Wesdome Gold Mines Ltd. (WDO) Earnings Call Transcript & Summary

Hello, and welcome to the Annual General Meeting of Shareholders of Wesdome Gold Mines. Please note that today's meeting is being recorded. It is now my pleasure to turn today's meeting over to Warwick Morley-Jepson, Chair of the Board of Wesdome Gold Mines. Mr. Warwick, the floor is yours.

Thank you, operator. Good morning, ladies and gentlemen. Welcome to the 2022 Wesdome Gold Mines Annual General Meeting of Shareholders. My name is Warwick Morley-Jepson, and I am the Chair of the Board of Wesdome Gold Mines, and I will preside as Chair of this Annual General Meeting of Shareholders in accordance with the company's bylaws. On the line this morning, are the other independent directors of the Board being Chuck Main, Nadine Miller, Brian Skanderbeg, Edie Thome and Bill Washington. Also joining me on the call is the seventh member of the Board, Duncan Middlemiss, President and CEO, along with the members of his executive team, Frederic Langevin, Chief Operating Officer; Scott Gilbert, Chief Financial Officer; Mike Michaud, Vice President, Exploration; Heather Laxton, Chief Governance Officer; Stacy Kimmett, Vice President, Human Resources; Lindsay Dunlop, Vice President, Investor Relations; and Joanna Miller, Vice President, Sustainability and Environment. On behalf of the Board and management of Wesdome, we wish to thank all our shareholders for their support as the company continues to navigate through challenging and unprecedented times. Health and safety are always our top priority. And for this reason, we have, once again, opted to hold the Annual General Meeting as a hybrid meeting today, and we thank you all for your understanding and patience. We greatly appreciate everyone taking time to virtually join us this morning. Today's agenda will consist of the formal business of the meeting, followed by a presentation by Duncan Middlemiss, President and CEO, and we will conclude with questions and answer period. I now call this meeting to order. I appoint Heather Laxton, Chief Governance Officer and Corporate Secretary of the company, to act as Secretary of the meeting. As this meeting is being held virtually by way of a live broadcast, I would like to ask the secretary to set out a few rules for the orderly conduct of this meeting.

Thank you, Mr. Chair, and good morning, everyone. For the purposes of the meeting today, voting on all matters will be conducted by electronic ballot. Registered shareholders and duly appointed proxy holders will be asked to vote on each business item. The polls will be open throughout the formal business of the meeting and votes can be cast using the virtual interface. Questions may be submitted by any registered shareholder or duly appointed proxy holder by selecting the Q&A icon in the top right of the virtual interface. Questions will be addressed during the Q&A period at the end of the meeting. The notice calling this Annual General Meeting of Shareholders was dated May 11, 2022, and was mailed to shareholders, along with the company's management information circular and the form of proxy on May 17, 2022. During the course of this meeting, reference may be made from time to time to matters discussed in the management information circular. If any shareholders are unclear as to the meaning of certain terms, please refer to the management information circular which is available through the virtual interface for this meeting as well as on the company's website and on SEDAR. Finally, pursuant to Section 9.10 of the bylaws of the company, quorum for the transaction of business at a meeting of shareholders is 2 individuals present in person, each being a shareholder entitled to vote at the meeting, or a duly appointed proxy or proxy holder for an absent shareholder that is entitled to vote, holding or representing in the aggregate, not less than 10% of the issued shares of the company enjoying voting rights at this meeting.

Thank you, Madam Secretary. I request that you please table and attach to the minutes of this meeting the proof of our meeting indicating that the notice of this general meeting, the management information circular and the formal proxy were properly mailed to shareholders. We will now proceed with the formal business of today's meeting. For the purpose of this meeting, I appoint the company's transfer agent, Computershare Trust Company of Canada through its representatives as scrutineer for the meeting to report on the number of shareholders present in person or by proxy for the purposes of the establishment of a quorum to tabulate the votes and to report to the secretary on the foregoing. Madam Secretary, I understand the scrutineer's preliminary report has now been provided.

Yes, it has, Mr. Chair. The scrutineer's preliminary report shows that there are present at this meeting 231 shareholders in person or represented by proxy, representing an aggregate of 102,829,083 common shares for a total representation in person and by proxy of 72.17% of the issued and outstanding common shares of the company.

Thank you, Madam Secretary. I'll ask that you please attach a copy of the scrutineer's final report on attendance to the minutes of this meeting. I now, therefore, declare that a quorum is present and that this meeting is properly constituted for the transaction of business for which it has been called. As stated in the notice of the meeting, there are 3 proposals to be voted on today, being the reappointment of Grant Thornton LLP as the independent auditors of the company for the fiscal year ending December 31, 2022; the election of the directors of the company for the ensuing year; and the advisory vote to approve the Board's approach to executive compensation. Each of the above proposals is discussed in detail in the management information circular. As mentioned by the Secretary, voting today will be conducted by way of electronic ballot. At this time, the polls will be open and will remain open throughout the formal business of the meeting. In order to expedite the formal business of the meeting, we have arranged for certain shareholders to make and second the formal motions at the appropriate time. I now place before the meeting the audited consolidated financial statements of the company for the financial year ended December 31, 2021, together with the auditor's report thereon. It is not proposed to ask shareholders to approve the financial statements, but management of the company would be pleased to answer any relevant questions concerning the financial statements following the meeting. The next item of business is the appointment of the auditors of the company for the ensuing year, and to authorize the directors of the company to fix the remuneration of the auditors. On the recommendation of the Audit Committee, the Board of Directors of the company has approved, subject to shareholder confirmation, the reappointment of Grant Thornton LLP to serve as auditor of the company until the next Annual Meeting of Shareholders and to authorize the directors to fix the auditor's remuneration. I will ask for a motion to approve these matters.

I so move.

I second the motion.

You have heard the motion as moved and seconded. Unless there are questions, I will move to the next item of business. The next item of business is the election of the directors of the company to hold office until the next Annual Meeting of Shareholders of Wesdome, or until their successors are elected or appointed. The management information circular, which was mailed to shareholders contains the names of 7 nominees. The process of voting will be on an individual basis. Shareholders can vote for or withhold from voting on the election of individual directors. The company's bylaws require advanced notice to the company of nominations of directors for election at the Annual Meeting of Shareholders of not less than 30 days prior to the date of the Annual Meeting. Since no such nominations were received by the company, only the nominees set out in the management information circular are eligible for election. For the sake of convenience, are now placing nomination for election as directors the following 7 individuals: Charles Main; Duncan Middlemiss; Nadine Miller; Warwick Morley-Jepson; Brian Skanderbeg; Edie Thome; and Bill Washington. I now request a motion that the individuals so nominated be elected directors of the company to hold office until the next Annual Meeting of Shareholders, or until the successors are elected or appointed subject to the company's articles and bylaws.

I so move.

I second the motion.

Thank you. Unless there are any questions, I will move on to the last item of business. The final matter to be dealt with is consideration of an advisory vote to support the Board's approach to executive compensation as disclosed in the company's management information circular. I will ask for a motion on a nonbinding resolution as set forth on Page 12 of the management information circular.

I so move.

I second the motion.

Thank you. Unless there are any questions, we will proceed with the final business of the meeting. As mentioned, voting today will be conducted by electronic ballot. As registered shareholders and duly appointed proxy holders who have properly logged in with their control numbers or user names and wish to vote are asked to do so now. Once the electronic ballot closes, the voting options will close and your votes will be automatically submitted. We will now pause to allow registered shareholders and duly appointed proxy holders approximately 1 more minute to complete their election ballots. During this time, there will be silence. [Voting]

Thank you, everyone, for your patience. The polls are now closed. I ask that the scrutineer please compile the report regarding the results of the voting on all business matters and deliver the reports to the Secretary of the meeting.

Mr. Chair, I have been advised by the scrutineers that the proxies deposited for the meeting have been voted in favor of each of the resolutions as follows: the appointment of Grant Thornton LLP, as the auditors of the company, has been approved, and the Board of Directors of the company has been authorized to fix their remuneration. Each of the 7 nominees have been elected as directors of the company to serve until the next Annual Meeting of Shareholders or until their successors are elected or appointed. And, on an advisory basis, the company's shareholders accept the approach to executive compensation disclosed in the company's management information circular dated May 17, 2022. The final results of the voting will be announced in a press release and filed on SEDAR in accordance with the policies of the TSX.

Thank you, Madam Secretary. I ask that the results of the poll be included with the minutes of this meeting. As the formal business of this meeting of shareholders of the company has now been completed, I will ask for a motion to terminate the meeting.

I so move.

I second the motion.

Thank you. As there is no other business coming before this meeting, I declare the meeting terminated. I would now like to introduce Duncan Middlemiss, President and CEO of the company, to proceed with a brief presentation to review some corporate highlights.

Great. Thanks, Warwick. I'd like to take this opportunity to extend my sincere thanks to the Board of Directors for their continued support and also to the Wesdome team for their outstanding efforts throughout 2021 and into the first half of 2022. As the ongoing COVID-19 pandemic continues to present challenges, the Wesdome team has continued to demonstrate patience, skill and resilience. I'll start with the presentation. I hope that you're all viewing this on your computer. So the title page is "Building Canada's Next Mid-Tier Gold Producer". This has been a stated objective of the company for -- going on 3 years now, with the addition of the Kiena asset, which is coming into production shortly. We've been working on Kiena for a while, and you could see a great picture there of Kiena and what a great mine and infrastructure that, that is. Getting into the presentation, of course, I will be mentioning cautionary statements, forward-looking statements. So just please be advised of that. Getting into management and the Board, I know that Warwick had mentioned everybody that was here. Really, this team has been with us for, in the most part, quite a few years now, and we're quite happy. Our newest additions, of course, are Frederic Langevin. Frederic joined us at start of June as our Chief Operating Officer. So we welcome Fred, and I look forward to his contribution to our stated objectives. Also, we've got Michael Michaud, our VP of Exploration; Scott Gilbert, our Chief Financial Officer; Lindsay Dunlop, our Vice President of Investor Relations; Raj Gill, our Vice President of Corporate Development; Heather Laxton, our Chief Governance Officer and Corporate Secretary; Stacy Kimmett, our Vice President of Human Resources; and Joanna Miller, our Vice President of Environment and Sustainability. And also joining us here are the directors, of course, Warwick Morley-Jepson, our Chairman; Charles Main, our Director -- Independent Director; Nadine Miller; Brian Skanderbeg; Edie Thome; and Bill Washington, all of our independent directors. We're very well represented with this Board, I must say it's very deep in terms of experience and very good business document, so thank you. The Wesdome investment proposition, really, this remains the same. Obviously, Tier 1 jurisdictions are just a massive benefit for the company. The production base starting off in Ontario and now adding a growth asset in Quebec, certainly great jurisdictions, and we're very thankful to be located here. High-grade growth. I can't stress that enough with the Eagle River reserve grade of 15.3 grams per tonne, the Kiena reserve grade at 11.1 grams per tonne certainly bodes well for the future of these underground mines. I think that we're able to generate margins, which have not been previously seen before for the company. So certainly very good. Also, in terms of our exploration potential, continues on, the company has invested heavily in towards drilling programs and exploration and that continues to bear fruit. So very, very happy about that. Low risk profile, obviously, also dealing with the fact that we are in a Tier 1 jurisdiction, but also that we're able to generate the cash flow from Eagle River in order to restart operations, like Kiena without any shareholder dilution. I think that, that's a fantastic add for the company, also currently fully permitted and things are certainly tracking well. Proven management, I'd have to say that the management team is very adaptive at turning around assets and optimization. And so certainly, I think that we're well represented in that. In terms of our year-end review, I very proudly say that Eagle River, for the first time in its history -- production history, produced over 100,000 ounces. We've also published the Kiena PFS, giving a 98% IRR. This was the basis that we made the decision to restart the Kiena Mine. So that's really been ongoing since the third quarter of 2021. New high-grade zones discovered at each asset. The Falcon Zone at Eagle has turned out to be quite a high-grade zone and also the Footwall Zone at Kiena has now got some clarity to it, and we're very excited about that. Of course, the Footwall Zone at Kiena is not included in the PFS. So this is certainly going to be very additive to the profitability of the mine. We've also monetized Moss Lake with a vend-in transaction to a junior by the name of Goldshore Resources. We received about $12.5 million in upfront cash, and we do have 30% of the issued and outstanding shares at the closing. So total consideration about $57 million on that transaction. So we're quite happy to have participated in that, and we continue to monitor that. We've been included in TMX 30. It's a recognition program, for the third consecutive year, and this program does showcase TMX's 30 top performing stocks based on dividend-adjusted share price appreciation. Quite proud about that. We've also been now listed in the Globe and Mail Board Games, which is really celebrating good governance amongst corporations, public companies. And you can see that we're in a -- we're in 10th place in the materials category, in a large tie there, but very, very good advancement in terms of our governance within the company. We've also been recognized recently in the Globe and Mail as the 74 public companies with the best track record of executive gender diversity. 44% of Wesdome's executive management are female. And we've just really released the annual environmental, social and governance report using the SASB guidelines, which is coming to -- every year, I would say that this report is improving and it really shows the efforts that Wesdome are making in terms of ESG. Speaking of ESG, really we celebrate a few things here, definitely. And I think environment, I mean, we really had 0 significant environmental incidents in 2021 at both Eagle and Kiena. The climate action that we're doing is underway, greenhouse gas inventory analysis and climate risk assessments are ongoing. Governance, I mentioned, we certainly have made some good strides in terms of governance. And certainly, since I've been involved with Wesdome, we've certainly come a long way. So I think that we really do stand behind our gender diversity. Women Lead Here is the actual name of the award, The Globe and Mail at we were recognized in, which we're quite proud of. We've increased our local employment, especially with the Kiena restart. So obviously, located only about 10 kilometers outside of Val-d'Or, Quebec, we certainly are a big draw for the Abitibi region in terms of employment. And really, what we've been able to do also with our COVID-19, we were able to supply vaccinations at Eagle River, and all protocols remain in place to where we are. We're very successful in terms of controlling the pandemic. Moving on to diversity, we can just see the growth at the Eagle River and the number of females involved with the operation continues to improve, also does the local employment. So this is something else we're quite proud of. We look at track record of growth. What we can see here, #1 on the left is the top 3 reserve grades in Canada. So Eagle River #2 at 15.3 grams per tonne. Kiena at 11.1 grams per tonne. So again, definitely high-grade assets. Quite fortunate within the company to have such high-grade assets, and we continue to find high-grade mineralization at both our mines. So we're very excited about that. The center slide here really shows cumulative production, and you can see that, that, in yellow, is continuing on. Last year, we did about 123,000 ounces. You can see also the subsequent increase in reserves and resources. So supporting production, obviously, we have to have a good inventory of reserves and resources. And compounded annual growth rate, you can see that the Wesdome investment thesis has been pretty successful since 2016, had a 25% CAGR and cash flow per share growth of 35%. So again, we are quite proud of our situation here. In terms of our exploration success, on the left-hand side of your screen, you can see a nice long section here at the Eagle River mine, you can see the trend here. Towards the left of the long section, you see the Falcon Zone. The Falcon Zone is existing outside the diorite, which was out of [ TruSub ], which this mine really existed in for over 20 years. All the mineralization was in there. Now, all of a sudden, we're able to find high-grade mineralization out to the west in the surrounding volcanics. This really does open up a trend for us that could that could quite frankly, go 20 kilometers along that trend. So we continue to explore. And so far, we've really, I'd say, yielded fruit on that. We've also got good potential at depth. Most of these zones are open at depth. So we're in the processes here of creating the proper exploration platforms for us to fully assess what we have and go on from there. Over on the right-hand side, you've got a long section of the Kiena mine. The deepest reserve resource we have here, of course, is the Kiena Deep. Of course, we discovered the Footwall into the Kiena Deep. It's about 50 meters to the Footwall of the A Zone. Quite exciting, as I mentioned before, the Footwall Zone is not included in the PFS. So any mineralization that we're able to get out of that is going to be additive to Kiena Mine's outputs. Over to Eagle Mine, specifically here. Again, we've got the same long section. The high-grade shoots are certainly where we target. Falcon Zone, we've got some very good potential there also along the contact on the north and also to the west of the Falcon Zone. We do believe that there seems to be some sort of a repeatability within the Falcon Zone. So between surface exploration and our underground program, and as I mentioned before, the development of new exploration platforms is allowing us to better assess the mineral potential of this mine. This mine has been in production since 1996. So it's certainly been a very longer life than I think than anybody would have expected back in 1996, and I think that the -- where the reserves and resources are right now, certainly would indicate that this would continue. So in terms of our Falcon development, we had a -- I think on the right-hand side, what you can see here is a planned view. And really we had a bit of a pleasant surprise when we went down there and did the actual development. We ended up with seeing, say, parallel lenses even within the Falcon. So I think that there's some other things that we need to follow up on. And of course, having the development in place better allows us to evaluate exactly what it is. But certainly, it's been a very high-grade mineralization, and we certainly are just in the process now of starting to fully develop it and understand it better. When we look at the surface and regional potential, as I mentioned, the Falcon Zone is sitting outside in the volcanics. And where it is? What you see there on the left-hand side is that mine diorite where we have a mining occurred for those 20 years. Now we're starting to get out into the Falcon Zone, which is actually hosted by the volcanics. And so potential is east and west of the diorite. You can see the shear zones on the right here. We've got known gold occurrences. These shear zones extend for about 20 kilometers on our property. And so every gold dot we see there is a known gold occurrence, which would require further evaluation, whether it be drilling or field work or geophysics. So certainly, there's a lot to look at here, and we've had a lot of success so far just with the discovery of the Falcon Zone. So we're quite proud of that. Get into the Kiena Mine restart. You can see a nice picture here, the head frame again. Kiena Mine was really built by Placer Dome operated until 2013 and it was put on care and maintenance until 2021, really when we decided to do a restart. Although we were doing some advanced exploration there to support our PFS, we certainly think that the infrastructure is in very good shape. We've already demonstrated that the shop and the mill and all the infrastructure required for a good underground mine is in excellent shape, and we have maintained it and improved it. So we are definitely getting prepared for commercial production. Just some of the metrics here for the pre-feasibility study. And again, this does not include any of the new discoveries. This essentially was for a resource base that was made into reserves back in 2021. So really, it was just the A Zones that were included there with some of the S50 in the Martin Zone. And so really, what we see here is a nice base, obviously, good IRR, very quick payback, 2.7 years of payback. And I think that when we look at the actual production rate just around 800 tonnes per day, certainly, with the Footwall Zone and others' discoveries that may occur, I think that we'll be able to capacitize further the mill. The mill has a capacity of up to 2,000 tonnes per day so we certainly do have some room on that. When we look at the exploration, I mentioned the Footwall Zone. Really a lot of these zones seem to really change over the style of mineralization below about 1,000 meters. So the Footwall Zone, of course, is in just off of the current A Zones, but we're also following up on the VC Zone. VC Zone, a very exciting mineralization, everything above 1,000 meters seems to be lower grade sulfidated. Down below, it's always associated with quartz and it's typically visible [indiscernible] gold. So definitely very exciting, and that's why the company certainly does have a lot of belief in the exploration potential at both our operations. Speaking here of the Footwall Zone. We've also got something that's appearing in the hanging wall. It's -- so we're really accessing the A Zones through the hanging wall where the salt is. The salt has got some lower-grade mineralization, but certainly exciting to find out about. And you can see over on the right some of the fantastic intercepts that we've been able to generate from the A Zones and the Footwall Zone. So Certainly, a lot of potential here. And I think the more we drill, the more we find out and it seems the more we're able to add. So certainly, a good benefit to the company. We're looking for surface targets and also mill capacity. You can see where Eagle is. Eagle's permanent for about 1,200 tonnes per day. Currently, we've been running the mill around 850 tonnes per day on the harder rock. The Mishi is essentially done now, that was softer rock, so we could process more. Over at Kiena, typically, when Placer Dome had it in the larger low-grade stopes, they could run up to 2,000 tonnes per day with some primary crushing done just ahead of the mill. So certainly, some good potential there. You can see, over on the right, what we really consider our base exploration potential, I would say. So obviously, a long trend along the shear zones at Eagle, especially now, even still within the diorite, but outside the diorite and the volcanics is very prospective for us. The North Contact Zone, you can see that right on the edge of the diorite. Over at Kiena, I mean, I have to say that a lot of the exploration done historically was really along the subsidiary faults, the Marbenite and Norbenite. And so really, the A Zone is mineralization, which actually connects those 2 faults in between. So now this obviously brings a whole different exploration targeting to the company. So we are definitely looking for more A Zones. We believe that these A Zone-type Riedel shears exist between these 2 faults. And you can see all the other past producers and resources that are on the property. So Kiena certainly does have a very bright future in terms of our exploration potential, I think. So we're excited about both assets, and we're excited to continue to surface the potential here, so it's good. In terms of our high-quality asset base, you can see right here that Eagle River located on the North Shore of Lake Superior just outside of the town of Wawa, Ontario. Again, in production since 1996. You can see last year's production was over 100,000 ounces, quite proud of that. And of course, the reserve grade and both the measured and indicated and inferred resource grades there. So definitely, kind to have resources in order to convert into reserves. And I think that, that definitely shows a strong potential for us there. Kiena, it's -- here we are now at 651,000 ounces in reserves at 11.1 grams and the inferred and indicated -- measured and indicated resources certainly be bode for good conversion. And I think that the more we explore, the more we find out. So we're quite pleased with the future of the company. And I think with that, I can sign off. We'll keep this presentation brief, and we can open up the floor for a question period if we can.

Thank you, Duncan. Ladies and gentlemen, we would now like to open the meeting for a question-and-answer session. Attendees who wish to ask a question may do so by selecting the Q&A icon in the top right of your virtual interface. You're asked to please indicate your name and confirm that you are a registered shareholder or duly appointed proxy holder. We will now pause briefly to allow time for any questions to be received. As there do not appear to be any questions. That concludes our meeting today. Before we sign off, I'd like to once again thank all shareholders for their continued support, and I echo Duncan's words with respect to the Wesdome team who have shown strength and perseverance throughout these challenging times. I thank you, and have a safe day.

And this concludes the meeting, and you may now disconnect.