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WESDOME GOLD MINES LTD ANNUAL REPORT

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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

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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,

(4)

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

(5)

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

(6)

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.

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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

(8)

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.

(9)

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.

(10)

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.

(11)

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.

(12)

(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:

(13)

(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.

(14)

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.

(15)

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

(16)

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.

(17)

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

(18)

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

(19)

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

(20)

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)

(21)

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

(22)

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)

(23)

YEARS ENDED DECEMBER 31, 2013 AND 2012

(Tabular amounts expressed in thousands of Canadian dollars)

1. DESCRIPTION OF BUSINESS

Wesdome 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

References

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