Attention Business/Financial Editors:
Western Goldfields Announces First Quarter Results
- All first-quarter milestones met in bringing Mesquite Mine into
production
- Mine fleet deliveries have already begun, and pre-stripping is
expected to commence by June 2007
- First ore to the pad expected by January 2008
- Full production expected by April 2008
TORONTO, May 2 /CNW/ - Western Goldfields, Inc. (TSX:WGI, OTC BB:WGDF.OB)
today announced financial results for the three-month period ended March 31,
2007. The Company's financial statements were prepared in accordance with
accounting principles generally accepted in the United States (US GAAP).
Dollar amounts are stated in U.S. dollars unless otherwise stated.
"Western Goldfields made significant progress in the first three months
of 2007 toward bringing the Mesquite Mine into full production," reported
Mr.�Randall Oliphant, Chairman. "We have met all of our first-quarter
milestones and full production is expected to be less than one year away.
Everything is now in place to make Mesquite a successful producing mine and to
establish a platform for the growth of Western Goldfields."
"The first deliveries of our mine fleet have arrived at the Mesquite
Mine," said Mr. Raymond Threlkeld, President and Chief Executive Officer. "Our
pre-stripping is expected to commence in June, and we expect to see the first
ore to the pad by January 2008. We are planning for full production of
165,000�ounces of gold annually by April 2008."
"With the results of our drilling program which was commenced in
September 2006, we were able to increase reserve and resource estimates at the
Mesquite Mine, adding approximately two years to the initial 9-1/2 year
project life," continued Mr. Threlkeld. "We are presently exploring ways to
increase annual production with our current planned mining fleet."
In the first quarter of 2007, the Company completed a common share equity
financing, which provided the Company with net proceeds of $59.2 million. On
March 30, 2007, the Company entered into a new term loan facility with
Investec Bank (UK) Limited under which the Company will be able to borrow up
to $105 million. The availability of funds under the term loan facility is
subject to certain conditions, including entering into an acceptable gold
hedging program for approximately 450,000 ounces, the resolution of certain
ancillary agreements and the delivery of the usual and customary documents,
opinions and certificates. The Company plans to draw $85 million under this
term loan facility for the development of the Mesquite Mine. The balance will
be available for other corporate purposes until late 2009. This agreement,
together with the first quarter equity financing, completes the financing
requirements for the development of the Mesquite Mine.
In March, the Company announced increases to its reserve and resource
estimates. Proven and Probable reserves increased to 2.77 million ounces of
gold from 2.36 million ounces announced in August 2006, which represents an
increase of 17%. Measured and Indicated resources (inclusive of mineral
reserves) increased to 3.87 million ounces of gold from the previously
announced 3.61 million ounces. Based on these results, the Company has
increased the life of the Mesquite Mine by approximately two years.
Also in March, the Company announced that its Board of Directors had
approved a plan to reorganize the Company's corporate structure so that its
place of incorporation will effectively be changed from Idaho, USA to Ontario,
Canada, subject to approval by the Company's shareholders at its annual
meeting. This strategy will enable the Company to more quickly complete
Corporate transactions requiring shareholder approval. The Company's Board of
Directors considers this an appropriate strategy in view of the pre-eminence
of The Toronto Stock Exchange for mining company listings as well as the fact
that, as at April 25, 2007, 55% of the Company's shares were registered
outside of the United States.
Mesquite Mine Development
-------------------------
The Company has made purchase commitments of $70.6 million for its mining
fleet and related equipment for the development of the Mesquite Mine. As of
March 31, 2007, equipment totaling $4.1 million was delivered to the site. In
addition, the Company has planned capital spending of approximately
$36.9�million in 2007 on other aspects of the mine expansion program, of which
$4.4 million has been spent as at the end of the first quarter of 2007.
Since the end of the first quarter of 2007, Western Goldfields has been
quickly ramping up the construction activities at the Mesquite Mine.
Highlights include:
- The leach pad expansion contract has been awarded to N.A. Degerstrom,
Inc. including ordering all pad liner material;
- The first O&K RH340 shovel has arrived in Los Angeles with shipping
to the site planned for the first week of May;
- Delivery of the mine haul trucks remains on schedule in support of
commencement of pre-stripping in June 2007;
- Despite a global shortage of mining truck tires, Mesquite Mine has a
full inventory of tires for the initial fleet and is accepting
delivery of additional tires to establish a tire inventory;
- The new mine truck shop building has been ordered;
- Certain site reclamation activities have been completed including the
rinsing of the Vista heap leach pad and removal and salvage of
redundant facilities; and
- All planned senior mine staff positions have been filled.
Western Goldfields has evaluated its pre-production capital spending
program, with a particular emphasis on operating costs and compliance with
California emissions standards. Our latest forecast for pre-production
spending is $108.5 million, which reflects our decision to accelerate the
acquisition of three haul trucks that were originally included in our 2008
production phase capital program and $1.6 million of additional development
drilling. With the acceleration of the purchase of the three haul trucks,
life-of-mine capital expenditures remain in line with previous estimates.
Financial Results
-----------------
Western Goldfields reports net loss to common shareholders for the first
quarter of 2007 of $2.6 million, or $0.03 per basic and diluted share from the
sale of 1,875 ounces of gold, compared with a loss of $3.8 million, or
$0.08�per basic and diluted share, for the corresponding 2006 quarter from the
sale of 5,000 ounces of gold.
Liquidity and Capital Resources
-------------------------------
At March 31, 2007, the Company's cash balance was $57.1 million and
working capital was $56.4 million. This represents a significant improvement
in the Company's financial position since December 31, 2006 when it reported
cash of $5.5 million and working capital $4.6 million. The improved liquidity
is due primarily to the equity offering of common shares in the first quarter
of 2007 which raised net proceeds of $59.2 million. Liquidity was also
improved through the conversion of warrants and the exercise of stock options
for proceeds of $0.5 million.
Western Goldfields, Inc.
------------------------
Western Goldfields is a gold producer focused on completing the expansion
of its wholly-owned Mesquite Mine, located in Imperial County, California, and
returning the mine to full production. The Mesquite Mine is the only
multi-million ounce U.S. reserve not controlled by a major gold company. The
Company is estimating average annual production of 165,000 ounces of gold from
the mine at a total cost of sales of approximately $335 per ounce by April
2008. The estimated project life of the mine is 11-1/2 years. Western
Goldfields is listed on the Toronto Stock Exchange and trades under the symbol
WGI, and is quoted on the OTCBB under the symbol WGDF.OB. For further details
regarding the Company, please visit www.westerngoldfields.com.
Further Information
-------------------
For further information about the financial results of the Company, see
the unaudited interim financial statements of the Company for the three months
ended March 31, 2007 and the related management's discussion and analysis,
which will be filed on Form 10-QSB with the U.S. Securities and Exchange
Commission and the applicable Canadian securities regulatory authorities and
will be available under the profile of the Company on EDGAR and SEDAR.
This announcement does not constitute an offer of any securities for
sale, or an offer or invitation to purchase any securities. In connection with
the proposed reorganization, a registration statement on form S-4 has been
filed with the Securities and Exchange Commission ("SEC") containing a form of
proxy statement/prospectus. Investors and security holders are urged to
carefully read the proxy statement/prospectus regarding the proposed
reorganization when it is finalized, because it will contain important
information. Investors and security holders may obtain a free copy of the
proxy statement/prospectus and other documents containing information about
the Company and the proposed reorganization, without charge, at the SEC's web
site at www.sec.gov. Copies of the proxy statement/prospectus and the SEC
filings that are incorporated by reference in the proxy statement/prospectus
may also be obtained for free by directing a request to: Western Goldfields,
Inc., 2 Bloor Street West, Suite 2102, P.O. Box 110, Toronto, Ontario, Canada
M4W 3E2, Attention: Julie Taylor, telephone: (416) 324-6000.
The Company and its directors, executive officers and other members of
its management and employees may be deemed to be participants in the
solicitation of proxies from the Company's shareholders in connection with the
proposed reorganization. Information concerning the Company's participants in
the solicitation is set forth in the Company's proxy statements and annual
reports on Form 10-KSB, filed with SEC, and in the aforementioned proxy
statement/prospectus relating to the reorganization.
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", "plans" 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, production and cost estimates, 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, 2006 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.
Cautionary Note to U.S. Investors Concerning Estimates of Measured,
Indicated and Inferred Resources
--------------------------------
This press release uses the terms "measured", "indicated" and/or
"inferred" mineral resources. United States investors are advised that while
such terms are recognized by Canadian regulations, the United States
Securities and Exchange Commission does not recognize them. United States
investors are cautioned not to assume that all or any part of mineral
resources will ever be converted into mineral reserves. Inferred mineral
resources have a great amount of uncertainty as to their existence, and as to
their economic and legal feasibility. It cannot be assumed that all or any
part of an inferred mineral resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of inferred mineral resources may
not form the basis of feasibility or other economic studies. United States
investors are cautioned not to assume that all or any part of an inferred
mineral resource exists, or is economically or legally mineable.
WESTERN GOLDFIELDS, INC.
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2007 2006
------------- -------------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash $ 57,146,615 $ 5,502,535
Receivables 321,499 223,507
Inventories 582,960 511,663
Prepaid expenses 1,057,351 841,636
------------- -------------
TOTAL CURRENT ASSETS 59,108,424 7,079,341
------------- -------------
Property, plant, and equipment, net of
accumulated amortization and depreciation 4,171,445 4,328,512
Construction in progress 8,458,006 2,880,775
Investments - remediation and reclamation 6,272,215 6,337,006
Long-term deposits 332,433 329,146
Long-term prepaid expenses 971,643 1,009,555
Deferred stock offering / debt
issuance costs 579,557 250,000
------------- -------------
TOTAL OTHER ASSETS 20,785,298 15,134,994
------------- -------------
TOTAL ASSETS $ 79,893,722 $ 22,214,335
------------- -------------
------------- -------------
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 878,226 $ 1,663,080
Accounts payable to related party 20,249 31,165
Accrued expenses 1,830,923 835,740
Accrued expenses - related party - -
Accrued interest - -
Loan payable, current portion - -
------------- -------------
TOTAL CURRENT LIABILITIES 2,729,398 2,529,985
------------- -------------
LONG-TERM LIABILITIES
Reclamation and remediation liabilities 4,741,351 4,805,473
------------- -------------
TOTAL LIABILITIES 7,470,749 7,335,458
------------- -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value,
25,000,000 shares authorized - -
Common stock, $0.01 par value,
500,000,000 shares authorized;
113,001,648 and 78,452,876 shares issued
and outstanding, respectively 1,130,017 784,529
Additional paid-in capital 91,729,025 32,100,269
Stock options and warrants 7,883,188 7,674,270
Accumulated deficit (28,312,042) (25,678,233)
Accumulated other comprehensive income (7,215) (1,958)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 72,422,973 14,878,877
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 79,893,722 $ 22,214,335
------------- -------------
------------- -------------
WESTERN GOLDFIELDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Three Months Ended March 31,
------------- -------------
2007 2006
------------- -------------
REVENUES
Revenues from gold sales $ 1,232,804 $ 2,774,628
------------- -------------
COST OF GOODS SOLD
Mine operating costs 1,907,078 1,979,167
Mine site administration 430,899 327,782
Selling, transportation, and refining 5,375 9,342
Amortization and accretion 375,108 312,214
Royalties 44,937 102,860
Inventory adjustment (134,661) 302,968
------------- -------------
2,628,736 3,034,333
------------- -------------
GROSS PROFIT (LOSS) (1,395,932) (259,705)
------------- -------------
EXPENSES
General and administrative 1,084,732 1,069,952
Stock based compensation 468,166 1,039,925
Exploration 283,332 438,957
------------- -------------
1,836,230 2,548,834
------------- -------------
OPERATING LOSS (3,232,162) (2,808,539)
------------- -------------
OTHER INCOME (EXPENSE)
Expenses of Romarco merger termination - (1,225,000)
Interest income 517,503 92,247
Interest expense - (20,434)
Gain on extinguishment of debt - 142,949
(Loss) gain on foreign exchange 80,850 -
------------- -------------
598,353 (1,010,238)
------------- -------------
LOSS BEFORE INCOME TAXES (2,633,809) (3,818,777)
INCOME TAXES - -
------------- -------------
NET LOSS (2,633,809) (3,818,777)
PREFERRED STOCK DIVIDENDS AND DEEMED DIVIDENDS - (12,500)
------------- -------------
NET LOSS TO COMMON STOCKHOLDERS (2,633,809) (3,831,277)
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment (5,257) 509
------------- -------------
NET COMPREHENSIVE LOSS $ (2,639,066) $ (3,818,268)
------------- -------------
------------- -------------
BASIC AND DILUTED NET LOSS PER SHARE $ (0.03) $ (0.08)
------------- -------------
------------- -------------
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 102,882,801 49,729,533
------------- -------------
------------- -------------
WESTERN GOLDFIELDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
------------- -------------
2007 2006
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,633,809) $ (3,818,777)
Adjustments to reconcile net loss to
net cash provided (used) by operating
activities:
Amortization and depreciation 294,736 255,509
Accretion expense 84,294 58,867
Interest on investments - reclamation
and remediation (83,625) (83,947)
Common stock issued for exploration
assets and services - 136,500
Stock based compensation 468,166 1,272,925
Changes in assets and liabilities:
Decrease (increase) in:
Accounts receivable (97,992) (3,551)
Inventories (71,296) 273,359
Prepaid expenses (177,803) 53,433
Deferred stock offering / debt
issue costs (329,557) -
Long term deposits (3,286) (2,487)
Increase (decrease) in:
Accounts payable (790,111) 182,700
Accounts payable - related parties (10,916) -
Accrued expenses 995,182 106,794
Accrued expenses - related parties - (45,834)
Accrued interest expense - (48,695)
------------- -------------
Net cash provided (used) by
operating activities (2,356,017) (1,663,204)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property & equipment,
including construction in progress (5,714,900) (241,305)
------------- -------------
Net cash provided (used) by
investing activities (5,714,900) (241,305)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on loan - (2,205,186)
Common stock issued for cash 59,190,191 4,012,000
Warrants issued for cash - 1,988,000
Exercise of options to purchase
common stock 145,425 -
Exercise of warrants to purchase
common stock 379,380 -
------------- -------------
Net cash provided (used) by
financing activities 59,714,996 3,794,814
------------- -------------
Change in cash 51,644,079 1,890,305
Cash, beginning of period 5,502,535 52,387
------------- -------------
Cash, end of period $ 57,146,614 $ 1,942,692
------------- -------------
------------- -------------
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ - $ 69,130
Taxes paid $ - $ -
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Stock and warrants issued for services $ - $ 1,272,925
Exploration fees and assets paid by
issuance of stock $ - $ 136,500
For further information: www.westerngoldfields.com; Ray Threlkeld, President
and Chief Executive Officer, (416) 324-6005,
rthrelkeld@westerngoldfields.com; Brian Penny, Chief Financial Officer,
(416) 324-6002, bpenny@westerngoldfields.com; Julie Taylor Pantziris,
Director, Regulatory Affairs and Investor Relations, (416) 324-6015,
jtaylor@westerngoldfields.com
