Western Goldfields Announces Improved Mine Plan for Mesquite, Releases Third Quarter Production Results, and Revises Full-Year P
October 06 2008 - 5:41PM
PR Newswire (US)
TORONTO, Oct. 6 /PRNewswire-FirstCall/ -- Western Goldfields Inc.
("Western Goldfields" or the "Company") (TSX:WGI, NYSE
Alternext:WGW) is pleased to announce its improved mine plan and
provide an unaudited third quarter production and gold sales update
for its Mesquite Mine. - Improved mine plan expected to boost
production to approximately 700,000 ounces over the four-year
period from 2009-2012 - Gold sales of 47,534 ounces of gold
averaged $857 per ounce for the quarter - Gold production in the
third quarter totaled 42,372 ounces, compared to 28,524 ounces in
the second quarter and 9,066 in the first quarter - Shifting to new
mine plan entails lowering the 2008 full-year target to
approximately 117,000 ounces of gold sold, as increased stripping
is required to prepare for 2009-2012 - Strong financial position
with cash on hand of approximately $44 million, including $7.5
million of restricted cash; Mesquite generating positive operating
cash flow The Company today announces an improved mine plan for its
Mesquite Mine in California that it expects to increase production
to approximately 700,000 ounces of gold at average costs of
sales(1) of $420 per ounce for the four-year period from 2009-2012.
This compares to a previously planned 635,000 ounces at an average
$425-$435 cost of sales(1) per ounce during the period. "Our new
mine plan for Mesquite will allow us to increase efficiencies,
minimize haul distances and produce more gold ounces over the next
four years with a resulting increase in annual cash flow
generation," said Raymond Threlkeld, President and Chief Executive
Officer. "This will result in reduced production in the short-term,
as we focus on sequential mining of the pits, but we expect
attractive gains beginning in 2009." The Company also announced
unaudited third quarter results for production and gold sales. Gold
production in the third quarter was 42,372 ounces of gold, up from
the second quarter but below the previous estimate. "During the
quarter, we continued to improve operations since our start-up in
January," said Mr. Threlkeld. "However, we did encounter challenges
due to shovel availability." Gold sales during the quarter totaled
47,534 ounces. Gold revenues during the quarter were $857 per
ounce. "I'm excited by the launch our new mining plan," added Mr.
Threlkeld. "It allows us to maximize the potential of Mesquite, a
multi-million-ounce mine, for the benefit of our shareholders."
Benefits of the Improved Mine Plan
---------------------------------- Under the new mine plan, the
operation will focus on mining ore from the Rainbow pit starting in
2009. This compares to the previous plan in which mining moved
between the Rainbow and Big Chief pits. The Company expects to
achieve increased efficiency by consolidating equipment in one
location, including reduced mining costs due to short haulage
distances, no wasted time moving between pits, as well as operator
efficiency. The estimated mine life remains at 14 years and the
Company plans to mine its three pits sequentially through the
duration of the mine life to continue to maximize these
efficiencies. Over the duration of the new mine plan, from
2009-2012, the operation is expected to benefit from: - Higher
annual production; - Higher annual cash flow generation; and -
Total production of approximately 700,000 ounces of gold for the
four-year period from 2009-2012 at cost of sales(1) of $420 per
ounce. The production represents an increase of approximately
65,000 ounces over the four years compared to the previous plan.
Third-Quarter and Year-to-Date Production Results
------------------------------------------------- The Mesquite mine
achieved the following: - Gold sales for the quarter were 47,534
ounces - Production for the quarter was 42,372 ounces of gold,
lower than the previous forecast, mainly reflecting a delay in the
availability of replacement parts for one shovel in its mining
fleet - Gold production for the nine months ended September 30,
2008 was 79,962 ounces; gold sales were 80,255 ounces 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, compared to a previous estimate of
135,000-145,000 ounces at $470-$490 per ounce. The revised estimate
reflects the Company's focus on preparations for its enhanced
mining plan, which include increased stripping operations planned
for the fourth quarter at the Rainbow pit. The Mesquite Mine is
expected to sell approximately 37,000 ounces of gold in the fourth
quarter. Beginning in 2009, the Company expects to achieve higher
production and cash flow under its new mine plan. The outlook could
be further enhanced as it continues to focus on adding value by
pursuing the following opportunities: 1. Sulfide Resources:
Mesquite contains meaningful sulfide resources, and the Company
continues to explore cost-effective alternatives to enhance
recovery and economically justify the mining of these sulfide ores.
2. Continuous Improvement: A continuous improvement program
throughout the Mesquite operation continues in an effort to further
increase productivity. One of the options considered was conveyor
haulage, however, after completing a conveyor haulage study, the
Company has determined that the option would not achieve sufficient
annual cost efficiencies to warrant the significant upfront capital
expenditure. 3. Fleet Enhancement: The Company is currently
negotiating and anticipates deliveries of lower cost tires for its
mining fleet in the early part of 2009. 4. Increased Mining Rate:
Mesquite is continuing to negotiate with Imperial County to
increase its mining permit above the current 60 million tons per
year. Liquidity and Capital Resources
------------------------------- Western Goldfields is
well-positioned to utilize Mesquite's cash flow in combination with
the Company's strong balance sheet as a strategic platform for
disciplined growth, through the acquisition of undervalued and
overlooked assets in politically stable North America. Western
Goldfields had cash on hand at September 30, 2008 of approximately
$44 million, including $7.5 million of restricted cash. (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 4.3 million ounces in
Measured and Indicated Mineral Resources (inclusive of 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. 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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