TORONTO, May 6 /PRNewswire-FirstCall/ -- Western Goldfields Inc.
(TSX:WGI, AMEX:WGW) - today announced financial results for the
three months ended March 31, 2008. The Company's financial
statements were prepared in accordance with accounting principles
generally accepted in the United States ("U.S. GAAP"). All dollar
amounts are stated in U.S. dollars unless otherwise indicated.
During the first quarter: - 9,960 ounces of gold were sold; - The
expanded leach pad, activated in late 2007, became operational; -
The process plant upgrade was completed; - New carbon columns for
the processing circuit were installed and were brought on line
April 25, 2008. "During the first quarter of 2008, we had 9,146
ounces of gold production from newly mined ore," reported Raymond
Threlkeld, President and Chief Executive Officer. "We also
substantially completed the remaining aspects of our capital
program at the Mesquite Mine." Financial Results -----------------
Western Goldfields incurred a net loss to common shareholders for
the three month period ended March 31, 2008 of $19.6 million, or
$0.14 per share. This compares to a loss of $2.6 million, or $0.03
per share for the three month period ended March 31, 2007. The net
loss includes a non-cash pre-tax loss of $24.1 million 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. Results
for 2008, as compared with 2007, show an increase in gold sold to
9,960 ounces from 1,875 ounces. The average selling price per ounce
rose to $929 in the first quarter of 2008 from $658 in the first
quarter of 2007. Liquidity and Capital Resources
------------------------------- At March 31, 2008 our cash balance
was $32.8 million, our restricted cash was $7.5 million, and our
working capital was $39.9 million. In addition, the Company had
unutilized credit facilities of $20.7 million of which $3.0 million
was available for the Mesquite Expansion project and $17.7 million
was available for general corporate purposes. Mesquite Mine
Production ------------------------ The Mesquite Mine, in its first
quarter of production placed 1.3 million tons of ore on the leach
pad at an average grade of 0.0165 ounces of gold per ton. Waste
mining production for the quarter was 11.0 million tons. Total
recoverable ounces placed on the leach pad in the first quarter
were 15,661 ounces of gold. First Quarter 2008 First Quarter 2007
Change ------------------ ------------------ ------ Tons Mined
Grade Tons Mined Grade Tons Mined Grade ---------- ----- ----------
----- ---------- ----- Ore Mined 1,268,736 0.0165 -- -- 1,268,736
0.0165 Waste Mined 11,042,050 -- -- -- 11,042,050 -- ----------
---------- ---------- TOTAL 12,310,786 -- 12,310,786 ----------
---------- ---------- ---------- ---------- ---------- Gold poured
during the quarter was 9,146 ounces and gold sold was 9,960 ounces
at an average selling price of $929 per ounce and cost of sales of
$939 per ounce of gold(1). Gold sales were at the low end of the
Company's projection in March 2008 of 10,000-13,000 ounces due to
the slower than expected production of gold bullion resulting in
higher than planned inventories in the heap leach pad. Operating
costs were negatively impacted by higher tire costs during the
first quarter due to performance related issues. Subsequent to the
end of the quarter the Company has been successful in procuring
Belshina tires for the haul trucks which to date perform better,
last longer and result in improved tire costs. Mesquite Capital
Expenditures ----------------------------- During the first
quarter, the remaining aspects of our capital program were
substantially completed. The retrofit of the process plant was
completed, and new carbon columns for the processing circuit were
also installed during the quarter and were brought on line April
25, 2008. Good progress was also made in construction of the new
truck repair shop and warehouse and mine administrative offices,
which will be completed during the second quarter. Our latest
forecast for spending on the mine expansion capital program is
$110.1 million, of which $95.9 million was incurred in 2006 and
2007 and $7.8 million was incurred in the first quarter of 2008,
with the remainder of $6.4 million to be spent during the second
quarter of 2008. In addition to the expansion capital, $1.3 million
was spent during the first quarter, of which approximately 50% was
spent on development drilling. Planned spending for the balance of
the year is $3.5 million primarily for a front-end loader which
will be delivered during the third quarter. This additional loading
unit will provide the ability to maintain production levels now
that the additional fourth crew has been mobilized. 2008 Outlook
------------ Mesquite is expected to produce between 20,000-30,000
ounces of gold in the second quarter. The decrease in production as
compared with prior estimates is related to the timing of leaching
and gold tied up in solution as pad inventory. Ounces placed on the
heap leach pad are above budget, but the timing and amount of
solution going to the carbon columns for gold recovery has not
reached anticipated levels. Now that the new process facility is
operating, solution flow has more than doubled and will allow more
gold in solution to be processed from the heap leach pad. Fuel
prices have risen steadily since late December 2007. Our initial
cost model for 2008 was $2.75 per gallon for off-road diesel fuel.
Fuel not only affects the direct mining costs as consumed by our
trucks and shovels, but also affects the cost of delivered
consumables, such as explosives and lime. Our current forecasts
assume a cost of $3.55 per gallon, which is consistent with both
current spot and forward prices for diesel. Given the slower leach
recovery and the increase in consumable costs, mainly of diesel
fuel, gold production for 2008 is projected to be 135,000-145,000
ounces, a decrease from the 155,000-165,000 ounces previously
estimated. Cost of sales for 2008 is expected to average between
$470-$490 per ounce of gold(1), up $60 per ounce from previous
estimates of $410-$430 per ounce(1). Going forward, 2009 gold
production is expected to be 135,000-145,000 ounces of gold
production at a cost of sales of $430-$450 per ounce(1). Average
annual gold production for the period 2010-2015 is expected to grow
to 160,000-170,000 ounces of gold at an average cost of sales of
$390-$410 per ounce(1). (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. Western Goldfields common shares trade on the
Toronto Stock Exchange under the symbol WGI, and on the American
Stock Exchange under the symbol WGW. For further details, please
visit http://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",
"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. 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, 2007 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 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) March 31, December 31,
2008 2007 ------------- ------------- (Unaudited) (Audited) ASSETS
CURRENT ASSETS Cash and cash equivalent $ 32,829 $ 43,870
Restricted cash 7,500 7,500 Receivables 220 298 Inventories 17,242
11,201 Prepaid expenses 845 887 Current portion of deferred income
tax asset 2,458 755 ------------- ------------- TOTAL CURRENT
ASSETS 61,094 64,512 ------------- ------------- Property, plant,
and equipment, net of accumulated amortization 94,981 77,951
Construction in progress 12,082 21,864 Investments - reclamation
and remediation 8,723 8,661 Long-term deposits 352 348 Long-term
prepaid expenses 1,512 1,555 Deferred debt issuance costs, net of
accumulated amortization 3,112 3,227 Deferred income tax asset
44,507 36,379 ------------- ------------- TOTAL OTHER ASSETS
165,269 149,984 ------------- ------------- TOTAL ASSETS $ 226,363
$ 214,495 ------------- ------------- ------------- -------------
LIABILITIES & STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts
payable and accrued liabilities $ 7,274 $ 8,781 Current portion of
mark-to-market loss on gold hedging contracts 6,303 1,935 Current
portion of loan payable 7,589 6,882 ------------- -------------
TOTAL CURRENT LIABILITIES 21,166 17,598 ------------- -------------
LONG-TERM LIABILITIES Mark-to-market loss on gold hedging contracts
76,710 56,966 Loan payable 76,734 69,581 Reclamation and
remediation liabilities 5,148 5,061 ------------- -------------
TOTAL LIABILITIES 179,758 149,206 ------------- -------------
COMMITMENTS AND CONTINGENCIES - - STOCKHOLDERS' EQUITY Common
stock, of no par value, unlimited shares authorized; 136,234,196
and 135,049,685 shares issued and outstanding,respectively 134,596
133,725 Stock options and warrants 7,620 7,551 Accumulated deficit
(95,611) (75,987) Accumulated other comprehensive income - -
------------- ------------- TOTAL STOCKHOLDERS' EQUITY 46,605
65,290 ------------- ------------- TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 226,363 $ 214,495 -------------
------------- ------------- ------------- WESTERN GOLDFIELDS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In
thousands U.S. dollars) (Unaudited) Three Months Ended March 31,
---------------------------- 2008 2007 ------------- -------------
REVENUES Revenues from gold sales $ 9,256 $ 1,233 COST OF GOODS
SOLD Mine operating costs 9,087 2,209 Amortization and accretion
2,094 375 Royalties 265 45 ------------- ------------- 11,446 2,629
------------- ------------- GROSS LOSS (2,190) (1,396)
------------- ------------- EXPENSES General and administrative
1,111 1,085 Stock based compensation 370 468 Exploration 224 283
------------- ------------- 1,704 1,836 ------------- -------------
OPERATING LOSS (3,894) (3,232) ------------- ------------- OTHER
INCOME (EXPENSE) Interest income 384 518 Interest expense and
commitment fees (699) - Amortization of deferred debt issuance
costs (115) - Unrealized loss on mark-to-market of gold forward
sales contracts (24,112) - Loss on foreign currency exchange
(1,020) 81 ------------- ------------- (25,563) 598 -------------
------------- LOSS BEFORE INCOME TAXES (29,456) (2,634) INCOME TAX
RECOVERY (9,832) - ------------- ------------- NET LOSS TO COMMON
STOCKHOLDERS (19,624) (2,634) OTHER COMPREHENSIVE INCOME Foreign
currency translation adjustment - (5,257) -------------
------------- NET COMPREHENSIVE LOSS $ (19,624) $ (7,891)
------------- ------------- ------------- ------------- BASIC AND
DILUTED NET LOSS PER SHARE $ (0.14) $ (0.03) -------------
------------- ------------- ------------- WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 135,659,101 102,882,801 -------------
------------- ------------- ------------- WESTERN GOLDFIELDS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands U.S. dollars)
(Unaudited) Three Months Ended March 31,
---------------------------- 2008 2007 ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (19,624) $ (2,634)
Adjustments to reconcile net loss to net cash provided (used) by
operating activities: Items not affecting cash: Amortization of
property, plant and equipment 2,013 295 Amortization of deferred
debt issuance costs 115 - Accretion expense 87 84 Deferred income
taxes (9,832) - Interest net of reimbursed costs - reclamation and
remediation (63) (84) Stock based compensation 370 468
Mark-to-market loss on gold hedging contracts 24,112 - Changes in
assets and liabilities: Decrease (increase) in: Accounts receivable
78 (98) Inventories (6,041) (71) Prepaid expenses and deposits 86
(178) Long term deposits (3) (3) Increase (decrease) in: Accounts
payable (1,339) (801) Payroll and related taxes payable (1,562) -
Accrued expenses 1,051 683 Accrued interest expense (171) -
-------------- ------------- Net cash provided (used) by operating
activities (10,723) (2,338) -------------- ------------- CASH FLOWS
FROM INVESTING ACTIVITIES Purchase of property & equipment,
including construction in progress (8,749) (5,715) --------------
------------- Net cash provided (used) by investing activities
(8,749) (5,715) -------------- ------------- CASH FLOWS FROM
FINANCING ACTIVITIES Term loan advances 7,860 - Deferred debt
issuance costs - (18) Common stock issued for cash - 59,190
Exercise of options to purchase common stock 233 145 Exercise of
warrants to purchase common stock 337 379 --------------
------------- Net cash provided by financing activities 8,430
59,697 -------------- ------------- Change in cash (11,041) 51,644
Cash and cash equivalents, beginning of period 43,870 5,503
-------------- ------------- Cash and cash equivalents, end of
period $ 32,829 $ 57,147 -------------- -------------
-------------- ------------- SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid (received), net $ 413 $ - --------------
------------- -------------- ------------- NON-CASH FINANCING AND
INVESTING ACTIVITIES: Stock, options and warrants issued for
services $ 370 $ 468 Equipment purchases included in accounts
payable $ 513 $ - Deferred debt issuance costs included in accrued
expenses $ - $ 312 DATASOURCE: Western Goldfields Inc. CONTACT:
please visit http://www.westerngoldfields.com/, or contact: Raymond
Threlkeld, President and Chief Executive Officer, (416) 324-6005, ;
Brian Penny, Chief Financial Officer, (416) 324-6002, ; Julie
Taylor Pantziris, Director, Regulatory Affairs and Investor
Relations, (416) 324-6015,
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