Duncan Middlemiss,
President & CEO,
WESDOME GOLD MINES
"We think we can get Eagle to between 100,000 oz/y and 125,000 oz/y in the next couple of years, and the same at Kiena. The question is what is next? Filling the mill at Val d’Or and a mill expansion at Wawa would be the priority."

Wesdome was ranked 7th on the TSX30 list in 2020 (up from 19th in 2019). What do think contributed to this?

It is a 1A/1B situation. I think it all started with operational improvements at the Eagle River complex, which would be 1A, but exploration at Eagle has also been transformative, so that would be 1B. Eagle had been underexplored and underinvested when I got involved, but we have managed to transform the asset from a 50,000 oz/y operation to 90,000+ oz/y, which we continue to incrementally grow. I think the investing public saw a company that operates a mine in a great jurisdiction (Ontario), visibility to opening a mine in another great jurisdiction (Québec), and a tangible path to become a 200,000+ oz/y producer in the near-term. We are not just chasing ounces, but focusing on high-grade gold in the Abitibi region.

Which investments have been made to upgrade operations at Eagle River in the last 12 months?

We are augmenting the ventilation system by adding a second fan on surface, and doing underground development as Eagle River evolves and gets deeper. These are steeply dipping ore shoots that are very Abitibi-typical. We have also modernized our hoists.

To what extent has drilling been constrained in 2020, and do you plan to add rigs in 2021?

Drilling has been challenged at both operations in 2020. At Eagle, because it is a camp job, we ceased all diamond drilling in late March. Pre-pandemic we had five drills underground and two on surface, and we have been able to get back to three drills underground and one on surface by November. To get back to pre-pandemic levels, we are improving the infrastructure at the camp and have redesigned the kitchen to allow for social distancing. At Kiena, drilling was shut down for 8 weeks in the spring, but we have been fortunate to be able to ramp up and now have seven drills operating underground. We have big plans to drill in 2021, but this will be partly dependent on what happens with the pandemic.

Will the cash flow accumulation in 2020 be enough to organically fund the restart at Kiena?

The Kiena start-up will be between C$35 to C$40 million according to the PEA, and we are in the process of doing the PFS which will further define costs. Wesdome is able to organically fund the restart. We have a pristine balance sheet with no debt and a C$45 million line of credit, so total liquidity is C$115 million. If things go to plan we will be able to get Kiena up and running by the end of 2021, providing value to shareholders without having to go back to the market.

What potential do you see to expand the resource at Kiena through exploration?

The mill at Kiena is a 2,000 mt/d entity and what we have is a very high-grade, smaller volume deposit at the A Zone, which should produce between 750 to 1,000 mt/d. Kiena has a great land position of 70 km2 with a lot of potential evident through historical results from past mining operations, many of which closed when gold was at US$35/oz. Furthermore, some of these operations were constrained by land, but Kiena is an amalgamation of 12 to 15 previous properties, so now we can explore the full potential.

Would you also consider M&A activity to grow Wesdome’s production profile?

We think we can get Eagle to between 100,000 oz/y and 125,000 oz/y in the next couple of years, and the same at Kiena. The question is what is next? Filling the mill at Val d’Or and a mill expansion at Wawa would be the priority. We want to do this in a three to five year timeline, so if the right M&A opportunity came along it is something we would consider, but organic growth is the current focus. There is a need for size to gain relevance, and US$5 billion market cap companies seem to be more investible for funds, which provides for better liquidity.

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