Wesdome breaking even (March 02, 2007)

Wesdome Gold Mines (WDO-T, WDOFF-O) was a little short on production in 2006 at its Kiena gold mine in Val dOr Que., but the future is looking up with the surprise discovery of a gold extension of the S50 zone.

The S50 mineralization is an open Z-fold with a north-south axis about 500 metres long. The company was targeting the South zone at the 330-metre level when it came across broad zones of S50 mineralization above the South zone.

Some of the best intersections included 13.3 metres grading 4.56 grams gold per tonne, 39.4 metres grading 4.42 grams gold per tonne and 15.9 metres grading 5.12 grams gold per tonne.

It wasnt supposed to be there, says Donovan Pollitt, Wesdome vice-president corporate development. Its nicely mineralized over huge widths so we are looking to put more holes into it to see what is there.

More than 1.5 million oz. were recovered from the S50 zone from 10.7 million tonnes of ore grading 4.75 grams gold per tonne between 1982 and 2002.

Pollitt says that the south zone wasnt really that hot, but that it is mineralized enough to encourage the company to keep exploring it.

South zone intersections included 4.2 metres grading 3.43 grams gold per tonne, 15.6 metres grading 1.73 grams gold per tonne and 2 metres grading 6.18 grams gold per tonne.

In total, Wesdome produced 52,000 oz. gold in 2006, slightly below the forecast of 55,000 oz.

The Kiena mine produced 9,000 oz. gold from 94,000 tonnes grading 3.1 grams gold per tonne. The company says the ore was from lower grade stopes that were already partially developed.

The company lowered its 2007 forecast for Kiena to 40,000 oz. gold from 50,000 oz.

We fell a bit behind on development at Kiena, says Pollitt. We were planning on getting most of our stuff out of the VC zone but were still developing it, so we were a little under.

The VC zone is immediately north of the Kiena mine and has returned intersections of 6.5 metres grading 14.71 grams gold per tonne, 10.3 metres grading 10.28 grams gold per tonne and 4 metres grading 12.13 grams gold per tonne.

Pollitt says troubles with maintaining a fleet due to a lack of availability as well as unreliable manpower caused Wesdome to fall behind at Kiena.

A lot of people are moving around all of the time, says Pollitt. Its totally a function of high nickel and copper prices.

With the surge in prices, workers are being offered higher paying jobs at other mines, Pollitt says.

People are being poached left, right and centre, he says.

By contrast, the companys Eagle River gold mine in Wawa, Ont. produced 43,000 oz. gold from 135,000 tonnes grading 10.2 grams gold per tonne after the company forecast only 36,000 oz. Eagle Rivers 2007 production forecast has been increased from 20,000 oz. to 30,000 oz. for 2007, balancing out the loss from Kiena and putting the total yearly production at 70,000 oz. gold.

For 2007, Kienas proven and probable reserves are 795,000 tonnes grading 4.4 grams gold per tonne, or 113,000 oz. gold. Measured and indicated resources are 1.4 million tonnes grading 4 grams gold per tonne, or 172,000 oz.

Eagle Rivers 2007 proven and probable reserves are 253,000 tonnes grading 12.9 grams gold per tonne, or 105,000 oz. gold. Measured and indicated resources are 71,000 tonnes grading 7.7 grams gold per tonne, or 17,500 oz.

Wesdome will release its 2006 financial results at the end of March.

Pollitt says the company has no debt but that operating costs have increased for labour, cyanide, explosives, energy, transport and steel.

Id love to sit here and tell you how great and profitable we are but we are just not. We are just trying to keep our nose above water, says Pollitt. Its not dire but everyone thinks that because the gold price is perpetually rising that were just minting money over here.

On Mar. 2 Wesdome shares were down 7 in Toronto to $1.70.