Wesdome Gold Mines Ltd.

Heather Laxton - Chief Governance Officer & Corporate Secretary Duncan Middlemiss - President & Chief Executive Officer Ben Au - Chief Financial Officer Marc-Andre Pelletier - Chief Operating Officer Michael Michaud - Vice President, Exploration Lindsay Dunlop - Vice President, Investor Relations

George Topping - Industrial Alliance Andrew Mikitchook - BMO Capital Markets

Great, thank you, operator. Good morning, everyone, thanks for joining us today.

Before we begin, I'd like to take this opportunity to reminder everyone that during this call we will discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today, actual events or results could cause outcomes to differ materially due to a number of risks and uncertainties including those mentioned in the detailed cautionary note contained in yesterday's press release and in the Company's management, discussion and announcement dated March 21, 2018.

Both documents are available on our website and on SEDAR. Please note, that all figures discussed on this call are in Canadian dollars unless otherwise stated.

A slide used for this presentation and a recording of this call will be posted on the Company's website. On the call with us this morning, we have Duncan Middlemiss, President and CEO.

Good morning.

Ben Au, Chief Financial Officer.

Hello, this is Ben Au.

Marc-Andre Pelletier, Chief Operating Officer.

Hello, this is Marc-Andrew.

Mike Michaud, Vice President, Exploration.

Good morning.

And Lindsay Carpenter Dunlop, Vice President, Investor Relations.

Good morning, everyone.

And with that it's 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, an operational review by Marc-Andre Pelletier; then our financial review by Ben Au.

We'll then move to a discussion on our recent reserve and resource update by Duncan Middlemiss, followed by an exploration update on the Eagle River and Kiena Complexes by Mike Michaud. Duncan will then conclude with the 2018 outlook.

We will then open the lines up for the question-and-answer session. Marc-Andre, please go ahead.

Thanks, Lindy. We have a strong financial 2017 and in Q4 we put 13,499 ounces of gold at head grade of 7.3 grams per ton at the Eagle River Underground Mine and 2,298 ounces at a head grade of 2.3 grams per ton from the Mishi open pit mine for total gold production of 15,797 ounces.

Both gold productions for the year slightly exceeded the top half of our guidance range at 58,980 ounces. Operational results in 2017 were a significant improvement over 2016 particularly with respect to head grade at the Eagle River Underground Mine.

With the focus our strategy to mine quality tons over quantity, I said as of development of higher grades area and [indiscernible] which has improved predictability and availability of the mine. Despite mining less funds on the ground this year, we produced 27% of ounces due to 32% increase in the head grade.

This approach has resulted in 10% decrease in cash flows and 12% decrease in all end sustaining cost achieving the midpoint of our cost guidance range. We expect cost to decrease a further 10% in 2018.

We are continuing with the necessary exploration and development work on the ground to increase the number of workplaces and ultimately had a higher proportion of underground tons as an open pit feeding the mill. During Q1 of 2018, we began mining the 303 lens which has an average width of 8 meters compared to the mines of 2 meters average width.

We expect increased mining in this ore will also help overall costs. I would now turn the call over to Ben.

Thank you, Marc. As a result of the increased gold production, we saw 19,351 ounces in the fourth quarter.

All-in sustaining costs decreased to CAD12.84 per ounce and we generated CAD5.7 million in free cash flow. With the year revenue increased 14% over 2016 despite gold prices.

Mine profit increased 41% over 2016 to CAD31.5 million, and operating cash flow increased by CAD4.8 million to CAD27.2 million or CAD0.20 per share. Net income for 2017 was negatively impacted by the onetime adjustment of CAD3.9 million in deferred mining taxes and CAD2.2 million in corporate restructuring costs.

Net income adjustment after removing these onetime items that impacted the 2017 net earnings was CAD6.8 million or CAD0.05 a share. Our operating profit this year was CAD4.2 million higher than 2016, adjusted earnings for both years are the same, primarily due to movement in tax accounts between the two years.

The cash burn stalled down there the end of the year has production ramp up and I will started rounding the high grade areas. Cash position sustained at CAD22 million throughout the end of the year as we invested capital at the Eagle River Underground Mine and the Kiena Complex.

In Eagle River Complex, that supported the Company's two most active years of exploration, as well as the exploration at Kiena. Now I'll turn over the call over to Duncan for results update.

Thanks, Ben. On February 26, the Company provided an update on Eagle River mineral reserves and resource statement.

We were able to add 73,000 ounces to reserves netting out the 53,000 ounces of 2017 mining depletion. Based upon our 125,000 ounce addition, I would say the reinvestment of capital into the Eagle River exploration program is standing off.

Our reserve high grade increased by 32% to 12.2 grams per ton from the 2016 reserve high grade of 9.2 grams per ton. The focus on the aggressive exploration of the Eagle River mine continues into 2018 with 5,000 meters of surface drilling and 50,000 meters of underground drilling, split evenly between exploration and definition drilling.

We are targeting all the zones, however the main focus is to explore for the possible extensions of the 307 zones to the east and up and down deck [ph] with the focus to add additional workplaces. For 2018, the entire exploration drilling program as we focused on Eagle as a potential to add higher margin ounces is great.

At the Mishi open pit mine, the reserves and resources have not yet been updated as the analysis of the 2017 drilling conducted here was not fully complied by year end. The company plans to conduct an in-depth study on Mishi that will be completed by the third quarter.

From drilling along the Mishi trends, we do see areas of mineralization upto 1.7 kilometers to the west, so the potential here is evident. As referenced in this slide, the impact of the 300 zone reserve increase can be readily seen.

We now had just over one half of our reserve ounces in this zone. We currently have one exploration drill dedicated to this area and we are exploring up and down depth and along strike with the goal of adding and producing areas in this high grade area.

The 300 zone remains open in all directions and [indiscernible] are very encouraging. So longer term exploration strategy is to test the 307 zones across the mines of lease for potential repetition of the east zone, the mine's main producing structure for the past 25 years which has produced in excess of 1 million ounces.

There is a lot of opportunity to add working basis overtime closer to the shaft requiring less [indiscernible] which would further increase our efficiencies. The systematic exploration program will continue for the next several years with the eventual goal of filling the mills with Eagle River underground ores.

I will now hand the call over to Mike to review exploration.

Thanks, Duncan. Wesdome had another great of exploration success at both, the Eagle River mine and at the past producing Kiena mine near Val D'Or where ramping is almost complete.

This will provide good platforms to efficiently to ask the Kiena deep discovery. In 2017 at the Eagle River mine, Wesdome successfully extended the 303 East Lanes that have high gold rates and above average rigs often greater than 10 meters.

So this has now been extended over 250 meters up and down plunge and remains open. Drift development on the 844 and 864 meter levels has now confirmed the initial drilling and confirms the continuity of the grade in which the 303 lens which now accounts for greater than 50% of the mineral reserves at Eagle River and will continue to be an important part of mining and explorations in 2018.

Ongoing development continued along the other parallel zone, the severance zone, and where exceptionally launched [indiscernible] including 23.3 grams per ton gold over an average width of 2.2 meters over full straight length of 104 meters from the 975 meter level. We expect to provide additional results from this area in the coming weeks.

These zones have excellent exploration potential to the east within the untested areas of the mine that would choose our objective of defining resources at shallow ore depths in the mine that are easily accessible and support our plan to open up new working areas to increase underground production. As such, this will continue to be a focus of surface and the underground drilling during 2018.

At the Kiena mine, we are very pleased with the exploration ramp development to-date, and we are on-track to complete the ramp at the end of the month. We're excited to report that last week we resumed drilling on the upper court and the Kiena Deep A-zone where the most recent drilling program in 2016 and 2017 returned numerous intersections of higher grade gold over significant wins.

We have two drills working there now and we expect a third drill next month. Results are expected to be released in Q2.

We're drilling a total of 50,000 underground meters this year and are aiming to complete a resource estimate on the Kiena Deep discovery in late 2018 or early 2019. Elsewhere Kiena, we have one drill continuing to drill the VC and S50 zones, past results include 6.7 grams per ton over 37.6 meters core length in the VC.

These zones are located near existing infrastructure and therefore could be quickly developed in a potential restart scenario. I will now turn the call back over to Duncan to review 2018 outlook.

Great, thanks Mike. In 2018 we forecasted 10% increase in gold production and 10% decrease in cost.

Production increases will primarily come from increased tons from the Underground Mine. Our strategy is to displace Mishi open pit tons for the higher grade Eagle River Underground Mine tons overtime.

Eagle River Underground ounces are higher margin ounces and this strategy will enable us to increase profitability. The Eagle River Underground mine is largely unexplored to the East and we believe there is potential for the 307 zone structures to contain additional high grade ore.

Timing of production increases will be dependent on exploration success. Underground tons of 2018 so far are an improvement over 2017 results and we expect it to ramp up further in the second half of the year.

Early exploration underground success with the delineation of new ore faces will accelerate this plan of increasing production. We're very excited about the potential and future of Eagle River.

At Kiena, the drilling material will also give us answer regarding timing and potential restart plans. The drilling of Kiena Deep A-zone and upper court zones will our focus this year.

A completion of the ramp which is coming in under budget, our drilling program is ready to go with the high year. Our aim is by the end of 2019 to be producing ore from two [indiscernible] Canada, both Tier-1 mining jurisdictions.

I will now turn the call back over to the operator for the question-and-answer session.

I had a question on the ventilation and power supply that -- are there any upgrades; I know we've talked about this on the call but how is the ventilation and power supply to the underground system to allow that increase with the fourth or even fifth store?

I'm really happy to say that the new ventilation fan has been commissioned in February. That will allow us to basically triple the amount of fresh air going underground, so we do have a bit of fine tuning to do in March of this month, it's kind of normal for those kind of vent changes but it's going actually better than expected.

So I think we can say that that issue has been resolved. On the power situation, we have made some good improvement in Q1, we had some power issues in January, we have fixed those issues.

On the better picture, we have a new transformer coming up, 7.5 MVA [ph] transformer that was purchased last year is coming up in April. And later on this year, we are looking to increase the power on the underground and we're also looking at making some upgrade on surface as well; so it's a safer power working out in progress.

So with those changes to ventilation and power, what would be the maximum you to be from the underground -- would then be limited by the plus capacity and shaft capacity?

Actually George, the shaft is really -- is in a bottleneck for us, I mean we really only get on night shifts so we've got lots of levy on that one. Really for us it's to develop workplaces in more of the uncongested area because all -- really 3 workplaces are associated with the ramp that goes down to 10.40 now.

And you know, the goal for us is to get these parallels almost identified further to the coast of the shaft thereby sort of taking the reliance upon off the ramp system. So really it's more of a diversification of areas I would say within the mines, but I think based on how the exploration has been going recently, we're pretty positive about this being able to happen, I think we've got some indications; so stay tuned for that one.

Right. And then switching over to Kiena; just to get a sense of when we're going to get the results there.

The lead time to get the assay results out, we're still looking around about May?

Yes, we have the two drills starting in A-zone right now and with the drilling products just coming along quite good, we expect to have the initial results coming out in Q2, later in Q2 and then continue on through Q3 and the rest of the year. You know, really to get the 50,000 meters, it will probably take us to Q4 and at that point we'll look upto the resource.

Could you maybe update the resolute's position; I know last count, I think they were down to about 6 million shares; has that changed since then?

As you know, since resolute sizes is under 10%, they are no longer required to file but they are no longer one of our top shareholders.

I guess, just the other thing; could you maybe talk about the delta between the guidance, the head graded Eagle River versus the proven and probable grade?

Really, budget was in around 10.3, obviously with the update in the reserves being at 12.2, for sure I expected this question. Really what it is, is a lot of the high grade that we have isn't immediately accessible to our mining plan, so really as you go further up deep and down deep, especially in that 303 lens, the grades are quite exceptional there but that's not the 2018 mining plan right now but we're certainly getting there.

I think what we're seeing right now though is really good evidence of strong grades within 300 and 700 right now and we're quite pleased and we'll be able to further guide the market as to how we're doing as the year goes on but I'd say we come out as per plan.

Couple of my questions are already answered. My last one is, can you kind of quantify for everyone the impact of having the ramp completed at Kiena in terms of meter that you have to drill to target these deeper intercepts compared to what you were drilling previously just to give everyone a sense of the advantages you have as this is being completed in the next days or weeks?

Certainly the ramp is shortened a hole by about 50%, so really that accelerates the program a lot because the shorter holes certainly from the percentage of holes [ph] are reaching their target, we've come from something like 30% to probably over 90% now of our depths. So the program is going quite well with the ramp, and then as we proceed with the drilling we do the infield drill at [indiscernible] to sort of a program within that 50 meters to really extending the zones and you know, if we're successful at that, who knows, maybe we'll go back and then we'll extend the underground workings that we have.

So really, that's going to take the next 6 months of continued drilling to get to the point where we really know what we have our depth there.

Could you give us an update on the Moss Lake program where you tested the new ground that had been acquired one or two years ago; it appear to be encouraging.

Really, the [indiscernible] for Wesdome in 2018, I call it sort of priority 1A and 1B. Unfortunately mass doesn't really hit that priority, obviously [indiscernible] are the top tier priorities we have.

We haven't budgeted any spend right now with Moss. Essentially what we're doing is we've compiled the results, I'd have to say that the interest in Moss Lake right now has grown 10-folds since we've been able to demonstrate that the actual mineralization along strides has probably increased by further 4.5 kilometers.

So I think that's very encouraging, I think a lot of people see the potential for this project for sure. However, we're in a position right now, we're happy just to sense the title on it and just review options with it.

So Duncan if I could paraphrase you in two different ways and you tell me which is the right interpretation. You're not postponing Moss Lake because it sucks, because you're postponing Moss Lake because it's too big and you want to get Kiena into production that's bite sized.

And when Kiena is flowing cash in first, and Eagle is flowing cash, then you can go back to Moss Lake?

John, I need you on this side of the phone. No, absolutely.

I mean that's what it is, it's a very large area; I mean, when -- and let's face it, our capability currently -- we really have a low CapEx expansion plan for Wesdome and we can see this -- we're able to increase our production to fill a mill at the Eagle -- you know, that mine would then be able to potentially do somewhere over 100,000 ounces at those grades and Kiena in stage 2 we don't know what it can be but we're certainly [indiscernible] some of the grades that we've been able to generate on the exploration program over the last two years. And again, the benefit of us having a fully permitted mining plans and the mill and the whole thing and [indiscernible] is awesome.

So again, another low CapEx with an increased production for us. So, yes, we need to get both these priorities underway and then we can certainly dedicate a little more resources to Moss.

When you go to work on Moss Lake, whenever that is; is it such a big project that you would have to take a partner or do you think at the initial phases you can evaluate it on your own?

I'd say the potential for -- I mean, we could certainly start on that but you look at -- the sheer breadth of what we're trying to do at Moss and you see the strike of mineralization and we really need to add to the resource ounces there in order to make it a compelling story. I'm not sure what Mike things about that in terms of spacing or whatever, do you have a…

Yes, one other things we're working on is reviewing along the drill date of that's been done and maybe there is a potential for something small or higher grade that really we're updating in 3D geologic model and looking at some of the new data and to see if there is another way to look at deposits in the future. But it wouldn't require some additional drilling and some other targets that we have remaining on the property to see exactly what we have there.

And John, I wouldn't say no to a joint venture type situation either on that one right now but like I said, in terms of where we stand on it right now is we're happy to keep holding it, it really doesn't cost us much to hold on to and I think that's probably the best way for us.

As it relates to Kiena, with a reasonable guess for 2019 or 2020 be something like 1,250 tons a day of throughput at either 9 grams?

Well, you've got the cart firmly in front of the horse here because this is why we're drilling. So is that -- it could happen, sure, but I think we really need to do our drilling and find out what it is.

What we see with Kiena John, and something that I'd been telling everybody that I meet with is that we see -- the Kiena Deep has been an important high grade portion of the mine, we also see other opportunities within the mine and we got to drill targeting the S50 and the VC zone and really, any sort of a potential research plan is probably a one-third contribution from each of those areas in order to get upto that 1,200 ton or 1,500 ton per day production rate. But again, very forward-looking at this point.

Well, thanks everyone for joining us today. We look forward to updating you on our future progress at both, our Ontario and Quebec assets.

Our aggressive exploration programs are certainly paying dividends and we see a great future at Wesdome. Good day.

Thank you.