Q4 2023 Wesdome Gold Mines Ltd Earnings Call
I will turn the call over to Lindsay Dunlop VP Investor relations to begin today.
Great. Thanks, operator, and good morning, everyone and welcome to Whitestone ball by fourth quarter and full year 2023 results conference call.
Comments are based on our predictions and expectations as of today and actual events or results could cause them 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 MD&A dated March 12 2020.
Yesterday's release should be read in conjunction with the MD&A and financial statements all of which can be found on SEDAR and on our website.
Following the prepared remarks, we will open the call for questions. All figures discussed on this call are in Canadian dollars unless otherwise noted now over at the end of your bass, President and CEO to begin today. Thanks, Lindsay and good morning, everyone. Before I begin I would like to say, Thank you said you'll be eating at the end of March.
Being a part of an ethical waste them for 10 years now.
And wish you well.
Speaking on the call with me today I E raw steel SVP corporate development and a great launch by Nokia and Mike Michelle H E B.
Resources.
Also in the room, you have to measure that.
Yes.
Yes.
Welcome to the engine to the executive team and thank Jonathan for me to stay on.
No.
Before I pass it over to Frank I'd like to begin.
Well I'll be like.
Bobby.
No.
Oh no.
The changes in 2023.
We used to have delivered on each of these strategic imperatives.
We achieved the midpoint of guidance on production.
We advanced development when you're not level.
I'll schedule and we ended the year with positive.
And our strength in LNG.
That's not the most updated yet.
Resort.
What is it 12%.
Okay.
After completion of people.
Overall portfolio rate essentially unchanged.
Cheetham are testament to the capacity and the commitment of our operating and corporate teams and I wanted to say a special thanks to all those who are listening today.
With almost a third of annual production of 123000 in the fourth quarter just kidding.
Getting a new pace and are well positioned to deliver higher production and lower costs in 2024 and 25.
We previously announced in January you need ways to deliver step change increase in production on the back of high breakeven point.
He's posted in Q2 just yet.
It's not money.
Our marketing approach and social development remains on track and you can read that you'll see more consistent performance and development baked in great because aviation.
Okay.
Yes, it will be Unreal Martin.
With the future value and improve margin, which gives us optionality on cap rate and the.
The potential to increase conversion on our results.
In terms of exploration remains the cornerstone of our strategy and we see a number of brownfield exploration and development opportunities and feel confident well trod resource and reserve condition any banks, Utah Stabled.
The operation more on deck for marketing environment.
And then she in a far better position exiting 2020, and we had been before liquidity ending the year well.
$73 million and net.
Net cash and cash Monica borrowing up to about $24 million with robust free cash flow.
Thanks.
The remaining three nominees.
Well about a two quarter and what's that tranche.
Actually the operational detail.
Thank you Andrea good morning, everyone.
Consistent with our internal projections, we had a very strong finish to the year on production at the two sites all key initiatives to setting up a successful 2020 for advanced after claims during the quarter.
Starting with Eagle River production in Q4 came in at 24000 tenants.
Higher production was mainly driven by higher grades and mill throughput remained consistent with previous quarters.
300 zone was the main contributor to gold production in Q4 as long continues to provide excellent returns.
You can find a partner.
For the full year 2020 for Eagle has produced a total of 87799.
Firmly above midpoint of guidance range with very stable production quarter.
Development performances in Q4, once again exceeded our guidance targets, which positions us very well for 2020 for production.
On the back of the strong execution of Ebola, we continue to benchmark the operational productivity.
To try and improve our cost structure so that the.
Cost pressures are increasing.
We expect to start seeing benefits of this program in 'twenty. Please.
Athena production in Q4 came in at 12140 for Us.
<unk> continues to attract higher than the upper end of guidance during the quarter due to a combination of continued strong performance from each yourself, where we're able to continue successful recycling. So located in targeted shifts and the contribution of hybrid reproduction or developing into the Avon underway. It's a level 129.
For the full year 2023 has produced a total of 35536 ounces slightly above the midpoint of guidance rich.
<unk> remains a key focus for the team in Q4, culminating in us reaching one nine level access.
Since then we've been focusing on developing the level of infrastructure requirements and issues finding activities, such as English phrases gateways and power distribution.
170, 149 with development in New York and Northern Europe.
With focus in Q1 remaining firmly on infrastructure development are the gold production levels are expected to be consistent with the 2021 readout.
As we complete infrastructure and sell development stope production is expected to ramp up to reach steady state by the end of Q2 with grades in line with two peanuts.
Finally, after receiving the required authorizations to proceed with the excavation of the Brookfield.
Or we've made headway installing support infrastructure at the begin excavation of the port which was initiated in early January.
Last week I think of the portal was completed and the ground support phase of the portal is ongoing.
As soon as this phase is completed.
I'm working with both match one sunpower exploration ramp is being tracked closely internally, we'll be keen establishing ventilation secondary transportation and all the jacks that support the existing operation, but also allowing us to leverage the 33 level infrastructure, just offering deep production starting with the press cancel.
So overall as expected and conveyed in our last update strong execution at the two sites in Q4. Thank you all for your cash.
Cash costs and all in sustaining default well within guidance range provided in January 2020.
Or do you.
Thank you Brad.
I will start with an overview of the fourth quarter and full year results.
We reported Q4 production of 36216 ounces was largely in line with expectations and brought full year production to 123000 336000 sales in the fourth quarter was 37620 ounces slightly ahead of production due to the timing of final buoy sales.
All in sustaining costs of 2082 or U S 1529 were down slightly from the same period in 2022, primarily due to higher sales volumes as Cynthia mentioned, we expect the trend of higher output driving lower costs to continue for 2024 with guidance set at.
160 to 180000 ounces.
Yes.
One 1325 to 14 75, an ounce.
Our net income and adjusted net income for the fourth quarter or 2023 of $2 4 million or <unk> <unk> per share.
Please do note that the quarter included a one time non cash deferred tax impact of $8 6 million or six cents per share.
Still a $5 $9 million higher than the corresponding period in 2022.
Cash flow from operations for the fourth quarter were $37 2 million or <unk> 25 per share and $101 4 million or 69 per share for the full year as a result of cash flow during the quarter and the year total liquidity stands at 153 million up.
Up from $143 million at the end of the third quarter and from $129 million at the end of 2022.
Balance sheet strength remains a priority for us and we expect higher grades achievement to drive costs, lower and supporting strong cash flows, especially in Q2 and at current gold prices, allowing us to pay down the remaining balance of <unk>.
Our revolving credit facility by the third quarter as well as fund the range of opportunities to reinvest in the organization.
We will now take us through the exploration review.
Thanks, John.
At December 31, 2023 milestones combined proven and probable mineral reserves.
$1 1 million ounces from $2 8 million tonnes grading 12, seven grams per tonne.
Combined measured and indicated resources exclusive of reserves were 327000 ounces.
And combined inferred mineral resources were 808000 ounces.
<unk> continues to be based on U S $1400 announced pool and resources are now based on U S $17 per ounce.
Gold contained in proven and probable reserves that increased 21% driven by a maiden reserve at Presque Isle of 66000 ounces grading seven six grams per tonne.
Along with replacement and additions in acuity.
I think whoever buy analysis were successfully for placements preserves.
After we applied or conservative estimation parameters and optimize the AAA <unk> techniques.
There remains a large resource of measured and indicated and also in third resource that Eagle River, how can the opportunity.
Turning to reserves in the future.
Reserves and resource estimates at all sites reflect reduced exploration spend in 2023 drilling was therefore focused on improving geometric understanding of ore bodies and conversion of inferred resources to measured and indicated categories.
However in 2020 for a drilling program has been increased substantially compared to 2023 to approximately $30 million or 185000 meters for a balanced program of underground delineation and exploration as well as surface drilling.
Okay.
It was a very exciting quarter in Eagle River as further drilling on several high grade intersections in October have developed into a new zone, namely the Falcons, we 11th zone that occurs within volcanic rocks immediately west of the mine diary.
Additionally, gold mineralization was identified along the eastern margin of the mine diary near the historic six confirming our theory that volcanic rocks along this trend our host for Goldman organization reached.
Recent drilling returned 123 grams per ton gold over one seven meters.
Meanwhile, underground drilling 300 East zone.
<unk> confirmed the consistency of the high grade mineralization now extends to the 1600 meter level and remains open down plunge.
Deeper step out drilling is planned to provide initial indications of mineralization below there so to optimize future drilling and development as well as to convert the large inferred resource base to indicated and subsequently into reserves.
As part of the 2024 increased exploration program testing is also planned at.
At the neighboring zones, such as six zone, 711% 11 zones. These zones have the potential to also extend to 600 vertical meters below surface and beyond.
On surface drilling is planned to test a number of targets generated using artificial intelligence on our existing databases as well as several known zones such as the fourth at Hertz fans. However year to date warm weather conditions may require drilling to be reallocated to exploration targets immediately east of the mine diary.
And your T cells.
In October 23, the company announced the discovery of the Falcon III 11 zone. Subsequent drilling has now delineated the zone to extend that lease 200 meters are punished and nearly 100 meters along strike and interpreted to extended 900 theatres to surface similar to that of the neighboring stores seven zone.
Recent drilling returned 270 grams per tonne over $2 3 million.
So the one section that return.
161 grams per ton gold over half meter.
Obviously this area remains a growth priority for 2014.
Yeah.
Despite the reduced drilling that kita.
It was an exciting year and we were able to add over 120000 ounces of reserves between prestige and acuity within Kenai drilling has been focused on better delineating the <unk> zones to de risk 2020 for volume production.
Particular, given the high rates in the reserve model.
The drilling was focused on the south end of 2023 and has confirmed the continuity and high grade of the stone also underground exploration has been completed to extend the deeper portion of the deeper zones as well as the footwall zones.
<unk> will be increased in the future once more optimal drill platforms are established.
Her skill drilling has confirmed not only the quantity of the gold mineralization and the validity of the geologic model, but also the potential for down plunge extensions towards the east, which will be further tested from surface and from underground drill platforms from the exploration ramp.
Of course, our skills all of it is just one of several zones, having the potential to offer supplementary source of mill feed near surface or the upper mine area for the spare installed capacity at the mill.
To this end recent drilling results from the shock and do some zones in 2023 are returned encouraging results.
Both of these zones are accessible from the existing 33 level development that extends across the property.
Hey, this is an important year for exploration at Cana, we have developed a balanced and integrated approach to optimize exploration spending with a combination of delineation extension in mine exploration and conceptual regional targets.
Other exciting targets to be tested this year is the wish bone, which is proximal to the shock Keystone and adjacent to the 33 level development. In this area limited drilling has intersected high grade gold along a basic ultra major contract.
We expect to release these results in the coming weeks and further to the east <unk> zone drilling will be focused on refining the <unk> oil and converting inferred resources.
Category.
Over to you.
As you can tell we're excited about the future of the business.
Delivery.
Yes.
This year, we had guided to produce 160 to 180000.
And she even split between the teeth and in ASIC Rafi You Act on it.
Yes.
'twenty three before this.
<unk> operates something that.
The strategic imperative.
And joining from development performance yesterday the Destocking.
The benefit from 125th Zimmer.
Thank you.
What is shown on the slide to wrap up.
Ladies and gentlemen, this compelling story, but the compounding future in <unk>.
Canadian production, Greg Tactful and long track record.
Finding and producing office efficiency significantly underexposed.
I would say is not all but no cap to maintain to keep it under utilized instruction and FMC continued to get stronger and stronger.
Efficient organic growth is remaining the industry ladies gentlemen.
The people and the opportunity to build this business.
Our superior returns over the longer run thanks.
Thanks for listening today, and with that I'll turn the upgrade to <unk> question.
Thank you as a reminder to ask a question. Please press star one one on your telephone.
Wait for your name to be announced towards the draw. Your question. Please press star one one again please.
Please standby, while we compile the Q&A roster.
Our first question comes from the line of Ralph <unk> from eight capital.
Thanks, operator, good morning, Andy and team two questions. Firstly on keynote maybe you can help me try to understand where are you in.
Respect of development ahead of the mine plan.
Sort of a six month phenomenon it was sort of a steady state development versus mining mining and are we there yet.
Sure.
Absolutely.
Hey.
Thanks for the question Ralph.
To give a bit more context as to where we are at keno.
Really establishing the one nine level of rising is the critical part so what we need to do is develop the infrastructure there, which we started and also as we do that concurrently redeveloped towards horizontal so that's been ongoing and at this point, we are at peak or in 127 and online 29, So we need to.
Development of the infrastructure that will support mining and at the same time continue development in New York and then you can start stoping.
Thank you.
Just to add to that.
The mining of Rodman allows us between one and the key is defining the chains.
Okay.
Okay, Okay, yes, thats better for clarity I appreciate that.
And maybe switching just to Falcon 311.
I noticed that borehole IP will be.
It will be it will be looked at here I'm just trying to understand how the.
Help us delineate a little bit better is this for Midtown for sort of a better understanding of the geologic settings are we looking at sort of improve mineralogy outlook.
Perhaps testing new targets in this borehole IP going to help us test a plunge towards surface ore at depth or sort of a combination of all of the above.
Thanks Ralph.
Yes, certainly the Falcon III.
Three level zone has more sulfide content.
Up to about 5% or so in some areas that it stays within the mine direct so we're looking at surface IP combined with horrible like since we have both we can actually merge them together.
What's going on to help us target the extent of that sold but also further to the west.
We've been able to do a lot of mapping and surface defined where this favorable horizon.
The goal of actually Kurzweil that horizon is important that we think all.
IP at surface IP is going to be able to detect the sulfides and sort of help with.
Getting the drill holes.
Okay.
Yes.
Very helpful answers, thanks very much.
Thanks Mark.
Thank you.
One moment for our next question.
Our next question comes from the line of Wayne Lam from RBC.
Thanks, Good morning, guys.
Just curious on the resource update.
Good to see the overall reserve additions.
I was just wondering if you might be able to provide a bit more detail on the change in parameters around the estimate.
For the resource and then.
Was there any greater dilution assumptions used and just curious if keeping the gold price assumption unchanged.
What the delta might have been.
Versus last year's estimate.
Great. Thanks, I'm going to hand, it to Mike I think he can help yes certainly.
<unk>.
We're trying to do as a company has certainly standardize our approach.
For resource estimation.
And as part of that Eagle River was on paper sort of political model to several years ago, and we converted it to three D.
We continue to improve there.
No.
Reminding these results, particularly in the mechanics that are somewhat new to us so.
What we're really we're looking at is.
Standardization, we're looking at maybe introducing.
Slightly more conservative capital levels.
At the Eagle River, just to kind of be more in line with managing risk that with BARDA, we have in place that Gina.
And that was a big part of it. We're also starting as you know we have implemented.
Fairly comprehensive.
Reconciliation, it's early days, we're still working on it but some indications and some areas, where we wanted to manage risk a little bit better.
These are very high grade zones, but sometimes when you get.
Over several kilograms of gold per tonne and then assays, how R&D cap that I mean can we go by ABC.
The big areas of physical gold, but I think in our estimation.
We are forecasting budgeting and manage that risk a little bit so we've decided to lower the cotton.
<unk>.
Some other zones there.
As far as that.
Lowering of the <unk>.
Cutoff grades we didn't change it for reserves that stays the same it did have a little bit of an impact at Eagle River. So far.
Typically in some of our high grade stopes the boundaries quite sharp, although we are noticing that there are some.
Other areas of the <unk>.
We're looking at some lower rate values that maybe if we could.
Some more favorable cutoff grade scenarios might be able to bring them. The mine plan as well, but I would say this is a big year for optimizing the work we're doing that equal river is determining.
The best way to mine all of this resource.
And I think it's important to note that.
And I think that's really going to be the focus.
It was off the team under this year.
Yeah.
Okay, great. Thanks, and then maybe.
Just curious if you might be able to provide a bit more detail on how the cost optimization.
Evaluation has been progressing at Eagle River.
And just curious if you anticipate any level of increase in cost as you move further down into the three hubs.
The 300 zone versus the Falcon zone closer to surface.
Yes, I mean, the cost optimization program, we launched about three months ago four months ago on the operation.
It's going really well at the moment it would be getting.
Getting to a point, where you're getting a sense of the baseline understanding and trying to understand where the costs.
That's all for the organization, which we want to leverage and I would say that we are quite excited about what the scheme in terms of opportunities.
Pushing that presents a show me the case not only on our cost us significant opportunities are significant as well we leverage loans.
Alongside our work on our mind mix at mine logic, as well, which is quite of 17 I think if you look at the ethanol plant I don't think you should anticipate a high and increasing costs.
Okay anticipate is it your <unk> cost structure, and driving a more logical approach to execution and across nimble.
Okay sounds good and then maybe just a.
Last question for me.
A follow up on the ramp up of Cana, just curious in terms of tonnage.
If we should kind of assume a ramp up to where you exit the year at say 700 to 750 tons per day, and then maybe just on the grade profile if.
If we assume lower grades through Q1, and maybe part of Q2 should we assume that grades kind of reached the upper end of guidance, maybe around the 2014 gram level by the end of the quarter as you get into the heart of the 100009 level.
It's a good assumption Ryan I think quarter. One you can certainly assume that the ramp up and I think it's been sick, but he is working on preparing for mining so it's really important.
Sort of what's being done on ensuring that we're ready to do that Mr. Mora.
Infrastructure.
It's small.
So that's a good assumption and then it does.
Good assumption regarding the numbers that you mentioned.
Okay perfect. Thanks for taking my questions.
Thank you.
One moment for our next question.
Yeah.
Our next question comes from the line of Ryan Walker from Echelon capital markets.
Hi, good morning, everyone and congrats on a strong finish to the year, So just sticking with Tina.
And in the press release or briefly that you are successfully addressing the challenges of mining and a shift.
Now that you're in there physically.
Is it more challenging than you would've thought or youre seeing perhaps youre needing to use more ground support or maybe anticipating a higher degree of.
Pollution during mine than you might have previously can you kind of just give us a status update in that regard.
Great Christian let me hand over to <unk>.
Thank you Kevin He's got settled our expansion mining vis a vis any itself.
Ryan Thanks for the question.
I would say mining, it's just right now is going really well.
In terms of.
Support the support schemes that we have are successful in addressing the challenge.
In terms of development assumptions also used development's assumptions that were derived I would say from past life mining in similar conditions and right now what we're seeing is our pharmacists about him have actually been slightly higher than what youre, assuming in our internal modeling. So things are looking up on that site.
Yeah.
Okay, Great. That's very helpful. Thank you that's it for me thanks.
Okay.
Thank you.
One moment for our next question.
Our next question comes from the line of John Tumazos from John Tumazos, very independent research LLC.
Thank you very much.
For a couple of years the company was.
Short of funds completing the Canada project.
How much catch up as needed.
Per machinery replacement.
Underground development.
Okay.
And.
We had about 165000 ounce fall in total resources.
As we infill.
The past resource categories to add to reserves.
And do you think one year is enough to catch up on those fronts.
John Great question you asked.
Two questions, Dave Let me start first with the capital requirements.
I think our capital.
All of that.
Fine.
Our concern on adding more capital.
Hi, Blake.
Things.
So maybe we can wait.
Great.
And so at those levels.
Need to do that I think one.
One on the way now to leverage.
Now that you see.
Yes, I think on the resource itself. So really great question and I think it's a fund.
And a little bit.
That's an interesting it was done in 2023.
Thanks, Josh.
Okay.
My focus, especially if you look at the convention that built the dominant market environment I think.
The trials, if you can't do a great job with the amount of money would be putting in exploration.
To get going towards best.
Good luck.
You'd be targeting these things and we wouldnt be putting the money these leases beneath it.
Let me ask Mike just to add if he's got anything.
Your question on that I would just add this year given the limited drilling that we did get out of 120000 ounces of reserve so as it take that from the resources of <unk>.
I get that but.
I would say we're.
Doubling I would say.
The amount of drilling this year and it is designed like I said, it's a balanced in where the integrated approach to subtly better define some of our known zones, but.
To add resources in <unk>.
Areas that also.
Look at some conceptual targets I mean, we want to have a balanced approach going forward. So we're always looking for a home run on exploration, but we're also looking to replace what we might have and that's our that's our goal there.
Pretty happy with the drilling that we've had.
We continue to increase the reserves.
In terms of the press skills.
How many.
Here's how much work is needed.
Credit to reach production.
So we actually mentioned it before we will we will.
And developing in that area by.
Monday.
Yes.
Okay.
In the mix it will be producing purpose Gil let me going to be start development into preschool during the beginning of next year Matt.
Yeah John.
I think that itself will.
So the actual PRASM up actually finding that it is well.
Well understood and the plan will be developing in the year. It will be produced will fund up conference gives us all the ALJ yet.
Thank you.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
[music].