the PFS of Green for Us.

A bit lower than years, all above five grams per tonne.

The intent was to test demand and ensure the process is working as it's supposed to be before we stopped feeding demand with higher grade ore.

Later in the call.

Okay.

Okay.

Great. Thanks for that now.

In terms of the spending at Cana I see year to date Capex spend at Cana as a total somewhere around $36.37 million.

Versus a full.

Full year budget of spend at Cana about $68 million.

Can I take anything away from this that maybe youre ahead of spend or are you comfortable with where you're at versus the full year estimate.

We we just.

The forecast for the year, and we actually plan to spend.

More and more money compared to what we had in the PFS is above $10 million.

And it's mainly equipment and the construction of the new paste plant.

So we actually.

Plan to spend more money in okay.

Okay. Okay would we expect it to spending at Keane is probably going to take that youre going to continue with the heavy spend into August and then it will taper off in September and thereafter or.

Or how should we allocate our quarterly quarterly spend through.

Through Q3 and Q4.

Okay.

Okay.

Fairly even on that Don actually were probably like as Marc Henri said, we've we've already spent about 37, we're going to.

Spend a total actually of about.

Underneath.

70, 979, sorry, 79, so really we think it's going to be fairly balanced in Q3 Q4, so the remainder of that.

Okay.

Okay guys. Thanks, so much that's all for me appreciate it and.

We will look forward to.

More results from the Footwall zone and continued success at Cana. Thanks, Yeah. Good stuff. Thanks, Sean.

Thank you as a reminder to ask a question you will need to press Star. One. Our next question comes from Andrew <unk> with BMO capital markets. Your line is open.

Hi, guys.

Really well done on the quarter and the trajectory for the balance of the year I think.

I just had a question as to how we should expect the key and a restart to work from an accounting perspective.

Are we can we expect.

Standard pre commercial period and at some point.

Scott takes over and.

Okay.

This car for piano or.

Or is there some other permutation here considering this as a restart of.

They don't care and maintenance.

Andrew there's been a change in the ISR standard. So therefore any of our revenue going forward will be included in the income statement, there will not be any offset against the <unk>.

Capitalized exploration asset.

Okay.

<unk>.

And my second question is I guess for Mike in terms of drilling.

Some of this stuff like the deep <unk> and some of the other targets around Kiana.

How much effort.

Uh huh.

Exploration drifts and other infrastructure access do you need.

In terms of.

And to get that set up too.

Properly drill something like the footwall, where some of the other targets underneath the other historical sounds like Canada.

Yes.

We have that in the budget I mean, where were drilling the footwall zone from.

Most of the drilling can be done from our current.

Platforms, but as the ramp continues to depths, we're going to be generating other platform is that we will be closer that better angles.

And certainly for the more historic zones to the eastern Keener look to want to get too up on 33 level. We are continuing to slash out the areas because there is an old tractor if right.

And we are slashing. So we can get the drills down those areas will start testing that so we are continuing right now with the development.

Sort of as we need for the drills.

Just a last question on Russia, because Marc Henry or who but.

At what point would the current infrastructure plan for debate.

We provide access to to what's known about the footwall at this point in time.

Several years.

Next year or.

Yeah.

As it is to the newly Footwall discovery is up it is about our MS elevation of the zone.

So considering the current life of mine, it's about in three years.

Andrew.

Okay great.

No other questions. Thank you I'll, let others. Thanks, Andrew congratulation to be clear I don't think we really found the upfronts without even so that's going to be a real moving target hopefully sooner. So.

Sooner is better got it yeah absolutely.

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

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Yeah.

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Sure.

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On the call.

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