Wesdome Gold Mines Ltd.

Good morning. Welcome to West Dome Goldmine's Q2 2023 Financial Results Conference Call. I will now turn the call over to Heather Laxton, Chief Governance Officer, to begin today.

Great. Thanks, Operator. And good morning, everyone. Welcome to West Dome Goldmine's second quarter 2023 Results Conference Call. Our release yesterday should be read in conjunction with our MD&A and financial statements, both of which can be found on CDAR 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. Before we begin, we'd like to take this opportunity to remind everyone that during this call, we'll 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 notes contained in yesterday's press release and in the company's management discussion and analysis dated August 10th, 2023. Both documents are available on our website and on CDAR. The slides used for this presentation and the recording of this call will be posted on the company's website. I will now turn the call over to Angie Bass, President and CEO.

Thanks, Heather, and good morning, everyone. After about six weeks at Western, I must express my sincere gratitude for the warm welcome and the chance to immerse myself in operations and engage with our dedicated team, as well as our value partners in the investment community and other stakeholders. I come away excited at the underlying potential of this asset as one of the opportunities that presents a fantastic pathway to increase value generation of this high-quality Canadian asset. Speaking on the call with me today will be our COO, Fred Longman. I'm sorry. Our co-NCFO, Scott Gilders, and our VP of Exploration, Michael Michaud. Before we delve into the final operational details, I'd like to share a few thoughts of my own. In the second quarter, both sites delivered solid operational performance, showing sequential improvements over the first quarter in terms of development rate and throughput, despite facing challenges from regional forest fires. Their rapid response, processes, procedures, and commitment to safety during this time is to be commended. Looking ahead, we are well positioned to meet the midpoint of annual guidance at 110,000 to 130,000 ounces at an all-in sustaining cost of the US dollar 1620 to $1,800 an ounce. We do forecast cash flow to remain back in wages this year as Q3 will coincide with peak capital spend and lower sales volume due to planned maintenance shutdown at Eagle. I must emphasize that the guidance we set forth at the beginning of the year remains intact. Despite the improvement to consistent operational delivery in 2023, there is more work to be done Over the coming months, I'm committed to developing and implementing a strategy founded on long-term, per-share value maximization, starting with improving our technical capacity to manage risk, optimize plans, and sustainably drive down cost-to-no-cost. These initiatives, in addition to an increased focus on step-change exploration, will serve to maximize value of the strong assets within a risk framework that's acceptable to our business. Tripping to our balance sheet, I'm pleased to announce And after an extensive and holistic review of near-term operating and financial projections, we have determined that the use of the ATN tool is no longer necessary. Based on preliminary updates to our Life of Mind plan, we have confidence in our outlook and we look forward to issuing at least two years of achievable production and cost guidance in January. With a substantial credit line of $150 million at our disposal, we have more than enough liquidity to meet short-term cash requirements. As such, I'd like to extend my thanks to Scott for working with us as a board of lenders to put this in place. Although we have not worked long together, I've enjoyed our relationship and wish Scott all the best in his next endeavor, where I know he'll do a great job. With that, I'll pass over to Fred to walk to an operational performance in the quarter.

Thank you, Nadia. Everyone, thank you for attending this morning. As Nadia mentioned, we're happy to report another strong order of execution in both operations. production was either in line or slightly better than internal targets again in Q2 at the two sites. Starting with Eagle River, Q2 production of 22,845 ounces was an improvement over Q1 and slightly higher than internal production. Now that the Mishi stockpile is depleted, the only source of ore at the mill is from the underground, and the underground really delivered in Q2 with a record throughput of 64,672 tons, or 718 tons per day. testament to the efforts of our people at site to focus on productivity, with particular emphasis on material movement in the ramp. Similarly, development performances in Q2 continue to exceed targets, and we now project 2023 to be a record year for lateral development at the model. This higher development rate results in slightly higher operating and capex costs in 2023 on an absolute basis, but it positions us very well for 2024. Akina Q2 production came in at 8,147 ounces a slight improvement over Q1, and higher than our internal projections. Grade was again slightly higher than upper end of guidance in Q2, as a result of higher than anticipated grades from the newly commissioned A2 zone, and continued positive reconciliation of the recovered diluted ore from previously mined areas in Keenan. Given the positive results seen in reconciliation today, we're now expecting grade at Keenan to track slightly higher than the upper end of the guidance for the year. Throughput in Q2 was also a record at Kena since restart with 51,824 tons processed. All of this despite the fact operations had to be suspended sporadically over the entire month of June due to the forest fires raging in the region. In total, the underground mine lost 15 shifts from the end of May to the end of June. Development performances were also excellent at Kena and Q2, and the Kena deep ram continues to track ahead of budget schedule. And earlier commissioning of the 129 level horizon positions us very well-deserved on increased production levels in 24. It also enables us to proceed with delineation drilling ahead of mining, validating ore grades and shape, and firming up our geological understanding of the area in informing the 2024 budget process that we're just about to kick off. We also continue to advance preparation work of the Presque Isle ramp to proceed as soon as the authorizations are granted. Initial results of our internal technical study have been positive. Finally, we processed approximately 7,500 tons of ore from a neighboring mine at Keenan in Q2, which are not shown in the numbers on the previous slide. This enabled us to use some of our excess mill capacity with the added operational benefit to us, aside from netting some profit, of improving stop-cycle time underground by increasing the availability of the paid stop-lives over the quarter. This agreement was put in place and concluded in Q2, and no further agreements are being discussed at the moment. So all in all, a strong quarter on the execution side for both mines, where our teams continue to show disciplined operation, consistently achieving a plan despite headwinds from weak weather events. I'll pass it on to Scott to walk through the financial highlights for this point. Thank you, Fred.

We generated $84.6 million in revenue from the sale of 32,000 ounces of coal, which includes 22,500 ounces from Eagle River and 9,500 ounces 28.3 million. Depreciation and depletion has increased by $16.9 million compared to the same period in 2022, primarily due to the inclusion of 14.3 million from Kena due to commercial production being declared on December 1st, 2022. County depreciation is based on units of production using time. Although the Q2 cash costs of $17.43 per ounce is above the guidance level, the year-to-date cash costs 15.80 per ounce remains in the middle of the range, and AISC of $2,111 per ounce is at the lower end of guidance. In H-1, we have spent $40.6 million in capital and are currently forecasting to spend $400 million to be included in our original guidance by December 31, 2023. At June 30, the cash balance is $22.1 million, with $39 million drawn on the $150 million revolver compared to $38 million at December 31, 2022. To date, we have raised $45.1 million of gross proceeds from the ATM, and are pleased to announce that based on our most turnout look, use of the ATM tool is no longer required to support liquidity needs, and we are comfortable with the available capacity under our existing facility.

And over to you, Mike. Thanks, Scott. Well, I think wherever exploration is going strong, We are continuing with our aggressive drilling program in 2023, with underground drilling focused on converting the large inferred resource base into indicated and subsequently into reserves at year end. The majority of this drilling has been completed at the high-grade 300 east zone at depth. As announced in June, drilling of the 300 east zone returned a number of exciting intersections with high grades and wider widths, including 78 grams per tonne gold over 9.4 metres core length veins of the mine. These wider hits occur at the intersection of two shear zones and is characteristic of the previously mined 303 lens. You'll recall that the 303 lens was mined primarily in 2019 with an average grade in excess of one ounce per ton. Confirming the extension of the 300 east zone down plunge bodes well for the neighboring zones such as at the 800 and 700 series veins to have similar down plunge potential and as such These will be tested as part of a deeper directional drilling program to commence in Q3. On surface, a comprehensive 3D lithostructure model has been developed to guide exploration drilling in the volcanic rocks immediately west of the mine diary. This drilling is designed to discover mineralization similar to that of the Falcon 7 zone that is currently being mined. Limited drilling in the past has returned several high-grade hits that could be part of a network first phase of drilling, approximately 8,000 meters, started in July. Any resources discovered here could meaningfully enhance the future operational flexibility of the mine. At Kena, underground drilling at the Kena Deep Zone has continued to return good results from the south limb and annual basalt zones at depth. Given the importance of these zones adding ounces to the resources drilling will be completed once more optimal drilling platforms are established at depth. Meanwhile, on surface, definition drilling is ongoing at the Preskill Zone, which is located less than two kilometers west of the TMI. The drilling is designed to convert the inferred resources to indicated and into reserves by year end. As part of this exploration, a ramp will be driven to provide the ideal platform to test the mineralization at depth, where it remains open. The start of the excavation of the exploration are secured. An added benefit of the exploration ramp is that it could be connected to Kena's existing underground ramp network, providing access to surface for the existing operation and provide a second access for conveyance of material and personnel, freeing time for additional ore hoisting via the shaft. Additionally, surface drilling east of the Kena mine returned encouraging results from several zones with vastly different styles of gold mineralization This highlights the amount of gold in the Kena system and the number of different gold deposits that could exist in this region. For example, drilling at the Shockey Zone returned 2.3 grams per ton gold over 72 meters within diorite and represents a more bulk mineable opportunity, whereas at the Dubuisson Zone, drilling returned 10 grams over 25 meters from a shear zone. Finding gold in various forms makes this relatively underexplored part of the property very exciting, not just for the prospectivity, but also due to the fact that it is proximal to the 33-level tractor that extends over three kilometers east of the Kena Mine shaft. Any ore found here will provide a second source of milk for the underutilized Kena milk. Over to you, Anthony.

Thanks, Mark. To wrap up today, I'm pleased with the first indications I see with an organization. I'll be using the next 12 to establish plans in collaboration with my team to drive an agenda towards increased value for all our stakeholders. All this done in the context of the risk profile in which we are comfortable to operate, and most importantly, of ensuring the safety of our people, which remains my number one priority. Thanks for listening today. This concludes the formal portion of the call today. We'll open up the lines for questions.

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

One moment for questions. Our first question comes from Don DeMarco with National Bank.

You may proceed.

Thank you, operator, and good morning, everyone. Good morning, NTA and team. Just a couple questions. First off, on the cost volatility at Eagle, and I see the mining rates throughput increasing, but can you just give a little bit more color as to whether that's just a one-off and you expect a rebound to cost lower in Q3, Q4?

Yeah, thanks, Don. It's Scott here. So when we look at the cost on an aggregate basis there, it could be fairly consistent throughout the year. However, in Q1, we received a credit on our inventory movement And that would be just because we shut the mills down a little bit early to do some maintenance. So therefore, we had a little bit higher on the stockpile. And then the only other fluctuating factor is ever with the in-circuit inventory. It's very dependent on the grade at the time that we're processing. If the grade is higher material at that point, typically, there will be more in the circuit at the end of the month. And therefore, the carrying value of the inventory will be higher. So therefore, it just flushes out in the next quarter usually.

Okay, good to hear. And I saw the news on the ATM. So it's no longer required. Just a couple quick questions on this. Did you draw anything on the ATM in Q3, say prior to last night's release? And also, do you plan to terminate it then? So when or do you plan to just let it expire?

Right now, Don, we didn't draw anything in Q3. As you're aware, we can't draw anything during a blackout period, so we drew about $11 million or raised about $11 million in Q2, and the intentions are that based on our liquidity, that we're not going to utilize the ATM at this point.

Okay. Yeah, go ahead. I'm just saying to Scott that we are not using the ATM. Okay, you won't be using it going forward. Okay. Thank you so much. That's all for me.

Good luck with Q3. Thank you. And as a reminder, to ask a question, please press star 1-1 on your telephone.

One moment for questions. Our next question comes from Ralph for 50 with eight capital.

You may proceed.

Thanks operator. Good morning, Anthony and team. Uh, two questions for me. First one, uh, maybe for, for Fred, uh, is there any of the 120 level or even one 21 or one 23 at Kina that's going to be available for mining in 2023? Or is that mostly sort of a 2024 plan? And if so, maybe you can help us for context around when and how much do you expect to be mining from those areas?

Thanks for the question, Ralph. Ultimately, yeah, the upper part of the 129 horizon will be available for mining, but only later in 24 and into 25, because the mining sequence as we draw ore, if you will, from the ore body has to start from the bottom up. So we start from, we drive the ramp down all the way down to 129 and start stoping there and then stopping upwards.

Okay, great. That sounds very encouraging for ounces per vertical meter. Second question, maybe for Scott. Scott, if all goes according to plan with regards to sort of these internal forecasts, how much, if any, of the credit facility will be required into year end to address CapEx and working capital needs?

When we look at the internal forecasts and look at the numbers, we're not going to use the majority of the revolver. We're very comfortable with the level that we have at this point, and that's why we decided to suspend it at this point.

Yep, understood. Okay. Thanks, Anthony and team for the color. Appreciate it.

Thank you. This concludes the Q&A session, and this concludes today's conference call. Thank you for participating. You may now disconnect.