In a March 11, 2020 research note, iA Securities analyst George Topping reported that Wesdome Gold Mines Ltd. (WDO:TSX) had "another strong year" in 2019.
The analyst reviewed the highlights. Production in 2019 of 91,700 ounces (91.7 Koz) fell in the high end of guidance. Throughput was decreased but made up for by Eagle underground mine gold grades of 28.6 grams per ton (28.6 g/t). For 2020, iA Securities models higher production, of 94 Koz, at lower gold grades, of 18.2 g/t.
As for the exploration and development company's 2019 financials, Topping noted they were in line. Free cash flow was CA$6.6 million, cash flow per share was CA$0.15 and EBITDA was CA$25.6 million, all as expected. All in sustaining cost (AISC) was US$988 per ounce, also in line with iA Securities' forecast. Wesdome ended the year with CA$36 million in cash and CA$41.5 million available through its credit facility.
Also noteworthy, Topping wrote, is that New Eagle's mineral reserve was expanded by 36%. It now stands at 550 Koz at 14.4 g/t gold, which "supports a typical six-year mine life at a 95 Koz per year production rate." Impressive drill results, particularly from the 303 lens, resulted in this 20% grade boost, he stated.
Topping noted there are two upcoming catalysts for Wesdome. One is drilling at the Kiena project. With the drilling platforms done, drill testing of the up-plunge extension is taking place. The second potential stock moving event is completion of a preliminary economic assessment for Kiena, which is expected in Q2/20.
Topping concluded that with New Eagle and Kiena, "Wesdome will be a 200–270 Koz producer at sub-US$1,000 AISC, possibly as soon as three years from restart."
IA Securities has a Buy rating and a CA$13.40 per share target price on Wesdome Gold, whose stock is trading now at around CA$8.41 per share.
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Disclosures from iA Securities, Wesdome Gold Mines Ltd., Research Update, March 11, 2020
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Company Related Disclosures:
Wesdome Gold Mines Ltd.:
The analyst has visited the issuer’s operations. No payment or reimbursement was received from the issuer for the associated travel costs.
