Exploration pays off for Wesdome with higher gold production seen

A jump in gold production is forecast for 2017 by Wesdome Gold Mines Ltd. after an exceptional year for exploration.

In 2017, it expects gold production to increase over 2016’s 47,737 ounces to range between 52,000 - 58,000 ounces at operating costs between CAD$1,030 - $1,130 per ounce (USD$765 - $835 per ounce).

In 2016, the company spent $10 million on exploration for 104,000 metres of drilling (2015: $1 million, 21,000 metres). The company had a 2016 net income of $2.4 million or $0.02 per share as compared to 2015’s $1.1 million. Wesdome is in its 29th year of continuous gold mining operations in Canada. The company is 100% Canadian focused with a pipeline of projects in various stages of development.

The Eagle River Complex at Wawa in Northeastern Ontario is currently producing gold from two mines, the Eagle River Underground Mine and the Mishi Open pit, that is processed at a central mill.

Wesdome is actively exploring its brownfields asset, the Kiena Complex in Val d’Or, Quebec. The Kiena Complex is a fully permitted former mine with a 930 metre shaft and 2,000 tonne per day mill.

The company has further upside at its Moss Lake gold deposit, located 100 kilometres west of Thunder Bay, Ontario, which is being explored and evaluated to be developed in the appropriate gold price environment.

Duncan Middlemiss, president and CEO, commented “we have implemented a cost-cutting program at the Eagle River Complex which is starting to yield results, and underground development work completed in 2016 has resulted in improved mine sequencing.

We have a total of eleven drills on four assets -- three underground at Eagle River, two at Mishi, four at Kiena and two at Moss Lake. Our asset base is strong and these are appropriate levels of exploration in order to return value to shareholders.”

About 2016, he stated “this was a transitional year for Wesdome with many achievements and positive changes. Despite a slow start to production, operating results improved throughout the year. The team brought higher grade stopes into the mine plan ahead of schedule and controlled production costs, even as additional investments were made to expand mineral reserves, re-new our capital equipment, and extend our operating infrastructures.

Work continues to increase gold production from the Eagle River Underground Mine where our margins are highest. This, along with higher gold prices resulted in higher operating cash flow and net income over 2015, despite lower production. Free cash flow was lower than 2015 primarily due to increased exploration spending and reserve development.

This exploration work is necessary to determine the appropriate production profile scenario at the Eagle River Complex.”

Middlemiss added that “Wesdome had an exceptional year for exploration. Eagle River reserves increased 15% net of depletion, 300 E Zone was drilled further and delineated, where the widths are significantly greater than previously encountered at Eagle River.

The 7 Zone was traced 200 metres up plunge towards surface. These results set the path for diversified working places underground with the goal of raising and stabilizing quarter to quarter production.

We are very excited by the Kiena Deep discovery in Val d’Or, Quebec. Since announcing the discovery in August 2016, we have increased the number of drills from 2 to 4 and results continue to deliver grades substantially higher than the historic production grade profile at Kiena of 4.5 g/t.

Step out holes confirmed mineralization now tested along 550 metres of strike length, indicating a potential large new gold system. We expect to make a decision on underground ramp development in the short term.” Mineral reserves net of 2016 production increased for the fourth consecutive year. Proven and probable reserves at Eagle River was 344,000 ounces (2015: 300,000 ounces) as at Dec. 31, 2016 -- a 15% increase from the prior year.

Mishi pit reserves were lowered to 102,000 ounces (2015: 131,000) after mining and reconfiguring the west pit.

Total reserves for the Eagle River Complex was 446,000 ounces as at Dec.31, 2016.

Total mill throughput of 309,035 tonnes averaging 844 tonnes per calendar day comparable to the previous year of 836 tonnes per calendar day.

Eagle River Complex revenue of $81.6 million (2015: $73.5 million) on gold sales of 48,680 ounces (2015: 49,804) at an average realized price of $1,676 or US$1,265 per ounce (2015: $1,475 or US $1,153).