Wesdome Gold Mines Ltd. (WDO) Q1 2026 Earnings Call Transcript

Good morning. Welcome to West Dome's Gold Mines conference call to discuss the company's financial and operating results for the three months ended March 31st, 2026. As a reminder, this call is being recorded. Your host for today is Trish Moran, West Dome's Vice President of Investor Relations. Ms. Moran, please go ahead.

Thank you, Operator, and good morning, everyone. Before we get started, I'd like to point out that during today's call, we may make forward-looking statements as defined under Canadian securities law. I ask that you view our slide presentation for cautionary language regarding forward-looking statements and the risk factors pertaining to these statements. Please note that all figures discussed on this call are in Canadian dollars, unless otherwise noted. Our press release, MD&A, and financial statements are available both on CDR Plus and on our corporate website, WestNome.com.

With us on today's webcast is Anthea Bhatt, WestNome's President and CEO, Phil Yee, our Chief Financial Officer, Tyler Mitchelson, our COO, Jonah Lawrence, SVP Exploration and Resources, Raj Gill, SVP Corporate Development and Investor Relations, and Kevin Lonergan, SVP Technical Services. Following management's formal remarks, we will then open the call for questions. And now over to Andrea.

Thank you, Trish, and good morning to everyone. Supported by strong production, Q1 was a company best with record revenue, net income, EBITDA, and operating cash flow. We generated $126 million in free cash flow and closed the period with over $430 million in cash, even after repurchasing nearly $50 million of our own shares beyond financial results we are making meaningful progress on initiatives that will drive long-term value for this company safety remains foundational across both eagle river and kena we are building on a strong track record with continuous improvement programs firmly in place at each side at eagle river the strategy is working we're expanding operational flexibility by opening more mining areas combined with better scope productivity and higher mill utilisation, this should translate into lower unit costs as fixed costs are spread over higher output. The results are showing up as steady production and a strong operating cash margin. At Kena, the operational improvements implemented over the past year are starting to translate into tangible results. Increasing operational flexibility, including the breakthrough of the ramp within the next week, combined with feed from the new pre-skill zone marks an important inflection point for this mine. With many more stops available at any given time, Kena is progressing toward a more stable, consistent and predictable operating profile and unlocking its capacity to grow. Exploration is a core pillar of this Western growth story and in 2026 we are leaning in, drilling more than 270 kilometres. The news flow has started with the release detailing high-grade growth at Kena and at the end of March and another update on the global mobile work at Eagle River earlier this week. We close the quarter with an exploration teaching designed to give the market a clearer, deeper line of sight into the long-term prospectivity of our large land packages. With over 220 targets, many of which are in categories with a high relative probability of conversion, one thing is very clear. There's a lot more to discover and I have no doubt will be mining for decades to come. As we look ahead to the updated technical reports for both Eagle River and Kina this summer, I want to be clear about what these updates represent and why they matter. What the market will see in our late June release is the first tangible and quantifiable output of a deliberate plan to transform Westo. A plan that was set in motion nearly three years ago. Historically, our operations were managed around relatively short reserve lives, even though both assets settled in highly prospective mineral systems. The limitation was never geology. It was the scale of exploration and the long-term investment required to fully unlock these assets. We made a conscious decision to change the company's approach, shifting from short-term replacement toward a more growth-oriented and systematic approach, an approach designed to establish a visible organic growth pipeline. The updated technical reports will demonstrate the first tangible outcome of that strategy. At Eagle River, our focus has been twofold. First, to add reserves to the upper sections of the mine, to incrementally increase tunnels, to extend mine life and to maximise effective utilisation of an existing processing infrastructure. While adding high-grade will always be our priority, Our drilling programs are also targeting areas close to infrastructure, where we can add additional economic tenants that can be brought into the mine plan efficiently and at a relatively low discovery cost. These areas, while lower in grade than a high-grade furnace zone, are still economic, they improve operational flexibility, and most importantly, they provide a top-up mill fee that can cost-effectively support the pursuit of high-grade targets in the pipeline across multiple areas in the mine. The second focus of Eagle River has been on deepening our understanding of the high-grade system. We believe Eagle River has the potential to evolve beyond its historic three-year reserve line by unlocking additional areas with shallower high-grade extensions are increasingly probable. Over time, this has the potential to improve out-of-density for vertical meter and enhance the overall quality and flexibility of the mine plan. At Keena, the objectives have been slightly different. While we continue to seek opportunities to replace high-grade depletion, we also see opportunity across a land package to identify new mining fronts, including along the level of 33 and across the northern corridor of this property. The updated technical work at Kino will demonstrate progress in rebuilding the high-grade inventory while advancing the pipeline of opportunities that can support higher throughput and production growth over the longer term. So while Evil River is currently focused on adding incremental answers and operational flexibility, Kena is focused on strengthening and expanding its pipeline. Two different priorities, reflecting two different assets at different stages, but both in line with building longevity, improving consistency and creating a stronger foundation for sustainable value creation. It's important to remember that what we report in June is a snapshot in time, reflecting drilling only through the end of 2025 and it's really just the beginning. We're now well into the second year of a multi-exploration program. As drilling intensity increases and our geological understanding deepens, we're systematically building the platform to do far more than extend my life. We're laying the foundation to reshape West Jones long-term growth profile and ultimately to redefine what this company can become so i'm pleased to say that we can pursue and fund exploration unlocking the full potential of our large prospective land packages all while returning continuing to return capital to our shareholders last evening's announcement they were proceeding to a second trance and our shared by their program is a direct reflection of that confidence and with that i'll hand over to phil to walk you through the first quarter financial highlight thank you and thea good morning everyone turning to slide seven q1 2026 marks another

record quarter as strong world prices and solid production continued a two-year trend of sequential financial growth record results this quarter included revenue of 300 million net income of 119 million or 79 cents per share EBITDA of 212 million and operating cash flow of 162 million and free cash flow of 126 million or 84 cents per share our free cash flow as a percentage of revenue is 42 percent and ranks among the highest in the gold sector margin expansion is a priority for west home irrespective of gold price as a company delivers initiatives designed to reduce costs. Turning to costs on slide eight, on a consolidated basis, all unsustaining costs per ounce of gold sold were $1,707 US per ounce. Asa Kephego River was $1,616 per ounce, while Kena was $1,844 per ounce, each driven by higher contractor, consultant, and maintenance consumable costs. The primary cost pressure point across the business is higher wages given the competitive labor environment we are also monitoring broader industry inflation and fuel and consumables and while our exposure is not material and availability is not a concern currently we are taking proactive steps to mitigate potential supply chain disruptions corporate gna of 10 million in q1 was in line with plan for q1 and is expected to decrease in subsequent quarters we are maintaining full year consolidated production and cost guidance moving to slide nine to support to support your modeling i want to summarize where we are after the first quarter eagle river production is expected to be evenly distributed across all four quarters kina's q1 was the lightest quarter with approximately 60 percent of energy production awaited the second half of the year supported by the wrap-up at Cresquillo. Consolidated ASIC is expected to peak in Q2 then decline as savings from supply chain initiatives are realized. Both sustaining and growth capex remain in line with guidance for the year. Depreciation is expected to decline following publication of our updated mineral resource and reserve statement at the end of june and is as it is calculated as a percentage of 2p reserves expiration expense guidance is on track for 30 million for the year 15 million per site at eagle river and kena and our effective tax rate on pre-tax income remains at 35 percent turning to slide 10 as of march 31st 2026 our cash balance grew to 431 million even after deploying 49 million to repurchase our shares at a substantial discount to where the shares are traded today including our revolving credit facility which is fully undrawn total liquidity now exceeds 770 million canadian and we expect this to continue strengthening throughout the year our balance sheet remains debt free and we are deploying capital with discipline investing 205 million capex this year with approximately 45 percent directed to growth and a record 55 million exploration budget in april we complete the first tranche of our nciv repurchasing 3 million shares for 68 million as announced last night we are proceeding with a second tranche to repurchase up to an additional 3 million shares given our strong and growing cash generation we are well positioned to execute on our organic growth plans, preserve operational and strategic flexibility, and continue returning meaningful capital to shareholders. With that, I'll turn it over to Tyler to review operations.

Thank you, Phil, and good morning, everyone. The first quarter was solid across both sites. Starting with safety, we had zero lost time incidents, and a total recordable incident frequency rate improved 13% year over year. as our programs mature we are enhancing our focus on critical controls and non-negotiable standards as they relate to high to potential high risk incidents across both sites people remain our biggest challenge but also our biggest opportunity attracting and retaining quality talent is a top priority and its importance to safety operational stability and cost control cannot be understated Moving to slide 12, in Q1, Eagle River performed in line with expectations, delivering 28,000 ounces, roughly 25% of the full-year guidance midpoint. Average grade came in at 12.5 grams per ton, as anticipated, reflecting plant mine sequencing and processing at 11,000 tons from a lower-grade stock crop. we are starting to see some of the results of our global model work coming into production opportunistic planning of incremental lower grade areas is providing more tons to the mine plan for the rest of the year furthermore we can also measure the productivity improvements from this material net of one-off cost we're seeing a direct reduction in our cost per ton proving to us the strategy is for here strategic initiatives undertaken at both the mine and the mill are starting to pay off mill throughput has been increasing on a fairly consistent basis averaging approximately 800 tons per day compared to an average of 600 in 2024 and 700 in 2025. still productivity is improving up more than 20 percent quarter over quarter and trending upward proactive maintenance is now fully embedded site-wide with 80 percent or better scheduled compliance this is in line with industry best practices it is driving measurable reliability gains the path to a thousand tons per day is clear to us to get there underground flexibilities are top priority and the required processes equipment and infrastructure are being put in place as part of our longer term strategy we continue to invest in key projects at eagle river and capital spending stepping up through second and third quarter we are making a critical investment in a full camp replacement something that will dramatically increase our ability to attract and talent in Eagle River. And as an added benefit, replacing the CAF will allow us to realize significant operational savings as we consolidate 13 separate structures into one building. We are also gearing up to support higher throughput rates and increased scale in the years ahead with additional capital for targeted power and tailings improvements. After a few months in this role, what is immediately evident to me is the breadth of depth of a team of evil strong eyesight leadership and a mindset of continuous improvement gives me confidence and our ability to execute on our long-term strategy moving to slide 13. kena is off to a solid start in 2026 producing 17 500 ounces in what we anticipate will be the softest order of the year with the receipt of the chris eel operating permit in january we have begun processing development ore and stockpiles contributing more than 2 000 ounces overall process grades are in line with their reserve rate averaging 10 parents a time for the quarter i'm pleased to report that the ramp connection to kina deep is imminent with this we'll have a second means of accessing the line which materially reduces the risk associated with having our shaft as a single point of entry, and represents another major milestone for the operational flexibility at Kena. Ventilation room development continues to progress, with fan installation and commissioning targeted for a route near it. This marks the last step in creating operational headroom we need to capture new opportunities underground. And importantly, capital spending Kiena tapers off in the second half, as both the ramp and the ventilation programs are brought to completion. Beyond the ramp, we've done a lot of work to create operational flexibility, and we now have three active mining horizons in Kiena, out from one just a year ago. The impact was tangible in Q1. For the first time, we mucked two stoves simultaneously, a meaningful step forward that reflects several quarters of deliberate, targeted work. We also just started mining our first stove on level 136, giving us the third level open and keen and deep concurrently, a major milestone by any measure. In addition, we are developing a persteel with production wrapping up through the back half of the year. and with new underground drifts in place we're seeing noticeably more effective drilling across the operation as a result stability is beginning to take hold equipment delays have been dramatically reduced allowing us to shift our focus towards productivity this reflects the impact of several quarters of sustained work to improve our maintenance processes and we're seeing that translate to the stronger equipment available since rolling out our operating model this quarter operating delays relative to the previous year's performance are down 70 percent a clear indicator the changes we're making are working for the balance of 2026 our priority is to embed these operating processes tighten our schedule adherence and continue reducing variability across the operation. Looking ahead, Q2 is off to a strong start. Production ramped up through March and exceeded 7,000 ounces in April. Development rates of per scale has accelerated. First oak is being prepared for mining before the end of Q2, our first near-term surface, or YAPM. We currently have a hybrid stockpile of development or filter steel, I expect to process it over the next few weeks. Delivering a step change over Q1, full production for your steel is expected by year end. I'm genuinely seeing the impact of leadership stability is bringing to that operation. kena is stabilizing and it is progressing towards the operation we know it will become there is still work ahead of us we are addressing it systematically one egg in a time boxes are being tipped projects are being delivered kena is on track and we were confident in the plan i'd like to make one final comment on cost before i pass across the genre as mentioned at the beginning the importance of labor availability to cost cannot be understated continued tightness in the labor market not just in bell door across the industry is driving our reliance on contractors to supplement our labor needs this is not new over the last several years we've been working actively on our attraction and retention programs and these continue to top priority our commitment to transitioning labor to our own employees is resume but it will take time and now over to charla for exploration thank you tyler and good morning everyone 2026 is a landmark year for exploration we're drilling more than 270 000 meters up significantly from 200 000 meters in 2025 our new hybrid strategy balances reserve replacement with

growth across all time horizons keeping the pipeline full and mineral inventories moving in the right direction we're not just drilling more we're drilling smarter data integration and technology are driving how we identify geologic patterns mineralization trends and resource gaps on march 30th we hosted our two-hour analyst teaching walking through our evolving strategy to growing target pipeline and the discipline process behind our resource growth and new discoveries our 2026 exploration program is off to a strong start at evil river with results to date supporting resource growth and conversion potential slide 15 highlights the progress made at two key zones 6 central and the adjacent 800 zone in 6 central four holes tested for the down plunge extension of the high grade chute and the results delivered. We confirmed a further 100 metre extension, bringing the total to 700 metres since discovery in late 2024. At the 800 zone, 11 holes focused on infill and conversion demonstrated great continuity of depth and sharpening our confidence in the zone's geometry and grade distribution. Critically, both stones, including the high grade chutes, remain open at depth, making them a priority focus for high-grade reserve replacement. We've also been drilling deep surface holes beneath both zones to test the continuity, and we plan to issue an update on these results in the coming weeks. Turning to slide 16, a look at our global model outcomes. Last year, we drilled over 40,000 meters on global model targets. Since the start of this year, we've added another 16,000 meters. Of the 32 initial targets, nine remain untested or partially tested, and the number of targets outside existing resources continues to evolve as the program advances. This year, we're planning 80,000 to 90,000 metres of conversion drilling, which includes targets outside the global model. One example stands out as a strong demonstration of what this program can deliver, the 7-Eleven In Q1, we targeted a previously untested portion of the 7-Eleven, centrally located in the mine with established underground access and at intermediate depths, a textbook global model target. 17 holes later, we've confirmed continuity and high-grade mineralisation with multiple intercepts over 10 grams per tonne. Confirming not just mineralisation but continuity and high grades is particularly encouraging, especially in a mine with 30 years of production history. This area remains open and we're pushing to bring it into the mine plan in the short to medium term. Before leaving Eagle River, there are other areas that are growing. Firstly, Falcon 311. Drilling has identified potential mineralisation extending 100 metres to the west and 150 metres down deep. Secondly, at the 7-11 zone, we've contained continuity in the base. Thirdly, at Falcon 720, drillings improve confidence in geometry with the zone remaining open at depth towards surface and to the west. Together, these results strengthen our confidence in the internal conversion opportunities and the broader resource growth potential at Eagle River. Looking ahead, we will be releasing results from some of our longest drill holes today, extending more than 1,500 metres from service. We plan to publish these proof-of-concept results ahead of our June technical report release. Moving to Kenya, the completion of the exploration platform on Level 134 has been truly transformative, improving drilling angles and significantly reducing drill hole distances into Kena D and the B zones. In Q1, we announced the discovery of six new lenses at Kena, a direct outcome of enhanced drilling access. Three of these new lenses were identified at Kena D, one on the A2 structure and two in the football zone. Beyond the new lens discoveries, we've also seen increased continuity of both known lenses in Kena deeps and football zone with expanded vertical and lateral extents. We expect this to drive meaningful mineralisation growth in Kena deeps over the medium term, translating into higher ounces per vertical meter. Exploration drilling in Kena deep has continued during the quarter with holes now testing a previously reported intercept on the far side of the Norberni fault, An historical drill hole in this area intercepted more than 80 metres at 10 grams per tonne, and we've been actively following up around that intersection. Drilling through the Norbernight Fault presents technical challenges. However, a discovery in this area would be genuinely transformative for the asset. We look forward to providing an update to the market later this year. of the zone in Q1, along with the identification of higher-grade mineralisation within the zone. Continued drilling and improved angles have allowed us to reinterpret the zone. We're now modelling it as four distinct lenses rather than a single lower-grade lens. We've also identified a corridor of higher-grade intercepts that has the potential to improve the economics of the zone. This area is a high priority given its proximity to existing infrastructure adjacent to Kiena Deep. Should we define economic mineralisation here, the part of production would be relatively straightforward. A brief update on the remainder of the Kiena program. Drilling has commenced at the VC zone, another prospective ore source located near underground infrastructure. And we completed 10 surface holes at a target south of the Kiena mine in an area with geology analogous to the Malartic mine. Look for updates on both programs in the coming months. Our surface exploration program is set to ramp up in the coming weeks as seasonal conditions improve. Surface grids have been mobilised to shore key, who will be planned to drill for several months through the summer. We're also looking forward to deploying our barge-mounted drills at Northwest, Westone, Cisco and Dubeson. There's a great deal of activity ahead and we'll keep the market informed as the results come in. Operator, you may now open the line for questions.

Thank you. If you would like to ask a question, please press star 1 in your telephone keypad. If you would like to withdraw your question, simply press star 1 again. Your first question comes from a line of Luke Bertozzi from CIBC. Your line is open.

Thank you, operator, and good morning, Anthony and team. Congratulations on the strong quarter. I'd just like to get a sense of the cadence of buybacks going forward. I believe in the past, you've viewed the buyback as an opportunity to repurchase shares when they're trading below net asset value. Does that continue to be their view or should we expect buybacks to continue regardless of share price fluctuation?

Hi Luke, it's Phil. Yeah, I would say, you know, the The strategy going forward is really to be opportunistic, as we have in the past, based on NAV, NAV per share. And as you know, we've announced a second tranche. And as we continue to grow our cash, I would say that we will continue to look at further opportunities as well.

Thanks.

That's it for my questions. your next question comes from a line of allison carson from desjardais your line is open thank you good morning anthony and team and thanks for taking my questions my first question is just on kina it's great to hear the things that are ramping up at press skills can you give us a little bit more detail on the contribution we should expect from press feeling q2 in terms of production morning yeah as we go into q2 we're going to start the sloping actually at the end of june so we'll see the wrap up generally you'll see a 60 40 split between and um and per steel

towards the end of the year so will we get any production from uh press healing q2 though you said you were going to process some low grades or some of the stockpiles as well yeah we're continuing to do development uh in q2 so we're pulling development or the first stoke should be coming out the second part of q2 okay great um and then my next question is also on shareholder capital return you know it's great to see you expanding the ncib are you looking at linking your capital return program to anything like a percentage of free cash flow in the future Hi, Alison.

It's Phil. I mean, the focus right now is really on the second tranche of the NCIP to be consistent. As I mentioned earlier, you know, we look at being opportunistic in that program. And then as we grow our cash, you know, we'll look at other options to expand our capital allocation strategy and we haven't finalized our approaches at this point yet but obviously you know all the various options are being considered and i would say that's one of them okay great well that's it for me thanks and congratulations on the quarter again if you'd like to ask a question press star one in your telephone keypad we'll pause for just a moment and there are no further questions this does conclude today's conference call

thank you for your participation you may now disconnect