Eagle River All -In Sustaining Costs

In the second quarter of 2014, bullion revenue exceeded costs of gold sales resulting in a mine operating profit of $6.4 million , compared to $2.8 million during the same period in 2013 at the Eagle River Complex.  In addition to these direct operating costs, additional cash costs, including royalty payments, corporate and general costs, and interest payments amounted to $1.5 million , which includes $0.4 million of ongoing care and maintenance costs at the Kiena Mine Complex.  Additionally, capital investments during the quarter totaled $4.1 million .

The Eagle River Mine provided the bulk of millfeed producing 13,329 ounces of gold from 31,713 tonnes milled at an average recovered grade of 13.1 gAu/tonne.  Mishi provided limited millfeed because the mill was down for one month to manage spring run-off.

This provided an opportunity to accelerate the mill refurbishment and expansion project.  Significant upgrades include the installation of new drum filters and high density pumps.  We expect significant increases in throughput and reliability in the second half of 2014.

Our goal is to progressively increase capacity and reliability of the mill and related infrastructure with low cost Mishi ore providing incremental increases in production.  The key element over the medium term is construction of a new tailings management area.  The permitting process is progressing, however, it is very difficult to predict precise timelines due to the complexity of regulatory oversight and process.

On June 27, 2014 , we released results of shallow definition and stepout drilling at Mishi.  Mineralization of potential economic merit has now been traced over a length of 1.75 kilometres and remains open in both directions.  We have initiated scoping studies to assess the longer term potential of expanding resources, infrastructure and operations.

Overall, the second quarter, 2014, was satisfactory and generated free cash flow (cash flow from operations less capital investments) of $1.1 million despite milling operations being suspended for one month.  Year to date mining operations have generated $5.7 million in free cash flow.

LIQUIDITY AND CAPITAL RESOURCES – Capacity to Self-Fund Growth

At June 30, 2014 , the Company had working capital of $13.6 million compared to $8.5 million at December 31 , 2013.  During the first half of 2014, capital expenditures totalled $7.8 million compared to $5.6 million in 2013.  Capital expenditures were concentrated in underground development, mine and mill infrastructure.  An additional $1.6 million of equipment leasing contracts were signed.

The Company carries an inventory of gold.  At June 30, 2014 , this liquid asset consisted of 7,190 ounces of gold with a market value of approximately $10.1 million .  The gold inventory is carried at the lower of cost or market, in this case at a cost of $8.4 million .  Furthermore, the Mishi ore stockpile at the mill is estimated to contain about 5,400 ounces of recoverable gold, or approximately $4.3 million , net of milling costs.  Including these non-IFRS working capital adjustments, working capital would increase to approximately $19.6 million .

The Company believes it has sufficient liquidity to carry out its mining, development and exploration programs.  With current gold prices, operations are capable of generating strong cash flow as evidenced by the recent quarterly results.

OUTLOOK – Production Guidance Increases

With production of more than 27,000 ounces of gold in the first half of 2014, our production guidance of 50,000 ounces for 2014 is revised upwards to 52,000 ounces.  We expect greater volumes of lower grade ore in the second half of 2014 and more Mishi ore to be processed.

We are having a closer look at potential future expansion at Mishi given recent favourable drilling results.

ABOUT WESDOME

Wesdome is in its 28^th year of continuous mining operations in Canada.  It currently has two producing gold mines in Wawa, Ontario , the Kiena Mine Complex in Val d'Or , Québec and the 3 million ounce Moss Lake gold deposit located 100 kilometres west of Thunder Bay , Ontario.  The Company has approximately 111.1 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. The Company has included in this news release certain non-IFRS performance measures, including, but not limited to, mine operating profit, mining and processing costs and cash costs. Cash 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.

SOURCE Wesdome Gold Mines Ltd.