Western Goldfields Announces Third Quarter Results
Thu Nov 1, 8:59 AM
ca.news.finance.yahoo.com
- All third-quarter milestones achieved to bring Mesquite Mine into
full production
- Mine fleet deliveries and construction program on schedule
- Full production expected January 2008
TORONTO, Nov. 1 /CNW/ - Western Goldfields Inc. (TSX:WGI, OTC BB:WGDFF.OB) 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
----------------------
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
-------------------------
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
-----------------
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
-------------------------------
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.
-----------------------
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.
Further Information
-------------------
For further information about the financial results of the Company, see the unaudited interim financial statements of the Company for the nine months ended September 30, 2007 and the related management's discussion and analysis, which will be filed on Form 10-QSB with the U.S. Securities and Exchange Commission and the applicable Canadian securities regulatory authorities and will be available under the profile of the Company on EDGAR and SEDAR.
Forward-Looking Information
---------------------------
Certain statements contained in this news release and subsequent oral statements made by and on behalf of the Company may contain forward-looking information within the meaning of the United States Private Securities Litigation Reform Act of 1995 and similar Canadian legislation. Such forward-looking statements are identified by words such as "intends", "anticipates", "believes", "expects", "plans" and "hopes" and include, without limitation, statements regarding the Company's plan of business operations, timing and costs to recommence commercial production, economic viability of the Mesquite Mine, production and cost estimates, financing options, including entering into a debt financing arrangement, and the consequences thereof, potential contractual arrangements, receipt of working capital, anticipated revenues, exercise of outstanding warrants, and capital and operating expenditures. These forward-looking statements are based on the best estimates of management at the time such statements are made. There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from such statements. Factors that could cause actual results to differ materially include, among others, those set forth in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2006 filed with the U.S. Securities and Exchange Commission, under the caption, "Risk Factors". Most of these factors are outside the control of the Company. Investors are cautioned not to put undue reliance on forward-looking statements. Except as otherwise required by applicable securities statutes or regulation, the Company disclaims any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.
Cautionary Note to U.S. Investors Concerning Estimates of Measured,
Indicated and Inferred Resources
-------------------------------------------------------------------------
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.
WESTERN GOLDFIELDS INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
------------- -------------
2007 2006
ASSETS
CURRENT ASSETS
Cash $ 18,038,341 $ 5,502,535
Restricted Cash 7,500,000 -
Receivables 128,873 223,507
Inventories 2,378,899 511,663
Prepaid expenses 1,826,246 841,636
------------- -------------
TOTAL CURRENT ASSETS 29,872,359 7,079,341
------------- -------------
Property, plant, and equipment, net of
accumulated amortization 69,325,464 4,328,512
Construction in progress 13,222,505 2,880,775
Investments - reclamation and remediation 8,555,114 6,337,006
Long-term deposits 342,926 329,146
Long-term prepaid expenses 1,590,847 1,009,555
Deferred debt issuance and stock
offering costs 3,342,675 250,000
------------- -------------
TOTAL OTHER ASSETS 96,379,531 15,134,994
------------- -------------
TOTAL ASSETS $126,251,890 $ 22,214,335
------------- -------------
------------- -------------
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 4,735,977 $ 1,663,080
Accounts payable to related party 15,156 31,165
Accrued expenses 1,181,107 835,740
Accrued interest 291,905 -
------------- -------------
TOTAL CURRENT LIABILITIES 6,224,145 2,529,985
------------- -------------
LONG-TERM LIABILITIES
Mark-to-market loss on gold hedging
contracts 27,572,494 -
Loan payable 51,107,815 -
Reclamation and remediation
liabilities 4,909,939 4,805,473
------------- -------------
TOTAL LIABILITIES 89,814,393 7,335,458
------------- -------------
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Common stock, of no par value, unlimited
shares authorized; 118,774,335 and
78,452,876 shares issued and
outstanding, respectively 97,173,005 32,884,798
Stock options and warrants 7,957,442 7,674,270
Accumulated deficit (68,692,950) (25,678,233)
Accumulated other comprehensive income - (1,958)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 36,437,497 14,878,877
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $126,251,890 $ 22,214,335
------------- -------------
------------- -------------
WESTERN GOLDFIELDS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ---------------------------
2007 2006 2007 2006
------------- ------------- ------------- -------------
REVENUES
Revenues from
gold sales $ 1,281,229 $ 1,897,155 $ 4,060,106 $ 6,776,098
------------- ------------- ------------- -------------
COST OF GOODS SOLD
Mine operating
costs 6,066,818 2,239,154 11,741,304 7,116,338
Amortization and
accretion 1,609,092 342,248 2,361,410 989,492
Royalties 49,726 72,475 154,086 255,718
Reclamation cost
recovery - (1,459,859) - (1,459,859)
------------- ------------- ------------- -------------
7,725,636 1,194,018 14,256,800 6,901,689
------------- ------------- ------------- -------------
GROSS PROFIT (LOSS) (6,444,407) 703,137 (10,196,694) (125,591)
------------- ------------- ------------- -------------
EXPENSES
General and
administrative 958,085 1,102,603 3,180,575 3,278,207
Stock based
compensation 661,892 868,208 1,950,446 2,638,364
Severance costs
payable in
common shares - 547,200 - 547,200
Exploration (272,774) 251,104 759,152 962,321
------------- ------------- ------------- -------------
1,347,203 2,769,115 5,890,173 7,426,092
------------- ------------- ------------- -------------
OPERATING LOSS (7,791,610) (2,065,978) (16,086,867) (7,551,683)
------------- ------------- ------------- -------------
OTHER INCOME
(EXPENSE)
Interest income 341,213 88,839 1,383,466 267,453
Interest expense (456,522) - (457,361) (20,434)
Agency and
commitment fees (149,579) - (390,829) -
Amortization of
deferred debt
issuance costs (117,601) - (227,145) -
Unrealized loss on
mark-to-market
gold hedging
contracts (28,331,371) - (27,572,494) -
Gain on
extinguishment
of debt - - - 142,949
Gain (Loss) on
foreign currency
exchange 89,022 (7,645) 294,072 (7,645)
Gain (Loss) on
sale of assets 42,441 - 42,441 (18,837)
Expenses of
Romarco
merger
termination - - - (1,225,000)
------------- ------------- ------------- -------------
(28,582,397) 81,194 (26,927,850) (861,514)
------------- ------------- ------------- -------------
LOSS BEFORE INCOME
TAXES (36,374,007) (1,984,784) (43,014,717) (8,413,197)
INCOME TAXES - - - -
------------- ------------- ------------- -------------
NET LOSS (36,374,007) (1,984,784) (43,014,717) (8,413,197)
PREFERRED STOCK
DIVIDENDS - - - (16,979)
------------- ------------- ------------- -------------
NET LOSS TO COMMON
STOCKHOLDERS (36,374,007) (1,984,784) (43,014,717) (8,430,176)
OTHER COMPREHENSIVE
INCOME
Foreign currency
translation
adjustment 8,131 6,610 - 2,797
------------- ------------- ------------- -------------
NET COMPREHENSIVE
LOSS $(36,365,876) $ (1,978,174) (43,014,717) $ (8,410,400)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
BASIC AND DILUTED
NET LOSS PER
SHARE $ (0.31) $ (0.02) (0.39) $ (0.14)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES
OUTSTANDING 118,281,240 68,009,489 111,628,367 60,063,849
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
WESTERN GOLDFIELDS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ---------------------------
2007 2006 2007 2006
------------- ------------- ------------- -------------
updated
CASH FLOWS FROM
OPERATING
ACTIVITIES
Net loss $(36,374,007) $ (1,984,784) $(43,014,717) $ (8,413,197)
Adjustments to
reconcile net
loss to net
cash provided
(used) by
operating
activities:
Amortization 1,530,576 277,590 2,122,983 807,099
Amortization
of deferred
debt
issuance
costs 117,601 - 227,145 -
Accretion
expense 84,294 67,538 252,882 185,273
Reclamation
cost recovery - (1,459,859) - (1,459,859)
Reclamation
costs incurred - (69,695) - (69,695)
Gain on sale of
assets and
investments (42,441) - (42,441) 18,837
Interest on
investments -
reclamation and
remediation (106,270) 1,003 (276,539) (150,693)
Common stock
issued for
exploration
assets and
services - - - 136,500
Common stock
issued in
respect of
severance
agreements - 547,200 - 547,200
Stock based
compensation 661,892 635,207 1,950,446 2,638,364
Mark-to-market
loss on gold
hedging
contracts 28,331,371 - 27,572,494 -
Warrants issued
for services
of consultant - 233,000 - 233,000
Changes in
assets and
liabilities:
Decrease
(increase) in:
Restricted
cash - - (7,500,000) -
Accounts
receivable 18,479 (130,571) 94,634 (141,581)
Inventories (1,827,345) 190,722 (1,867,236) 419,935
Prepaid
expenses (1,018,973) 45,049 (1,565,902) 148,768
Long term
deposits (4,556) (2,430) (13,780) (7,302)
Increase
(decrease) in: -
Accounts
payable 1,285,607 (264,581) 336,824 (436,445)
Accounts
payable -
related
parties (10,231) (84,507) (16,009) 33,694
Accrued
expenses 144,806 (171,293) 345,366 150,962
Accrued
expenses -
related
parties - - - (45,835)
Accrued
interest
expense 291,905 - 291,905 (48,695)
Accrued
agency and
commitment
fees (241,250) - - -
------------- ------------- ------------- -------------
Net cash provided
(used) by
operating
activities (7,158,542) (2,170,411) (21,101,945) (5,453,671)
------------- ------------- ------------- -------------
CASH FLOWS FROM
INVESTING
ACTIVITIES
Purchase of
property &
equipment,
including
construction
in progress (43,304,571) (85,290) (74,681,081) (473,069)
Increase in
reclamation
and remediation
investment - - (2,090,094) -
------------- ------------- ------------- -------------
Net cash provided
(used) by
investing
activities (43,304,571) (85,290) (76,771,175) (473,069)
------------- ------------- ------------- -------------
CASH FLOWS FROM
FINANCING
ACTIVITIES
Term loan advances
(repayments) 51,107,815 - 51,107,815 (2,205,186)
Deferred debt
issuance costs (2,469,747) - (3,319,820) -
Common stock
issued for cash - - 59,191,196 4,012,000
Warrants issued
for cash - - - 1,988,000
Exercise of options
to purchase common
stock 408,200 (3,650,250) 909,183 -
Exercise of warrants
to purchase common
stock 705,000 5,286,238 2,520,552 5,286,238
Preferred stock
dividends - - - (51,354)
------------- ------------- ------------- -------------
Net cash provided
(used) by financing
activities 49,751,268 1,635,988 110,408,926 9,029,698
------------- ------------- ------------- -------------
Change in cash (711,845) (619,713) 12,535,806 3,102,958
Cash, beginning of
period 18,750,186 3,775,058 5,502,535 52,387
------------- ------------- ------------- -------------
Cash, end of
period $ 18,038,341 $ 3,155,345 $ 18,038,341 $ 3,155,345
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
SUPPLEMENTAL CASH
FLOW DISCLOSURES:
Interest paid
(received) $ 164,617 $ (300) $ 165,456 $ 69,130
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
NON-CASH FINANCING
AND INVESTING
ACTIVITIES:
Stock, options
and warrants
issued for
services $ 661,892 $ 635,207 $ 1,950,446 $ 2,638,364
Exploration fees
and assets paid
by issuance of
stock $ - $ - $ - $ 136,500
Equipment
purchases
included in
accounts
payable $ (9,093,639) $ - $ 2,738,144 $ -
Deferred debt
issuance costs
included in
accrued
expenses $ (2,328,277) $ - $ - $ -
Contacts
please visit www.westerngoldfields.com
or contact: Ray Threlkeld
President and Chief Executive Officer
(416) 324-6005
rthrelkeld@westerngoldfields.com
Brian Penny
Chief Financial Officer
(416) 324-6002
info@westerngoldfields.com
Julie Taylor Pantziris
Director
Regulatory Affairs and Investor Relations
(416) 324-6015
jtaylor@westerngoldfields.com |
