TORONTO, April 30 /PRNewswire-FirstCall/ -- Western Goldfields Inc.
("Western Goldfields" or the "Company") (TSX:WGI, NYSE Amex:WGW)
today announces financial results for the three-month period ended
March 31, 2009. The Company continued to focus on further enhancing
its operational efficiency and met its production guidance at lower
cost of sales per ounce(1) in the first quarter. All amounts are
expressed in United States dollars unless otherwise indicated. -
Cash flow from operations of $8.9 million during the quarter - Cash
at March 31, 2009 of $26.6 million, including $7.5 million of
restricted cash, an increase of $7.8 million during the quarter -
Gold production for the first quarter of 33,660 ounces - Gold sales
of 32,715 at an average realized price(2) of $867 per ounce - Cost
of sales per ounce(1) for the quarter of $573 - Net loss of $5.3
million, or $0.04 per share, for the first quarter of 2009,
compared to a net loss of $19.6 million or $0.14 per share in 2008.
The net loss in 2009 includes after tax mark-to-market losses on
gold forward sales contracts of $7.5 million, or $0.06 per share as
compared to $14.7 million, or $0.11 per share in the same prior
year period. As disclosed in the Company's April 20, 2009 news
release, Western Goldfields' production was within the guidance
range for the first quarter with cost of sales per ounce(1) below
the guidance range. Cost of sales per ounce(1) was positively
impacted by lower costs across many of the key inputs, including
diesel and explosives. The operations at Mesquite are also
benefiting from more experienced equipment operators, better
performing radial tires, and increased efficiencies from
re-sequencing of the mining operations commencing with the Rainbow
pit. The combination of these factors led the Company to a solid
first quarter as Western Goldfields generated $8.9 million in cash
flow from operations during the quarter. "The operating trend being
realized by the Company is very encouraging," said Raymond
Threlkeld, President and Chief Executive Officer. "Both our mining
rate and the timing of our leach pad recovery continue to improve
in line with expectations resulting in excellent cash flow
generation from Mesquite." Financial Results -----------------
During the first quarter of 2009, the net loss was $5.3 million or
$0.04 per share, compared to $19.6 million or $0.14 per share in
the same prior year period. The net loss in 2009 includes after tax
mark-to-market losses on gold forward sales contracts of $7.5
million or $0.06 per share as compared to after tax mark-to-market
losses of $14.7 million, or $0.11 per share in the same prior year
period. Per the terms of the term-loan facility, in the first
quarter of 2009 the Company settled three of its 5,500 ounce
monthly contracts delivering a total of 16,500 ounces of gold at
$801 per ounce. As at March 31, 2009, the Company holds 69 of these
contracts representing a total commitment of 379,500 ounces; the
increase in the spot gold price between December 31, 2008 ($870 per
ounce) and March 31, 2009 ($917 per ounce) was a principal driver
of the unrealized portion of the loss on gold forward sales
contracts during the quarter. As at March 31, 2009, the cumulative
mark-to-market loss on gold forward sales contracts was $57.5
million. The Company also financially settled 630,000 gallons into
our fuel hedge contracts and realized losses of $0.3 million. Gold
sales in the first quarter of 2009 were 32,715 ounces compared to
9,960 ounces in the same prior-year period; this increase is a
result of the Company escalating production in the first quarter of
2008 until Mesquite attained steady-state production from the new
leach pad during the second quarter of 2008. The average selling
price declined to $867 per ounce in the first quarter of 2009
compared to $929 per ounce of gold in the same prior year period.
Liquidity and Capital Resources -------------------------------
Western Goldfields had $26.6 million of cash, including $7.5
million of restricted cash, at March 31, 2009. This increase in
cash was a result of the Company generating $8.9 million in cash
flow from operations, which was partially offset by $1.5 million in
capital expenditures. The capital expenditures during the quarter
primarily related to the purchase of a training simulator which is
intended to increase driver efficiency and decrease repair and
maintenance costs going forward. Western Goldfields continues to
project minimal capital expenditures going forward. The Company's
debt remains at $68.6 million, and the next scheduled debt
repayment of $4.7 million will occur on June 30, 2009. Business
Combination with New Gold ---------------------------------- Below
is a summary schedule of the proposed Business Combination with New
Gold: - May 13, 2009 - New Gold Annual and Special Meeting of
Shareholders - May 14, 2009 - Western Goldfields Annual and Special
Meeting of Shareholders - June 1, 2009 - Expected closing
Additional Information on Non-GAAP Financial Measures
----------------------------------------------------- (1) Cost of
sales per ounce is a non-GAAP financial measure which is calculated
by dividing cost of sales, as per the Company's financial
statements, including realized losses from the settlement of fuel
hedge contracts, by the number of gold ounces sold. This is the
first quarter where this adjustment has been made as the Company
began settling its fuel hedges in fiscal 2009. The Company records
the realized and unrealized gains/losses from its fuel hedge
contracts in other income. Consequently, we believe that including
the realized gains/losses from settlement of fuel hedge contracts
provides investors and analysts with a measure of our costs related
to production that is more comparable to measures presented by
other mining companies. Management also uses this measure
internally to monitor, evaluate, and manage those factors that
impact production costs on a monthly basis. This calculation is
performed on a consistent basis for the periods presented. The cost
of sales per ounce statistic is intended to provide additional
information, does not have any standardized meaning prescribed by
U.S. GAAP and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
U.S. GAAP. This non- GAAP measure may not be comparable to similar
measures presented by other issuers. Three months ended March 31
2009 2008 Statement of Operations (000's) Cost of sales (excludes
amortization and accretion) $ 18,450 $ 9,352 Realized losses from
settlement of fuel forward contracts 288 - ------------
------------ Cost base for calculation $ 18,738 $ 9,352
------------ ------------ Gold ounces sold 32,715 9,960 Cost of
sales per ounce $ 573 $ 939 (2) Average realized gold price is a
non-GAAP financial measure. It is calculated by dividing total
revenue by ounces sold. We believe that including the average
realized gold price provides investors and analysts with a measure
of our revenue related to production that is more comparable to
measures presented by other mining companies. Management also uses
this measure internally to monitor, evaluate, and manage those
factors that impact revenue on a monthly basis. The average
realized gold price statistic is intended to provide additional
information, does not have any standardized meaning prescribed by
U.S. GAAP and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
U.S. GAAP. This non-GAAP measure may not be comparable to similar
measures presented by other issuers. Western Goldfields Inc.
----------------------- Western Goldfields Inc. is a 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 2.6 million ounces in Proven and Probable
Reserves as outlined in more detail in its latest annual report on
Form 10K filed on http://www.sedar.com/. Western Goldfields common
shares trade on the Toronto Stock Exchange under the symbol WGI,
and on the NYSE Amex under the symbol WGW. For further details,
please visit http://www.westerngoldfields.com/. 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,
timing of the recovery of gold 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 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-K for the year ended
December 31, 2008 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) March 31,
December 31, 2009 2008 ------------ ------------ ASSETS CURRENT
ASSETS Cash and cash equivalents $ 19,057 $ 11,275 Restricted cash
7,500 7,500 Receivables 634 2,550 Inventories 34,964 35,098 Prepaid
expenses 1,517 1,747 Current portion of deferred income tax asset
3,716 2,045 ------------ ------------ TOTAL CURRENT ASSETS 67,388
60,215 ------------ ------------ Plant and equipment, net of
accumulated amortization 109,729 111,334 Investments - reclamation
and remediation 8,960 8,934 Long-term deposits 371 367 Long-term
prepaid expenses 1,341 1,384 Deferred debt issuance costs, net of
accumulated amortization 2,593 2,766 Deferred income tax asset
24,696 22,368 ------------ ------------ TOTAL OTHER ASSETS 147,690
147,153 ------------ ------------ TOTAL ASSETS $ 215,078 $ 207,368
------------ ------------ ------------ ------------ LIABILITIES
& STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and
accrued liabilities $ 7,058 $ 7,484 Current portion of
mark-to-market loss on gold hedging contracts 8,071 5,606 Current
portion of mark-to-market loss on fuel hedging contracts 809 540
Current portion of loan payable 11,656 11,656 Current portion of
reclamation and remediation liabilities 339 339 ------------
------------ TOTAL CURRENT LIABILITIES 27,933 25,625 LONG-TERM
LIABILITIES Mark-to-market loss on gold hedging contracts 49,406
39,580 Mark-to-market loss on fuel hedging contracts 425 391 Loan
payable 56,984 56,984 Reclamation and remediation liabilities 4,824
4,737 ------------ ------------ TOTAL LIABILITIES 139,572 127,317
------------ ------------ STOCKHOLDERS' EQUITY Common stock, of no
par value, unlimited shares authorized; 135,581,286 and 134,801,286
shares issued and outstanding, respectively 134,043 133,383 Stock
options and warrants 8,378 8,291 Accumulated deficit (66,915)
(61,623) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY
75,506 80,051 ------------ ------------ TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 215,078 $ 207,368 ------------ ------------
------------ ------------ WESTERN GOLDFIELDS INC. CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME / LOSS (In
thousands U.S. dollars) (Unaudited) Three Months Ended March 31,
2009 2008 ------------ ------------ REVENUES Revenues from gold
sales $ 28,369 $ 9,256 ------------ ------------ COST OF GOODS SOLD
Mine operating costs 17,806 9,087 Royalties 644 265 ------------
------------ Cost of sales (excludes amortization and accretion)
18,450 9,352 Amortization and accretion 2,776 2,094 ------------
------------ 21,226 11,446 ------------ ------------ GROSS PROFIT
(LOSS) 7,143 (2,190) ------------ ------------ EXPENSES General and
administrative 1,370 1,481 Exploration and business development
1,478 224 ------------ ------------ 2,848 1,705 ------------
------------ OPERATING INCOME (LOSS) 4,295 (3,895) ------------
------------ OTHER INCOME (EXPENSE) Interest income 44 384 Interest
expense and commitment fees (486) (699) Amortization of deferred
debt issuance costs (173) (115) Realized and unrealized loss on
mark-to-market of gold forward sales contracts (12,291) (24,111)
Realized and unrealized loss on mark-to-market of fuel forward
contracts (591) - Loss on foreign currency exchange (99) (1,020)
------------ ------------ (13,596) (25,561) ------------
------------ LOSS BEFORE INCOME TAXES (9,301) (29,456) INCOME TAX
RECOVERY 4,009 9,832 ------------ ------------ NET LOSS $ (5,292) $
(19,624) ------------ ------------ ------------ ------------ BASIC
AND DILUTED NET LOSS PER SHARE $ (0.04) $ (0.14) ------------
------------ ------------ ------------ WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 135,189,376 135,659,101 ------------
------------ ------------ ------------ WESTERN GOLDFIELDS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands U.S. dollars)
(Unaudited) Three Months Ended March 31, 2009 2008 ------------
------------ CASH FLOWS FROM OPERATING ACTIVITIES Net loss $
(5,292) $ (19,624) Adjustments to reconcile net loss to net cash
provided (used) by operating activities: Items not affecting cash:
Amortization of plant and equipment 2,531 2,013 Amortization of
deferred debt issuance costs 173 115 Accretion expense 87 87
Deferred income taxes (3,999) (9,832) Interest net of reimbursed
costs - reclamation and remediation (26) (63) Stock based
compensation 350 370 Mark-to-market loss on gold hedging contracts
12,291 24,112 Mark-to-market loss on fuel hedging contracts 303 -
Changes in assets and liabilities: Decrease (increase) in: Accounts
receivable 1,689 78 Inventories 320 (6,041) Prepaid expenses and
deposits 269 83 Increase (decrease) in: Accounts payable 1,463
(1,337) Payroll and related taxes payable - (1,563) Accrued
liabilities (1,204) 1,051 Accrued interest expense (39) (171)
------------ ------------ Net cash provided (used) by operating
activities 8,916 (10,722) ------------ ------------ CASH FLOWS FROM
INVESTING ACTIVITIES Purchase of plant and equipment, including
construction in process (1,531) (8,749) ------------ ------------
Net cash used by investing activities (1,531) (8,749) ------------
------------ CASH FLOWS FROM FINANCING ACTIVITIES Advances under
loan facilities - 7,860 Exercise of options to purchase common
stock 397 233 Exercise of warrants to purchase common stock - 337
------------ ------------ Net cash provided by financing activities
397 8,430 ------------ ------------ Change in cash and cash
equivalents 7,782 (11,041) Cash and cash equivalents, beginning of
period 11,275 43,870 ------------ ------------ Cash and cash
equivalents, end of period $ 19,057 $ 32,829 ------------
------------ ------------ ------------ SUPPLEMENTAL CASH FLOW
DISCLOSURES: Interest paid $ (526) $ (797) ------------
------------ ------------ ------------ Interest received $ 21 $ 384
------------ ------------ ------------ ------------ Taxes paid $
(44) $ - ------------ ------------ ------------ ------------
NON-CASH FINANCING AND INVESTING ACTIVITIES: Stock options and
warrants issued $ 350 $ 370 Equipment purchases included in
accounts payable $ 132 $ 513 Non-cash component of inventories $
186 $ - 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,
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