- Record gold sales of 47,535 ounces of gold averaged $870 per
ounce in the third quarter compared to 22,760 ounces in the second
quarter and 9,960 ounces in the first quarter TORONTO, Nov. 4
/PRNewswire-FirstCall/ -- Western Goldfields Inc. ("Western
Goldfields" or the "Company") (TSX:WGI, NYSE Alternext:WGW) today
announced financial results for the three-month and nine-month
periods ended September 30, 2008. During the nine-month period
ended September 30, 2008 the Company continued to increase
production and further improved efficiencies to reduce cost of
sales per ounce. Results are based on U.S. GAAP and expressed in
U.S. dollars unless otherwise indicated. "We are pleased to report
our strongest quarter ever with our highest sales, lowest cost of
sales and most significant cash flow," stated Mr. Raymond
Threlkeld, President and Chief Executive Officer. Gold sales during
the quarter totaled 47,535 ounces, at an average cost of sales(1)
of $390 per ounce which is below the Company's previous cost
guidance. Gold revenues during the quarter were $870 per ounce.
Gold production was 42,357 ounces. Gold sales for the first nine
months were 80,255 ounces, at an average cost of sales(1) of $503
per ounce. Gold revenues for the first nine months were $884 per
ounce. Gold production was 79,947 ounces. Subsequent to the quarter
end, the Company announced the completion of one of its previously
stated value-enhancing initiatives by introducing Western
Goldfields' improved mine plan. The improved plan is designed to
focus on sequential mining of the Mesquite pits in order to
increase production to over 700,000 ounces through the next four
years, reduce costs and improve cash flow. "We are very excited
about the improved mine plan as it increases production and cash
flow in the next four years for the benefit of our shareholders,"
said Mr. Threlkeld. Third Quarter and Year-to-Date Highlights
----------------------------------------- For the third quarter
2008, gold sales totaled 47,535 ounces, at an average cost of
sales(1) of $390 per ounce which was below the Company's previous
cost guidance. The Company produced 42,357 ounces of gold.
Production for the third quarter continued to ramp-up. The Company
continued to focus on controlling costs and improving equipment
efficiency resulting in lower cost of sales(1) per ounce than
previously forecast, despite a decrease in shovel availability that
negatively impacted production. Total year-to-date gold sales
totaled 80,255 ounces, at an average cost of sales(1) of $503 per
ounce. The Company produced 79,947 ounces of gold. Third Quarter
2008 Nine Months 2008
--------------------------------------------------- Tons Mined
Grade Tons Mined Grade ------------ ------------ ------------
------------ Ore Mined 3,012,630 0.023 6,266,543 0.026 Waste Mined
11,280,193 - 34,152,652 - ------------ ------------ TOTAL
14,292,823 40,419,195 ------------ ------------ ------------
------------ Financial Results ----------------- For the third
quarter, Western Goldfields reported net income of
$30.5 million compared to a net loss of $36.4 million for the
third quarter of 2007. For the three and nine-month periods ended
September 30, 2008, the Company had net income to common
shareholders of $30.5 million and $6.8 million, or $0.22 and
$0.05 per share, respectively. This compares to a loss of $36.4
million and $43.0 million, or $0.31 and $0.39 per share for the
three and nine-month periods ended September 30, 2007,
respectively. The net income for the three and nine months includes
a after-tax gain of $18.8 million and loss of $1.2 million,
respectively, arising from the mark-to-market of contracts for the
forward sale of gold, which were taken out as a requirement of our
term loan facility. The mark-to-market gain reflects the fact that
the spot gold price decreased from $930 per ounce at June 30, 2008
to $885 at September 30, 2008. Year-to-date results for 2008, as
compared with 2007, show an increase in gold sold to 80,255 ounces
from 6,101 ounces; the average selling price per ounce rose to $884
in 2008 from $665 in 2007. Liquidity and Capital Resources
------------------------------- At September 30, 2008, the
Company's cash balance was $45.4 million, including restricted cash
of $7.5 million. In addition, the Company had unutilized credit
facilities of $18.7 million. The Mesquite Mine generated
$16.5 million and $3.0 million of cash flow from operating
activities for the three and nine-month periods ended September 30,
2008, respectively. Capital Expenditures -------------------- The
third quarter represented Western Goldfields' last significant
quarter of expansion capital spending with the Company incurring
$5.2 million of capital expenditure at its Mesquite mine. Planned
spending for the balance of the year is $1.6 million. The Company
expects future capital requirements to achieve the current mine
plan at Mesquite to be minimal. We continue to assess the potential
of the sulfide resources. 2008 Outlook ------------ Gold sales for
full-year 2008 are expected to total approximately
117,000 ounces of gold at an average cost of sales(1) of $500
per ounce. The Mesquite Mine is expected to sell approximately
37,000 ounces of gold in the fourth quarter. (1) Cost of sales per
ounce is defined as cost of sales as per the Company's financial
statements divided by the number of ounces sold. Western Goldfields
Inc. ----------------------- Western Goldfields Inc. is an
independent gold production and exploration company with a focus on
precious metal mining opportunities in North America. The Mesquite
Mine, currently the Company's sole asset, was brought into
production in January 2008, and the Company's focus is now on
achieving the anticipated rate of production and completing planned
improvements to the property. The Company has 2.8 million ounces in
Proven and Probable Reserves. Western Goldfields common shares
trade on the Toronto Stock Exchange under the symbol WGI, and on
the New York Stock Exchange Alternext under the symbol WGW. Mr. Wes
Hanson, P.Geo., Vice President of Mine Development, Western
Goldfields Inc., is the qualified person under National Instrument
43-101 who supervised the preparation of the technical information
contained in this news release. Mr. Hanson is an officer of the
Company. Forward-Looking Information ---------------------------
Certain statements contained in this news release and subsequent
oral statements made by and on behalf of the Company may contain
forward-looking information within the meaning of the United States
Private Securities Litigation Reform Act of 1995 and similar
Canadian securities law. Such forward-looking statements are
identified by words such as "intends", "anticipates", "believes",
"expects", "plans" and include, without limitation, statements
regarding the Company's plan of business operations, production and
cost estimates, receipt of working capital, anticipated revenues,
and capital and operating expenditures. These forward-looking
statements are based on the best estimates of management at the
time such statements are made. Expected production results and cost
of sales (including without limitation, statements made with
respect to future production and costs contemplated by our new mine
plan) are based in part on current and historical production and
cost data factoring certain assumptions with respect to future
metal prices, costs and availability of supplies and labour and
other parameters. There can be no assurance that such statements
will prove to be accurate; actual results and future events could
differ materially from such statements. Factors that could cause
actual results to differ materially include, among others,
variations in metal prices and/or cost of supplies, possible
variations in ore grade or recovery rates, failure of plant,
equipment or processes to operate as anticipated, accidents, labour
disputes, as well as those set forth in the Company's Annual Report
on Form 10-KSB for the year ended December 31, 2007 filed with the
U.S. Securities and Exchange Commission and with SEDAR, under the
caption "Risk Factors" as well as other filings made by the Company
with securities regulatory authorities. Most of these factors are
outside the control of the Company. Investors are cautioned not to
put undue reliance on forward-looking statements. Except as
otherwise required by applicable securities statutes or
regulations, the Company disclaims any intent or obligation to
update publicly these forward-looking statements, whether as a
result of new information, future events or otherwise. WESTERN
GOLDFIELDS INC. CONSOLIDATED BALANCE SHEETS (In thousands U.S.
dollars) (Unaudited) September 30, December 31, 2008 2007
------------- ------------- ASSETS CURRENT ASSETS Cash and cash
equivalents $ 37,914 $ 43,870 Restricted cash 7,500 7,500
Receivables 364 298 Inventories 30,305 11,201 Prepaid expenses
1,165 887 Current portion of deferred income tax asset 1,070 755
------------- ------------- TOTAL CURRENT ASSETS 78,318 64,511
------------- ------------- Plant and equipment, net of accumulated
amortization 106,757 77,951 Construction in process 4,592 21,864
Investments - reclamation and remediation 8,884 8,661 Long-term
deposits 362 348 Long-term prepaid expenses 1,427 1,555 Deferred
debt issuance costs, net of accumulated amortization 2,881 3,227
Deferred income tax asset 31,285 36,379 ------------- -------------
TOTAL OTHER ASSET S 156,188 149,984 ------------- -------------
TOTAL ASSETS $ 234,506 $ 214,495 ------------- -------------
------------- ------------- LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES Accounts payable and accrued liabilities $
8,315 $ 8,781 Current portion of mark-to-market loss on gold
hedging contracts 5,674 1,935 Current portion of loan payable
15,109 6,882 ------------- ------------- TOTAL CURRENT LIABILITIES
29,098 17,598 ------------- ------------- LONG-TERM LIABILITIES
Mark-to-market loss on gold hedging contracts 54,633 56,966 Loan
payable 71,230 69,581 Reclamation and remediation liabilities 5,323
5,061 ------------- ------------- TOTAL LIABILITIES 160,284 149,206
------------- ------------- STOCKHOLDERS' EQUITY Common stock, of
no par value, unlimited shares authorized; 136,761,919 and
135,049,685 shares issued and outstanding, respectively 135,267
133,725 Stock options and warrants 8,109 7,551 Accumulated deficit
(69,154) (75,987) ------------- ------------- TOTAL STOCKHOLDERS'
EQUITY 74,222 65,289 ------------- ------------- TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY $ 234,506 $ 214,495 -------------
------------- ------------- ------------- WESTERN GOLDFIELDS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS) (In thousands U.S. dollars) (Unaudited) Three Months Ended
Nine Months Ended September 30 September 30
--------------------------- --------------------------- 2008 2007
2008 2007 ------------- ------------- ------------- -------------
REVENUES Revenues from gold sales $ 41,353 $ 1,281 $ 70,955 $ 4,060
EXPENSES Mine operating costs 17,591 6,067 38,800 11,741 Royalties
928 50 1,533 154 ------------- ------------- -------------
------------- Cost of sales (excludes amortization and accretion)
18,519 6,117 40,333 11,895 Amortization and accretion 2,564 1,609
6,948 2,362 ------------- ------------- ------------- -------------
21,083 7,726 47,281 14,257 ------------- -------------
------------- ------------- GROSS PROFIT (LOSS) 20,270 (6,445)
23,674 (10,197) ------------- ------------- -------------
------------- EXPENSES General and administrative 1,525 1,620 4,491
5,131 Exploration and business development 121 (273) 936 759
------------- ------------- ------------- ------------- 1,646 1,347
5,427 5,890 ------------- ------------- ------------- -------------
OPERATING INCOME (LOSS) 18,624 (7,792) 18,247 (16,087)
------------- ------------- ------------- ------------- OTHER
INCOME (EXPENSE) Interest income 269 341 942 1,383 Interest expense
and commitment fees (1,007) (606) (3,026) (848) Amortization of
deferred debt issuance costs (115) (118) (346) (227) Realized and
unrealized gain (loss) on mark-to-market of gold forward sales
contracts 30,777 (28,331) (2,043) (27,573) Gain on sale of assets -
43 - 43 Gain (loss) on foreign currency exchange (826) 89 (1,596)
294 ------------- ------------- ------------- ------------- 29,098
(28,582) (6,069) (26,928) ------------- ------------- -------------
------------- INCOME (LOSS) BEFORE INCOME TAXES 47,722 (36,374)
12,178 (43,015) INCOME TAX EXPENSE (17,206) - (5,345) -
------------- ------------- ------------- ------------- NET INCOME
(LOSS) 30,516 (36,374) 6,833 (43,015) OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment - 8 - - -------------
------------- ------------- ------------- NET COMPREHENSIVE INCOME
(LOSS) $ 30,516 $ (36,366) $ 6,833 $ (43,015) -------------
------------- ------------- ------------- -------------
------------- ------------- ------------- NET INCOME (LOSS) PER
SHARE - BASIC $ 0.22 $ (0.31) $ 0.05 $ (0.39) -------------
------------- ------------- ------------- -------------
------------- ------------- ------------- - DILUTED $ 0.21 $ (0.31)
$ 0.05 $ (0.39) ------------- ------------- -------------
------------- ------------- ------------- -------------
------------- WEIGHTED AVERAGE NUMBER OF COMMON STOCK OUSTANDING -
BASIC 136,739,854 118,281,240 136,272,266 111,628,367 - DILUTED
147,861,514 118,281,240 149,303,191 111,628,367 WESTERN GOLDFIELDS
INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands U.S.
dollars) (Unaudited) Three Months Ended Nine Months Ended September
30, September 30, ---------------------------
--------------------------- 2008 2007 2008 2007 -------------
------------- ------------- ------------- CASH FLOWS FROM OPERATING
ACTIVITIES Net income (loss) $ 30,516 $ (36,374) $ 6,833 $ (43,015)
Adjustments to reconcile net income (loss) to net cash provided
(used) by operating activities: Items not affecting cash:
Amortization of plant and equipment 3,710 1,531 6,740 2,123
Amortization of deferred debt issuance costs 115 118 346 227
Accretion expense 88 84 262 253 Deferred income taxes 16,640 -
4,779 - Gain on sale of assets - (43) - (43) Interest net of
reimbursed costs - reclamation and remediation (81) (106) (223)
(276) Stock based compensation 417 662 1,075 1,950 Mark-to-market
loss (gain) on gold hedging contracts (31,415) 28,331 1,405 27,572
Changes in assets and liabilities: Decrease (increase) in: Accounts
receivable 576 18 (66) 95 Inventories (6,372) (1,827) (19,104)
(1,867) Prepaid expenses and deposits (323) (1,019) (150) (1,566)
Long term deposits (5) (5) (14) (14) Increase (decrease) in:
Accounts payable (724) 1,286 (1,251) 337 Payroll and related taxes
payable - - (1,562) - Accrued expenses 3,409 (106) 4,173 329
Accrued interest expense (26) 292 (256) 292 -------------
------------- ------------- ------------- Net cash provided (used)
by operating activities 16,525 (7,158) 2,987 (13,603) -------------
------------- ------------- ------------- CASH FLOWS FROM INVESTING
ACTIVITIES Restricted cash - - - (7,500) Purchase of plant and
equipment, including construction in process (5,175) (43,305)
(19,844) (74,681) Increase in reclamation and remediation
investment - - - (2,090) ------------- ------------- -------------
------------- Net cash used by investing activities (5,175)
(43,305) (19,844) (84,271) ------------- -------------
------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES
Loan payable - 51,108 9,876 51,108 Deferred debt issuance costs -
(2,470) - (3,320) Common stock issued for cash - - - 59,191
Exercise of options to purchase common stock 15 408 687 909
Exercise of warrants to purchase common stock - 705 338 2,521
------------- ------------- ------------- ------------- Net cash
provided by financing activities 15 49,751 10,901 110,409
------------- ------------- ------------- ------------- Change in
cash 11,365 (712) (5,956) 12,535 Cash and cash equivalents,
beginning of period 26,549 18,750 43,870 5,503 -------------
------------- ------------- ------------- Cash and cash
equivalents, end of period $ 37,914 $ 18,038 $ 37,914 $ 18,038
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
SUPPLEMENTAL CASH FLOW DISCLOSURES: Interest paid $ (693) $ (457) $
(2,982) $ (457) NON-CASH FINANCING AND INVESTING ACTIVITIES: Stock,
options and warrants issued for services $ 417 $ 662 $ 1,075 $
1,950 Equipment purchases included in accounts payable $ (18) $
(9,094) $ 316 $ 2,738 Deferred debt issuance costs included in
accrued expenses $ - $ (2,329) $ - $ - Non-cash component of
inventories $ 422 $ - $ 1,623 $ - DATASOURCE: Western Goldfields
Inc. CONTACT: please visit http://www.westerngoldfields.com/, or
contact: Raymond Threlkeld, Chief Executive Officer, (416)
324-6005, ; Brian Penny, Chief Financial Officer, (416) 324-6002, ;
Hannes Portmann, Director, Corporate Development and Investor
Relations, (416) 324-6014,
Copyright