In an Oct. 15 research note, BMO Capital Markets analyst Andrew Mikitchook reported that Wesdome Gold Mines Ltd.'s (WDO:TSX) Q3/19 production was a beat and management raised full-year production guidance. "Eagle continues to outperform, delivering strong cash flows," the analyst added, referring to the company's Ontario mine.
During Q3/19, Wesdome produced 28,910 ounces (28.91 Koz) of gold at Eagle, which exceeded BMO's forecast of 19 Koz and the company's Q2/19 production by 29%, indicated Mikitchook. This beat was due to positive grades that averaged 13.3 grams per ton (13.3 g/t). In comparison, reserve grades at Eagle are about 12 g/t. Thus far in 2019, the gold miner produced 70.3 Koz.
Mikitchook relayed that Wesdome's management increased full-year 2019 production guidance to 88–93 Koz gold from 72–80 Koz but did not change cost guidance, which is a cash cost of US$640 per ounce or an all-in sustaining cost of US$985 per ounce. Costs for the year are expected to come in at the low end of guidance.
The company's strong cash flows continue to fund Wesdome's ongoing exploration at its Eagle and Kiena mines, Mikitchook pointed out.
BMO has an Outperform rating and a CA$9 per share target price on Wesdome. The company's current share price is around CA$6.49.
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Disclosures from BMO Capital Markets, Wesdome Gold Mines, October 15, 2019
IMPORTANT DISCLOSURES
Analyst's Certification
I, Andrew Mikitchook, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
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