Western Goldfields Announces Third Quarter Results
2007-11-01 08:59 ET - News Release
TORONTO, Nov. 1 /PRNewswire-FirstCall/ - Western Goldfields Inc. today announced financial results for the nine-month and three-month periods ended September 30, 2007. The Company's financial statements were prepared in accordance with accounting principles generally accepted in the United States (US GAAP). Dollar amounts are expressed in U.S. dollars unless otherwise stated.
"Western Goldfields continued to make excellent progress through the third quarter towards our goal of bringing the Mesquite Mine into full production in January 2008," reported Mr. Randall Oliphant, Chairman. "We continue to meet the milestones we have set. Everything is now in place to make Mesquite a successful producing mine and to establish a platform for the growth of Western Goldfields."
"Completion of the term loan facility for $105 million in May secured the financing for the project," continued Mr. Oliphant. "The equity financing in early October of $33.5 million provides us with additional financial flexibility as we seek out new investment opportunities."
"Eleven of the fourteen mine haul units on order were commissioned by quarter-end and we are pleased at the capabilities of the units," said Mr. Raymond Threlkeld, President and Chief Executive Officer. "Pre-stripping operations are now well advanced, new ore is being placed on the leach pad and we look forward to achieving commercial production in January 2008. Once we have achieved full production, the Company will commence further exploration activities at Mesquite."
Financing Transactions
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In the first quarter of 2007, the Company completed a common share equity financing at a price of C$2.25 per share, which provided net proceeds of $59.2 million. On March 30, 2007, the Company entered into a term loan facility under which the Company will be able to borrow up to $105 million, of which $87.3 million is available for development of Mesquite. The balance will be available for other corporate purposes until late 2009. As required under the terms of the loan facility, the Company has entered into hedging contracts for the forward sale of 429,000 ounces of gold at a price of $801 per ounce during the period July 2008 to December 2014. On October 12, 2007, the Company completed a further common share equity financing at a price of C$3.05 per share, which provided net proceeds of $33.5 million.
Mesquite Mine Development
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Capital spending on the project to September 30, 2007 is $80.8 million of which $63.4 million relates to the mining fleet and $17.4 million relates to other plant and infrastructure upgrades. Since late in the first quarter of 2007, Western Goldfields has been vigorously executing its expansion program at Mesquite. Accomplishments to date include:
- Leach pad expansion project is approximately 50% complete;
- Two O&K RH340 45 cubic yard hydraulic shovels were delivered to the
site from Germany, commissioning is complete and the units are now in
service;
- Eleven Terex 205-ton haul trucks have been delivered to the site,
have been commissioned and are now engaged in pre-stripping
operations;
- Three more trucks are on schedule for delivery by year-end;
- New truck maintenance facility is under construction;
- Various site reclamation activities have been completed, including
regulatory approval of the Vista heap leach pad closure and the
removal and salvage of redundant facilities; and
- All planned senior mine staff positions have been filled with highly
qualified individuals.
Financial Results
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Western Goldfields reports a net loss to common shareholders for the nine months ended September 30, 2007 of $43.0 million, or $0.39 per share (basic and diluted), and for the three months ended September 30, 2007 of $36.4 million, or $0.31 per share. The net loss for the nine and three month periods includes non-cash losses of $27.6 million and $28.3 million, respectively, resulting from the mark-to-market of forward gold sales contracts. The net loss to common shareholders for the nine months ended September 30, 2006, was $8.4 million, or $0.14 per share (basic and diluted), and for the three months ended September 30, 2006, was $2.0 million, or $0.02 per share. Gold sales for the nine months ended September 30, 2007 were 6,101 ounces and for the three months ended September 30, 2007 were 1,876 ounces. Gold sales for the nine months ended September 30, 2006 were 11,445 ounces and for the three months ended September 30, 2006 were 3,070 ounces. These losses are in line with the Company's plan during its startup period.
Liquidity and Capital Resources
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At September 30, 2007, the Company's available cash balance was $18.0 million, restricted cash was $7.5 million and working capital was $23.6 million. Subsequent to quarter-end the Company received a further $33.5 million as proceeds of a further common share equity issue. This represents a significant improvement in the Company's financial position since December 31, 2006 when it reported cash of $5.5 million and working capital $4.6 million. The improved liquidity is due primarily to the equity offering of common shares in the first quarter of 2007 which raised net proceeds of $59.2 million. Liquidity was also improved through the conversion of warrants and the exercise of stock options for proceeds of $3.4 million. In addition, at September 30, 2007 the Company had $53.9 million of available capacity under the term loan facility.
Western Goldfields Inc.
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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. With a 2.8 million ounce gold reserve, and total resources of 3.9 million ounces inclusive of reserves, the Company is the only multi-million ounce US gold reserve not controlled by a major gold company. The Company is fully permitted and fully funded, and estimates average production of 160,000-170,000 ounces of gold annually during the first eight years of mine life. In June 2007, Western Goldfields announced that its production schedule has been moved ahead by one full quarter, which will bring the company into full production by January 2008. Western Goldfields Inc. is listed on the Toronto Stock Exchange and trades under the symbol WGI, and is quoted on the OTCBB under the symbol WGDFF.OB. For further details regarding the mineral reserves and mineral resources at Mesquite, please visit www.westerngoldfields.com.
This press release uses the terms "measured", "indicated" and/or "inferred" mineral resources. United States investors are advised that while such terms are recognized by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. United States investors are cautioned not to assume that all or any part of mineral resources will ever be converted into mineral reserves. Inferred mineral resources have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable.
The technical information contained in this press release has been prepared under the supervision of Wes Hanson, a qualified person under NI 43-101. Mr. Hanson is an officer of Western Goldfields. |
