Western Goldfields Announces First Quarter Production and Status of the New Gold Business Combination
20 April 2009 - 11:16PM
PR Newswire (US)
TORONTO, April 20 /PRNewswire-FirstCall/ -- Western Goldfields Inc.
("Western Goldfields" or the "Company") (TSX:WGI, NYSE Amex:WGW) is
pleased to announce its 2009 first quarter production for the
Mesquite Mine and the status of the New Gold Business Combination.
All amounts are expressed in United States dollars unless otherwise
indicated. - Gold production for the first quarter of 33,660
ounces, within the 2009 quarterly guidance range - Cost of sales
per ounce(1) for the quarter of $573, below 2009 quarterly guidance
- Cash at March 31, 2009 of $26.6 million, including $7.5 million
of restricted cash, an increase of $7.8 million during the quarter
- Previously announced Business Combination with New Gold Inc.
("New Gold") continues to move forward with the Western Goldfields'
shareholder vote on May 14, 2009 The Company today announces its
2009 first quarter production was in line with guidance at lower
cost of sales per ounce(1). Production for the first quarter of
33,660 ounces was within the range expected of 33,000 to 38,000.
During the quarter, the Mesquite Mine met its operational targets
including: total tons mined, ore tons placed, ore grade and strip
ratio. Cost of sales per ounce(1) of $573 for the first quarter was
below the guidance range for the first quarter of $595 to $605 per
ounce. Lower costs were primarily driven by savings in the
following areas: diesel, explosives, repairs and maintenance; these
savings were partially offset by higher costs for cyanide and lime
due to increased consumption. Consistent with prior guidance, gold
production for the year is expected to be between 140,000 and
150,000 ounces. The Business Combination with New Gold announced on
March 4, 2009 continues to move forward; materials for the Annual
and Special Meeting of Shareholders were mailed for the New Gold
and Western Goldfields meetings on May 13, 2009 and May 14, 2009,
respectively. "The start to 2009 has been a very exciting one for
Western Goldfields both operationally at Mesquite, as we see
production increasing with costs coming down, and strategically
with the announcement of our business combination with New Gold,"
said Randall Oliphant, Chairman. "As the Company merges with New
Gold, we will continue to focus on delivering on our targets, with
the aim of using the strength of our existing assets as a platform
for future growth." First Quarter Production and Cost Results
----------------------------------------- The Mesquite mine
achieved the following during the first quarter compared to the
first and fourth quarters of 2008:
-------------------------------------------------------------------------
Q1 2009 Q4 2008 Q1 2008
-------------------------------------------------------------------------
Total tons mined (millions) 14.8 14.1 12.3
-------------------------------------------------------------------------
Total ore tons mined (millions) 2.9 2.7 1.3
-------------------------------------------------------------------------
Grade (ounces per ton) 0.012 0.015 0.016
-------------------------------------------------------------------------
Gold production (ounces) 33,660 28,378 9,146
-------------------------------------------------------------------------
Gold sales (ounces) 32,715 30,625 9,960
-------------------------------------------------------------------------
Average realized gold price(2) ($/ounce) 867 799 929
-------------------------------------------------------------------------
Cost of sales per ounce(1) ($/ounce) 573 522 939
-------------------------------------------------------------------------
Since the Company brought the Mesquite mine back into production in
January 2008, the focus has been on continued operational
improvements. The above results show the steady progression we have
made operationally. With the benefit of more experienced drivers,
better performing tires and increased efficiencies from the
operations being focused in the Rainbow pit, Western Goldfields'
tons mined in the first quarter were the highest of any quarter
since the restart. Based on these operational improvements combined
with lower input costs, the Company expects to continue to generate
significant cash flow. Liquidity and Capital Resources
------------------------------- Western Goldfields had $26.6
million of cash, including $7.5 million of restricted cash, at
March 31, 2009. This represents an increase of $7.8 million in the
cash balance during the first quarter of 2009. The Company's debt
remains at $68.6 million as the next scheduled debt repayment of
$4.7 million will occur on June 30, 2009. The Company incurred $1.5
million in capital expenditures during the quarter primarily
related to the purchase of a training simulator which is aimed at
increasing driver efficiency and decreasing repair and maintenance
costs going forward. Western Goldfields continues to expect minimal
capital expenditures going forward. Business Combination with New
Gold ---------------------------------- Below is a summary schedule
of the proposed Business Combination with New Gold: - May 13, 2009
- New Gold Annual and Special Meeting of Shareholders - May 14,
2009 - Western Goldfields Annual and Special Meeting of
Shareholders - June 1, 2009 - Expected closing (1) Cost of sales
per ounce is defined as cost of sales as per the Company's
financial statements, plus realized losses from the settlement of
fuel forward contracts, divided by the number of ounces sold. Cost
of sales per ounce is a non-GAAP financial measure as it adds
realized losses from settlement of fuel hedge contracts with cost
of sales per the Company's financial statements. We record the
realized and unrealized gains/losses from our fuel hedge contracts
in other income. Consequently, we believe that including the
realized gains/losses from settlement of fuel hedge contracts
provides investors and analysts with a measure of our costs related
to production that is more comparable to measures presented by
other mining companies. Management also uses this measure
internally to monitor, evaluate, and manage those factors that
impact production costs on a monthly basis. The cost of sales per
ounce statistic is intended to provide additional information, does
not have any standardized meaning prescribed by U.S. GAAP and
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with U.S. GAAP. This
non-GAAP measure may not be comparable to similar measures
presented by other issuers. This is the first quarter where this
adjustment has been made as the Company only began hedging fuel at
the beginning of fiscal 2009. We will include in our first quarter
report a reconciliation of cost of sales per ounce to reported cost
of sales as per the Company's U.S. GAAP financial statements. (2)
Average realized gold price is a non-GAAP financial measure. It is
calculated by dividing total revenue by ounces sold. We believe
that including the average realized gold price provides investors
and analysts with a measure of our revenue related to production
that is more comparable to measures presented by other mining
companies. Management also uses this measure internally to monitor,
evaluate, and manage those factors that impact revenue on a monthly
basis. The average realized gold price statistic is intended to
provide additional information, does not have any standardized
meaning prescribed by U.S. GAAP and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with U.S. GAAP. This non-GAAP measure may not be
comparable to similar measures presented by other issuers. We will
include in our first quarter report the details related to revenue
and ounces sold per the Company's U.S. GAAP financial statements.
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 2.6 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 Amex 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-K for the year ended December 31, 2008 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,
Copyright