Wesdome Gold Mines (WDO.TO) has announced an operational update on the third quarter of 2015, and it’s great to see the company was able to increase its gold production by 14% to in excess of 14,000 ounces.
Of the 14,284 ounces, 10,637 ounces were produced from the high-grade underground mine at Eagle River where the ore had an average grade of 7.7 g/t. The remainder of the gold production had an average grade of 3 g/t and was sourced from the Mishi open pit (so a 3 g/t grade is pretty good for an open pit scenario). The average grade and production rate could be even higher in the current quarter, as Wesdome said the average grade at Eagle River increased to 9 g/t during the month of September, and the 300 zone where the ore was sourced from is currently still producing this high grade ore.
The company has also raised C$5M in a private placement priced at C$1 per share, and this will be very useful to start expanding the mill at the company’s main project. This should increase the production rate from 57,000 ounces (midpoint) in 2016 to 76,000 ounces per year in 2018-2019. The higher capacity and higher average head grade will reduce the operating costs per ounce from C$1130/oz to less than C$850/oz. This would result in an operating cash flow of C$45M (using a C$1450 gold price) which should be more than sufficient to cover the
Disclosure: The author holds no position in Wesdome Gold Mines. Please see our disclaimer for current positions.
