Wesdome announces positive Pre-Feasibility Study and restart decision for Kiena in Val d’Or

“We are excited to be moving ahead with the Kiena re-start, less than five years following the discovery of the Kiena Deep A Zone," said Duncan Middlemiss, President and CEO.  

Wesdome Gold Mines Ltd. has announced positive results from the independent Pre-Feasibility Study (“PFS”) prepared in accordance with the requirements of National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) at its 100% owned Kiena Complex in Val d’Or. Based on the results of the PFS, the Board of Directors of the Company has made a restart decision for the Kiena Complex, commencing immediately.

Highlights of the PFS are outlined below. All figures are in Canadian dollars unless otherwise stated:

• After-tax NPV5% of $367 million at US$1,600 per ounce gold, increasing to an after-tax NPV5% of $491 million at US$1,900 per ounce gold using CAD/USD exchange rate of $1.32
• Internal Rate of Return of 98% and after tax payback period of 2.7 years
• Average annual gold production of approximately 84,000 oz per year, with peak production over 115,000 oz in 2025; over 100,000 oz per year run rate expected in 2024
• LOM average cash costs of $502/oz (US$380/oz) and all-in sustaining costs (“AISC”) of $894/oz (US$676/oz)
• Life of mine capital of $230 million ($68 million spent in 2021) fully funded by existing liquidity and operating cash flows
• Average annual free cash flow (2022-2027) of $85.5 million at US$1,600 per ounce gold or $109.5 million at US$1,900 per ounce gold
• Reserve mine life of approximately 7 years represented based on Indicated Mineral Resources as at October 2020 (average grade 11.9 grams per tonne)
• Production activities will utilize using existing mine infrastructure such as the shaft and the existing 2,000 tonne per day mill, which was successfully restarted for the bulk sample, thereby allowing for low costs and short time period to restart the mine

"This transformational project continues to present compelling economics and represents a strong step toward Wesdome becoming a diversified mid-tier producer. We now expect to see initial production from Kiena as early as Q3 2021. To that end, we will maintain our previously released guidance of 15,000 – 25,000 ounces at Kiena until later in the year, when we will reassess based upon start up performance," said Middlemiss.

Compared to the Preliminary Economic Assessment dated June 17, 2020 (“PEA”), higher capital and operating costs reflect modest changes in project scope. The increases are primarily related to the addition of a paste backfill plant, water treatment facility, work at the tailings management area, as well as ventilation and power upgrades, ultimately allowing for increased production and a longer mine life as we delineate additional resources at depth and across the Kiena property. The significant infrastructure in place allows for a low capex, high return project.

Subsequent to the September 18, 2020 diamond drilling cut off date for resources included in this PFS and despite the challenges presented as a result of the ongoing COVID-19 pandemic, 41,780 meters of exploration drilling represented by 143 diamond drill holes have been completed in the Kiena Deep Zone, effective April 12, 2021 demonstrating the potential to add more ounces per vertical metre and potentially enhance economics through higher annual output over a longer mine life. This is evidenced in particular by the recent Footwall Zone discovery and intersection of hole 6760W1 at 41.2g/t over 51.2m which is interpreted as a 300 metre down plunge extension of the initial discovery (see March 23rd and May 19th, 2021 releases). As such, the PFS represents a dated snapshot in time and we strongly believe in the potential of the Kiena Deep Zone becoming a much more substantial deposit.”

Overview

The Kiena Complex is in the Province of Quebec in the Abitibi-Temiscamingue administrative region within the limits of the municipality of Val d’Or and 100 km east of Rouyn-Noranda. It lies to the northwest of the urban centre of Val d’Or and covers 7,047 ha. The Project includes the 2,000 tpd mill and tailings facilities of the Kiena mine, nine shafts including the 930 metre (“m”) Kiena hoisting shaft, related underground workings from past producers and exploration projects, and various surface facilities. Other than the exploration activities and underground exploration development, the principal infrastructure of the Project has been under care and maintenance since mid-2013. Past production from 1981 – 2013 was 12.5M tonnes at 4.5 g/t Au for 1.75 M ounces produced. The Kiena Deep A Zone was first intersected in December 2007 and is localized within the Marbenite Fault (“MF”) deformation corridor and is divided into three main lenses and a fourth smaller lens.

The June 2020 PEA had demonstrated a low-cost, high margin operation with low capital requirements with a short payback period. The PEA was based on the Mineral Resource Estimate (“MRE”) dated September 2019. Consequently, the Company decided to begin a definition diamond drilling program to convert the inferred resources into indicated resources. The updated mineral resource estimate was used as a basis for the PFS.

Mineral Resources

The 2020 mineral resource model with a drill database closeout date of September 18, 2020 (issued on December 15, 2020) was used as the base for the PFS. Drilling efforts converted a large portion of the existing A Zone’s inferred resources to indicated resources despite the lower than planned drill metres due to the operational disruptions attributed to the COVID-19 restrictions. A decision by the company was taken in May 2020 to focus 100% on inferred to indicated resource conversion within the A Zone, as the ability to drill metres had become challenged with the pandemic.

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