Wesdome reports fourth quarter and annual operating and financial results

TORONTO, Feb. 28, 2014 /CNW/ - Wesdome Gold Mines Ltd (TSX: WDO) ("Wesdome" or the "Company") is pleased to report its financial and operating results from its Canadian operations for the year ended December 31, 2013. This information should be read in conjunction with the Company's annual financial statements and Management's Discussion and Analysis. All figures are in Canadian dollars unless otherwise specified.

HIGHLIGHTS

$4.4 million free cash flow generated in Q4, despite weak gold prices
Eagle River produces 15,700 ounces at 12.3 gAu/tonne in Q4
$14.7 million in cash and gold bullion at market as at December 31, 2013
Reserves increase 28%, net of depletion
Two new high grade discoveries at Eagle River
Technical and Management experience strengthened
Announced Moss Lake Gold Mines acquisition

Rolly Uloth, President & CEO comments "A weak gold market forced the industry to reinvent itself. We refocused on our core assets and liked what we saw. I think the 4^th quarter performance demonstrates what our team and assets are capable of."

OVERALL PERFORMANCE

The Company owns and operates the Eagle River Mine Complex in Wawa, Ontario and the Kiena Mine Complex in Val-d'Or, Quebec. On January 1, 2012, the Mishi mine in Wawa commenced commercial production. The Eagle River and Mishi mines feed a common mill and are referred to as the Eagle River Mine Complex. The Eagle River mine has been in continuous production since commercial production commenced January 1, 1996. It has produced 961,936 ounces to date. The Kiena mine was purchased by the Company in 2003. It restarted commercial production on August 1, 2006. It was previously in production from 1982 - 2002. To date the Kiena mine has produced 1,757,475 ounces of gold.

At December 31, 2013, the Company had $8.5 million in working capital. In 2013, revenue exceeded mining and processing costs by $15.4 million and $10.9 million in capital costs were incurred. Cash flow from operations totalled $13.3 million and a net loss of $3.9 million was recorded on one-time, non-cash changes.

In 2013, 52,980 ounces of gold were produced and 54,914 ounces were sold. Production costs decreased 25.3% to average $1,088 per ounce for the year, and at year end the Company had 7,034 ounces of gold inventory.

On March 7, 2013, the Company announced the suspension of operations at the Kiena Mine Complex. This preserved and improved the Company's financial position, allowing capital allocation to projects with better returns to shareholders. Kiena remains a good long-term investment but tight margins and declining gold prices forced prompt action.

External factors that significantly influenced the financial and operational results in 2013 were three-fold:

1)	Weather - Spring floods and a lightning strike on our main electrical transformer resulted in a loss of about two months of milling.

2)	Crashing Market Confidence - Gold prices dropped 30% after rising for 10 years. Investors capitulated and sold off gold shares. The situation was exacerbated by fund redemptions forcing sales into an illiquid, no-bid market. The consequences of these losses were an industry-wide management rout (and its associated costs) to which we were not immune.

3)	Rise of Anti-Mining Public Sentiment - The consequences of this are intensified regulation and economic pressures on mine operators. Significant cumbersome amendments to both the Ontario and Quebec Mining Acts were adopted in 2013. The implementation of these amendments could have a material impact on financial results going forward.

On the bright side, conditions forced a refocus on basics and pruning of higher cost production, increased quality manpower availability and enabled quality strategic tuck-in acquisitions at very reasonable costs. We remain confident in the longer term potential of our assets and are relieved to put 2013 in the rear view mirror.

RESULTS OF OPERATIONS

					Three Months Ended Dec31		Twelve Months Ended Dec 31
					2013	2012	2013	2012
*EAGLE RIVER MINE COMPLEX*
*Eagle River Mine*
	Tonnes milled				39,766	36,940	124,861	155,020
	Recovered grade (g/t)				12.3	7.0	10.7	6.5
	Production (oz)				15,726	8,314	42,850	32,223

*Mishi Mine*
	Tonnes milled				2,788	11,919	22,536	64,915
	Recovered grade (g/t)				2.5	1.5	3.3	2.3
	Production (oz)				221	562	2,360	4,776
	Surface stockpile (tonnes)				81,443	37,301	81,443	37,301

*Total Eagle River Mine Complex*
	Production (oz)				15,947	8,876	45,210	36,999
	Sales (oz)				13,400	7,500	46,800	36,400
	Bullion revenue ($000) ^†				17,882	12,709	67,777	60,545
	Mining and processing costs
		(cost of sales) ($000) *			12,114	11,460	50,446	44,759
	Mine operating profit ($000) *				5,768	1,246	17,331	14,786

*KIENA MINE COMPLEX*
			Tonnes milled		-	70,279	97,158	265,872
			Recovered grade (g/t)		-	2.2	2.5	2.2
			Production (oz)		-	4,869	7,700	18,814
			Sales (oz)		1,514	5,000	8,114	19,100
			Bullion revenue ($000) ^†		2,046	8,498	11,949	31,763
			Mining and processing costs
				(cost of sales) ($000) *	1,970	6,970	13,836	31,780
			Mine operating profit (loss) ($000) *		76	1,528	(1,887)	(17)

					Three Months Ended Dec31		Twelve Months Ended Dec 31
					2013	2012	2013	2012
*TOTAL MINE OPERATIONS*
			Production (oz)		15,947	13,745	52,980	55,813
			Sales (oz)		14,914	12,500	54,914	55,500
			Gold inventory (oz)		7,034	8,965	7,034	8,965
			Bullion revenue ($000) ^†		19,928	21,207	79,726	92,308
			Mining and processing costs
				(cost of sales) ($000) *	14,084	18,430	64,282	76,539
			Mine operating profit ($000) *		5,844	2,777	15,444	15,769
			Gold price realized ($Cdn/oz)		1,336	1,697	1,452	1,660

RECONCILIATION OF PRODUCTION COSTS TO MINING AND PROCESSING COSTS (Cost of Sales)

		Three Months Ended Dec 31		Twelve Months Ended Dec 31
		2013	2012	2013	2012
*Eagle River Mine Complex*
	Mining and processing costs ($000)	12,114	11,460	50,446	44,759
	Inventory-related adjustments ($000) ^††	(217)	2,089	(6,122)	1,143
	Production costs ($000) *	11,897	13,549	44,324	45,902
	Production costs per ounce ($Cdn)	746	1,526	980	1,241

*Kiena Complex*
	Mining and processing costs ($000)	1,970	6,970	13,836	31,780
	Inventory-related adjustments ($000) ^††	(1,970)	(289)	(506)	(477)
	Production costs ($000) *	-	6,681	13,330	31,303
	Production costs per ounce ($Cdn)		1,372	1,731	1,664

TOTAL MINE PRODUCTION COSTS
	Production costs ($000) *	11,897	20,230	57,654	77,205
	Production costs per ounce ($Cdn)	746	1,383	1,088	1,383

^†	Bullion revenue includes minor by-product silver sales

*	The Company has included in this report certain non-IFRS performance measures, including mine operating profit, mining and processing costs to applicable sales, and production costs. Production costs per ounce reflect actual mine operating costs incurred during the fiscal period divided by the number of ounces produced. These measures are not defined under IFRS and therefore should not be considered in isolation or as an alternative to or more meaningful than, net income(loss) or cash flow from operating activities as determined in accordance with IFRS as an indicator of our financial performance or liquidity. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company's performance and ability to generate cash flow.

^††	Inventory-related adjustments are adjustments made to production costs in order for the Company's gold inventory to be valued at the lower of production cost on a first-in, first-out basis and at net realizable value, in accordance with its accounting policy under IFRS.

In 2013, bullion sales exceeded mining and processing costs resulting in a mine operating profit, or gross margin, of $15.4 million. In addition to these direct operating costs, additional cash costs, including royalty payments, corporate and general costs and interest payments amounted to $8.8 million. These other costs were $4.0 million greater than last year's due to expenses related to reconfiguring the board and management and costs related to suspending mining operations at Kiena. We expect such costs to return to normal levels in subsequent years. Additionally, as a result of the decline in gold prices observed in 2013, the Company recorded a one-time impairment charge of $1.7 million against its deferred tax assets, due to the adverse impact of the price decline on future revenue forecasts.

At the Eagle River Mine recovered grades increased 65% from last year's average to 10.7 gAu/tonne. This lowered production costs per ounce to $980 from $1,212 in 2012. Proven and Probable Reserves increased 28%, net of depletion. Two new parallel zones were discovered and we are now forecasting potential to extend our high grade mining sequence beyond 2015.

At Mishi we suspended contract mining in the spring and continue to work off substantial ore stockpiles of 81,443 tonnes grading 2.8 gAu/tonne at year end. In 2013, we milled 22,536 tonnes at a recovered grade of 3.3 gAu/tonne to produce 2,360 ounces. Mishi proven and probable reserves increased to 1,592,000 at 2.2 gAu/tonne with a life-of-mine stripping ratio of 2.7:1.

We are focused on refurbishing and expanding our milling and tailings management systems to increase production and decrease unit costs moving forward. We expect a 50% increase in mill throughput in 2014 with overall costs stable.

Mining operations at Kiena were suspended June 30, 2013. Costs associated with this action amounted to about $3.5 million. This included a one-time charge in the fourth quarter of $1.5 million against its parts inventory at the mine. Also, an additional $0.6 million impairment charge was recorded to cover the period January 1, 2013 to June 30, 2013. About $0.5 million cash proceeds were derived from equipment sales. Furthermore, some equipment and materials transported to the Eagle River Mine Complex are already generating tangible productivity improvements. We estimate costs to maintain and explore our Val d'Or properties and infrastructure at about $2.0 million per year. We envision a two year exploration program, targeting higher grade portions of our substantial resources for expansion. In 2014, planning, costing, and scheduling work will be undertaken to define more clearly the economic conditions required to generate reasonable risk adjusted returns. All options will be considered for our Kiena property to enhance shareholder value.

Two strategic acquisitions were initiated in 2013. We merged with Windarra Minerals Ltd. to consolidate and expand our land position at Mishi and eliminate future royalties. Subsequent to year end, we announced a business combination with subsidiary company Moss Lake Gold Mines Ltd. This is scheduled to close in the spring of 2014 and will clarify ownership and a potential development path for the large Moss Lake gold deposit located near Thunder Bay, Ontario.

In summary, in an environment of unforeseen tumultuous celestial and market upheavals, we posted a small loss of $2.2 million on one-time costs and charges, reduced costs per ounce significantly and set a clear capital investment path that should generate strong returns moving forward.

Fourth Quarter
During the fourth quarter, 2013, combined operations produced 15,947 ounces of gold and 14,914 ounces were sold at an average realized price of $1,336 per ounce. This represents a 16% increase in production and a 19% increase in ounces sold compared to the fourth quarter of 2012. Realized gold prices were $1,336 per ounce, or 21% lower than in the fourth quarter, 2012.

Production came primarily from Eagle River, which generated 15,726 ounces of gold from 39,766 tonnes milled at an average recovered grade of 12.3 gAu/tonne.

This solid performance generated free cash flow (Cash Flow from Operations less capital investments) of $4.4 million in the fourth quarter despite weak gold prices. We believe this is a good representation of what our streamlined operations are capable of.

LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2013, the Company had working capital of $8.5 million compared to $13.9 million at December 31, 2012. During fiscal 2013, capital expenditures totalled $11.1 million compared to $11.2 million in 2012. Capital expenditures were concentrated in underground development, mine and mill infrastructure. If the one-time charge of $1.5 million related to Kiena's parts inventory is not taken into account, working capital as at December 31, 2013, would have been $10.0 million, compared to $9.8 million as at September 30, 2013.

The Company carries an inventory of gold. At December 31, 2013, this liquid asset consisted of 7,034 ounces of gold with a market value of approximately $9.0 million. The gold inventory is carried at the lower of cost or market, in this case at a cost of $5.7 million. Furthermore, the Mishi ore stockpile at the mill is estimated to contain about 6,500 ounces of recoverable gold, or approximately $4.5 million, net of milling costs. Including these non-IFRS working capital adjustments, working capital would increase to approximately $16.3 million.

On May 24, 2012, the Company completed a $7,021,000 placement of unsubordinated convertible debentures. The term is 5-years bearing interest at 7% per annum payable semi-annually and convertible into common shares at $2.50 per common share. The net proceeds of $6,821,000, along with cash at hand, were used to redeem existing convertible debentures in the amount of $10,931,000 that matured on May 31, 2012. This resulted in the Company paying down $4.1 million in debt.

Management believes we have sufficient liquidity to carry out our mining, development and exploration programs and prefers not to dilute shareholders' interest with equity issues.

With current gold prices, operations are capable of generating strong cash flow as evidenced by the fourth quarter results.

OUTLOOK
In 2014 we forecast 50,000 ounces of gold production, or a 10% increase from Eagle River and Mishi over 2013. Production will come primarily from the Eagle River Mine and the Mishi stockpile, and strong grades at the Eagle River Mine are expected to persist. Mill throughput is expected to increase 50% during the year, resulting in increased Mishi throughput, as millfeed from Eagle River is expected to remain steady. A strong fourth quarter performance, new gold discoveries, recently resurgent gold prices and an ambitious yet realistic capital investment plan give us great confidence in the potential of our streamlined operations.

At Mishi, reserves within the existing mine plan represent less than a third of the open pit resource base. Subject to positive in-fill drilling results and increased mill availability and capacity, we see significant potential for future expansion.

ABOUT WESDOME
Wesdome is in its 27th year of continuous mining operations in Canada. It currently has two producing gold mines in Wawa, Ontario, and owns the Kiena Mine Complex in Val d'Or, Québec. The Company has 105.8 million shares issued and outstanding and trades on the Toronto Stock Exchange under the symbol "WDO".

This news release contains "forward-looking information" which may include, but is not limited to, statements with respect to the future financial or operating performance of the Company and its projects. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements contained herein are made as of the date of this press release and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The Company undertakes no obligation to update forward-looking statements if circumstances, management's estimates or opinions should change, except as required by securities legislation. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements.


Wesdome Gold Mines Ltd.
Consolidated Statements of Financial Position
(Expressed in thousands of Canadian dollars)

December 31			2013		2012
Assets
Current
	Cash and cash equivalents	$	5,651	$	4,633
	Restricted funds - short term		-		200
	Receivables		1,982		4,298
	Inventory		10,757		19,633
			8,390		28,764

Restricted funds			2,994		2,381
Deferred income taxes			13,025		14,870
Mining properties, plant and equipment			35,118		32,681
Exploration properties			33,522		30,154
		$	103,049	$	108,850

Liabilities
Current
	Payables and accruals	$	9,393	$	13,996
	Current portion of obligations under finance leases		526		898
			9,919		14,894

Income taxes payable			22		22
Obligations under finance leases			380		641
Convertible debentures			5,996		5,760
Provisions			2,434		2,545
			18,751		23,862

Equity
Equity attributable to owners of the Company
	Capital stock		125,352		122,651
	Contributed surplus		2,150		2,059
	Equity component of convertible debentures		932		870
	Deficit		(44,400)		(41,009)
			84,034		84,571

Non-controlling interest			264		417
Total equity			84,298		84,988
		$	103,049	$	108,850


Wesdome Gold Mines Ltd.
Consolidated Statements of Loss and Comprehensive Loss
(Expressed in thousands of Canadian dollars)
			Three Months Ended Dec 31				Twelve Months Ended Dec 31
				2013		2012		2013		2012
Revenue
	Gold and silver bullion		$	19,928	$	21,207	$	79,726	$	92,308

Operating expenses
	Mining and processing			14,083		18,430		64,281		76,539
	Depletion of mining properties			2,228		1,570		7,838		8,340
	Production royalties			397		252		1,158		965
	Corporate and general			652		920		3,436		2,703
	Share based compensation			149		90		349		601
	Kiena restructuring and care and
		maintenance costs		2,091		-		3,437		-
	Impairment charges			-		60,948		633		61,898
				19,600		82,210		81,132		151,046

(Loss) income from operations				328		(61,003)		(1,406)		(58,738)
Interest and other income				34		10		149		70
Interest on long term debt				(196)		(206)		(785)		(1,081)
Other interest				(1)		(8)		(30)		(26)
Accretion of decommissioning liability				175		(14)		111		(54)
(Loss) income before income tax				340		(61,221)		(1,961)		(59,829)
Income tax expense (recovery)
	Current			-		2		-		13
	Deferred			2,122		(14,759)		1,907		(14,589)
				2,122		(14,757)		1,907		(14,576)
Net loss				(1,782)		(46,464)		(3,868)		(45,253)
Total comprehensive loss			$	(1,782)	$	(46,464)	$	(3,868)	$	(45,253)

Net loss and total comprehensive
	loss attributable to:
		Non-controlling interest	$	(53)	$	(41)	$	(160)	$	(195)
		Owners of the Company		(1,729)		(46,423)		(3,708)		(45,058)
			$	(1,782)	$	(46,464)	$	(3,868)	$	(45,253)

Basic and diluted loss per share
	Basic		$	(0.02)	$	(0.46)	$	(0.04)	$	(0.44)
	Diluted		$	(0.02)	$	(0.46)	$	(0.04)	$	(0.44)

Basic and diluted weighted average
	number of common shares (000)
		Basic		101,880		101,880		102,892		101,887
		Diluted		101,880		101,880		102,892		101,887


Wesdome Gold Mines Ltd.
Consolidated Statements of Cash Flows
(Expressed in thousands of Canadian dollars)
			Three Months Ended Dec 31				Twelve Months Ended Dec 31
			2013		2012		2013		2012
Operating activities
	Net loss		$	(1,782)	$	(46,464)	$	(3,868)	$	(45,253)
	Depletion of mining properties			2,228		1,570		7,838		8,340
	Accretion of discount on
		convertible debentures		63		58		236		348
	Impairment charges			-		60,948		633		61,898
	Loss (gain) on sale of equipment			-		-		27		23
	Share-based compensation			149		90		349		601
	Deferred income taxes			2,122		(14,759)		1,907		(14,589)
	Interest expensed			134		148		550		733
	Accretion of decommissioning provisions			(175)		14		(111)		54
				2,739		1,605		7,561		12,155
	Net changes in non-cash working
		capital		4,794		2,107		5,692		2,016
				7,533		3,712		13,253		14,171
Financing activities
	Funds paid to repurchase common
		shares under NCIB		-		-		(51)		(42)
	Redemptions of convertible debentures			-		-		-		(10,931)
	Issuance of convertible debentures,
		net of financing		-		-		-		6,821
	Repayment of obligations
		under finance leases		(214)		553		(863)		(192)
	Interest paid			(134)		(148)		(550)		(733)
				(348)		405		(1,464)		(5,077)
Investing activities
	Additions to mining and exploration
		properties		(3,167)		(3,669)		(10,875)		(11,234)
	Proceeds on sale of equipment			11		-		582		3
	Cash received on acquisition of assets			-		-		6		-
	Funds held against standby letters
		of credit		(400)		(516)		(413)		(196)
				(3,556)		(4,185)		(10,700)		(11,427)
	Net changes in non-cash working
		capital		576		1,448		(71)		1,751
				(2,980)		(2,737)		(10,771)		(9,676)
Increase (decrease) in cash and				4,205		1,380		1,018		(582)
	cash equivalents, beginning of period			1,446		3,253		4,633		5,215
Cash and cash equivalents,
		end of period	$	5,651	$	4,633	$	5,651	$	4,633

Cash and cash equivalents consist of:
	Cash		$	5,651	$	3,826	$	5,651	$	3,826
	Term deposit (2012: 0.93%)			-		807		-		807
			$	5,651	$	4,633	$	5,651	$	4,633

SOURCE Wesdome Gold Mines Ltd.

For further information:

Rolly Uloth,
President & CEO
416-360-3743 ext 25

or

George Mannard, P.Geo.
Vice President, Exploration
416-360-3743 ext 22

8 King St. East, Suite 1305
Toronto, ON, M5C 1B5
Toll Free: 1-866-4-WDO-TSX
Phone: 416-360-3743, Fax: 416-360-7620
Email: invest@wesdome.com, Website: www.wesdome.com

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