Good morning. Welcome to Wesdome Gold Mines' Conference Call to discuss the Company's Financial and Operating results for the first quarter ended March 31, 2025. As a reminder, this call is being recorded. Your host for today is Trish Moran, Wesdome Vice President of Investor Relations. Ms. Moran, please go ahead.
Thank you, and good morning, everyone. Before we get started, I'd like to point out that during today's call, we may make forward-looking statements as defined under Canadian securities law. I ask that you view our slide presentation for cautionary language regarding forward-looking statements and the risk factors pertaining to these statements. Please note that all figures discussed on this call are in CAD unless otherwise noted. Our press release, MD&A, and financial statements are available both on SEDAR+ and on our corporate website, wesdome.com. With us on today's webcast is Anthea Bath, Wesdome's President and CEO, Guy Belleau, our COO, Fernando Ragone, our CFO, Jono Lawrence, SVP Exploration, Raj Gill, SVP Corporate Development and Investor Relations, and Kevin Lonergan, SVP Technical Services. Following management's formal remarks, we will then open the call to questions. Now over to Anthea.
Thank you, Trish. Good morning, everyone. The year has off to a good start, and we're pleased to be sharing with you another quarter with solid results across the board. Starting with health and safety, we continue to see reductions in our lagging indicators. By way of example, our total recordable incident frequency rate in the first quarter is at its lowest level in more than four years, a result that demonstrates that our efforts to build a safety culture are working. As shown on slide four, we produced nearly 46,000 ounces, and our quarter one financials captured the upside move in the gold price and set many quarterly records: revenue, EBITDA, net income, free cash flow. Importantly, these records were set on a per-share basis as well.
We also increased our liquidity to CAD 318 million, which included CAD 168 million in cash and CAD 150 million of undrawn full capacity on our revolver. As we go through this quarter's results, there are three key messages that we want to emphasize. Firstly, as outlined in our mining rights release, operating performance is expected to be second-half weighted, primarily driven by Presque Hill coming online in the second half of 2025. Two, we are making progress on embedding our principles of optimization and value creation across these operations. Thirdly, we're advancing the fill-the-mill strategy, which will daylight value for our shareholders. Post-quarter end, we announced the acquisition of Angus Gold, a transaction expected to close by the end of June. The acquisition is a strong fit in our strategy.
As you can see on slide five, it offers a unique opportunity to consolidate and expand the prospective land position around Eagle River, quadrupling it to roughly 400 sq km. This transaction underscores our long-term commitment to Eagle River and will meaningfully enhance our regional greenfield exploration pipeline. We are the logical acquirer of Angus. With a strong balance sheet, established infrastructure, and strategic relationships, we're in a great position to build on the impressive groundwork already laid out and accelerate both exploration and development across the combined land package, creating real value for our shareholders. Moving to slide six, our organic growth strategy, what we call the fill-the-mill, has the potential to unlock significant additional value to our shareholders over the next three to five years. If you recall, the strategy has three pillars, namely the Global Resource Model Initiative, strategic exploration, and cost optimization.
Work related to each of these initiatives is ongoing and will be incorporated into new technical reports for both Eagle River and Kiena next year. Let me update you on what we hope to achieve on each of these assets. At Eagle River, the focus of the Global Resource Model Initiative is on incorporating all available data. To get there, we complete the QA/QC processes to qualify the database, including all historic drilling that was recently digitized. We have modeled the target areas and designed an aggressive drill program aimed at maximizing conversion. We want to ensure we can revisit the potential for restart at the historic Mishi and Magicon areas. Moving to Kiena, our ultimate aim is the same, but our focus areas to unlock value are different.
Whereas the Eagle River technical report is looking to drive value primarily from the Global Resource Model Initiative, at Kiena, we look to unlock value through a combination of cost optimization, the inclusion of near-surface deposits along 33 level, and holistic strategic mining planning. There's much work upfront to be done to publish these two technical reports in 2026, and we'll certainly keep you updated along the way. Now over to Guy to review the quarter's operating highlights.
Thank you, Anthea. Good morning, everyone. The year is off to a solid start. Moving to slide nine, Eagle River delivered a strong quarter one performance, producing approximately 29,000 ounces, up 16% compared to the same quarter in 2024, driven by sequence and dilution control. As planned, approximately 65% of tons produced came from two zones, 300 and 720 Falcon. The average head grade at Eagle River was above the guidance range for the quarter due to two main factors: carryover of material from a high-grade stope in the 300 zone from late 2024 into Q1, and positive grade reconciliation in a stope in the 720 Falcon zone. Sequencing remains compliant to the overall plan for the year, and in the second quarter, process grades are planned to be back within the guidance range.
As we open up new mining fronts, we're creating optionality and flexibility within our mining plan, resulting in a higher level of predictability. Notably, we have increased our available stope inventory to three months and are establishing new mining areas for sustainable production, such as 6, 8, and 5 zones. 300 zone's development is planned to be one year ahead of the production front, giving us ample time for delineation of the ore body at depth. As part of our plan to set up Eagle River for long-term success, a continuous improvement program has been implemented and is beginning to see results. One of our focus areas has been a transition from contractor to owner-operated activities. Plans are in place to transition the surface ore haulage to owner-operated by the end of the second quarter, and we also continue to see a progressive transition of the underground development meters.
Another focus has been on maintenance and warehouse improvements. By investing in infrastructure and improving our practices in these areas, we can significantly enhance equipment availability and reliability. Furthermore, dilution control continues to improve, contributing to Eagle River's positive results, particularly in long-haul stoking through a multi-phase program initiated late in 2024. On the processing side, throughput increased to an average of 667 tons per day, an increase of 18% over the first quarter of last year and 10% above the 2024 average. This reflects the success of our 2024 initiatives to boost drilled and developed inventory, as well as operational debottlenecking and optimization. All-in Sustaining Costs for quarter one were U.S. CAD 1,337 per ounce, including CAD 13 million in sustaining CapEx. In 2025, we're also making investments to improve mill reliability and upgrade infrastructure during a two-week scheduled shutdown this month.
We're proud of Eagle River's performance to date and are excited about what lies ahead. Turning now to Kiena on slide 10, our focus remains on ramping up Kiena Deep and delivering value to our shareholders. In quarter one, Kiena produced about 16,700 ounces, double the output of quarter one 2024. While it was planned that Q1 would be the lowest production quarter of the year due to planned sequencing, there was also a delay in the sequencing of some key high-grade stopeing and development areas due to lower-than-plan equipment availability, which is being addressed. Maintaining strict adherence for the mining plan remains a critical performance driver for Kiena Deep. The second quarter is expected to improve, and the back half of the year is projected to represent 60% of total production, as outlined in our guidance release in January.
Overall, grade reconciliation of Kiena Deep is trending well to block model grade, and the mine delivered an average head grade of 10.8 grams per tonne in quarter one 2025, despite processing a small volume of lower-grade material from a recovered stope. In the quarter, we experienced a delay in the sequencing in some key high-grade stoping and development areas due to lower-than-plan equipment availability. To improve performance, our focus remains on maintenance reliability, mine planning and execution, and increasing available mining fronts as we move towards first production from Presqu Hill and mining at level 136 next year. The hybrid cut-and-fill mining method continues to be implemented in specific areas and is yielding better-than-expected results with a significant reduction in dilution. Moving from mining to processing, the mill performed well in quarter one 2025, processing 541 tonnes per day, up 7% year over year.
Associated production costs per ton were CAD 489 a ton, a 5% increase over Q1 2024, primarily due to higher mining and site administration costs. All-in Sustaining Costs for the quarter were U.S. CAD 1,412 per ounce and include CAD 9 million in sustaining CapEx. Another CAD 9 million in sustaining CapEx, mostly related to the delivery of our first battery electric trucks, was carried over from quarter one to quarter two. These new energy-efficient vehicles, the first ones for Wesdome, will improve material movement and free up ventilation capacity. There is a lot going on at Kiena beyond day-to-day operation. Let me highlight the status of several ongoing projects. First, we recently completed the exploration drift on level 134, setting us up for drilling success with two active underground platforms. Next, 136 is expected to be completed in Q3, establishing a second mining horizon.
Our goal is to have three mining fronts by year-end. The Presque Hill continues to advance towards a year-end completion target. This 2.5 km ramp is the final major step in gaining access to material in the upper portion of the Kiena mine and a critical component of achieving our fill-the-mill strategy. Access across the Presque Hill deposit is already established, and our guidance calls for up to 10,000 ounces from the area in 2025. It is a busy year at Kiena, and the team remains sharply focused on safe, disciplined execution. Now over to Jono to discuss exploration.
Thank you, Guy. Good morning, everyone. During my first four months at Wesdome, I've had the opportunity to have robust conversations with the exploration and geology teams at site, visit our extensive land packages, familiarize myself with the geology, and review past drill programs and results. From this collaborative work, the teams now have revised Wesdome's exploration strategy to better support the company's organic growth plans. The key shift in focus has been from short-term reserve replacement to longer-term growth-oriented thinking. We've come up with a program that creates the most value for our shareholders by effectively supporting our short, medium, and long-term growth aspirations. Going in reference to slide 12, I'm going to highlight this strategy, which is a time-guided resource-generative approach, resulting in a project pipeline designed to extend the life of our mines.
The strategy is designed to generate incremental additions to resources in the near term, to generate at least one new discovery in the medium term, and to extend the mine life with further discoveries in the long term to deliver stable production and cash flow beyond 2028. The strategy has three aims. The first is to support our life of mine over the next 12 months by replacing depletion, growing our resource base, and supporting our fill-the-mill strategy. The second is to extend our life of mine over the next one to three years by evaluating the continuity of deposits both laterally and at depth and targeting discovery of at least one new deposit. We do this by continuous global portfolio management, constant ranking of opportunities, and district consolidation.
The third aim of our strategy is to transform our life of mine in the long term by taking a holistic approach to the exploration and mineralization potential in our districts, understanding the geometallurgy and mineralization style of potential targets, balancing the grade and volume characteristics of targets, and the potential economic upsides in a rising gold price environment and regional consolidation. These two aims are critical as exploration is a truly iterative and data-driven process. The tool that we have chosen to manage our global exploration program is the target triangle. While not a new concept in the industry, spending the last few months assessing our property-wide prospects of both assets has really given me a sense of the tremendous opportunity that we have at Wesdome. As you can see from slide 13, we've taken the approach of ranking our targets in terms of priority.
Our consolidated global view of the current opportunity at Wesdome includes 76 targets in the tier four, five, and six categories. As you can see, there is no shortage of target opportunities for us to work on. Now that we have our list of targets, both Eagle and Kiena are in the target selection and probability-weighted ounce potential stage. This is a critical part of the process, and it will help rank the targets for prioritizing work and associated budget activities. Our primary objective for the rest of the year is to complete detailed geologic evaluations of the mining permit areas and surrounding claims. At Eagle, this includes the Eagle River, Mishi, and MagnaCon claims, and the exploration claims immediately adjacent to these areas.
Evaluation will focus on two aspects: surface target areas defined during the ranking process and underground targets defined as part of the global model fill-the-mill work processes. While the process at Kiena is similar, the unique nature of the ore body under the lake requires us to use slightly different tools. To help delineate and fine-tune targets, a high-resolution drone magnetic survey will be executed over the lake and permit areas. The survey will deliver more detailed information than previously available, which could help identify key features that contribute to development of the mineralized lodes. Stay tuned. Before I wrap up, let me give you a brief update on our exploration programs in the first quarter. Starting at Eagle on slide 14, drilling at the 6 Central Zone is successful in confirming the continuation of mineralization down plunge at similar thickness and grade.
The latest interpretation of drill sites in the 300 zone indicates the presence of a separate sub-parallel structure to that hosting the main 300 zone mineralization. Initial assays in this zone, now known as the 300 fold, support continuation of thickness in the tenor of mineralization with down plunge continuation open for further exploration. Results are also indicating that the mineralization is plunging at a more moderate angle than the steeply plunging main 300 zone. This is a key interpretation as it highlights the variability of the plunge of the chutes, and this gives exploration opportunities for testing down plunge continuation. Finally, during our surface drilling programs, we drilled five holes at IP Anomaly D and 11 holes at the Birch Vein on the Eagle River splay.
Two of the holes at IP Anomaly D intercepted anomalous gold, and several holes at the Birch Vein have intercepted smoky quartz veining with strong biotite alteration. Assays are pending. Our work continues to follow up on these results and will be discussing more on these areas in the press release in quarter three. Turning to Kiena on slide 15, the focus in the first quarter has been on preparing development for the rest of the year's drilling. Currently, there are six rigs underground with barge drilling expected to commence in July. The exploration drift on the 109 level was completed, and drilling commenced targeting the VC zone. It's a top priority for us to drill in 2025. VC zone historically returned a high-grade intercept at the base of the mineralization wireframe, and the mineralization is open at depth and demonstrates a style that's analogous to Kiena Deep.
Drilling to date has been unsuccessful due to poor ground conditions between the drilling bay and the VC zone. We're reviewing options to extend the underground development to a more optimal location, which is expected to enable more effective drilling of both the VC zone and the nearby North zone targets. Drilling continues at Deep Kiena Deep, and we remain encouraged by the results we are seeing, particularly in the Footwall zone. Excitingly, preparation of the first two drill platforms on the 134 exploration drill is almost completed, and drilling is expected to commence at month's end. Drilling from this platform will target both the Kiena Deep and Footwall zones, giving us more optimal drill intersection angles. Exploration drilling also commenced from level 33, confirming the continuity of the porphyry hosting the Shawkey- 22 zone, and work has progressed on setting up platforms to drill Dugasong and Duchenne in July.
An exploration update is expected to be released later this quarter. Now, over to Fernando who will take you through this quarter's financial results.
Thank you, Jono. Good morning, everyone. Turning to slide 17, we have achieved a strong gold production of nearly 46,000 ounces, a 37% increase over the comparative quarter in 2024. The year-over-year increase in ounces produced was driven mainly by accessing a greater proportion of high-grade ore from the 300 Zone at Eagle River and high-grade ore from Kiena Deep. Recall that we were still advancing the ramp in Q1 last year, and we did not start mining and processing Kiena Deep material until around mid-April 2024. On a per ounce basis, we have seen another sequential decline in quarterly all-in sustaining costs to $1,366 per ounce, which includes about CAD 230 for sustaining exploration and development in the first quarter. Now moving to slide 18, the first quarter of 2024-2025 was really solid from a financial perspective.
Revenue increased 86% year-over-year to CAD 198 million, driven mainly by significantly higher production and a 38% increase in average realized gold price per ounce sold in US dollars. During the first quarter, the company recorded net income of over CAD 62 million or CAD 0.42 per share, an increase of almost five times over the prior year due to the increased production and the higher average realized gold price. In addition, compared to the first quarter of 2024, cash margin was up by 174% to CAD 128 million, EBITDA nearly tripled to CAD 120 million. Net cash on operating activities grew by 72% to CAD 80 million, and free cash flow increased by about two and a half times to CAD 48 million. We have a clean balance sheet with zero debt.
Our working capital increased to CAD 181 million from CAD 131 million as of December 31, 2024, due primarily to an increase in our cash balance, which grew by CAD 45 million during the quarter to CAD 168 million at the end of March. The Angus Gold acquisition is scheduled to close by the end of June, and therefore, you should model the cash portion of the purchase of approximately CAD 31 million in your Q2 cash projections. Between cash on hand and our fully enrolled senior secured revolving credit facility, we have CAD 318 million in liquidity. I should mention that we're currently in discussion with a group of banks to renew our revolving credit facility, which matures in late August. We will keep you apprised of our progress on that area. As a reminder, slide 19 outlines our guidance for 2025.
The only change I would note, and again, this is effective with the Angus Gold transaction, is that our annual exploration spend is expected to increase by up to CAD 5 million following the closing of the transaction. Lastly, for those of you who did not pick up in our management information circular filed a couple of weeks ago, Grant Thornton, who has been our auditor for more than 20 years, had changed its overall strategic direction. As a result of that, we're changing our auditors. Subject to shareholders' approval, Ernst & Young will assume auditor responsibilities in relation to the period ended June 30. We would like to thank Grant Thornton for the many years of service. With that, operator, you can now open the lines for questions.
Thank you. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, press star one a second time. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, it is star one if you would like to ask a question. Our first question comes from the line of Wayne Lam with TD Cowen. Your line is open.
Yeah, morning, guys. Just wondering maybe on the recent Angus Gold transaction, given the proximity of the operations to the prior Mishi pit, would there be an accelerated permitting process to operations today if everything was drilled off? Just curious in terms of the future tailings storage, what's the current capacity remaining, and what does the permitting timeline look like for construction of the next facility?
Hi, Wayne. It's Anthea. Thank you for your question. Can I just ask you just to help me a little bit with your first question regarding Angus? What were you asking?
Just wondering what the permitting timeline might be?
From a tailings perspective or from a?
In terms of advancing it into operations, if everything was drilled off, would you guys be able to mine it today, or you'd have to go through it and get an operating permit?
Yeah, absolutely. I think there would be a whole process around that. The focus right now at Angus is to get a drilling program that supports the development of a resource in the right way. Following that, we'd start the permitting process accordingly. Your second question on the tailings is we have sufficient tailings, obviously, to run the growth plan quite substantially for the period of the—how far ahead, Kevin?
2037.
2037. The tailings are well managed within Eagle River.
Okay, understood. Thanks. Maybe at Kiena, can you maybe provide us a bit more detail on the planned switch to the hybrid mining approach with the greater cut-and-fill? Just wondering if that's a function of dilution control or ground conditions, and would that entail a scale back in underground mining rates at Kiena Deep or impact the fill-the-mill strategy?
Again, let me maybe reiterate the message on the hybrid model. The hybrid model is to optimize the dilution within the mine, which we see as an opportunity and recovery. We see it only impacting, I think, a third of the ore body for 2025, and it is slowly coming in. I think he told me he has only done two stopes this year of the total stopes that have been produced, and this should increase slightly in 2026 in terms of percentage of the total stopes that are actually being impacted by it. We do not see it impacting the sequence or the timing underground.
Okay, great. Thanks. Maybe just last one at Presque Hill. Seems like pretty good progress there. Are you guys ahead of schedule on development there given the mining of ore this quarter? What would the targeted tonnage contribution be on a go-forward basis?
We are on track on the development to deliver as per plan for Presque Hill for this year, and obviously, this continues into next year, and it ramps up year on year. Tonnage contribution for next year is what you're asking, Wayne, or for this year?
Maybe for next year.
Okay. It is about 100,000 tons for next year, Wayne.
Okay, perfect. Okay, great. Thanks for taking my questions.
Thank you.
Our next question comes from the line of Don DeMarco with National Bank. Your line is open.
Thanks, operator. Good morning, Wesdome team. Congratulations on a strong quarter. First question, at Kiena, you mentioned a delay in the sequencing of some key high-grade areas due to lower than expected equipment availability. Has this been resolved, and is it potentially reoccurring?
It is definitely due to availability of equipment, and it is understood, and we are dealing with it.
Okay. Was it something that came about toward the—how much of an impact did it have, and how should we think about it going forward in terms of timing of expectation to get resolved?
I think what you should see, this is normal operations issues that we need to manage, and we'll manage it. I don't think you should see it as a concern. The problem with Kiena is you do run five stopes a month typically, so when you delay on a stope, it will go over into the next quarter. This is the reality of not managing these things perfectly in this kind of mine. However, we understand it very well, and we'll continue to solve it.
Okay. So you mentioned that you're reiterating your backend loaded year, but maybe should at Kiena, would we expect Q2 to be maybe just a touch soft then, or really no material impact if this?
You should see Q2 increasing from Q1, certainly, but it's aligned with our plan.
Okay, great. Just carrying on with Wayne's questions on Presque Hill, maybe if you could—are you still on track to come out with updated technical reports early next year? In those reports, would we see the contributions from Presque Hill? You mentioned tonnage next year. What are you thinking about first pour through the mill this year and tonnage this year? How much more you got spare- mill capacity, certainly, at Kiena. How much of that mill capacity might this utilize once it gets ramped up?
That's a good question. Just on the technical reports, I think we're saying within the first half of next year is what we're aiming for. I want to reaffirm the importance of making sure that the inputs into that report are there, which is really around the QA/QC of our current drill database into the digitized database. That's the key criteria point that's going through. For Presque Hill for 2025, we have between 35,000 and 40,000 tons that are in the current plan, and that increases. Presque Hill will certainly be a part of the technical report going forward. You could probably imagine that we won't, in the technical report, see more than the current reserve between Q2 to the summer as well and other potential areas that Jono is able to drill out this year.
It will not see the full utilization of the mill, I believe, within the technical report for Kiena.
Okay, great. Thanks for that. Perhaps just as a final question, the balance sheet's getting stronger, and we would expect that to continue. What are your plans for the cash? Do you want to stockpile dry powder in the event of M&A or potential next mine development, or are you considering a potential dividend or share buyback program?
Great question. Again, as we all know, hopefully after the AGM, we can appoint Ed into his seat as our Chairman. We are certainly going to be having these conversations with Ed. I think just from a capital movement perspective, the most important thing is really on organic opportunities in the current operation. I am looking left towards my friend Jono here, and pushing him on driving the exploration program as hard as we can. That is one of the strategic pillars that we are driving within Wesdome right now. Thereafter, I think, as we have always said, we remain very prudent on everything we are doing with regards to capital deployment, and we will make those decisions with our shareholders in mind, obviously.
If there's money to spare, that's a conversation we'll be having with our board, and we're hoping to talk to the market at the second half of the year to discuss those thoughts.
Okay. Okay, great. We will look forward to those developments as they progress.
Thank you.
Anyway, that's all for me. Thanks again, and good luck with the rest of the quarter.
So much more.
As a reminder, it is star one if you would like to ask a question. Our next question comes from the line of Andrew Mikitchook with BMO Capital Markets. Your line is open.
Thank you for letting me ask some questions. Some great ones have already been asked. Can we come back to the developed ore tons for both Eagle and Kiena? I think I scribbled down that there were three months available stopes for Eagle. How does that contrast with maybe where you were previously and where you want to get to? I did not hear any sense of where you are on the similar situation for Kiena in terms of tons developed and where you want to get them to, please.
Just with regards to Eagle River, I mean, I think our baseline—I cannot be perfectly clear on it, but we do know it is significantly higher, right, Keith, in terms of developed inventory. We are targeting and tracking the three months that we are really making sure we deliver at minimum in that operation. For Kiena, it is a little bit different. Kiena is currently still very much just in time on that operation. We are obviously working on opening up the other mining fronts in level 136 to assure that value as well and get more flexibility within the mine. Obviously, with Presque Hill, that adds the third mining front, or it will be the second in that sequence, which gives us a next level of flexibility. This is something that you will hopefully see next year start to grow further.
When we speak about ramp-up, this is the kind of stuff we speak to around, this is the flexibility we like to give us that ability to be much more certain going forward. This is the kind of initiative that's really going to drive a much more stable execution from us.
Okay. So just to be clear, so that three months at Eagle that's there today, you guys would look to increase that with time. Is that fair?
Three months is sufficient at Eagle with respect to what we believe is good for us from that perspective from a developing. Yeah, it's a sweet spot for us from that side. Obviously, from a drilled-out side, it's a bit further. Each of these parameters might be slightly different, but yes, we're comfortable with that level.
Okay. And then just one last question on this exploration. The pyramid, I think, kind of puts everything into perspective, the one that was up on the presentation. My question is, how long in terms of time or even dollars would it take to incorporate the Angus Gold acquisition into that? Is that something that would take just a few months, or is it a more material amount of work to integrate that into the process?
Andrew, hi. It's Jono here. Look, we had a look at the opportunities on the Angus ground before we initiated the transaction. We definitely do see upside in that property. When the transaction is finalized, we'll be going through that data in a very aggressive manner and treating it in the same methodology that we have for our existing assets all around Eagle. Timing-wise, we would be doing drilling this year in the second half, utilizing and advancing the programs at Dorset as well as over at the Einstein Formation. More of background information for us, but also setting the grounds for work in 2026 and 2027. Confirmation drilling, proof of ideas, validation of some holes, but definitely drilling and advancing. More work will set up in 2026, but we will be aggressive in processing and reviewing that data as soon as the transaction finishes.
Okay. Thank you very much. I will sign off and let others ask questions.
Thanks, Andrew.
Ladies and gentlemen, this concludes our question and answer session and also concludes this morning's call. If you have any further questions, please contact Trish Moran at trish.moran@wesdome.com. Thank you for participating today, and you may now disconnect.