Earnings call transcript: Wesdome Gold Mines Q4 2024 beats estimates

Wesdome Gold Mines Ltd. (WDO) reported its fourth-quarter 2024 earnings, surpassing analyst expectations with an earnings per share (EPS) of $0.38 against the forecasted $0.355. The company also reported revenue of $183 million, exceeding the anticipated $169.88 million. According to InvestingPro data, the company maintains a "GREAT" financial health score of 3.6 out of 5, with particularly strong momentum and profitability metrics. Despite these strong earnings, the company’s stock fell by 4.96% to $15.33 in after-hours trading, reflecting a complex investor sentiment.

Key Takeaways

• Wesdome Gold Mines exceeded both EPS and revenue forecasts for Q4 2024.
• The company achieved record annual production and significant revenue growth.
• Despite strong financial results, the stock price declined by nearly 5% in after-hours trading.
• The company is focusing on high-grade gold zones and has commenced new exploration initiatives.
• Guidance for 2025 indicates further growth in production and strategic investments.

Company Performance

Wesdome Gold Mines reported robust performance for the fourth quarter of 2024, marked by a 79% year-over-year increase in revenue to $183 million. The company achieved record annual production of 172,000 ounces, up 39% from the previous year. InvestingPro analysis shows impressive revenue growth of 56.15% over the last twelve months, with a healthy gross profit margin of 34.72%. This growth was driven by increased processing at its Eagle River and Kiena mines, as well as higher gold prices.

Financial Highlights

• Revenue: $183 million, up 79% year-over-year
• Earnings per share: $0.38, surpassing the forecast of $0.355
• Net Income: $57 million
• EBITDA: $115 million, tripling compared to the previous year
• Cash Balance: Increased to $123 million

Earnings vs. Forecast

Wesdome Gold Mines reported an EPS of $0.38, beating the forecast of $0.355 by approximately 7%. The company’s revenue of $183 million also exceeded expectations, showing a strong performance in both top and bottom lines. This marks a significant improvement over previous quarters, reflecting the company’s operational efficiencies and market conditions.

Market Reaction

Despite the earnings beat, Wesdome Gold Mines’ stock fell by 4.96% in after-hours trading, closing at $15.33. This decline may be attributed to broader market trends or investor concerns about future growth prospects, despite strong current performance. InvestingPro data reveals the stock is currently trading near its 52-week high, with a robust Altman Z-Score of 9.6 indicating strong financial stability. The company’s current ratio of 2.14 suggests excellent liquidity, with liquid assets comfortably exceeding short-term obligations. Discover 12 additional exclusive ProTips and comprehensive analysis with an InvestingPro subscription.

Outlook & Guidance

Looking ahead, Wesdome Gold Mines projects a 16% increase in production for 2025, targeting 400,000 ounces. The company plans to invest $160 million in capital expenditures, with a significant portion allocated to growth and exploration initiatives. Based on InvestingPro’s Fair Value analysis, the stock appears undervalued, suggesting potential upside for investors. All-in sustaining costs are expected to range between $1,325 and $1,475 per ounce, reflecting efforts to manage expenses while expanding production. For detailed valuation metrics and comprehensive analysis, access the full Pro Research Report, available exclusively to InvestingPro subscribers.

Executive Commentary

CEO Anthea Baff emphasized the importance of the company’s workforce, stating, "Our success depends on our people." She also highlighted the company’s strategic focus, saying, "We are not trying to squeeze margin and drive low-value tons." Jono Lawrence, SVP of Exploration, expressed optimism about the coming year, noting, "2025 is shaping up to be an exciting year."

Risks and Challenges

• Potential fluctuations in gold prices could impact revenue and profitability.
• The company faces operational risks associated with mining activities and safety.
• Capital allocation for exploration and growth may not yield expected returns.
• Macroeconomic factors, such as inflation and interest rates, could affect costs and margins.

Q&A

During the earnings call, analysts inquired about reserve grade changes and the development of a global resource model. The company also discussed its capital allocation strategy and the potential for resource and reserve accretion, indicating a focus on long-term growth and sustainability.

Full transcript - Wesdome Gold Mines Ltd. (WDO) Q4 2024:

Conference Operator: Good morning. Welcome to Westdome Gold Mines conference call to discuss the company’s financial and operating results for the three and twelve months ended 12/31/2024. As a reminder, this call is being recorded. Your host for today is Trish Moran, Westdome’s Vice President of Investor Relations. Ms.

Moran, please go ahead.

Trish Moran, Vice President of Investor Relations, Westdome Gold Mines: Thank you, and good morning, everyone. Before we get started, I would like to point out that during today’s call, we may make forward looking statements as defined under Canadian securities laws. 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 Canadian dollars unless otherwise noted. Our press release, MD and A and financial statements are available on both SEDAR Plus and on our corporate website, weststone.com.

With us on today’s webcast is Anthea Baff, Westone’s President and CEO Yibolo, our COO Fernando Rigone, our Chief Financial Officer Jonah Lawrence, SAP 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. And now over

Anthea Baff, President and CEO, Westdome Gold Mines: to Anthea. Thank you, Trish. Good morning, everyone. I’d like to begin today’s call by recognizing the outstanding efforts of the entire West Elm team throughout the year. The hard work and commitment of everyone in this organization has led to the most robust operating and financial year in the company’s history.

As shown on Slide four, we’ve seen significant year over year reduction in both instant frequency and severity rates. These improvements clearly demonstrate that the safety culture we’ve been building over the past eighteen months is proving effective. Together with this year’s safety achievements, we broke all time company records in terms of reduction, revenue, EBITDA, net income, free cash flow and net cash balance. This performance is not just a result of higher gold prices. This is due to strong execution by the team bringing on a second mark just as gold began to say.

We have renewed leadership across the organization and they’re doing a brilliant job bringing their teams together and aligning to the overall vision. Our success of course depends on our people and we’re taking steps to ensure everyone understands their role and how they contribute to the organization. Compensation is aligned with driving value for shareholders and this is reflected in the behaviors and the decisions that we are making. It was a year of achievement and Kiena had a standout year. We commenced processing of the high grade Kiena C4 in mid April.

We subsequently ramped up production and delivered three solid quarters of production. Rehabilitation of the near surface 33 level was complete and we commenced development of the secondary mine egress in ramp, which will give us access to both production of the Presquill deposits and a platform for drilling other near surface zones. By Kiena, Eagle River also had an outstanding year. The team exceeded both original and revised guidance and completed the first phase of the global resource model initiative. We kicked off several continuous improvement initiatives of the Eagle River last year and we are excited about what we’ve seen as this translates into better unit costs and productivity metrics.

2024 marked the first step in our further more strategy at both Eagle River and Kiena. This strategy is anchored by three key initiatives: the global resource model, strategic exploration and thirdly, optimizing and limiting our fixed cost base. These initiatives are the foundation of our growth strategy ensuring we maximize the asset value while driving sustainable production. Walking through these in a little bit more detail. In 2024, we completed the first phase of the global resource model, digitizing critical data from drilling, sampling and mapping.

The next step is to construct an unconstrained resource model, which will be essential for optimizing production at both operations. This work is also enhancing our geological understanding. By incorporating decades of historical data into our modeling, we’re understanding and updating mine plans with more comprehensive real time models to identify new opportunities near existing workings and enhancing drill targeting and maximizing installing exploration. At Eagle River applying the global model has already begun to show promise. We have already identified near surface assets, supporting increased production at lower cost improving our ability to see opportunities across multiple mining areas.

We’ve already seen these cost trends moving in the right direction. Secondly, our long term success continues to allow consistently growing high quality reserves and resources. To that end, we increased our exploration budget and focused on delineation and conversion drilling in 2024. We incorporated geological models into a centralized view of the assets and we deployed grassroots exploration practices such as geophysics and historical data reinterpretation. Again, these efforts are already paying off into a high quality MRMR for the year end.

And we saw a 37% increase in resources in the measured category. Relatively, proven reserves grew 34% at Eagle and 462% at Kiena, which is really, really important because these answers support more detailed and reliable mine plans on our operations. Despite our success, a significant portion of our man package remains undexplored presenting future upside. Joanna will explain a bit further around how we change the geological models, which will explain a little bit around inferred resource change in grade. The third pillar of our strategy focuses on operational efficiency and cost leverage.

Our goal is to fill the mold at both Eagle River and Kiena by blending high grade ore with near surface low cost material without displacing high grade tons and not sacrificing mine life. At Kiena, we are making advancements to support the strategy. We are unlocking multiple mining fronts. We have proven our Kiena deeds further. We’ve extended and drilled to understand the skill, so we can produce in 2025.

And we upgraded Dupeyson, so we can start planning to mine it further. We’re developing new drill platforms to finally test in a deep down plant. And we’re opening up Level 33 in order to open up the mines of latchery and down plant, so we can demand overall geological potential. At Eagle River, we started by strengthening our mine planning capabilities, specifically by building a more robust model for real time understanding of the mine and kicking off a range of continuous improvement initiatives, which Guy will touch on shortly. Stepping back, these three integrated workflows directly support our goal of maximizing the utilization of margins, all while sustainably extending mine life.

To summarize, Western’s organic growth strategy remains our highest return opportunity and we remain completely excited about what we see. Now over to Guy for the quarterly operating highlights.

Guy Yibolo, COO, Westdome Gold Mines: Thank you, Anthea. Good morning, everyone. It was a solid finish to a record year. Importantly, on top of strong results, we also improved safety at both sites. Starting in mid-twenty twenty three, there has been a major emphasis of rigorous leading indicators by its SAIC leadership.

As you can see now on Slide nine, our efforts to improve our safety culture started to bear fruit in 2024. This performance is a true testimony of the strong culture of safety we are building. Moving to Slide ten, 2024 was a record year for West Elm with 172,000 ounces produced, an increase of 39 compared to 2023. Eagle River represented 55% of full year 2024 production with 94,500 ounces. Its production for the year, which was driven by approximately strong fourth quarter exceeded Eagle River’s increased revised guidance and was higher over the prior year by 8%.

Delivering another solid production year is even more noteworthy when you consider that Eagle River has been in continuous production since 1996. Average grade in 2024 also exceeded revised guidance with an average of 13.7 grams per tonne. This outperformance was primarily driven by higher than expected grades as well as improvements in our dilution control practices. We’re seeing this trend continue in early twenty twenty five. We improved material movement during the back half of the year.

And as a result, in Q4, Eagle River processed six fifty two tonnes per day, which is more than 60,000 tonnes. This represents an increase of 10% over the fourth quarter of twenty twenty three, driven by improved access to ore and additional high grade stockpile fee, taking advantage of mill availability. The mill at Eagle River continues to run well. For the full year, it processed more than 222,000 tonnes or six ten tonnes per day on average at a recovery of 96.8%. We are looking at potential investments that could improve recoveries over the medium term.

All in sustaining costs per ounce at Eagle River were US1512 dollars for the fourth quarter and US1540 dollars for the full year. Lowering our cost is a key component of our organic growth strategy. At Eagle Rivers, we have commenced the first significant continuous improvement project in recent history. The focus of this initiative is to improve site cost structure and focus on areas where we are confident in achieving meaningful savings and productivity improvements such as transitioning development to an owner operated model, a process that is underway improving equipment reliability and efficiency consolidating and optimizing our surface infrastructure to improve workforce productivity and achieving supply chain synergies with Kiena to increase company wide buying power on key consumables and inputs. These initiatives, together with the gradual integration of technology and automation, will help create a more safe, efficient and productive workforce.

We expect to start realizing the benefits of this program starting this year. In 2024, we made investments to improve operational flexibility by increasing drill and develop ore in pantry. Additional investment in 2025 will ensure that we also have infrastructure in place to support our till the middle strategy, increase our adherence to our plans and reduce variability in the coming years. Eagle River has been operating for more than thirty years, and we are focused on ensuring it continues to have a bright and long future. Turning now to Kiena on Slide 11.

The team has shown consistent performance since mining started in the Kina Deep zone with excellent production results to date. Kina, which started mining and processing high grade Kina Deep material in April, delivered three consecutive quarters and ending the year with production of more than 77,000 ounces of gold. This was within its revised guidance range. Due to the high grade nature at Kiena, grade fluctuates from quarter to quarter depending on the stoping sequence. We ended the year with an average process grade of 11.2 grams per tonne.

While process grades for the full year were on the low end of revised guidance, it should be noted that once we started producing from Kiena process grades during Q2, Q3 and Q4 were in the midpoint of the original guidance range. Ore mills in the first in the fourth quarter exceeded 62,000 tonnes, a first since the restart of operations at Kinai in 2021. For the full year, oil milled increased by 13% year over year to nearly 217,000 tonnes. The ramp up of Kinadi is ongoing. We continue to refine our mining methods for optimal performance and have recently introduced a hybrid cut and till approach, targeting reduced dilution and increased mining recoveries.

Last year, we completed the level 109 exploration drill. The newest one, level 134 is expected to be ready in Q2. The ramp is currently heading to Level 136, where we anticipate first stoping will take place in the fourth quarter. This new mining front will add flexibility to our mining operations in the coming years. The goal is to have three mining fronts by the end of twenty twenty six, ’2 high grade and one low grade.

Beyond Kinadi, there is a lot of work ongoing to unlock the upper portion of our mine. Last year, we completed the irrigation of Level 33 drift and commenced development of a more than two kilometer exploration ramp from Presque Isle that will intersect Level 33 and provide additional material movement and ventilation. The ramp at Presque Isle is progressing and expected to be completed at the end of twenty twenty five. This ramp marks an important component of our field and mill strategy as it provides access to the first source of supplemental ore outside of Kiena Deep. Kiena’s production guidance for 2025 includes up to 10,000 ounces from Prescale late in the year.

We are currently set up to progress our mining in three different mining horizons in 2026. I want to thank each of our site teams for your tremendous work in 2024, and I look forward to working with you all to achieve another year of record performance in 2025. And now over to Jono for his first quality exploration update at Westover.

Jono Lawrence, SVP Exploration, Westdome Gold Mines: Thank you, Guy. First, I would like to say that whilst I’ve only been in the seat for a couple of months, it’s been a pleasure to be part of the Westover team. I’m extremely excited about the potential of our two mines and the large land packages. At Eagle River, more than 105,000 meters were drilled as part of the 2024 exploration program, which focused on the surface and underground drilling, delineation expansion of key zones close to existing infrastructure, as well as identifying new targets advancing geological understanding. Some highlights of the 2024 drill program include successful extension of the resource envelope at six Central down plunge by 70% or some two fifty meters, whilst also identifying a parallel structure to the north now known as the 6 Central Parallel Zone.

The 6 Central story is significant as the global work model global model work highlighted this area as a potential target for investigation. It now has a reserve grade that’s second only to the 300 Zone and it remains open at depth. Intersection of high grade mineralization approximately 50 meters west of existing drilling at Falcon 311. The result highlights the potential for continuation of mineralization outside of the diorite. Demonstrated the continuity of high grade mineralization in the 300 Zone, reinforcing the zones continued exploration and resource conversion potential.

On the 300 Zone, drilling from the twelve oh one level achieved several objectives. First, it improved our understanding of the lithostructural mine. Second, it tested the strike length and down plunge extension of the structure below the 1,400 level. And finally, it targeted the high grade plunge of the deposit. The result of the drilling across approximately 500 meters of strike length is a combination of higher and lower grade drilling to steps indicating some pension swell structures that have developed within the host shear.

Whilst these results have a short term impact on the overall inferred resource grades at Eagle River, it has helped us to hone in on the high grade portion of the 300 Zone. The delineation of the high grade portion and its continuation is the next part of the work process. In 2025, we’ve expanded the exploration program at Eagle River in terms of meters, dollars and scope. While historically, Eagle River has focused primarily on infill and conversion drilling, Greenfield and Brownfield drilling will be front and center to drive expansion and discovery 2025 and going forward. New for 2025 will be a reinterpretation of the shear zone between the historic two and six zones to develop drill targets.

Regional drilling at the Birch And Fork Veins and completion of drill testing including induced polarization anomalies that were generated in 2024. We plan to complete an additional much larger IP survey this year, testing the area further to the west of the mine diorite. The addition of surface geochemical work, soil and barge sampling will provide a multi pronged approach to regional target generation. Finally, the addition of oriented core programs at Mishi and Magnecon will support our global resource model initiative by helping to validate geologic models and structural information that we used in previous resource modeling. Improving our integration of the Michi Magnecon Corridor forms a key part of our regional strategy.

Moving on to Kiena on Slide 14, during 2024, more than 80,000 meters of drilling was focused on converting DuBoisin and Kiena Deep’s inferred resources to the integrated category and subsequently into the reserve. Some highlights of the 2024 drill program include the continued intersection of high grades over mineable width and Kiena Deep, including the footwall and hanging wall zones. Results of data are encouraging and the understanding of the geologic complexity of the Kina Deep deposit at depth continues to improve with geologic interpretations based on the drilling adjusted accordingly. Completion of the exploration drift from the 109 level will allow us drilling to test down plunge extensions of the VC zone. This zone is significant.

It’s geologically analogous to Kiena Deep and therefore testing of the zones are top priority for 2025. At DuBoisin, the continuity of the deposit was confirmed and drilling provided better geological context for interpretation and planning. The deposit remains open laterally and down plunge and is a high priority for drilling from level 33 and surface this year. At Presqu’ile, drilling confirmed not only the continuity of gold mineralization and the validity of the geologic model, but also the potential for down plunge extensions towards the east. Further drilling, targeting lateral and depth extensions from the surface is planned for the coming year.

Until now, drilling at Kiena has been difficult due to limited number of drill platforms underground. Steeper dipping ore bodies really are a challenge for drilling. Drilling angles and intercept angles for Kiena Deep in particular had been challenging. With the completion of 33 level rehabilitation and the new exploration drifts on levels 109 to 134, we look forward to more optimal drilling this year and are excited to start testing the targets. Slide 15, our twenty twenty four minuteeral reserve and resource update exceeded depletion and delivered a 5% increase in total contained reserve ounces.

Our mineral reserves now total 3,600,000 tonnes at an average grade of 10.2. Critically, we are pleased with increased confidence levels in our resource and reserves. The focus now drilling the 2024 program was primarily on converting material for mining and the results demonstrate this. Our proven reserves increased by 79 and our indicated resources, good for planning purposes, increased by 37% year on year. These increases will help us to optimize our mine plans and reduce variability over the short term allowing us to increase our focus on medium to long term exploration.

Our resource and reserve update demonstrates our new integrated approach including three d modeling. We have adopted a holistic methodology to better align with industry best practices and support an improved understanding of the structural architecture of our deposits and the controls on mineralization. At Eagle, this three d modeling and resource work is a journey. And this mineral resource mineral reserve update is a point in time. Ongoing work reviews and domaining optimization, including sensitivity analysis on a two stage high grade, low grade domaining approach are expected to lead to improved grades.

The results of this work will be fed into an updated mineral resource mineral reserve models for the Eagle Drive PFS. We’ll update the market accordingly in quarter two. Completion. Looking ahead, we plan to increase the proportion of expansion drilling, testing down tons of existing structures and unlocking near surface potential, particularly at DuBoisin and Presque Isle. With the addition of new greenfield exploration team, we are turning our focus outwards from our operations and into the substantial land packages that we have to explore.

We are convinced the prospectivity of our ground determined to showcase this prospectivity in 2025 and beyond. Between the geologic resource models at both Eagle River and Pena, upcoming technical reports and a renewed focus on regional exploration, 2025 is shaping up to an exciting year for Westo. We’ll be starting to discuss initial results of these programs in the coming quarters. And now over to Fernando, who will take you through the quarter’s financial results.

Fernando Rigone, Chief Financial Officer, Westdome Gold Mines: Thank you, Jono, and good morning, everyone. Turning to Slide 17. In the fourth quarter, we achieved a strong gold production of nearly 50,000 ounces, a 37% increase over Q4 twenty twenty three. This in turn dropped record annual production of 172,000 ounces. The year over year increase was driven mainly by two key areas, accessing a greater proportion of ore from high grade zones in Eagle River and three quarters of processing high grade ore from Kiena Deep.

On a per ounce basis, we have seen a sequential decline in quarterly all in sustaining costs to $13.73 dollars per ounce in the fourth quarter. For the full year, all in sustaining cost was US1459 dollars per ounce. I would like to highlight that in 2024, ’17 percent of that all in sustaining cost was attributable to sustaining exploration and development ramping up significantly over the last two years. Moving now to Slide 18, financially we delivered strong results in the fourth quarter. Revenue for the quarter has increased 79% year over year to $183,000,000 driven by both higher production and a 34% increase in average realized coal price per ounce in U.

S. Dollars. During the quarter, the company recorded net income of $57,000,000 or $0.38 per share, an increase over the prior year due to the increased production and the higher realized coal price. In addition, when we compare to Q4 twenty twenty three, cash margin of $125,000,000 was up by 16%. EBITDA more than tripled to $115,000,000 Net cash from operating activity doubled to $76,000,000 and free cash flow increased by about five times to $40,000,000 We have a clean liquid balance sheet with zero debt.

We ended 2023 with $41,000,000 of cash. Fast forward just one year and our cash balance tripled to $123,000,000 at the end of twenty twenty

Guy Yibolo, COO, Westdome Gold Mines: four.

Fernando Rigone, Chief Financial Officer, Westdome Gold Mines: And this is after paying off $39,000,000 owing under the revolving credit facility in the first half of this year. Together with our fully undrawn revolver facilities, we got over $273,000,000 in liquidity. Our balance sheet has continued to strengthen with working capital increasing to $131,000,000 at the December from a negative $19,000,000 at the start of the year. Essentially, we improved our net position by $150,000,000 in 2024, all supported by increasing free cash flow. Next, let’s look at our guidance for the year on Slide 19.

Consolidated production is expected to be between 400,000 ounces, which based on the midpoint represents a 16% increase compared to 2024. Production is anticipated to strengthen in the second half of twenty twenty five with the first and fourth quarters accounting for approximately 2030% of total gold production respectively. We’re guiding to all in sustaining costs in the range of US1325 dollars and US1475 dollars per ounce and self funding CapEx of US160 million dollars This includes $40,000,000 for exploration and $40,000,000 in growth capital related to the rampart kinah, which is foundational for the fill the mill strategy and long term growth. With the gold price over $3,000 we are setting up for another good year in terms of free cash flow. At export prices, our expected free cash flow is almost 70% higher than our current budget expectation.

This would imply that we are currently trading a double digit free cash flow yield. This underscore why Western is a higher return, lower risk proposition. With that operator, you can now open the line for questions.

Conference Operator: Thank you. We will now begin the question and answer session. Our first question comes from Wayne Lam with TD. You may proceed.

Wayne Lam, Analyst, TD: Yes, thanks guys. Good morning everyone. Just wondering if you could provide a bit more detail on this change in reserve grade, particularly at Eagle River and the new litho structural model. Just wondering exactly what changed with this new model and just wondering how the reserve haircut is being, I guess, informed by the greater drill density?

Anthea Baff, President and CEO, Westdome Gold Mines: Okay. I’m going to pass to Jonas to start and then I’ll add that. But hello, Wayne. Go ahead, Joe.

Jono Lawrence, SVP Exploration, Westdome Gold Mines: Wayne, hi. It’s Jono speaking. Can you hear me okay?

Guy Yibolo, COO, Westdome Gold Mines: Yes. Okay.

Jono Lawrence, SVP Exploration, Westdome Gold Mines: So one of the changes, the reserve grade is due to variance in the cutoff grade. By lowering a cutoff grade, we are already looking at larger tons and an overall drop in the grade. So that’s one aspect. That’s a function of our review and part of our growth as a company. The second part on the resources side that feed into the reserve, the drill tensor, we did drill a lot of holes last year.

The results of those holes did feed into a modeling process. The implicit modeling on the wireframing has been quite robust. We’re using Leapfrog to help drive us through. Leapfrog has some components where if it’s not controlled will lead to higher volumes and bubbles. The person that we engaged to do that work as part of our global model work and resources work is excellent.

It’s been well controlled. We’ve been reviewing that work and the wireframe, the litho structural work has incorporated information from underground mapping, backs by the geologists, FACES, plus lithology mapping, shear zones, quartz veins to build three d architecture on the lithology first, shear zone locations and then that’s fed into the continuation of the building of the mineralized wireframes. Hole density came part of the interpolation process in how the grades from those two holes fit into the allocation of the grade into the block ones. But the wireframing process was very, very sound.

Anthea Baff, President and CEO, Westdome Gold Mines: Okay. So I’m going to try and summarize a little bit differently, right? So what we’ve done is we’ve changed our modeling to be more real time, to apply best practices to last see the mine in a different way. We are locking many new mining areas and there are many, many more. The measured rate is consistent in 300 Zone.

Remember, we reduced the color grade by Jonas by 20%, but you see the grade remains quite consistent, which is great to see. The probable reserve ounces have increased by 22% at Eagle River. The reserve has increased by 80,000 ounces in Eagle River. And I think, Wayne, what’s important to understand is that these ounces are close to mine infrastructure or higher up in the mines unlocking these new areas as well. The cost per tonne is down.

So when you look at this, you need to see this as part of a journey, a growth journey West Elm is on. We start to look at this mine in a very different way. It’s part of the global resource initiative work we’re doing. Once we might upgrade the answers or grade of the inferred answers as they are, the fact is what we’re seeing now is a big picture story to drive the strategy we’re actually working on. The cost reduction we’re doing start to play into good effect here.

We start to see the answers coming through and we’re going to keep building this up to assure that actually we deliver more value for our shareholders.

Wayne Lam, Analyst, TD: Okay, great. Thanks for the explanation. So yes, I mean, I guess a bit of an increase in tension, still some high margin ounces there. Just wondering on the grade optimizations and the domain name used, can you give us a better idea of some of the refinements that you guys are looking at? And what might we expect with the new technical reports coming up next year?

Jono Lawrence, SVP Exploration, Westdome Gold Mines: Thanks. So some of the refinements, Wayne, we were looking at ways of the capping strategy, the influence that they have on the overall grades, the search ellipsoids, the selection of how far they can look, the influence of structures. We’ve got oriented core and teleview work looking at how the structures and the grades and drill holes are linked together in three d space, which comes back to the search ellipsoids. We’re looking at different domaining approaches now whether we applying a lower grade and then a higher grade domain. So there’s a less of an influence from the lower grade and reducing drill holes with a higher grade values.

It’s an iterative process going backwards and forwards. It’s happening now and we’ll see the benefits of those in the coming weeks, the next model update.

Anthea Baff, President and CEO, Westdome Gold Mines: I think also just to add on the global model work, I think it’s also important to say that when you look at the global model, you’re adding in many, many more tons and ounces that are lying in currently what we call CAT3 and CAT4 data or CAT3, CAT4 answers. And these answers, the information needs to be qualified from a QAQC as well as a confirmation drilling perspective. So none of this is currently in these models right now. So it’s really important to say that to everybody on this call that we’re still doing this work. If you can imagine this, it can be a far bigger piece of information to review and to understand as time goes by.

And I think what we’re going to be doing over the next while with this is making sure we get the QAQC confirmation drilling in. And we can understand that that obviously will lead into the technical report towards next year. And that’s why I’m not going to be it should happen in Q1 when we deliver this, but that information needs to draw properly into those reports to ensure we can get the picture coming out in the right kind of way. But my gut feeling tells me that what you will see is the high grade is going to be strongly there like we think. We’re going to keep adding in good ounces at different levels in the mine.

It’s going to allow us to focus more at a lower cost per tonne, which is what we’ve always been saying to the market. Wheatstone’s current fixed cost is highly levered on Eagle specifically in both mines, but Eagle specifically. So this allows us to take advantage of this mine and take advantage of the current asset that is there.

Wayne Lam, Analyst, TD: Okay, great. Thank you. And then, yes, maybe just last one for me. Yes, just wondering on the global resource initiative, has the digitization of Eagle River already been incorporated into in informing that new reserve and just wondering how that’s expected to improve operations moving forward? And then similar to Aquina, just wondering how long that might take Aquina?

Anthea Baff, President and CEO, Westdome Gold Mines: I think Kevin answered this one. He’s leading this from outside.

Kevin Lonergan, SVP Technical Services, Westdome Gold Mines: Wayne, at Eagle River, firstly, the global model has stated that it’s evolving to your point, has it been included in this reserve a very small portion of it, but what we’re actually seeing as it evolves into the modeling is far greater potential and over the next six to nine months what we see is a QAQC system and targeting and conversion of that global model into our reserves over the next six to nine months and possibly to twelve months. At Keenan at a much I suppose a less mature stage. So it is probably twelve months of work at Kiena to define it a bit better.

Wayne Lam, Analyst, TD: Okay, great. Thanks for taking my questions.

Anthea Baff, President and CEO, Westdome Gold Mines: Thank you.

Conference Operator: Our next question comes from Don DeMarco with National Bank. You may proceed.

Don DeMarco, Analyst, National Bank: Thank you, operator, and good morning, everyone. So first, I guess, just continuing with questions on the resource to Jono. So Jono, at Endeavor, they would set targets for reserve or resource accretion over, say, a five year period. Is there any plans to do the same at West Elm? And if so, what kind of target level of reserves might you expect over a certain period of time?

Jono Lawrence, SVP Exploration, Westdome Gold Mines: Don, that’s part of the secret sauce unfortunately. But yes, yes, the aim when I looked at the data initially in arriving, there is a wealth of information and targets. It’s a process that we’ve started with the surface exploration and the underground exploration teams. It’s too soon to comment on how far that can go and how far it can lead into resource and reserve updates, but that’s certainly a focus for me for the coming quarter to set up. Westland has been very supportive.

They see the challenge for the growth and they see opportunities. And I agree 100% and we want to showcase those in the coming quarters with the information and some press releases.

Don DeMarco, Analyst, National Bank: Okay. Thank you. Just briefly on the technical reports pending next year. So that’s going to be can you confirm that’s for both mines and it’ll include mine plans with costs?

Kevin Lonergan, SVP Technical Services, Westdome Gold Mines: Yes, it’s for both mines, so I believe that I’m keen.

Don DeMarco, Analyst, National Bank: Okay. Thank you. Now, Kiena, costs are attractive in Q4. So but how should we be thinking about Presqu’ile? Like how much tonnage is expected from Presqu’ile this year, next year?

And how should we think about the implications on grades and costs at Kiena after Presque Isle is ramped up?

Kevin Lonergan, SVP Technical Services, Westdome Gold Mines: So Kiena is the first sorry, the first introduction of Presque Isle tonnage this year and ’37 and it obviously ramps up this is the first year of developing the ore body since the development in our first soap is planned for Q4 this year and will ramp up production thereafter. Cost wise, as you know, it’s near surface deposits, no constraints as far as transportation. So that’s why the cut off grade for Priscilla is much lower than Kinetty, just pure logistics and cost after production.

Anthea Baff, President and CEO, Westdome Gold Mines: And then that ramps up, Kevin, I think for 2026, you start seeing four quarters of that, right? Exactly. It can come back in, that’s right.

Don DeMarco, Analyst, National Bank: Okay. So I guess we’ll look at we would expect maybe the grades to edge higher costs a little bit too, as we might expect given the grades. Okay, great. Then just final question. So the balance sheet is strong, trending higher.

What are your plans for capital allocation? Do you have a target cash balance you’d like to achieve before considering maybe a dividend or special dividend? And do you want to build up some dry powder to provide flexibility under potential M and A scenarios?

Anthea Baff, President and CEO, Westdome Gold Mines: Yes. I mean, that’s a great question. And obviously, it’s really deep in conversation here at West Elm. I think the first thing to note on this is the exploration. You can hear how important the exploration is when we keep pushing exploration and driving organic side.

On a basic cash minimum cash balance, I would argue that about $120,000,000 1 hundred and 30 million dollars is the right number for West Elm, I would believe. Okay. On the conservative side of where we are. So you can imagine that we obviously are really considering what those options may be for our shareholders. We’ve got some feedback from our shareholders too.

And we’ll have a look at how this progresses over the year, what we’re going to do with that.

Don DeMarco, Analyst, National Bank: Okay, excellent. Thank you for that. And thanks, Athena. Good luck with Q1. Thanks.

Conference Operator: Our next question comes from John Tomazos with John Tomazos Barry Independent Research. You may proceed.

John Tomazos, Analyst, Barry Independent Research: Thank you for taking my question. Looking ahead of year, if the current gold prices were to hold, the SEC three year moving average gold price would be in the 2400s neighborhood. From where we sit now, do you think you’ll do your reserves next year at U. S. 1,500 or how much might you raise it?

Anthea Baff, President and CEO, Westdome Gold Mines: We check these every year, John, thank you for the question. You check them every year, we’ll review it at that particular time. What we typically do is check what market is telling us at the time and we do a review relative to peers as well. We’d like to be quite conservative specifically on reserves to allow that margin to remain in the organization. So I think our reserve currently sitting at about 1,500 if not mistaken.

So it’s yes, we’ll review at that stage, Sean.

John Tomazos, Analyst, Barry Independent Research: So let me try another way. Do you think your reserve replacement next year will solely be from lowering the cutoff grade or how much of it do you think will be from new discoveries?

Anthea Baff, President and CEO, Westdome Gold Mines: I mean, I think if we look at the aggressive exploration program we have in place, I would argue that this is going to be replaced from exploration, correct, Jonah? What you would think? I mean, there would obviously be a cut of grade reaction in the relationship as well as well as the global model addition that you’re going to see too. But, Jonah, I would argue that your exploration program is driving preserved replacement.

Jono Lawrence, SVP Exploration, Westdome Gold Mines: That’s correct. That’s correct, John. We’re gearing it and optimizing targets with various filters grade of course, but also structure host dilation potential for continuity along striking down plunge, putting those proof of concept holes in and we have the flexibility and the mandate that if positive results come through then be aggressive in following it up. So yes, growth for reserve.

Anthea Baff, President and CEO, Westdome Gold Mines: I think it’s important John to say that we’re not trying to squeeze margin and drive tons like low grade and low value ounce tons into the mill. We said to ourselves from the outset that we’re going to be driving value for our shareholders. We’re value it’s a value ton that we’re putting through that mold. So when we look at this, we really consider does that particular ton do what it needs to do in terms of that strategy? And I think it’s really important to say that to everybody here that we will remain like that very conscious of that push the strategy forward.

John Tomazos, Analyst, Barry Independent Research: Thank you.

Conference Operator: Thank you. There are no further questions at this time. This concludes this morning’s call. If you have any further questions, please contact Trish Moran at investwisdome dot com. Thank you for participating today.

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