Wesdome
is an established gold mining company that has produced over 1.3 million ounces of gold over the last
25 years. During this time, we have consolidated dominant land positions and mining and milling infrastructure in two
proven Canadian gold mining camps. This includes over 5.0 million ounces of gold resources. We are focused on
investing in our most profitable core assets. We believe that establishing a clear, longterm path here will enhance value
and crystallize the tremendous blue sky potential of our assets in the market’s eye.
2013 Highlights... 2
Reserves and Resources ... 3
Management’s Discussion and Analysis ... 4
Management’s Responsibility for Financial Statements ... 15
Independent Auditors’ Report ... 16
Consolidated Statements of Financial Position ... 17
Consolidated Statements of Loss and Comprehensive Loss ... 18
Consolidated Statements of Total Equity ... 19
Consolidated Statements of Cash Flows ... 20
Notes to the Consolidated Financial Statements ... 21
2013
was a remarkable year for the gold mining industry and Wesdome particularly. The gold price dropped
after 10 years of gains, confidence in the industry cratered and gold stocks sold off. A lot of money was lost by late arrivals
to the party. Understandably, conditions forced a rethink and prompt action. Boards and Managements changed, risk
capital disappeared and rear-guard defensive strategies became the industry norm.
At Wesdome we shuttered our higher cost producer and focused capital investment at the Eagle River Complex. This
high grade operation has proven defensive at much lower gold prices than today and with modest capital investment
has significant potential to grow.
Perhaps this is best demonstrated by reviewing this year’s performance. Despite two months of milling downtime due
to floods and lightning strikes, Eagle River generated strong operating earnings and essentially covered one-time costs
associated with Board and Management shake-ups and the suspension of mining operations at Kiena. Your Company
essentially broke even with a small loss on one-time non-cash accounting attributes.
What is even more relevant is that we generated $4.4 million free cash flow in the fourth quarter, are off to a strong start
in 2014 and have seen the Canadian dollar gold price rise by $200 per ounce to $1,480 Cdn since year end. We are on
a bit of a roll here with continued high grades in our sights and new high grade discoveries. Reserves are up, investment
capital is focused on a simple achievable plan and morale is upbeat.
In 2013, we pursued two transactions that will save costs, expand potential and increase flexibility in the future. Gold
assets were on sale last year.
As the last of these are settled this spring, our gold portfolio will host 43-101 compliant proven and probable reserves of
281,000 ounces, additional measured and indicated resources of 2.3 million ounces and additional inferred resources
of 2.6 million ounces.
Lastly, our team makes it happen and we are very fortunate that the industry downturn has enabled us to significantly
deepen our technical and management expertise and experience.
On behalf of the Board of Directors,
HIGHLIGHTS
n
$4.4 million free cash flow generated in Q4, despite weak gold prices
n
Eagle River produces 15,700 ounces at 12.3 gAu/tonne in Q4
n
$14.7 million in cash and gold bullion at market as at December 31, 2013
n
Reserves increase 28%, net of depletion
n
Two new high grade discoveries at Eagle River
n
Technical and Management experience strengthened
n
Announced Moss Lake Gold Mines Ltd. acquisition
MINERAL RESERVES* December 31, 2013
Mine
Category
Tonnes
Grade
Contained Gold
(gAu/tonne)
(ounces)
EAGLE RIVER
Proven + Probable
520,000
10.1
169,000
MISHI
Proven + Probable 1,592,000
2.2
112,000
TOTAL
Proven + Probable
281,000
ADDITIONAL MINERAL RESOURCES* December 31, 2013
Mine
Category
Tonnes
Grade
Contained Gold
(gAu/tonne)
(ounces)
EAGLE RIVER
Measured + Indicated
167,000
8.3
44,000
Inferred
437,000
7.5
105,000
MISHI
Open Pit
Indicated 3,688,000
2.1
248,000
Inferred
764,000
2.4
59,000
Underground
Indicated
567,000
4.5
82,000
Inferred
437,000
5.8
81,000
KIENA
Measured + Indicated 3,900,000
3.5
438,000
WESDOME
Indicated
336,000
7.5
80,000
Inferred 2,311,000
8.0
598,000
MOSS LAKE
Indicated 39,795,000
1.1
1,377,000
Inferred 50,364,000
1.1
1,751,000
TOTAL MEASURED + INDICATED
2,269,000
TOTAL INFERRED
2,594,000
RESOURCES
* All Mineral Reserves and Mineral Resources estimates have been made in accordance with the Standards of the Canadian Institute of Mining, Metallurgy and Petroleum and National Instrument 43-101 and assume a gold price of $1,300CDN per ounce. All Mineral Resources are in addition to Mineral Reserves.
Mineral Resources are not in the current mine plan and therefore do not have demonstrated economic viability.
As per section 4.2 (b)(ii) of National Instrument 43-101, the change in mineral reserves and resources for the Eagle River and Mishi Mines does not constitute a material change in the affairs of the Company. For the Eagle River Mine refer to the Technical Report filed on SEDAR, dated December, 2005, by Strathcona Mineral Services Ltd. All mineral reserves and resources at Eagle River employ a 1.5m minimum width, a 3.0
gAu/tonne minimum grade for continuity and include 1.0m of external dilution. The Mishi Mine Mineral Resource estimates were completed by InnovExplo Inc. in a
43-101 Technical Report dated August 25, 2010, and filed on SEDAR. The initial Mishi Mineral Reserves estimates were compiled in a 43-101 Report by InnovExplo Inc. dated January 12, 2011, and also filed on SEDAR.
At Mishi, proven reserves include broken ore, stockpiles and about half of two 5 metre benches (Bench 2990 and 2995). A 1.0 gAu/tonne cut-off grade is employed. Mishi resources are based on InnovExplo’s 2010 model employing a 1.0 gAu/tonne
cut-off grade. This has been adjusted to reflect production, broken ore and stockpiles mined in 2012 and 2013. Actual ore mined and milled reconciles very well with the block model. This is clearly a robust and reliable model to date and is carried forward subject to production reconciliation.
Qualified Persons for the Mineral Reserves and Mineral Resources estimates as per 43-101 are as follows:
Eagle River:
George N. Mannard, P.Geo., Vice President Exploration, Wesdome Gold Mines Ltd Mishi:
Reserves:
Daniel Lapointe, P.Geo., Chief Geologist, and George Mannard, P.Geo., Vice President Exploration, both Wesdome Gold Mines Ltd.
Resources:
Based on a Resource Estimate by Karine Brosseau, P.Eng. and Carl Pelletier, P.Geo., InnovExplo Inc., independent consultants, dated August 25, 2010. This estimate has been reconciled to 2012 and 2013 production and stockpiles by Daniel Lapointe, P.Geo., Chief Geologist, Wesdome Gold Mines Ltd.
1. Eagle River: 43-101, December 31, 2013, Wesdome, G. Mannard 2. Mishi: 43-101, December 31, 2013, Wesdome, D. Lapointe 3. Kiena: 43-101, July 4, 2013, Wesdome, M. Ducharme
FOR THE YEAR ENDED DECEMBER 31, 2013
This Management’s Discussion and Analysis (“MD&A”) dated February 28, 2014, should be read in conjunction with
Wesdome Gold Mines Ltd.’s (“Wesdome” or “the Company”) audited consolidated financial statements for the years
ended December 31, 2013 and 2012, and their related notes which have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
This MD&A contains “forward-looking statements” that are subject to risk factors set out in the cautionary statement
below. All figures are in Canadian dollars unless otherwise stated. Additional information on Wesdome, including current
and previous years’ Annual Information Forms (“AIF”) and other corporate information, can be found at www.wesdome.
com or www.sedar.com. Wesdome trades on the Toronto Stock Exchange under the symbol “WDO”. The Company’s
head office is at 8 King Street East, Suite 1305, Toronto, Ontario, Canada.
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
All statements, other than statements of historical fact, constitute “forward-looking statements” and are based on
expectations, estimates and projections as at the date of this MD&A. The words ”believe”, “expect”, “anticipate”, “plan”,
“intend”, “continue”, “estimate”, “may”, ”will”, “schedule” and similar expressions identify forward-looking statements.
The Company cautions the reader that such forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or achievements of Wesdome to be materially
different from the Company’s estimated future results, performance or achievements expressed or implied by the
forward-looking statements and the forward-looking statements are not guarantees of future performance. Factors that
could cause results or events to differ materially from current expectations expressed or implied are inherent to the gold
mining industry and include, but are not limited to, those discussed in the section entitled “Risks and Uncertainties”. The
Company does not intend, and does not assume any obligation to update these forward-looking statements, whether as
a result of new information, future events or results or otherwise except as required by applicable laws.
OVERALL PERFORMANCE
The Company owns and operates the Eagle River Mine Complex in Wawa, Ontario and the Kiena Mine Complex in Val
d’Or, Quebec. On January 1, 2012, the Mishi Mine in Wawa commenced commercial production. The Eagle River and
Mishi Mines feed a common mill and are referred to as the Eagle River Mine Complex. The Eagle River Mine has been
in continuous production since commercial production commenced January 1, 1996. It has produced 961,936 ounces to
date. The Kiena Mine was purchased by the Company in 2003. It restarted commercial production on August 1, 2006. It
was previously in production from 1982-2002. To date, the Kiena Mine has produced 1,757,475 ounces of gold.
At December 31, 2013, the Company had $8.5 million in working capital. In 2013, revenue exceeded mining and processing
costs by $15.4 million and $10.9 million in capital costs were incurred. Cash flow from operations totalled $13.3 million and
a net loss of $3.9 million was recorded on one-time, non-cash charges.
In 2013, 52,980 ounces of gold were produced and 54,914 ounces were sold. Production costs decreased 25.3% to
average $1,088 per ounce for the year, and at year end the Company had 7,034 ounces of gold inventory.
On March 7, 2013, the Company announced the suspension of operations at the Kiena Mine Complex. This preserved
and improved the Company’s financial position, allowing capital allocation to projects with better returns to shareholders.
Kiena remains a good long-term investment but tight margins and declining gold prices forced prompt action.
External factors that significantly influenced the financial and operational results in 2013 were three-fold:
1) Weather
Spring floods and a lightning strike on our main electrical transformer resulted in a loss of about two months of milling.
2) Crashing Market Confidence
Gold prices dropped 30% after rising for 10 years. Investors capitulated and sold off gold shares. The situation was
exacerbated by fund redemptions forcing sales into an illiquid, no-bid market. The consequences of these losses
were an industry-wide management rout (and its associated costs) to which we were not immune.
3) Rise of Anti-Mining Public Sentiment
The consequences of this are intensified regulation and economic pressures on mine operators. Significant
cumbersome amendments to both the Ontario and Quebec Mining Acts were adopted in 2013. The implementation
of these amendments could have a material impact on financial results going forward.
On the bright side, conditions forced a refocus on basics and pruning of higher cost production, increased quality
manpower availability and enabled quality strategic tuck-in acquisitions at very reasonable costs. We remain confident in
the longer term potential of our assets and are relieved to put 2013 in the rear view mirror.
SELECTED ANNUAL INFORMATION
(in thousands except income per common share)
2013
2012
Total revenue
$
79,726
$
92,308
Net loss
(3,868)
(45,253)
Loss per common share
(0.04)
(0.44)
Total assets
103,049
108,850
Long term financial liabilities
8,832
8,968
RESULTS OF OPERATIONS
Three Months Ended Dec 31 Twelve Months Ended Dec 31
2013
2012
2013
2012
Eagle River Mine Complex
Eagle River Mine
Tonnes milled
39,766
36,940
124,861
155,020
Recovered grade (g/t)
12.3
7.0
10.7
6.5
Production (oz)
15,726
8,314
42,850
32,223
Mishi Mine
Tonnes milled
2,788
11,919
22,536
64,915
Recovered grade (g/t)
2.5
1.5
3.3
2.3
Production (oz)
221
562
2,360
4,776
Surface stockpile (tonnes)
81,443
37,301
81,443
37,301
Total Eagle River Complex
Production (oz)
15,947
8,876
45,210
36,999
Sales (oz)
13,400
7,500
46,800
36,400
Bullion revenue ($000)
†17,882
12,709
67,777
60,545
Mining and processing costs (cost of sales) ($000)
*12,114
11,460
50,446
44,759
Mine operating profit ($000)
*5,768
1,246
17,331
14,786
Kiena Mine Complex
Tonnes milled
-
70,279
97,158
265,872
Recovered grade (g/t)
-
2.2
2.5
2.2
Production (oz)
-
4,869
7,700
18,814
Sales (oz)
1,514
5,000
8,114
19,100
Bullion revenue ($000)
†2,046
8,498
11,949
31,763
Mining and processing costs (cost of sales) ($000)
*1,970
6,970
13,836
31,780
Mine operating profit (loss) ($000)
*76
1,528
(1,887)
(17)
Total Mine Operations
Production (oz)
15,947
13,745
52,980
55,813
Sales (oz)
14,914
12,500
54,914
55,500
Gold inventory (oz)
7,034
8,965
7,034
8,965
RECONCILIATION OF PRODUCTION COSTS TO MINING AND PROCESSING COSTS (Cost of Sales)
Three Months Ended Dec 31 Twelve Months Ended Dec 31
2013
2012
2013
2012
Eagle River Mine Complex
Mining and processing costs ($000)
12,114
11,460
50,446
44,759
Inventory-related adjustments ($000)
††(217)
2,089
(6,122)
1,143
Production costs ($000)
*11,897
13,549
44,324
45,902
Production costs per ounce ($Cdn)
746
1,526
980
1,241
Kiena Complex
Mining and processing costs ($000)
1,970
6,970
13,836
31,780
Inventory-related adjustments ($000)
††(1,970)
(289)
(506)
(477)
Production costs ($000)
*-
6,681
13,330
31,303
Production costs per ounce ($Cdn)
1,372
1,731
1,664
TOTAL MINE PRODUCTION COSTS
Production costs ($000)
*11,897
20,230
57,654
77,205
Production costs per ounce ($Cdn)
746
1,383
1,088
1,383
† Bullion revenue includes minor by-product silver sales.
* The Company has included in this report certain non-IFRS performance measures, including mine operating profit, mining and processing costs to applicable sales, and production costs. Production costs per ounce reflect actual mine operating costs incurred during the fiscal period divided by the number of ounces produced. These measures are not defined under IFRS and therefore should not be considered in isolation or as an alternative to or more meaningful than, net income(loss) or cash flow from operating activities as determined in accordance with IFRS as an indicator of our financial performance or liquidity. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company’s performance and ability to generate cash flow.
††Inventory-related adjustments are adjustments made to production costs in order for the Company’s gold inventory to be valued at the lower of production cost on a first-in, first-out basis and at net realizable value, in accordance with its accounting policy under IFRS.
In 2013, bullion sales exceeded mining and processing costs resulting in a mine operating profit, or gross margin, of
$15.4 million. In addition to these direct operating costs, additional cash costs, including royalty payments, corporate
and general costs and interest payments amounted to $8.8 million. These other costs were $4.0 million greater than
last year’s due to expenses related to reconfiguring the board and management and costs related to suspending mining
operations at Kiena. We expect such costs to return to normal levels in subsequent years. Additionally, as a result of the
decline in gold prices observed in 2013, the Company recorded a one-time impairment charge of $1.7 million against its
deferred tax assets, due to the adverse impact of the price decline on future revenue forecasts.
At the Eagle River Mine recovered grades increased 65% from last year’s average to 10.7 gAu/tonne. This lowered
production costs per ounce to $980 from $1,241 in 2012. Proven and Probable Reserves increased 28%, net of depletion.
Two new parallel zones were discovered and we are now forecasting potential to extend our high grade mining sequence
beyond 2015.
At Mishi we suspended contract mining in the spring and continue to work off substantial ore stockpiles of 81,443 tonnes
grading 2.8 gAu/tonne at year end. In 2013, we milled 22,536 tonnes at a recovered grade of 3.3 gAu/tonne to produce
2,360 ounces. Mishi proven and probable reserves increased to 1,592,000 tonnes at 2.2 gAu/tonne with a life-of-mine
stripping ratio of 2.7:1.
We are focused on refurbishing and expanding our milling and tailings management systems to increase production and
decrease unit costs moving forward. We expect a 50% increase in mill throughput in 2014 with overall costs stable.
Mining operations at Kiena were suspended June 30, 2013. Costs associated with this action amounted to about $3.4
million. This included a one-time charge in the fourth quarter of $1.5 million against its parts inventory at the mine. Also, an
additional $0.6 million impairment charge was recorded to cover the period January 1, 2013 to June 30, 2013. About $0.5
million cash proceeds were derived from equipment sales. Furthermore, some equipment and materials transported to
the Eagle River Mine Complex are already generating tangible productivity improvements. We estimate costs to maintain
and explore our Val d’Or properties and infrastructure at about $2.0 million per year. We envision a two year exploration
program, targeting higher grade portions of our substantial resources for expansion. In 2014, planning, costing, and
scheduling work will be undertaken to define more clearly the economic conditions required to generate reasonable risk
adjusted returns. All options will be considered for our Kiena property to enhance shareholder value.
Two strategic acquisitions were initiated in 2013. We merged with Windarra Minerals Ltd. to consolidate and expand our
land position at Mishi and eliminate future royalties. Subsequent to year end, we announced a business combination with
subsidiary company Moss Lake Gold Mines Ltd. This is scheduled to close in the spring of 2014 and will clarify ownership
and a potential development path for the large Moss Lake gold deposit located near Thunder Bay, Ontario.
In summary, in an environment of unforeseen tumultuous market upheavals, we posted a loss of $3.9 million on one-time
costs and charges, reduced costs per ounce significantly and set a clear capital investment path that should generate
strong returns moving forward.
SUMMARY OF QUARTERLY RESULTS
2013
(in thousands except per share data)
4th Quarter
3rd Quarter
2nd Quarter
1st Quarter
Total revenue
$
19,928
$
16,669
$
21,709
$
21,420
Net (loss) income
(1,782)
(2,095)
43
(34)
(Loss) earnings per share – basic and diluted
(0.02)
(0.02)
0.00
0.00
2012
4th Quarter
3rd Quarter
2nd Quarter
1st Quarter
Total revenue
$
21,207
$
23,108
$
25,948
$
22,045
Net income (loss)
(46,464)
819
700
(308)
Earnings (loss) per share – basic and diluted
(0.46)
0.01
0.01
(0.00)
FOURTH QUARTER
During the fourth quarter, 2013, combined operations produced 15,947 ounces of gold and 14,914 ounces were sold at an
average realized price of $1,336 per ounce. This represents a 16% increase in production and a 19% increase in ounces
sold compared to the fourth quarter of 2012. Realized gold prices were $1,336 per ounce, or 21% lower than in the fourth
quarter, 2012.
Production came primarily from Eagle River, which generated 15,726 ounces of gold from 39,766 tonnes milled at an
average recovered grade of 12.3 gAu/tonne.
This solid performance generated free cash flow (Cash Flow from Operations less capital investments) of $4.4 million in
the fourth quarter despite weak gold prices. We believe this is a good representation of what our streamlined operations
are capable of.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2013, the Company had working capital of $8.5 million compared to $13.9 million at December 31, 2012.
During fiscal 2013, capital expenditures totalled $11.1 million compared to $11.2 million in 2012. Capital expenditures were
concentrated in underground development, mine and mill infrastructure. If the one-time charge of $1.5 million related to
Kiena’s parts inventory is not taken into account, working capital as at December 31, 2013, would have been $10.0 million,
compared to $9.8 million as at September 30, 2013.
The Company carries an inventory of gold. At December 31, 2013, this liquid asset consisted of 7,034 ounces of gold with
a market value of approximately $9.0 million. The gold inventory is carried at the lower of cost or market, in this case
at a cost of $5.7 million. Furthermore, the Mishi ore stockpile at the mill is estimated to contain about 6,500 ounces of
recoverable gold, or approximately $4.5 million, net of milling costs. Including these non-IFRS working capital adjustments,
working capital would increase to approximately $16.3 million.
On May 24, 2012, the Company completed a $7,021,000 placement of unsubordinated convertible debentures. The term
is 5-years bearing interest at 7% per annum payable semi-annually and convertible into common shares at $2.50 per
common share. The net proceeds of $6,821,000, along with cash at hand, were used to redeem existing convertible
debentures in the amount of $10,931,000 that matured on May 31, 2012. This resulted in the Company paying down $4.1
million in debt.
The following table shows the timing of cash outflows relating to contractual obligations going forward.
Payments Due by Period (in thousands)
Contractual Obligations
Total
< 1 year
1 – 2 years
3 – 5 years
After 5 years
Equipment leases
$
929
$
524
$
295
$
110
-Convertible debentures
8,659
491
983
7,185
-
$
9,588
$
1,015
$
1,278
$
7,295
-
OFF-BALANCE SHEET ARRANGEMENTS
There are no off-balance sheet arrangements.
TRANSACTIONS WITH RELATED PARTIES
Key management personnel and director compensation comprised of the following:
Three months ended Dec 31
Twelve months ended Dec 31
2013
2012
2013
2012
Salaries and short-term employee benefits
$
287
$
311
$
1,704
$
1,212
Post employment benefits
8
11
62
46
Share-based payments
83
76
231
415
$
378
$
398
$
1,997
$
1,673
In fiscal 2013, the Company paid a total of $55,200 in directors’ fees, $76,908 in consulting fees, and $98,500 in legal fees
to the following companies, whose managing partners or presidents are/were directors of the Company. These services
were incurred in the normal course of operations for attendance at committee and board meetings as well as general
corporate matters. All services were made on terms equivalent to those that prevail with arm’s length transactions.
Directors Fees
• Capital Inter A World Inc.: $43,200 – Marc Blais, Managing Partner
• Aird & Berlis LLP: $12,500 – Eldon Bennett, Managing Partner
Consulting Fees
• Chauvin Engineering Ltd.: $40,500 – JP Chauvin, Managing Partner
• The Rosedale Group: $36,400 – Rolly Uloth, President
Legal Fees
• Aird & Berlis LLP: $98,500 – Eldon Bennett, Managing Partner
OUTLOOK
In 2014 we forecast 50,000 ounces of gold production, or a 10% increase from Eagle River and Mishi over 2013. Production
will come primarily from the Eagle River Mine and the Mishi stockpile, and strong grades at the Eagle River Mine are
expected to persist. Mill throughput is expected to increase 50% during the year, resulting in increased Mishi throughput,
as millfeed from Eagle River is expected to remain steady. A strong fourth quarter performance, new gold discoveries,
recently resurgent gold prices and an ambitious yet realistic capital investment plan give us great confidence in the
potential of our streamlined operations.
At Mishi, reserves within the existing mine plan represent less than a third of the open pit resource base. Subject to
positive in-fill drilling results and increased mill availability and capacity, we see significant potential for future expansion.
SIGNIFICANT JUDGMENTS AND SOURCES OF ESTIMATION UNCERTAINTY
The preparation of the Company’s consolidated financial statements in conformity with IFRS requires management to
make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures
at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the
reporting period. Estimates and assumptions are continually evaluated and are based on management’s experience and
other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual
results could differ from these estimates.
CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES
(i)
Exploration and evaluation expenditures
Judgment is required in determining whether the respective costs are eligible for capitalization where applicable, and
whether they are likely to be recoverable by future exploration, which may be based on assumptions about future
events and circumstances. Estimates and assumptions made may change if new information becomes available.
(ii)
Equity component of convertible debentures
The convertible debentures are classified as liabilities, with the exception of the portion relating to the conversion
feature, resulting in the carrying value of the liability being less than its face value. The discount is being accreted over
the term of the debentures, utilizing the effective interest method which approximates the market rate at the date
the debentures were issued. Management uses its judgment to determine an interest rate that would have been
applicable to non-convertible debt at the time the debentures were issued.
KEY SOURCES OF ESTIMATION UNCERTAINTY
(i)
Reserves
Proven and probable reserves are the economically mineable parts of the Company’s measured and indicated
mineral resources that have been incorporated into the mine plan. The Company estimates its proven and probable
reserves and measured and indicated and inferred mineral resources based on information compiled by appropriately
qualified persons. The information relating to the geological data on the size, depth and shape of the ore body
requires complex geological judgments to interpret the data. The estimation of future cash flows related to proven
and probable reserves is based upon factors such as estimates of foreign exchange rates, commodity prices, future
capital requirements and production costs along with geological assumptions and judgments made in estimating the
size and grade of the ore body.
Changes in the proven and probable reserves or measured, indicated and inferred mineral resources estimates may
impact the carrying value of mining properties and equipment, depletion, impairment assessments and the timing of
decommissioning and remediation obligations.
(ii)
Depletion
Mining properties are depleted using the units-of-production method (“UOP”) over a period not to exceed the
estimated life of the ore body based on recoverable ounces to be mined from proven and probable reserves and
measured and indicated resources.
Mobile and other equipment are depreciated, net of residual value over the useful life of the equipment but does not
exceed the related estimated life of the mine based on proven and probable reserves and measured and indicated
resources.
The calculation of the UOP rate, and therefore the annual depletion expense, could be materially affected by changes
in the underlying estimates. Changes in estimates can be the result of actual future production differing from current
forecasts of future production, expansion of mineral reserves through exploration activities, differences between
estimated and actual costs of mining and differences in the gold price used in the estimation of mineral reserves.
Significant judgment is involved in the determination of useful life and residual values for the computation of depletion
and no assurance can be given that actual useful lives and residual values will not differ significantly from current
assumptions.
(iii)
Provision for decommissioning obligations
The Company assesses its provision for decommissioning on an annual basis or when new material information
becomes available. Mining and exploration activities are subject to various laws and regulations governing the
protection of the environment. In general, these laws and regulations are continually changing and the Company
has made, and intends to make in the future, expenditures to comply with such laws and regulations. Accounting for
decommissioning obligations requires management to make estimates of the future costs the Company will incur to
complete the decommissioning work required to comply with existing laws and regulations at each mining operation.
Also, future changes to environmental laws and regulations could increase the extent of decommissioning work
required to be performed by the Company. Increases in future costs could materially impact the amounts charged
to operations for decommissioning. The provision represents management’s best estimate of the present value of
the future decommissioning obligation. Actual future expenditures may differ from the amounts currently provided.
(iv)
Share-based payments
The determination of the fair value of share-based payments is not based on historical cost, but is derived based on
subjective assumptions input into an option pricing model. The model requires that management make forecasts as
to future events, including estimates of the average future hold period of issued stock options before exercise, expiry
or cancellation; future volatility of the Company’s share price in the expected hold period (using historical volatility as
a reference); and the appropriate risk-free rate of interest. Share based payments incorporate an expected forfeiture
rate. The expected forfeiture rate is estimated based on historical forfeiture rates and expectations of future forfeiture
rates, and is adjusted if the actual forfeiture rate differs from the expected rate.
The resulting value calculated is not necessarily the value that the holder of the option could receive in an arm’s
length transaction, given that there is no market for the options and they are not transferable. It is management’s
view that the value derived is highly subjective and dependent entirely upon the input assumptions made.
(v)
Deferred taxes
Preparation of the consolidated financial statements requires an estimate of income taxes in each of the jurisdictions
in which the Company operates. The process involves an estimate of the Company’s current tax exposure and an
assessment of temporary differences resulting from differing treatment of items, such as depreciation and depletion,
for tax and accounting purposes. These differences result in deferred tax assets and liabilities that are included in the
Company’s consolidated statements of financial position.
An assessment is also made to determine the likelihood that the Company’s deferred tax assets will be recovered
from future taxable income.
Judgment is required to continually assess changing tax interpretations, regulations and legislation, to ensure
liabilities are complete and to ensure assets are realizable. The impact of different interpretations and applications
could be material.
(vi)
Recoverability of mining properties
The Company’s management reviews the carrying values of its mining properties on a regular basis to determine
whether any write-downs are necessary. The recovery of amounts recorded for mining properties depends on
confirmation of the Company’s interest in the underlying mineral claims, the ability of the Company to obtain the
necessary financing to complete the development, and future profitable production or proceeds from the disposition
thereof. Management relies on life-of-mine (“LOM”) plans in its assessments of economic recoverability and
probability of future economic benefit. LOM plans provide an economic model to support the economic extraction
of reserves and resources. A long-term LOM plan and supporting geological model identifies the drilling and related
development work required to expand or further define the existing ore body.
(vii) Inventory – ore stockpile
Expenditures incurred and depletion of assets used in mining and processing activities are deferred and accumulated
as the cost of ore maintained in stockpiles. These deferred amounts are carried at the lower of cost or net realizable
value (“NRV”). Impairments of ore in stockpiles resulting from NRV impairments are reported as a component of
current period costs.
The allocation of costs to ore in stockpiles and the determination of NRV involve the use of estimates. There is a
significant degree of uncertainty in estimating future milling costs, future milling levels, prevailing and long-term gold
and silver prices, and the ultimate estimated recovery for ore.
FINANCIAL INSTRUMENTS – DISCLOSURES AND PRESENTATION
Financial instruments disclosures requires the Company to provide information about: a) the significance of financial
instruments for the Company’s financial position and performance and, b) the nature and extent of risks arising from
financial instruments to which the Company is exposed during the period and at the statement of financial position date,
and how the Company manages those risks.
Financial Instruments – Fair Values
Following is a table which sets out the fair values of recognized financial instruments using the valuation methods and
assumptions described below:
(in thousands)
2013
2012
Carrying
Fair
Carrying
Fair
Value
Value
Value
Value
Financial Liabilities
Other financial liabilities:
Convertible debentures
$
-
$
-
$
-
$
-Convertible debentures – new issues
$
7,021
$
5,968
$
7,021
$
7,021
Determination of Fair Value
The fair value of a financial instrument is the amount of consideration that would be agreed upon in an arm’s length
transaction between willing parties. The Company uses the following methods and assumptions to estimate fair value of
each class of financial instruments for which carrying amounts are included in the consolidated balance sheets as follows:
Cash and cash equivalents and restricted funds – The carrying amounts approximate fair values due to the short
maturity of these financial instruments.
Receivables – The carrying amounts approximate fair values due to the short maturity of these financial instruments.
Other financial liabilities – Payables and accruals and the convertible debentures are carried at amortized cost.
The carrying amount of payables and accruals approximates fair value due to the short maturity of these financial
instruments. The fair value of the convertible debentures is based on the quoted market price.
The fair value hierarchy for financial instruments measured at fair value is Level 1 for convertible debentures. The Company
does not have Level 2 or Level 3 inputs.
Financial Risk Management
The Company is exposed to a number of different risks arising from normal course business exposures, as well as the
Company’s use of financial instruments. These risk factors include: (1) market risks relating to commodity prices, foreign
currency risk and interest rate risk; (2) liquidity risk; and, (3) credit risk. The Board of Directors has overall responsibility
for the establishment and oversight of the Company’s risk management framework and establishes and monitors risk
management policies to: identify and analyze the risks faced by the Company; to set appropriate risk limits and controls;
and to monitor risks and adherence to market conditions and the Company’s activities.
1)
Market Risk
Market risk is the risk or uncertainty arising from possible market price movements and their impact on the
future performance of the business. The market price movements that could adversely affect the value of the
Company’s financial assets and liabilities include commodity price risk, foreign currency exchange risk and
interest rate risk.
(a) Commodity price risk
The Company’s financial performance is closely linked to the price of gold which is impacted by world
economic events that dictate the levels of supply and demand. The Company had no gold price hedge
contracts in place as at or during the years ended December 31, 2013 and 2012.
(b) Foreign currency exchange risk
The Company’s revenue is exposed to changes in foreign exchange rates as the Company’s primary product,
gold, is priced in U.S. dollars. The Company had no forward exchange rate contracts in place and no foreign
currency holdings as at or during the years ended December 31, 2013 and 2012.
(c) Interest rate risk
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of
changes in market interest rates.
Financial assets and financial liabilities with variable interest rates expose the Company to cash flow interest
rate risk. The Company’s cash has in the past included highly liquid investments that earn interest at market
rates and interest paid on the Company’s convertible debentures is based on a fixed interest rate. Fluctuations
in market rates of interest do not have a significant impact on the Company’s results of operations due to the
short term to maturity of the investments held, if any.
2)
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due. The Company
manages its liquidity risk by forecasting cash flows from operations and anticipated investing and financing
activities. The Company believes it has access to sufficient capital through internally generated cash flows and
equity and debt capital markets. Senior management is also actively involved in the review and approval of
planned expenditures.
The following table shows the timing of cash outflows relating to payables and accruals, mining taxes, capital
leases and convertible debentures:
December 31, 2013
<1 Year
1-2 Years
3-5 Years
Over 5 Years
Payables & accruals
$
9,393
$
-
$
-
$
-Obligations under finance leases
$
524
$
295
$
110
$
-Convertible debentures
$
491
$
983
$
7,185
$
-December 31, 2012
<1 Year
1-2 Years
3-5 Years
Over 5 Years
Payables & accruals
$
13,996
$
-
$
-
$
-Obligations under finance leases
$
921
$
695
$
-
$
-Convertible debentures
$
491
$
983
$
7,675
$
-3)
Credit Risk
Credit risk is the risk of a financial loss to the Company if a customer or counterparty to a financial instrument fails
to meet its contractual obligation. The Company minimizes its credit risk by selling its gold exclusively to financial
institutions with forty-eight hour terms of settlement. The Company’s accounts receivable consist primarily of
government refunds and credits. The Company estimates its maximum exposure to be the carrying value of
cash and cash equivalents, accounts receivable and funds held against standby letters of credit.
The Company manages credit risk by maintaining bank accounts with Schedule 1 Canadian banks and investing
only in Guaranteed Investment Certificates. The Company’s cash is not subject to any external limitations.
RISKS AND UNCERTAINTIES
The operations of the Company are speculative due to the high risk nature of its business which is the operation,
exploration and development of mineral properties. In addition to risks described elsewhere herein, shareholders should
note the following:
Nature of Mineral Exploration
The exploration for and development of mineral deposits involves significant financial risks which even a combination
of careful evaluation, experience and knowledge may not eliminate. While the discovery of an orebody may result in
substantial rewards, few properties which are explored are ultimately developed into producing mines. Major expenses
may be required to establish ore reserves, to develop metallurgical processes and to construct mining and processing
facilities at a site. It is impossible to ensure that the exploration programs planned by the Company will result in a
profitable commercial mining operation.
Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are the particular
attributes of the deposit, such as size, grade and proximity to infrastructure, as well as metal prices which are highly
cyclical and government regulations. The exact effect of these factors cannot be accurately predicted, but the combination
of these factors may result in the Company not receiving an adequate return on invested capital.
Mining Risks and Insurance
The business of mining is generally subject to a number of risks and hazards, including environmental hazards, industrial
accidents, labour disputes, encountering unusual or unexpected geologic formations, cave-ins, flooding and periodic
interruptions due to inclement or hazardous weather conditions. Such risks could result in damage to, or destruction of,
mineral properties or producing facilities, personal injury, environmental damage, delays in mining, monetary losses and
possible legal liability. Insurance against environmental risks (including potential for pollution or other hazards as a result
of disposal of waste products occurring from exploration and production) is not generally available to the Company or to
other companies within the industry.
Government Regulations and Environmental Matters
The Company’s activities are subject to extensive federal, provincial and local laws and regulations controlling not only
the mining of and exploration for mineral properties, but also the possible effects of such activities upon the environment.
Permits from a variety of regulatory authorities are required for many aspects of mine operation and reclamation.
Future legislation and regulations could cause additional expense, capital expenditures, restrictions and delays in the
development of the Company’s properties, the extent of which cannot be predicted. In the context of environmental
permitting, including the approval of reclamation plans, the Company must comply with known standards, existing laws
and regulations which may entail greater or lesser costs and delays depending on the nature of the activity to be
permitted and how stringently the regulations are implemented by the permitting authority. It is possible that the costs
and delays associated with compliance with such laws, regulations and permits could become such that the Company
would not proceed with the development or operation of a mine.
In Ontario, the Company has obtained approval for its closure plan for the Eagle River Mill, Eagle River Mine and the
Mishi-Magnacon Complex and has provided security of approximately $0.9 million to cover estimated rehabilitation and
closure costs. In Quebec, the Company has obtained approval for its closure plan for the Kiena Mine and Milling Complex
and has provided security of approximately $1.0 million to cover estimated rehabilitation and closure costs. In the event
of any future expansion or alteration of a mine on the Eagle River property or the Kiena Mine, the Company would likely
be required to amend its closure plans and could also be required to provide further security.
Reliance on Management
The Company is heavily reliant on the experience and expertise of its executive officers. If any of these individuals should
cease to be available to manage the affairs of the Company, its activities and operations could be adversely affected.
Economic Conditions
General levels of economic activity and recessionary conditions may have an adverse impact on the Company’s business.
Mineral Resource and Mineral Reserve Estimates
There are numerous uncertainties inherent in estimating mineral resources and mineral reserves, including many factors
beyond the Company’s control. Such estimation is a subjective process, and the accuracy of any mineral resources and
mineral reserves estimate is a function of the quality of available data and of the assumptions made and judgements
used in engineering and geological interpretation. Differences between management’s assumptions, including economic
assumptions such as metal prices and market conditions, could have a material effect in the future on the Company’s
financial position and results of operations.
Competition
The mining industry is intensely competitive in all of its phases, and the Company competes with many companies
possessing greater financial resources and technical facilities in its search for, and the acquisition of, mineral properties
as well as the recruitment and retention of qualified employees with technical skills and experience in the mining industry.
There can be no assurance that the Company will be able to compete successfully with others in acquiring mineral
properties, obtaining adequate financing and continuing to attract and retain skilled and experienced employees.
Conflicts of Interest
Certain officers and directors of the Company are, or may be, associated with other companies that acquire interests in
mineral properties. Such associations may give rise to conflicts of interest from time to time. The directors are required
by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interest
which they may have in any project or opportunity of the Company. Not every officer or director devotes all of their time
and attention to the affairs of the Company.
Insurance
The Company carries insurance to protect against certain risks in such amounts as it considers adequate. Risks not
insured against include environmental pollution, mine flooding or other hazards against which such companies cannot
insure or against which they may elect not to insure.
Additional Funding Requirements
Further exploration on, and development of, the Company’s mineral resource properties, will require additional capital. In
addition, a positive production decision on any of the Company’s development projects would require significant capital
for project engineering and construction. Accordingly, the continuing development of the Company’s properties will
depend upon the Company’s ability to either generate sufficient funds internally or to obtain financing through the joint
venturing of projects, debt financing, equity financing or other means. Although the Company has been successful in the
past in obtaining financing through the sale of equity securities and the issuance of debt instruments, there can be no
SUMMARY OF SHARES ISSUED
As of February 28, 2014, the Company’s share information is as follows:
Common shares issued
105,803,191
Common share purchase options
2,720,000
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Disclosure Controls and Procedures
In accordance with the requirements of National Instrument 52-109 “Certification of Disclosure in Issuers’ Annual and
Interim Filings”, the Company’s management, including the Chief Executive Officer (“CEO”) and the Chief Financial Officer
(“CFO”), have evaluated the effectiveness of the Company’s disclosure controls and procedures. Based upon the results
of that evaluation, the Company’s CEO and CFO have concluded that as at December 31, 2013, the Company’s disclosure
controls and procedures to provide reasonable assurance that the information required to be disclosed by the Company
in reports it files is recorded, processed, summarized and reported within the appropriate time periods and forms were
effective.
Internal Control over Financial Reporting
Internal control over financial reporting (“ICFR”) is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
applicable Canadian GAAP. Internal control over financial reporting should include those policies and procedures that
establish the following:
• maintenance of records in reasonable detail, that accurately and fairly reflect the transactions and dispositions of
our assets
• reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with applicable Canadian GAAP
• receipts and expenditures are only being made in accordance with authorizations of management and the Board
of Directors
• reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of
our assets that could have a material effect on the financial instruments
The Company’s management, with the participation of the CEO and CFO, assessed the effectiveness of the Company’s
internal controls over financial reporting and concluded that as at December 31, 2013, the Company’s internal control
over financial reporting was effective.
Limitations of Controls and Procedures
The Company’s management, including the CEO and CFO, believe that any disclosure controls and procedures or
internal control over financial reporting, no matter how well conceived and operated can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. Further, the design of a control system must
reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their
costs. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that any design will not
succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations
in a cost effective control system, misstatements due to error or fraud may occur and not be detected.
FOR FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been
prepared by and are the responsibility of the management of
the Company. The consolidated financial statements have been
prepared in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards
Board and reflect management’s best estimate and judgement
based on currently available information.
Management is also responsible for a system of internal control
which is designed to provide reasonable assurance that assets
are safeguarded, liabilities are recognized and that the accounting
systems provide timely and accurate financial reports.
The Board of Directors is responsible for ensuring that management
fulfils its responsibilities in respect of financial reporting and internal
control. The Audit Committee of the Board of Directors meets
periodically with management and the Company’s independent
auditors to discuss auditing matters and financial reporting issues.
In addition, the Audit Committee reviews the annual consolidated
financial statements before they are presented to the Board of
Directors for approval.
The Company’s independent auditors, Grant Thornton LLP, are appointed by the shareholders to conduct an
audit in accordance with generally accepted auditing standards in Canada, and their report follows.
Toronto, Canada
Brian Ma
AUDITOR’S REPORT
TO THE SHAREHOLDERS OF
WESDOME GOLD MINES LTD.
We have audited the accompanying consolidated financial
statements of Wesdome Gold Mines Ltd., which comprise the
consolidated statements of financial position as at December
31, 2013 and 2012, and the consolidated statements of loss and
comprehensive loss, consolidated statements of total equity and
consolidated statements of cash flows for the years then ended,
and a summary of significant accounting policies and other
explanatory information.
Management’s responsibility
for the financial statements
Management is responsible for the preparation and fair presentation
of these consolidated financial statements in accordance with
International Financial Reporting Standards, as issued by the
International Accounting Standards Board, and for such internal
control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We
conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and
fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness
of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis
for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial
position of Wesdome Gold Mines Ltd. as at December 31, 2013 and 2012, and its financial performance and its
cash flows for the years ended December 31, 2013 and 2012, in accordance with International Financial Reporting
Standards, as issued by the International Accounting Standards Board.
Toronto, Canada
Grant Thornton LLP
February 28, 2014
Chartered Professional Accountants
December 31
2013
2012
Assets
Current
Cash and cash equivalents
$
5,651
$
4,633
Restricted funds – short term (Note 9)
-
200
Receivables (Note 7)
1,982
4,298
Inventory (Note 8)
10,757
19,633
18,390
28,764
Restricted funds (Note 9)
2,994
2,381
Deferred income taxes (Note 18)
13,025
14,870
Mining properties, plant and equipment (Note 10)
35,118
32,681
Exploration properties (Note 12)
33,522
30,154
$
103,049
$
108,850
Liabilities
Current
Payables and accruals
$
9,393
$
13,996
Current portion of obligations under finance leases (Note 13)
526
898
9,919
14,894
Income taxes payable
22
22
Obligations under finance leases (Note 13)
380
641
Convertible debentures (Note 14)
5,996
5,760
Provisions (Note 15)
2,434
2,545
18,751
23,862
Equity
Equity attributable to owners of the Company
Capital stock (Note 16)
125,352
122,651
Contributed surplus
2,150
2,059
Equity component of convertible debentures (Note 14)
932
870
Deficit
(44,400)
(41,009)
84,034
84,571
Non-controlling interest
264
417
Total equity
84,298
84,988
$
103,049
$
108,850
Commitments (Note 27)
Subsequent events (Note 28)
On behalf of the Board,
FINANCIAL POSITION
Years Ended December 31
2013
2012
Revenue
Gold and silver bullion
$
79,726
$
92,308
Operating expenses
Mining and processing
64,281
76,539
Depletion of mining properties
7,838
8,340
Production royalties
1,158
965
Corporate and general
3,436
2,703
Share based payments (Note 17)
349
601
Kiena restructuring and care and maintenance costs
3,437
-Impairment charges (Note 11)
633
61,898
81,132
151,046
Loss from operations
(1,406)
(58,738)
Interest and other income
149
70
Interest on long term debt
(785)
(1,081)
Other interest
(30)
(26)
Accretion of decommissioning provisions (Note 15)
111
(54)
Loss before income tax
(1,961)
(59,829)
Income tax expense (recovery) (Note 18)
Current
-
13
Deferred
1,907
(14,589)
1,907
(14,576)
Net loss and total comprehensive loss
$
(3,868)
$
(45,253)
Net loss and total comprehensive loss attributable to:
Non-controlling interest
$
(160)
$
(195)
Owners of the Company
(3,708)
(45,058)
$
(3,868)
$
(45,253)
Basic and diluted loss per share
Basic (Note 19)
$
(0.04)
$
(0.44)
Diluted (Note 19)
$
(0.04)
$
(0.44)
Basic and diluted weighted average number of common shares (000)
Basic (Note 19)
102,892
101,887
Diluted (Note 19)
102,892
101,887
LOSS AND COMPREHENSIVE LOSS
(Expressed in thousands of Canadian dollars)
Contributed Surplus Equity Total Share Component of Retained Attributable
Capital Based Share Dilution Convertible Earnings to Owners Non-Controlling Total Stock Payments Repurchases Gains Debentures (Deficit) of the Company Interest Equity
Balance, December 31, 2011
$ 122,685
$ 1,064
$ 383
$
513
$ 1,970
$ 1,585
$ 128,200
$
607
$ 128,807
Net loss for the year
ended December 31, 2012
-
-
-
-
-
(45,058)
(45,058)
(195)
(45,253)
Value attributed to options expired
-
(494)
-
-
-
494
-
-
-Share based payments (Note 17)
-
601
-
-
-
-
601
-
601
Shares purchased under
normal course issuer bid (Note 16)
(34)
-
(8)
-
-
-
(42)
-
(42)
Subsidiary capital transactions
-
-
-
-
-
-
-
5
5
Redemption of convertible debentures (Note 14)
-
-
-
-
(1,970)
1,970
-
-
-Equity component of
convertible debentures (Note 14)
-
-
-
-
870
-
870
-
870
Balance, December 31, 2012
122,651
1,171
375
513
870
(41,009)
84,571
417
84,988
Net loss for the year
ended December 31, 2013
-
-
-
-
-
(3,708)
(3,708)
(160)
(3,868)
Shares issued to acquire
Windarra Minerals Ltd. (Notes16 and 23)
2,811
-
-
-
-
-
2,811
-
2,811
Value attributed to options expired
-
(317)
-
-
-
317
-
-
-Share based payments (Note 17)
-
349
-
-
-
-
349
-
349
Shares purchased under
normal course issuer bid (Note 16)
(110)
-
59
-
-
-
(51)
-
(51)
Subsidiary capital transactions
-
-
-
-
-
-
-
7
7
Change in deferred liability of equity component
of convertible debentures (Note 14 & 18)
-
-
-
-
62
-
62
-
62
Balance, December 31, 2013
$ 125,352
$ 1,203
$ 434
$
513
$
932
$ (44,400)
$ 84,034
$
264
$ 84,298
TOTAL EQUITY
Years Ended December 31
2013
2012
Operating activities
Net loss
$
(3,868)
$
(45,253)
Depletion of mining properties
7,838
8,340
Accretion of discount on convertible debentures (Note 14)
236
348
Impairment charges (Note 11)
633
61,898
Loss on sale of equipment
27
23
Share-based payments (Note 17)
349
601
Deferred income taxes
1,907
(14,589)
Interest expensed
550
733
Accretion of decommissioning provisions
(111)
54
7,561
12,155
Net changes in non-cash working capital (Note 24)
5,692
2,016
13,253
14,171
Financing activities
Funds paid to repurchase common shares under NCIB (Note 16)
(51)
(42)
Redemptions of convertible debentures (Note 14)
-
(10,931)
Issuance of convertible debentures, net of financing (Note 14)
-
6,821
Repayment of obligations under finance leases
(863)
(192)
Interest paid
(550)
(733)
(1,464)
(5,077)
Investing activities
Additions to mining and exploration properties
(10,875)
(11,234)
Proceeds on sale of equipment
582
3
Cash received on acquisition of assets
6
-Funds held against standby letters of credit
(413)
(196)
(10,700)
(11,427)
Net changes in non-cash working capital (Note 24)
(71)
1,751
(10,771)
(9,676)
Increase (decrease) in cash and cash equivalents
1,018
(582)
Cash and cash equivalents, beginning of year
4,633
5,215
Cash and cash equivalents, end of year
$
5,651
$
4,633
Cash and cash equivalents consist of:
Cash
$
5,651
$
3,826
Term deposit (2012: 0.93%)
-
807
$
5,651
$
4,633
Supplemental disclosure (Note 24)
CASH FLOWS
(Expressed in thousands of Canadian dollars)
YEARS ENDED DECEMBER 31, 2013 AND 2012
(Tabular amounts expressed in thousands of Canadian dollars)
1. DESCRIPTION OF BUSINESSWesdome Gold Mines Ltd. (“Wesdome” or “the Company”) is a gold producer engaged in mining and related activities including exploration, extraction, processing and reclamation. The Company’s principal assets include the Eagle River Mine, the Mishi Mine and the Eagle River Mill located near Wawa, Ontario and the Kiena Mining and Milling Complex and exploration properties located in Val d’Or, Quebec. The Company is a publicly traded company, continued under Part 1A of the Companies Act (Quebec) and its common shares are listed on the Toronto Stock Exchange (TSX: WDO). Wesdome’s head office is located at 8 King Street East, Suite 1305, Toronto, ON, M5C 1B5.
2. BASIS OF PRESENTATION
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
These consolidated financial statements are presented in Canadian dollars (“Cdn $”), which is also the functional currency of the Company. These consolidated financial statements were author