Western Goldfields Announces 2009 Outlook and Fourth Quarter Production Update for the Mesquite Mine
19 Januar 2009 - 11:15PM
PR Newswire (US)
TORONTO, Jan. 19 /PRNewswire-FirstCall/ -- Western Goldfields Inc.
("Western Goldfields" or the "Company") (TSX:WGI, NYSE
Alternext:WGW) is pleased to announce its 2009 outlook and fourth
quarter production update for the Mesquite Mine. All amounts are
expressed in United States dollars unless otherwise indicated. -
Gold production for 2009 is expected to be in the range of 140,000
to 150,000 ounces, a significant increase over 2008 - Gold
production is expected to range from 33,000 to 38,000 ounces in
each of the first three quarters before increasing to 38,000 to
43,000 ounces in the fourth quarter - Gold production for the
fourth quarter and full year 2008 totaled 30,465 and 110,412
ounces, respectively - The Company reduced its debt by $17.7
million to $68.6 million at December 31, 2008 2009 Full Year
Guidance ----------------------- The Company today announces its
2009 guidance for Western Goldfields' Mesquite Mine in California.
In 2009, the Company expects to incur $68.0 to $72.0 million in
operating costs to place and process approximately 155,000
recoverable ounces of gold on the leach pad, resulting in a cost
per recoverable ounce placed(1) of $430 to $450 per ounce for the
year. At the end of 2008, Western Goldfields had approximately
55,000 recoverable ounces of inventory on the leach pad which is
estimated to increase to approximately 65,000 ounces at the end of
2009. Due to the timing of leach pad recoveries and the impact of
inventory adjustments, the Company forecasts production and sales
to be between 140,000 and 150,000 ounces at cost of sales per
ounce(2) of $530 to $540. As higher cost leach pad gold inventory
at December 31, 2008 is planned to be replaced by lower cost
inventory at December 31, 2009, the planned cost of sales(3) for
2009 includes approximately $11 million from the expected reduction
in the value of leach pad gold inventory. These costs were included
in work in process inventory at December 31, 2008 and therefore do
not affect 2009 operating cash flow. Operating cash flow is
expected to be $40 - $45 million for 2009 assuming a gold price of
$850 per ounce. Western Goldfields expects production and sales to
grow again in 2010 to approximately 175,000 ounces with total
operating costs remaining similar to 2009 at $68 to $72 million,
thus reducing the cost of sales per ounce(2) in 2010 to
approximately $400. "We are very excited as we move into 2009; our
increased production and cash flow generation will allow us to
continue to de-lever our balance sheet and better position us to
pursue the strategic growth opportunities that lie before us," said
Randall Oliphant, Chairman. 2009 Quarterly Guidance
----------------------- While total operating costs are expected to
remain consistent on a quarterly basis from $16.5 to $18.5 million,
higher stripping ratios and lower grades result in lower ounces
placed and lower production in the first three quarters of 2009.
Approximately 50% of the recoverable ounces placed in 2009 are
forecast to be placed in the fourth quarter. Production in each of
the first three quarters is expected to be 33,000 to 38,000 ounces
before increasing to 38,000 to 43,000 ounces in the fourth quarter.
The cost of sales per ounce(2) in the first three quarters of the
year are forecast to be $595 to $605 and include approximately $4
million per quarter of costs from the expected reduction in the
value of leach pad gold inventory quarter to quarter. The fourth
quarter cost of sales per ounce(2) are expected decline to $365 to
$375 and include approximately a $1 million reduction to cost of
sales(3) from the expected increase in the value of leach pad gold
inventory during the fourth quarter. The inventory related costs do
not impact the Company's cash flow in the respective quarters. Fuel
Price Assumption --------------------- The 2009 cost of sales(3)
forecast assumes a diesel price of $1.75 per gallon for the 50% of
Mesquite's 2009 diesel requirement that is currently unhedged;
$1.75 per gallon corresponds to the current price paid for diesel
at Mesquite. Diesel represents approximately 20% of Mesquite's
annual operating cost. Cost of sales per ounce(2) is impacted by
changes in diesel price as approximately 50% of Mesquite's annual
diesel consumption remains unhedged. Every $0.10 per gallon
movement in diesel price now results in an approximate $2 per ounce
change in cost of sales per ounce(2). 2008 Fourth Quarter and Full
Year Production Results
---------------------------------------------------- The Company
also announces its 2008 unaudited fourth quarter and full year
production results. During the fourth quarter and full year 2008,
Western Goldfields sold 30,625 and 110,880 ounces, respectively.
Gold production was 30,465 and 110,412 ounces during the fourth
quarter and full year, respectively. The Company realized average
gold prices of $799 and $855 per ounce during the fourth quarter
and full year, respectively. Unaudited cost of sales per ounce(2)
for the fourth quarter were $515 with unaudited cost of sales per
ounce(2) for the full year of $508. Fourth Quarter 2008 Full Year
2008 ------------------- -------------- Ounces Sold 30,625 110,880
Ounces Produced 30,465 110,412 Cost of Sales per ounce(2) $515 $508
Average realized gold price $799 per ounce $855 per ounce The
Company will provide a complete statement of its 2008 production
and cost of sales(2) as part of its fourth quarter and year-end
2008 financial results, which are expected to be released on March
6, 2009. Liquidity and Capital Resources
------------------------------- Western Goldfields repaid $17.7
million of its outstanding debt at the end of 2008 leaving $68.6
outstanding under the credit facility. At the end of 2008, the
Company had cash of $18.8 million, including $7.5 million of
restricted cash. As Mesquite's capital program is completed, the
Company expects nominal sustaining capital requirements going
forward. Western Goldfields forecasts approximately $1.5 million in
capital spending in 2009 and only $0.5 million annually thereafter.
Western Goldfields intends to continue using Mesquite's cash flow
to de-lever the balance sheet and pursue disciplined growth
opportunities. (1) Cost per recoverable ounce placed is defined as
total operating costs divided by the number of recoverable ounces
placed on the leach pad. (2) Cost of sales per ounce is defined as
cost of sales as per the Company's financial statements divided by
the number of ounces sold. (3) Cost of sales is defined as mine
operating costs, including changes in leach pad inventory, plus
royalties. Cost of sales does not include non-cash amortization and
accretion expense. Note: (1) is a Non-GAAP measure that does not
have any standardized meaning prescribed under U.S. GAAP, and
therefore they may not be comparable to similar measures employed
by other companies. The data is intended to provide additional
information which will allow statement readers to assess the future
cash flow generation ability of the Company and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with U.S. GAAP. Western
Goldfields Inc. ----------------------- Western Goldfields Inc. is
a gold production and exploration company with a focus on precious
metal mining opportunities in North America. The Mesquite Mine,
currently the Company's sole asset, was brought into production in
January 2008, and the Company's focus is now on achieving the
anticipated rate of production and completing planned improvements
to the property. The Company has 2.8 million ounces in Proven and
Probable Reserves as outlined in more detail in its latest annual
report on Form 10K filed on http://www.sedar.com/. Western
Goldfields common shares trade on the Toronto Stock Exchange under
the symbol WGI, and on the NYSE Alternext under the symbol WGW. For
further details, please visit http://www.westerngoldfields.com/.
Mr. Wes Hanson, P.Geo., Vice President of Mine Development, Western
Goldfields Inc., is the qualified person under National Instrument
43-101 who supervised the preparation of the technical information
contained in this news release. Mr. Hanson is an officer of the
Company. 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 securities law. Such forward-looking statements are
identified by words such as "intends", "anticipates", "believes",
"expects", "plans" and include, without limitation, statements
regarding the Company's plan of business operations, production and
cost estimates, receipt of working capital, anticipated revenues,
timing of the recovery of gold and capital and operating
expenditures. These forward-looking statements are based on the
best estimates of management at the time such statements are made.
Expected production results and cost of sales (including without
limitation, statements made with respect to future production and
costs contemplated by our mine plan) are based in part on current
and historical production and cost data factoring certain
assumptions with respect to future metal prices, costs and
availability of supplies and labour and other parameters. 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, variations in metal prices and/or
cost of supplies, possible variations in ore grade or recovery
rates, failure of plant, equipment or processes to operate as
anticipated, accidents, labour disputes, as well as those set forth
in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 2007 filed with the U.S. Securities and Exchange
Commission and with SEDAR, under the caption "Risk Factors" as well
as other filings made by the Company with securities regulatory
authorities. 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 regulations, 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. DATASOURCE: Western Goldfields Inc.
CONTACT: please visit http://www.westerngoldfields.com/, or
contact: Raymond Threlkeld, Chief Executive Officer, (416)
324-6005, ; Brian Penny, Chief Financial Officer, (416) 324-6002, ;
Hannes Portmann, Director, Corporate Development and Investor
Relations, (416) 324-6014,
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