Exhibit 99.1
News release via Canada NewsWire, Toronto 416-863-9350
Attention Business/Financial Editors:
Western Goldfields Announces Record Production, Earnings and Operating
Cash Flow in Third Quarter 2008
<<
- 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
- Net income of $30.5 million or $0.22 per share, including an
after-tax mark-to-market gain of $18.8 or $0.14 per share, in the
third quarter
- Cash flow provided from operating activities of $16.5 million in the
third quarter
- Cost of sales of $390 per ounce in the quarter below previous
guidance
- Strong financial position with cash of $45.4 million, including
$7.5 million of restricted cash, an increase of $11.4 million in the
quarter
>>
TORONTO, Nov. 4 /CNW/ - 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 $ -
>>
%CIK: 0001394186
/For further information: please visit www.westerngoldfields.com, or
contact: Raymond Threlkeld, Chief Executive Officer, (416) 324-6005,
rthrelkeld(at)westerngoldfields.com; Brian Penny, Chief Financial Officer, (416)
324-6002, bpenny(at)westerngoldfields.com; Hannes Portmann, Director, Corporate
Development and Investor Relations, (416) 324-6014,
hportmann(at)westerngoldfields.com/
(WGI. WGW)
CO: Western Goldfields Inc.
CNW 16:37e 04-NOV-08