Western Goldfields Announces Third-Quarter Results
2006-11-14 16:00 ET - News Release
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- Company is evaluating three financing proposals to bring Mesquite
Mine into production and intends to sign a mandate letter by the end
of November
- Interim results from drilling program to expand Mesquite Mine
resources expected by end of 2006
- First gold pour from Mesquite expected by April 2008
>>
TORONTO, Nov. 14 /CNW/ - Western Goldfields, Inc. (TSX:WGI, OTC BB:WGDF.OB) today announced financial results for the three-month and nine-month periods ended September 30, 2006. The Company's financial statements conform to accounting principles generally accepted in the United States (US GAAP). Dollar amounts are stated in U.S. dollars unless otherwise stated.
"The first nine months of 2006 have been a very exciting period for Western Goldfields in which we have made significant progress toward bringing our Mesquite Mine in California into full production," said Mr. Randall Oliphant, Chairman, Western Goldfields. "In the third quarter, we completed a major milestone with the release of the feasibility study that we had commenced in March. The study confirmed the excellent potential of this unique gold mining opportunity - a fully permitted, multi-million ounce reserve in a politically safe location - with expected average annual production of 165,000 ounces of gold at a total cash cost of approximately $335 per ounce beginning in April 2008."
"In October 2006, we commenced a 70,000-foot drilling program with the goal of expanding our resources at Mesquite. We expect to receive interim results from this drilling program before the end of 2006," said Mr. Raymond W. Threlkeld, President and Chief Executive Officer. "We are also evaluating three different project debt proposals. We intend to sign a financing mandate letter by the end of November."
"We regard the Mesquite Mine as the foundation on which we can create increasing value for the shareholders of Western Goldfields," added Mr. Oliphant. "Western Goldfields will pursue additional precious metals opportunities that we identify as having similarly exciting potential in our resource industry, particularly in North America."
Financial Results
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Western Goldfields reports net loss to common shareholders for the 2006 third quarter was $1.985 million, or $0.03 per basic and diluted share from the sale of 3,070 ounces of gold, compared with $2.484 million, or $0.06 per basic and diluted share, for the corresponding 2005 quarter from the sale of 5,244 ounces of gold. For the respective nine-month periods, the net loss was $8.430 million, or $0.14 per basic and diluted share in 2006 from the sale of 11,445 ounces of gold, compared with $3.882 million, or $0.10 per basic and diluted share, in 2005 from the sale of 19,336 ounces of gold.
Liquidity and Capital Resources
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At September 30, 2006, the Company's cash balance was $3.156 million and working capital was $2.865 million. This represents a significant improvement in the Company's financial position since December 31, 2005 when it reported cash of $52,000 and a working capital deficit of $2.515 million.
With the improvement in Western Goldfields' stock price subsequent to its restructuring and re-financing in February 2006, the Company's liquidity has been enhanced through the conversion of warrants and the exercise of stock options. In the period up to September 30, 2006, warrants to purchase 5,123,738 shares of common stock were exercised for proceeds to the Company of $4.986 million. In addition, 500,000 preferred share warrants were exercised to purchase 1,562,500 shares of common stock for proceeds to the Company of $300,000. The funds are being used to finance expansion plans at the Mesquite Mine in accordance with the August 2006 feasibility study. During the period from October 1 to October 31, 2006, the Company received a further $4.631 million on the exercise of 4,631,162 warrants and $66,000 on the exercise of 135,000 options.
Western Goldfields is currently evaluating three different proposals for project debt financing for the expansion of the Mesquite Mine. The Company intends to sign a mandate letter in November 2006.
On November 6, 2006, Western Goldfields announced the U.S. Securities and Exchange Commission had declared effective the Company's Form S-3 Registration Statement as filed on October 5, 2006. The Company also had filed a short-form shelf prospectus under the multijurisdictional disclosure system in each of the provinces of Canada, except Quebec. The Company may now issue securities in the United States and Canada from time to time through one or more methods of distribution and may raise up to $100 million under this Registration Statement.
Further Information
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For further information about the financial results of the Company, see the unaudited interim financial statements of the Company for the three and nine months ended September 30, 2006 and the related management's discussion and analysis, which have been filed on Form 10-QSB with the U.S. Securities and Exchange Commission and the applicable Canadian securities regulatory authorities and are available under the profile of the Company on EDGAR and SEDAR.
Western Goldfields, Inc.
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Under a new, highly experienced, and dynamic management team, Western Goldfields is a gold producer focused on completing the expansion of its Mesquite Mine, located in Imperial County, California, and returning the mine to full production. Western Goldfields acquired the Mesquite property in 2003 from Newmont Mining Corporation. Newmont operated the mine until 2001 when it ceased operations, as the low gold prices at that time did not support expansion plans. However, Newmont continued the permitting process for expansion, and the permits were approved in 2002. Western Goldfields has continued producing gold from ore placed on heaps by the previous owners, and expects gold production in 2006 to be about 14,000 ounces.
Western Goldfields, Inc. is listed on the Toronto Stock Exchange and trades under the symbol WGI. The Company currently has 74,954,632 common shares issued and outstanding and 110,911,372 shares of common stock on a fully diluted basis. For further details, please visit www.westerngoldfields.com |
