News release via Canada NewsWire, Toronto 416-863-9350
Attention Business/Financial Editors:
Western Goldfields Announces Third-Quarter Results
<<
- Company is evaluating three financing proposals to bring Mesquite
Mine into production and intends to sign a mandate letter by the end
of November
- Interim results from drilling program to expand Mesquite Mine
resources expected by end of 2006
- First gold pour from Mesquite expected by April 2008
>>
TORONTO, Nov. 14 /CNW/ - Western Goldfields, Inc. (TSX:WGI, OTC
BB:WGDF.OB) today announced financial results for the three-month and
nine-month periods ended September 30, 2006. The Company's financial
statements conform to accounting principles generally accepted in the United
States (US GAAP). Dollar amounts are stated in U.S. dollars unless otherwise
stated.
"The first nine months of 2006 have been a very exciting period for
Western Goldfields in which we have made significant progress toward bringing
our Mesquite Mine in California into full production," said Mr. Randall
Oliphant, Chairman, Western Goldfields. "In the third quarter, we completed a
major milestone with the release of the feasibility study that we had
commenced in March. The study confirmed the excellent potential of this unique
gold mining opportunity - a fully permitted, multi-million ounce reserve in a
politically safe location - with expected average annual production of 165,000
ounces of gold at a total cash cost of approximately $335 per ounce beginning
in April 2008."
"In October 2006, we commenced a 70,000-foot drilling program with the
goal of expanding our resources at Mesquite. We expect to receive interim
results from this drilling program before the end of 2006," said Mr. Raymond
W. Threlkeld, President and Chief Executive Officer. "We are also evaluating
three different project debt proposals. We intend to sign a financing mandate
letter by the end of November."
"We regard the Mesquite Mine as the foundation on which we can create
increasing value for the shareholders of Western Goldfields," added Mr.
Oliphant. "Western Goldfields will pursue additional precious metals
opportunities that we identify as having similarly exciting potential in our
resource industry, particularly in North America."
Financial Results
-----------------
Western Goldfields reports net loss to common shareholders for the 2006
third quarter was $1.985 million, or $0.03 per basic and diluted share from
the sale of 3,070 ounces of gold, compared with $2.484 million, or $0.06 per
basic and diluted share, for the corresponding 2005 quarter from the sale of
5,244 ounces of gold. For the respective nine-month periods, the net loss was
$8.430 million, or $0.14 per basic and diluted share in 2006 from the sale of
11,445 ounces of gold, compared with $3.882 million, or $0.10 per basic and
diluted share, in 2005 from the sale of 19,336 ounces of gold.
Liquidity and Capital Resources
-------------------------------
At September 30, 2006, the Company's cash balance was $3.156 million and
working capital was $2.865 million. This represents a significant improvement
in the Company's financial position since December 31, 2005 when it reported
cash of $52,000 and a working capital deficit of $2.515 million.
With the improvement in Western Goldfields' stock price subsequent to its
restructuring and re-financing in February 2006, the Company's liquidity has
been enhanced through the conversion of warrants and the exercise of stock
options. In the period up to September 30, 2006, warrants to purchase
5,123,738 shares of common stock were exercised for proceeds to the Company of
$4.986 million. In addition, 500,000 preferred share warrants were exercised
to purchase 1,562,500 shares of common stock for proceeds to the Company of
$300,000. The funds are being used to finance expansion plans at the Mesquite
Mine in accordance with the August 2006 feasibility study. During the period
from October 1 to October 31, 2006, the Company received a further
$4.631 million on the exercise of 4,631,162 warrants and $66,000 on the
exercise of 135,000 options.
Western Goldfields is currently evaluating three different proposals for
project debt financing for the expansion of the Mesquite Mine. The Company
intends to sign a mandate letter in November 2006.
On November 6, 2006, Western Goldfields announced the U.S. Securities and
Exchange Commission had declared effective the Company's Form S-3 Registration
Statement as filed on October 5, 2006. The Company also had filed a short-form
shelf prospectus under the multijurisdictional disclosure system in each of
the provinces of Canada, except Quebec. The Company may now issue securities
in the United States and Canada from time to time through one or more methods
of distribution and may raise up to $100 million under this Registration
Statement.
Further Information
-------------------
For further information about the financial results of the Company, see
the unaudited interim financial statements of the Company for the three and
nine months ended September 30, 2006 and the related management's discussion
and analysis, which have been filed on Form 10-QSB with the U.S. Securities
and Exchange Commission and the applicable Canadian securities regulatory
authorities and are available under the profile of the Company on EDGAR and
SEDAR.
Western Goldfields, Inc.
------------------------
Under a new, highly experienced, and dynamic management team, Western
Goldfields is a gold producer focused on completing the expansion of its
Mesquite Mine, located in Imperial County, California, and returning the mine
to full production. Western Goldfields acquired the Mesquite property in 2003
from Newmont Mining Corporation. Newmont operated the mine until 2001 when it
ceased operations, as the low gold prices at that time did not support
expansion plans. However, Newmont continued the permitting process for
expansion, and the permits were approved in 2002. Western Goldfields has
continued producing gold from ore placed on heaps by the previous owners, and
expects gold production in 2006 to be about 14,000 ounces.
Western Goldfields, Inc. is listed on the Toronto Stock Exchange and
trades under the symbol WGI. The Company currently has 74,954,632 common
shares issued and outstanding and 110,911,372 shares of common stock on a
fully diluted basis. For further details, please visit
www.westerngoldfields.com.
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 legislation. Such
forward-looking statements are identified by words such as "intends",
"anticipates", "believes", "expects", and "hopes" and include, without
limitation, statements regarding the Company's plan of business operations,
timing and costs to recommence commercial production, economic viability of
the Mesquite Mine, financing options, including entering into a debt financing
arrangement, and the consequences thereof, potential contractual arrangements,
receipt of working capital, anticipated revenues, exercise of outstanding
warrants, and capital and operating expenditures. 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, those set forth in
the Company's Annual Report on Form 10-KSB for the year ended December 31,
2005 filed with the U.S. Securities and Exchange Commission, under the
caption, "Risk Factors". 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
regulation, 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
September 30, December 31,
2006 2005
-------------- --------------
(Unaudited) (Audited)
Restated
ASSETS
CURRENT ASSETS
Cash $ 3,156,345 $ 52,387
Receivables 151,760 10,179
Inventories 485,412 905,347
Prepaid expenses 273,332 308,363
-------------- --------------
TOTAL CURRENT ASSETS 4,066,849 1,276,276
-------------- --------------
Property, plant, and equipment,
net of accumulated depreciation 4,517,421 4,860,434
Construction in progress - 10,853
Investments - remediation and reclamation 6,398,913 6,248,220
Long-term deposits 326,588 319,286
Long-term prepaid expenses 1,047,467 1,161,204
-------------- --------------
TOTAL OTHER ASSETS 12,290,389 12,599,997
-------------- --------------
TOTAL ASSETS $ 16,357,238 $ 13,876,273
-------------- --------------
-------------- --------------
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 367,767 $ 807,009
Accounts payable to related party 33,694 -
Accrued expenses 801,033 650,071
Dividends payable on preferred stock - 34,375
Accrued expenses - related party - 45,834
Loan payable - Romarco - 705,186
Accrued interest - 48,696
Loan payable, current portion - 1,500,000
-------------- --------------
TOTAL CURRENT LIABILITIES 1,202,494 3,791,171
-------------- --------------
LONG-TERM LIABILITIES
Reclamation and remediation liabilities 4,852,289 6,196,570
-------------- --------------
TOTAL LIABILITIES 6,054,783 9,987,741
-------------- --------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value,
25,000,000 shares authorized;
nil and 1,000,000 shares issued
and outstanding, respectively - 10,000
Common stock, $0.01 par value,
500,000,000 shares authorized;
69,554,289 and 39,468,051 shares
issued and outstanding, respectively 695,543 394,681
Additional paid-in capital 22,816,127 10,444,652
Additional paid-in capital preferred - 2,175,000
Value of shares to be issued 547,200 -
Stock options and warrants 8,748,953 4,942,188
Accumulated deficit (22,508,165) (14,077,989)
Accumulated other comprehensive income 2,797 -
-------------- --------------
TOTAL STOCKHOLDERS' EQUITY 10,302,455 3,888,532
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 16,357,238 $ 13,876,273
-------------- --------------
-------------- --------------
WESTERN GOLDFIELDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Restated Restated
REVENUES
Revenues from
gold sales $ 1,897,155 $ 2,153,160 $ 6,776,098 $ 7,851,647
------------ ------------ ------------ ------------
COST OF GOODS SOLD
Mine operating costs 1,680,398 1,599,709 5,551,901 4,761,649
Mine site
administration 429,848 376,097 1,106,443 1,079,553
Selling,
transportation,
and refining 10,681 8,423 27,557 28,712
Depreciation,
amortization and
accretion 342,248 290,931 989,492 954,678
Royalties 72,475 97,677 255,718 700,654
Reclamation cost
recovery (1,459,859) - (1,459,859) -
Inventory adjustment 118,227 27,764 430,437 791,263
------------ ------------ ------------ ------------
1,194,018 2,400,601 6,901,689 8,316,509
------------ ------------ ------------ ------------
GROSS PROFIT (LOSS) 703,137 (247,441) (125,591) (464,862)
------------ ------------ ------------ ------------
EXPENSES
General and
administrative 1,102,603 281,531 3,278,207 1,169,958
Stock based
compensation 868,208 186,155 2,638,364 386,016
Severance costs
payable in
common shares 547,200 - 547,200 -
Exploration -
Mesquite 171,894 - 748,193 -
Exploration - Other 79,210 26,424 214,128 143,222
------------ ------------ ------------ ------------
2,769,115 494,110 7,426,092 1,699,196
------------ ------------ ------------ ------------
OPERATING LOSS (2,065,978) (741,551) (7,551,683) (2,164,058)
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Expenses of Romarco
merger termination - - (1,225,000) -
Interest income 88,839 40,150 267,453 133,263
Interest expense - (82,814) (20,434) (177,107)
Gain on extinguishment
of debt - - 142,949 -
Loss on foreign
exchange (7,645) - (7,645) -
(Loss) gain on sale
of assets - - (18,837) 26,334
------------ ------------ ------------ ------------
81,194 (42,664) (861,514) (17,510)
------------ ------------ ------------ ------------
LOSS BEFORE INCOME
TAXES (1,984,784) (784,215) (8,413,197) (2,181,568)
INCOME TAXES - - - -
------------ ------------ ------------ ------------
NET LOSS (1,984,784) (784,215) (8,413,197) (2,181,568)
PREFERRED STOCK
DIVIDENDS AND
DEEMED DIVIDENDS - (1,700,000) (16,979) (1,700,000)
------------ ------------ ------------ ------------
NET LOSS TO COMMON
STOCKHOLDERS (1,984,784) (2,484,215) (8,430,176) (3,881,568)
OTHER COMPREHENSIVE
INCOME
Foreign currency
translation
adjustment 6,610 - 2,797 -
Forward sales
derivative mark-
to-market - 60,934 - 445,547
------------ ------------ ------------ ------------
NET COMPREHENSIVE
LOSS $(1,978,174) $ (723,281) $(8,410,400) $(1,736,021)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
BASIC AND DILUTED NET
LOSS PER SHARE $ (0.03) $ (0.06) $ (0.14) $ (0.10)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 68,009,489 38,891,809 60,063,849 38,836,700
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
WESTERN GOLDFIELDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
2006 2005
-------------- --------------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (8,413,197) $ (2,181,568)
Adjustments to reconcile net loss
to net cash provided (used)
by operating activities:
Depreciation 807,099 743,170
Amortization of loan fees - 198,632
Accretion expense 185,273 -
Reclamation cost recovery (1,459,859)
Reclamation costs incurred (69,695) -
(Gain) loss on sale of assets
and investments 18,836 (26,334)
Interest accrued on investments -
reclamation and remediation (150,693) (121,208)
Common stock issued for exploration
assets and services 136,500 -
Common stock issuable in respect
of severance agreements 547,200 -
Stock based compensation 2,638,364 386,016
Warrants issued for services
of consultant 233,000 -
Cost of extending expiry date of warrants - 5,333
Changes in assets and liabilities:
Decrease (increase) in:
Accounts receivable (141,581) (11,562)
Inventories 419,935 727,449
Prepaid expenses 148,768 289,993
Long term deposits (7,302) (3,048)
Increase (decrease) in:
Accounts payable (436,445) 137,108
Accounts payable - related parties 33,694
Accrued expenses 150,962 (176,521)
Accrued expenses - related parties (45,835) (13,718)
Accrued interest expense (48,695) 14,688
-------------- --------------
Net cash provided (used) by
operating activities (5,453,671) (31,570)
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property & equipment,
including Construction in Progress (472,069) (10,853)
Proceeds from sale of investments - 47,734
-------------- --------------
Net cash provided (used) by investing
activities (472,069) 36,881
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on loan (2,205,186) (1,500,000)
Common stock issued for cash 4,012,000 -
Warrants issued for cash 1,988,000 -
Exercise of warrants to purchase
common stock 5,286,238 -
Preferred stock dividends (51,354) -
-------------- --------------
Net cash provided (used) by
financing activities 9,029,698 (1,500,000)
-------------- --------------
Change in cash 3,103,958 (1,494,689)
Cash, beginning of period 52,387 1,534,778
-------------- --------------
Cash, end of period $ 3,156,345 $ 40,089
-------------- --------------
-------------- --------------
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ 69,130 $ 162,419
-------------- --------------
-------------- --------------
Taxes paid $ - $ -
-------------- --------------
-------------- --------------
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Stock options and warrants
issued for services $ 2,638,364 $ 391,349
Exploration fees and assets paid
by issuance of stock $ 136,500 $ -
>>
%SEDAR: 00021587E %CIK: 0001208038
/For further information: please visit www.westerngoldfields.com, or
contact: Brian Penny, Chief Financial Officer, (416) 324-6002,
bpenny(at)westerngoldfields.com; Julie Taylor Pantziris, Director, Regulatory
Affairs and Investor Relations, (416) 324-6015, jtaylor(at)westerngoldfields.com;
Richard Wertheim, Investor and Media Relations, Wertheim + Company Inc., (416)
594-1600, wertheim(at)wertheim.ca/
(WGDF WGI.)
CO: Western Goldfields, Inc.
CNW 16:24e 14-NOV-06
