Wesdome Gold Mines Ltd.

Heather Laxton - Chief Governance Officer & Corporate Secretary Hemdat Sawh - CFO George Mannard - VP, Explorations Lindsay Dunlop - VP, IR Duncan Middlemiss - President and CEO

George Topping - Industrial Alliance Ryan Walker - Echelon Wealth Partners Barry Allan - Laurentian Bank

Thank you, operator and good morning, everyone. Thanks for joining us on the call today.

Before we begin, I would like to remind everyone that today's call may contain forward-looking statements or information. Forward-looking statements are based on certain material factors and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions discussed today.

We refer you to our detailed cautionary note regarding forward-looking statements contained in yesterday's press release and in the company's interim management discussion and analysis dated August 2, 2017. Both documents are available on the company's website and on SEDAR.

Please note that all figures discussed on this call today are in Canadian dollars unless otherwise stated. A recording of this call will be available for replay; the details of which will be posted on the company's website.

On the call with us this morning, we have Duncan Middlemiss, President and CEO.

Good morning.

Hemdat Sawh, Chief Financial Officer.

Hello, this is Hemdat Sawh.

George Mannard, Vice President, Exploration.

Good morning, George here.

And Lindsay Dunlop, Vice President, Investor Relations.

Good morning, everyone.

And now over to Lindsay for a review of the agenda for today's call.

Thanks, Heather. The agenda for today's call will be as follows, first, a review of the operational results by Duncan Middlemiss, followed by our financial results review by Hemdat Sawh; then, an exploration update on the Eagle River Complex, Kiena Project and Moss Lake Properties by Vice President of Exploration, George Mannard.

Finally, Duncan will conclude with a corporate update, summary and outlook. We will then open the lines up for question-and-answer.

Duncan, please go ahead.

Thanks, Lindsay. Today, I would like to emphasize our progress over the past year.

We have focused on development undergoing at Eagle to ensure we have enhanced stope sequencing in order to better manage head grade consistently quarter over quarter. As well, we have shifted our focus to quality times by employing stringent dilution control initiatives of enhanced cable bolting, modified stope design and narrower scooptrams to lessen the undercutting of stope openings.

As a result, the Eagle River head grades have improved significantly to 10.7 grams per ton in the first half of 2017 compared to 6.6 grams per ton in the same period of 2016. The increase of element rates and definition drilling have impacted the first half of 2017 all-in sustaining costs.

However, this now means we can foresee a higher-grade mining cycle for the next couple of years. The development work has also enabled us to create more underground exploration drill base to further drill and delineate the parallel wells.

The discovery of the 303 East lens within the 300 East zone was as a direct result of one of these new base. We will begin mining in the 303 East at the end of the year and we'll have production from this high-grade area throughout most of 2018.

Longer term, we plan to continue the systematic underground exploration drilling with the goal to add additional workplaces which could potentially fill the mill with the higher grade ore from the underground operation. At Mishi, we're taking measured steps to determine future production scenario.

We'll be updating reserves and resources at the end of the year and publishing those in the first quarter of 2018. I will now turn the call over to Hemdat Sawh for a financial review.

Thank you, Duncan. As Duncan discussed earlier, our shift in focus to develop high-grade areas of quality ton has resulted in a demonstrated improvement in financial performance in H1 2017 versus H1 2016.

We generated CAD43.3 million revenue from the sale of 25,350 ounces of gold at CAD16.74 per ounce in H1 2017 versus CAD31.7 million from the sale of 19,365 ounces at CAD16.39 per ounce. Accordingly, mine operating profit increased substantially to CAD13.7 million versus CAD3.4 million.

Net income for H1 2017 was CAD1.6 million or CAD0.01 per share versus a loss of CAD1.6 million or CAD0.01 per share. Cash flows from operating activities also improved significantly to CAD10.6 million compared to CAD2.1 million.

This inflow of cash was used to finance CAD7.9 million in sustaining capital and partially fund CAD11.6 million in exploration, resulting in a net free cash outflow of CAD8.9 million versus a net outflow of CAD9.3 million in H1 2016. While a slight improvement, the current year-to-date free cash outflow was the direct result of increased exploration at the Kiena Complex, Moss Lake and Eagle River Complex, where we spent CAD6.3 million, CAD2.7 million and CAD2.6 million respectively; whereas in H1 2016, we spent a combined total of CAD2.1 million on these properties.

During Q2 2017, an additional CAD2.8 million of convertible debentures were converted prior to maturity and the remaining CAD2.1 million of the CAD7 million debentures were repaid at maturity. Accordingly, our overall cash position decreased by CAD4.1 million to CAD22.7 million as of June 30, 2017.

I will now turn the call over to George Mannard for an exploration update.

Thank you, Hemdat. We're undertaking an aggressive drilling and development focus on resource expansion on three fronts, first, at the Eagle River and Mishi gold mines; second, at the Kiena property underground; and finally at the Moss Lake deposit.

I'll go through these in sequence, starting with the Eagle River Underground. Our most tangible results come from the 300 structure which sits 400 meters north of the main historic mine structure.

The 300 structure was discovered in 2013. It is divided into east and west areas separated by a diabase dike.

The 300 west area commenced commercial production in 2015 and consistent tabular quartz vein. Drilling has extended this zone 250 meters further up plunge and it is still open.

These results were summarized in a May 31st press release. The 300 East area has the most complex geometry of older and dislocated quartz veins.

In Q1 2017, we opened our first development on the 844-meter level. Drilling confirmed a three-fold increase in grade compared to our yearend reserve model.

A combined strike length of 173.7 meters with average weighted width of 2.85 meters cut and uncut grades of 22.62 grams per ton and 34.79 grams per ton respectively. Unusually wide and rich fold nozzles or ballrooms such as the 303 East lens shown in the slide demonstrated an average width of 8.15 meters, 29.67 grams per ton cut and 50.63 grams per ton uncut.

This has been traced down plunge to 1,000 meters and remains open up plunge. We're ramping down to open a sub level 70 meters below the 844 level and expect early production in Q4 2017.

These development results, combined with unusually wide and rich interceptions released January 26, confirm the importance and potential of this new structure. The 300 structure has blossomed and it just seems to be getting better the more work and experience we get with it and it's opening up a whole new mining area at Eagle River.

As the Mishi deposit, detailed drilling, expansion drilling, stepping out the west conducted in the first half of the year extended good grade and with a further 300 meters towards the west. We look forward to incorporating this data in our growing resource model.

Moving on to Kiena, Kiena Deep. During the quarter, we made significant progress towards the development of an exploration ramp at Kiena.

We selected CMAC-Thyssen Mining as the contractor and the cruiser on site. Equipment has been mobilized and we're drilling off the first round two days ago.

We're on track to begin development. We expect to be back drilling at Kiena Deep in September or October this year as drilling stations open up.

In the meantime, two drills have been defining potential new resources near existing development that has potential to inexpensively and rapidly be brought into future mine plans. We have already had early success on the VC and the S50 target as released in the June 21st press release.

Neither of these targets are in the existing resource space, so we're obviously excited by early success and the implications of this potential. Finally, we have two drills operating at the large Moss Lake deposit located 100 kilometers due west of Thunder Bay.

The purpose of the Moss Lake exploration program for 2017 is just extend structure and mineralization beyond the 2.5 kilometer known strike length of the conceptual open pit determined in the 2013 preliminary economic assessment. The 3 million ounce resource was previously constrained by an awkward property boundary.

Since consolidating the land in the area, we have completed IP surveys which indicates the mineralization may extend significantly to the northeast and southwest. Drilling at 200 meters base sections is currently testing this thesis and we're compiling initial results to update shareholders on progress to date.

Back to you, Duncan.

Great. Thanks, George.

In summary, with 27,691 ounces produced in the first half of 2017, we're well on track to achieve out guidance range of 52,000 to 58,000 ounces. The development work we have done over the last year has us well positioned to open up additional high grade production areas in all three parallel zones for the next several years.

As a result, we expect 2017 costs to be on the higher end of our guidance range. However, higher range does lead to lower per ounce costs in pre-cash flow generations.

Mishi evaluations are ongoing and we will determine next steps after resource statements are completed at the end of the year. We remain very excited about the potential of the Kiena project.

In addition to the Kiena Deep discovery, there are many other prospective near mine targets and existing resources at this project. We will continue drilling with plans to publish a resource update in 2018.

From there, we will determine an appropriate production scenario utilizing the existing infrastructure that remains in excellent conditions, allowing for limited CapEx and near term potential restarts. Finally, the company held its annual and special meeting on June 21, where two new directors were elected to the board.

Charles Main and Warwick Morely-Jepson are both seasoned mining industry professionals with experience and expertise in mining operations, management, technical expertise and capital markets. As Wesdome transitions from a junior to an intermediate producer, Charles and Warwick's experiences as executives of major gold mining companies will be very valuable assets to our team and complement our existing board members.

We welcome them to the Wesdome team. That concludes today's presentation.

So any -- we're happy to take any questions. Over to you, operator.

So, Duncan, could you give us an indication of whether the capital expenditure and exploration expenditure for the second half of the year is still within guidance? Or are you expecting less exploration, for example?

Yes, no, we're within guidance, George. Really, I think one of the things that we see with our all-in sustaining costs, for example, the [indiscernible] cost, I mean certainly our production has been on target.

Certainly we're tracking a little bit higher than our range, but I think we had a deficit of, what I call, developed stope inventory or stope reserves. And we've now brought that back to comfortable levels.

We've got about three months in inventory now. We've brought it up from about a month in inventory which was uncomfortably close and really the ramification of that is that we don't have much flexibility in terms of work places.

So now we developed that flexibility and it cost us a little bit of money upfront and really we made up this ground, I would say, really, in the second quarter. So I think we're back on track.

And I think we're going to start to see normalization of our cost storage site. I do think that we will probably be on the upper end of our cost range, but I believe that we will be within range.

Good. So, on the 20,000 tons of ore reserves at and near of depletion, the -- do you have a grade associated with that?

Yes, it wasn't really ore reserves and I don't know if -- what it is developed reserves. So we did develop these reserves.

It's not additional reserves. We don't really calculate reserves until the end of the year, but the grade is certainly above reserve grade.

I can certainly confirm that. A lot of the stope tons developed would be in the 300, I think, 300 zone, where George has indicated it is really blossoming; both East and West.

I know we've spent a lot of time talking about the East and how great it is, but really the last is really starting to blossom, too and we're getting some nice up plunge hit. As George mentioned, it's probably 250 meters up plunge right now that we've identified it.

So I think that that's well. And then the 303 was the East part and George did mention it in his commentary.

We had -- because we were just getting into it and obviously added a lot more information in January and February after the reserves were calculated, but what we see for 303 right now is the reserve grade that we added in there, plugged in and it's probably tripled. So it's a very conservative 6.5, 7 grams and now we're potentially probably over 18 or 19.

So certainly bodes well for us. The volume that we're seeing here in the high grade I think that we're really set up for the near term and mid term, so.

George Topping, right, good. And then just final before I let someone else on is just on the news flow that we can expect over the next few months, particularly the exploration drilling at Eagle, Moss and particularly Kiena.

Yes, we have -- Lindsay has got me queued up for a steady news flow.

Good.

We just get this quarter out of the way and then we'll start throwing them out.

Yes, I think you'll see -- I'll see it, George, from all three areas. So that'll be good.

So can you put a time frame on that?--

I think August, really September, I'll think we'll have a news release out for Moss Lake. In the next couple weeks, we're going have update at Kiena, the proximal zones is what we'll call them.

And I think at Eagle we're going to have some news flow by September. So I think in the next, say, six to eight weeks, we should have the news out on all three properties.

Great. Thank you.

All right, good morning, guys. Thanks for the call.

Really, I mean the important question's been asked about cost going forward. So you mentioned that all-in sustaining costs, you expect to hit the higher end of the range.

So that's, I mean, more reliant on higher grades toward the end of the year than reduced OpEx, would you say?

Well, I think really -- a good question. I think higher grade is certainly going to be part of it, half of it, but I think really our volume, I believe, we're going to see better volume.

As you can see, really, we only milled about 35,000 tons of Eagle in this past quarter; the previous quarter was sort of 38,500. I think we'll probably have better volume in the second half.

I do believe that our grades will remain at or above our reserve grades. So I think, really, we're really well set up from what we can see right now for the second half.

So we'll see a reduction in our unit costs.

OK. And so, the lower throughput in the mill, that was more function of mine than mill itself?

Yes, it really was. I mean, again, getting back to the sort of develop reserves inventory, coming into the second, we really didn't have a great inventory.

Just what happened is we have some development, some difficulties. We changed our mining contractor which is a significant portion of our mine development.

And as per usual, when you have a change like that, it doesn't stop one day and the new guys come in the next day. So the mobilization in the first quarter took a little bit longer than we would have liked.

And we lost some performance there, but I'd have to say that everybody really pulled together in the second quarter and really made up for the short fall. And we were able to bring our developed reserve inventory back to reasonable level.

We typically like to have three to six months of stope production sitting ahead of us in order to maintain our flexibility. So we're getting there.

Okay, great. Thanks.

Yes, good morning. Just a further refinement, I guess, of your stope inventory and how that might come in the production stream over the balance of the year.

My question really is because you do have some very high grade areas that you now have developed, it could make a big difference depending relatively what area the Mine of yours is being drawn from. So, just trying to get an understanding, quarter to quarter, are we going to see much variation in mill feed grade?

We're actually -- Barry, we're really trying to normalize it that's why we sort of emphasized the flexibility in terms of where the 30,000 tons of developed inventory and how to split it almost evenly between the three zones. So we're going to benefit from all three zones which is great not to have all of our eggs in one basket.

I think we're starting to turn the corner from doing what we want to do versus doing what we have to do which is very important for any mine operations. So with -- so that's kind of what we're seeing here right now.

So, really, like I said, it's going to be at reserve or above reserve grades. I think that we're probably going to be pleasantly surprised with 303.

Just -- we're pleasantly surprised with the 844 development. So I can't believe that the 864 development's going to be significantly different.

And as we get down towards -- I mean this thing has just certainly exceeded all of our expectations over the last little while, so.

No, I can certainly recognize that depending on how much ore you actually draw from there can materially, probably change your mill feed grade. So, just expect more normalized kind of quarter-over quarter, kind of better than average grade, but perhaps better throughput as well.

You're not planning anymore scheduled mill maintenance over the balance of the year, are you?

No -- and really that mill maintenance was really pegged on a two-day power outage that was given to us by our service provider. So we just made the most of it, really.

But, really, you can look at the 35,000 tons milled. I'd have to say that was really more of a function of the mining.

We did have a small stock pile left at the end of the quarter, something like 1,500 tons; but two days of milling but not a significant amount. So, basically, we're just trying to build concurrent with the power outage and do the mill maintenance that we could do.

Oh, good, fair enough. Thanks for the update.